UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
DC 20549





FORM
10-K





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


ACT
OF 1934





For
the fiscal year ended December 31, 2007








[_]
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
      Bulletin Board





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):





Lar  
      Large accelerated filer o
            
            Accelerated
      filer o
            
            Non-accelerated
      filer þ
            
            Smaller
      reporting company o





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





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.   $40,546,724





The number
of shares outstanding of common stock, par value $0.001, as of March 28,
2008 was 207,318,975.





DOCUMENTS
INCORPORATED BY REFERENCE:





None










NewMarket
Technology, Inc.





ANNUAL
REPORT ON FORM 10-K





FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2007




PART
      I
            3Item
      1. Description of Business
            3Item 1A. Risk Factors
            11Item 1B. Unresolved Staff Comments
            13Item
      2.  Description of Properties
            14Item
      3.  Legal Proceedings
            14Item
      4.  Submission of Matters to a Vote of Security
      Holders
            15PART
      II
            15Item
      5.  Market for Common Equity and Related Stockholder
      Matters
            15Item
      6. Selected Financial Data
            16Item
      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
            23Item 15. Exhibits and Financial Statement
      Schedules
            23Signatures
            26Index to Financial
      Statements
            F-1









PART I





Item 1.Description of Business





Forward-Looking
Information





Certain
matters discussed in this report or in the information incorporated by reference
may constitute forward-looking statements. Forward- looking statements can
generally be identified by the use of forward-looking terminology, such as
"believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "estimates," or "anticipates" or the negative of these terms
or other comparable terminology, or by discussions of strategy, plans or
intentions. Statements contained in this report that are not historical facts
are forward- looking statements. Without limiting the generality of the
preceding statement, all statements in this report concerning or relating to
estimated and projected earnings, margins, costs, expenditures, cash flows,
growth rates and financial results are forward-looking statements. In addition,
we, through our senior management, from time to time make forward-looking public
statements concerning our expected future operations and performance and other
developments. These forward-looking statements are necessarily estimates
reflecting our best judgment based upon current information and involve a number
of risks and uncertainties. Other factors may affect the accuracy of these
forward-looking statements, and our actual results may differ materially from
the results anticipated in these forward-looking statements. While it is
impossible to identify all relevant factors, factors that could cause actual
results to differ materially from those estimated by us include, but are not
limited to, those factors or conditions described in "Management Discussion and
Analysis or Plan of Operation" as well as changes in the regulation of the IP
telephony industry at either or both of the federal and state levels,
competitive pressures in the IP telephony industry and our response to these
factors, and general conditions in the economy and capital markets.





All
subsequent written and oral forward-looking statements attributable to NewMarket
Technology, Inc. ("NewMarket " or the "Company") and persons acting on our
behalf are qualified in their entirety by the cautionary statements contained in
this report.





3




The
Company





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, the Company 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.





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





To better
reflect the Company's renewed business plan and the product line expansion
beyond voice communications, the Company changed its name from IPVoice
Communications Inc. to NewMarket Technology Inc. in June 2004. The common stock
is currently traded on the OTC Bulletin Board under the symbol
"NMKT."





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.





Consistent
with the VTI asset acquisition agreement, the Company 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 Company.





As part of
the Company's renewed business strategy, two additional acquisitions were
completed in the 2003 fiscal year. In 2003, the Company acquired all of the
issued and outstanding stock of Infotel Technology PTE Ltd. ("Infotel") in
Singapore as part of a strategy to establish a foothold operation in Asia. The
Company also acquired a majority of the issued and outstanding stock of IP
Global Voice, Inc. ("IP Global Voice") of San Francisco, California as part of a
strategy to accelerate business development. Each of these businesses is now
operated as a majority or wholly-owned subsidiary of the Company. Infotel is a
communications systems integrator 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 voice-over IP
(“voIP”)service provider that went into production in December,
2003.





NewMarket
entered the healthcare industry in 2004 by acquiring Medical Office Software
Inc, (“MOS”),a twenty year old technology company providing practice management
and claims processing IP software and maintenance to three thousand ongoing
physician clients. NewMarket further added to its Healthcare strategy with a
minority equity investment in Sensitron, Inc., a wireless health records
maintenance provider.





NewMarket
expanded into the homeland security industry in 2004 with our acquisition of
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. We
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.





NewMarket
continued to expand its telecommunications industry strategy in 2004 with a
minority equity investment in RedMoon Broadband Inc. ("RedMoon") RedMoon
specializes in the engineering and management of municipal wireless broadband
networks.  Also in 2004, the Company acquired RKM Suministros, Ltd.
(“RKM”), a Venezuela-based computer systems integration company.





In the
second half of 2004, NewMarket entered into an agreement to purchase Logicorp,
Inc., a general technology service business.  The acquisition was
never completed regardless of the fact that the Company paid in excess of $1
million in cash out of a $2.1 million total purchase price.  Some
joint operations between Logicorp and NewMarket ensued. Ultimately, Logicorp did
not prove to be a sustainable business and the operations of Logicorp have been
closed or divested.  NewMarket has alternatively entered into an
agreement to exchange our contemplated equity position in Logicorp for a
minority equity position in Broker Payment Services, Inc., a financial services
software companyPart of the Company's growth strategy includes expansion into
high-growth developing economic regions. These developing economic regions
provide both an environment for accelerated growth as well as a parallel
platform for acquiring early stage subsidiary technology companies and
developing them into mainstream technology service and product
companies.





4


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
February 2005, we entered into an agreement with Defense Technology Systems,
Inc. (“DFTS”), a homeland security products company, under which DFTS acquired
our 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 minority interest in TekVoice. TekVoice will
expand the NewMarket business model into the Hispanic and Latin American market
with plans to establish an independent public listing on a United States
securities exchange. Currently, TekVoice is a Hispanic and Latin America voIP
service provider.





In May
2005, NewMarket executed a stock purchase agreement to acquire fifty-one percent
ownership of Vera Technology Inc (“Vera”). In a simultaneous agreement, Vera
acquired one hundred percent of 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 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 June
2005, NewMarket acquired substantially all of the assets of Corsa Networks
Technologies, Inc.  (“Corsa”). Corsa is 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,
which may be increased to $8,539,680 based on various financial
benchmarks.  The purchase price is payable in tranches through the end
of 2008.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, as well as a regional office in Santiago de Chile,
Chile.





In March
2006, the Company and Sensitron Inc., (“Sensitron”), a Delaware corporation,
agreed to convert NewMarket’s previous equity investment of $411,400 in
Sensitron  into a two –year Promissory Note with a rate of 6% per
annum. Additionally, the Company received 20,000 warrants to purchase common
stock of Sensitron.   The parties previously entered into a
Common Stock Subscription Agreement dated August 17, 2004 and pursuant to the
terms of that Subscription Agreement, NewMarket had invested the sum of $411,400
in Sensitron.





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
August 2006,  NewMarket
China,  Inc.  ("NewMarket China"),  a
wholly-owned subsidiary of NewMarket, 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 and stock ticker symbol was changed to NewMarket
China to reflect the new operations of the business.





In October
2006, NewMarket completed the sale of its majority interest in
MOS  pursuant to a stock purchase agreement  with
VirtualHealth Technologies, Inc. (“VirtualHealth”). Under the terms of the
Agreement, NewMarket received 1.4 million shares of VirtualHealth common stock
and a $900,000 convertible note in exchange  for
its  majority  interest  in MOS.





5


In
February 2007, NewMarket executed a share exchange agreement with Paragon
Financial Corporation, (“Paragon”), a Delaware
corporation,   under which the Company will sell our interest in
Unione to in exchange for the issuance to the Company of a supermajority voting
preferred stock.  These preferred shares will be deemed at all times
as the equivalent of ninety-percent (90%) of the common shares of Paragon for
voting purposes on all matters.  It is anticipated that this
transaction will close in the second quarter of 2008.





In March 2007, NewMarket executed a
definitive agreement with Diamond I, Inc. ("DMOI") under which the Company would
purchase 2 million shares of DMOI Series B Preferred Stock ("Series B shares")
to be issued in consideration for cash and a promissory note to be issued by the
Company. The Series B shares would be deemed at all times as the equivalent of
sixty-percent (60%) of the common shares of DMOI for voting purposes on all
matters. In June 2007, the agreement expired and the parties terminated further
discussions.  Additionally, a result of the
termination of the DMOI transaction, the company has delayed the acquisition of
a majority interest in Redmoon.





The
Company has never been the subject of a bankruptcy, receivership or similar
proceeding.





Recent
Financing





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 $73,333 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.





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.





The
Company is obligated to file a registration statement registering the resale of
shares of the Company's common stock issuable upon conversion of the Notes and
exercise of the warrants within 60 days and to have such registration statement
declared effective within 180 days. The Company is also required to file a
registration statement to register shares of common stock underlying any warrant
issued after the closing within 90 days after the issuance of such warrants and
shares issuable to the holders as a result of any adjustments of the Fixed
Conversion Price or the exercise price of the warrants within 90 days after any
such event or the date of adjustment and have such registration statement
declared effective within 90 days. The Company will be required to pay
liquidated damages if a registration statement is not timely filed, or declared
effective within the required timeframes or ceases to be effective after being
declared effective for a period of 90 days in any 365 days or 30 consecutive
days or the Company’s common stock is not listed or quoted or is suspended from
trading for a period of 3 consecutive trading days.





6




The
Company 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.





Additionally,
pursuant to the terms of the Security Agreement and the Notes, 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.








Current
Corporate Strategy:





NewMarket
Technology is in the business of developing market entry technology products and
services into early and mainstream technology products and services. To this
end, NewMarket has 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 the NewMarket 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. NewMarket contains each technology product and
service offering within a subsidiary company. As the product and service
offering matures, NewMarket plans 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 NewMarket with a profit margin advantage.





The
NewMarket 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 the NewMarket 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, NewMarket will issue subsidiary stock to common
shareholders through a dividend declaration. By issuing stock in subsidiary
companies to NewMarket common shareholders, NewMarket believes it will enhance
long-term return opportunity for common shareholders by adding dividend returns
to NewMarket stock appreciation, if any. The ability of NewMarket common
shareholders to liquidate subsidiary stock issued in a NewMarket dividend
creates incremental return opportunities that can be immediately realized
without liquidating NewMarket stock.





We believe
the NewMarket Technology 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.





NewMarket
Technology has 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.





7




In order
to create a meaningful organization through smaller investments, the counter
strategy to smaller investments is more investments. NewMarket is concentrating
on Internet Protocol (IP) Communication Technologies. The Company currently has
three market sector concentrations, each leveraging a core expertise in IP
Technology - Telecommunications, Healthcare and Homeland
Security.  The Company has plans to expand into financial services
technologies.





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 the Company fails to perform adequate due diligence,
NewMarket may acquire a company or technology that:





(a) is not
complementary to the business;


(b) is
difficult to assimilate into the business;


(c)
subjects the Company to possible liability for technology or product defects;
or


(d)
involves substantial additional costs exceeding estimated costs.





In
addition, the Company also faces the following risks in connection with its
acquisitions:





(a) the
Company may spend significant funds conducting negotiations and due diligence
regarding a potential acquisition that may not result in a successfully
completed transaction;


(b) the
Company may be unable to negotiate acceptable terms of an
acquisition;


(c) if
financing is required to complete the acquisition, the Company may be unable to
obtain such financing on reasonable terms, if at all; and


(d)
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.





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, Sun Microsystems, iPass, and Lockheed Martin Overseas
Corporation among other software and systems corporations. 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


·
            Proprietary
      Healthcare Practice Management
Software


·
            Proprietary
      Defense Industry System Solutions


·
            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; o Intelligent Contact Management;
  and


·
            Wireless
      Features, Long-Distance and
Applications.


·
            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


·
            Long-Distance
      Telephone Services, both Domestic and
  International


·
            Technical
      Independent Consulting


·
            Security





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:





8




For
integration and licensing services, we bill our customers on a biweekly 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.





Marketing:





We plan to
partner with branded communications providers to integrate their systems into a
consolidated package representing a single value proposition for direct
marketing to our target markets.





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.





Suppliers/Raw
Materials:





Our
principal suppliers are provided below:





·
            Microsoft


·
            SAP


·
            Hyperion
      Solutions


·
            iPass


·
            Broadsoft


·
            Cisco
      Systems


·
            Sun
      Microsystems


·
            SSA
      Global


·
            Oracle


·
            Lockheed
      Martin Overseas Corporation


·
            Telenetics
      Corporation


·
            Andrew
      Telecommunication Systems





Although
there can be no assurances, management believes that we have good relations with
each of our principal suppliers. Our business does not require the use of raw
materials to any significant degree. Those raw materials that we do need are
readily available through numerous commercial sources.





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





9




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.





Canadian





In Canada,
the Canadian Radio-Television and Telecommunication Commission determined in
1998 that IP Telephony service providers must pay local contribution charges for
calls terminating on local telephone networks, while those calls that originate
and terminate on computers are not subject to these charges. Canadian regulatory
authorities may in the future make a determination to apply international call
termination fees or otherwise tariff IP Telephony. We may also be required to
comply with the regulations regarding the operation of our business in several
foreign jurisdictions and will be subject to compliance with the requirements of
the authorities of these locales regarding the establishment and operation of
our business.





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.





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:





o
content,


o
privacy,


o access
to adult content by minors,


o
pricing,


o bulk
e-mail,


10




o
encryption standards,


o consumer
protection,


o
electronic commerce


o
taxation,


o
copyright infringement, and


o 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.





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,
2007 and 2006, 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





11




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 each of the last three 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.





We cannot
predict our future results because our business has a limited operating history,
particularly in its current form.





Given our
limited operating history, it will be difficult to predict our future results.
You should consider the uncertainties that we may encounter as an early stage
company in a new and rapidly evolving market. These uncertainties
include:





o
.......market acceptance of our products or services;


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


o
.......our ability to create user-friendly applications; and


o
.......our unproven and evolving business model.





We have
only recently begun to generate significant revenues and we still incurred
losses in fiscal years 2001 and 2002.





We have a
limited operating history and incurred losses for 2001 and 2002. 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.





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 industry is characterized by rapid technological innovation, sudden
changes in user and customer requirements and preferences, frequent new product
and service introductions and the emergence of new industry standards and
practices. Each of these characteristics could render our services, products,
intellectual property and systems obsolete. The rapid evolution of our market
requires that we improve continually the performance, features and reliability
of our products and services, particularly in response to competitive offerings.
Our success also will depend, in part, on our ability:





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


o to
respond to technological advances and emerging industry standards and practices
on a cost-effective and timely basis.





If we are
unable, for technical, financial, legal or other reasons, to adapt in a timely
manner to changing market conditions or user preferences, we could lose
customers, which would cause a decrease in our revenue.





We may be
unable to obtain additional capital if needed to grow our business, which would
adversely impact our business. If we raise additional financing, you may suffer
significant dilution.





12




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.





Risks
Related to Our Industry





Deterioration
of the IP Communications industry could lead to further reductions in capital
spending budgets by our customers, which could further adversely affect our
revenues, gross margins and income.





Our
revenues and gross margins will depend significantly on the overall demand for
IP communication products. Reduced capital spending budgets by our customers
caused by the ongoing industry downturn have led to continued soft demand for
our products and services, which has resulted in, and may continue to result in,
decreased revenues, earnings levels or growth rates. The global economy in
general, and the technology market in particular, has weakened and market
conditions continue to be challenging. As a result, individuals and companies
are delaying or reducing expenditures. We have observed effects of the global
economic downturn in many areas of our business. In addition, the technology
industry has experienced significant consolidation, and this trend is expected
to continue. It is possible that we and one or more of our competitors each
supply products to the companies that have merged or will merge. This
consolidation could result in further delays in purchasing decisions by merged
companies or in us playing a decreased role in the supply of products to the
merged companies. Further delays or reductions in spending could have a material
adverse effect on demand for our products and services and, consequently, our
results of operations, prospects and stock price.





Risks
Related to Our Capital Stock





The public
market for our common stock may be volatile.





The market
price of our common stock has been and is likely to continue to be volatile and
significantly affected by various factors, including:





o general
market conditions and market conditions affecting technology stocks in
particular;


o actual
or anticipated fluctuations in our quarterly or annual operating
results;


o
announcements relating to contracts, investments, acquisitions,
divestitures;


o
discontinued operations, layoffs or corporate actions;


o industry
conditions or trends; and


o 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.





13




Our common
stock is subject to regulations prescribed by the SEC relating to “penny
stocks.” The SEC has adopted regulations that generally define a penny stock to
be any equity security that has a market price (as defined in such regulations)
of less than $5.00 per share, subject to certain exceptions. As our common stock
meets the definition of a penny stock, it is subject to these regulations, which
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and “accredited
investors” (generally institutions with assets in excess of $5,000,000 and
individuals with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 (individually) or $300,000 (jointly with their spouse)).





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





Shareholder
interest in the 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.





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, 2007, our headquarters operated out of approximately 671 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, 2008. 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.
The Company intends to vigorously defend this action and assert certain
offsetting counterclaims.




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.




14




In May
2007, Homevest Capital LLC filed a lawsuit styled Homevest Capital, LLC, v.
NewMarket Technology, Inc., alleging Netsco, Inc., a wholly owned subsidiary of
NewMarket Technology, defaulted on a Promissory Note executed in 2001. The
action was brought in Mecklenburg County, North Carolina, whereby Homevest
Capital claims they are owed the principal sum of the note $153,500.00 plus
interest and legal fees. Homevest Capital alleges that NewMarket Technology is
liable for the debt. The Company has filed a motion to dismiss for lack of
personal jurisdiction and 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 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





We did not
submit any matter to a vote of security holders during 2007.











PART II





Item 5. Market for Common Equity and Related Stockholder
Matters





Our common
stock has been since July 1998, and is currently, quoted on the Over-the-Counter
Bulletin Board ("OTCBB") under the symbol "NMKT". The high, low and average 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, 2007, the last reported sale price of the common
stock on the OTCBB was $0.211 per share.








Quarter
            
            
            High
            
            
            Low
            
            
            Average2006First
      Quarter
            
            
            $
            0.41
            
            
            $
            0.27
            
            
            $
            0.31Second
    Quarter
            
            
            $
            0.70
            
            
            $
            0.34
            
            
            $
            0.42Third
      Quarter
            
            
            $
            0.35
            
            
            $
            0.28
            
            
            $
            0.31Fourth
    Quarter
            
            
            $
            0.38
            
            
            $
            0.26
            
            
            $
            0.302007First
      Quarter
            
            
            $
            0.44
            
            
            $
            0.28
            
            
            $
            0.38Second
      Quarter
            
            
            $
            0.45
            
            
            $
            0.29
            
            
            $
            0.37Third
    Quarter
            
            
            $
            0.35
            
            
            $
            0.22
            
            
            $
            0.26Fourth
    Quarter
            
            
            $
            0.29
            
            
            $
            0.18
            
            
            $
            0.23







Holders:





As of
December 31, 2007, we had 202,993,416 shares of our common stock outstanding
held of record by approximately 175 shareholders of record. We currently have
only one class of common stock outstanding.   Based upon
information provided to the Company by persons holding securities for the
benefit of others, it is estimated that the Company has in excess of 14,000
beneficial owners of its 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.





Recent
Sales of Unregistered Securities:




15




Set forth
below is information regarding the issuance and sale of our securities without
registration during the three month period ended December 31, 2007:





·
            The
      Company issued 1,504,325 shares of common stock to convert $280,000 of
      convertible debt and accrued
interest.





·
            The
      Company issued 912,261 and 1,098,067 shares of common stock pursuant to
      the conversion of 200 shares of Series F preferred stock and 200 shares of
      Series H preferred stock,
respectively.





Each of
the above issuances was deemed to be exempt under Rule 506 of Regulation D
and/or Section 4(2) of the Securities Act of 1933, as amended. No advertising or
general solicitation was employed in offering the securities. The offerings and
sales were made to a limited number of persons, all of whom were accredited
investors, business associates of our company or executive officers of our
company, and transfer was restricted by our company in accordance with the
requirements of the Securities Act of 1933. In addition to representations by
the above-referenced persons, we have made independent determinations that all
of the above-referenced persons were accredited or sophisticated investors, and
that they were capable of analyzing the merits and risks of their investment,
and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access to
our Securities and Exchange Commission filings.








Item 6.  Selected Financial Data





The
following selected financial data is derived from the consolidated financial
statements of the Company. 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 31,2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003SELECTED
      STATEMENT OF OPERATIONS DATANet
      sales
            
            $
            93,108
            
            
            
            77,636
            
            
            
            50,138
            
            
            
            24,977
            
            
            
            2,347Net
      income
            
            $
            7,349
            
            
            
            5,887
            
            
            
            2,909
            
            
            
            243
            
            
            
            195Net
      income (loss) per weighted avg. common share-basic
            
            $
            0.04
            
            
            
            0.04
            
            
            
            0.03
            
            
            
            0.01
            
            
            
            0.01SELECTED
      BALANCE SHEET DATAWorking
      capital
            
            $
            19,198
            
            
            
            10,018
            
            
            
            6,142
            
            
            
            2,199
            
            
            
            1,260Total
      assets
            
            $
            75,080
            
            
            
            64,576
            
            
            
            51,512
            
            
            
            25,149
            
            
            
            7,580Long
      term liabilities
            
            $
            2,109
            
            
            
            9,916
            
            
            
            4,244
            
            
            
            2,947
            
            
            
            3,800Stockholders'
      equity
            
            $
            58,292
            
            
            
            45,168
            
            
            
            32,766
            
            
            
            17,143
            
            
            
            4,942











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





Forward-Looking
Statements:





Statements
in this Management Discussion and Analysis include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The words or phrases "would be," "will
allow," "intends to," "will likely result," "are expected to," "will continue,"
"is anticipated," "estimate," "project," or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements may be found in
"Description of Business," "Management Discussion and Analysis or Plan of
Operation" and elsewhere in the report. 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 offered over the Internet; (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-KSB 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-KSB, except as may otherwise be required by applicable
law.





Overview





We have
achieved an operating profitability, but until we achieve a sustained level of
profitability over multiple years, we must be considered an early stage entity.
Until that time, we may periodically depend on financing resources for cash
flows to meet certain operating expenses and no assurance of our financial
success or economic survival can be given during this period.





16




We believe
our strategy, introduced in June of 2002, to package our own proprietary
technology products and services with recognized brand names and to pursue sales
in the high demand Telecommunications, Healthcare and Homeland Security Markets
will be successful.





Overall
sales in fiscal year 2007 were $93,108,116 which resulted in net income of
$7,348,832.  The comprehensive net income for 2007 was $7,885,223,
which represents an adjustment to compensate for the risk associated with
foreign profits and the potential conversion of foreign currency.





In
addition to the products and services we currently offer in the
Telecommunications market, the Healthcare and Homeland Security markets we plan
to expand into the Financial Services market in the future. Our plans call for
accelerating market expansion into the Telecommunications, Healthcare, Homeland
Security and Financial Service industries through strategic mergers and
acquisitions.





In 2005,
we initiated an expansion of the NewMarket business model through the launch of
sister operations in Latin America and Asia. In the future we plan to similarly
expand into Eastern Europe.





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





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





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





Net sales
increased twenty percent (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 twenty one percent (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, respectively. 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 nineteen
percent (19%).  The increase in general and administrative expenses
was primarily due to the overall increase in sales and operational expenses.
Management plans 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, 2006 were $1,781,720 compared
to $2,879,970 for the year ended December 31, 2007, 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.





Results
of Operations -Year Ended December 31, 2006 Compared to the Year Ended December
31, 2005





Net sales
increased fifty five percent (55%) from $50,137,694 for the year ended December
31, 2005 to $77,635,622 for the year ended December 31, 2006. This increase was
due primarily to the implementation of the previously herein described new
business model implemented in June 2002 and the corresponding herein described
acquisitions starting with VTI in June 2002 in addition to the operations and
growth from the acquired assets.





17




Cost of
sales increased seventy six percent (76%) from $31,587,560 for the year ended
December 31, 2005 to $55,752,439 for the year ended December 31, 2006. This
increase was primarily due to the corresponding increase in overall sales. Our
cost of sales, as a percentage of sales was approximately 72% and 63% for the
years ended December 31, 2006 and 2005, respectively. Management plans to
continue to pursue strategies to reduce the overall cost of sales as a
percentage of sales as the company grows. Management will leverage the increased
purchasing volume to improve purchasing contracts and reduce overall cost of
sales. Management will also implement resource utilization strategies that can
demonstrate notable savings when applied over higher volumes of
production.





Compensation
expense increased two percent (2%) from $10,105,543 for the year ended December
31, 2005 to $10,305,045 for the year ended December 31, 2006. Management is
working to keep compensation in reasonable proportion to the overall Company
sales and expenses. Management has significantly decreased its stock-based
compensation to outside consultants, officers and related party consultants and
plans to continue to limit such compensation. No performance incentive
compensation program has yet been in place since the implementation of the new
business model in June 2002, but management plans to construct and implement
such a plan in the future intended to support the aforementioned objective of
keeping overall compensation in proportion to Company sales and
expenses.





General
and administrative expenses for the year ended December 31, 2005 were $4,026,123
compared to $5,138,833 for the year ended December 31, 2006. The increase in
general and administrative expenses was primarily due to the overall increase in
sales and operational expenses. Management plans 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.





Depreciation
and amortization expense increased from $621,775 for the year ended December 31,
2005 to $786,173 for the year ended December 31, 2006. The increase is due
primarily to the overall increase in fixed assets as a result of the Company’s
acquisitions. Depreciation on fixed assets is calculated on the straight-line
method over the estimated useful lives of the assets.





Net income
increased one-hundred and two percent (102%) from $2,908,949 for the year ended
December 31, 2005 to $5,887,493 for the year ended December 31, 2006. 2006 net
income represented 7.6% of net sales compared to  2005 net income
which represented 5.8% 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, increased one-hundred and forty-five
percent (145%) from $2,699,076 for the year ended December 31, 2005 to
$6,615,601 for the year ended December 31, 2006. 2006 comprehensive net income
represented 8.5% of net sales compared to 2005 comprehensive net income which
represented 5.4% of net sales The net increase in profit and increase in the
percentage of net sales were due primarily to the  implementation of
the previously  herein described  new
business  model  implemented in June 2002 and the
corresponding herein described  acquisitions starting with VTI in June
2002 in addition to the operations and growth from the
acquired  assets and the investment in operations made to effect such
growth, and gains attributable to the sale of our Medical Office Systems and
Vera Technology subsidiaries.





Liquidity
and Capital Resources





The
Company's cash balance at December 31, 2007 increased $1,908,073 from $3,294,171
as of December 31, 2006, to $5,202,244. The increase was the result of a
combination of loan proceeds totaling $4,000,000, and net proceeds from
investing activities totaling $4,087,169, offset by cash used by operations
totaling $3,790,076, cash used for repayment of loans totaling $1,647,680,and
the effect of exchange rates on cash totaling $741,340.  Operating
activities for the year ended December 31, 2007 exclusive of changes in
operating assets and liabilities provided $6,354,122 in cash, as well as an
increase in accounts payable and accrued expenses of $1,454,575 and other
current assets of $210,379, offset by an increase in accounts receivable of
$8,656,613, inventory of $1,169,898 and other current assets of
$1,982,641.





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 $73,333 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.





18




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.





The
Company is obligated to file a registration statement registering the resale of
shares of the Company's common stock issuable upon conversion of the Notes and
exercise of the warrants within 60 days and to have such registration statement
declared effective within 180 days. The Company is also required to file a
registration statement to register shares of common stock underlying any warrant
issued after the closing within 90 days after the issuance of such warrants and
shares issuable to the holders as a result of any adjustments of the Fixed
Conversion Price or the exercise price of the warrants within 90 days after any
such event or the date of adjustment and have such registration statement
declared effective within 90 days. The Company will be required to pay
liquidated damages if a registration statement is not timely filed, or declared
effective within the required timeframes or ceases to be effective after being
declared effective for a period of 90 days in any 365 days or 30 consecutive
days or the Company’s common stock is not listed or quoted or is suspended from
trading for a period of 3 consecutive trading days.





Since
inception, the Company has financed operations primarily through equity security
sales. The Company 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 start-up nature of the Company and the potential of a
future poor financial condition, we may be unsuccessful in obtaining such
financing or the amount of the financing may be minimal and therefore inadequate
to implement our continuing plan of operations. There can be no assurance that
we will be able to obtain financing on satisfactory terms or at all, or raise
funds through a debt or equity offering. In addition, if we only have nominal
funds by which to conduct our operations, it will negatively impact our
potential revenues.





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





During the
two most recent fiscal years ended December 31, 2007 and December 31, 2006,
there were no changes in or disagreements with the Company’s independent public
accountants.





Item 9A. Controls and Procedures





Evaluation
of Disclosure Controls and Procedures




We have
carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31,
2007. Based on such evaluation, we have concluded that, as of such date, our
disclosure controls and procedures were effective to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in
applicable SEC 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 discussions regarding
required disclosure.




Management’s
Report on Internal Control Over Financial Reporting




Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) promulgated under the Exchange Act. Those rules define
internal control over financial reporting as a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:


19




·
            
            Pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of the assets of the
      Company;·
            
            Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the Company
      are being made only in accordance with authorizations of management and
      directors of the Company; and·
            
            Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisitions, use or disposition of the Company’s assets that
      could have a material effect on the financial
  statements.




Because of
its inherent limitations, internal controls over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.




Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2007. In making this assessment, the Company’s
management used the criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). Based on our assessment, we believe that, as of
December 31, 2007, the Company’s internal control over financial reporting
is effective based on those criteria.




This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.




Changes
in Internal Control Over Financial Reporting




There have
been no changes in our internal control over financial reporting during the most
recent fiscal quarter that have materially affected, or are 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 March 31,
2008.








Name
            
            Age
            
            PositionPhilip M.
      Verges
            
            42
            
            Chairman, Chief
      Executive Officer,DirectorPhilip J.
      Rauch
            
            47
            
            Chief Financial
      Officer, DirectorJames
      Mandel
            
            54
            
            DirectorBruce
Noller
            
            51
            
            DirectorHugh G.
      Robinson
            
            75
            
            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, brings substantial financial and corporate
development talent and experience to NewMarket.  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.  Since February 2004, Mr. Rauch has 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. From 1993 to 1997, Mr. Rauch was
Vice President and Chief Financial Officer of Columbus Construction, a heavy
construction company with several plant facilities.  He is currently a
member of the American Management Association.





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.





BRUCE
NOLLER, Director, is currently the Director of Operations for NewMarket
Technology, Inc.., 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.  Before he
founded his own firm in 1994, he served as Vice President for Integrated Control
Systems, a worldwide management consulting firm. During that time, Mr. Noller
proposed and oversaw engagements
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.





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.







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 the only executive officers of the Company during
fiscal 2007.








21




Summary
Compensation








Long-Term
            
            
            All
      OtherCompensation
            
            
            CompensationAnnualCompensation
            
            
            AwardsSecuritiesName and
            
            
            
            
            
            
            
            
            
            UnderlyingPrincipal
      Position
            
            Year
            
            Salary
            
            
            Bonus
            
            
            OptionsPhilip M.
      Verges
            
            2007
            
            $
            225,000
            
            
            
            --
            
            
            
            --
            
            
            
            --Chairman, Chief
      Executive Officer,
            
            2006
            
            
            200,000
            
            
            
            --
            
            
            
            --
            
            
            
            --Director
            
            2005
            
            
            125,000
            
            
            
            --
            
            
            
            --
            
            
            
            --(since June
      2002)Philip J. Rauch
      (1)
            
            2007
            
            $
            200,000
            
            
            
            --
            
            
            
            --
            
            
            
            --Chief Financial
      Officer, Director
            
            2006
            
            
            188,000
            
            
            
            --
            
            
            
            --
            
            
            
            --(since Feb
      2006)
            
            2005
            
            
            0
            
            
            
            --
            
            
            
            --
            
            
            
            --






(1) Mr.
Rauch became Chief Financial Officer in February 2006 and therefore was paid no
salary in any prior fiscal years.





Option
Grants in 2007





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





Option
Exercises in 2007 and 2007 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 2006.





Compensation
of Directors





Directors
who are also employees of the Company 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 a
compensation and 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 2007:





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





The
following table sets forth as of December 31, 2007, certain information
regarding beneficial ownership of the Common Stock held by each person known by
the Company to own beneficially more than 5% of the Common Stock, each of the
Company's directors, each of the executive officers named in the Summary
Compensation Table, and all of the Company's 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 202,993,416
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, 2007 and resulting in a fully diluted 221,250,653 shares of
common stock at December 31, 2007. 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.




22










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)
            
            63,000,000
            
            28.5%
            
            --
            
            --Philip J. Rauch
      (2)
            
            1,000,000
            
            0.5%
            
            --
            
            --Bruce Noller
      (3)
            
            500,000
            
            0.3%
            
            --
            
            --All current Officers
      and Directors
            
            64,500,000
            
            29.3%
            
            --
            
            --VergeTech, Inc.
      (4)(5)
            
            63,000,000
            
            28.5%
            
            --
            
            --





(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 2007
and 2006:












2007
            
            
            2006Audit
      fees
            
            $
            98,000
            
            
            $
            115,500Tax
    fees
            
            
            0
            
            
            
            0Total:
            
            $
            98,000
            
            
            $
            115,500






Audit
Fees: Consists of fees billed for professional services rendered for the audits
of the Company’s 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.





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,
2007.








PART IV








Item 15. Exhibits and Financial Statement Schedules





23




(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, 2007 and 2006




Consolidated
Statements of Operations for the years ended December 31, 2007, 2006 and
2005




Consolidated
Statements of Stockholders' Equity for the years ended December 31, 2007, 2006
and 2005




Consolidated
Statements of Cash Flows for the years ended December 31, 2007, 2006 and
2005




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






EXHIBITNO.
            
            DESCRIPTION OF
      EXHIBIT2.1
            
            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-Kfiled
      October 15, 2003 and incorporatedherein
      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 21.0to
      the Company's  Current  Report on Form 8-K
      filed  September 2, 2003and
      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
      andincorporated
      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  theCompany's
      Form 10-SB filed November 3, 1999 and incorporated herein byreference.)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-SBfiled
      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  Form10-SB
      filed November 3, 1999 and incorporated herein by
      reference.)3.5
            
            Certificate of
      Amendment of Correction  completing the  description
      of the
      Senior  Convertible  Preferred Shares listed in the
      Certificate ofAmendment
      of Articles of Incorporation filed on April 19, 1999. (Filedas
      Exhibit 3.(i).5 to theCompany's  Quarterly  Report
      of Form 10- QSBfiled
      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 PreferredStock.  (Filed
      as Exhibit 3.(i).6 to the Company's Quarterly Report ofForm
      10-QSB filed May 15, 2000 andincorporated
      herein by reference.)




24




3.7
            
            Certificate of
      Amendment of Articles of Incorporation changing name to IPVoice  Communications,   Inc.  (Filed  as  Exhibit  3.(i).7  to  theCompany's  Amendment  No.
      2 to Form SB-2 filed  February  12, 2001 andincorporated
      herein by reference.)3.8
            
            Certificate of
      Amendment of the Articles of Incorporation  designating the
      preferences, limitations and relative rights of Series C
      PreferredStock.  (Filed
      as Exhibit 3.(i).8 to the Company's  Amendment No. 2 toForm  SB-2  filed  February  12,  2001  and  incorporated   herein  byreference.)3.9
            
            Certificate
      of Amendment to the Articles
      of  Incorporation  increasingthe
      authorized common stock to
      100,000,000  shares.  (Filed as Exhibit3.(i).9
      to the  Company's  Annual  Report on Form
      10-KSB filed May 15,2000
      and incorporated herein byreference.)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 byreference.)4.1
            
            Form of Private
      Placement Offering  Memorandum dated February 27, 1997offering
      1,600,000 common shares at $0.01 per share. (Filed as Exhibit4.1  to  the  Company's   Form  10-SB  filed   November  3,  1999  andincorporated
      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 Exhibit4.2  to  the  Company's   Form  10-SB  filed   November  3,  1999  andincorporated
      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 Exhibit4.3  to  the  Company's   Form  10-SB  filed   November  3,  1999  andincorporated
      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 Exhibit4.4  to  the  Company's   Form  10-SB  filed   November  3,  1999  andincorporated
      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 Exhibit4.5  to  the  Company's   Form  10-SB  filed   November  3,  1999  andincorporated
      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 tothe  Company's  Form
      10-SB  filed  November  3, 1999
      and  incorporatedherein
      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-SBfiled
      November 3, 1999 and incorporated herein by
      reference.)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  filedNovember
      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 theCompany's  Form
      8-K  filed  March 3, 2005
      and  incorporated  herein byreference.)4.10
            
            Certificate  of  Designation,   Preferences  and  Rights  of  Class  D
      Cumulative  Preferred  Stock
      (Filed as Exhibit  10.3 to the  Company'sForm
      8-K filed March 3, 2005 and incorporated herein by
      reference.)




25




10.1
              
              Secured  Convertible  Promissory  Note
      dated  August 26,  2003 from IP Global
      Voice,  Inc.  (Filed as Exhibit 20.0 to
      the  Company's  CurrentReport
      on Form 8-K filed September 2, 2003 and incorporated  herein byreference.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 (Filedas
      Exhibit  10.3 to the  Company's  Form 8-K
      filed  March 15, 2005 andincorporated
      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.)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 byreference.)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 byreference.)31.1
*
              
              Certification  of
      Chief Executive Officer Pursuant to Rule
      13a-14 and Rule 15d-14(a), promulgated under the Securities andExchange
      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 andExchange
      Act of 1934 as amended.32.1
*
              
              Certification  of
      Chief Executive Officer Pursuant to 18USC
      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


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:   April
7, 2008








By:
/s/ Philip M. Verges


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


Philip
M. Verges


Chief
Executive Officer and


Chairman
of the Board of Directors








Date:   April
7, 2008








By:
/s/ Philip J. Rauch


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


Philip
J. Rauch


Chief
Financial Officer





26





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.
      VergesChief Executive
      Officer and
            
            April 7,
    2008Philip M.
      Verges
            
            Chairman of the
      Boards/ Philip J.
      RauchChief Financial
      Officer and
            
            April 7,
    2008Philip J.
    Rauch
            
            Director/s/ James
      MandelDirector
            
            April 7,
    2008James
Mandel/s/ Bruce
      NollerDirector
            
            April 7,
    2008Bruce
Noller/s/ Hugh G.
      RobinsonDirector
            
            April 7,
    2008Hugh G.
      Robinson




27




INDEX TO FINANCIAL STATEMENTS
    Reports
      of Independent Registered Public Accounting Firms
              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
  28
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 The Board
of Directors and Stockholders
 NewMarket
Technology, Inc.
 Dallas,
Texas
 
 We have
audited the accompanying balance sheet of NewMarket Technology, Inc., as of
December 31, 2007 and 2006, and the related consolidated statements of
operations and comprehensive income, stockholders’ equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audits.
 
 We
conducted our audits 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 financial statements referred to above present fairly, in all
material respects, the financial position of NewMarket Technology, Inc. and
subsidiaries as of December 31, 2007 and 2006, 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.
 
 
 
 
 Pollard-Kelley
Auditing Services, Inc.
 Independence,
Ohio
 April 4 ,
2008
  F-2
  NewMarket Technology, Inc.
 Consolidated
Balance Sheet
 December
31,
 ASSETS
              
              2007
              
              
              2006CURRENT
      ASSETSCash
              
              $
              5,202,244
              
              
              $
              3,294,171Accounts
      receivable, net of allowance of $86,032 and $55,936
              
              
              20,730,090
              
              
              
              12,600,352Inventory,
      at cost
              
              
              2,156,581
              
              
              
              900,899Prepaid
      expenses, deposits and other current assets
              
              
              3,927,010
              
              
              
              1,468,078Total
      current assets
              
              
              32,015,925
              
              
              
              18,263,500PROPERTY
      AND EQUIPMENTComputer
      and office equipment
              
              
              3,005,650
              
              
              
              2,906,680Less:
      Accumulated depreciation
              
              
              (1,993,222
              )
              
              
              (1,658,373
              )Total
      property and equipment
              
              
              1,012,428
              
              
              
              1,248,307OTHER
      ASSETSNotes
      receivable including accrued interest
              
              
              6,903,678
              
              
              
              5,856,839Investment
      in unconsolidated affiliates/subsidiaries
              
              
              8,851,400
              
              
              
              8,826,400Investment
      in restricted securities
              
              
              875,000
              
              
              
              875,000Deposit
      on investment in unconsolidated affiliates
              
              
              0
              
              
              
              0Goodwill
              
              
              22,344,599
              
              
              
              26,250,473Software
      code, net of accumulated amortization
              
              
              2,840,486
              
              
              
              3,182,746Intangible
      property
              
              
              236,469
              
              
              
              72,881Total
      other assets
              
              
              42,051,632
              
              
              
              45,064,339Total
      Assets
              
              $
              75,079,985
              
              
              $
              64,576,145LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payableTrade
              
              $
              3,911,240
              
              
              $
              3,369,039Related
      parties
              
              
              267,087
              
              
              
              7,830Accrued
      expenses
              
              
              2,889,477
              
              
              
              1,980,760Liabilities
      of discontinued operations
              
              
              308,683
              
              
              
              0Customer
      deposits
              
              
              400,684
              
              
              
              224,057Current
      portion of long-term debt
              
              
              2,087,680
              
              
              
              285,868Short-term
      debt
              
              
              2,953,029
              
              
              
              2,377,722Total
      current liabilities
              
              
              12,817,880
              
              
              
              8,245,276LONG-TERM
      LIABILITIESDeferred
      income tax liability
              
              
              4,038
              
              
              
              3,910Notes
      payable, net of deferred financing costs
              
              
              2,105,202
              
              
              
              9,911,952Total
      long-term liabilities
              
              
              2,109,240
              
              
              
              9,915,862Total
      Liabilities
              
              
              14,927,120
              
              
              
              18,161,138Derivative
      liability
              
              
              536,540
              
              
              
              0Minority
      interest in consolidated subsidiaries
              
              
              1,324,342
              
              
              
              1,247,418STOCKHOLDERS’
      EQUITYSenior
      convertible preferred stock, $0.001 par value, authorized 10,000,000
      shares;Series
      C 925 and 925; Series D  0 and 550; Series E  51 and
      750;  Series F 1,500 and 2,000; Series G 0 and 200; Series
                H
      835 and 1,035 and; Series I 541 and 975 shares issued and outstanding at
      December 31, 2007 and 2006, respectively
              
              
              4
              
              
              
              5Common
      stock, $0.001 par value, 300,000,000 shares authorized; 202,993,416 and174,165,284
      issued and outstanding at December 31, 2007 and 2006,
      respectively
              
              
              202,993
              
              
              
              174,165Deferred
      compensation
              
              
              (37,500
              )
              
              
              (265,758
              )Additional
      paid-in capital
              
              
              50,822,185
              
              
              
              45,840,098Accumulated
      comprehensive income
              
              
              1,316,126
              
              
              
              779,735Retained
      earnings (accumulated deficit)
              
              
              5,988,175
              
              
              
              (1,360,657
              )Total
      stockholders’ equity
              
              
              58,291,983
              
              
              
              45,167,589Total
      Liabilities and  Stockholders’ Equity
              
              $
              75,079,985
              
              
              $
              64,576,145
  F-3
 
 NewMarket Technology,
Inc.
 Consolidated
Statements of Operations
 Years
Ended December 31,
 
 2007
              
              
              2006
              
              
              2005REVENUESServices
      revenue
              
              $
              83,280,821
              
              
              $
              67,847,261
              
              
              $
              39,148,965Contract
      revenues
              
              
              3,305,066
              
              
              
              3,847,945
              
              
              
              3,063,681Product
      revenues
              
              
              6,522,229
              
              
              
              5,940,416
              
              
              
              7,925,048Total
      revenues
              
              
              93,108,116
              
              
              
              77,635,622
              
              
              
              50,137,694COST
      OF SALESServices
      COS
              
              
              59,203,151
              
              
              
              48,262,075
              
              
              
              23,882,781Contract
      COS
              
              
              2,795,461
              
              
              
              2,698,207
              
              
              
              1,657,292Product
      COS
              
              
              5,324,366
              
              
              
              4,792,157
              
              
              
              6,047,487Total
      Cost of sales
              
              
              67,322,978
              
              
              
              55,752,439
              
              
              
              31,587,560Gross
      Margin
              
              
              25,785,138
              
              
              
              21,883,183
              
              
              
              18,550,134OPERATING
      EXPENSES:General
      and administrative expenses
              
              
              19,836,138
              
              
              
              16,635,341
              
              
              
              14,748,049Research
      and development
              
              
              0
              
              
              
              0
              
              
              
              110,844Depreciation
      and amortization
              
              
              775,698
              
              
              
              786,173
              
              
              
              621,775Inventory
      reserve
              
              
              0
              
              
              
              0
              
              
              
              0Total
      expenses
              
              
              20,611,836
              
              
              
              17,421,514
              
              
              
              15,480,668Income
      (Loss) from operations
              
              
              5,173,302
              
              
              
              4,461,669
              
              
              
              3,069,466OTHER
      INCOME (EXPENSE):Interest
      income
              
              
              623,593
              
              
              
              1,023,967
              
              
              
              449,538Interest
      expense
              
              
              (608,928
              )
              
              
              (503,714
              )
              
              
              (449,227
              )Foreign
      currency transaction gain (loss)
              
              
              (4,474
              )
              
              
              13,298
              
              
              
              3,662Inflation
      effects
              
              
              0
              
              
              
              (318,539
              )
              
              
              (12,873
              )Bad
      debt expense recoupment
              
              
              0
              
              
              
              0
              
              
              
              574,712Gain
      on debt forgiveness
              
              
              4,293,000
              
              
              
              0
              
              
              
              203,872Gain
      on sale of fixed assets
              
              
              303,631
              
              
              
              0
              
              
              
              0Gain
      on sale of subsidiary
              
              
              0
              
              
              
              625,816
              
              
              
              0Gain
      on capital contribution for subsidiary
              
              
              0
              
              
              
              1,300,000
              
              
              
              0Goodwill
      impairment
              
              
              (1,457,690
              )
              
              
              0
              
              
              
              0Lawsuit
      settlement expense
              
              
              (248,433
              )
              
              
              (92,124
              )
              
              
              (818,372
              )Other
      expense
              
              
              (171,172
              )
              
              
              (365,810
              )
              
              
              (174,506
              )Other
      income
              
              
              150,443
              
              
              
              98,826
              
              
              
              119,259Total
      other income (expense)
              
              
              2,879,970
              
              
              
              1,781,720
              
              
              
              (103,935
              )Net
      income before income tax (credit) and minority interest
              
              
              8,053,272
              
              
              
              6,243,389
              
              
              
              2,965,531Foreign
      income tax (credit)
              
              
              108,665
              
              
              
              55,886
              
              
              
              56,582Minority
      interest in consolidated subsidiary
              
              
              (595,775
              )
              
              
              (300,010
              )
              
              
              0Net
      income
              
              
              7,348,832
              
              
              
              5,887,493
              
              
              
              2,908,949Other
      comprehensive income (loss)Foreign
      currency translation gain (loss)
              
              
              536,391
              
              
              
              728,108
              
              
              
              (209,873
              )Comprehensive
      income
              
              $
              7,885,223
              
              
              $
              6,615,601
              
              
              $
              2,699,076Income
      per weighted average common share - basic
              
              $
              0.04
              
              
              $
              0.04
              
              
              $
              0.03Income
      per weighted average common share - fully diluted
              
              $
              0.03
              
              
              $
              0.03
              
              
              $
              .02Number
      of wtd average common shares outstanding - basic
              
              
              193,757,301
              
              
              
              158,604,670
              
              
              
              95,814,972Number
      of wtd average common shares outstanding -  fully
      diluted
              
              
              212,014,538
              
              
              
              215,034,964
              
              
              
              182,759,172
  F-4
  NewMarket Technology, Inc.
 Consolidated
Statements of Stockholders’ Equity
 Number
      of Shares
              
              Par
      Value of Stock
              
              Additional
                Paid-In
              
              Deferred
              
              Accum
                Comp
                Income
              
              Accumulated
              
              Total
                Stockholders’
      EquityPfd
              
              Common
              
              Pfd
              
              Common
              
              Capital
              
              Comp
              
              (Loss)
              
              DeficitBEGINNING  BALANCE,December 31, 2003
              3,903
              
              50,934,786
              
              4
              
              50,935
              
              15,202,578
              
              0
              
              0
              
              (10,327,859)
              
              4,925,658Conversion
      of Series B pref. stock
              (503)
              
              1,075,257
              
              (1)
              
              1,075
              
              (1,074)
              
              0
              
              0
              
              0
              
              0Conversion
      of debt to common stock
              0
              
              25,087,115
              
              0
              
              25,087
              
              4,303,756
              
              0
              
              0
              
              0
              
              4,328,843Issuance
      of common stock for services
              0
              
              2,668,845
              
              0
              
              2,669
              
              796,621
              
              (714,500)
              
              0
              
              0
              
              84,790Issuance
      of common stock for acquisition
              0
              
              2,000,000
              
              0
              
              2,000
              
              977,000
              
              0
              
              0
              
              0
              
              979,000Issuance
      of Series D pref. stock
              550
              
              0
              
              1
              
              0
              
              364,999
              
              0
              
              0
              
              0
              
              365,000Issuance
      of Series E pref. stock
              2,000
              
              0
              
              2
              
              0
              
              1,999,998
              
              0
              
              0
              
              0
              
              2,000,000Issuance
      of Series F pref. stock
              3,000
              
              0
              
              3
              
              0
              
              2,999,997
              
              0
              
              0
              
              0
              
              3,000,000Amortization
      of deferred compensation
              0
              
              0
              
              0
              
              0
              
              0
              
              607,222
              
              0
              
              0
              
              607,222Other
      comprehensive income (loss)
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              261,500
              
              0
              
              261,500Net
      income
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              170,759
              
              170,759BALANCE,December 30,
      2004
              8,950
              
              81,766,003
              
              9
              
              81,766
              
              26,643,875
              
              (107,278)
              
              261,500
              
              (10,157,100)
              
              16,722,772Conversion
      of Series C pref. stock
              (997)
              
              1,673,300
              
              (1)
              
              1,673
              
              (1,672)
              
              0
              
              0
              
              0
              
              0Conversion
      of Series E pref. stock
              (900)
              
              2,373,757
              
              (1)
              
              2,374
              
              (2,373)
              
              0
              
              0
              
              0
              
              0Conversion
      of debt to Series G pref stock
              4,900
              
              0
              
              5
              
              0
              
              4,899,995
              
              0
              
              0
              
              0
              
              4,900,000Issuance
      of Series H pref stock
              1,300
              
              0
              
              1
              
              0
              
              1,299,999
              
              0
              
              0
              
              0
              
              1,300,000Issuance
      of Series I pref stock
              1,400
              
              0
              
              2
              
              0
              
              1,399,998
              
              0
              
              0
              
              0
              
              1,400,000Issuance
      of common stock for loan penalty
              0
              
              100,000
              
              0
              
              100
              
              62,400
              
              0
              
              0
              
              0
              
              62,500Conversion
      of debt to common stock
              0
              
              18,572,309
              
              0
              
              18,572
              
              4,311,208
              
              0
              
              0
              
              0
              
              4,329,780Issuance
      of common stock for services
              0
              
              3,700,000
              
              0
              
              3,700
              
              1,370,075
              
              (1,050,075)
              
              0
              
              0
              
              323,700Issuance
      of common stock -settle lawsuit
              0
              
              551,996
              
              0
              
              552
              
              499,438
              
              0
              
              0
              
              0
              
              499,990Amortization
      of deferred compensation
              0
              
              0
              
              0
              
              0
              
              0
              
              528,208
              
              0
              
              0
              
              528,208Other
      comprehensive income (loss)
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              (209,872)
              
              0
              
              (209,872)Net
      income
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              2,908,949
              
              2,908,949BALANCE,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)
              
              0
              
              0
              
              0
              
              0Conversion
      of debt to common stock
              0
              
              34,010,321
              
              0
              
              34,010
              
              4,692,447
              
              0
              
              0
              
              0
              
              4,726,457Issuance
      of common stock for services
              0
              
              1,828,043
              
              0
              
              1,828
              
              694,289
              
              (661,450)
              
              0
              
              0
              
              34,667Amortization
      of deferred compensation
              0
              
              0
              
              0
              
              0
              
              0
              
              1,024,837
              
              0
              
              0
              
              1,024,837Other
      comprehensive income (loss)
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              728,108
              
              0
              
              728,108Net
      income
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              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)
              
              0
              
              0
              
              0
              
              0Conversion
      of debt to common stock
              0
              
              20,240,905
              
              0
              
              20,241
              
              4,339,172
              
              0
              
              0
              
              0
              
              4,359,413Issuance
      of common stock for services
              0
              
              1,450,000
              
              0
              
              1,450
              
              543,050
              
              (450,000)
              
              0
              
              0
              
              94,500Issuance
      of common for lawsuit settle
              0
              
              250,000
              
              0
              
              250
              
              106,750
              
              0
              
              0
              
              0
              
              107,000Amortization
      of deferred compensation
              0
              
              0
              
              0
              
              0
              
              0
              
              678,258
              
              0
              
              0
              
              678,258Other
      comprehensive income (loss)
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              536,390
              
              0
              
              536,390Net
      income
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              0
              
              7,348,832
              
              7,348,832ENDING BALANCE,December
      31, 2007
              3,452
              
              202,993,416
              
              $4
              
              $202,993
              
              $50,822,185
              
              $(37,500)
              
              $1,316,126
              
              $5,988,175
              
              $58,291,983
  F-5
 NewMarket Technology, Inc.
 Consolidated
Statements of Cash Flows
 Years
Ended December 31,
 CASH
      FLOWS FROM OPERATING ACTIVITIES:
              
              2007
              
              
              2006
              
              
              2005Net
      income
              
              $
              7,348,832
              
              
              $
              5,887,494
              
              
              $
              2,908,949Adjustments
      to reconcile net income to net cash used by operating
      activities:Minority
      interest in consolidated subsidiary income (loss)
              
              
              595,775
              
              
              
              (300,010
              )
              
              
              0Gain
      on sale of subsidiaries
              
              
              (303,631
              )
              
              
              (625,816
              )
              
              
              0Gain
      on debt forgiveness/capital contribution for subsidiaries
              
              
              (4,293,000
              )
              
              
              (1,300,000
              )
              
              
              0Goodwill
      impairment
              
              
              1,457,690
              
              
              
              0
              
              
              
              0Bad
      debt, warranty and inventory reserves
              
              
              0
              
              
              
              1,071
              
              
              
              (375,953
              )Stock
      issued for services
              
              
              772,758
              
              
              
              1,037,837
              
              
              
              851,908Depreciation
      and amortization
              
              
              775,698
              
              
              
              786,173
              
              
              
              621,775Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
              
              
              (8,656,613
              )
              
              
              2,829,931
              
              
              
              (10,070,604
              )(Increase)
      decrease in inventory
              
              
              (1,169,898
              )
              
              
              370,326
              
              
              
              208,651(Increase)
      decrease in prepaid expenses and deposits
              
              
              (1,457,641
              )
              
              
              (339,227
              )
              
              
              (196,420
              )(Increase)
      decrease in interest receivable
              
              
              (525,000
              )
              
              
              0
              
              
              
              0Increase
      (decrease) in accounts payable - trade
              
              
              411,278
              
              
              
              (3,721,042
              )
              
              
              6,491,064Increase
      (decrease) in accounts payable - related parties
              
              
              278,704
              
              
              
              (634,596
              )
              
              
              (59,742
              )Increase
      (decrease) in customer deposits
              
              
              210,251
              
              
              
              131,763
              
              
              
              146,821Increase
      (decrease) in deferred revenue
              
              
              0
              
              
              
              (252,348
              )
              
              
              252,348Increase
      (decrease) in accrued expenses
              
              
              764,593
              
              
              
              (1,103,815
              )
              
              
              620,188Increase
      (decrease) in payables to affiliates
              
              
              0
              
              
              
              (6
              )
              
              
              57,794Increase
      (decrease) in income taxes payable
              
              
              128
              
              
              
              (88,937
              )
              
              
              31,025Net
      cash provided (used) by operating activities
              
              
              (3,790,076
              )
              
              
              2,678,797
              
              
              
              1,487,804CASH
      FLOWS FROM INVESTING ACTIVITIES:Notes
      receivable advances
              
              
              0
              
              
              
              0
              
              
              
              (1,215,000
              )Investment
      in unconsolidated affiliates
              
              
              0
              
              
              
              0
              
              
              
              (1,283,512
              )Proceeds  from
      sale of fixed assets
              
              
              4,294,100
              
              
              
              0
              
              
              
              0Acquisition
      of intangible asset
              
              
              (125,919
              )
              
              
              (287,097
              )
              
              
              (56,000
              )Purchase
      of property and equipment
              
              
              (81,012
              )
              
              
              (315,942
              )
              
              
              0Net
      cash provided (used) by investing activities
              
              
              4,087,169
              
              
              
              (603,039
              )
              
              
              (2,554,512
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Payments
      on capital leases
              
              
              0
              
              
              
              0
              
              
              
              0Advances
      on notes payable
              
              
              4,000,000
              
              
              
              800,000
              
              
              
              2,177,156Payments
      on notes payable
              
              
              (1,647,680
              )
              
              
              (3,546,140
              )
              
              
              (732,348
              )Advances
      on short term line of credit
              
              
              0
              
              
              
              0
              
              
              
              495,171Payments
      on short term line of credit
              
              
              0
              
              
              
              0
              
              
              
              (45,815
              )Cash
      purchased in acquisitions
              
              
              0
              
              
              
              0
              
              
              
              0Net
      cash provided (used) by financing activities
              
              
              2,352,320
              
              
              
              (2,746,140
              )
              
              
              1,894,164Effect
      of exchange rates on cash
              
              
              (741,340
              )
              
              
              858,032
              
              
              
              (276,838
              )Net
      increase in cash and equivalents
              
              
              1,908,073
              
              
              
              187,650
              
              
              
              550,618CASH,beginning of
      period
              
              
              3,294,171
              
              
              
              3,106,521
              
              
              
              2,555,903CASH,end of
      period
              
              $
              5,202,244
              
              
              $
              3,294,171
              
              
              $
              3,106,521SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      paid in cash
              
              $
              608,928
              
              
              $
              503,714
              
              
              $
              449,227Non-Cash
      Financing Activities:Common
      stock issued to settle debt
              
              $
              4,359,413
              
              
              $
              4,726,457
              
              
              $
              4,329,780Common
      stock issued for acquisition of affiliate
              
              $
              0
              
              
              $
              0
              
              
              $
              0Preferred
      stock issued for acquisition of consolidated subsidiaries
              
              $
              0
              
              
              $
              0
              
              
              $
              2,700,000Issuance
      of promissory note and preferred stock to acquire
    subsidiaries
              
              $
              0
              
              
              $
              0
              
              
              $
              0Preferred
      stock issued to settle debt
              
              $
              0
              
              
              $
              0
              
              
              $
              4,900,000
  F-6
  NewMarket Technology, Inc.
 Notes
to Consolidated Financial Statements
 
 (1)
Description of Business and Summary of Significant Accounting
Policies
 
 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, homeland security and wireless
broadband technology.
 
 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.
 
 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.
 
 F-7
  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.
 
 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,
which may be increased to $8,539,680 based on various financial
benchmarks.  The purchase price is payable in tranches through the end
of 2008. 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, as well as a regional office in Santiago de Chile,
Chile.
 
 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, 2007, 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.
  F-9
  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.
 
 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 translation 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 year ended December
31,, 2007, the Company recorded an impairment charge of $1,457,690.
  F-10
  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 forclosed 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 has elected to value the license and code, on its books, at
the amount of the defaulted note, $5,000,000. The software license and code were
incidental to the Company’s purchase of Infotel, however the Company quickly saw
how this software license and code could be utilized through its majority-owned
subsidiary, IP Global Voice, (IPGV). The Company began utilizing this software
in the IPGV services offered to its customers. The Company believes that the
remaining useful life of this asset is approximately 10 years, therefore it is
being amortized over this period beginning in 2004. Expenditures to modify,
maintain and update the software will be expensed when incurred. 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. The Company began
deriving revenue in 2004, from the use of this software through its
majority-owned subsidiary, IPGV.
 
 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 89%, 3% and 8% of revenue, respectively, for the year ended
December 31, 2007.   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, based in
Caracas, Venezuela, serving Latin America, represents approximately 4% of the
Company’s total revenue and 1.5% of total assets; Infotel, based in Singapore,
and serving Asia, represents approximately 3.5% of the Company’s total revenue
and 12% of total assets; NewMarket China, based in Shanghai, China, represents
approximately 43% of the Company’s total revenue and 6% of total assets and
UniOne, based in Sao Paulo, Brazil, serving Latin America, represents
approximately 21% of the Company’s total revenue and 6% of total
assets.
 
 Investment in unconsolidated
affiliates/subsidiaries
 
 The
Company’s investment in affiliates at December 31, 2007, is composed of a 10%
equity position in Red Moon, a 5% equity position in AlterNet, a 49% interest in
DFTS and de minimus investments in two other companies. These equity positions
do not represent a controlling interest in these companies.
  F-11
  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, 2007, 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.
 
 Recent
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.
  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.
  F-12
  (2)
      Stockholders’ Equity
 
 Common
stock
 
 The
Company has authorized 300,000,000 shares of $0.001 par value common
stock.  The Company had 202,993,416 shares of common stock issued and
outstanding at December 31, 2007.  During the year ended December 31,
2007, the Company issued 28,828,132 shares of common stock for the
following:
 
 ·
                The
      Company issued 1,977,174 shares of common stock pursuant to the conversion
      of 699 shares of Series E preferred
stock.
 ·
                The
      Company issued 1,791,761 shares of common stock pursuant to the conversion
      of 500 shares of Series F preferred
stock.
 ·
                The
      Company issued 661,220 shares of common stock pursuant to the conversion
      of 200 shares of Series G preferred
stock.
 ·
                The
      Company issued 1,098,067 shares of common stock pursuant to the conversion
      of 200 shares of Series H preferred
stock.
 ·
                The
      Company issued 1,359,005 shares of common stock pursuant to the conversion
      of 434 shares of Series I preferred
stock.
 ·
                The
      Company issued 1,200,000 shares of common stock pursuant to a consulting
      agreement with an individual to provide investor relations
      services.  The shares were valued at $450,000 or $0.375 per
      share.
 ·
                The
      Company issued 250,000 shares of common stock to one party for payment of
      legal services rendered.  The shares were valued at $94,500 or
      $0.378 per share.
 ·
                The
      Company issued 250,000 shares of common stock to one party pursuant to the
      terms of a legal settlement agreement.  The shares were valued
      at $107,000 or $0.428 per share.
 ·
                The
      Company issued 20,240,905 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, 2007:
 
 ·
                The
      Company had 925 shares of Series C preferred stock outstanding at December
      31, 2007.  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 51 shares of Series E preferred stock outstanding at December
      31, 2007.  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 1,500 shares of Series F preferred stock outstanding at
      December 31, 2007. 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, 2007.  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, 2007.  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.
 
 At
December 31, 2007, the shares of preferred stock represented approximately
18,257,237 shares of common stock, had they been elected to be converted on
December 31, 2007.
 
 (3)  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 5).  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
$536,540 using the Black-Scholes valuation model.
 
 (4) 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,
      2007, is $1,278,000, 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
      $1,278,000, as the Company has no long-term history of profitable
      operations, in substantive amount necessary to utilize this
      asset.  The significant components of the net deferred tax asset
      as of December 31, 2007 are:
  F-14
  Net
      operating losses
                
                $
                0Goodwill
      amortization
                
                
                1,278,000Valuation
      allowance
                
                
                (1,278,000
                )Net
      deferred tax asset
                
                $
                0
 
 (5)
      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 $73,333 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.
  The
Company is obligated to file a registration statement registering the resale of
shares of the Company's common stock issuable upon conversion of the Notes and
exercise of the warrants within 60 days and to have such registration statement
declared effective within 180 days. The Company is also required to file a
registration statement to register shares of common stock underlying any warrant
issued after the closing within 90 days after the issuance of such warrants and
shares issuable to the holders as a result of any adjustments of the Fixed
Conversion Price or the exercise price of the warrants within 90 days after any
such event or the date of adjustment and have such registration statement
declared effective within 90 days. The Company will be required to pay
liquidated damages if a registration statement is not timely filed, or declared
effective within the required timeframes or ceases to be effective after being
declared effective for a period of 90 days in any 365 days or 30 consecutive
days or the Company’s common stock is not listed or quoted or is suspended from
trading for a period of 3 consecutive trading days.
  At
December 31, 2007, the amount outstanding under the Revolving Note was
$1,744,827.
   Additionally,
pursuant to the terms of the Security Agreement and the Notes, 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, 2007, the Company issued 20,240,905 shares of
restricted common stock pursuant the conversion of debt and accrued
interest.
  Other
revolving lines of credit
  As
of December 31, 2007, the Company’s NewMarket China and Unione subsidiaries had
four revolving lines of credit with two financial institutions:
 
 Annual
                
                
                
                AmountCredit
                
                
                Interest
                
                Due
                
                OutstandingInstitution
                
                Line
                
                
                Rate
                
                Date
                
                at
      12/31/07Banco
      Itau
                
                $
                226,160
                
                
                
                27.12
                %
                4/17/08
                
                $
                226,160Banco
      Itau
                
                
                565,400
                
                
                
                22.20
                %
                6/30/08
                
                
                341,113Shanghai
      Pudong Development Bank
                
                
                68,500
                
                
                
                6.39
                %
                4/24/08
                
                
                63,066Shanghai
      Pudong Development Bank
                
                
                274,200
                
                
                
                8.02
                %
                11/20/08
                
                
                246,780Total:
                
                $
                1,202,760
                
                
                
                
                
                
                
                $
                877,119
 
 These
lines of credit are secured by the accounts receivable of the respective
operating subsidiaries.
 
 Short-term
debt
 
 As
of December 31, 2007, the Company’s NewMarket China subsidiary had two unsecured
promissory notes outstanding with two different financial
institutions:
  F-16
  Annual
                
                
                
                AmountInterest
                
                Maturity
                
                OutstandingInstitution
                
                Rate
                
                Date
                
                at
      12/31/07Ningbo
      Bank
                
                
                6.00
                %
                2/22/08
                
                $
                137,100Shanghai
      Pudong Development Bank
                
                
                6.00
                %
                3/20/08
                
                
                137,100Total:
                
                
                
                
                
                
                $
                274,200
 
 
 (6) Earnings per share
 
 Following is the disclosure required by SFAS
128.
 
 For the year ended December 31,
2007
 Income
      (Numerator)
                
                
                Shares
      (Denominator)
                
                
                Per-Share
      AmountBasic
      EPS:Income
      available to common stockholders
                
                $
                7,348,832
                
                
                
                193,757,301
                
                
                $
                0.04Effect
      of Dilutive Securities:Convertible
      preferred stock
                
                
                0
                
                
                
                18,257,237Diluted
      EPS:Income
      available to common stockholders + assumed conversions
                
                $
                7,348,832
                
                
                
                212,014,538
                
                
                $
                0.04
 
 
 For the year ended December 31,
2006
 Income
      (Numerator)
                
                
                Shares
      (Denominator)
                
                
                Per-Share
      AmountBasic
      EPS:Income
      available to common stockholders
                
                $
                5,887,493
                
                
                
                158,604,032
                
                
                $
                0.04Effect
      of Dilutive Securities:Convertible
      preferred stock
                
                
                0
                
                
                
                16,430,294Convertible
      debt
                
                
                0
                
                
                
                40,000,000Diluted
      EPS:Income
      available to common stockholders + assumed conversions
                
                $
                5,887,493
                
                
                
                215,034,326
                
                
                $
                0.03
 
 For the year ended December 31,
2005
 Income
      (Numerator)
                
                
                Shares
      (Denominator)
                
                
                Per-Share
      AmountBasic
      EPS:Income
      available to common stockholders
                
                $
                2,908,949
                
                
                
                95,814,972
                
                
                $
                0.03Effect
      of Dilutive Securities:Convertible
      preferred stock
                
                
                0
                
                
                
                46,944,200Convertible
      debt
                
                
                0
                
                
                
                40,000,000Diluted
      EPS:Income
      available to common stockholders + assumed conversions
                
                $
                2,908,949
                
                
                
                182,759,172
                
                
                $
                0.02
  F-17
  (7)
    Software
 
 Infotel,
      the Company’s wholly-owned Singapore based subsidiary, owns a software
      package, which Infotel acquired from its former parent, Appiant
      Technologies, as settlement for debt owed Infotel by Appiant of
      approximately $8 million. Appiant acquired the software from Cisco. Cisco
      acquired the software from Amtiva for a reported $100 million. The Company
      has impaired the value of the software to $5.2 million. In addition, the
      Company recorded negative goodwill of $1,158,000 as a result of the
      acquisition of Infotel from the creditors of Appiant. Negative goodwill is
      spread pro-rata against all long-lived assets of Infotel, rather than
      being recorded as part of goodwill. This software was the only long-lived
      asset of Infotel, therefore its book value is further reduced by
      $1,158,000, leaving a net value of approximately $4 million. The Company
      believes that this software has a remaining useful life of 10 years from
      acquisition date, therefore, the Company is amortizing the balance at a
      rate of approximately $100,000 per
quarter.
 
 (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, 2008. 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.
 
 (9)
Selected quarterly financial data (unaudited)
 
 (All
numbers are in thousands, except per share data)
 
 First
                
                
                Second
                
                
                Third
                
                
                FourthQuarter
                
                
                Quarter
                
                
                Quarter
                
                
                Quarter2007:Net
      revenues
                
                $
                18,134
                
                
                
                21,892
                
                
                
                23,434
                
                
                
                29,648Gross
      margin
                
                $
                3,606
                
                
                
                5,201
                
                
                
                4,856
                
                
                
                12,123Net
      income
                
                $
                599
                
                
                
                606
                
                
                
                1,561
                
                
                
                4,583Net
      income/share-basic
                
                $
                0.01
                
                
                
                0.01
                
                
                
                0.01
                
                
                
                0.01Net
      income/share-diluted
                
                $
                0.01
                
                
                
                0.01
                
                
                
                0.01
                
                
                
                0.012006:Net
      revenues
                
                $
                17,330
                
                
                
                16,870
                
                
                
                18,975
                
                
                
                24,461Gross
      margin
                
                $
                5,127
                
                
                
                4,433
                
                
                
                5,456
                
                
                
                6,867Net
      income
                
                $
                434
                
                
                
                482
                
                
                
                1,379
                
                
                
                3,592Net
      income/share-basic
                
                $
                0.01
                
                
                
                0.01
                
                
                
                0.01
                
                
                
                0.02Net
      income/share-diluted
                
                $
                0.01
                
                
                
                0.01
                
                
                
                0.01
                
                
                
                0.01
 
 
 F-18
  (10)
Subsequent events (unaudited)
 
 In
January 2008, the Company issued Oberon Securities, L.L.C. (“Oberon”), the
placement agent for the Security Agreement, 1,600,000 shares
of  common stock and five year warrants to purchase 2,800,000 shares
of  common stock . The warrants have an exercise price of $0.20 per
share.
  In
addition, in January 2008, the Company entered into an agreement with Oberon,
pursuant to which Oberon was retained to assist the Company on a best efforts
basis to explore, structure and negotiate financial alternatives such as joint
ventures, acquisitions, or mergers. Pursuant to the agreement with Oberon, the
Company issued Oberon 600,000 shares of common stock as an annual retainer
fee.
  In
January 2008, the Company issued 600,000 shares to a firm pursuant to a
consulting agreement for investor relations.  The shares were valued
at $114,000 or $0.19 per share.
  In
January 2008, the Company issued 472,928 shares of common stock pursuant to the
conversion of 100 shares of Series F preferred stock.
 
 
 F-19