This is what I submitted to Rick last Thursday for the Conference call this coming Monday. I received an email back on Friday to call Rick but I did not check my email till today. So, I hope we get some of our questions answered tomorrow. We will see.
Good Luck to all and peace on earth.
Augie
Hi Rick,
This is the list that we came up with on the IHUB Board for Phil to answer on the CC this coming Monday. Thank you for your help on this.
Augie from the IHUB Board.
Questions from the IHUB Board Members.
1. Why was NMKT not able to get an AMEX listing in 2005?
2. What has changed that makes it possible to get one in 2006?
3. Is NMKT subject to the New AMEX listing requirement or are they grandfathered in under the Old Standard?
4. Will reverse split be needed to gain listing on the AMEX? If so, how much of a reverse split will be needed?
5. Does NMKT plan to have a CFO or board of directors in the near future? Timeline?
6. What are NMKT’s plan for Xiptel? Do they have a stock dividend, spin off an outright sale or something else?
7. Would NMKT consider selling one of it’s divisions and use the money to reduce outstanding shares?
8. If the company /management think that the company is doing so well \ undervalued, how come no officers / management in the company are buying stocks in the open market?
9. How much total debt does NMKT have at this point? How much is due within the next 12 months? How much within the next 3 years? Any due any longer out?
10. How much cash on hand, if any?
11. What are the conditions of the debt? How much is able to be converted into shares, how many shares at what price or is this up in the air until date of conversion?
12. Phil used to say (a year or two ago) he was buying distressed companies at low prices, bringing them up to better valuations, and setting these deals up so that the better valuations of the companies would increase the share price of the parent company to a higher level than when the deal was originally transacted. In this, there was a bargain valued in because, as he often bragged, the number of shares required to pay off the remainder of the deal in a year or two would be much less (fewer shares) than if he were to pay at the time the original deal was constructed. Of concern is, rather than the value of our shares increasing over the last year, they have markedly decreased. This being the case, will the reverse begin to happen as these deals have to be paid out, and thus are we going to have to pay some exorbitant number of shares due to our lower share price rather than having the bargains we were banking on? I am starting to get quite concerned about this one and this might be who the naked shorters are working for rather than the infamous Augustine fund.
13. Does the old subsidiary of Vergetech still exist? - I am speaking of Innoprise, Inc.. What was Innoprise Inc. for, what did it do?
14. Is Augustine partly involved in any manner in the Innoprise fund? Have they put money into this fund? If so , how much and what percentage does this amount to?
15. How much money total has come into the fund? I know - it is a PRIVATE fund and thus, I do not think you have to disclose this, but we are asking.
How much money total has been loaned out?
Has 100% of these loans been to NMKT?
If not, who else, or what other entities has Innoprise Fund loaned money to? Would you please lay out all the terms and conditions of each of these loans, especially those to NMKT? (Would like to know amounts, % interest, length of time loan is to be effective, default clauses, any involvement of conversions and the way the share values are to be determined, and if any numbers of shares are established, etc.)
16. How is it legal to have a private fund loaning money to a public entity and the private fund have the same persons involved in it as the persons who are directors, debt holders and/or shareholders of the public company?
17. BUSINESS CAPABILITIES:
Please explain Newmarket’s business capabilities (defined/branded products and services, customer bases, etc), using this context:
- $100k capital equipment, implying that you can’t manufacture anything, and have limited physical facilities.
- $100K inventory, implying that you don’t have products that you manufacture and sell
- $0 in Research and Development during your entire tenure at NMKT, suggesting zero innovation or new product development.
- As of Dec 31 2004, only 200 employees, implying that “services” provided by NMKT employees does not represent significant revenue
Specifically:
1. Xiptel: How can Xiptel be operating without capital equipment? Is it coincidence that Xiptel has never announced a named customer? Or that you have chosen not to disclose Xiptel financials, despite suggestions to investors that Xiptel is a spin off candidate?
2. RFID: How can you claim to have an RFID program? No inventory, capital equipment, and no R&D. What is a “provisional patent”, which you announced last year? What is your specific RFID product?
3. Homeland Defense: You make frequent references to “homeland defense solutions”. What specifically are they? Can you provide one specific example of a product? For that product, please explain: How was it developed without R&D? How is it produced without capital equipment? How has it been sold, given that no customer wins or names have ever been announced?
4. Last January you announced that a NMKT subsidiary would be development financial software that would result in an estimated $10million - $12million in 2005 revenue. How, given that there is zero R&D? What were the actual results for 2005? If this was part of the failed logicorp deal, why did you choose not to inform investors that the failure of Logicorp meant that your $10million - $12million revenue expectation is eliminated?
18. DFTS:
a). Defense Technology Systems (DFTS): This company had no assets, $4million in liabilities, no products, 4 (four) employees of which two were clerical, and was in violation of bankruptcy agreements. Why did NMKT enter into a transaction with this company? What role did Augustine Capital, holder of DFTS convertible debt, play? Why did you choose not to include this information when announcing DFTS?
b). In the PR announcing the sale of DCI to Skylynx, you state that DFTS has moved to the pink sheets as part of an effort to fix the company, which implies that this was a voluntary move. Is the real reason because DFTS has been unable to file its June 30, 2005 10K? Why did you choose not to mention the late 10K filing in your explanation?
c). What is the reason why DFTS is unable to file the 10k? Aren’t investors entitled to know this? Given that DFTS refilled it’s 2004 10K this past August, does that suggest that there is an SEC review underway (given that the NMKT refiling were due to an SEC review)?
19. SEC RESTATEMENT:
a). Why did management choose to not timely notify investors of the SEC review, which was conducted in June 2005?
b). When Rick Lutz suggested to investors that the refilings in June 2005 were the result of Amex discussions, was he misleading? Was the real reason due to the SEC investigation?
20. FINANCIAL REPORTING
a). Newmarket’s Accounts Receivable balance of $20million is equivalent to 120 calendar days of sales (or about 140 business days). Why? Given that a normal range is 30-45 days, this would imply that AR in question is approx $10million - $15million.
b). Debt – in the past 5 quarters, $7.6million of debt has been converted to equity (at an average of 21 cents per share). The majority of this debt has never appeared on the balance sheet. Where has it come from? Why have you chosen not to issue 8k disclosure of the transaction details, as required, to inform investors?
c). During your tenure, you have never once issued an 8k disclosing details of a material financial transaction. Given that you are operating without a CFO to countersign, without an independent board of directors, and without an audit committee, what rationale do you have for not filing 8k disclosures to inform investors on the details your self-approved transactions, many of which are to related parties and other business partners?
d). You choose not to disclose revenue and gross margin by business unit. Why? This information is readily available, since it is used to compile the consolidated numbers that you do report.
21. Corporate Governance:
a). You have refused to hire a CFO, you operate with one board member who is not independent, you have spent 80% of your tenure as the only officer, you have never formed an audit committee (which requires independent directors), and you have never submitted a matter to shareholder vote. During that time, you have engaged in: A significant financing transaction with a company that you own (VTI), attempted to form a financing company (Innoprise) in which you would have an economic conflict of interest, issued 5million shares for “consulting services” at an average 50% discount to market, issued 37million shares to convert debt most of which has never appeared on the balance sheet, and engaged in a transaction with a company (DFTS) with significant financial risk that happened to be owned by your business partner (the same one that you attempted to form Innoprise with). Is the reason why you have refused to hire a CFO or appoint a full slate of officers, nominate independent directors and form an Audit Committee because it would limit your ability to engage in the type of dealings that you have conducted during your tenure?
b). You stated last year that the failed financing in Dec 2004 prevented you from hiring a CFO. Why did this prevent you from spending $200k/year on a CFO? Given your insider dealings, consistently late filings, and accounting restatement, why have you chosen not to invest in a CFO? Why can you issue 2million shares for consulting services (at significant discounts to market) in the first 3 quarters of 2005, and yet imply that you can’t afford a CFO? Can you name one other public company who intentionally operates without a CFO?
c). Why has the only board member (in addition to yourself) never been submitted to a shareholder vote?
22. AMEX:
a). NMKT applied for an Amex listing in Jan 2005, at which time you stated that NMKT met all qualifications (that statement was actually from Dec 2004). In Feb 2005, you stated that NMKT was responding to questions. One year later, NMKT is not listed. You have denied that NMKT has been declined. What was the specific response from Amex during 2005? Why have you chosen not to inform investors of this response?
b). Did the Amex response include mentions of the lack of independent directors, lack of an audit committee (which requires independent directors) lack of CFO, consistently late filings, accounting restatement, lack of tangible assets, lack of product/services specifics, and no named customers
23. Has NMKT done anything to make sure that the audited results for 2005 will be filed on time and future reports will be filed in a timely manner?
24. a) Please tell us what our NET TANGIBLE ASSETS are at this point in time. I am NOT asking for stockholder equity or shareholder assets, I am asking for NET TANGIBLES.
b) Will you, from this time on, be able disclose each quarter what our net tangible assets are? I am one shareholder that would appreciate this.
25. Does the company have any plans on reducing the total Outstanding and Fully Diluted Shares count to date?
AI
