COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

NOTE K - COMMITMENTS AND CONTINGENCIES

Leases

The Company is obligated under two non-cancelable operating leases for its primary office facilities, located in Dallas, TX and Fort Lauderdale, FL.  The leases expire on February 28, 2015 and February 28, 2013, respectively.  

Rent expense for these operating leases (net of a month-to-month sublease for a small portion of the primary office premises) for the years ended December 31, 2011 and 2010 was $62,870 and $68,459, respectively.

Commitments for minimum rentals under non-cancelable leases at December 31, 2011 are as follows:

2012	$	75,644
2013		45,328
2014		39,072
2015 and thereafter		6,512
Total	$	166,556

Consulting Agreements

See Note F for a discussion of the Consulting Services Agreement with iTella, Inc. and the Consulting Agreement with Mr. Warren Gilbert.

Letter of Credit

As of December 31, 2011 and 2010, the Company has an outstanding standby letter of credit in the amount of $150,000 for the benefit of the one of the Company’s vendors, Sprint Spectrum, L.P. This letter of credit is secured by a certificate of deposit, which at December 31, 2011 and 2010, is classified as restricted cash, a non-current asset.

Settlements

On August 19, 2011, Abundance Partners LP (“APL”) filed a complaint against the Company and its wholly owned subsidiary, Syncpointe, Inc., in the United States District Court, Southern District of New York (the “Court”).  APL’s complaint alleged, among other things, that the Company and Syncpointe failed to comply with the terms of, and were in default under, a certain loan and security agreement with APL, as amended, because the company failed to pay APL certain amounts allegedly due under the loan agreement.  APL sought a judgment against the Company and Syncpointe, jointly and severally, in an amount estimated by APL to be at least $99,883.99.  On January 23, 2012, the Company and APL settled this matter and it was dismissed with prejudice by the Court on February 14, 2012. Pursuant to the settlement agreement the Company issued to APL 200,000 shares of its common stock.

On September 21, 2011, Mary Kratka, doing business as StockVest (“StockVest”), filed a complaint against the Company in the Circuit Court of the Ninth Judicial Circuit in and for Osceola County, Florida (the “Circuit Court”).  StockVest’s complaint alleged, among other things, that the Company failed to comply with the terms of, and are in default under, a certain contract with StockVest because the Company failed to issue to StockVest 200,000 restricted shares of its common stock.  StockVest sought a judgment against the Company in the amount of $130,000.  On February 7, 2012, the Company and StockVest settled this matter and it was dismissed with prejudice by the Circuit Court on February 17, 2012. Pursuant to the settlement agreement the Company agreed to issue to StockVest 25,000 shares of its common stock.

WQN was a defendant in an action styled American Express Bank, FSB vs. Steven Ivester and WQN, Inc., in the County Court in and for Broward County, Florida, Case No. CONO 11-010246.  This matter was settled in full with no cost to the Company and the lawsuit dismissed on December 7, 2011.

The Company is a defendant in an action styled Robert Picow vs. Quamtel, Inc. and Steven Ivester, in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, Case No. 50 2012 CA 004398 XXXX MB.  Picow asserts he is entitled to damages as a consequence of an alleged breach of a consulting agreement and for an alleged interference with his ability to trade his Quamtel shares. The Company believes the claims to be without merit and will aggressively defend same. The Company has not yet filed a response.

Stock Payable

At December 31, 2011 and 2010, the Company recorded a stock payable of $644,350 and $491,000, respectively. The stock payable represents amounts that the Company has an obligation to issue common shares for in the future.