Commitment and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 8 – Commitment and Contingencies

On September 14, 2012, a supplier to the Company, Arrow Electronics, Inc. (“Arrow”), filed a complaint in the United States District Court for the Southern District of Florida, Case No.: 1:12-cv-23366-FAM, alleging breach of contract by the Company and seeking damages of not less than $473,319 due to such alleged breach.  The Company and Arrow Electronics, Inc. entered into a settlement agreement providing for the payment of past due amounts. A final order was entered into on December 12, 2012 dismissing the litigation. As of September 30, 2013, the Company owes Arrow Electronics approximately $123,000 and will continue making frequent payments until the obligation is satisfied.

On November 26, 2012, a supplier to the Client, Broadvox, LLC (“Broadvox”), filed a complaint in the Court of Common Pleas, Cuyahoga County, Ohio, Case No.: CV-12-796095, alleging breach of contract by the Company and seeking damages of not less than $111,701 due to such alleged breach.  The Company and Broadvox entered into a settlement agreement providing for the payment of all past due amounts. As of October 25, 2013 the company has a balance owing to Broadvox of approximately $10,000.

A Statement of Claim was served by DACS Marketing & Sponsorship Inc. on NetTalk.com Inc. on June 20, 2012. The claim is for $125,834.21 for amounts DACS claims is owing to it pursuant to its agreement as well as $126,000 for general damages for breach of contract. A Statement of Defense was delivered on behalf of the Company on August 31, 2012, denying all claims.

The following offers to settle have been made by the parties but to date, the parties have not accepted any proposed offers:

1. November 7, 2012, NetTalk offered to settle the action by payment to DACS of $5,000.

2. December 18, 2012, DACS offered to settle the action by NetTalk paying to DACS the sum of $85,000.

3. December 27, 2012, NetTalk offered to settle the action by payment to DACS of $10,000.

4. October 24, 2013, NetTalk offered to settle the action by payment to DACS of $35,000 and by issuing to DACS approximately 144,000 NetTalk common shares.

5.     October 28, 2013, DACS offered to settle the action for $60,000 paid monthly in four equal installments. This offer is awaiting signatures from both parties.

On February 13, 2013, Rates Technology, Inc. (“RTI”) sent a letter alleging that the Company breached an agreement dated June 22, 2012; RTI has threatened litigation. RTI has alleged, among other matters, that the Company breached the agreement by failing to make a payment of $60,000, breached certain confidentiality provisions in the Agreement, and has failed to timely file its reports under the Exchange Act. The Company denies RTI’s allegations and intends to defend any lawsuit if brought.

ADP filed a lawsuit against the Company on or about September 1, 2013. The claim is for an amount not exceeding $89,000 for general damages for alleged breach of contract. The Company is in the process of settling this action.