Interesting article again on Dr.Scam or should i say Dr.Fraud.
In December 1996, the Company applied to the United States Patent and Trademark Office to register the trademarks: “WorldQuest” and “WorldQuest Networks.” We received a registration for the trademark “WorldQuest” from the U.S. Patent and Trademark Office on November 23, 1999. In October 1997, the Patent and Trademark Office issued a notice of publication regarding our application to register “WorldQuest Networks” as a trademark. In response to that notice, Qwest Communications filed a notice of opposition in September 1998. Qwest Communications instituted a cancellation proceeding in the Patent and Trademark Office for the registered trademark “WorldQuest.” In December 2001, a judgment was made in the Company’s favor whereby Qwest’s motion to cancel our “WorldQuest” trademark was dismissed, however, Qwest filed a motion appealing the judgment. In December 2002, Qwest filed a separate complaint stating that the Company’s prepaid cash card product infringes on the Qwest trademark. In February 2003, the companies settled all outstanding claims whereby WorldQuest received a cash payment and telecommunication services (primarily long distance termination) from Qwest and Qwest retained all rights to the trademarks in question. Pursuant to the term of a settlement agreement with Qwest Communications arising out of a trademark dispute, on November 9, 2004 the Company changed its name to WQN, Inc. from WorldQuest Networks, Inc.
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Effective October 31, 2005, WQN entered into a Securities Purchase Agreement with Park Ave. Assoc. LLC, a Delaware limited liability company (“PAA”) pursuant to which the Company subscribed for a 50.9% membership interest in PAA in exchange for the contribution of a capital commitment to PAA of $5.6 million in cash to be funded over time. PAA was established as a real estate development company specializing in the acquisition and development of properties for small business use and for communities designed for the active adult lifestyle. An additional $5.4 million was to be invested over time by the other members of PAA for a total capitalization of $11 million. Although WQN became entitled to elect 3 of the 5 members of PAA’s Board of Managers, control over PAA’s day-to-day activities was exercised by PAA’s chief executive officer. The financial statements of the Company reflect that PAA has no assets or liabilities at December 31, 2005.
Pursuant to the Securities Purchase Agreement, WQN made capital contributions to PAA aggregating approximately $3.6 million as of December 31, 2005. In the course of its review of various documents relating to certain real estate investments purportedly entered into by the former chief executive officer of PAA, WQN discovered certain irregularities. On February 2, 2006, WQN caused the Board of Managers of PAA to remove said chief executive officer and appoint Scott W. Hartman as the interim chief executive officer of PAA and David S. Montoya as the interim chief financial officer of PAA. The new management of PAA has met with various persons with whom the former chief executive officer of PAA had business dealings and discovered that a number of the transactions in which PAA was purportedly involved were in fact improperly conducted. As a result of these discoveries, WQN has taken a write-down for 2005 in the amount of $2,577,001
On February 9, 2006, WQN commenced litigation against Mark C. Hotton, the former chief executive officer of PAA, and certain other persons and entities, seeking the return of the monies involved in the transactions that the Company alleges were improperly conducted at PAA. On February 14, 2006, the Supreme Court of the State of New York issued an Order to Show Cause with Temporary Restraining Order against Mr. Hotton and certain others.
On May 17, 2006, WQN, Inc., a Delaware corporation, (“WQN”) and PAA (“Park Ave. Delaware’) entered into a Settlement Agreement (the "Settlement Agreement"), by and among WQN, Park Ave. Delaware (WQN and Park Ave. Delaware are collectively referred to as the “WQN Parties” or the “Company”), Mark C. Hotton (“Hotton”), 154 TH Street Corp. (“154 TH Street”), Pioneer Ventures LLC (“Pioneer”), The Rising Child Foundation (“Rising Child”), Mark C. Hotton Trust (the “Hotton Trust”), Mark C. Hotton Living Trust (the “Hotton Living Trust”), Edward Johnson (“Johnson”), Park Ave. Assoc. LLC, a New Jersey limited liability company (“Park Ave. New Jersey”) (Hotton, 154 th Street, Pioneer, Rising Child, the Hotton Trust, the Hotton Living Trust, Johnson and Park Ave. New Jersey are collectively referred to as the “Hotton Parties”) and certain other parties.
The Hotton Parties will pay to the Company the agreed upon sum of $2,000,000 as follows: $1,000,000 upon the release of the Eastern District Funds (defined below); and $1,000,000 in installments over a period of 18 months as follows: (i) $150,000 on or before the 6 month anniversary of the date of the Settlement Agreement; (ii) $150,000 dollars on or before the 9 month anniversary of the date of the Settlement Agreement; (iii) $150,000 on or before the 1 year anniversary of the date of the Settlement Agreement; (iv) $275,000 on or before the 15 month anniversary of the date of the Settlement Agreement; and (v) $275,000 on or before the 18 month anniversary of the date of the Settlement Agreement. “Eastern District Funds” means certain monies deposited into an interest bearing account with the United States District Court, Eastern District of New York, with respect to a lawsuit pending in such court by and among Spina, Hotton, WQN and certain other parties. Contemporaneous with the entry into the Settlement Agreement, certain lawsuits involving various parties to the Settlement Agreement were dismissed with prejudice and the parties entered into general releases with each other. The Eastern District Funds were released to WQN on May 19, 2006.
WQN is currently involved as the defendant and counter-claimant in an arbitration dispute styled: Dr. Alex Parsinia v. WQN, Inc. (f/k/a World Quest Networks, Inc.); Arbitration before the International Institute for Conflict Prevention and Resolution. The dispute arises from an Asset Transfer Agreement and Addendum thereto that WQN entered into in 2003. The transferor, Dr. Alex Parsinia, claims that WQN breached the Asset Transfer Agreement. WQN claims that Dr. Parsinia breached the agreement, converted WQN’s proprietary information, and committed fraud. Pursuant to the Asset Transfer Agreement and Addendum thereto, WQN and Dr. Parsinia will arbitrate their claims before the International Institute for Conflict Prevention and Resolution in Dallas, Texas. WQN believes the transferor’s claims are without merit. At this point in time the amount of damages, if any, is not known although management does not believe, that when known, it will be material.
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WQN is also in the initial stages of responding to a second matter involving Dr. Parsinia. This second matter has been asserted by Hossein Haghighi in the form of a letter demand dated March 8, 2006. Mr. Haghighi claims that WQN is liable for damages he sustained as a result of a business transaction with Dr. Parsinia. He claims that he purchased calling cards from Dr. Parsinia of SuperTel that turned out to be defective and unusable. WQN has requested additional information from Mr. Haghighi’s attorney regarding the claim, however, no response has been received as of May 30, 2006. It is unclear when Mr. Haghighi’s claim arose and therefore, WQN’s potential liability for this matter is also unclear as facts pertinent to issues of liability and successor liability are currently unknown.
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