UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

Form 10-Q

_____________________

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  September 30, 2011

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

QUAMTEL, INC.

(Exact name of small business issuer as specified in its charter)

Nevada	000-31757	98-0233452
(State of Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

14911 Quorum Drive, Suite 140, Dallas, Texas  75254

(Address of Principal Executive Office) (Zip Code)

(972) 361-1980

(Issuer’s telephone number, including area code)

Indicate whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Check whether the registrant filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes  ¨ No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of each of the issuer's classes of common equity as of November 14, 2011 is 51,761,737.

QUAMTEL, INC.

Table of Contents

		Page
PART I – FINANCIAL INFORMATION
ITEM 1.	FINANCIAL INFORMATION	3
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	22
ITEM 4T.	CONTROLS AND PROCEDURES	22
PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	24
ITEM 1A	RISK FACTORS	24
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	25
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	25
ITEM 4.	(REMOVED AND RESERVED)	26
ITEM 5.	OTHER INFORMATION	26
ITEM 6.	EXHIBITS	27
SIGNATURES		28

2

PART I – FINANCIAL INFORMATION 

ITEM 1.  FINANCIAL INFORMATION

INDEX TO FINANCIAL STATEMENTS

	Page
Condensed Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010	4
Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010	5
Unaudited Condensed Consolidated Statement of Cash Flow for the nine months ended September 30, 2011 and 2010	6
Unaudited Condensed Consolidated Statement of Stockholders’ Deficiency for the nine months ended September 30, 2011	7
Notes to the Unaudited Condensed Consolidated Financial Statements	8

3

Quamtel, Inc.

Condensed Consolidated Balance Sheets

Unaudited

	September 30, 2011			December 31, 2010
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	-		$	78,739
Accounts receivable, net		33,237			55,654
Inventory		39,870			21,870
Prepaid expenses and deposits		98,498			113,903
Total current assets		171,605			270,166
Restricted Cash		150,000			150,000
Property and equipment, net		346,912			504,535
Goodwill and other intangibles		1,044,266			1,078,845
TOTAL ASSETS	$	1,712,783		$	2,003,545
LIABILITIES AND SHAREHOLDERS'  (DEFICIENCY)
Current liabilities:
Accounts payable	$	833,381		$	994,936
Accrued expenses		101,480			146,361
Unearned revenue		231,552			363,227
Advances from related party		616,475			614,678
Stock-based payable		316,000			491,000
Current portion of notes payable		853,261			2,162,932
Total current liabilities		2,952,149			4,773,133
TOTAL LIABILITIES		2,952,149			4,773,132
Shareholders'  (deficiency):
Common stock - $0.001 par value; 200,000,000 shares authorized;
49,362,237 and 23,312,237 shares issued and 49,062,237 and      23,212,237 shares outstanding at
September 30, 2011 and December 31, 2010, respectively		49,362			23,312
Preferred stock - $0.001 par value; 50,000,000 shares authorized;
no shares issued and outstanding		-			-
Additional paid-in capital		15,522,283			9,289,474
Treasury stock, 300,000 shares and 100,000 shares at September 30, 2011       and December 31, 2010, respectively		(160,000	)		(100,000	)
Accumulated (deficit)		(16,651,011	)		(11,982,372	)
Total shareholders'  (deficiency)		(1,239,366	)		(2,769,586	)
TOTAL LIABILITIES AND SHAREHOLDERS'  (DEFICIENCY)	$	1,712,783		$	2,003,545

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Quamtel, Inc.

Condensed Consolidated Statement of Operations

For the Three and Nine Months Ended September 30, 2011 and 2010

Unaudited

	Three Months						Nine Months
	2011			2010			2011			2010
Revenues	$	502,576		$	484,405		$	1,457,020		$	1,660,308
Cost of sales		361,896			419,096			993,242			1,355,694
Gross profit		140,680			65,309			463,778			304,614
Operating expenses:
Compensation, consulting and related expenses		2,592,870			2,427,897			4,588,242			3,827,279
General and administrative expenses		130,917			801,924			563,994			1,411,462
Depreciation and amortization		33,662			36,108			99,999			98,756
Total operating expenses		2,757,449			3,265,929			5,252,235			5,337,497
Loss from operations		(2,616,769	)		(3,200,620	)		(4,788,457	)		(5,032,883	)
Other (income) expense:
Interest and financing expense		38,666			47,556			152,978			113,242
Other (income) loss		-			-			(25,000	)		-
(Gain) loss on disposition assets		-			1,137			(247,796	)		73,761
Total other (income) expense		38,666			48,693			(119,818	)		187,003
Loss before income taxes		(2,655,435	)		(3,249,313	)		(4,668,639	)		(5,219,886	)
Income tax expense (benefit)		-			-			-			-
Net loss	$	(2,655,435	)	$	(3,249,313	)	$	(4,668,639	)	$	(5,219,886	)
Basic and diluted loss per share:
Net loss per share	$	(0.07	)	$	(0.17	)	$	(0.16	)	$	(0.27	)
Weighted average number of shares outstanding		37,688,117			19,446,625			29,668,250			19,093,158

 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Quamtel, Inc.

Condensed Consolidated Statements of Cash Flow

For the Nine Months Ended September 30, 2011 and 2010

Unaudited

	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,668,639	)	$	(5,219,887	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization		99,999			98,756
Gain on disposition of assets		(247,796	)		73,761
Noncash consulting expense		3,524,250			2,819,511
Changes in operating assets and liabilities
Accounts receivable		22,417			3,080
Inventory		(18,000	)		39,880
Prepaid expenses and deposits		15,405			331,137
Accounts payable		3,445			65,733
Accrued expenses		(44,881	)		74,483
Stock payable		-			310,000
Unearned revenue		(131,675	)		(114,474	)
Net cash used in operating activities		(1,445,475	)		(1,518,020	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equipment		-			(165,380	)
Disposition (acquisition) of  assets		175,000			(26,577	)
Deposit paid		-			(150,000	)
Net cash provided by (used in) investing activities		175,000			(341,957	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock issuances		700,850			539,975
Proceeds from promissory note issuances		549,089			1,542,417
Advances from (repayments to) related party		1,797			(50,539	)
Cash paid to redeem common stock		(60,000	)		(100,000	)
Repayment of notes payable		-			(85,375	)
Net cash provided by financing activities		1,191,736			1,846,478
Net increase (decrease) in cash		(78,739	)		(13,499	)
Cash and cash equivalents at beginning of period		78,739			94,003
Cash and cash equivalents at end of period	$	-		$	80,504
Supplemental cash flow information:
Cash paid for taxes	$	-		$	-
Cash paid for interest	$	38,666		$	113,242
Noncash investing and financing activities:
Issuance of common stock for settlement of stock based payable	$	175,000		$	26,000
Issuance of common stock for property and equipment	$	-		$	92,204
Issuance of common stock for intangible assets	$	-		$	1,645,548
Issuance of common stock in settlement of debt	$	1,858,759		$	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

Quamtel, Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Deficiency

For the Nine Months Ended September 30, 2011

	Common Stock				Additional Paid-		Treasury			Accumulated
	Shares		Amount		in Capital		Stock			(Deficit)			Total
Balances as of December 31, 2010		23,312,237	$	23,312	$	9,289,474	$	(100,000	)	$	(11,982,372	)	$	(2,769,587	)
Common stock issued for services		200,000		200		139,800					-			140,000
Common stock issued for cash		950,000		950		184,050					-			185,000
Net loss for three months ended March 31, 2011		-		-		-					(679,090	)		(679,090	)
Balances as of March 31, 2011		24,462,237	$	24,462	$	9,613,324	$	(100,000	)	$	(12,661,462	)	$	(3,123,677	)
Common stock issued for services		4,420,000		4,420		1,099,030					-			1,103,450
Common stock issued for cash  and settlement of stock based payable		3,630,000		3,630		599,220					-			602,850
Net loss for three months ended June 30, 2011		-		-		-					(1,334,114	)		(1,334,114	)
Balances as of June 30, 2011		32,512,237	$	32,512	$	11,311,574	$	(100,000	)	$	(13,995,576	)	$	(2,751,490	)
Common stock issued for services		6,905,000		6,905		2,273,895					-			2,280,800
Common stock issued for cash		945,000		945		87,055					-			88,000
Common stock issued for debt conversion		9,000,000		9,000		1,849,759								1,858,759
Common stock held in treasury		-						(60,000	)					(60,000	)
Net loss for three months ended September 30, 2011		-		-		-					(2,655,435	)		(2,655,435	)
Balances as of September 30, 2011		49,362,237	$	49,362	$	15,522,283	$	(160,000	)	$	(16,651,011	)	$	(1,239,366	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE A – BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

Description of Business

The Quamtel Inc. (“the Company”) provides prepaid and postpaid enhanced telecommunications services with an emphasis on transporting calls that originate from the United States and Canada and terminate in other specific regions of the world. Customers utilize WQN’s Voice over Internet Protocol (“VoIP”) network to place quality international calls at discounted rates. The voice quality of WQN’s VoIP calls is virtually the same as an international telephone call carried over a traditional telephone line. A substantial portion of WQN’s revenue is derived from the sale of prepaid service to customers calling from the United States to India. WQN’s products and services are provisioned and sold online via its websites.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements as of September 30, 2011 and for the nine months ended September 30, 2011 and 2010 are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q, and therefore, do not include all the information necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated December 31, 2010 financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on May 17, 2011.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies are detailed in Company’s consolidated financial statements for the year ended December 31, 2010 as presented in the Company’s Form 10-K filed with the SEC on May 17, 2011.

Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial statements.

8

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE C – LIQUIDITY

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has reported historical losses from operations.   As of September 30, 2011, the Company has reported an accumulated deficit of $16,651,011 and a working capital deficit of $2,780,544 and has been dependent on issuances of debt and equity instruments to fund its operations.

The Company intends to generate future profitability and seek new sources or methods of revenue to pursue its business strategy.  If the Company’s financial resources from operations are insufficient, the Company will require additional financing in order to execute its operating plan and continue as a going concern.  The Company cannot predict whether this additional financing will be in the form of equity or debt, or be in another form. The Company may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all.  In any of these events, the Company may be unable to implement its current plans for expansion, repay its debt obligations as they become due, or respond to competitive pressures, any of which circumstances would have a material adverse effect on its business, prospects, financial condition and results of operations.

The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE D - PROPERTY AND EQUIPMENT, NET

At September 30, 2011 and December 31, 2010, respectively, property and equipment consisted of the following:

	2011			2010
	(Unaudited)
Computers and equipment	$	530,609		$	622,813
Automobile		32,123			32,123
Furniture & Fixtures		16,346			16,346
Total		579,078			671,282
Less accumulated depreciation		(232,166	)		(166,747	)
Total	$	346,912		$	504,535

Depreciation expense for the three months ended September 30, 2011 and 2010 amounted to $22,009 and $13,813, respectively.  Depreciation expense for the nine months ended September 30, 2011 and 2010 amounted to $65,419 and $56,876, respectively.

9

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE E - INTANGIBLE ASSETS

At September 30, 2011 and December 31, 2010 respectively, intangible assets consisted of the following:

		2,011			2010
	(Unaudited)
Goodwill associated with the acquisition of Data Jack, Inc.		669,957			669,957
Acquisition of 800.com domain name		462,327			462,327
Total		1,132,284			1,132,284
Less accumulated amortization		(88,018	)		(53,439	)
Total	$	1,044,266		$	1,078,845

Amortization expense for the three months ended September 30, 2011 and 2010 amounted to $11,653 and $22,295, respectively. Amortization expense for the nine months ended September 30, 2011 and 2010 amounted to $34,579 and $41,880, respectively.

The goodwill amounts of $669,957 and $462,327 were recorded with the Data Jack acquisition in December, 2009.

In December 2009, the Company purchased the URL DataJack.com (the "DataJack Domain Name”) for a cash payment of $30,000, plus a commitment to issue 10,000 restricted shares of the Company’s common stock which were valued at $26,000.  The shares have not yet been issued, and the liability is reflected as a stock-based payable on the Company’s consolidated balance sheet at September 30, 2011.  The total cost of the DataJack Domain Name was $56,000 which is less than its estimated fair value, and is being amortized over a period of 10 years.

10

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE F – RELATED PARTY TRANSACTIONS

From time to time, Steven Ivester, the Company’s former sole shareholder, who is currently the Assistant Secretary of and also a consultant to the Company through a Consulting Services Agreement with iTella, Inc., has made personal advances to the Company under an Unsecured Revolving Promissory Note (the "Unsecured Note"). The Unsecured Note has a maximum amount of $1,000,000, is repayable upon demand, is non-interest bearing and is unsecured.  Advances under the Unsecured Note amounted to $616,475 and $614,678 at September 30, 2011 and December 31, 2010, respectively.

Effective August 1, 2009 and subsequently amended, the Company executed a Restated Consulting Services Agreement with iTella, Inc., whereby iTella, Inc. provides, at the reasonable request of the Company’s management, advanced business strategy, financing, product development and marketing advice including but not limited to day to day operations. The initial term of this agreement is for five years, and automatically renews for additional one year terms if approved by both parties. During this agreement’s term and at the Company’s expense, iTella, Inc. will be provided an office and administrative support in Weston, Florida. iTella, Inc.’s compensation consists of the following:

1.	Cash payments totaling $8,333 for the first two months, payable monthly;
2.	Cash payments totaling $66,667 for the next four months, payable monthly;
3.	Annual cash payments of $250,000 thereafter, payable monthly;
4.	Nine percent of the Company’s consolidated gross revenue, payable quarterly (except the first two months, in which the rate is one percent of gross revenues), subject to an annual calendar year cap of $800,000;
5.	Employees of Consultant  may be eligible for grants of stock options pursuant to the Company’s Equity Incentive  Plan, in such amounts as may from time to time be determined by the Company, at its sole discretion; and
6.	Reimbursement of reasonable, related business expenses.

Expenses under the Restated Consulting Services Agreement for the nine months ended September 30, 2011 and year ended December 31, 2010, respectively, were $334,962 and $467,044.  Prior to closing the Restated Consulting Services Agreement, Quamtel did not have expertise in the management and financing of a public company, and required the services of iTella, Inc. as outlined in the Restated Consulting Services Agreement. The Restated Consulting Services Agreement is not cancellable by either party in advance of its contractual term, except under a defined change in control.

11

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On August 20, 2009, the Company issued and sold $300,000 in principal amount of an unsecured convertible note to Gilbert, receiving net proceeds of $300,000. This note bore interest at 18% and was converted into 115,000 shares of the Company’s common stock at a conversion price of $2.70 per share on September 10, 2009. In connection with his purchase of this convertible note, on August 20, 2009, Gilbert also received six-year warrants to purchase 54,000 shares of the Company’s common stock exercisable at a price of $2.70 per share.  On May 9, 2011, Gilbert signed an agreement with the Company rescinding and cancelling these warrants as of their issue date, August 20, 2009. 

On August 20, 2009, the Company also executed a one-year consulting agreement with Gilbert. Gilbert is the president of Gilder Funding Corp., a shareholder of the Company.  Pursuant to the terms of this agreement, Gilbert provided advice and counsel regarding the Company’s financial management and strategic opportunities. As compensation, Gilbert was issued 300,000 shares of the Company’s common stock, which were registered with the SEC in a registration statement on Form S-8 on November 9, 2009.

On December 15, 2009, the Company issued an unsecured $200,000 promissory note (the “2009 Gilbert Note”) to Gilbert for cash.  The 2009 Gilbert Note bore interest at 15.9% per year, and unpaid principal and interest was repayable in full on September 15, 2010. Under the terms of the 2009 Gilbert Note, Gilbert was to be paid $40 toward the Note for each Data Jack unit sold, plus a $5.00 bonus payment (in addition to interest) on each Data Jack unit sold up to 5,000 units.  No such payments were due or made.  The 2009 Gilbert Note, with accrued interest, was repaid in full on February 27, 2010 from proceeds of the 2010 Secured Gilder Note (defined below).

On February 27, 2010, the Company executed a $1,000,000 Senior Secured Promissory Note payable to Gilder Funding Corp. (“Gilder”), a company that is a shareholder of the Company and controlled by Gilbert (the “2010 Secured Gilder Note”) for cash.  The proceeds of the 2010 Secured Gilder Note were used, in part, to repay the 2009 Gilbert Note, with accrued interest.  Interest on the 2010 Secured Gilder Note is 15% per annum, and beginning April 5, 2010, the Company was required to make monthly payments on the 2010 Secured Gilder Note in the amount of $23,789.93 per month, with any remaining outstanding principal and any accrued but unpaid interest due on or before February 27, 2016. The 2010 Secured Gilbert Note is secured by substantially all of the Company’s assets.  Effective May 24, 2010, the Company and Gilder amended the 2010 Secured Gilder Note to increase the principal amount to $1,250,000, with the Company receiving the additional $250,000 in cash.  Effective September 15, 2010, monthly payments were increased to $27,000; and the maturity date was changed to February 27, 2015.   The Company made three monthly payments of $27,000 under the 2010 Secured Gilder Note and has since begun making monthly payments of $11,000.  Because of this reduced monthly payment, the Company is in default of the terms of the 2010 Secured Gilder Note and, as such, at the option of Gilder, the entire unpaid principal balance and the accrued and unpaid interest are due and payable on demand, with past due principal bearing interest from the date of default at the maximum rate allowed by law. Gilder, under a security agreement with the Company, holds a first priority lien and security interest in all of the assets of the Company, which secures the performance of the Company’s obligations under the 2010 Secured Gilder Note.   The Company has requested that Gilder waive these default provisions and has received his oral commitment to do so.

12

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On December 13, 2010, the Company issued an unsecured $250,000 promissory note to Gerald and Seena Sperling (the “2010 Sperling Note”), together a shareholder of the Company (the “Sperlings”), for cash.  The 2010 Sperling Note bore interest at 3% per year and was payable in full, with interest, on February 25, 2012.  At December 31, 2010, the outstanding principal and interest on the Note was $250,349.  On March 10, 2011, the Company replaced and cancelled the 2010 Sperling Note with a new note (the “2011 Sperling Note”) in the amount of $500,000 in exchange for an additional $250,000 in cash from the Sperlings.  As a result of this transaction, the 2010 Sperling Note was deemed paid in full.  The 2011 Sperling Note bears interest at 3% per year and is payable in full, with interest, on March 10, 2013.

On December 16, 2010, the Sperlings made a short term loan to the Company of $75,000.  This loan was made pursuant to an oral agreement, bore no interest and was repaid in full prior to the end of the year.

On December 16, 2010, the Sperlings invested an additional $500,000 in the Company and received 1,300,000 shares for $325,000 of that investment, or $0.25 per share.  The Sperlings will receive an additional 700,000 shares for the remaining $175,000 of their investment.

On August 11, 2011, the Company and Gilder entered into a settlement agreement pursuant to which the Company agreed to issue to Gilder six million five hundred thousand (6,500,000) restricted shares of its common stock (the “Settlement Shares”) in exchange for settlement in full of the 2010 Secured Gilder Note.  Gilder also agreed to terminate, upon receipt of the Settlement Shares, his security interest the Company granted to him in connection with the 2010 Secured Gilder Note.  Concurrently with this settlement, the Company entered into a consulting agreement with Gilder pursuant to which it agreed to pay Gilder $11,000 per month for 12 months for consulting services to the Company relating to financial management and strategic opportunities.

Also on August 12, 2011, the Company and the Sperlings entered into a settlement agreement pursuant to which the Company agreed to issue to the Sperlings two million five hundred thousand (2,500,000) restricted shares of its common stock in exchange for settlement in full of the outstanding $500,000 principal amount of the 2011 Sperling Note.

13

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE G - NOTES PAYABLE

At September 30, 2011 and December 31, 2010, notes payable consisted of the following:

	September 30, 2011			December 31, 2010
	(unaudited)
Promissory note payable - shareholders	$	699,240		$	2,014,934
Note payable - Abundance Partners LLC		97,939			84,763
Note payable - Dell Computer		40,951			40,951
Note payable - American Honda Finance Corporation		-			14,321
Note payable - Total Bank		15,131			7,963
Total notes payable		853,261			2,162,932
Less current portion		(853,261	)		(2,162,932	)
Noncurrent portion	$	-		$	-

On August 11, 2011, the Company and Gilder entered into a settlement agreement pursuant to which it agreed to issue to Gilder six million five hundred thousand (6,500,000) restricted shares of its common stock (the “Settlement Shares”) in exchange for settlement in full of the 2010 Secured Gilder Note.  Gilder also agreed to terminate, upon receipt of the Settlement Shares, his security interest the Company granted to him in connection with the 2010 Secured Gilder Note.  Concurrently with this settlement, the Company entered into a consulting agreement with Gilder pursuant to which it agreed to pay Gilder $11,000 per month for 12 months for consulting services to the Company relating to financial management and strategic opportunities.

Also on August 12, 2011, the Company and the Sperlings entered into a settlement agreement pursuant to which it agreed to issue to the Sperlings two million five hundred thousand (2,500,000) restricted shares of its common stock in exchange for settlement in full of the outstanding $500,000 principal amount of the 2011 Sperling Note.

14

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE H– FINANCING AND OTHER TRANSACTIONS

During the third quarter of 2011, the Company issued 16,650,000 shares of common stock valued at $4,167,559 as follows:

● 945,000 shares were issued and sold to 7 accredited investors for net proceeds of $88,000;

● 120,000 shares valued at $38,400 were issued to employees as partial compensation for their employment in 2011;

● 6,585,000 shares valued at $2,182,400 were issued to consultants for services rendered; and

● 9,000,000 shares valued at $1,858,759 were issued to 2 debt holders for conversion of 2 notes payable.

Additionally, the Company entered into a twelve month consulting agreement with Sequoia Asset Management Group (“Sequoia”) dated as of August 12, 2011 pursuant to which it has agreed to issue to Sequoia 200,000 restricted shares of its common stock.  No shares under this agreement have yet been issued to Sequoia as of September 30, 2011.

These securities were offered and sold pursuant to the exemption from the registration requirements of the federal securities laws provided by Section 4(2) of the Securities Act of 1933, as amended.

NOTE I – SYNCPOINTE LLC ASSET SALE

Effective June 6, 2011, Syncpointe sold substantially all of its assets (the “Syncpointe Asset Sale”) to Mobilelogik, Inc. (the “Purchaser”) for two cash payments totaling $175,000. In conjunction with this transaction, the Purchaser assumed Syncpointe’s $115,000 liability (original liability of $165,000 was settled for $115,000 pursuant to agreement dated May 27, 2011) to a software vendor (“Vendor”), and the Company issued to Vendor, as partial consideration for this assumption, 15,000 shares of its restricted common stock. Closing of the Syncpointe Asset Sale was contingent on the debt settlement with Vendor; consequently, the full $165,000 of debt extinguishment from our balance sheet is included in the gain on disposition of assets on our Income Statement.  The Purchaser separately agreed to pay the Company $25,000 for the Company’s future marketing and sales assistance relating to Syncpointe’s business.  These transactions resulted in the Company recognizing a related non-operating disposition gain of $247,796 during the three months ended June 30, 2011.  As a condition to closing the Syncpointe Asset Sale, the Company placed 200,000 shares of its common stock in escrow, pending the Purchaser’s taking full possession of Syncpointe software related assets held by Vendor.

15

QUAMTEL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE J – COMITTMENTS AND CONTINGENCIES

In the ordinary course of business, the Company is involved in numerous lawsuits. The costs that may result from these lawsuits are only accrued for when it is more likely than not that a liability, resulting from past events, will be incurred and the amount of that liability can be quantified or estimated within a reasonable range. Described hereunder are new lawsuits filed against the Company during the reported period:

On August 1, 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 are 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 is seeking a judgment against the Company and Syncpointe, jointly and severally, in an amount to be determined at trial but estimated by APL to be at least $99,883.99.  The Company and Syncpointe filed an answer with the Court on September 12, 2011 denying most of APL’s substantive allegations and on October 7, 2011, the Company filed a motion for summary judgment with the Court seeking dismissal of the complaint.  The Company intends to vigorously defend against all claims in APL’s complaint.  Since the litigation is at an early stage, the Company cannot predict the outcome of these proceedings.

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 it failed to issue to StockVest 200,000 restricted shares of its common stock.  StockVest is seeking a judgment against the Company in the amount of $130,000.  The Company filed a motion to dismiss and/or abate with the Circuit Court on November 2, 2011 and is waiting to hear from the Circuit Court with a decision on this motion.  The Company intends to vigorously defend against all claims in StockVest’s complaint.  Since the litigation is at an early stage, the Company cannot predict the outcome of these proceedings.

NOTE K - SUBSEQUENT EVENTS

On October 31, 2011, the Company issued 300,000 shares of common stock to Steven Ivester, Jr. in return for consulting services performed in relation to building the Data Jack distribution channel.  Steven Ivester, Jr. is the son of the Steven Ivester, the Company’s Assistant Secretary and a consultant to the Company through a consulting services agreement with iTella, Inc.

On October 31, 2011, the Company issued 1,300,000 shares of common stock to Anthony Gallo in return for consulting services to be performed in relation to building the Data Jack distribution channel and M2M business segments.  

On November 9, 2011, the Company signed a settlement agreement with Mirador Consulting, Inc. (‘Mirador”) pursuant to which the parties agreed that the Company did not owe Mirador any additional fees under the consulting agreement by and between the parties dated August 23, 2010.  As a result of this settlement, the Company will be able to reduce approximately $310,000 of the stock based payable liability accrued as of September 30, 2011.

16

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis contains various “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward-looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.

When used in this yearly report, the terms the “Company” “Quamtel,” “we,” “our,” and “us” refers to Quamtel, Inc. a Nevada corporation.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the unaudited condensed consolidated financial statements included herein. Further, this quarterly report on Form 10-Q should be read in conjunction with the Company’s Consolidated Financial Statements and Notes to Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Securities and Exchange Commission (the “SEC”) on May 17, 2011.

Background

On January 13, 2009, Quamtel (formerly Atomic Guppy, Inc.) and WQN, Inc., a Texas corporation (“WQN”) executed a Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which the shareholders of WQN received a total of 15,000,000 post-split shares of our common stock in exchange for all of their shares of WQN stock (the “Exchange” or “Merger”). All conditions for closing were satisfied or waived, and the Merger closed on July 28, 2009.As a result of, and at the time of, the Exchange, the shareholders of WQN owned approximately 91% of our then outstanding common stock. In conjunction with closing the Merger, certain outstanding obligations of Quamtel including officers and director’s compensation, notes and amounts payable to officers and directors and third party loans outstanding, were exchanged for 1,275,000 post-split shares of our common stock.

As a result of the Exchange, WQN became our wholly-owned subsidiary, through which our operations are conducted. On September 8, 2009, we filed an amendment to our Articles of Incorporation concluding a one-for-ten reverse split of our common stock and increasing our authorized stock to 200,000,000 common shares and 50,000,000 preferred shares.

On December 9, 2009, we acquired all of the outstanding membership interests of Mobile Internet Devices, LLC, a Florida limited liability company (“Mobile Devices”), in exchange for 500,000 shares of our unregistered common stock, and up to 500,000 additional unregistered common stock shares contingent upon Mobile Devices achieving specified levels of new customers in the future.  Mobile Devices was subsequently renamed and reorganized as Data Jack, Inc., a Texas corporation (“Data Jack”).

Effective August 18, 2010, we acquired all of the outstanding membership interests of Syncpointe, LLC, a Missouri limited liability company (“Syncpointe”), from Half A Minute, LLC; McPheeters Communication Group, LLC; and VKS, LLC (collectively, the “Sellers”). We acquired Syncpointe in exchange for 1,000,000 shares of our unregistered common stock, with piggyback registration rights.  Effective September 6, 2011, Syncpointe sold substantially all of its assets (the “Syncpointe Asset Sale”) to Mobilelogik, Inc. (the “Purchaser”) for two cash payments totaling $175,000. In conjunction with this transaction, the Purchaser assumed Syncpointe’s $115,000 liability (original liability of $165,000 was settled for $115,000 pursuant to agreement dated May 27, 2011) to a software vendor (“Vendor”), and we issued to Vendor, as partial consideration for this assumption, 15,000 shares of our restricted common stock.  As a condition to closing the Syncpointe Asset Sale, we placed 200,000 shares of our common stock in escrow, pending the Purchaser’s taking full possession of Syncpointe software related assets held by the Vendor.

17

Overview

WQN was formed as a Texas corporation in September 2007, when it acquired an operating business that was originally founded in 1996. WQN provides prepaid and postpaid enhanced telecommunications services with an emphasis on transporting calls that originate from the United States and Canada and terminate to specific regions of the world. Customers utilize WQN’s Voice Over Internet Protocol (“VoIP”) network to place quality international calls at discounted rates. The voice quality of WQN’s VoIP calls is nearly the same as an international telephone call carried over a traditional telephone line. A substantial portion of WQN’s revenue is derived from the sale of prepaid service to customers calling from the United States to India. WQN’s products and services are provisioned and sold online via its websites.

Data Jack was formed in February 2009, and its revenues prior to the Company’s acquisition were $96,113.  Data Jack specializes in delivering nationwide mobile 3G data coverage for a competitive fixed monthly price, through a proprietary USB device connected to any computer with a Windows or Mac operating system.

Syncpointe is a software developer focused on the development of mobile device management software. The Company’s products are geared toward global enterprise, government, and consumer markets. Syncpointe was formed in November 2008, and its revenues prior to the Company's acquisition were $0 and $89,000 during 2010 and 2009, respectively.

Results of Operations for the Three Months ended September 30, 2011 Compared to the Same Period in 2010

Revenues

Our revenues for the three months ended September 30, 2011 and 2010 were $502,576 and $484,405, respectively. Revenues were slightly higher in the current quarter due to lower deferred revenue estimates.  Data Jack revenues for the three months ended September 30, 2011 and 2010 were $94,192 and $100,725, respectively.

Cost of Sales and Gross Profit

Cost of sales was $361,896 and $419,096 for the three months ended September 30, 2011 and 2010, respectively. This resulted in gross profit of $140,680 (28%) and $65,309 (13%) for the respective 2011 and 2010 periods. The increased gross margin in 2011 was due to the completion of our TDM to VoIP migration, which resulted in lower cost of sales.

Operating Expenses

Operating expenses were $2,757,449 and $3,265,929 for the three months ended September 30, 2011 and 2010, respectively. Compensation and consulting expenses were $2,592,870 and $2,427,897 during these periods. Compensation and consulting expenses are primarily a result of the issuance of common shares for consulting services. General and administrative (“G&A”) expenses decreased from $801,924 in the 2010 period to $130,917 in 2011.  The decrease in G&A expenses in the current quarter were due to reduced legal and acquisition expenses, in addition to the absence of a $465,000 marketing expense charge recorded in the three months ended September 30, 2010.

18

Other Income and Expense

Interest, financing and other expenses decreased from $47,556 to $38,666 for the three months ended September 30, 2011 versus the corresponding 2010 period, due primarily to lower interest related to the secured and unsecured promissory notes payable discussed in Note G to the Company’s unaudited condensed consolidated financial statements.

Net Loss

A slight increase in gross profit, along with a substantial reduction in marketing and legal expenses resulted in a net loss of $2,655,435 for the three months ended September 30, 2011, compared to a net loss of $3,249,313 for the same period in 2010.

Results of Operations for the Nine Months ended September 30, 2011 Compared to the Same Period in 2010

Revenues

Our revenues for the nine months ended September 30, 2011 and 2010 were $1,457,020 and $1,660,308, respectively. Revenues have been decreasing primarily because the retail rates to India, one of the Company’s primary markets, have been rapidly declining due to increased competition.  This trend is expected to continue, in turn putting further downward pressure on revenues and margins. Data Jack revenues for the nine months ended September 30, 2011 and 2010 were $251,913 and $301,238, respectively.

Cost of Sales and Gross Profit

Cost of sales was $993,242 and $1,355,694 for the nine months ended September 30, 2011 and 2010, respectively. This resulted in gross profit of $463,778 (32%) and $304,614 (18%) for the respective 2011 and 2010 periods. The increased gross margin percentage in 2011 was due in part to a large vendor credit received in the three months ended March 31, 2011. After adjusting for the vendor credits, gross margins were 28%, a 9% increase from 2010.  The increased gross margin in 2011 was due to the completion of our TDM to VoIP migration, which resulted in lower cost of sales.

Operating Expenses

Operating expenses were $5,252,235 and $5,337,497 for the nine months ended September 30, 2011 and 2010, respectively. Compensation and consulting expenses increased from $3,827,279 to $4,588,242 during these periods due primarily to the $409,000 increase in the value of common shares issued for compensation and consulting services as described in Note H to the Company’s unaudited condensed consolidated financial statements. G&A expenses decreased from $1,411,462 in the 2010 period to $563,994 in 2011, primarily due to management reducing advertising expenses and professional and legal fees related to M&A activity.

19

Other Income and Expense

Interest, financing and other expenses increased from $113,242 to $152,978 for the nine months ended September 30, 2011 versus the corresponding 2010 period, due primarily to acceleration of some interest payments related to the secured and unsecured promissory notes payable discussed in Note G to the Company’s unaudited condensed consolidated financial statements. The Company recognized a gain on disposition of assets of $247,796 in the nine months ending September 30, 2011, compared to a loss of $73,761 on the disposition of assets for the same period in 2010. The $247,796 gain was a result of the September 6, 2011 sale of Syncpointe assets discussed in Note I to the Company’s unaudited condensed consolidated financial statements.

Net Loss

A reduction in G&A expenses of $847,468 along with $247,796 gain on disposition of assets offset by a $760,963 increase in compensation and consulting expenses resulted in a lower net loss of $4,668,639 for the nine month period ended September 30, 2011 compared with a net loss of $5,219,886 for the same period in 2010.

Liquidity and Capital Resources

Cash and cash equivalents were a deficit of $0 at September 30, 2011. Our net cash used in operating activities for the nine months ended September 30, 2011 was $1,445,475, due primarily to our cash-based net loss during this period.

Our primary sources of funding for the nine months ended September 30, 2011 have been (i) gross proceeds of $875,850 from the sale of our common stock to accredited investors, (ii) proceeds of $250,000 from a promissory note from one of our existing investors, (iii) short-term non-interest bearing loans of $182,000 from two of our accredited investors and (iv)) advances from Steven Ivester under an unsecured, revolving, non-interest bearing promissory note with a maximum amount of $1,000,000.  Advances outstanding under this unsecured revolving promissory note totaled $616,475 as of September 30, 2011.

At September 30, 2011, restricted cash consisted of a $150,000 security deposit in the form of an irrevocable letter of credit held in escrow related to our performance under a service contract with one of our telecommunication service providers.

Our accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern. We have incurred operating losses and negative cash flows from operations since the Merger, have incurred an accumulated deficit of $16,651,011 through September 30, 2011, and have been dependent on issuances of debt and equity instruments to fund our operations.  We intend to generate future profitability and seek new sources or methods of financing or revenue to pursue our business strategy.  However, there can be no certainty that we will be successful in this strategy.  These factors raise substantial doubt about our ability to continue as a going concern.  Accordingly, our independent auditors added an explanatory paragraph to their opinion on our consolidated financial statements for the year ended December 31, 2010, based on substantial doubt about our ability to continue as a going concern.

Our unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. We expect to raise any necessary additional funds through loans and additional sales of our common stock or debt instruments. There can be no assurance that we will be successful in raising additional capital in amounts or on terms acceptable to us, if at all.

20

Capital Expenditure Commitments

We did not have any substantial outstanding commitments to purchase capital equipment at September 30, 2011.

Plan of Operations

We do not currently have sufficient capital resources to meet projected cash flow requirements. We will need to continue to raise capital through the issuance of new shares or by issuing new debt securities. However, any failure in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, could have a material adverse effect on our business, results of operations, liquidity and financial condition.

Our future cash requirements include those associated with maintaining our status as a reporting entity. We believe that on an annual basis those costs would not exceed an average of $25,000 per month.

We presently do not have any available credit, bank financing or other external sources of liquidity. Due to our brief operating history and lack of substantial historical operating profits, our operations have not been a source of liquidity. We will need to obtain additional capital in order to fund our operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or borrow funds from private lenders. There can be no assurance that we will be successful in obtaining additional funding in amounts or on terms acceptable to us, if at all.

Critical Accounting Policies

The application of our accounting policies, which are important to our financial position and results of operations, requires significant judgments and estimates on the part of management. These estimates bear the risk of change due to the inherent uncertainty attached to each estimate and are likely to differ to some extent from actual results. A description of our critical accounting policies follows: 

1. In accordance with FASB ASC 350 (formerly Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets,") the Company tests its intangible asset (goodwill) for impairment at least annually by comparing the fair value of this asset to its carrying value. If in the future the carrying value of our goodwill exceeds its fair value, the Company will recognize an impairment charge in an amount equal to that excess. For purposes of these tests, the excess of the fair value of the Company over the amounts assigned to its identified assets and liabilities is the implied fair value of its goodwill.

2. Our revenues are primarily derived from fees charged to terminate voice services over the Company's network and from related monthly recurring charges. Variable revenue is earned based on the number of minutes during a call and is recognized upon completion of a call. Revenue from each customer is calculated from information received through the Company's network switches. The Company tracks the information received from the switch and analyzes the call detail records and applies the respective revenue rate for each call. Fixed revenue is earned from monthly recurring services provided to customers that are fixed and recurring in nature, and are connected for a specified period of time. Revenues are recognized as the services are provided and continue until the expiration of the contract or until cancellation of the service by the customer. Cash fees received prior to call completion are recorded on the Company’s consolidated balance sheet as unearned revenue.

21

Payments Due by Period

The following table illustrates our outstanding debt, purchase obligations, and related payment projections as of September 30, 2011:

			2011								2015 and
	Total		(Remainder)		2012		2013		2014		Thereafter
Advances from related party	$	616,475	$	616,475	$	-	$	-	$	-	$	-
Notes payable (principal)		853,261		853,261		-		-		-		-
Subtotals		1,469,736		1,469,736		-		-		-		-
Purchase obligations		-		-		-		-		-		-
Operating leases		181,006		14,450		75,644		45,328		39,072		6,512
Totals	$	1,650,742	$	1,484,186	$	75,644	$	45,328	$	39,072	$	6,512

ITEM 3.     QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK 

Not applicable.

ITEM 4.     CONTROLS AND PROCEDURES

(a)  Evaluation of Disclosure Controls and Procedures.

As required by Rule 13a-15(b) under the Exchange Act as of September 30, 2011, our management conducted an evaluation with the participation of our President who also serves as our principal financial and accounting officer (the “Certifying Officer”) regarding the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.  A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.  A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.

22

Based on this evaluation, our Certifying Officer concluded that our disclosure controls and procedures were ineffective as of September 30, 2011. Our President, who is our sole executive officer, is not a financial or accounting professional, and we do not have a chief financial officer or sufficient accounting staff.  Until we are able to engage a qualified financial officer, and/or accounting staff, we may continue to experience material weaknesses in our disclosure controls that may adversely affect our ability to timely file our quarterly and annual reports.

Our management, including the Certifying Officer, does not expect that our disclosure controls and procedures will prevent all errors and all improper conduct. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, a design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any, have been detected. These inherent limitations include the realities that judgments and decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more persons, or by management override of the control. Further, the design of any system of controls is also based in part upon assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations and a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

The Company has an insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual consolidated financial statements could occur and not be prevented or detected on a timely basis.  We have not achieved the optimal level of segregation of duties relative to key financial reporting functions and we do not have an audit committee or an independent audit committee financial expert. While not being legally obligated to has an audit committee or independent audit committee financial expert, it is management’s view that an audit committee, comprised of independent board members, and an independent financial expert is an important entity-level control over the Company's financial statements.  We have not achieved an optimal segregation of duties for executive officers of the Company.

(b)  Changes in Internal Control over Financial Reporting.

During the quarter ended September 30, 2011, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

23

PART II – OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS 

On August 1, 2011, Abundance Partners LP (“APL”) filed a complaint against us and our 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 we and Syncpointe failed to comply with the terms of, and are in default under, a certain loan and security agreement with APL, as amended, because we failed to pay APL certain amounts allegedly due under the loan agreement.  APL is seeking a judgment against us and Syncpointe, jointly and severally, in an amount to be determined at trial but estimated by APL to be at least $99,883.99.  We and Syncpointe filed an answer with the Court on September 12, 2011 denying most of APL’s substantive allegations and on October 7, 2011, we filed a motion for summary judgment with the Court seeking dismissal of the complaint.  We intend to vigorously defend against all claims in APL’s complaint.

On September 21, 2011, Mary Kratka, doing business as StockVest (“StockVest”), filed a complaint against us 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 we failed to comply with the terms of, and are in default under, a certain contract with StockVest because we failed to issue to StockVest 200,000 restricted shares of our common stock.  APL is seeking a judgment against us in the amount of $130,000.  We filed a motion to dismiss and/or abate with the Circuit Court on November 2, 2011 and we are waiting to hear from the Circuit Court with a decision on this motion.  We intend to vigorously defend against all claims in StockVest’s complaint.

On October 28, 2011 we filed a complaint against Atlanta Capital Partners, LLC (“ACP”) in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, pursuant to which we are demanding the return of $12,500 in cash and 50,000 restricted shares of our common stock, which we advanced to ACP during negotiations as consideration for services to be rendered to us under a consulting agreement that ACP never signed.  No consulting services were provided to us by ACP. We intend to vigorously prosecute this matter against ACP.

ITEM 1A.  RISK FACTORS

See the risk factors set forth in our Annual Report on Form 10-K filed with the SEC on May 17, 2011.

24

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the third quarter of 2011, the Company issued 16,650,000 shares of common stock valued at $4,167,559 as follows:

● 945,000 shares were issued and sold to 7 accredited investors for net proceeds of $88,000;

● 120,000 shares valued at $38,400 were issued to employees as partial compensation for their employment in 2011;

● 6,585,000 shares valued at $2,182,400 were issued to consultants for services rendered; and

● 9,000,000 shares valued at $1,858,759 were issued to 2 debt holders for conversion of 2 notes payable.

Additionally, we entered into a twelve month consulting agreement with Sequoia Asset Management Group (“Sequoia”) dated as of August 12, 2011 pursuant to which we have agreed to issue to Sequoia 200,000 restricted shares of our common stock per month for the duration of the agreement.  No shares under this agreement have yet been issued to Sequoia.

These securities were offered and sold pursuant to the exemption from the registration requirements of the federal securities laws provided by Section 4(2) of the Securities Act of 1933, as amended.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

On February 27, 2010, the Company executed a $1,000,000 Senior Secured Promissory Note payable to Gilder Funding Corp. (“Gilder”), a company that is a shareholder of the Company and controlled by Gilbert (the “2010 Secured Gilder Note”) for cash.  The proceeds of the 2010 Secured Gilder Note were used, in part, to repay the 2009 Gilbert Note, with accrued interest.  Interest on the 2010 Secured Gilder Note is 15% per annum, and beginning April 5, 2010, the Company was required to make monthly payments on the 2010 Secured Gilder Note in the amount of $23,789.93 per month, with any remaining outstanding principal and any accrued but unpaid interest due on or before February 27, 2016. The 2010 Secured Gilbert Note was secured by substantially all of the Company’s assets.  Effective May 24, 2010, the Company and Gilder amended the 2010 Secured Gilder Note to increase the principal amount to $1,250,000, with the Company receiving the additional $250,000 in cash.  Effective September 15, 2010, monthly payments were increased to $27,000; and the maturity date was changed to February 27, 2015.   The Company made three monthly payments of $27,000 under the 2010 Secured Gilder Note then began making monthly payments of $11,000.  Because of this reduced monthly payment, the Company defaulted on the terms of the 2010 Secured Gilder Note. Gilder, under a security agreement with the Company, held a first priority lien and security interest in all of the assets of the Company, which secured the performance of the Company’s obligations under the 2010 Secured Gilder Note.

On August 11, 2011, we and Gilder entered into a settlement agreement pursuant to which we agreed to issue to Gilder nine million five hundred thousand (6,500,000) restricted shares of our common stock (the “Settlement Shares”) in exchange for settlement in full of the outstanding $1,250,000 principal amount (plus accrued but unpaid interest) of the 2010 Secured Gilder Note.  Gilder also agreed to terminate, upon receipt of the Settlement Shares, his security interest we granted to him in connection with this note.

25

ITEM 4.     (REMOVED AND RESERVED)

ITEM 5.     OTHER INFORMATION

Concurrently with the settlement with Gilder, we entered into a consulting agreement with Gilder pursuant to which we agreed to pay Gilder $11,000 per month for 12 months for consulting services to us relating to financial management and strategic opportunities.

On August 12, 2011, we and Gerald and Seena Sperling (the “Sperlings”) entered into a settlement agreement pursuant to which we agreed to issue to the Sperlings two million five hundred thousand (2,500,000) restricted shares of our common stock in exchange for settlement in full of the outstanding $500,000 principal amount 3% promissory note dated March 10, 2011.

On August 26, 2011 the Company’s transfer agent issued 200,000 shares of Quamtel, Inc common stock in the name of StockVest for consulting services that StockVest was contracted to perform.  The Company’s has not released the 200,000 shares of common stock to StockVest due to a dispute relating to the contract (as referenced in Part II, Item 1 – Legal Proceedings, above).  The 200,000 shares are currently recorded in Treasury shares on the Company’s balance sheet at September 30, 2011.

On October 31, 2011, we issued 300,000 shares of common stock to Steven Ivester, Jr. in return for consulting services performed in relation to building the Data Jack distribution channel.  Steven Ivester, Jr. is the son of the Steven Ivester, our Assistant Secretary and a consultant to us through a consulting services agreement with iTella, Inc.

On October 31, 2011, we issued 1,300,000 shares of common stock to Anthony Gallo in return for consulting services to be performed in relation to building the Data Jack distribution channel and M2M business segments.  

On November 9, 2011, we signed a settlement agreement with Mirador Consulting, Inc. (‘Mirador”) pursuant to which we and Mirador agreed that we did not owe Mirador any additional fees under the consulting agreement by and between Mirador and us dated August 23, 2010.  As a result of this settlement, we will be able to remove $310,000 in current liabilities from our balance sheet under the account “Stock-Based Payable.”

26

ITEM 6.     EXHIBITS

In reviewing the agreements included as exhibits to this Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

●   should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

●   have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

●   may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

●   were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about us may be found elsewhere in this Form 10-Q and our other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

The following exhibits are included as part of this report:

Exhibit No.	Description
10.1	Consulting Agreement by and between the Registrant and StockVest dated as of June 6, 2011
10.2	Consulting Agreement by and between the Registrant and Shari Frimer dated as of July 1, 2011
10.3	Consulting Agreement by and between the Registrant and Windel Thelusma dated as of July 10, 2011
10.4	Consulting Agreement by and between the Registrant and Steven Siegelaub dated as of August 9, 2011
10.5	Consulting Agreement by and between the Registrant and SCG Family Trust dated as of August 9, 2011
10.6	Settlement and Release Agreement dated August 11, 2011 by and between the Registrant and Gilder Funding Corp.
10.7	Settlement and Release Agreement dated August 12, 2011 by and between the Registrant and Gerald and Seena Sperling
10.8	Consulting Agreement by and between the Registrant and Sequoia Asset management Group dated as of August 12, 2011 corrected and restated as of November 11, 2011
10.9	Consulting Agreement by and between the Registrant and Barry Ahron dated as of September 12, 2011
10.10	Consulting Agreement by and between the Registrant and Steven Litton dated as of September 23, 2011
10.11	Settlement Agreement dated November 9, 2011 by and between the Registrant and Mirador Consulting, Inc.
10.12	Consulting Agreement by and between the Registrant and Anthony Gallo dated as of September 25, 2011
10.13	Consulting Agreement by and between the Registrant and MS Starr LLC dated as of August 1, 2011
10.14	Consulting Agreement by and between the Registrant and South Florida Business Technology dated as of October 10, 2011
31.1/31.2	Certification of Principal Executive Officer and Principal Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1/32.2	Certification of Chief Executive Officer and Interim Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

___________________

*  This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

27

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	QUAMTEL, INC.
Dated: November 17, 2011	By:	/s/ Stuart Ehrlich
		Stuart Ehrlich,
		President and Chief Executive Officer

28