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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-QSB (Mark One) x
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  OR o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to Commission file number 0-27751 WORLDQUEST NETWORKS, INC.  Delaware
    
    75-2838415(State or other jurisdiction of
    
    (I.R.S. EmployerIncorporation or organization)
    
    Identification No.)14911 Quorum Drive, Suite 140, Dallas, Texas
    
    75254(Address of principal executive offices)
    
    (Zip Code)Issuers telephone number, including area code:
    
    (972) 361-1980
 Check 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 issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.YES [X] NO [   ] At April 30, 2004, the registrant had outstanding 6,595,232 shares of par value
$.01 common stock. Transitional Small Business Disclosure Format (check one): Yes
[   ] No [X] -1-




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TABLE OF CONTENTS  PART IFINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONITEM 3. CONTROLS AND PROCEDURESPART II-OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 2. CHANGES IN SECURITIESITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITS AND REPORTS ON FORM 8-KSIGNATURESCertification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive OfficerCertification of Chief Financial Officer    Table of Contents  WORLDQUEST NETWORKS, INC. 
 PART IFINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS. 
 WORLDQUEST NETWORKS, INC.
CONSOLIDATED BALANCE SHEETS March 31,
    
    December 31,2004
    
    2003(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    15,207,633
    
    
    $
    17,931,820Accounts receivable, net
    
    
    567,980
    
    
    
    553,251Note receivable
    
    
    2,000,000
    
    
    
    Prepaid expenses and other current assets
    
    
    513,499
    
    
    
    557,577Total current assets
    
    
    18,289,112
    
    
    
    19,042,648Property and equipment, net
    
    
    822,857
    
    
    
    1,039,783Other assets, net
    
    
    75,894
    
    
    
    101,192Total assets
    
    $
    19,187,863
    
    
    $
    20,183,623LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,469,060
    
    
    $
    1,108,152Accrued expenses
    
    
    482,081
    
    

    
    471,746Deferred revenue
    
    
    279,000
    
    
    
    254,121Total current liabilities
    
    
    2,230,141
    
    
    
    1,834,019Promissory note
    
    
    300,000
    
    
    
    300,000Commitments and contingenciesStockholders equity:Preferred stock, par value $0.01 per share:Authorized shares10,000,000; none issued and outstanding
at March 31, 2004 and December 31, 2003
    
    
    
    
    
    
    Common stock, par value $.01 per share:Authorized shares50,000,000; issued and outstanding
shares  6,595,232 at March 31, 2004 and
6,386,199 at December 31, 2003
    
    
    65,952
    
    
    
    63,862Additional capital
    
    
    42,612,270
    
    
    
    41,994,594Accumulated deficit
    
    
    (26,020,500
    )
    
    
    (24,008,852
    )Total stockholders equity
    
    
    16,657,722
    
    
    
    18,049,604Total liabilities and stockholders equity
    
    $
    19,187,863
    
    
    $
    20,183,623
 The accompanying notes are an integral part of these condensed consolidated financial statements. -2-




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WORLDQUEST NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) Three months ended March 31,2004
    
    2003Telephony revenue
    
    $
    2,005,118
    
    
    $
    2,276,780Financial services and other
    
    
    162,970
    
    
    
    145,425Total revenue
    
    
    2,168,088
    
    
    
    2,422,205Cost of revenue
    
    
    1,601,604
    
    
    
    1,792,865Gross profit
    
    
    566,484
    
    
    
    629,340Operating expenses:Selling, general and administrative
    
    
    2,406,797
    
    
    
    1,343,709Depreciation and amortization
    
    
    213,144
    
    
    
    301,897Total operating expenses
    
    
    2,619,941
    
    
    
    1,645,606Operating loss
    
    
    (2,053,457
    )
    
    
    (1,016,266
    )Interest income, net
    
    
    41,809
    
    
    
    62,090Net loss
    
    $
    (2,011,648
    )
    
    $
    (954,176
    )Net loss per share - basic and diluted
    
    $
    (0.31
    )
    
    $
    (0.15
    )Weighted average common shares outstanding - basic and diluted
    
    
    6,417,431
    
    
    
    6,386,199
 The accompanying notes are an integral part of these condensed consolidated financial statements. -3-




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WORLDQUEST NETWORKS, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY Common
    
    Additional
    
    Accumulated
    
    StockholdersShares
    
    Amount
    
    Capital
    
    Deficit
    
    EquityBalance at December 31, 2003
    
    
    6,386,199
    
    
    $
    63,862
    
    
    $
    41,994,594
    
    
    $
    (24,008,852
    )
    
    $
    18,049,604Exercise of employee stock options
    
    
    209,033
    
    
    
    2,090
    
    
    
    617,676
    
    
    
    
    
    
    
    619,766Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,011,648
    )
    
    
    (2,011,648
    )Balance at March 31, 2004
    
    
    6,595,232
    
    
    $
    65,952
    
    
    $
    42,612,270
    
    
    $
    (26,020,500
    )
    
    $
    16,657,722
 The accompanying notes are an integral part of these condensed consolidated financial statements. -4-




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WORLDQUEST NETWORKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) Three months ended March 31,2004
    
    2003Operating ActivitiesNet loss
    
    $
    (2,011,648
    )
    
    $
    (954,176
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    213,144
    
    
    
    301,897Loss on disposition of property and equipment
    
    
    16,522
    
    
    
    Asset write-downs
    
    
    60,000
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (14,729
    )
    
    
    (257,355
    )Accounts payable and accrued expenses
    
    
    371,243
    
    
    
    220,627Deferred revenue
    
    
    24,879
    
    
    
    81,238Other assets
    
    
    44,078
    
    
    
    (213,110
    )Net cash used in operating activities
    
    
    (1,296,511
    )
    
    
    (820,879
    )Investing ActivitiesAdditions to property and equipment
    
    
    (47,442
    )
    
    
    (113,557
    )Loan to Ntera Holding, Inc.
    
    
    (2,000,000
    )
    
    
    Net cash used in investing activities
    
    
    (2,047,442
    )
    
    
    (113,557
    )Financing ActivitiesProceeds from exercise of stock options
    
    
    619,766
    
    
    
    Decrease in cash and cash equivalents
    
    
    (2,724,187
    )
    
    
    (934,436
    )Cash and cash equivalents at beginning of period
    
    
    17,931,820
    
    
    
    20,721,207Cash and cash equivalents at end of period
    
    $
    15,207,633
    
    
    $
    19,786,771Supplemental
Disclosure of Cash Flow Information:Interest paid
    
    $
    1,094
    
    
    $
    
 The accompanying notes are an integral part of these condensed consolidated financial statements. -5-




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WORLDQUEST NETWORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  1.
    
    Basis of Presentation The accompanying unaudited condensed consolidated financial statements of
WorldQuest Networks, Inc. and subsidiaries (collectively, the Company) have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for annual financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included. The results for the interim periods presented

are not necessarily indicative of the results that may be expected for any
future period. The balance sheet at December 31, 2003 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The financial statements in this Form 10-QSB
should be read in conjunction with the financial statements and notes thereto
included in the Companys Annual Report on Form 10-KSB for the year ended
December 31, 2003.  2.
    
    Net Loss Per Share Stock options and warrants convertible into 1,649,856 and 1,835,947 shares
of the Companys common stock at March, 31, 2004 and 2003, respectively, are
excluded from the calculation of net loss per share as their effect would be
antidilutive.  3.
    
    Related Party Transactions The Companys founder, Chief Executive Officer and President holds a
controlling interest in Eagle Venture Capital, which owns approximately 2.6
million outstanding shares of the common stock of the Company as of March 31,
2004. A consulting company managed by one of the Companys directors holds
warrants outstanding to acquire 100,000 shares of the Companys common stock.
The warrants have an exercise price of $6.00 per share and expire in 2005.  4.
    
    Merger Agreement with Ntera Holdings On March 16, 2004, the Company entered into an Agreement and Plan of
Merger with Ntera Holdings, Inc., a Delaware corporation (Ntera), providing
for transactions that, once completed, will result in a change of control of
WorldQuest. The transaction will be accounted for as a reverse merger, and
under the terms of the Merger Agreement, Ntera will be merged with and into
WorldQuest, with WorldQuest as the surviving company (the Merger).
Stockholders of Ntera at the effective time of the Merger will be entitled to
receive 80% of the common stock of the combined company, with existing
WorldQuest stockholders owning the remaining 20%. The Merger has been
unanimously approved by the Boards of Directors of both WorldQuest and Ntera,
and is subject to various conditions to closing, including approval by the
holders of not less than a majority of WorldQuests outstanding common stock,
approval of continued listing of WorldQuests common stock on the Nasdaq Stock
Market, completion of audited financial statements for Nteras fiscal year
ended December 31, 2003, receipt of a bring-down of the fairness opinion
rendered to the Board of Directors of WorldQuest, WorldQuests approval of
Nteras financial performance and certain other conditions. In connection with the merger agreement, WorldQuest has also extended to
Ntera a bridge loan in the principal amount of $2 million bearing interest of
7% per annum. If the merger agreement is terminated for any reason, the full
amount of the loan and accrued interest will become due and payable within six
months of such termination. Ntera and certain of its subsidiaries have granted
WorldQuest a security interest in their assets to secure repayment of the loan.  5.
    
    Promissory Note The Company has borrowed $300,000 from a financial institution under a
term promissory note agreement (the Note). The Note bears interest at the
financial institutions prime rate as adjusted from time to time (4.00% at
March 31, 2004) less 2.25% per annum. The Note, is due in October 2005 and is
collateralized by a $300,000 certificate of deposit bearing interest of .95%
per annum. -6-




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WORLDQUEST NETWORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(UNAUDITED)  6.
    
    Stock-Based Compensation The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees, in the primary financial
statements and has provided supplemental disclosures required by Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation and by Statement of Financial Accounting Standards No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure an
amendment of FASB Statement No. 123. Statement of Financial Accounting Standards No. 123, Accounting for Stock
Based Compensation, (SFAS 123) requires the disclosure of pro forma net loss
and loss per share computed as if the Company had accounted for its employee
stock options under the fair value method set forth in SFAS 123. The following
table illustrates the effect on net loss and earnings per share as if the
Company had applied the fair value recognition provisions of SFAS 123. Three months ended March 31,2004
    
    2003Net loss as reported
    
    $
    (2,011,648
    )
    
    $
    (954,176
    )Less stock-based employee
compensation expense
    
    
    (107,800
    )
    
    
    (61,868
    )Pro forma net loss
    
    $
    (2,119,448
    )
    
    $
    (1,016,044
    )Earnings per share:As reported  basic and diluted
    
    $
    (0.31
    )
    
    $
    (0.15
    )Pro forma  basic and diluted
    
    $
    (0.33
    )
    
    $
    (0.16
    )
  7.
    
    Segment Reporting The Company manages its business segments primarily on a products and
services basis. The Companys reportable segments are: 1) Internet telephony
services and 2) financial services. Internet telephony services primarily
consist of the sale of virtual calling cards, which allow customers to utilize
our network of Internet gateways and other traditional networks to place
long-distance calls at discounted rates. We focus on the international long
distance market and a substantial portion of our telephony revenue is derived
from the sale of virtual calling cards to customers calling from the Unites
States to India. Financial services consist of a web service that enables
customers to send money and a personalized message from the United States to
friends, family, or others in India, Sri Lanka, Russia and The Philippines. In
addition, financial services include the sale of the WorldQuest cash card that
can be used to withdraw money or check balances at ATMs worldwide and to pay
for merchandise at any location associated with the Plus®, Pulse® or Star®
networks. The accounting policies of the segments are the same as those described in
the summary of significant accounting policies included in our financial
statements and notes thereto in the Companys Annual Report on Form 10-KSB for
the year ended December 31, 2003. The Company evaluates the performance of its
business units based on segment operating profit. Segment operating profits
includes personnel, sales and marketing expenses and other operating expenses
directly attributable to the segment and excludes certain expenses that are
managed outside the segment. Costs excluded from the segment operating profit
consist of corporate expenses, including interest income and interest expense.
Corporate expenses are primarily comprised of executive compensation, legal,
insurance and other general and administrative expenses that are separately
managed. Corporate assets are not included in segment assets and consist
primarily of cash and cash equivalents. -7-




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WORLDQUEST
NETWORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Continued)
(UNAUDITED) Summary information by segment for the three months ended March 31, 2004 is as
follows: Internet
    
    FinancialTelephony
    
    Services
    
    Corporate
    
    ConsolidatedThree months ended March 31, 2004:Revenue
    
    $
    2,005,118
    
    
    $
    162,970
    
    
    $
    
    
    
    $
    2,168,088Depreciation and amortization
    
    $
    138,956
    
    
    $
    65,415
    
    
    $
    8,773
    
    
    $
    213,144Operating income / (loss)
    
    $
    22,196
    
    
    $
    (252,799
    )
    
    $
    (1,822,854
    )
    
    $
    (2,053,457
    )Identifiable assets
    
    $
    866,217
    
    
    $
    1,149,499
    
    
    $
    17,172,147
    
    
    $
    19,187,863Three months ended March 31, 2003:Revenue
    
    $
    2,276,780
    
    
    $
    145,425
    
    
    $
    
    
    
    $
    2,422,205Depreciation and amortization
    
    $
    235,397
    
    
    $
    38,591
    
    
    $
    27,909
    
    
    $
    301,897Operating income / (loss)
    
    $
    (95,522
    )
    
    $
    (233,324
    )
    
    $
    (687,420
    )
    
    $
    (1,016,266
    )Identifiable assets
    
    $
    1,514,984
    
    
    $
    1,193,377
    
    
    $
    19,915,861
    
    
    $
    22,624,222
  9.
    
    Legal Matters 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 shall retain all
rights to the trademarks in question. WorldQuest has approximately five months
from March 31, 2004 to cease using the name WorldQuest. We are currently
evaluating potential corporate names and anticipate that a decision will be
made within the next five months. The Company is a defendant from time to time in lawsuits and disputes
arising in the ordinary course of business. The Company believes that
resolution of all known contingencies is uncertain, and there can be no
assurance that future costs related to such litigation would not be material to
the Companys financial position or results of operations. -8-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following discussion of the financial condition and results of
operations of WorldQuest Networks, Inc. should be read in conjunction with the
Managements Discussion and Analysis or Plan of Operation (including Risk
Factors That May Affect Results of Operations and Financial Condition) and the
Consolidated Financial Statements and the Notes thereto included in the
Companys Annual Report on Form 10-KSB for the year ended December 31, 2003. Forward-Looking Statements Certain statements in this report, including statements of WorldQuests
and managements expectations, intentions, plans and beliefs, including those
contained in or implied by Managements Discussion and Analysis or Plan of
Operation and the Notes to Condensed Consolidated Financial Statements, are
forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the Exchange Act), that are
subject to certain events, risks and uncertainties that may be outside
WorldQuests control. These forward-looking statements include statements of
managements plans and objectives for WorldQuests future operations and
statements of future economic performance, information regarding our expansion
and possible results from expansion, our expected growth, our capital budget
and future capital requirements, the availability of funds and our ability to
meet future capital needs, the realization of our deferred tax assets, and the
assumptions described in this report underlying such forward-looking
statements. Actual results and developments could differ materially from those
expressed in or implied by such statements due to a number of factors,
including, without limitation, those described in the context of such
forward-looking statements, our expansion and acquisition strategy, our ability
to achieve operating efficiencies, our dependence on network infrastructure,
capacity, telecommunications carriers and other suppliers, industry pricing and
technology trends, evolving industry standards, domestic and international
regulatory matters, general economic and business conditions, the strength and
financial resources of our competitors, our ability to find and retain skilled
personnel, the political and economic climate in which we conduct operations
and the risk factors described from time to time in our other documents and
reports filed with the Securities and Exchange Commission. Overview We are an international Internet telephony and money transfer company. Our
customers utilize our networks of Internet gateways and other traditional
networks to place long-distance calls online at discounted rates. We also sell
virtual calling cards processed through other companies platforms including
prepaid wireless and prepaid Internet and from time to time we sell our excess
capacity to other long distance carriers. Through our wholly-owned subsidiary,
buyindiaonline.com (known as Cash2India), we also provide a web service that
enables customers to send money and a personalized message from the United
States to friends, family, or others in India, Sri Lanka, Russia and The
Philippines over our Web and telephony networks. In 2002, we began selling the WorldQuest CashCard, a multi-purpose
stored-value card, and in 2003 we added the ability for customers to upgrade
their WorldQuest CashCard to a WorldQuest prepaid VISA®. The WorldQuest
CashCard and VISA® CashCard, can be used to withdraw money or check balances at
ATMs worldwide and to pay for merchandise at any location associated with the
Plus®, Pulse® or Star® Networks. The WorldQuest VISA® CashCard can be used
anywhere VISA® is accepted. Card holders can add money to their card via the
direct deposit of their paychecks, by cashing their paychecks, by ACH transfer
and by using cash, credit cards, or electronic checks. In addition, the
CashCards also serve as a prepaid long-distance calling card, which operates
using our telecom infrastructure. As of March 31, 2004, Eagle Venture Capital, LLC (Eagle Venture) owned
approximately 2.6 million, or 41%, of our outstanding shares of common stock.
Eagle Venture is primarily owned by our founder and Chief Executive Officer. Our primary source of revenue is the fees that we receive from our
telephony customers for completing calls over our network and processing fees
we receive for our money transfer service and on the usage of our cash card.
Our Internet telephony revenue is dependent on the volume of voice traffic
carried over the network, which is measured in terms of minutes of voice
traffic and the fees per minute of traffic we charge our customers. We
recognize this revenue in the period in which the call is completed. We bill
our retail customers on a prepaid basis through credit cards. Our money
transfer and cash card fees are dependent on the number of transactions
processed and the fees we charge per transaction. Money transfer fees are
recognized upon transfer of funds to the recipient. Cash card fees are
recognized upon usage of the cash card. Cost of telephony revenue consists primarily of data communication and
telecommunication expenses to terminate long distance traffic over our
networks, which vary proportionately with the volume of traffic carried over
our network. These costs include Internet related expenses to send voice
traffic over the Internet, fees we pay to terminate calls, fees we pay to
utilize the traditional telephone network to terminate our calls and expenses
incurred to connect our customers to our network. -9-




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Cost of money transfer and cash card revenue consists primarily of processing
fees and usage fees we pay for utilizing the Plus®, Pulse® or Star® networks
which varies proportionally with the number of transactions processed. Selling, general and administrative expenses consist of advertising and
promotional expenditures, payroll and related expenses for executive and
administrative personnel, facilities expenses, professional services expenses,
travel and other general corporate expenses. Merger Agreement with Ntera Holdings On March 16, 2004 the Company and Ntera Holdings, Inc., a Delaware
corporation (Ntera), entered into an Agreement and Plan of Merger dated as of
that date (the Merger Agreement), providing for transactions that, once
completed, will result in a change of control of WorldQuest. Under the terms of the Merger Agreement, Ntera will be merged with and
into WorldQuest, with WorldQuest as the surviving company (the Merger).
Stockholders of Ntera at the effective time of the Merger will be entitled to
receive 80% of the common stock of the surviving company, with existing
WorldQuest stockholders owning the remaining 20% of the common stock of the
surviving company. After consummation of the Merger, Mr. Engin Yesil, Nteras
controlling stockholder, will own approximately 35% of the outstanding shares
of the merged entity. The Merger has been unanimously approved by the Boards of Directors of
both WorldQuest and Ntera, and is subject to various conditions to closing,
including approval by the holders of not less than a majority of WorldQuests
outstanding common stock, approval of continued listing of WorldQuests common
stock on the Nasdaq Stock Market, completion of audited financial statements
for Nteras fiscal year ended December 31, 2003, receipt of a bring-down of
the fairness opinion rendered to the Board of Directors of WorldQuest,
WorldQuests approval of Nteras financial performance and certain other
conditions. Michael Adler, who, as sole shareholder of Eagle Venture Capital,
LLC, beneficially owns approximately 42% of WorldQuests stock, has executed a
Voting Agreement and Irrevocable Proxy, dated as of March 16, 2004 (the Voting
Agreement), whereby he has agreed to vote his shares in favor of the Merger so
long as the Merger Agreement has not been terminated. The stockholders of
Ntera have already approved the Merger. Under the terms of the Merger Agreement, the Board of Directors of the
surviving company will consist of WorldQuests four current directors (or their
successors), and three new directors named by Ntera. In addition, Mr. Yesil
has agreed in the Merger Agreement not to exercise his voting rights with
respect to any shares of the surviving company to alter the composition of its
Board of Directors until the earlier of WorldQuests 2005 annual meeting of
stockholders or June 30, 2005. In connection with the Merger, WorldQuest intends to relocate its
executives to Nteras headquarters in Miami, Florida. On March 16, 2004, R.
Stephen Polley resigned as President, Chief Executive Officer and a director of
WorldQuest because of his desire to not relocate to Miami. Gary W. Fiedler
also notified WorldQuest of his resignation from his position as a director of
WorldQuest, effective as of March 10, 2004. As a result, B. Michael Adler,
formerly Chairman of the Board of WorldQuest, was elected President and Chief
Executive Officer of WorldQuest, and Robert A. Farmer, an existing member of
WorldQuests Board, was elected Chairman of the Board of WorldQuest and also
chairman of WorldQuests Audit Committee. Under the terms of the Merger
Agreement, both gentlemen will continue in those roles after completion of the
Merger. Also under the terms of the Merger Agreement, Mr. Yesil will serve as
President of Business Development of the surviving company but will not serve
on its Board of Directors and Victor E. Grijalva, Vice President and Chief
Financial Officer of WorldQuest, will continue as Vice President and Chief
Financial Officer of the surviving company. The transaction, when consummated, will create a company with the quality,
scale and technology needed to capitalize on the growing demand for consumer
and carrier-grade voice over Internet protocol (VoIP) solutions. The combined
company expects to generate more than $150 million in diversified annual
revenues, anchored by a wholesale business that is complemented by a
higher-margin retail component. Nteras VoIP network currently interconnects 100 cities in the United
States, 100 cities in Mexico, and 23 Canadian cities along with other major
cities around the world through a 300,000-port TDM and 75,000-port VoIP
switching platform that is controlled through proprietary soft-switch
intelligence with current network capacity in excess of 4 billion minutes a
month. -10-




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Targeted benefits of the proposed transaction include:  -
    
    The creation of a publicly traded company with a revenue base
expected to be more than $150 million a year, with a diversified
revenue stream that includes a higher-margin retail business in
addition to a wholesale business presently terminating 2.4 billion
minutes a quarter.-
    
    Higher margins due to Nteras proprietary, low-cost telecom
network.-
    
    The opportunity for WorldQuest and Ntera to realize cost-saving
synergies through the consolidation of redundant operations and
infrastructure.-
    
    The addition of an attractive technology platform that
WorldQuest can leverage to roll out new products and services to fuel
future growth.-
    
    The addition of an attractive technology platform that
WorldQuest can leverage to roll out new products and services to fuel
future growth.-
    
    Opportunity to significantly expand exposure of WorldQuests
VISA® stored-value card to consumers through Nteras POS technology
and distribution network of more than 5,000 retail outlets. Value Communications Transaction In April 2004, the Company purchased from Value Communications Corporation
(ValuCom), a wholly owned subsidiary of Rediff.com India Limited (Rediff)
certain assets consisting primarily of ValuComs brand, trademarks, web sites,
internally built software, customer lists and certain hardware for $500,000.
The Company paid $200,000 of the total consideration at closing with the
remaining $300,000 to be paid in twelve monthly installments of $25,000
commencing May 2004. ValuCom generated revenue in excess of $4.5 million for
the calendar year 2003. Separately, in April 2004, the Company entered into an
advertising agreement with Rediff.com, Inc. entitling WorldQuest to exclusive
rights to prominent online advertising space on the Rediff.com U.S website, the
premier online destination for Indians in North America. Critical Accounting Policies The Companys significant accounting policies are summarized in Note 2 of
its consolidated financial statements included in the Companys Annual Report
on Form 10-KSB for the year ended December 31, 2003. While all these
significant accounting policies impact its financial condition and results of
operations, the Company views certain of these policies as critical. Policies
determined to be critical are those policies that have the most significant
impact on the Companys financial statements and require management to use a
greater degree of judgment and/or estimates. Actual results may differ from
those estimates. The Company believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause a material effect on the Companys
consolidated results of operations, financial position or liquidity for the
periods presented in this report. The accounting policies identified as
critical are as follows: Revenue Recognition The Company recognizes revenues in accordance with generally accepted
accounting principles as outlined in SAB No. 101 which requires that four basic
criteria be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists, (2) product delivery, including customer acceptance, has
occurred or services have been rendered, (3) the price is fixed or determinable
and (4) collectibility is reasonably assured. We bill our telephony calling
card customers on a prepaid basis through credit cards and recognize the
revenue in the period in which the call is completed. A substantial portion of
the Companys revenues is derived from the sale of prepaid phone cards that
terminate in India. Money transfer fees are recognized upon transfer of funds
to the recipient. Cash card fees are recognized upon usage of the cash card. Property and Equipment Property and equipment are depreciated over their useful lives. Useful
lives are based on managements estimates of the period that the assets will
generate revenue. Any change in conditions that would cause management to
change its estimate as to the useful lives of a group or class of assets may
significantly impact the Companys depreciation expense on a prospective basis. -11-




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Web Site Development Costs Our products and services are sold predominantly through our web sites. We
incur costs to maintain and add new functionality to our existing web sites and
to develop new web sites. Costs related to the planning and post
implementation phases of our web site development efforts are expensed. Direct
costs incurred in the development phase are capitalized and amortized over the
products estimated useful life of one to three years, which is included in
depreciation expense. Costs associated with minor enhancements and maintenance
for web sites are expensed. Income Taxes As of March 31, 2004, we had approximately $25,134,000 of net operating
loss carry forwards for federal income tax purposes, which expire beginning in
2011. We have not recognized an income tax benefit for our losses because of
uncertainty regarding future realizability and we have provided a full
valuation allowance on our deferred tax assets. Results of Operations Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003 Revenue Revenue decreased approximately 10% to $2,168,000 for the three months
ended March 31, 2004 from $2,422,000 for the three months ended March 31, 2003.
This $254,000 decrease is due to a $272,000 decrease in telephony revenues
offset by a $18,000 increase in financial services and other revenue. The
decrease in telephony revenue is attributable to a decrease in the average
price per minute charged to our customers, a substantial portion of which are
calling from the United States to India, which has decreased to 16.3 cents per
minute of use in the first quarter of 2004 from 21.3 cents in the first quarter
of 2003. The decrease in the price per minute has been partially offset by a
15% increase in the minutes of use, which has increased to 12.3 million minutes
for the three months ended March 31, 2004 from 10.7 million minutes for the
three months ended March 31, 2003. The Indian international telephony market continues to experience downward
pricing pressures and it is unlikely that this trend will reverse in the near
future. In light of this trend, we are focused on capturing and retaining
customers who desire quality, feature rich, and cost effective services and are
willing to pay a reasonable premium for these services. Also, we expect
revenues to increase in the second quarter of 2004 due to the addition of the
ValuCom assets in April 2004. The increase in financial services and other revenues is due primarily to
the increase in money transfer transactions processed due to the growth in our
Cash2India customer base and an increase in frequency of use by existing
customers. During the three months ended March 31, 2004 we processed over 7,800
transactions and remitted $4,473,000 compared to over 6,300 transactions and
remittances of $3,723,000 for the three months ended March 31, 2003. Cost of Revenue Cost of revenue decreased approximately 11% to $1,602,000 for the three
months ended March 31, 2004 from $1,793,000 for the three months ended March
31, 2003. This $191,000 decrease is attributable to a corresponding decrease in
the price per minute to terminate long distance traffic partially offset by an
increase in the minutes of use. The gross profit percentage for the quarter
ended March 31, 2004 was approximately 26% which remains unchanged from the
year ago quarter. Selling, General and Administrative Selling, general and administrative expenses increased approximately 75%
to $2,407,000 for the three months ended March 31, 2004 from $1,344,000 for the
three months ended March 31, 2003. This $1,063,000 increase is due primarily
to cost incurred in the Ntera Holdings merger agreement. We have incurred
transactions fees with respect to this merger of approximately $1,167,000
comprised of the following: legal fees ($375,000), investment banking fees
($134,000), severance and other personnel cost ($574,000), accounting fees
($26,000), and other administrative expenses ($58,000). Selling, general and
administrative expense also includes an impairment charge of approximately
$60,000 related to certain stored value equipment that is no longer in use.
Selling, general and administrative expenses for the 2003 quarter include a
benefit of $125,000 in connection with the Companys Qwest settlement (see Item
1  Legal Proceedings in Part II of this Report). -12-




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We expect selling, general, and administrative expenses will be
significantly lower commencing in the second quarter of 2004 as the majority of
the expected costs to be incurred with the Ntera merger were incurred in the
first quarter of 2004. We also expect personnel cost to be lower due to the
reduction of staffing levels from 25 full-time employees at December 31, 2003
to 19 full-time employees at March 31, 2004. Depreciation and Amortization Depreciation and amortization decreased approximately 29% to $213,000 for
the three months ended March 31, 2004 from $302,000 for the three months ended
March 31, 2003. The decrease in depreciation and amortization is primarily
attributable to certain depreciable assets becoming fully depreciated in 2003.
Also, effective January 1, 2004 the Company changed its estimated useful life
from 3 years to 5 years for certain switching and Internet gateway equipment
which had a remaining life of 1.3 years and a net book value of $135,000 at the
date of the change in estimate. Interest Income, Net Interest income, net consists of interest earned on cash and cash
equivalents less interest expense on borrowings. Interest earned on cash and
cash equivalents decreased to $43,000 for the three months ended March 31, 2004
from $63,000 for the three months ended March 31, 2003. This decline is due to
an overall decrease in short-term interest rates in the United States financial
markets and to a decrease in the average cash balance invested. Interest
expense for the 2004 quarter totaled approximately $1,000 compared to $1,000 in
the comparable 2003 quarter. Net Loss We incurred a net loss of $2,012,000 for the three months ended March 31,
2004 compared to a net loss of $954,000 for the three months ended March 31,
2003. The increase in net loss for the 2004 quarter is primarily attributable
to transaction costs of approximately $1,167,000 incurred with the Ntera
Holdings merger and to a lesser extent, a $63,000 decrease in gross profit and
a $20,000 decrease in interest income offset by a $89,000 decrease in
depreciation and amortization. Commencing with the second quarter of 2004, we expect our net loss to
reduce significantly as the majority of the expected expenses related to the
Ntera merger were incurred in the first quarter of 2004. We also expect to
reduce our loss by lower personnel cost stemming from the reduction in staffing
levels and the addition of ValuCom revenues commencing in April 2004. Liquidity and Capital Resources As of March 31, 2004, we had approximately $15,208,000 of cash and cash
equivalents and working capital of approximately $16,059,000. We generated
negative cash flow from operating activities of approximately $1,297,000 during
the three months ended March 31, 2004, compared with negative cash flow from
operating activities of approximately $821,000 during the three months ended
March 31, 2003. Net cash used in operating activities for the 2004 and 2003
periods primarily consisted of net operating losses as well as changes in
working capital. The $476,000 decrease in cash flow from operating activities
in the 2004 period from the 2003 period is due primarily to transaction costs
incurred in connection with the Ntera Holdings merger. Cash used in investing activities was $2,047,000 for the three months
ended March 31, 2004 and $114,000 for the three months ended March 31, 2003.
Cash used in investing activities for the three months ended March 31, 2004
includes a $2,000,000 loan made to Ntera Holdings in connection with the merger
agreement. The loan bears interest at 7% per annum and Ntera and certain of
its subsidiaries have granted WorldQuest a security interest in their assets to
secure repayment of the loan. If the merger agreement is terminated for any
reason, the full amount of the loan and accrued interest will become due and
payable within six months of such termination. In 2001, we borrowed $300,000 from a financial institution under a term
promissory note agreement (the Note). The Note bears interest at the
financial institutions prime rate as adjusted from time to time (4.00% at
March 31, 2004) less 2.25% per annum. The Note is due in October 2005 and is
collateralized by a $300,000 certificate of deposit bearing interest of 0.95%
per annum. -13-




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In April 2004, we provided ValuCom an irrevocable letter of credit for
$300,000 as security for the remaining consideration to be paid for the
purchase of certain ValuCom assets. The remaining consideration is to be paid
in twelve monthly installments of $25,000 commencing in May 2004. The letter
of credit is secured by a $300,000 deposit in a money market fund. The amount
of the letter of credit and the security deposit shall reduce as the monthly
installments are paid. Also, in April 2004, we provided Rediff.com, Inc. an
irrevocable letter of credit for $600,000 as security for the Companys
obligation to pay $50,000 per month commencing in May 2004 for advertising
services. The letter of credit is secured by a $600,000 deposit in a money
market fund. The amount of the letter of credit and the security deposit shall
reduce as the monthly installments are paid. We currently anticipate that our existing cash resources will be
sufficient to meet our anticipated needs for working capital and capital
expenditure requirements through at least the next 24 months. We may need to
raise additional funds prior to the expiration of such period if, for example,
we pursue business or technology acquisitions or experience operating losses
that exceed our current expectations. If we raise additional funds through the
issuance of equity, equity-related or debt securities, such securities may have
rights, preferences or privileges senior to those of the rights of our common
stock and our stockholders may experience additional dilution. We cannot be
certain that additional financing will be available to us on favorable terms
when required, or at all. Income Taxes As of March 31, 2004, we had approximately $25,134,000 of net operating
loss carry-forwards for federal income tax purposes, which expire beginning in
2011. We have not recognized an income tax benefit for our losses because of
uncertainty regarding future profitability; therefore, at March 31, 2004, we
have provided a full valuation allowance on our deferred tax assets of
approximately $9,482,000. Limitations on the utilization of these
carry-forwards may result if we experience a change of control, as defined in
the Internal Revenue Code of 1986, as amended, as a result of changes in the
ownership or our common stock. 
 ITEM 3. CONTROLS AND PROCEDURES In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an
evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this Report on Form 10-QSB. Based on that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of March 31, 2004 to
provide reasonable assurance that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commissions rules and forms. There has been no change in our internal controls over financial reporting
that occurred during the three months ended March 31, 2004 that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting. -14-




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PART II-OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS In December 1996, we 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. In July
2000, 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 cashcard product infringes on the Qwest
trademark. In February 2003, the companies settled all outstanding claims
whereby WorldQuest will receive a cash payment and services from Qwest and
Qwest shall retain all right to the trademarks in question. WorldQuest has
approximately five months from March 31, 2004 to cease using the name
WorldQuest. We are currently evaluating potential corporate names and
anticipate that a decision will be made within the next five months. The Company is a defendant from time to time in lawsuits and disputes
arising in the ordinary course of business. We are not involved in any other
material legal proceedings at this time. 
 ITEM 2. CHANGES IN SECURITIES The effective date of our first registration statement, filed on Form SB-2
under the Securities Act of 1933 (no. 333-93019) relating to our initial public
offering of our Common Stock, was February 4, 2000. A total of 3,162,500
shares of our Common Stock were sold at a price of $13.00 per share. Net
proceeds to WorldQuest were approximately $36.3 million. From the time of
receipt through March 31, 2004, the net proceeds were applied toward:  -
    
    Repayment of indebtedness, $4,498,000;-
    
    Equipment purchases including additional back-up systems, $4,403,000;-
    
    Merger and acquisition related, $2,550,000;-
    
    Software development, $781,000; and-
    
    General corporate purposes, including operating losses, payment of
outstanding payables, payoffs of capital leases, liability insurance
premiums, development of strategic relationships and research and
development of new products, $8,860,000. The remaining proceeds are being used as working capital or are being held
in high quality, short-term investment instruments such as short-term corporate
investment grade or United States Government interest-bearing securities. Of the $4,498,000 paid for repayment of indebtedness, $1,440,000 was paid
to Eagle Venture Capital, LLC, which owns approximately 41% of our Common Stock
and is controlled by B. Michael Adler, our Chief Executive Officer and
President. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. 
 ITEM 5. OTHER INFORMATION Not applicable. -15-




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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.  (a)
    
    The following exhibits are filed as a part of this Report on
Form 10-QSB pursuant to Item 601 of regulation S-B: ExhibitNumber
    
    Description of Exhibits2.1
    
    Agreement and Plan of Merger, dated as of December 6, 2001, by and among WorldQuest, WQN
Mercury Inc., WQN Mercury Sub Inc., and buyindiaonline.com Inc.,
filed as exhibit 2.1 to WorldQuests Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2001, and incorporated herein
by this reference.2.2
    
    Agreement and Plan of Merger, dated as of March 16, 2004, among
WorldQuest, Ntera Holdings,
Inc. and Engin Yesil, filed as exhibit 2.1 to WorldQuests Current
Report on Form 8-K/A dated March 19, 2004, as amended, and
incorporated herein by this reference.3.1
    
    Certificate of Incorporation of WorldQuest, filed as Exhibit 3.1 to
WorldQuests Form SB-2 Registration Statement, File No. 333-82721 (the
Prior Registration Statement), and incorporated herein by this
reference.3.2
    
    Bylaws of WorldQuest, filed as Exhibit 3.2 to the Prior Registration
Statement, and incorporated herein by this reference.4.1
    
    Specimen common stock certificate, filed as Exhibit 4.1 to the Prior
Registration Statement, and incorporated herein by this reference.4.2
    
    Amended and Restated Note dated May 5, 1999 payable to WorldQuest
Networks, LLC (now known as Eagle Venture Capital, LLC), filed as Exhibit
4.2 to the Prior Registration Statement, and incorporated herein by this
reference.4.3.1
    
    Representatives Warrant dated February 4, 2000 granted to John G.
Kinnard and Company Incorporated for 68,750 shares of common stock, filed
as Exhibit 4.3.1 to WorldQuests Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1999, and incorporated herein by this
reference.4.3.2
    
    Representatives Warrant dated February 4, 2000 granted to Kaufman
Bros., L.P. for 178,750 shares of common stock, filed as Exhibit 4.3.2 to
WorldQuests Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999, and incorporated herein by this reference.4.3.3

    
    Representatives Warrant dated February 4, 2000 granted to WestPark
Capital, Inc. for 27,500 shares of common stock, filed as Exhibit 4.3.3 to
WorldQuests Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999, and incorporated herein by this reference.4.4
    
    Amended and Restated Note date August 15, 1999 payable to Eagle Capital
Venture, LLC, which replaces the Amended and Restated Note filed as
Exhibit 4.2, filed as Exhibit 4.4 to the Prior Registration Statement, and
incorporated herein by this reference.4.5
    
    Form of Unsecured Subordinated Convertible Promissory Note issued in the
private placement closed in December 1999 (the Private Placement), filed
as Exhibit 4.5 to WorldQuests Form SB-2 Registration Statement, file no.
333-93019 (the Second Registration Statement), and incorporated herein
by this reference.4.6
    
    Form of Warrant issued in the Private Placement, filed as Exhibit 4.6 to
the Second Registration Statement, and incorporated herein by this
reference.4.7
    
    Warrant to Purchase 50,000 shares of common stock granted to Advanced
Multimedia Group, Inc. on March 16, 2000.4.8
    
    Warrant to Purchase 50,000 shares of common stock granted to Advanced
Multimedia Group, Inc. on April 26, 2000.10.1
    
    Joint Venture Agreement dated April 9, 1999 between WorldQuest and BDC
LLC, filed as Exhibit 10.1 to the Prior Registration Statement, and
incorporated herein by this reference.10.2
    
    Amended 1997 Stock Option Plan, filed as Exhibit 10.2 to the Prior
Registration Statement, and incorporated herein by this reference.10.3
    
    Stock Option Agreement dated December 7, 1998 granted to Michael R.
Lanham by WorldQuest, filed as Exhibit 10.3 to the Prior Registration
Statement, and incorporated herein by this reference.10.4
    
    Stock Transfer Agreement dated December 7, 1998 between WorldQuest
Communications, Inc., WorldQuest Networks, LLC and WorldQuest, filed as
Exhibit 10.4 to the Prior Registration Statement, and incorporated herein
by this reference.10.5
    
    Amendment and Clarification Agreement dated September 27, 1999 between
WorldQuest Communications, Inc., WorldQuest and Eagle Venture Capital, LLC
amending and clarifying the Stock Transfer Agreement filed as Exhibit
10.4, filed as Exhibit 10.7 to the Prior Registration Statement, and
incorporated herein by this reference.10.6
    
    Form of Registration Rights Agreement executed in connection with the
Private Placement, filed as Exhibit 10.6 to the Second Registration
Statement, and incorporated herein by this reference.
 -16-




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ExhibitNumber
    
    Description of Exhibits10.7
    
    Purchase Agreement dated April 17, 2000 between WorldQuest and BDC LLC,
filed as Exhibit 10.1 to WorldQuests Quarterly Report on Form 10-QSB for
the fiscal quarter ended March 31, 2000, and incorporated herein by this
reference.10.8
    
    2001 Stock Option Plan, filed as Exhibit 4.8 to WorldQuests Form S-8
Registration Statement, File No. 333-54498, and incorporated herein by
this reference.10.9
    
    Employment agreement by and between WorldQuest Networks, Inc. and R.
Stephen Polley effective as of May 14, 2001, filed as Exhibit 10.1 to
WorldQuests Quarterly Report as Form 10-QSB for the quarter ended June
30, 2001.10.10
    
    2002 Stock Option Plan.*31.1
    
    Certification of the Companys Chief Executive Officer, pursuant to
Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of the Companys Chief Financial Officer, pursuant to
Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of the Companys Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*32.2
    
    Certification of the Companys Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
   *
    
    Filed herewith.  (b)
    
    Reports on Form 8-KThe Company filed a Current report on Form 8-K dated March 25, 2004
to furnish in accordance with Securities Exchange Commission Release
No. 33-8126 under Item 12, Results of Operations and Financial
Condition, the Companys press release announcing its financial
results for the year ended December 31, 2003. The Company filed a
Current report on Form 8-K/A dated March 19, 2004 to furnish in
accordance with Securities Exchange Commission Release No. 33-8126
under Item 1 and Item 5, Changes in Control of Registrant and
Other Events, the Companys announcement of its Agreement and Plan
of Merger with Ntera Holdings, Inc. dated March 16, 2004. The
Company filed a Current report on Form 8-K dated March 17, 2004 to
furnish in accordance with Securities Exchange Commission Release
No. 33-8126 under Item 1 and Item 5, Changes in Control of
Registrant and Other Events, the Companys announcement of its
Agreement and Plan of Merger with Ntera Holdings, Inc. dated March
16, 2004. 
 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
there-unto duly authorized. WORLDQUEST NETWORKS, INC.May 14, 2004
    By:
    /s/ Victor E. GrijalvaVictor E. GrijalvaVice President, Chief
Financial Officer, Secretary
and Treasurer
(Principal Financial and Accounting Officer) -17-