WARRANT CANCELLATION AGREEMENT

This WARRANT CANCELLATION AGREEMENT (the " Agreement ") is made and entered into as of the 19th day of December, 2005 by and among QSGI INC., a corporation organized and existing under the laws of the State of Delaware (“ QSGI ” or the “ Company ”) and BARRON PARTNERS LP (hereinafter referred to as “ Investor ”).

WHEREAS , Investor is the holder of a Common Stock Purchase Warrant dated May 18, 2004 which is currently exercisable to purchase up to 1,866,667 shares of the Company’s Common Stock for $1.50 per share and the holder of a Common Stock Purchase Warrant dated May 18, 2004 which is currently exercisable to purchase up to 2,416,667 shares of the Company’s Common Stock for $3.60 per share (together the “Warrants”); and

WHEREAS, the Investor and the Company intent to memorialize this Agreement whereby the Warrants shall be cancelled for the consideration set forth herein; and

NOW, THEREFORE , in consideration of the mutual covenants and premises contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby conclusively acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.1   Incorporation by Reference . The foregoing recitals are hereby acknowledged to be true and accurate and are incorporated herein by this reference.

1.2   Superseder . This Agreement is the full and complete agreement between the parties relating to the Warrants and shall supersede any other instrument or understanding to the fullest extent permitted by law. A copy of this Agreement shall be filed at the Company’s principal office.

3.1   Closing Date   The closing of the transactions contemplated by this Agreement shall be held at the offices of the Company in Palm Beach, Florida at 10:00 a.m. local time, on December 19, 2005 or on such other date and at such other place as may be mutually agreed by the parties. Document signatures may be transmitted by facsimile with originals to follow.

3.2   Deliveries by the Company . In addition to and without limiting any other provision of this Agreement, the Company agrees to deliver, or cause to be delivered, to the Investor the following:

3.3   Deliveries by Investor. In addition to and without limiting any other provision of this Agreement, Investor agrees to deliver, or cause to be delivered, to the Company the following:

In the event any document provided to the other party pursuant to Articles 3.2 and 3.3 herein are provided by facsimile, the party shall forward an original document to the other party within seven (7) business days of Closing.

3.4   Further Assurances . The Company and Investor shall, upon request, on or after the Closing Date, cooperate with each other by furnishing any additional information, executing and delivering any additional documents and/or other instruments and doing any and all such things as may be reasonably required to consummate or otherwise implement the transactions contemplated by this Agreement

The Company represents and warrants to the Investor (which warranties and representations shall survive the Closing regardless of examinations, inspections, audits and other investigations the Investor has heretofore made or may hereinafter make with respect to such warranties and representations) as follows:

4.1   Organization and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.

4.2   Authority to Enter Into Agreement . The Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby except as disclosed in this Agreement. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, or other

 similar laws affecting the enforcement of creditors' rights generally and general principles of equity.

4.3   No Conflict; Required Filings and Consents .   The execution and delivery of this Agreement by the Company does not, and the performance by the Company of the obligations hereunder will not: (i) conflict with or violate the Articles or By-Laws of the Company; (ii) conflict with, breach or violate any federal, state, foreign or local law, statute, ordinance, rule, regulation, order, judgment or decree (collectively, " Laws ") in effect as of the date of this Agreement and applicable to the Company; or (iii) result in any breach of, constitute a default (or an event that with notice or lapse of time or both would become a default) under, give to any other entity any right of termination, amendment, acceleration or cancellation of, require payment under, or result in the creation of a lien or encumbrance on any of the properties or assets of the Company pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party. Excluding from the foregoing are such violations, conflicts, breaches, defaults, terminations, accelerations, creations of liens, or incumbency that would not, in the aggregate, have a material adverse effect upon the Company.

4.4   Brokers . No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.

4.5   SEC Documents . Investor acknowledges that the Company is a publicly held company and has made available to the Investor true and complete copies of any requested SEC Documents. The Company has registered its Common Stock pursuant to Section 12 of the 1934 Act, and the Common Stock is listed and traded on the Pacific Exchange. The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for such listing, and the Company has maintained all requirements for the continuation of such listing. The Company has not provided to the Investor any information that, according to applicable law, rule or regulation, should have been disclosed publicly prior to the date hereof by the Company, but which has not been so disclosed. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and rules and regulations of the SEC promulgated thereunder and the SEC Documents did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

4.6   Full Disclosure . No representation or warranty made by the Company in this Agreement and no certificate or document furnished or to be furnished to the Investor pursuant to this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading.

4.7   Patriot Act .   The Company and Investor certify that they have not been

designated, and are not owned or controlled by, a “suspected terrorist” as defined in Executive Order 13224. The parties seek to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Company hereby represents and warrants that: (i) none of the cash that the Company will pay to Investor will or has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; (ii) no disbursement by the Company to the Investor, to the extent within the Company’s control, shall cause any party to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001; (iii) the Company has complied with the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 and/or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 and the Company’s business is not derived from, or related to, any activity that is deemed criminal under United States law. The Company shall promptly notify the Investor if any of these representations ceases to be true and accurate regarding the Company. The Company agrees