UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

(Mark One)

[ x ] Annual report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934

                 For the fiscal year ended December 31, 2004

[   ] Transition report under Section 13 or 15(d) of the Securities Exchange
      Act of 1934

For the transition period from                   to
                               ------------------   -------------------

Commission file number 000-33327




                           Y-TEL INTERNATIONAL, INC.
                 (Name of Small Business Issuer in Its charter)

             Delaware                                          134151225
      (State or Other Jurisdiction of                        (IRS Employer
      Incorporation or Organization)                       Identification No.)

      1100 NW 163rd Drive
      N. Miami Beach FL                                          33169
(Address of Principal Executive Offices)                      (Zip Code)


                                 (305) 623-1140
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:

    Title Of Each Class             Name Of Each Exchange On Which Registered
    --------------------            -----------------------------------------
         None                                        None

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, Par Value $.001 Per Share
                                (Title of Class)


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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

                                     - 1 -
<PAGE>
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $1,249,380.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed based on the average bid and asked prices of such common
equity, as of March 31, 2005 was $13,597,549.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

The number of shares outstanding of the Issuer's common stock, $.001 par value
per share, as of March 31, 2005 was 16,273,438 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

Transitional Small Business Disclosure Format: Yes [ ] No [ ]



































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<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                                   FORM 10-KSB
                                Table of Contents
                                -----------------                       Page
Item                                                                  Number
----                                  PART I                          ------
1.  Description of Business                                             4
2.  Description of Property                                             6
3.  Legal Proceedings                                                   7
4.  Submission of Matters to a Vote of Security Holders                 7


                                      PART II

5.  Market for Common Equity and Related Stockholder Matters            8
6.  Management's Discussion and Analysis or Plan of Operation           10
7.  Financial Statements                                                14
8.  Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure                                              14

8A. Controls and Procedures                                             14
8B. Other Information                                                   15


                                     PART III

9.  Directors and Executive Officers of the Registrant                  15
10. Executive Compensation                                              19
11. Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters                                   22
12. Certain Relationships and Related Transactions                      23
13. Exhibits and Reports on Form 8-K                                    23
14. Principal Accountant Fees and Services                              24

Signatures                                                              25

Audited Consolidated Financial Statements                               F-1


PRELIMINARY NOTE: This Annual Report on Form 10-KSB contains forward-looking
statements relating to our goals, beliefs, plans or current expectations and
other statements that are not historical facts. For example, when we use words
such as "project," "believe," "anticipate," "plan," "expect," "estimate,"
"intend," "should," "would," "could" or "may," or other words that convey
uncertainty of future events or outcome, we are making forward-looking
statements. We refer you to the caption entitled "Trends, Risks and
Uncertainties" in Item 6 of Part II for important factors that could cause
actual results to differ materially from those indicated by our forward-looking
statements made herein and presented elsewhere by management. Such
forward-looking statements represent management's current expectations and are
inherently uncertain. We do not undertake any obligation to update
forward-looking statements made by us.





                                     - 3 -

<PAGE>
                                     PART I

Item 1.  Description of Business.

Overview

Y-Tel International, Inc (YTLI:OTC/BB) ("we," "us", "Y-Tel", or the "Company")
was incorporated as Consolidated Pictures Corp. ("CPC") in January 2001. On
October 13, 2004, CPC acquired all of the issued and outstanding capital stock
of Y-Tel International, LLC in a reverse merger transaction and on December 26,
2004 changed its name to Y-Tel International, Inc.

Y-Tel is in the international telecommunications and Voice for WIFI over Land
("VoWLAN") industries with telecom HUBS located in Miami, Florida and Panama
City, Panama. The Company's growth strategy is to become a leading provider of
international wholesale long distance and Wifi VoWLAN services. These segments
include telecommunications traffic originating from fiber, satellite, internet,
VOIP and Wifi.

Growth Strategy
The Company's growth strategy focuses on strategic alliances and acquisitions
within the related business segments.

International Wholesale Long Distance Industry Segment
Y-Tel has created a strategic alliance with the fastest growing cellular
provider in the Caribbean region. The provider is under contract with the
Company and is the Company's sole customer at the present time. The annual
contract terminated on January 20, 2005 at which time it converted to a month to
month contract. This relationship will become the catalyst for expansion
throughout the Caribbean islands. Strategic alliances with other carriers,
within the telecom industry will enable the Company to capture a significant
part of the market share in selected, underserved regions around the world.

Competition in the International Wholesale Long Distance Industry
The wholesale telecom industry is not new to competition. There are many
profitable companies competing around the world today. Some try to offer better
rates while others focus on quality and reliability. The cliche of "you get what
you pay for" seems to really apply in this industry. However, Y-Tel's strategy
for beating the competition focuses on a combination of service, cost, quality
and reliability. The Company prides itself in being able to meet the specific
needs of its customers within a timely manner. Secondly, the Company is
currently developing plans to control its own tier 1 routes to ensure the
highest quality at the lowest price. These activities Combined with a strategy
of key alliances, will help the Company's goal of quick penetration in selected
markets around the world.

Wifi VoWLAN Industry Segment
The Company has formed a strategic alliance with EBI Communications, Inc in the
form of an exclusive distributor agreement for their new Wifi VoWLAN product.
This alliance enables the Company to target customers seeking lower
international long distance costs through the use of the Company's new Wifi
phones and VoWLAN networks. The new phones will be used by international
travelers placing calls in one of 40,000 Wifi hotspots located around the world.




                                     - 4 -

<PAGE>
Y-Tel has also completed an Agreement with KBMP Communications for the
development of a WiFi network throughout the Bahamas Islands. Customers will get
excellent coverage within the network and experience a substantial cost savings,
because a minute of WiFi airtime costs only a fraction of what a cellular call
costs. The cost savings is magnified exponentially when making international
calls, such as international travelers calling home. For example, the average
call from a hotel room in Panama City, Panama to the United States averages
$2.75/minute; but the same call, in the same Hotel, using a WiFi phone across
the WiFi network would only cost $.25/minute.

Competition in the Wifi VoWLAN Industry
The Wifi VoWLAN industry is a much different competitive environment. Many
believe the technology for delivering voice over a Wifi network is not readily
available and thus, the competition in the marketplace is not in full swing.

Acquisitions
An integral part of Y-Tel's aggressive growth strategy is acquisition of
strategic, specialized, profitable and well- managed companies currently
operating within these two industries. The Company is currently evaluating
several companies as acquisition candidates for FY 2005.

Regulatory Matters

General

The telecommunications industry is subject to various federal, state and local
laws. The Company is in full compliance with both domestic and international
laws.

Business Background

Consolidated Pictures Corp was incorporated in Delaware on January 16, 2001, for
the purpose of developing, producing, marketing and distributing low-budget
films. On May 30, 2001, Consolidated Pictures Corp filed a Registration
Statement with the Securities and Exchange Commission for their initial public
offering. On September 4, 2001, the Registration Statement was deemed effective
and September 4, 2003, the public offering of units of securities was officially
closed. Each unit was offered at $0.50 and consisted of one share of common
stock; one Class A and one Class B warrant. Upon the closing of the offering,
the Company had sold a total of 27,900 units consisting of 27,900 shares of
common stock; 27,900 Class A warrants and 27,900 Class B warrants and received
net proceeds of $10,909 after offering expenses of $3,041. No business activity
transpired from inception, January 16, 2001 through September 30, 2004. The
Company's authorized capital stock consisted of 50,000,000 shares of common
stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par
value $0.0001 per share. As of September 30, 2004, there were 4,579,900 shares
of common stock issued and outstanding. None of the preferred stock has been
issued. As of September 30,2004 there were 27,900 Class A warrants and 27,900
Class B warrants outstanding. Each Class A warrant entitles the holder to
purchase one share of common stock at $1.00 per share and each Class B warrant
entitles the holder to purchase one share of common stock at $1.50 per share.
The Class A warrants expire on September 4, 2005 and the Class B warrants, on
September 4, 2006.




                                     - 5 -

<PAGE>
On October 13, 2004, CPC entered into an Agreement and Plan of Reorganization
(the "Agreement") with Y-Tel International, LLC, a Florida limited liability
company and subsequently changed its name to Y-Tel International, Inc. This
transaction was accounted for as a reorganization.

Progression of Y-Tel International, LLC and its subsidiaries
Y-Tel International, LLC was organized as a limited liability company in the
state of Florida on August 8, 2003 for the purpose of developing an
International wholesale long distance company with operations in Panama City,
Panama. On August 21, 2003 Y-Tel International, LLC established Y-Tel
International Panama, SA as a wholly owned subsidiary in the Republic of Panama
for the purpose of operating an international gateway for telecommunications
traffic around the world.

October 2003 - Y-Tel shipped equipment to Panama and initiated the installation
process.

On October 29, 2003, Y-Tel completed the acquisition of International Telekom,
LLC (formerly Intel Communications, LLC) which is located in Miami, Florida.
International Telekom, LLC is accounted for as a wholly owned subsidiary of
Y-Tel.

January 2004, International Telekom, LLC completed a contract with Digicel USA,
the fastest growing GSM provider in the Caribbean region. The contract provides
for revenue resulting from port rental charges and termination of traffic
throughout the Caribbean islands.

February 2004, the Company redirects 100% of its resources to servicing Digicel.

July 2004, the Company completed installation of a 9 meter satellite dish for
Digicel.

October 13, 2004, the Company completed the reverse merger with Consolidated
Pictures Corp.

October 25, 2004 Y-Tel entered the Wifi VoWLAN business by completing an
exclusive distributor agreement with EBI Communications, Inc.

December 2004, the Company entered into a contract with KBMP for installation of
a VoWLAN network in the Bahamas islands.

December 26, 2004 Consolidated Pictures Corp changed its name to Y-Tel
International, Inc. and the trading symbol was thereby changed from CPUR to
YTLI.

Employees
The Company employs three full time employees, four telecom technicians
(contract labor) and various consultants.

Item 2.  Description of Property.

As of December 31, 2004, the Company had leased facilities for its telecom hub
in Miami, Florida and leased facilities for its hub in Panama City, Panama.

The lease for the 800 sq. ft. Miami facility expires on July 1, 2005 and the
rent is $84,000 per annum.

                                     - 6 -
<PAGE>
The lease related to the 800 sq. ft. Panama facility expires in September 2008.
However, as of March 8, 2005 the lease agreement has been substantially amended
to effectively change the terms from five years to a month-to-month lease at a
rate of $800 per month.

Item 3.  Legal Proceedings.

We are not subject to any pending litigation, legal proceedings or claims.

Item 4.  Submission of Matters to a Vote of Security Holders.

None.













































                                     - 7 -
<PAGE>
                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

Market Prices

The Common Stock of the Company began trading on the Over the Counter Bulletin
Board ("OTC: BB") on October 5, 2004 and is listed under the symbol "YTLI." The
following table sets forth, for the fiscal quarters indicated, the range of the
high and low sales prices for the Company's common stock as reported by
Stockwatch.com or the National Quotation Bureau, Inc, as applicable. These
quotations reflect inter-dealer prices, without retail mark-up, markdown or
commission, and may not represent actual transactions.

Fiscal Year ended December 31, 2004:                       High   Low
-------------------------------------                      -----  ---
Quarter ended December 31, 2004 (YTLI)                     5.25   2.00

Stockholders

As of December 31, 2004, the Company had approximately 99 record holders of its
Common Stock, as reflected on the books of the Company's transfer agent. A
significant number of shares were held in street name and, as such, the Company
believes that the actual number of beneficial owners is significantly higher.

Dividends

The Company has not established a policy concerning payment of regular dividends
nor has it paid any dividends on its Common Stock to date. Any payment of
dividends in the future will be determined by the Board of Directors in light of
conditions then existing, including restrictions imposed by the Company's
preferred stock then outstanding, the Company's earnings, financial condition,
capital requirements and debt covenants, and the tax treatment consequences of
paying dividends.

Penny Stock
The Company's Common Stock is subject to provisions of Section 15(g) and Rule
15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
commonly referred to as the "penny stock rule." Section 15(g) sets for the
certain requirements for transactions in penny stock, and Rule 15g-9(d)
incorporates the definition of "penny stock" that is found in Rule 3a51-1 of the
Exchange Act. The SEC generally defines "penny stock" to be any equity security
that has a market price less than $5.00 per share, subject to certain
exceptions. If the Company's Common Stock is deemed to be penny stock, trading
in the shares will be subject to additional sales practice requirements on
broker-dealers who sell penny stock to persons other than established customers
and accredited investors. "Accredited investors" are person with assets in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with their spouse. For transactions covered by these rules, broker-dealers must
make a special suitability determination for the purchase of such security and
must have the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving penny stock, unless
exempt, the rules require the delivery, prior to the purchase. Additionally, for
any transaction involving a penny stock, unless exempt the rules require the
delivery, prior to the first transaction of a risk disclosure document, prepared


                                     - 8 -
<PAGE>
by the SEC, relating to the penny stock market. A broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly
statements must be sent disclosing recent price information for the penny stocks
held in an account and information to the limited market in penny stocks.
Consequently, these rules may restrict the ability of broker-dealer to trade
and/or maintain a market in the Company's Common Stock and may affect the
ability of the Company's shareholders to sell their shares.

Sale of Unregistered Securities

During the fourth quarter of 2004, the Company issued the following shares of
its common stock without registration under the Securities Act of 1933, as
amended (the "Securities Act"):

1.  On October 13, 2004, the Company issued 10,000,000 shares of common stock to
    the partners of Y-Tel International, LLC as a result of the reverse merger;

2.  On October 25, 2004, the Company issued 270,000 shares of common stock to
    EBI Communications, Inc. and 30,000 shares of common stock to Van Orten &
    Partners in connection with the Exclusive Distributor Agreement for the Wifi
    VoWLAN product;

3.  On November 30, 2004, the Company issued 100,000 shares of common stock to
    Van Orten & Partners in connection with consulting services;

4.  On November 30, 2004 the Company issued a convertible promissory note to
    Steven Math for $150,000 at 8% per annum. On December 28, 2004 the holder
    converted the principal and accrued interest into 37,750 shares of the
    Company's common stock.

5.  On December 2, 2004, the Company issued 50,000 shares of common stock to
    George Simpson in connection with consulting services;

6.  On December 2, 2004, the Company issued 50,000 shares of common stock to
    Steven Math in connection with consulting services;

7.  On December 3, 2004, the Company issued 25,000 shares of common stock to
    Executive Financial Group in connection with consulting services;

8.  On December 6, 2004 the Company issued 10,000 shares of common stock to JT
    Tucker, Inc in connection with services provided.

The above issuances were unregistered, as the Company was relying on the
exemptions from registration contained in Section 4(2) of the Securities Act,
and Regulation D promulgated thereunder, on the basis that such transactions did
not involve public offerings of securities.

Transfer Agent
The Company's transfer agent is Atlas Stock Transfer in Salt Lake City, Utah.

Stock Options
During the year ended December 31, 2004, the Company granted options to purchase
1,000,000 shares of the Company's common stock to two employees, and 1,500,000
to three consultants. The options were granted pursuant to employment agreements


                                     - 9 -
<PAGE>
and consulting agreements. During the year ended December 31, 2004, $550,000 and
$408,750 of stock based compensation expenses were recognized in the
accompanying consolidated statements of operations for options granted to
employees and consultants, respectively. The options are exercisable at
$.55/share and expire on September 30, 2007.

Warrants
As of December 31, 2004, the Company had issued 27,900 Class A warrants and
27,900 Class B warrants, which were granted together with the issuance of 27,900
shares of the Company's common stock in connection with a public offering
effected September 4, 2003. Each warrant entitles the holder to acquire one
share of common stock. The Class A warrants are exercisable at $1.00 per share
and their expiration date is September 4, 2005, as amended. The Class B warrants
are exercisable at $1.50 per share and their expiration date is September 4,
2006.

Item 6.  Management's Discussion and Analysis or Plan of Operation.

General

Use of Estimates and Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results may differ from those estimates.

Allowance for Doubtful Accounts

Management believes all customer receivables are fully collectible at December
31, 2004 and therefore, an allowance for bad debts has not been recorded in the
financial statements. Approximately 86% of the Company's revenue was provided
from one customer and there have been no indications the customer's financial
condition has deteriorated. As the Company expands, Management will continue
monitoring financial indicators and cash flow patterns and will establish such
an allowance should the need arise.

Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting Bulletin
("SAB") No. 101, Revenue Recognition in Financial Statements," as revised by SAB
No. 104. As such, the Company recognizes revenue when persuasive evidence of an
arrangement exists, services have been performed, the price is fixed or readily
determinable and collectibility is probable. Sales are recorded net of sales
discounts. The Company's revenue is generated primarily from the sale of traffic
(minutes) to other telecom companies. Revenue is recognized when invoiced to the
customer, which approximates the time the phone calls are placed.

Stock-Based Compensation

The Company uses the intrinsic value method of accounting for stock-based
compensation to employees in accordance with Accounting Principles Board Opinion
("APB") No. 25, as amended, "Accounting for Stock Issued to Employees." The


                                     - 10 -
<PAGE>
Company accounts for non-employee stock-based compensation under Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." At December 31, 2004, the Company had one stock-based employee
compensation plan, which is described more fully in Note 10 of the accompanying
consolidated financial statements. The Company accounts for this plan under the
recognition and measurement principles of APB 25, and related interpretations.
The Company has applied the disclosure provisions in SFAS No. 148 in its
consolidated financial statements and the accompanying notes.

Issuance of Stock for Non-cash Considerations

All issuance of the Company's common stock for non-cash consideration have been
assigned a dollar amount equaling either the market value of the shares issued
or the value of consideration received whichever is more readily determinable.
The majority of the non-cash consideration received pertains to services
rendered by consultants and others and has been valued at the market value of
the shares issued. In certain issuances, the Company may discount the value
assigned to the stock issued for illiquidity and restrictions on resale.

The Company's accounting policy for equity instruments issued to consultants and
vendors in exchange for goods and services follows the provisions of Emerging
Issues Task Force ("EITF) 96-18, "Accounting for Equity Instruments That are
Issued to Other than Employees for Acquiring, or in Conjunction with Selling
Goods or Services" and EITF 00-18, "Accounting Recognition for Certain
Transactions Involving Equity Instruments Granted to Other Than Employees." The
measurement date for the fair value of the equity instruments issued is
determined bat the earlier of (i) the date at which a commitment for performance
by the consultant or vendor is reached or (ii) the date at which the consultant
or vendor's performance is complete. In the case of equity instruments issued to
consultants, the fair value of the equity instrument is recognized over the term
of the consulting agreement. In accordance to EITF 00-18, an asset acquired in
exchange for the issuance of fully vested, nonforfeitable equity instruments
should not be presented or classified as an offset to equity on the grantor's
balance sheet once the equity instrument is granted for accounting purposes.
Accordingly, the Company records the fair value of the common stock issued for
consulting services to be performed in future periods as prepaid services in its
consolidated balance sheet.

Results of Operations - Year Ended December 31, 2004 Compared to Year Ended
December 31, 2003

Net Sales

Net sales of $1,249,380 for the year ended December 31, 2004 is comprised of
twelve months of revenue from International Telekom. The revenue of $76,423 for
the period ended December 31, 2003 represents only two months of revenue from
International Telekom, which was acquired effective November 2003.

Cost of Sales

Cost of sales of $635,418 for the year ended December 31, 2004 is comprised of
twelve months of costs from International Telekom. The cost of sales of $101,992
for the period ended December 31, 2003 represents only two months of costs from
International Telekom, which was acquired effective November 1, 2003.



                                     - 11 -
<PAGE>
Operating Expenses

Operating expenses were $3,996,160 for the year ended December 31, 2004 compared
to $518,487 for the period ended December 31, 2003. This represents an increase
of $3,477,673 or 669.99% over 2003. Of this increase, approximately $1,227,947
is related to the full year effect of operations for the Company in 2004 versus
only four months of operations in 2003. Y-Tel and Y-Tel Panama were both founded
in August 2003, and International Telekom was acquired in November 2003. The
remaining net increase of $2,249,726 is a result of non-cash stock based
compensation for employees and consultants in connection with the
reorganization.

Liquidity and Capital Resources

The Company has net working capital of $153,552 as of December 31, 2004. This is
largely attributed to the amount capitalized as prepaid services resulting from
common stock issued for services to be rendered through December 2005. The
Company believes the funding arrangements provided through the sale of common
stock under Regulation S are sufficient to meet its working capital needs for
the next twelve months. However, implementation of the Company's strategic plan
related to acquisitions and production of the Company's Wifi phones, will
require additional capital.

Going Concern

The Company's independent registered public accounting firm has stated in their
report included in this Form 10-KSB, that the Company incurred an operating loss
and had negative cash flows from operations for the year ended December 31,
2004, and has an accumulated deficit of $3,926,254 at December 31, 2004. These
factors, among others, raise substantial doubt about the Company's ability to
continue as a going concern.

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most significant risks to
our business, but we cannot predict whether or to what extent any of such risks
may be realized, nor can there be any assurances that the Company has identified
all possible risks that might arise. Current and potential investors should
carefully consider all of the following risk factors before making an investment
decision with respect to our stock.

We Have a Limited History

The Company was founded in August 2003 and thus, has a limited history of
operations. The Company may encounter unanticipated, unusual, or unexpected
risks and problems, which could adversely affect our operations, revenue, and
ability to obtain a profit.

We Require Additional Capital for Production of Wifi Phones

The Company will require additional capital for production of Wifi phones. If we
are unable to raise capital when our needs arise, we will be unable to pursue
our current business strategy and may not be able to fund our operations.

We Require Additional Capital for Acquiring Other Companies


                                     - 12 -
<PAGE>
The Company will require additional capital for acquisition of other companies
that will complement the Company's growth strategy. If we are unable to raise
capital when our needs arise, we will be unable to pursue our current business
strategy and may not be able to fund our operations.

If We Obtain Additional Financing, or Acquire Companies using Our Common Stock,
It Could Dilute Present Stockholder Holdings.

We will likely need to raise money through the sale of additional equity within
the next twelve months, in one or more private placements and/or public
offerings. If we do so, all of the then current existing stockholders and their
stock holdings will be proportionately diluted. In addition, we will likely
acquire companies using our common stock as consideration. If we do so, all of
our existing stockholders at such time and their stock holdings will be
proportionately diluted.

Our Business Depends on:
   A.  The Company's ability to secure adequate funding to ensure the Company
       meets its financial objectives.
   B.  The Company's ability to obtain Tier 1 routes for our customers.
   C.  The Company's ability to offer competitive rates to our customers.

Our Aggressive Business Plans Will Place a Significant Strain on Our Assets.

Implementation of our aggressive acquisition strategy will impose significant
strains on our management, operating systems and financial resources. The
acquisitions that we are currently contemplating would involve substantial
expenditures of our time and resources to close. If we fail to manage our growth
or encounter unexpected difficulties during expansion, it could have a material
adverse effect on our financial condition and results of operations. The pursuit
and integration of acquisitions will require substantial attention from our
senior management, which will limit the amount of time they are able to devote
to our existing operations.

We Are Heavily Dependent on Our Senior Management.

If we lose members of our senior management, we may not be able to find
appropriate replacements on a timely basis, and our business could be adversely
affected. Our existing operations and continued future development depend to a
significant extent upon the performance and active participation of certain key
individuals, including our Chief Executive Officer and our Chief Financial
Officer. We cannot guarantee that we will be successful in retaining the
services of these or other key personnel. If we were to lose any of these
individuals, we may not be able to find appropriate replacements on a timely
basis and our financial condition and results of operations could be materially
adversely affected.

We have a history of losses.

We incurred consolidated net losses of $3,382,198 and $544,056 during the year
ended December 31, 2004, and period ended December 31, 2003, respectively. Our
management believes that our revised business plan will be successful and we
will become profitable; however, there can be no assurance that we will be
successful in implementing our business plan or that we will be profitable now
or in the future.


                                     - 13 -
<PAGE>
Because Our Competition Has Greater Experience and Resources Than We Do, We May
Be at a Competitive Disadvantage.

Many of our competitors have significantly greater experience and financial
resources than us, which could place us at a competitive disadvantage.

Item 7.  Financial Statements.

The audited consolidated financial statements and the related notes are set
forth at pages F-1 through F-25 attached hereto.

Item 8.  Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.

On October 28, 2004, Consolidated Pictures Corp. (the "Company") appointed
Corbin & Company, LLP. (the "New Accountants") as the independent registered
public accounting firm to audit the financial statements of the Company for the
year ended December 31, 2004. Concurrent with the appointment of the New
Accountants, Michael F. Cronin, CPA resigned as the Company's independent
auditor. The Board of Directors approved this decision on October 28, 2004.

In connection with the audits of the Company's financial statements for each of
the two fiscal years ended December 31, 2003 and 2002, and in the subsequent
interim periods, there were no disagreements with Michael F. Cronin, CPA on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to the satisfaction of
Michael F. Cronin, CPA, would have caused Michael F. Cronin, CPA to make
reference to the matter in his report.

The reports of Michael F. Cronin, CPA on the Company's financial statements for
the Company's two most recent fiscal years did not contain an adverse opinion or
disclaimer of opinion, or was modified as to audit scope, or accounting
principles.

During the Company's two most recent fiscal years and the subsequent interim
period through the date of engagement of the New Accountants, the Company did
not consult the New Accountant regarding either (i) the application of
accounting principles to a specific completed or contemplated transaction, or
the type of audit opinion that might be rendered on the Company's
financialstatements; or (ii) any matter that was the subject of a disagreement
or event identified in response to Item 304(a)(1)(iv) of Regulation S-B.

There were no reportable events as that term is described in Item
304(a)(1)(iv)(A)-(E) of Regulation S-B.

Item 8A. Controls and Procedures.

As of December 31, 2004, an evaluation was carried out under the supervision and
with the participation of the Company's management, including our Chief
Executive Officer and our Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) under Securities Exchange Act of 1934.) Based upon
that evaluation, the Chief Executive Officer and the Chief Financial Officer
conclude that the design and operation of these disclosure controls and
procedures were effective. No significant changes were made in our internal


                                     - 14 -

<PAGE>
controls or in other factors that could significantly affect these controls
subsequent to December 31, 2004.

(a) Evaluation of Disclosure Controls and Procedures. The Company carried out an
evaluation under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO"), of the effectiveness of the Company's disclosure
controls and procedures. Based upon that evaluation, the CEO and CFO concluded
that as of December 31, 2004 our disclosure controls and procedures were
effective in timely alerting them to the material information relating to the
Company (or the Company's consolidated subsidiaries) required to be included in
the Company's periodic filings with the SEC, subject to the various limitations
on effectiveness set forth below under the heading, "LIMITAIONS ON THE
EFFECTIVENESS OF INTERNAL CONTROL," such that the information relating to the
Company, required to be disclosed in SEC reports (i) is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms, and (ii) is accumulated and communicated to the Company's management,
including our CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure.

(b) Changes in internal control over financial reporting. There has been no
change in the Company's internal control over financial reporting that occurred
during the fiscal quarter ended December 31, 2004 that has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.

LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS

The Company's management, including the CEO and CFO, does not expect that our
disclosure controls and procedures or our internal control over financial
reporting will necessarily prevent all fraud and material error. An internal
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, the design of the control system must reflect that the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitation in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
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 people, or by management
override of the internal control. The design of any system of controls also is
based in part upon certain assumption 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, control may become
inadequate because of changes in conditions, and/or the degree of compliance
with the policies or procedures may deteriorate.

Item 8B. Other Information

None.
                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.

                                     - 15 -
<PAGE>
All directors of our company hold office until the next annual meeting of the
security holders or until their successors have been elected and qualified. The
officers of our company are appointed by our board of directors and hold office
until their death, resignation or removal from office. Our directors and
executive officers, their ages, positions held, and the duration of their office
are as follows:
                                                               Date First
Name            Position Held with the Company        Age  Elected or Appointed
Steve Lipman    President, Chief Executive Officer,    52    October 13, 2004
                Chairman of the Board and Director
John R. Conroy  Chief Financial Officer and Director   48    October 13, 2004
Garry McHenry   Director                               47    October 13, 2004
Jon McMurray    Director                               45    October 13, 2004

Business Experience

The following is a brief account of the education and business experience of
each director and executive officer during at least the past five years,
indicating each person's principal occupation during the period, and the name
and principal business of the organization by which he was employed.

Steve B. Lipman, serves as the Company's Chairman of the Board, President, and
Chief Executive Officer. Mr. Lipman has served the Company in this capacity
since the effective date of the reverse merger. Mr. Lipman is a senior executive
experienced in mergers and acquisitions, strategic planning, operations, sales
and marketing. He has structured 6 companies and taken 3 companies public,
raised millions of dollars and secured major buying contracts. He is the former
President of Carrosell, Inc., a $20 million airport advertising company, and
former President and Chairman of Satellite Control Tech, Inc. An $80 million
wireless technology company specializing in GPS/Cellular and paging for vehicle
monitoring, tracking and recovery. Previously, Mr. Lipman was the President of
Allied Voice Tech, Inc., a $20 million re-recordable microchip company
responsible for developing, manufacturing re-recordable products.

John T. Conroy, serves as the Company's Chief Financial Officer, Secretary and
Treasurer. Mr. Conroy was the co-founder of Y-Tel and has served as the
Company's Chief Financial Officer since October 2004. Mr. Conroy has over 15
years experience with financial and executive management responsibilities in the
healthcare field. He has been Chief Financial Officer and Chief Executive
Officer for four hospitals in Florida and Louisiana. His major accomplishments
include the successful turn around of two rehab hospitals. Prior to Mr. Conroy
taking over the projects, both hospitals were reflecting negative cash flows in
excess of one million dollars. After two years in each facility, both had
achieved a positive cash flow position in excess of one million dollars while
dropping the Medicare utilization within each facility from 98% to 62%. He is
the former founder and CEO of Specialty Hospital Resources, Inc., a rehab
development company specializing in designing, building and managing physical
rehabilitation facilities for hospitals.

Garry McHenry , serves as a director on the Board and as a consultant performing
the duties of Vice President of Marketing. Mr. McHenry served as the President
for SATX, a public company working in the GPS tracking and cell phone
businesses. Prior to SATX, Mr. McHenry was the Eastern Regional Manager of
Hospitality Long Distance for Qwest Communications. He has also served as Vice
President of International Sales for Bright Technologies, a company that
engineered fixed-wireless pay phones.

                                     - 16 -
<PAGE>
Jon McMurray, serves as a director on the Board and as a consultant for the
Company. Mr. McMurray was the co-founder of Y-Tel International, LLC ("Y-Tel,
LLC"). Mr. McMurray was instrumental in the development of a carrier based
switch hub in Miami, Florida, and the Panama hub located in the Republic of
Panama. Prior to Y-Tel, LLC he worked with a private Atlanta based long distance
company developing new markets for the network. Prior to his involvement in
telecommunications, Mr. McMurray owned his own construction company for 22 years
in Baldwin County, located in south Alabama.

     Directors are elected at each annual meeting of stockholders, although
vacancies resulting from resignation, removal, death, or an increase in the size
of the Board between annual meetings may be filled by the remaining members of
the Board. Directors hold office until the next annual meeting of stockholders
and until their successors are elected and qualified. The Board met once during
2004, and the Board approved of several matters by unanimous written consent.
The Board of Directors does not have a nominating committee.

     Audit Committee . Due to the limited time between the reorganization and
     ---------------
fiscal year end, the Board has not yet implemented an audit committee. This is
expected to be completed during FY 2005. The Audit Committee will oversee
Y-Tel's corporate accounting and financial reporting process. For this purpose,
the Audit Committee will perform several functions. The Audit Committee will
evaluate the performance of and assesses the qualifications of the independent
auditors; determine the engagement of the independent auditors; determine
whether to retain or terminate the existing independent auditors or to appoint
and engage new independent auditors; review and approve the retention of the
independent auditors to perform any proposed permissible non-audit services;
monitor the rotation of partners of the independent auditors on Y-Tel's
engagement team as required by law; review the financial statements to be
included in Y-Tel's annual report on Form 10-KSB; and discusses with management
and the independent auditors the results of the annual audit and the results of
Y-Tel's quarterly financial statements.

     Compensation of Directors . The Company does not currently pay directors'
     -------------------------
fees to its Board members, but does provide transportation, lodging and
reimbursement of all reasonable expenses for attending Board meetings.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Y-Tel's directors and executive officers, and persons who own more than 10% of a
registered class of Y-Tel's equity securities, to file with the SEC reports of
ownership and changes in ownership of Common Stock and other equity securities
of Y-Tel. Such reporting persons are required to furnish the Company with copies
of all Section 16(a) forms they file.

     All of the initial filings on Form 3 for the officers, directors and 10%
shareholders were not timely filed. This was primarily due to a change in
management in connection with the reorganization in October 2004. Management
believes that proper controls have now been implemented to assure timely filings
in the future of all Section 16(a) forms that are required. During the fiscal
year ended December 31, 2004 there were no transactions by officers, directors
or 10% shareholders that required the filing of any Form 4.


                                     - 17 -
<PAGE>
Code of Ethics
--------------
     Effective March 26, 2004, our Company's board of directors adopted a Code
of Business Conduct and Ethics that applies to, among other persons, our
company's president (being our principal executive officer) and our company's
chief financial officer (being our principal financial and accounting officer
and controller), as well as persons performing similar functions. As adopted,
our Code of Business Conduct and Ethics sets forth written standards that are
designed to deter wrongdoing and to promote:

(1) honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional relationships;

(2) full, fair, accurate, timely, and understandable disclosure in reports and
documents that we file with, or submit to, the Securities and Exchange
Commission and in other public communications made by us;

(3) compliance with applicable governmental laws, rules and regulations;

(4) the prompt internal reporting of violations of the Code of Business Conduct
and Ethics to an appropriate person or persons identified in the Code of
Business Conduct and Ethics; and

(5) accountability for adherence to the Code of Business Conduct and Ethics.

Our Code of Business Conduct and Ethics requires, among other things, that all
of our company's personnel shall be accorded full access to our president and
chief financial officer with respect to any matter which may arise relating to
the Code of Business Conduct and Ethics. Further, all of our company's personnel
are to be accorded full access to our company's board of directors if any such
matter involves an alleged breach of the Code of Business Conduct and Ethics by
our president or chief financial officer.

In addition, our Code of Business Conduct and Ethics emphasizes that all
employees, and particularly managers and/or supervisors, have a responsibility
for maintaining financial integrity within our company, consistent with
generally accepted accounting principles, and federal and state securities laws.
Any employee who becomes aware of any incidents involving financial or
accounting manipulation or other irregularities, whether by witnessing the
incident or being told of it, must report it to his or her immediate supervisor
or to our company's president or chief financial officer. If the incident
involves an alleged breach of the Code of Business Conduct and Ethics by the
president or chief financial officer, the incident must be reported to any
member of our board of directors. Any failure to report such inappropriate or
irregular conduct of others is to be treated as a severe disciplinary matter. It
is against our company policy to retaliate against any individual who reports in
good faith the violation or potential violation of our company's Code of
Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics is filed herewith with the Securities
and Exchange Commission as Exhibit 14.1 to this annual report. We will provide a
copy of the Code of Business Conduct and Ethics to any person without charge,
upon request. Requests can be sent to: Y-Tel International.




                                     - 18 -
<PAGE>
Item 10.  Executive Compensation.

Summary Compensation Table
--------------------------
     The following table sets forth the cash and non-cash compensation paid by
or incurred on behalf of Y-Tel to its Chief Executive Officer and certain other
executive officers for the year ended December 31, 2004. No Chief Executive
Officer or other executive officer of our Company received any cash or other
compensation for the years ended December 31, 2002 and 2003.

    Name and                                      Number of        All Other
 Principal Position  Year Salary ($) Bonus ($) Stock Options (#)  Compensation
Steve Lipman          2004  $36,000      --         500,000           $2,700
(Chairman/CEO)

John Conroy           2004  $24,000      --         500,000         $101,800(1)
(Secretary/Treasurer
/CFO)

Garry McHenry         2004      --       --         500,000         $124,000(2)

Jon McMurray          2004      --       --         500,000         $124,000(3)

-------------

(1) Of this amount, $1,800 consists of an automobile allowance paid to Mr.
Conroy. The remaining $100,000 represents consulting fees during the period of
time in 2004 (January through October) that Mr. Conroy was a non-employee
consultant to the Company. Included in the $100,000 are non cash consulting fees
valued at $60,000, which were contributed by Mr. Conroy to the Company.

(2) Mr. McHenry serves as a director on the Board and as a consultant to the
Company. The $124,000 represents consulting fees during the period of time in
2004 (January through December) that Mr. McHenry was a non-employee consultant
to the Company. Included in the $124,000 are non-cash consulting fees valued at
$60,000, which were contributed by Mr. McHenry to the Company. Mr. McHenry has
an eight month consulting agreement with the Company ending on June 30, 2005 at
compensation of $12,000 per month.

(3) Mr. McMurray serves as a director on the Board and as a consultant to the
Company. The $124,000 represents consulting fees during the period of time in
2004 (January through December) that Mr. McMurray was a non-employee consultant
to the Company. Included in the $124,000 are non-cash consulting fees valued at
$60,000, which were contributed by Mr. McMurray to the Company. Mr. McMurray has
an eight month consulting agreement with the Company ending on June 30, 2005 at
compensation of $12,000 per month.

Employment Contracts and Termination of Employment and Change in Control
Arrangements

On September 27, 2004, we entered into an employment agreement with Steve
Lipman, pursuant to which Mr. Lipman will serve as the President and Chief
Executive Officer of the Company for a two year term with an automatic renewal
for a successive one-year term period unless either party to the agreement gives
to the other party at least 90 days advance notice that they do not wish to


                                     - 19 -
<PAGE>
renew. Mr. Lipman receives $12,000 per month plus $900 per month automotive
allowance. Mr. Lipman shall also receive an automatic salary increase to between
$15,000 and $20,000 per month upon the Company attaining a net profit of
$100,000 per month. In addition Mr. Lipman was granted 500,000 stock options
with an exercise price of $0.55 per share and an expiration date of September
30, 2007.

On September 27, 2004, we entered into an employment agreement with John Conroy
pursuant to which Mr. Conroy will serve as Chief Financial Officer for a two
year term with an automatic renewal for a successive one-year term period unless
either party to the agreement gives to the other party at least 90 days advance
notice that they do not wish to renew. Mr. Conroy receives $12,000 per month
plus $900 per month automotive allowance. Mr. Conroy shall also receive an
automatic salary increase to between $15,000 and $20,000 per month upon the
Company attaining a net profit of $100,000 per month. In addition Mr. Conroy was
granted 500,000 stock options with an exercise price of $0.55 per share and an
expiration date of September 30, 2007.

Other than as set forth in this filing, we have not entered into any employment
or consulting agreements with any of our current officers, directors or
employees.

We have no plans or arrangements in respect of remuneration received or that may
be received by our executive officers to compensate such officers in the event
of termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control, where
the value of such compensation exceeds $60,000 per executive officer.

We do not provide pension, retirement or similar benefits for our directors or
executive officers. We have no material bonus or profit sharing plans pursuant
to which cash or non-cash compensation is or may be paid to our directors or
executive officers, except that stock options may be granted at the discretion
of the board of directors or a committee thereof.

Stock Option Plan

On January 31, 2005, our directors ratified an amendment to the Company's 2001
Stock Option Plan (the "Plan") authorizing the plan to grant options to purchase
up to 3,500,000 shares of our common stock. The amendment is subject to
shareholder approval within 12 months. The board's responsibility will include
the selection of option recipients, as well as, the type of option granted and
the number of shares covered by the option and the exercise price. In 2004
2,500,000 options were granted under the Plan.

Plan options may either qualify as non-qualified options or incentive stock
options under Section 422 of the Internal Revenue Code. Any incentive stock
option granted under the plan must provide for an exercise price of at least
100% of the fair market value on the date of such grant and a maximum term of
ten years. If the employee owns more than 10% of our stock, the exercise price
of any incentive option granted must be at least 110% of fair market value and
must be exercised within five years after the grant.

All of our officers, directors, key employees and consultants will be eligible
to receive non-qualified options under the plan. Only officers, directors and
employees who are formally employed by the Company are eligible to receive
incentive options.

                                     - 20 -
<PAGE>
All incentive options are non-assignable and non-transferable, except by will or
by the laws of descent and distribution. If an optionee's employment is
terminated for any reason other than death, disability or termination for cause,
the stock option will lapse on the earlier of the expiration date or three
months following the date of termination. If the optionee dies during the term
of employment, the stock option will lapse on the earlier of the expiration date
of the option or the date one-year following the date of death. If the optionee
is permanently and totally disabled within the meaning of Section22(e)(3) of the
Internal Revenue Code, the plan option will lapse on the earlier of the
expiration date of the option or one year following the date of such disability.

Option Grants in 2004

     The following table provides details regarding stock options granted in
2004 to the Named Executive Officers and directors:

                                       % of Total
               Number of Securities  Options Granted                 Expiration
      Name     Underlying Options    to Employees in  Exercise Price    Date
                     Granted              2004          per Share
Steve Lipman         500,000             50.00%           $.55       09/30/2007

John Conroy          500,000             50.00%           $.55       09/30/2007

Garry McHenry        500,000              N/A             $.55       09/30/2007

Jon McMurray         500,000              N/A             $.55       09/30/2007

Aggregated Option Exercises in 2004 and Year-End Option Values
--------------------------------------------------------------

     The following table details the December 31, 2004 year-end estimated value
of unexercised stock options of each of the Named Executive Officers:

<TABLE>
<S>           <C>          <C>       <C>         <C>             <C>          <C>
               Number                  Number of Securities        Value of Unexercised
    Name      of Shares      Value    Underlying Unexercised       In-the-Money Options
              Acquired on  Realized    Options at Year-End:           at Year-End (1) :
              Exercise (#)    ($)    Exercisable  Unexercisable  Exercisable  Unexercisable
Steve Lipman      0            0        500,000           --      $1,475,000            --
John Conroy       0            0        500,000           --      $1,475,000            --
Garry McHenry     0            0        500,000           --      $1,475,000            --
Jon McMurray      0            0        500,000           --      $1,475,000            --
</TABLE>

---------------

(1) The estimated value of unexercised in-the-money stock options held at the
end of 2004 assumes a per-share fair market value of $3.50 (the closing trading
price of the Common Stock on December 31, 2004), and per-share exercise prices
as follows: $.55 for 500,000 of Mr. Lipman's vested options; $.55 for 500,000 of
Mr. Conroy's vested stock options, $.55 for 500,000 of Mr. McHenry's vested
stock options; and $.55 for 500,000 of Mr. McMurray's vested stock options.
Securities Authorized for Issuance Under Equity Compensation Plans



                                     - 21 -
<PAGE>
The following provides information, as of December 31, 2004, concerning
compensation plans (including individual compensation arrangements) under which
equity securities of the Company are authorized for issuance.

                           (a)            (b)                         (c)

      Plan Category   Number of                         Number of
                      securities to                     securities remaining
                      be issued       Weighed-average   available for
                      upon exercise    exercise price   future issuances
                      of outstanding   of outstanding   under equity
                      options,            options,      compensation plans
                      warrants and     warrants and     (excluding securities
                      rights              rights        reflected in column (a))

 Equity compensation
  plans approved by
  security holders            -        $         -                          -
 Equity compensation
  plans not approved
  by security holders  2,500,000 (1)   $      0.55                  1,000,000
                       -------------   -----------            ---------------
      Total            2,500,000       $      0.55                  1,000,000

(1) Includes all options issued under the 2001 Stock Option Plan, as amended in
2005, (the "Plan") as the Plan has not been approved by the shareholders of the
Company.

For a complete description of the Company's equity compensation plans, please
refer to Note 7 of our audited financial statements as of December 31, 2004,
which are filed herein.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.

Principal Stockholders
----------------------
The following table sets forth, as of April 5, 2005, certain information with
respect to the beneficial ownership of our common stock by each security holder
known by us to be the beneficial owner of more than 5% of our common stock and
by each of our current directors and certain executive officers. Each person has
sole voting and investment power with respect to the shares of common stock
except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated.

                                          Number of Shares   Percentage of Class
                                         Beneficially Owned  Beneficially Owned
Steve Lipman, Chairman, CEO & President     1,666,392 (1)              9.93%
John T. Conroy, CFO                         1,882,037 (2) (4)         11.22%
Garry McHenry, Director                     1,216,983 (3)              7.26%
Jon McMurray, Director                      1,649,070 (3)(4)           9.83%
Avitra S.A.                                 2,178,988 (5)             12.99%
Terry Lipham                                  989,832                  5.90%
Bella Star Enterprises                      1,100,000                  6.56%
Health Care Services, LLC (6)               1,450,400                  8.65%
George Simpson                              1,125,300                  6.71%

                                     - 22 -
<PAGE>
All directors and executive officers
as a group (four persons)                   4,414,482 (4)             25.70%
 --------------

(1) Includes 500,000 stock options awarded to Mr. Lipman. As of this date, these
shares are fully vested and are exercisable at $0.55 per share.

(2) Includes 500,000 stock options awarded to Mr. Conroy. As of this date, these
shares are fully vested and are exercisable at $0.55 per share.

(3) Includes 500,000 stock options awarded to each Mr. McMurray and Mr. McHenry.
As of this date, these shares are fully vested and are exercisable at $0.55 per
share.

(4) Includes 582,716 shares in the name of CGA Holdings, LLC, of which 194,238
shares are beneficially owned by Mr. McMurray and 194,238 shares are
beneficially owned by Mr. Conroy.

(5) Avitra SA is a corporation principally owned by Gil Epstein a consultant to
the Company. Includes 194,240 shares beneficially owned through CGA Holdings,
LLC. Also includes 500,000 stock options awarded to Mr. Epstein. As of this
date, these shares are fully vested and exercisable at $0.55 per share.

(6) Health Care Services, LLC is owned by Nick Elliot.

Item 12. Certain Relationships and Related Transactions.

None


Item 13. Exhibits.

(a) Exhibits

   Exhibit   Description of Document
     1.1     Form of subscription agreements. (1)
     2.1     Agreement and Plan of Reorganization dated as of October 12, 2004
             between CPC and Y-Tel. (2)
     3.1     Certificate of Incorporation of Consolidated Pictures Corp. (1)
     3.2     By-laws of Consolidated Pictures Corp. (1)
     3.6     Class A Redeemable Warrant Agreement. (1)
     3.7     Class B Redeemable Warrant Agreement. (1)
     4.1     Specimen common stock certificate. (1)
    10.1     Employment Agreement between Y-Tel and Steve Lipman dated September
             27, 2004. (2)
    10.2     Employment Agreement between Y-Tel and John Conroy dated September
             27, 2004. (2)
    10.3     Consulting Agreement between Y-Tel and Gil Epstein dated September
             27, 2004. (2)
    10.4     Consulting Agreement between Y-Tel and Jon McMurray dated September
             27, 2004. (2)
    10.5     Consulting Agreement between Y-Tel and Garry McHenry dated
             September 27, 2004. (2)
    10.6     2001 Stock Option Plan. (1)



                                     - 23 -
<PAGE>
    10.7     Distribution agreement between Y-Tel and EBI Communications, Inc.
             dated October 25, 2004. (3)
    10.8     2001 Stock Option Plan. (1)
    10.9     Addendum to Employment Agreement between Y-Tel and Steve Lipman
             dated October 8, 2004. *
    10.10    Addendum to Employment Agreement between Y-Tel and John Conroy
             dated October 8, 2004. *
    10.11    Addendum to Consulting Agreement between Y-Tel and Gil Epstein
             dated October 8, 2004. *
    10.12    Addendum to Consulting Agreement between Y-Tel and John McMurray
             dated October 8, 2004. *
    10.13    Addendum to Consulting Agreement between Y-Tel and Garry McHenry
             dated October 8, 2004. *
    31.1     302 Certification by Chief Executive Officer. *
    31.2     302 Certification by Chief Financial Officer. *
    32.1     906 Certification by Chief Executive and Chief Financial Officer. *

---------------
(1) Incorporated by reference from our Registration Statement on Form SB-2 filed
with the SEC on May 30, 2001. (2) Incorporated by reference from our current
report on Form 8-K filed with the SEC on October 18, 2004. (3) Incorporated by
reference from our current report on Form 8-K filed with the SEC on November 12,
2004. * Filed herewith.

Item 14. Principal Accountant Fees and Services.

Audit Fees

The fees billed by Michael F. Cronin, CPA for professional services rendered for
the audit of our annual financial statements included in our annual report on
Form 10-KSB for the fiscal year ended December 31, 2003 were $1,000.

The aggregate fees billed by Corbin & Company, LLP for professional services
rendered for the audit of our annual financial statements included in our annual
report on Form 10-KSB for the fiscal year ended December 31, 2004 were $43,825.

Audit Related Fees

None.

Tax Fees

For the fiscal year ended December 31, 2003, the aggregate fees billed by RSM
McGladrey for other non-audit professional services, other than those services
listed above, totaled $6,950.

We do not use our auditors for financial information system design and
implementation. These services, which include designing or implementing a system
that aggregates source data underlying the financial statements or generates
information that is significant to our financial statements, are provided
internally or by other service providers. We do not engage our auditors to
provide compliance outsourcing services.





                                     - 24 -
<PAGE>
                                   SIGNATURES

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

                                              Y-TEL INTERNATIONAL, INC.

Dated: April 14, 2005               By:     /s/  STEVE LIPMAN
                                            Steve Lipman

                              Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.

        Signatures                  Title                             Date

/s/ Steve Lipman       CEO and Chairman of the Board           April 14, 2005
Steve Lipman

/s/ John T. Conroy     Secretary and CFO                       April 14, 2005
John T. Conroy

/s/ Garry McHenry      Director                                April 14, 2005
Garry McHenry

/s/ Jon McMurray       Director                                April 14, 2005
Jon McMurray



























                                     - 25 -

<PAGE>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To The Board Of Directors
Y-TEL INTERNATIONAL, INC.

We  have  audited  the   accompanying   consolidated   balance  sheet  of  Y-TEL
INTERNATIONAL, INC. (formerly Consolidated Pictures Corp.) and subsidiaries (the
"Company") as of December 31, 2004, and the related  consolidated  statements of
operations,  stockholders' equity, and cash flows for the year then ended. These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We  conducted  our audit in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated financial statements are free of material misstatement. The Company
is not  required  to  have,  nor were we  engaged  to  perform,  an audit of its
internal control over financial reporting.  Our audit included  consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over  financial  reporting.  Accordingly,  we express no such opinion.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and

disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  financial statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Y-TEL INTERNATIONAL,
INC.  and  subsidiaries  as of  December  31,  2004,  and the  results  of their
operations  and their  cash  flows for the year then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated  financial  statements,  the Company incurred an operating loss and
had negative cash flows from  operations  for the year ended  December 31, 2004,
and has an  accumulated  deficit of  $3,926,254  at  December  31,  2004.  These
factors,  among others,  raise  substantial doubt about the Company's ability to
continue as a going concern.  Management's  plans in regard to these matters are
described in Note 1. The  consolidated  financial  statements do not include any
adjustments  relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might result should
the Company be unable to continue as a going concern.

/s/ Corbin & Company, LLP
-------------------------
Corbin & Company, LLP

Irvine, California
March 8, 2005



F-1
<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Members
Y-Tel International, LLC and Subsidiaries

We have audited the accompanying consolidated statement of operations, members'
equity, and cash flows of Y-Tel International, LLC and subsidiaries for the
period August 8, 2003 (inception) to December 31, 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations, members' equity
and cash flows of Y-Tel International, LLC, for the period August 8, 2003
(inception) to December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.

The Company's financial statements have been presented on the basis that the
Company will continue as a going concern, which contemplates the ability to
raise capital and the satisfaction of liabilities in the normal course of
business. The Company incurred a net loss of $544,046during 2003. These factors
raise substantial doubt about the Company's ability to continue as a going
concern unless the Company enters into a significant revenue-bearing contract.
Management is currently seeking additional equity or debt financing. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.


/s/ Stonefield Josephson, Inc.
Stonefield Josephson, Inc.
Santa Monica, California

August 19, 2004










F-2

<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
                                          (Formerly Consolidated Pictures Corp.)
                                                      CONSOLIDATED BALANCE SHEET

                                                               December 31, 2004
--------------------------------------------------------------------------------
ASSETS
Current assets:
    Cash                                                         $      19,833
    Accounts receivable                                                 64,240
    Prepaid expenses                                                    20,975
    Prepaid services                                                 1,273,542
    Due from stockholder                                                46,763
                                                                 -------------
      Total current assets                                           1,425,353

Property and equipment, net                                            996,762

Intangible asset, net                                                  693,250

Other assets                                                            34,600
                                                                 -------------
                                                                 $   3,149,965
                                                                 =============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                             $     697,738
    Accrued expenses                                                   107,063
    Due to related parties                                             227,000
    Current portion of note payable to related party                   240,000
                                                                 -------------
      Total current liabilities                                      1,271,801

Long-term liabilities:
    Note payable to related party, net of current portion               87,598
                                                                 -------------
Total liabilities                                                    1,359,399
                                                                 -------------
Commitments and contingencies

Stockholders' equity:
    Preferred stock, $0.0001 par value,
      5,000,000 shares authorized; no
      shares issued and outstanding                                          -
    Common stock, $0.0001 par value,
      50,000,000 shares authorized;
      15,427,650 shares issued and outstanding                           1,543
    Additional paid in capital                                       5,715,277
    Accumulated deficit                                             (3,926,254)
                                                                 -------------
      Total stockholders' equity                                     1,790,566
                                                                 -------------
                                                                 $   3,149,965
                                                                 =============


F-3                 See accompanying notes to consolidated financial statements.

<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
                                           (Formerly Consolidated Pictures Corp)
                                           CONSOLIDATED STATEMENTS OF OPERATIONS

                                    For the Year Ended December 31, 2004 and the
                Period From August 8, 2003 (Inception) through December 31, 2003
--------------------------------------------------------------------------------
                                                     2004             2003
                                                -------------    -------------
Net sales                                       $  1,249,380     $     76,423

Cost of sales                                        635,418          101,992
                                                ------------     ------------
Gross profit (loss)                                  613,962          (25,569)

Operating expenses:
  Satellite, bandwidth and other
      telecommunications expenses                    292,931           32,835
  Contract labor                                     199,052                -
  Contract labor paid to related party               147,382          144,447
  Salaries and related expenses                      106,725            2,137
  Noncash compensation                             2,249,726          150,000
  Other general and administrative expenses        1,000,344          189,068
                                                ------------     ------------
     Total operating expenses                      3,996,160          518,487
                                                ------------     ------------
Net loss                                        $ (3,382,198)    $   (544,056)
                                                ============     ============
Basic and diluted net loss per common
   share and member unit, respectively          $      (0.34)    $      (0.07)
                                                ============     ============
Weighted average common shares and
   member units outstanding,
   respectively - basic and diluted                9,931,115        7,548,668
                                                ============     ============




















--------------------------------------------------------------------------------
F-4         See accompanying notes to audited consolidated financial statements.

<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
                                           (Formerly Consolidated Pictures Corp)
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

         For the Year Ended December 31, 2004 and the Period From August 8, 2003
                                           (Inception) through December 31, 2003
--------------------------------------------------------------------------------
<TABLE>
<S>                <C>         <C>           <C>       <C>       <C>   <C>          <C>            <C>
                                                                                                       Total
                      Member     Members'        Common Stock            Deferred   Accumulated   Stockholders'
                      Units      Capital     Shares      Amount  APIC  Compensation   Deficit         Equity
---------------------------------------------------------------------------------------------------------------
Balance,
  August 8, 2003
  (Inception)               -  $        -          -   $      -  $  -  $        -   $        -     $         -
Issuance for units
  in initial
  capitalization    5,741,029     300,000          -          -     -           -            -         300,000
Reduction in units
  issued to initial
  members          (1,583,732)          -          -          -     -           -            -               -
Issuance of units
  for services
  rendered            593,900      30,000          -          -     -           -            -          30,000
Merger with
  International
  Telekom formerly
  Intel
  Communications,
  L.L.C.            3,117,972     489,302          -          -     -           -            -         489,302
Conversion of debt
  to equity         1,039,324     165,000          -          -     -           -            -         165,000
Units sold for cash   791,866     175,000          -          -     -           -            -         175,000
Estimated fair value
  of services rendered
  by members                -     180,000          -          -     -     (60,000)           -         120,000
Net loss for the
  period from August 8,
  2003 (inception)
  to December 31, 2003      -           -          -          -     -           -     (544,056)       (544,056)
                    ------------------------------------------------------------------------------------------
Balance at
December 31, 2003   9,700,359  1,339,302           -          -     -     (60,000)    (544,056)        735,246
</TABLE>



















F-5                  See accompanying notes to consolidated financial statements

<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
                                           (Formerly Consolidated Pictures Corp)
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - CONTINUED

         For the Year Ended December 31, 2004 and the Period From August 8, 2003
                                           (Inception) through December 31, 2003
--------------------------------------------------------------------------------
<TABLE>
<S>              <C>           <C>           <C>        <C>     <C>        <C>        <C>           <C>
                                                                                                       Total
                      Member     Members'        Common Stock               Deferred   Accumulated  Stockholders'
                      Units      Capital       Shares    Amount  APIC      Compensation   Deficit      Equity
---------------------------------------------------------------------------------------------------------------
Balance at December
  31, 2003         9,700,359   $ 1,339,302            - $     - $        - $ (60,000) $  (544,056)  $  735,246
Member units
  issued for cash    435,520       152,000            -       -          -         -            -      152,000
Member units
  issued for
  conversion of
  notes payable      752,273       190,000            -       -          -         -            -      190,000
Member units
  received in
  treasury, net     (197,967)            -            -       -          -         -            -            -
Member units
  repurchased for
  cash            (2,474,581)     (242,000)           -       -          -         -            -     (242,000)
Estimated fair
  value of services
  rendered by members      -       400,000            -       -          -    60,000            -      460,000
Estimated fair
  value of member
  interests issued
  for services     1,784,396       622,768            -       -          -         -            -      622,768
Issuance of
  common stock
  in connection
  with the merger
  of Y-Tel
  International,
  LLC            (10,000,000)   (2,462,070)  14,579,900   1,458  2,460,612         -            -            -
Common stock
  issued upon
  conversion of
  note payable             -             -       37,750       4    150,996         -            -      151,000
Estimated fair
  value of common
  stock issued for
  prepaid services         -             -      510,000      51  1,469,949         -            -    1,470,000
Estimated fair
  value of common
  stock issued for
  distribution
  rights                   -             -      300,000      30    674,970         -            -      675,000
Estimated fair
  value of options
  granted for
  consulting
  services                 -             -            -       -    408,750         -            -      408,750
Intrinsic value
  of options
  granted to
  employees                -             -            -       -    550,000         -            -      550,000
Net loss                   -             -            -                  -         -   (3,382,198)  (3,382,198)
                 ---------------------------------------------------------------------------------------------
Balance,
December 31, 2004          -   $         -   15,427,650 $ 1,543 $5,715,277 $       -  $(3,926,254)  $1,790,566
                 =============================================================================================
</TABLE>



F-6                  See accompanying notes to consolidated financial statements

<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
                                          (Formerly Consolidated Pictures Corp.)
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                                    For The Year Ended December 31, 2004 and the
                Period From August 8, 2003 (Inception) Through December 31, 2003
--------------------------------------------------------------------------------
                                                          2004          2003
                                                     ------------- -------------
Cash flows from operating activities:
  Net loss                                           $ (3,382,198) $   (544,056)

  Adjustments to reconcile net loss to
   net cash used in operating activities:
     Depreciation and amortization                         56,717         8,903
     Estimated fair value of member
        interests issued for services                     622,768             -
     Amortization of prepaid services
        and intangible asset                              208,208             -
     Estimated fair value of services
        rendered by members                               460,000       150,000
     Estimated fair value of options granted
        for consulting services                           408,750             -
     Intrinsic value of stock options granted
        to employees                                      550,000             -
     Estimated fair value of services rendered
        for note payable to related party                 201,421             -
     Write off of amounts due from related parties         64,800             -
     Changes in operating assets and liabilities:
        Accounts receivable                                (7,641)      (56,599)
        Prepaid expenses                                   (4,975)      (16,000)
        Due from stockholders                              (1,963)      126,177
        Other assets                                      (31,000)      (33,600)
        Accounts payable and accrued expenses             720,349        85,452
                                                     ------------  ------------
     Net cash used in operating activities               (134,764)     (279,723)
                                                     ------------  ------------
Cash flows from investing activities:
     Purchases of property and equipment                 (178,083)     (223,936)
                                                     ------------  ------------
     Net cash used in investing activities               (178,083)     (223,936)
                                                     ------------  ------------
Cash flows from financing activities:
     Proceeds from the issuance of member units           152,000       359,339
     Payments for the repurchase of member units          (15,000)            -
     Proceeds from the issuance of a note payable         150,000       190,000
                                                     ------------  ------------
     Net cash provided by financing activities            287,000       549,339
                                                     ------------  ------------
(Decrease) increase in cash                               (25,847)       45,680

Cash at beginning of period                                45,680             -
                                                     ------------  ------------
Cash at end of period                                $     19,833  $     45,680
                                                     ============  ============
--------------------------------------------------------------------------------
F-7                  See accompanying notes to consolidated financial statements


<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
                                          (Formerly Consolidated Pictures Corp.)
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                                    For The Year Ended December 31, 2004 and the
                Period From August 8, 2003 (Inception) Through December 31, 2003
--------------------------------------------------------------------------------
                                                          2004          2003
                                                     ------------- -------------
Supplemental disclosure of cash flow information -
     Cash paid during the year for:
          Interest                                   $          -  $          -
                                                     ============  ============
          Income taxes                               $          -  $          -
                                                     ============  ============
Supplement schedule of noncash investing and
   financing activities:
     Acquisition of equipment through loan converted
        to membership interest through merger with
        InTel Communications, L.L.C.                 $          -  $    343,700
                                                     ============  ============
     Acquistion of equipment through merger with
        InTel Communications, L.L.C.                 $          -  $      1,663
                                                     ============  ============
     Acquistion of note receivables due from
        members through merger with InTel
        Communications, L.L.C.                       $          -  $    143,860
                                                     ============  ============
     Acquistition of equipment through loan
        converted to membership interest             $          -  $    165,000
                                                     ============  ============
     Deferred compensation for issuance of
        membership interest                          $          -  $     90,000
                                                     ============  ============
     Acquisition of equipment through direct
        payment by members to membership interest    $          -  $    150,000
                                                     ============  ============
     Conversion of capital from merger with InTel
        Communications, L.L.C.                       $          -  $    131,952
                                                     ============  ============
     Issuance of common stock upon conversion of
        notes payable                                $    341,000  $          -
                                                     ============  ============
     Issuance of common stock for prepaid services
        and distribution rights                      $  2,145,000  $          -
                                                     ============  ============
     Repurchase of member units for note payable     $    227,000  $          -
                                                     ============  ============
     Accounts payable to related party converted
        to note payable to related party             $    126,177  $          -
                                                     ============  ============
     Conversion of member interests into common
        stock upon reverse acquisition               $  2,460,612  $          -
                                                     ============  ============

--------------------------------------------------------------------------------
F-8                  See accompanying notes to consolidated financial statements

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------------------
Company Description and Nature of Operations
--------------------------------------------
Nature of Business

The accompanying  consolidated  financial  statements  include the activities of
Y-Tel  International,  Inc. ("Y-Tel") and its wholly owned  subsidiaries,  Y-Tel
International,  L.L.C. ("Y-Tel LLC"), Y-Tel International - Panama, S.A. ("Y-Tel
Panama")   and   International   Telekom   ("International"),   formerly   Intel
Communications, L.L.C., collectively referred to as the "Company".

Y-Tel was formerly  known as  Consolidated  Pictures Corp.  ("CPC"),  a Delaware
corporation.  Y-Tel LLC was  organized in the state of Florida on August 8, 2003
("Inception").  Y-Tel  Panama  was  incorporated  in the  Republic  of Panama on
September 1, 2003.  International  was organized in the state of Florida on June
16, 2003, and acquired by Y-Tel on October 26, 2003.

The Company provides  long-distance  and other telecom related services to phone
companies.  The Company is currently targeting markets in the rapidly developing
Americas region (Caribbean, Central and South Americas).

As a result  of the  commencement  of the  Company's  principal  operations  and
related  revenues during the year ended December 31, 2004, the Company ceased to
be a development stage enterprise.

On  October  12,  2004,  Y-Tel  LLC  entered  into  an  Agreement  and  Plan  of
Reorganization (the "Agreement") with CPC. Such transaction was accounted for as
a  reorganization  (see  Note 2).  Y-Tel  LLC is  considered  the  acquirer  for
accounting  purposes  (a  "reverse  acquisition")  because  of (a) its  majority
ownership  of CPC (b) its  representation  on CPC's board of  directors  and (c)
executive management positions held by former officers of the Company.

Going Concern

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern  which  contemplates,  among
other things,  the realization of assets and  satisfaction of liabilities in the
ordinary course of business.  The Company has incurred  operating losses and had
negative cash flows from operations through December 31, 2004, and has a lack of
operational  history which,  among other factors,  raise substantial doubt about
its ability to continue as a going concern.

Management  recognizes the Company must generate additional  resources to enable
it to continue operations. The reverse acquisition, as noted above, will provide
the Company with an  opportunity  to raise  working  capital  through the public
markets.  Specifically,  the Company has entered into an  agreement  with Revlon
Holdings  and  Omega  Financial  Services  regarding  the sale of the  Company's
restricted  common  stock to  non-U.S.  persons  as  defined  in  Regulation  S,
promulgated  under the  Securities  Act of 1933,  as amended,  for amounts up to
$1,000,000.
                                     F - 9
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------
The successful outcome of future fund raising activities cannot be determined at
this time,  and there is no assurance  that, if achieved,  the Company will have
sufficient  funds to execute its  intended  business  plan or generate  positive
operating results.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Y-Tel
International,   Inc.  and  its  wholly  owned  subsidiaries.   All  significant
intercompany transactions and balances have been eliminated in consolidation.

Fair Value of Financial Instruments

For certain of the Company's  financial  instruments,  including cash,  accounts
receivable,   accounts  payable  and  accrued  expenses,  the  carrying  amounts
approximate fair value due to their short maturities. The fair values of amounts
due from  stockholder,  due to related parties and note payable to related party
are not determinable as these are with related parties.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and disclosure of the contingent  assets and liabilities at the date
of the financial  statements  and the reported  amounts of revenues and expenses
during the reporting period.  Significant  estimates made by management include,
among others, the realizability of accounts receivable,  property and equipment,
prepaid  services,  intangible  asset and the  valuation of deferred tax assets.
Actual results could differ from these estimates.

Concentration of Credit Risk and Foreign Operations

Financial  instruments,  which potentially subject the Company to concentrations
of credit risk,  consist of cash and  receivables.  The Company  places its cash
with high  quality  financial  institutions  and at times may exceed the Federal
Deposit Insurance Corporation ("FDIC") $100,000 insurance limit. At December 31,
2004,  the Company did not have any accounts with balances in excess of the FDIC
insurance limits.

The Company offers its services predominately to international customers located
outside  the United  States  and  extends  credit  based on an  evaluation  of a
customer's financial condition, generally without collateral. Exposure to losses
on accounts  receivable is principally  dependent on each  customer's  financial
condition.


                                     F - 10
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------
The Company monitors its exposure for credit losses and maintains allowances for
anticipated losses, if required. Although the Company expects to collect amounts
due, actual collections may differ from the estimated amounts.

One customer accounted for 85% and 98% of the total net sales for the year ended
December  31,  2004 and for the period  from  August 8, 2003  Inception  through
December 31, 2003 and 100% of the accounts  receivable  as of December 31, 2004.
All funds have subsequently been collected.

As of  December  31,  2004,  equipment  installation  in process  with a cost of
$459,665 is located in Panama.

Property and Equipment

Property and equipment are stated at cost, and are being  depreciated  using the
straight-line  method over the  estimated  useful  lives of the related  assets,
ranging from five to fifteen years.  Maintenance and routine repairs are charged
to expense as incurred. Significant renewals and betterments are capitalized. At
the time of retirement or other disposition of property and equipment,  the cost
and  accumulated  depreciation  are removed from the accounts and any  resulting
gain or loss is  reflected  in the  statement  of  operations.  The  Company has
equipment installation in process in Panama that is not being depreciated, as it
has not been placed in service.  The Company will begin depreciating such assets
once they are placed in service.

Long-Lived Assets

The Company's management assesses the recoverability of its long-lived assets by
determining  whether the depreciation and amortization of long-lived assets over
their remaining lives can be recovered  through  projected  undiscounted  future
cash flows. The amount of long-lived asset impairment, if any, is measured based
on fair  value and is charged to  operations  in the period in which  long-lived
asset  impairment  is  determined  by  management.  At December  31,  2004,  the
Company's  management  believes there is no impairment of its long-lived assets.
There can be no assurance,  however,  that market  conditions will not change or
demand for the Company's products and services will continue, which could result
in impairment of long-lived assets in the future.

Revenue and Expense Recognition

The Company  recognizes  revenue in accordance  with Staff  Accounting  Bulletin
("SAB") No. 101,  "Revenue  Recognition in Financial  Statements," as revised by
SAB No. 104. As such, the Company recognizes revenue when persuasive evidence of
an  arrangement  exists,  services  have been  performed,  the price is fixed or
readily  determinable and collectibility is probable.  Sales are recorded net of
sales discounts.  The Company's revenue is generated  primarily from the sale of

                                     F - 11
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------
traffic  (minutes)  to other  telecom  companies.  Revenue  is  recognized  when
invoiced  to the  customer,  which  approximates  the time the  phone  calls are
placed.

Deferred Compensation

Deferred  compensation  represented the estimated value of services  provided by
members in exchange  for  membership  units based on  employment  agreements  in
fiscal year 2003.  Such service  costs were  amortized  over a period of nine to
twelve months, which approximated the service period.

During the year ended  December 31, 2004 and the period from  Inception  through
December 31, 2003, the Company recognized  $400,000 and $120,000,  respectively,
of expense  (estimated fair value of the services  provided) related to services
provided  by  various   stockholders/members   in  lieu  of  payroll,  which  no
compensation was paid by the Company.

Stock-Based Compensation

The Company  uses the  intrinsic  value  method of  accounting  for  stock-based
compensation to employees in accordance with Accounting Principles Board Opinion
("APB")  No.  25,  "Accounting  for Stock  Issued  to  Employees,"  and  related
Interpretations.  The Company accounts for non-employee stock-based compensation
under Statement of Financial  Accounting Standards ("SFAS") No. 123, "Accounting
for  Stock-Based  Compensation."  At  December  31,  2004,  the  Company has one
stock-based employee compensation plan, which is described more fully in Note 7.
During  the  periods  ended  December  31,  2004  and  2003,  $550,000  and  $0,
respectively,  of  compensation  expense  was  recognized  in  the  accompanying
statements  of  operations  for options  issued to employees  below market value
pursuant  to APB No. 25. No other  option-based  employee  compensation  cost is
reflected  in the 2004 and  2003  consolidated  statements  of  operations.  The
following  table  illustrates  the  effect on net loss and loss per share if the
Company  had applied the fair value  recognition  provisions  of SFAS No. 123 to
stock-based employee compensation:













                                     F - 12
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------
                                                           Period From August
                                                                 8, 2003
                                                               (Inception)
                                   Year Ended December      Through December
                                         31, 2004               31, 2003
                                   -------------------     ------------------

Net loss, as reported                 $   (3,382,198)        $      (544,056)
Deduct:
  Total stock-based employee
    compensation under APB
    No. 25, net of related
    tax expense                              550,000                       -
Add:
  Total stock-based employee
    compensation expense
    under fair value based
    method for all awards,
    net of related tax effect             (1,090,000)                      -
                                      --------------         ---------------
Pro forma net loss                    $   (3,922,198)        $      (544,056)
                                      ==============         ===============
Basic and diluted loss per
  share and member unit,
  respectively - as reported          $        (0.34)        $        (0.07)
                                      ==============         ==============
Basic and diluted loss per
  share and member unit,
  respectively - proforma             $        (0.39)        $        (0.07)
                                      ==============         ==============

Issuance of Stock for Non-cash Considerations

All issuances of the Company's common stock for non-cash consideration have been
assigned a dollar amount  equaling  either the market value of the shares issued
or the value of consideration  received whichever is more readily  determinable.
The  majority  of the  non-cash  consideration  received  pertains  to  services
rendered by  consultants  and others and has been valued at the market  value of
the shares  issued.  In certain  issuances,  the Company may  discount the value
assigned to the stock issued for illiquidity and restrictions on resale.

The Company's accounting policy for equity instruments issued to consultants and
vendors in exchange for goods and services  follows the  provisions  of Emerging
Issues Task Force ("EITF") 96-18,  "Accounting for Equity  Instruments  That are
Issued to Other Than  Employees for Acquiring,  or in Conjunction  with Selling,
Goods  or  Services"  and  EITF  00-18,   "Accounting  Recognition  for  Certain

                                     F - 13
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------

Issuance of Stock for Non-cash Considerations (continued)

Transactions  Involving Equity Instruments Granted to Other Than Employees." The
measurement  date  for the  fair  value  of the  equity  instruments  issued  is
determined at the earlier of (i) the date at which a commitment for  performance
by the  consultant or vendor is reached or (ii) the date at which the consultant
or vendor's performance is complete. In the case of equity instruments issued to
consultants, the fair value of the equity instrument is recognized over the term
of the consulting  agreement.  In accordance to EITF 00-18, an asset acquired in
exchange for the issuance of fully  vested,  nonforfeitable  equity  instruments
should not be presented or  classified  as an offset to equity on the  grantor's
balance  sheet once the equity  instrument is granted for  accounting  purposes.
Accordingly,  the Company recorded the fair value of the common stock issued for
consulting  services as prepaid services in its consolidated  balance sheet (see
Note 7).

Income Taxes

The  Company  accounts  for  income  taxes in  accordance  with  SFAS  No.  109,
"Accounting for Income Taxes." Under the asset and liability  method of SFAS No.
109,  deferred  tax assets and  liabilities  are  recognized  for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences  are expected to be  recovered  or settled.  Under SFAS No. 109, the
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized  in  operations  in the period that  includes the  enactment  date. A
valuation  allowance is provided  for certain  deferred tax assets if it is more
likely than not that the Company  will not  realize  tax assets  through  future
operations.

Comprehensive Income

During the periods presented,  the Company had no items of comprehensive  income
and, therefore, has not presented a statement of comprehensive income.

Loss Per Share

Basic  earnings  per share  ("BEPS") is computed by dividing  loss  available to
common  stockholders by the weighted average number of outstanding common shares
during the period of  computation.  Diluted  earnings per share  ("DEPS")  gives
effect to all dilutive  potential common shares outstanding during the period of
computation.  The  computation of DEPS does not assume  conversion,  exercise or


                                     F - 14
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------

contingent  exercise of securities  that would have an  anti-dilutive  effect on
earnings.  As of  December  31, 2004 and 2003,  the  Company had no  potentially
dilutive  securities  that  would  affect  loss per  share or per  member  unit,
respectively.

Business Segments

During 2004, the Company operated in one segment,  Wholesale  International Long
Distance, operated from the HUB in Miami, Florida.

Reclassifications

Certain   reclassifications  have  been  made  to  prior  year  amounts  in  the
consolidated  financial  statements  in order to  conform  to the  current  year
presentation.  These  reclassifications  have no effect on  previously  reported
results of operations.

New Accounting Pronouncements

In December 2004, the Financial  Accounting Standards Board ("FASB") issued SFAS
No.  123  (revised  2004)  ("SFAS  123(R)"),  "Share-Based  Payment"  to provide
investors and other users of financial statements with more complete and neutral
financial  information  by  requiring  that the  compensation  cost  relating to
share-based  payment  transactions be recognized in financial  statements.  That
cost  will be  measured  based on the  fair  value of the  equity  or  liability
instruments issued. SFAS 123(R) covers a wide range of share-based  compensation
arrangements including share options, restricted share plans,  performance-based
awards,  share  appreciation  rights,  and employee share purchase  plans.  SFAS
123(R) replaces SFAS No. 123, and supersedes APB 25. SFAS No. 123, as originally
issued  in  1995,  established  as  preferable  a  fair-value-based   method  of
accounting for share-based payment  transactions with employees.  However,  that
Statement  permitted  entities the option of continuing to apply the guidance in
APB 25, as long as the  footnotes to  financial  statements  disclosed  what net
income  would have been had the  preferable  fair-value-based  method been used.
Small  business  issuers  will be  required to apply SFAS 123(R) as of the first
interim or annual  reporting  period that begins after  December  15, 2005.  The
Company is in the process of evaluating whether the adoption of SFAS 123(R) will
have a  significant  impact on its overall  results of  operations  or financial
position.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
establishes  standards  for  how  a  company  classifies  and  measures  certain
financial  instruments with  characteristics of both liabilities and equity, and
is effective for public  companies as follows:  (i) in November  2003,  the FASB

                                     F - 15
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------

issued  FASB Staff  Position  ("FSP") FAS 150-03  ("FSP  150-3"),  which  defers
indefinitely (a) the measurement and classification guidance of SFAS No. 150 for
all  manditorily  redeemable   non-controlling  interests  in  (and  issued  by)
limited-life  consolidated  subsidiaries,  and (b)  SFAS No.  150's  measurement
guidance for other types of manditorily  redeemable  non-controlling  interests,
provided  they  were  created  before  November  5,  2003;  (ii)  for  financial
instruments  entered  into or  modified  after May 31, 2003 that are outside the
scope of FSP 150-3; and (iii)  otherwise,  at the beginning of the first interim
period  beginning  after June 15, 2003. The Company  adopted SFAS No. 150 on the
aforementioned  effective dates. The adoption of this pronouncement did not have
a material impact on the Company's results of operations or financial condition.

In  December  2004,  the FASB issued SFAS No.  153,  "Exchanges  of  Nonmonetary
Assets,  an  amendment  of  APB  Opinion  No.  29,  Accounting  for  Nonmonetary
Transactions."  APB Opinion No. 29 is based on the principle  that  exchanges of
nonmonetary  assets  should be  measured  based on the fair  value of the assets
exchanged. The guidance in that Opinion, however, included certain exceptions to
that  principle.  This  Statement  amends APB  Opinion No. 29 to  eliminate  the
exception for nonmonetary exchanges of similar productive assets and replaces it
with a general  exception for exchanges of  nonmonetary  assets that do not have
commercial  substance,  that is, if the future  cash flows of the entity are not
expected to change significantly as a result of the exchange.  The provisions of
this statement are effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. The Company anticipates that SFAS No. 153
will not have an impact on its financial statements.

NOTE 2 - ACQUISITIONS AND DISPOSITIONS

Acquisition of Y-Tel International, LLC

On  October  12,  2004,  Y-Tel  LLC  entered  into  an  Agreement  and  Plan  of
Reorganization  (the  "Agreement")  with  CPC.  Management   accounted  for  the
reorganization as a capital stock transaction.  Accordingly,  the reorganization
is reported  herein as a  recapitalization  of CPC.  Y-Tel LLC is considered the
acquirer for accounting  purposes (a "reverse  acquisition")  because of (a) its
majority  ownership of CPC, (b) its  representation on CPC's board of directors,
and (c) executive  management  positions held by former officers of the Company.
However,  Y-Tel LLC became a wholly  owned  subsidiary  of CPC after the reverse
acquisition. In connection with the reverse acquisition, CPC changed its name to
Y-Tel International,  Inc. in December 2004. The results of CPC previously filed
with  the  SEC  in  prior  years  are  not  included  herein.  The  accompanying
consolidated  financial  statements include the historical results of operations
of Y-Tel LLC.



                                     F - 16
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 2 - ACQUISITIONS AND DISPOSITIONS (Continued)
--------------------------------------------------
Immediately prior to the reorganization, CPC had 4,579,900 outstanding shares of
common stock and no outstanding  shares of preferred  stock.  In accordance with
the Agreement,  CPC issued  10,000,000 shares of its common stock to the members
of Y-Tel LLC in exchange for all of the  outstanding  member  interests of Y-Tel
LLC.  Simultaneously  with the closing of the  acquisition,  Mr. Pack,  the then
President and director of CPC, sold 1,450,400  restricted shares of his personal
CPC common stock in a private  transaction to an unrelated business associate of
the Company. Immediately after the reorganization,  (i) the current stockholders
of CPC  owned  3,129,500  shares,  or  approximately  21%,  and  (ii) CPC is now
controlled  by the former  members of Y-Tel LLC, who own 69% of the  outstanding
CPC shares.  The share exchange ratio in the acquisition was determined  through
arms-length negotiations between Y-Tel LLC and CPC.

In  connection  with  the  reorganization,   CPC  has  entered  into  employment
agreements with two officers (see Note 9).

The proforma  financial  information  has not been presented  because CPC had no
significant operations.

Acquisition  of  International  Telekom,  LLC  (formerly  InTel  Communications,
L.L.C.)

On October 26, 2003, the Company  acquired 100% of the  membership  interests in
International Telekom, LLC ("International  Telekom").  The members of Y-Tel and
International  Telekom surrendered their respective membership interests in each
entity and subsequently received a new distribution of member interests based on
the projected consolidated values of all the respective entities of the Company.
All the members  agreed to the  acquisition  and their newly  issued  membership
interest in the Company.

The method used to determine the new allocation was an informal  agreement among
the members as to the acceptable  partnership  interest units.  The members took
into  consideration,  equity and equipment  contributions,  as well as technical
expertise each member brought to the new company.

Inasmuch as the business was acquired from a related  party,  under Topic 5 G of
the SEC Staff  Accounting  Bulletin,  the assets  acquired  were recorded at the
transferor's carryover basis as follows:

Cash                                                               $     79
Due from stockholders:
  Related to equipment purchases                     34,260
  Other stockholder amounts                          84,600
                                              -------------
                                                                    118,860
Note receivable                                                      25,000
Equipment                                                           345,363
                                                            ---------------
                                                            $       489,302
                                     F - 17
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 2 - ACQUISITIONS AND DISPOSITIONS (Continued)
--------------------------------------------------

The amounts due from members consisted of non-interest  bearing loans to various
members of International Telekom prior to acquisition and advances for equipment
purchases.  During fiscal year 2004, the Company  wrote-off  $39,800  related to
these loans. The remaining balance of $44,800 is expected to be paid back to the
Company during fiscal 2005 by the respective  stockholder and is included in due
from stockholder in the accompanying consolidated balance sheet.

The note  receivable  of $25,000  was  written off by the Company in fiscal year
2004.  This  loan  was  to  the  principal  owner  of  SunGlobe  Telecom,   Inc.
("SunGlobe") and was initiated as an integral part of a stock purchase agreement
to acquire SunGlobe.  At the end of fiscal year 2004,  management decided not to
pursue the  acquisition  of SunGlobe  and as a result the Company  wrote off the
loan.

NOTE 3 - PROPERTY AND EQUIPMENT
-------------------------------
Property and equipment consists of the following at December 31, 2004:

Equipment                                                       $     599,717
Furniture                                                               3,000
                                                                 ------------
                                                                      602,717

Less accumulated depreciation                                         (65,620)
                                                                 ------------
Fixed assets, net                                                     537,097

Equipment installation in process (Panama)                            459,665
                                                                 ------------
Property and equipment, net                                     $     996,762
                                                                 ============


Depreciation  and  amortization  expense for property and equipment for the year
ended December 31, 2004 and for the period from Inception  through  December 31,
2003 were $56,717 and $8,903 respectively.

NOTE 4 - INTANGIBLE ASSET
-------------------------
In October 2004, the Company  entered into an exclusive  worldwide  distribution
agreement (the "Distribution Agreement") with EBI Communications,  Inc. ("EBI").
In accordance  with the  Distribution  Agreement,  the Company  agreed to pay an
exclusive  marketing  fee of  $100,000,  $5,000  payable  upon  execution of the
Distribution  Agreement and $95,000 within 60 days thereafter,  of which $30,000
was paid as of December 31,  2004.  Also,  in  consideration  of  receiving  the
exclusive  distribution  rights,  the Company  has issued EBI 300,000  shares of


                                     F - 18
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 4 - INTANGIBLE ASSET (Continued)
-------------------------------------
restricted common stock valued at approximately $675,000 (based on the estimated
fair  market  value on the date of  issuance)  and  recorded  such  amount as an
intangible  asset in accompanying  consolidated  balance sheet (see Note 9). The
Company  will  amortize  such  amount to expense  over the  10-year  life of the
agreement. The Company has amortized $11,750 to expense in 2004.
NOTE 4 - INTANGIBLE ASSET (Continued)

The estimated amortization expense for the next five years is as follows:

    Years Ending
    December 31,
        2005                    $       67,500
        2006                            67,500
        2007                            67,500
        2008                            67,500
        2009                            67,500

NOTE 5 - NOTES PAYABLE
----------------------
In November 2004, the Company  issued a convertible  note payable  ("Convertible
Note")  in the  amount of  $150,000,  bearing  interest  at 8% per  annum,  with
principal and accrued  interest due on November 30, 2006. The  Convertible  Note
required no payment of principal or interest during the term and was convertible
to common  stock of the  Company  at any time at the option of the  holder.  The
number of common shares issuable upon conversion is equal to the total principal
and unpaid interest as of the date of conversion,  divided by $4.00. In December
2004,  the holder  converted  principal  and accrued  interest of  approximately
$151,000 into 37,750 shares of common stock.

In November  and  December  2003,  the Company  issued  notes  payable  totaling
$190,000.  In January 2004,  the notes were  converted into 752,273 member units
(see Note 7).

At December 31, 2004 the Company had an outstanding  note payable with a related
party totaling $327,598 (see Note 6).

NOTE 6 - RELATED PARTY TRANSACTIONS
-----------------------------------
On February  18, 2004,  the Company  repurchased  2,474,581  member units from a
majority  member for  $242,000  for the purpose of  reissuing  such units to new
members. At December 31, 2004, the remaining balance to be paid was $227,000. In
January 2005, as part of a settlement agreement (see below), all amounts payable
to the related party were forgiven.

During the year ended  December 31, 2004 and the period from  Inception  through
December 31, 2003, the Company purchased  several pieces of equipment  (totaling
$3,472 and $132,000 in 2004 and 2003,  respectively) and received contract labor


                                     F - 19
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 6 - RELATED PARTY TRANSACTIONS (Continued)
-----------------------------------------------
and  other  services   (totaling   $197,949  and  $172,437  in  2004  and  2003,
respectively) from a company owned by a stockholder of the Company. Such amounts
totaled  $327,598,  net of amounts due from the related  party of  $178,260.  In
January  2005,  the Company  and the related  party  entered  into a  settlement
agreement  (the  "Settlement")  for all amounts owed and amounts due between the
parties.  In  accordance  with the  Settlement,  the Company is required to make
payments of $20,000 per month  beginning in February 2005 and a final payment of
$12,402 in June  2006.  In  connection  with the  Settlement,  the  Company  was
relieved  from  $227,000  owed to the related  party (see above),  which will be
credited to additional paid in capital in 2005.

The Company  entered into  consulting  agreements  with three  stockholders  for
services to be provided through June 2005 (see Note 9).

NOTE 7 - EQUITY
---------------
In December  2003,  the Company  issued  791,866  member  units for  proceeds of
$175,000.  The  proceeds  were  received  directly  by  a  company  owned  by  a
stockholder.  Therefore,  the amounts  have been  recorded as due from a related
party,  less $31,000,  which was paid in December 2003. The amounts due from the
related  party have been netted  against  amounts owed to the related  party and
included in the Settlement (see Note 6).

Prior to the reverse  acquisition  with CPC,  the Company  issued the  following
membership units:

In January 2004, a member  relinquished  197,967 member units to the Company for
no  consideration  in order for the Company to resell such units and utilize the
proceeds for working capital.

As  described  in Note 6, the  Company  entered  into an  agreement  to purchase
2,474,581  member  units from a majority  member for  $242,000  for the  purpose
reselling such member units for working capital.

During 2004,  holders of notes payable  converted  $190,000 into 752,273  member
units.

During 2004, the Company sold 435,520 member units for $152,000.

In October 2004, the Company completed a recapitalization, whereby it authorized
and  issued an  aggregate  of  10,000,000  member  units to the  members  of the
Company.  All previously issued member units were cancelled and new certificates
reflecting  the new  allocation of member units were issued.  The allocation was
based on the then current  ownership  percentages,  subsequent to accounting for
the addition of the new Company  President and an  adjustment  from treasury for
units  relinquished  for working  capital needs of the Company.  The member unit
amounts  and per  unit  amounts  referred  to in  these  consolidated  financial
statements have been adjusted to reflect such recapitalization.

                                     F - 20
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 7 - EQUITY, continued
--------------------------
In October 2004,  the Company  issued  1,166,392  member units to its President,
valued at $407,080  (based on the estimated fair value on the date of issuance),
in connection with a signing bonus and was expensed upon issuance.

In October 2004, the Company issued 618,004 member units to an existing  member,
valued at approximately  $215,688 (based on the estimated fair value on the date
of issuance) for services rendered and were expensed upon issuance.

In December 2004, the Company issued 37,750 shares of restricted common stock in
connection  with the  conversion of $151,000 of principal  and accrued  interest
(see Note 5).

During the year ended  December 31, 2004,  the Company  issued 300,000 shares of
restricted  common  stock  in  connection  with  an  exclusive   distributorship
agreement.  The 300,000 shares were valued at $675,000  (based on the fair value
of the common stock at the date of the agreement) (see Note 4).

During the year ended  December 31, 2004,  the Company  issued 510,000 shares of
restricted   common  stock  to  various   consultants  in  connection  with  the
performance of consulting  services to be performed  through  December 2005. The
510,000 shares were valued at $1,470,000  (based on the fair value of the common
stock at the respective  measurement  dates) and recorded as prepaid services in
the accompanying  consolidated  balance sheet.  Such amount will be amortized to
expense over the lives of the related agreements, of which $196,458 was expensed
during the year ended December 31, 2004.

Stock Options

In connection with the reverse acquisition (see Note 2), the Company adopted the
existing  2001 Stock  Option  Plan (the  "Plan") of CPC.  The Plan has  reserved
3,500,000 shares of common stock, as amended.  Under provisions of the Plan, the
exercise  price of the options  shall be determined by the Board of Directors at
the time of grant.  The  exercise  period shall be no more than 10 years and the
awards  will  vest  over a  period  of time to be  determined  by the  Board  of
Directors.

In connection  with the employment  agreements  (see Note 9), the Company issued
options to purchase an  aggregate  of  1,000,000  shares of common  stock to two
officers,  with an exercise price of $0.55,  which vest  immediately  and expire
through September 2007. The Company recorded compensation expense of $550,000 in
connection with the issuance of the employee options.

In connection with consulting  agreements (see Note 9) with three  stockholders,
the Company  issued  options to purchase an  aggregate  of  1,500,000  shares of
common stock, with an exercise price of $0.55, which vest immediately and expire
through September 2007. The options were valued using the  Black-Scholes  option
pricing  model at an aggregate of  $1,635,000.  The Company is  amortizing  such
amount  over  the  life  of  the  related  consulting  agreements  and  recorded
compensation expense of $408,750 during fiscal 2004.
                                     F - 21
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 7 - EQUITY, continued
--------------------------
The following  summarizes the Company's stock option  transactions  for the year
ended December 31, 2004:

                                         Weighted
                                          Average    Life (Years)
Outstanding,
December 31, 2003        -              $       --
Granted                  2,500,000            0.55
Exercised                --                     --
Canceled                 --                     --
                                        ----------     ----------
Outstanding,
December 31, 2004        2,500,000      $     0.55           2.75
                                        ==========     ==========
Weighted average fair
value of options granted                $     1.09
                                        ==========

Warrants

In connection  with the reverse  acquisition  with CPC (see Note 2), the Company
assumed Class A warrants to issue 27,900  shares of the  Company's  common stock
and Class B warrants to issue 27,900 shares of the Company's  common stock.  The
Class A  warrants  are  exercisable  at $1.00,  vested  upon grant and expire in
September  2005, as amended.  The Class B warrants are  exercisable at $1.50 per
share,  vested  upon  grant and  expire in  September  2006.  There was no other
warrant activity during fiscal 2003 and 2004.

The following  table  summarizes  information  about warrants  outstanding as of
December 31, 2004:

                            Warrants Outstanding and Exercisable
                                          Weighted                  Weighted
Range of                                  Average                   Average
Exercise                                  Remaining                 Exercise
Prices                      Number        Contractual Life          Price
-------                     -------       -----------------         -----
$1.00 - $1.50               55,800        1.25 years                $     1.25


NOTE 8 - INCOME TAXES

Prior to October 12, 2004, the Company elected to be taxed as a partnership. All
income and losses  were passed  through to the  members  and the members  report
these on their individual  income tax returns.  There was no significant  entity
level income tax for the Company for Federal and State purposes up to such date.



                                     F - 22
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 8 - INCOME TAXES (Continued)
---------------------------------
The  provision  for  income  taxes in the  accompanying  consolidated  financial
statements  consists  of the  following  for the period  from  October  12, 2004
through December 31, 2004:

                       2004
                       ----
Current:
       Federal         $              -
       State
                                      -
Deferred:
       Federal                        -
       State                          -
                           -------------
                                      -
                           -------------
                       $              -
                           =============

The  reconciliation  of the effective  income tax rate to the Federal  statutory
rate is as follows for the period from October 12, 2004 through December 31:

                                                                       2004
                                                                       ----
Federal income tax rate                                                (34.0)%
State and local income tax rate, net of Federal effect                  (5.0)%
Increase in valuation allowance
                                                                        39.0 %
                                                                 -------------
Effective income tax rate                                                  - %
                                                                 =============

Deferred  tax assets and  liabilities  reflect  the net tax effect of  temporary
differences  between the carrying  amount of asset and liabilities for financial
reporting  purposes  and  amounts  used for  income  tax  purposes.  Significant
components  of the  Company's  deferred tax assets are as follows as of December
31, 2004:

Deferred tax assets:
       Loss carryforwards                           $    676,000
       Less: valuation allowance                        (676,000)
                                                      -----------
Net deferred tax assets                             $           -
                                                      ===========

The valuation allowance increased by $676,000 during the period from October 12,
2004 through December 31, 2004.


                                     F - 23
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 8 - INCOME TAXES (Continued)
---------------------------------
At December  31,  2004,  the Company  had Federal and State net  operating  loss
carryforwards  of  approximately  $1,832,000.  Net operating loss  carryforwards
expire through 2024. Per year availability may be subject to change of ownership
limitations under Internal Revenue Code Section 382.

NOTE 9 - COMMITMENTS AND CONTINGENCIES
--------------------------------------
Indemnities and Guarantees

The Company has made certain  indemnities and guarantees,  under which it may be
required to make payments to a guaranteed or indemnified  party,  in relation to
certain transactions. The Company indemnifies its directors, officers, employees
and  agents  to the  maximum  extent  permitted  under  the laws of the State of
Florida and Delaware.  In connection with its facility  leases,  the Company has
indemnified  its  lessors  for  certain  claims  arising  from  the  use  of the
facilities.  In  connection  with  certain  of  its  stock  purchase  and  other
agreements,  the Company has  indemnified  lenders,  sellers,  and various other
parties for certain claims arising from the Company's breach of representations,
warranties and other provisions contained in the agreements. The duration of the
guarantees  and  indemnities  do not provide for any  limitation  of the maximum
potential future payments the Company could be obligated to make.  Historically,
the Company has not been  obligated to make any  payments for these  obligations
and no liabilities  have been recorded for these  indemnities  and guarantees in
the accompanying consolidated balance sheet.

Litigation

As of  December  31,  2004,  the Company was not named in any current or pending
litigation.
From time to time,  the Company may be involved in various  claims,  lawsuits or
disputes  arising in the normal  operations of its business.  The Company is not
currently  involved in any such matters which  management  believes could have a
material  adverse  effect on the  Company's  financial  position  or  results of
operations.

Employment Agreements

In connection with the  reorganization,  the Company has entered into employment
agreements with two officers.  Such  agreements are in effect through  September
2006 and  continue  in effect  from  year to year  thereafter  unless  otherwise
terminated,  pursuant  to the terms of such  contracts.  Future  annual  minimum
payments under these employment agreements approximate $288,000,  with potential
annual increases, as defined. In connection with the employment agreements,  the
Company  issued  options to purchase an aggregate of 1,000,000  shares of common
stock to the two officers (see Note 7).

Consulting Agreements



                                     F - 24
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                  (Formerly Consolidated Pictures Corporation)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     For The Year Ended December 31, 2004 and The Period From August 8, 2003
                     (Inception) Through December 31, 2003

NOTE 9 - COMMITMENTS AND CONTINGENCIES, continued
-------------------------------------------------
In October  2004,  the Company  entered into  consulting  agreements  with three
stockholders.  Such  agreements  are in effect through June 2005 and provide for
aggregate monthly consulting fees of $36,000.  In connection with the consulting
agreements,  the Company  issued  options to purchase an  aggregate of 1,500,000
shares of  common  stock  (see Note 7).  Approximately  $480,000  of  consulting
expense related to these  agreements was recorded during the year ended December
31, 2004.

Operating Leases

The Company leases its facilities and leased its satellite bandwidth (expired in
July 2004) under  non-cancelable  operating lease agreements.  The leases expire
onvarious  dates  through  September  2008 and provide for monthly rents ranging
from

approximately $1,100 to $10,200.  Rental expense for the year ended December 31,
2004 and the period from Inception  through December 31, 2003 was  approximately
$265,000 and $50,000, respectively.
Future  minimum  lease  payments  under  non-cancelable  operating leases are as
follows:

Years Ending December 31,
2005                                   $              150,000
2006                                                   85,000
2007                                                   80,000
2008                                                   60,000
                                           -------------------
Total                                  $              375,000
                                           ===================

NOTE 10 - SUBSEQUENT EVENTS (UNAUDITED)

During the three month period ended March 31, 2005,  the Company  issued 769,888
shares of restricted common stock for cash approximating $569,000.

During the three month period ended March 31, 2005,  the Company  issued  73,700
shares of restricted common stock for services to be provided through March 2006
valued at approximately  $172,000 (based on the estimated fair value at the date
of grant).











                                     F - 25