UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                  For the quarterly report ended March 31, 2007

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT

              For the transition period from ________ to __________


                        Commission File Number: 000-03296


                         TRADEQUEST INTERNATIONAL, INC.
                         ------------------------------
          (Exact name of small business issuer as specified in charter)


                    NEVADA                                 64-0440887
                    ------                                 ----------
      (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                  Identification No.)


                               801 Brickell Avenue
                                    9th Floor
                              Miami, Florida 33131
                              --------------------
                    (Address of principal executive offices)


                                 (305) 377-2110
                                 --------------
                           (Issuer's telephone number)


Check whether the issuer (1) has 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 [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

                       APPLICABLE ONLY TO COPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: At May 15, 2007, there were 24,801,526
shares of common stock were issued and outstanding.

Transitional Small Business Disclosure Format (Check one) Yes [ ] No [X]

<PAGE>

         References in this report to "Tradequest", the "Company", "we", "us"
and "our" are to Tradequest International, Inc. a Nevada corporation, and our
subsidiary.

           CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

         This quarterly report contains forward-looking statements. These
forward-looking statements are subject to risks and uncertainties and other
factors that may cause our actual results, performance or achievements to be
materially different from the results, performance or achievements expressed or
implied by the forward-looking statements. You should not unduly rely on these
statements. Forward-looking statements can be identified by the fact that they
do not relate strictly to historical or current facts. They use words such as
"anticipate," "estimate," "expect," "project," "intend," "plan," "believe,"
"project," "contemplate," "would," "should," "could," or "may." With respect to
any forward-looking statement that includes a statement of its underlying
assumptions or bases, we believe such assumptions or bases to be reasonable and
have formed them in good faith, assumed facts or bases almost always vary from
actual results, and the differences between assumed facts or bases and actual
results can be material depending on the circumstances. When, in any
forward-looking statement, we express an expectation or belief as to future
results, that expectation or belief is expressed in good faith and is believed
to have a reasonable basis, but there can be no assurance that the stated
expectation or belief will result or be achieved or accomplished. All subsequent
written and oral forward-looking statements attributable to us, or anyone acting
on our behalf, are expressly qualified in their entirety by the cautionary
statements.

                                        2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                 March 31, 2007
                                    Unaudited

                                     ASSETS
Current Assets:
  Cash ..........................................................   $   164,645
  Other current assets ..........................................        18,732
                                                                    -----------
                                                                        183,377

  Property and equipment, net of accumulated
    depreciation of $12,322 .....................................        17,347
  Deferred financing fees, net of accumulated
    amortization of $23,044 .....................................       209,209
  Security deposits .............................................        23,500
                                                                    -----------

     Total assets ...............................................   $   433,433
                                                                    ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
  Accounts payable and accrued expenses .........................   $    82,338
  Deferred revenues .............................................         6,799
  Derivative liabilities ........................................     1,166,536
  Due to related party ..........................................       118,350
  Note payable to related party and accrued interest ............       408,667
  Convertible promissory notes and accrued interest,
    net of discount of $1,180,728 ...............................       345,357
  Notes payable and accrued interest ............................       474,362
                                                                    -----------

     Total current liabilities ..................................     2,602,409

Stockholders' Deficit:
  Preferred stock; $0.001 par value, 10,000,000 shares
    authorized, 1,000,000 issued and outstanding ................         1,000
  Common stock; $.001 par value, 100,000,000 shares
    authorized, 75,645,137 issued and outstanding ...............        75,645
  Additional paid-in capital ....................................     8,052,341
  Deferred compensation .........................................      (336,762)
  Accumulated deficit ...........................................    (9,961,200)
                                                                    -----------

     Total stockholders' deficit ................................    (2,168,976)
                                                                    -----------

     Total liabilities and stockholders' deficit ................   $   433,433
                                                                    ===========

                  See Notes to Unaudited Financial Statements.

                                        3
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF OPERATIONS

                                                        For the three-month
                                                       period ended March 31,
                                                    ---------------------------
                                                        2007           2006
                                                    ------------   ------------
                                                     (Unaudited)    (Unaudited)

Revenues .........................................  $      4,537   $      7,816

Cost of revenues .................................        21,048         12,969
                                                    ------------   ------------

Gross loss: ......................................       (16,511)        (5,153)

Operating expenses:
  Sales, general and administrative ..............       506,104        167,322
  Sales, general and administrative-related party              -         16,050
                                                    ------------   ------------
     Total operating expenses ....................       506,104        183,372
                                                    ------------   ------------

     Operating loss ..............................      (522,615)      (188,525)
                                                    ------------   ------------

Other income (expenses):
Other income-derivatives .........................       710,331      4,963,083
Interest expense-related party ...................        (7,000)        (7,000)
Interest expense .................................      (183,214)      (107,823)
                                                    ------------   ------------

Net income .......................................  $     (2,498)  $  4,659,735
                                                    ============   ============

Basic income per share ...........................  $      (0.00)  $       0.08
                                                    ============   ============

Diluted loss per share ...........................  $      (0.01)  $      (0.01)
                                                    ============   ============

Basic weighted average shares outstanding ........    75,243,129     57,118,734
                                                    ============   ============

Diluted weighted average shares outstanding ......    75,243,129     57,118,734
                                                    ============   ============

                  See Notes to Unaudited Financial Statements.

                                        4
<PAGE>
<TABLE>
                                   TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                           For the three-month
                                                                                          period ended March 31,
                                                                                        -------------------------
                                                                                            2007          2006
                                                                                        -----------   -----------
                                                                                        (Unaudited)   (Unaudited)
<S>                                                                                     <C>           <C>
Cash flows from operating activities:
Net income (loss) ....................................................................  $    (2,498)  $ 4,659,735
Adjustments to reconcile net income (loss) to net cash
 used in operating activities:
  Amortization of debt discount ......................................................      109,010        51,125
  Amortization of deferred compensation ..............................................      216,242             -
  Amortization of deferred financing costs ...........................................       22,777             -
  Fair value of derivative liabilities at date of issuance, in excess of debt discount            -         9,000
  (Decrease) increase in fair value of derivative liabilities ........................     (710,331)   (4,972,063)
  Fair value of shares issued in satisfaction of interest on note payable ............        5,670        32,009
  Write-off of deferred financing fees ...............................................            -        10,000
  Depreciation .......................................................................        2,697         2,481
Changes in operating assets and liabilities
  Accounts receivable ................................................................            -          (226)
  Security deposits ..................................................................       (6,900)            -
  Other current assets ...............................................................      (18,732)            -
  Accounts payable to related party ..................................................            -        16,050
  Deferred revenues ..................................................................      (13,667)          652
  Accounts payable and accrued expenses ..............................................      (11,247)        5,202
  Accrued interest on promissory notes-related party .................................       (1,900)        2,334
  Accrued interest and premiums on promissory notes ..................................       20,757        24,689
                                                                                        -----------   -----------

Net cash used in operating activities ................................................     (388,122)     (159,012)

Cash flows from investing activity:
  Purchase of property and equipment .................................................       (2,531)            -
                                                                                        -----------   -----------
Net cash used in financing activities ................................................       (2,531)            -

Cash flows from financing activities:
  Proceeds from issuance of convertible promissory notes .............................      500,000        75,000
  Proceeds from issuance of promissory notes .........................................            -        50,000
  Principal repayments of promissory notes ...........................................      (66,666)            -
  Payment of deferred financing costs ................................................      (50,000)            -
  Use of bank overdraft ..............................................................            -        34,532
                                                                                        -----------   -----------

Net cash provided by financing activities ............................................      383,334       159,532

(Decrease) increase in cash ..........................................................       (7,319)          520

Cash, beginning of period ............................................................      171,964             -
                                                                                        -----------   -----------

Cash, end of period ..................................................................  $   164,645   $       520
                                                                                        ===========   ===========

Supplemental disclosures of cash flow information:

  Cash paid during the period for interest ...........................................  $    33,900   $     4,666
                                                                                        ===========   ===========
  Cash paid during the period for taxes ..............................................  $         -   $         -
                                                                                        ===========   ===========

Supplemental schedule of non-cash financing and investing activities:

Fair value of embedded conversion features and corresponding increase in debt discount  $   360,000   $    85,200
                                                                                        ===========   ===========
Reclassification of contracts from liability to equity ...............................  $     4,800   $         -
                                                                                        ===========   ===========
Conversion of convertible promissory notes ...........................................  $     6,850   $         -
                                                                                        ===========   ===========

                                   See Notes to Unaudited Financial Statements.

                                                         5
</TABLE>
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization
------------

The Company was incorporated under the laws of the State of Mississippi on
August 8, 1966 and it was reincorporated in Nevada on August 17, 2005. During
August 2005, the Company acquired IP1 Network Corporation ("IP1"). The Company
is an Internet communications provider offering worldwide Voice over Internet
Protocol ("IP") and other IP services to medium and large size synergistic
businesses that can offer such IP services to their client base. The Company is
providing such services by leveraging the IP infrastructure of various
telecommunications provider. The initial marketing programs are aimed at the
Latin American market. The Company's operations are located in South Florida.

Going Concern
-------------

The accompanying financial statements have been prepared on a going concern
basis. The Company has generated minimal revenue since its inception and has
incurred net losses of approximately $10.0 million. The Company's ability to
continue as a going concern is dependent upon its ability to obtain the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due, to fund possible future
acquisitions, and to generate profitable operations in the future. Management
plans to continue to provide for its capital requirements by issuing additional
equity securities and debt. The outcome of these matters cannot be predicted at
this time and there are no assurances that if achieved, the Company will have
sufficient funds to execute its business plan or generate positive operating
results.

These matters, among others, raise substantial doubt about the ability of the
Company to continue as a going concern. These financial statements do not
include any adjustments to the amounts and classification of assets and
liabilities that may be necessary should the Company be unable to continue as a
going concern.

Basis of Presentation
---------------------

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form l0-QSB and Article 10 of
Regulation S-B. Accordingly, they do not include all the information and
disclosures required for annual financial statements. These financial statements
should be read in conjunction with the consolidated financial statements and
related footnotes as of the year ended December 31, 2006, included in the Annual
Report filed on Form l0-KSB.

In the opinion of the management, all adjustments (consisting of normal
recurring accruals) necessary to present fairly the Company's financial position
as of March 31, 2007, and the results of operations and cash flows for the
three-month period ending March 31, 2007 have been included. The results of
operations for the three-month period ended March 31, 2007 are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report filed on Form l0-KSB as filed
with the Securities and Exchange Commission for the year ended December 31,
2006.

                                        6
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Concentration of Credit Risks
-----------------------------

The Company is subject to concentrations of credit risk primarily from cash.
During the three-month period ended March 31, 2007, the Company reached bank
balances exceeding the FDIC insurance limit. The Company minimizes its credit
risks associated with cash by periodically evaluating the credit quality of its
primary financial institutions.

Product Concentration
---------------------

The Company earns all of its revenues from providing worldwide Voice over IP and
other IP services to medium and large size synergistic businesses that can offer
such IP services to their client base.

Customer Concentration
----------------------

One of the Company's clients accounted for 90%of the revenues during the
three-month period ended March 31, 2007.

Cash and Cash Equivalents
-------------------------

The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.

Fair Value of Financial Instruments
-----------------------------------

The carrying value of cash, accounts payable and accrued expenses, notes
payables and convertible promissory notes approximate their fair value due to
their short-term maturities. The carrying value of the derivative liabilities is
based on its fair value.

Income Taxes
------------

Income taxes are accounted for in accordance with SFAS No. 109, Accounting for
Income Taxes. SFAS No. 109 requires the recognition of deferred tax assets and
liabilities to reflect the future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. Measurement of
the deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and tax bases of
the Company's assets and liabilities result in a deferred tax asset, SFAS No.
109 requires an evaluation of the probability of being able to realize the
future benefits indicated by such assets. A valuation allowance related to a
deferred tax asset is recorded when it is more likely than not that some or all
of the deferred tax asset will not be realized.

                                        7
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Use of Estimates
----------------

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States 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 the reported amounts of revenues and expenses during the
reporting periods. Significant estimates made by management include, but are not
limited to, the realization of receivables, the valuation of stock-based
compensation, and the recoverability of long-lived assets. Actual results will
differ from these estimates.

Earnings per Share
------------------

Basic earnings per share are calculated by dividing income available to
stockholders by the weighted-average number of common shares outstanding during
each period. Diluted earnings per share are computed using the weighted average
number of common and dilutive common share equivalents outstanding during the
period. Dilutive common share equivalents consist of shares issuable upon the
exercise of stock options and warrants (calculated using the reverse treasury
stock method). The outstanding options, warrants and shares equivalent issuable
pursuant to the convertible promissory notes amounted to 59,853,333 and
19,095,476 at December 31, 2006 and 2005, respectively. Such outstanding
options, warrants and shares equivalent issuable pursuant to convertible debt
are excluded from the loss per share computation for that period due to their
antidilutive effect.

The following sets forth the computation of basic and diluted earnings per
share:

                                                  Three Months Ended March 31,
                                                    2007               2006
                                                ------------       ------------
Numerator:
Net income ..............................       $     17,312       $  4,659,735
Other income, net - derivatives .........           (710,331)        (4,963,083)
                                                ------------       ------------
Numerator for diluted earnings per share        $   (693,019)      $   (303,348)
                                                ============       ============

Denominator:
Denominator for basic and diluted
earnings per share -
Weighted average shares outstanding .....         75,243,129         57,118,734

Basic earnings (loss) per share .........       $       0.00       $       0.08
                                                ============       ============
Diluted earnings (loss) per share .......       $      (0.01)      $      (0.01)
                                                ============       ============
Anti-dilutive weighted-average shares ..         239,327,143         19,458,809
                                                ============       ============

                                        8
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Revenue Recognition
-------------------

Revenue is recognized when earned. The Company's revenue recognition policies
are in compliance with the Securities and Exchange Commission's Staff Accounting
Bulletin ("SAB") No. 104 "Revenue Recognition".

The Company generally invoices its customers upon ordering. Revenues from the
sale of phone equipment are recognized upon shipment by the manufacturer to the
reseller. Revenues from the Internet communications services are recognized in
the period such services are used by the end-user. The invoices are based on
specific list prices for phone equipment and per minute rates for Internet
communications services. The Company adjusts its product prices and services
rates based on volume of services and marketing promotion programs. All
adjustments are recorded at the time the services are rendered. The Company will
generally receive a deposit from resellers of Internet communication services
and will apply the Internet communication services usage fees against the
resellers' outstanding deposit.

Segment reporting
-----------------

The Company operates in one segment, Internet communications. The Company's
chief operating decision-maker evaluates the performance of the Company based
upon revenues and expenses by functional areas as disclosed in the Company's
statement of operations.

Derivative Liabilities
----------------------

The Company accounts for its embedded conversion features and freestanding
warrants pursuant to SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", which requires a periodic valuation of their fair value and
a corresponding recognition of liabilities associated with such derivatives. The
recognition of derivative liabilities related to the issuance of shares of
common stock is applied first to the proceeds of such issuance, at the date of
issuance, and the excess of derivative liabilities over the proceeds is
recognized as other expense in the accompanying consolidated financial
statements. The recognition of derivative liabilities related to the issuance of
convertible debt is applied first to the proceeds of such issuance as a debt
discount, at the date of issuance, and the excess of derivative liabilities over
the proceeds is recognized as other expense in the accompanying consolidated
financial statements. Any subsequent increase or decrease in the fair value of
the derivative liabilities is recognized as other expense or other income,
respectively. The reclassification of a contract is reassessed at each balance
sheet date. If a contract is reclassified from permanent equity to an asset or a
liability, the change in the fair value of the contract during the period the
contract was classified as equity is accounted

                                        9
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

for as an adjustment to equity. If a contract is reclassified from an asset or
liability to equity, gains or losses recorded to account for the contract at
fair value during the period that contract was classified as an asset or a
liability are not reversed and are accounted for as an adjustment to equity.

In December 2006, FASB issued FASB Staff Position No. EITF 00-19-2 "Accounting
for Registration Payment Arrangements" ("FSP 00-19-2"). FSP 00-19-2 provides
that the contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement, should be separately
recognized and measured in accordance with FASB Statement No.5, "Accounting for
Contingencies". The registration statement payment arrangement should be
recognized and measured as a separate unit of account from the financial
instrument(s) subject to that arrangement. If the transfer of consideration
under a registration payment arrangement is probable and can be reasonably
estimated at inception, such contingent liability is included in the allocation
of proceeds from the related financing instrument.

Property and Equipment
----------------------

Computer and office equipment are stated at cost, and is depreciated over their
estimated useful life, using the straight-line method, which is three years.

Depreciation expense amounted to approximately $3,000 and $2,000 during the
three-month period ended March 31, 2007 and 2006, respectively.

Share Based Payments
--------------------

In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which
replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
companies are required to measure the compensation costs of share-based
compensation arrangements based on the grant-date fair value and recognize the
costs in the financial statements over the period during which employees are
required to provide services. Share-based compensation arrangements include
stock options, restricted share plans, performance-based awards, share
appreciation rights and employee share purchase plans. In March 2005 the SEC
issued Staff Accounting Bulletin No. 107, or "SAB 107". SAB 107 expresses views
of the staff regarding the interaction between SFAS No. 123(R) and certain SEC
rules and regulations and provides the staff's views regarding the valuation of
share-based payment arrangements for public companies. SFAS No. 123(R) permits
public companies to adopt its requirements using one of two methods. On April
14, 2005, the SEC adopted a new rule amending the compliance dates for SFAS
123R. Companies may elect to apply this statement either prospectively, or on a
modified version of retrospective application under which financial statements
for prior periods are adjusted on a basis consistent with the pro forma
disclosures required for those periods under SFAS 123. Effective January 1,
2006, the Company has fully adopted the provisions of SFAS No. 123R and related
interpretations as provided by SAB 107. As such, compensation cost is measured
on the date of grant at their fair value. Such compensation amounts, if any, are
amortized over the respective vesting periods of the option grant.

                                       10
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

The Company applies this statement prospectively. Performance or service
conditions that affect vesting are not reflected in estimating the fair value of
an award at the grant date because those conditions are restrictions that stem
from the possible forfeiture of instruments to which the option holder has not
yet earned the right.

During July 2005, the Company issued 2,610,000 options to a consultant of the
Corporation, with an exercise price of $0.01. Such options are not vested or
exercisable at March 31, 2007. There is no expiration date on the options. The
options vest in the year in which the Company achieves $20 million in revenues,
and a prorata portion of the options would vest in the year in which the Company
achieves $10 million in revenues. Accordingly, no compensation cost associated
with the options is recognized during the three-month period ended March 31,
2007 and 2006, respectively.

Recent accounting pronouncements
--------------------------------

In September 2006, the FASB issued FASB Statement No. 157. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective for
financial statements for fiscal years beginning after November 15, 2007. Earlier
application is permitted provided that the reporting entity has not yet issued
financial statements for that fiscal year. Management believes this Statement
will have no impact on the financial statements of the Company once adopted.

On July 13, 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48 ("FIN 48") entitled "Accounting for Uncertainty in Income
Taxes - an Interpretation of FASB Statement No. 109". Concurrently, FASB issued
a FASB staff position (FSP) relating to income taxes, (FSP) No. FAS 13-2,
"Accounting for a Change or Projected Change in the Timing of Cash Flows
Relating to Income Taxes Generated by a Leveraged Lease Transaction." FASB's
summary of FIN 48 notes that differences between tax positions recognized in the
financial statements and tax positions taken in the tax return (referred to
commonly as "book" vs. "tax") will generally result in: (a) an increase in a
liability for income taxes payable or a reduction of an income tax refund
receivable, (b) a reduction in a deferred tax asset or an increase in a deferred
tax liability, or (c) both of the above. FIN 48 requires the affirmative
evaluation that it is more likely than not, based on the technical merits of a
tax position, that an enterprise is entitled to economic benefits resulting from
positions taken in income tax returns. Further, if a tax position does not meet
the more-likely-than-not recognition threshold, the benefit of that position is
not recognized in the financial statements. Additionally, FIN 48 establishes
guidance for "derecognition" of previously recognized deferred tax items, and
sets forth disclosure requirements. The effective date of FIN 48 is for fiscal
years beginning after December 15, 2006. The Company does not believe that FIN
48, once adopted, will have a significant impact on its financial position,
operating results, or cash flows.

                                       11
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

In July 2005, the FASB issued FASB Staff Position ("FSP") 150-5, "Accounting
Under SFAS 150 for Freestanding Warrants and Other Similar Instruments on
Redeemable Shares". FSP 150-5 clarifies that warrants on shares that are
redeemable or puttable immediately upon exercise and warrants on shares that are
redeemable or puttable in the future qualify as liabilities under SFAS 150,
regardless of the redemption feature or redemption price. The FSP is effective
for the first reporting period beginning after September 30, 2005, with
resulting changes to prior period statements reported as the cumulative effect
of an accounting change in accordance with the transition provisions of SFAS
150. We adopted the provisions of FSP 150-5 on July 1, 2005, which did not have
a material effect on our financial statements.

NOTE 2 - RELATED PARTY TRANSACTIONS

The Company subleased space used for its headquarters' and operational
activities from an entity affiliated to one of its stockholders. The sublease
provided for monthly payments of approximately $5,000. The Company incurred
approximately $0 and $16,000 during the three-month period ended March 31, 2007
and 2006, respectively. During August 2006, the related party relinquished all
its rights under the sublease at the condition that the Company vacated the
premises by August 31, 2006, which it did. The Company owed approximately
$118,000 to the related party prior to vacating the premises. During June 2005,
the Company issued a $200,000 note payable to an entity wholly-owned by one of
its executive officers. The note is secured by substantially all assets of the
Company. The note bears interest at 14% per annum and includes a repayment
premium of $200,000 at December 15, 2005. The note, including accrued interest
and premium initially matured on December 15, 2005 and was extended to March 1,
2007. On March 1, 2007, the note was extended to September 1, 2007 for an
extension fee of $20,000. The Company recognized approximately $27,000 and
$7,000 of interest expense in connection with this note during the three-month
period ended March 31, 2007 and 2006, respectively. The amount payable under the
note amounts to approximately $409,000 at March 31, 2007. The Company paid
approximately $28,000 and $7,000 of interest expense during the three-month
period ended March 31, 2007 and 2006, respectively.

NOTE 3 - DERIVATIVE LIABILITIES

MARCH 2005 TRANSACTION

During March 2005, the Company issued a convertible promissory note. The lender
had the option to convert up to $100,000 principal and accrued interest into
shares of the Company at a 25% discount of the fair value of the shares at the
date of conversion. In connection with the issuance of the convertible
promissory note, the Company also issued 2,200,000 warrants exercisable at $0.10
per share. As a result of the issuance of the promissory note with such terms,
there was no explicit number of shares that are to be delivered upon
satisfaction of the convertible promissory note, therefore Company is unable to
assert that it had sufficient authorized and unissued shares to settle such
note. Accordingly, all of the Company's previously issued and outstanding
instruments, such as warrants and options as well as those issued in the future,
would be classified as liabilities as well, effective with the issuance of the
convertible promissory note.

                                       12
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 3 - DERIVATIVE LIABILITIES-CONTINUED

AUGUST 2006 TRANSACTION

During August 2006, the Company issued $500,000 convertible promissory notes
which provide for, among other things, a conversion price amounting to 50% of
the market price of the Company's common shares and liquidated damages in the
event the Company does not timely register the shares issuable pursuant to the
convertible promissory notes. Accordingly, on August 31, 2006, the Company will
no longer be able to assert that it has a sufficient number of authorized but
unissued shares to satisfy its obligations under the convertible promissory
notes and all other outstanding warrants and other convertible instruments.
Therefore, the Company accounted for the convertible promissory notes,
outstanding warrants, and other convertible instruments as derivative contracts
and recorded a corresponding liability based on the fair value of such
derivatives at the measurement dates.

Between November 2006 and January 2007, the Company issued an additional
$1,000,000 pursuant to similar convertible promissory notes.

The Company believes that the aforementioned embedded derivatives and
freestanding warrants met the criteria of SFAS 133 and EITF 00-19, when
appropriate, at March 31, 2007 and 2006, respectively, and were accounted for as
separate derivatives with a corresponding value recorded as liability.

The fair value of the derivative liabilities issued during the three-month
periods ended March 31, 2007 and 2006, respectively, were as follows:

                                            Three month            Three month
                                            period ended           period ended
                                           March 31, 2007         March 31, 2006
                                           --------------         --------------

Freestanding warrants .........               $      -               $ 10,200
Embedded conversion feature ...                360,000                 84,000
                                              --------               --------
                                              $360,000               $ 94,200
                                              ========               ========

The Company computed the fair value of the outstanding freestanding warrants and
embedded conversion features, at their issuance date, using the Black Scholes
valuation model with the following assumptions:

Freestanding warrants
                                            Three month            Three month
                                            period ended           period ended
                                           March 31, 2007         March 31, 2006
                                           --------------         --------------

Market price: .................                 N/A                  $0.51
Exercise price: ...............                                      $1.50
Term: .........................                                      3 years
Volatility: ...................                                      110%
Risk free interest rate: ......                                      4.82%
Number of warrants: ...........                                      30,000


                                       13
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 3 - DERIVATIVE LIABILITIES-CONTINUED

Embedded conversion features
                                            Three month            Three month
                                            period ended           period ended
                                           March 31, 2007         March 31, 2006
                                           --------------         --------------

Market price: .................               $0.05                  $1.00
Conversion price: .............               $0.025                 $0.50
Term: .........................               2.6 years              0.5 years
Volatility: ...................               52.5%                  110%
Risk free interest rate: ......               4.82%                  4.82%
Maximum liability: ............               $500,000               $75,000

The fair value of the derivative liabilities outstanding at March 31, 2007 is as
follows:

                                                At March 31, 2007
                                                -----------------

Freestanding warrants .......................       $  100,000
Embedded conversion feature .................        1,066,536
                                                    ----------
                                                    $1,166,536
                                                    ==========

The Company computed the fair value of the outstanding freestanding warrants and
embedded conversion features, at their measurement date, using the Black Scholes
valuation model with the following assumptions:

Freestanding warrants
                                                At March 31, 2007
                                                -----------------

Market price: ...............................   $0.05
Exercise price: .............................   $0.001 - 1.50
Term: .......................................   0.75 - 6.42 years
Volatility: .................................   52.5%
Risk free interest rate: ....................   4.54%
Number of warrants: .........................   23,410,000


                                       14
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 3 - DERIVATIVE LIABILITIES-CONTINUED

Embedded conversion features
                                                At March 31, 2007
                                                -----------------

Market price: ...............................     $0.05
Conversion price: ...........................     $0.025
Term: .......................................     2.42 years
Volatility: .................................     52.5%
Risk free interest rate: ....................     4.54%
Maximum liability: ..........................     $1,500,000

The Company used the following methodology to value the embedded conversion
features and liquidated damages:

The Company had 2,610,000 outstanding options issued to non-employees for which
performance has not occurred at December 31, 2006. The fair value of such
options will be recognized when performance has occurred, pursuant to EITF
00-19.

The aggregate fair value of the warrants and embedded conversion feature issued
during the three-month period ended March 31, 2007 and 2006 amounted to
approximately $360,000 and $94,200 at the date of their issuance of which
approximately $360,000 and $84,000 has been recognized as debt discount and $0
and $10,200 has been recognized as interest expense, during the three-month
period ended March 31, 2007 and 2006, respectively.

The aggregate fair value of the embedded conversion features reclassified from
liability to equity contracts, pursuant to conversion of convertible promissory
notes, amounted to approximately $5,000 during the three-month period ended
March 31, 2007.

The decrease in fair value of the derivatives between their measurement date and
March 31, 2007 and 2006, respectively, amounting to approximately $710,000 and
$5 million, has been recognized as other income.

NOTE 4 - CONVERTIBLE PROMISSORY NOTE AND NOTES PAYABLE

Convertible promissory note and notes payable at March 31, 2007 consist of the
following:

   o  $110,000 convertible promissory note, bearing interest at 10% per annum,
      initially maturing on March 22, 2006. On June 28, 2006, the lender has
      agreed to amend the convertible promissory note to extended the maturity
      date, with principal, accrued interest and penalty aggregating
      $125,000,toSeptember 22, 2006. The convertible promissory note was further
      extended and is now due March 1, 2007. The lender no longer has the option
      to convert the promissory note into the Company's common shares. The
      Company owes $100,000 and $220 in principal and accrued interest and
      penalties, respectively, at March 31, 2007. The promissory note is
      unsecured. The note is currently past due.

                                       15
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 4 - CONVERTIBLE PROMISSORY NOTE AND NOTES PAYABLE-CONTINUED

   o  $100,000 note payable, bearing no stated interest, with principal
      repayment of $150,000 initially due on February 15, 2006. The Company owes
      $90,000 under such note at March 31, 2007. The maturity of the note was
      extended twice and is now March 31, 2007. In consideration for the
      extensions, the Company issued in aggregate 35,000 warrants and 300,000
      shares of its common stock. The warrants are exercisable at $1 per share
      and expire on April 2009. The note is unsecured. The note is currently
      past due.

   o  $100,000 notes payable, bearing no stated interest, with principal
      repayment of $100,000 initially due on March 15, 2006 as well as 40,000
      shares of the Company's common stock. The maturity of the notes was
      extended four times and is now August 1, 2007, with six equal installments
      from March 1 to August 1, 2007. In consideration for the extensions, the
      Company issued in aggregate 275,000 shares to the note holders. The
      Company owes $66,667 in principal at March 31, 2007, 2006. The notes are
      unsecured. The Company did not make its April 1, 2007 payment. The notes
      are currently past due.

   o  $50,000 promissory note, bearing no interest rate, initially due on May
      15, 2006, with a premium repayment of 20,000 shares of common stock and
      30,000 warrants. The exercise price of the warrants amounts to $1.50 per
      share. The maturity of the note was extended to August 1, 2007, with six
      principal repayments payable on March 1 through August 1, 2007. In
      consideration for the extensions, the Company issued 150,000 shares of
      common stock. The note is unsecured. The note is currently past due.

   o  $100,000 promissory note, bearing interest at 10%, initially due on
      November 30, 2006, with a prepayment premium of 350,000 shares of the
      Company's common stock. The note was extended to June 15, 2007, with
      monthly principal and interest payments of $25,000 on February 15, 2007,
      $21,667 from March 15, 2007 to May 15, 2007, and $20,833 on June 15, 2007.
      The note is unsecured. The Company did not make the March 15, 2007
      payment. The note is currently in past due.

   o  $100,000 promissory note, bearing interest at 10%, initially due on July
      11, 2006, with a prepayment premium of $50,000 and 25,000 shares of the
      Company's common stock. The note was issued in April 2006 and the Company
      received $100,000 as consideration. Additionally, the Company issued
      50,000 warrants in connection with the issuance of the promissory note.
      The warrants are exercisable at $0.50 per share and expire in April 2009.
      The maturity date of the promissory note was extended to February 28,
      2007. In consideration for the extension, the Company issued 375,000
      shares. The note is unsecured. The note is currently in past due.

                                       16
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 4 - CONVERTIBLE PROMISSORY NOTE AND NOTES PAYABLE-CONTINUED

   o  $1,500,000 convertible promissory notes, bearing interest at 6% due on
      August 29, 2009. This convertible promissory note is part of a $1,500,000
      financing of its 6% Secured Convertible Notes and Common Stock Purchase
      Warrants to purchase 10,000,000 shares of common stock. At the initial
      closing $500,000 of notes were issued and paid for. In addition, $500,000
      principal amount of notes were funded in December 2006, the date the
      Company filed its registration statement, and the remaining $500,000
      principal amount of notes was funded in January 2007, at the date that the
      registration statement was declared effective with the Securities and
      Exchange Commission. The warrants were issued at the closing and are
      exercisable at $.40 per share, subject to adjustment, and expire on August
      29, 2013. The amount owed under such notes amounted to $1,493,150 in
      principal and $32,935 in interest at March 31, 2007.

      The purchasers of the notes are four accredited institutional investors.
      The exercise of the warrants and conversion of the notes are subject to a
      4.99% cap of the beneficial ownership that each purchaser may have at any
      point in time while the securities are outstanding.

      The notes are secured by all of the assets of Tradequest. The notes are
      convertible into common shares of Tradequest at a price equal to 50% of
      the market price of the common shares of Tradequest. Interest is payable
      monthly subject to certain exceptions as provided in the notes. No holder
      may convert the greater of (i) $80,000 per calendar month or (ii) the
      average daily dollar volume calculated during the 10 business days prior
      to a conversion. Each purchaser of the notes is subject to a 4.99% cap on
      the beneficial ownership that each purchaser may have at any point in time
      while the notes are outstanding. The notes include certain covenants,
      including restrictions that preclude (i) future offerings either in the
      form of equity or debt, except for indebtedness to trade creditors or
      financial institutions incurred in the ordinary course of business, and
      additionally, these covenants preclude the Company from, directly or
      indirectly, using proceeds for any loan to or investment in any other
      corporation, partnership, enterprise or other person (except in connection
      with its currently existing direct or indirect subsidiaries), (ii) the
      satisfaction of any portion of the Company's debt, or (iii) the redemption
      of any Common Stock.

      Provided Tradequest is not in default under the terms of the transaction
      documents, its common shares are trading at or below $0.20 and subject to
      certain other conditions, Tradequest shall have the right to prepay the
      notes in cash equal to either (i) 120% for prepayments occurring within 30
      days of issuance of the notes, (ii) 130% for prepayments between 31 and 60
      days after the issue date or (iii) 140% for prepayments occurring after
      the 60th day following the issue date plus accrued and unpaid interest or
      any default interest.

      The Company has agreed to file a registration statement covering the
      shares of common stock underlying the securities issued. In the event the
      registration statement is not filed by September 29, 2006 or does not
      become effective within 120 days from the closing, the Company is required
      to pay liquidated damages equal to 2% of the principal amount of the notes
      outstanding on a monthly basis until the registration covenant is
      satisfied. The damages may be satisfied in common shares of Tradequest at
      our option. The transaction documents also provide for the payment of
      liquidated damages to the investors in certain events, including the
      Company's failure to maintain an effective registration statement covering
      the resale of the common shares issuable upon conversion or exercise of
      the securities.

                                       17
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 4 - CONVERTIBLE PROMISSORY NOTE AND NOTES PAYABLE-CONTINUED

The Company generated gross proceeds of $500,000 and $75,000 pursuant to the
issuance of convertible promissory notes during the three-month period ended
March 31, 2007 and 2006, respectively.

The Company issued 400,000 shares of common stock to holders of the $1,500,000
convertible promissory notes pursuant to notices of conversion of $6,850 in
principal during the three-month period ended March 31, 2007.

Certain of the aforementioned notes are past due. Management is negotiating with
the appropriate note holders to either satisfy or extend the maturity of the
notes. Management cannot determine whether it will be successful in extending
the maturity of such notes.

The fair value of certain warrants and embedded conversion features issued and
outstanding at March 31, 2007 and 2006 has been accounted as derivative
liabilities. A debt discount of approximately $360,000 and $84,000 has been
recognized pursuant to the issuance of the warrants and embedded conversion
features during the three-month period ended March 31, 2007 and 2006,
respectively. The debt discount is amortized using the effective interest method
and amounted to approximately $109,000 and $51,000 during the three-month period
ended March 31, 2007 and 2006, respectively.

The Company issued 94,494 and 55,611 shares of common stock in connection with
certain notes payable during the three-month period ended March 31, 2007 and
2006, respectively. The fair value of such shares amounted to $6,000 and $32,000
during the three-month period ended March 31, 2007 and 2006, respectively.

Interest expense, including the amortization of debt discount, amounted to
approximately $690,000 and $190,000 during the three-month period ended March
31, 2007 and 2006, respectively.

NOTE 5 - STOCKHOLDERS' DEFICIT

Warrants

Pursuant to the $50,000 promissory note issued in February 2006, the Company
issued 30,000 warrants during fiscal 2006. The exercise price of the warrants
amounts to $1.50 per share. Such warrants expire in March 2009.

The fair value of all warrants issued during the three-month period ended March
31, 2007 and 2006 has been recorded as derivative liabilities at their date of
issuance. On June 28, 2006, the Company reclassified the warrants as equity
contracts and recorded their fair value at that date as additional paid-in
capital. During August 2006, in connection with the issuance of the August
Convertible Promissory Notes, the Company reclassified the outstanding warrants
as liability contracts and recorded their fair value at that date as other
expenses.

                                       18
<PAGE>

                  TRADEQUEST INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007

NOTE 5 - STOCKHOLDERS' DEFICIT-CONTINUED

Common Stock

The Company issued 94,494 and 55,611 shares of common stock in connection with
certain notes payable during the three-month period ended March 31, 2007 and
2006, respectively. The fair value of such shares amounted to $6,000 and $32,000
during the three-month period ended March 31, 2007 and 2006, respectively.

The Company issued shares for one-year term services during fiscal 2006. The
aggregate fair value of such shares amounted to approximately $877,000 and is
amortized over the term of the contracts. The Company recognized amortization of
deferred compensation in connection with such services of approximately $216,000
during the three-month period ended March 31, 2007.

Preferred Stock

The Company's Board of Directors, without further shareholder approval, may
issue preferred stock in one or more series from time to time and fix or alter
the designations, relative rights, priorities, preferences, qualifications,
limitations and restrictions of the shares of each series. The rights,
preferences, limitations and restrictions of different series of preferred stock
may differ with respect to dividend rates, amounts payable on liquidation,
voting rights, conversion rights, redemption provisions, sinking fund provisions
and other matters. The Company's Board of Directors may authorize the issuance
of preferred stock, which ranks senior to our common stock for the payment of
dividends and the distribution of assets on liquidation. In addition, the Board
of Directors can fix limitations and restrictions, if any, upon the payment of
dividends on the Company's common stock to be effective while any shares of
preferred stock are outstanding.

In October 2006 the Board of Directors created a series of 1,000,000 shares of
preferred stock, designated as Series A Preferred Stock. These shares are held
by our chief executive officer and chairman and have following rights and
preferences:

   o  each share has a liquidation preference of $0.001 per share which equals
      the par value of the shares,

   o  the shares are not convertible into any other security,

   o  each share entitles the holder to 250 votes at any meeting of our
      stockholders and such shares will vote together with the Company's common
      stockholders,

   o  the shares are not subject to redemption, and

   o  so long as the shares are outstanding, the Company agreed not to alter or
      change the rights of the security in a manner which would adversely affect
      the Series A Preferred Stock, create a new class of preferred stock having
      preference over the Series A Preferred Stock, or take any action which
      would result in the taxation of the holder under Section 305 of the
      Internal Revenue Code.

NOTE 6 - SUBSEQUENT EVENTS

The Company issued 350,000 shares of common stock pursuant to the conversion of
convertible promissory notes of approximately $2,000 between April 1 and May 8,
2007.

                                       19
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

         Our business model is to provide full service, turnkey IP-based
communication solutions to strategic partners that deliver VoIP service to their
customers. Our branded turnkey IP-based communication solution provides a
partner with the equipment, software, and support necessary to market a custom
tailored VoIP service. We are targeting partners that include equipment
manufacturers, technology integrators, cellular vendors, cable companies that do
not want to undertake the financial burden of creating an IP-based
telecommunication infrastructure, computer firms, Internet cafes, call centers
as well as wholesale relationships with communications providers, aggregators
and resellers, ISPs and other broadband and service providers. Our marketing
concentration is in the Caribbean, Central and South America. We targeted these
geographic areas as we believe these areas are starting to embrace broadband
and, as a result of government regulations of telecommunications providers, are
generally insulated from the intense competition of the U.S. communications
market.

         Our business model provides that we will generate revenues from
negotiated price points with each partner. These price points will be determined
based upon the individual dynamics of the partner's abilities, geographic
markets, anticipated monthly per minute usage and their overall acceptance of
our proposed and/or negotiated price plan. Some of the sources of revenue are
equipment sales, activation fees, access fees and per minute usage charges. Both
access fees and per minute charges will represent recurring revenues as opposed
to one time sales comprised of equipment sales and activation fees. In either
case, partners are engaged on a pre-pay basis and accounts will be settled in
U.S. currency.

         We began marketing our service on a test basis during the third quarter
of fiscal 2005 and to date have generated minimal revenues. We anticipate that
we will begin generating recurring revenues during the second quarter of fiscal
2007. While we believe that our turnkey solutions will be well received by
potential partners, we do not have the resources to undertake a broad marketing
campaign in an effort to secure partners in our target markets. The network of
personal relationships of our management is integral to our marketing efforts
and we primarily rely on those relationships in our efforts to build our
distributor network.

         In addition to securing partners and generating recurring revenues,
another significant challenge facing our company is our need for additional
working capital. We do not generate sufficient revenue to fund our operations
and have relied on short-term borrowings to provide working capital. The terms
of some of these notes require significant cash premiums at repayment, as well
as significant equity issuances. While the net proceeds from the sale of the
callable 6% secured convertible notes during fiscal 2007 provided us with
capital to begin establishing our partner network, upgrading certain of our
services and for overhead expenses until approximately the second quarter of
fiscal 2007, we have approximately $507,000 outstanding under short-term
promissory notes which are past due and another related party note in the
principal amount of $200,000 together with a premium of $200,000 which is due
September 1, 2007. We do not have sufficient funds to satisfy these obligations
and the terms of the callable 6% secured convertible notes prohibit us from
using the proceeds of those notes to pay these loans. The terms of the callable
6% secured convertible notes also restrict our ability to raise capital. While
we are attempting to restructure some of these obligations and we believe that
our operations will begin to generate meaningful revenues during fiscal 2007, so
long as these short-term notes remain outstanding, one of which is secured by
our assets and is presently past due, our ability to continue our operations is
in jeopardy.

                                       20
<PAGE>

RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED MARCH 31,
                                                     ---------------------------
                                                        2006            2005         $ CHANGE       % CHANGE
                                                     -----------     -----------     ----------     --------
                                                             (unaudited)
<S>                                                  <C>             <C>             <C>            <C>
Revenues ........................................    $     4,537     $     7,816         (3,279)       042%
Cost of revenues ................................         21,048          12,969          8,079        +62%

Operating expenses:
Sales, general and administrative ...............        506,104         167,322        338,782       +202%
Sales, general and administrative - related party              0          16,050        (16,050)        NM
                                                     -----------     -----------
  Total operating expenses ......................        506,104         183,372        322,732       +176%

Operating (loss) ................................       (522,615)       (188,525)       334,090       +177%

Other income (expenses):
Other income - derivatives ......................        710,331       4,963,083     (4,252,752)        NM
Interest (expense) - related party ..............         (7,000)         (7,000)             0          -
Interest (expense) ..............................       (183,214)       (107,823)        75,311        +70%

Net income (loss) ...............................    $    (2,498)    $ 4,659,735     (4,657,237)        NM

NM = not meaningful
</TABLE>

REVENUES

         We have generated minimal revenues since inception. Since we began
marketing our service through the end of fiscal 2006, our revenues were related
to charges to potential partners who were testing our services. Beginning in the
second quarter of fiscal 2007 we anticipate that we will begin generating
recurring revenues from our first distributor. We are unable, however, to
predict at this time the amount of revenue we may generate from this partner in
future periods. In addition, in order to increase our revenues, we must continue
to develop partner relationships with a wide range of companies in a number of
geographic locations that already are serving our target markets.

COST OF REVENUES

         During the three months ended March 31, 2007 our cost of revenues
represented the variable costs of network carriers through which we provide our
VoIP communications services which is based upon the actual number of minutes
used in the period. Our cost of revenues during the three months ended March 31,
2006 consisted of the costs to secure our VoIP communication services with
network carriers as well as the cost of phone equipment sold to distributors. We
do not anticipate that we will incur any additional fixed costs in providing our
services in future periods and that all cost of revenues in future periods will
be variable based upon the actual number of minutes used in the period.

GROSS PROFIT

         We reported a gross loss of $16,511 for the first quarter of fiscal
2007 as compared to a gross loss of $5,153 for the first quarter of fiscal 2006.
Because we have incurred fixed costs associated with our revenues and cost of
revenues in future periods will be the variable cost associated with the minutes
actually used, we anticipate that we will increase our gross profit margins in
future periods although we are unable to quantify the amount of the increase at
this time.

                                       21
<PAGE>

TOTAL OPERATING EXPENSES

         Sales, general and administrative

         Our sales, general, and administrative expenses consist of consultant
fees incurred in connection with the sales and support of our VoIP services,
consultant fees paid to our executive officers and directors as compensation,
general overhead expenses and consultant fees incurred with third party
providers. During the three months ended March 31, 2007 our selling, general and
administrative expenses increased $338,782, or approximately 202%, from the
comparable period in fiscal 2006. These increases included amortization of
deferred compensation of $216,242 and increased compensation for sales, as well
as increased general and administrative expenses:

         We treat all persons performing services for us as independent
contractors and not employees and their compensation is recorded as a consulting
fee. We anticipate that we will enter into employment agreements with our
executive officers and other consultants presently providing services to us
before the end of fiscal 2007. While we anticipate that the overall compensation
we are paying these individuals will not increase substantially, the conversion
of the status of the individuals from independent contractors to employees will
result in an overall increase in our compensation expense in future periods. We
anticipate our compensation expense will increase by approximately $10,000 per
month during the next 12 months as a result of the hiring of these individuals
as employees, absent any increases in their base compensation. We anticipate we
will also hire additional personnel during the fiscal 2007 in areas such as
sales and marketing and we anticipate that our sales, general and administrative
expenses will increase in future periods as our business expands. We are unable
at this time to quantify the amount of the increase as we cannot predict the
timing of these new hires or the exact amount of compensation which will be paid
to them.

         Sales, general and administrative - related party

         During fiscal 2006 we sub-leased our office space from a company
affiliated with one of our stockholders and our sales, general and
administrative - related party expense during the three months ended March 31,
2006 represents this rental expense. We terminated this arrangement in August
2006 and, accordingly, our sales, general and administrative - related party for
the first quarter of fiscal 2007 reflects the termination of this agreement. We
do not anticipate recognizing a rental expense to a related party in future
periods.

OPERATING LOSS

         We reported an operating loss of $522,615 for the first quarter of
fiscal 2007 as compared to an operating loss of $188,525 for the comparable
period in fiscal 2006. The increase in our operating loss is primarily
attributable to the increase in our sales, general and administrative expenses.

OTHER INCOME (EXPENSES)

         Other income - derivatives

         Other income - derivatives includes the variation in the fair value of
embedded conversion feature, freestanding warrants, and liquidated damages.
During the three months ended March 31, 2007 we recognized other income of
$710,331 which represents the change in the fair value of the derivate
instruments between measurement dates, as compared to other income - derivatives
of $4,963,083 during the three months ended March 31, 2007. The decrease in the
fair value of the derivative liabilities is

                                       22
<PAGE>

primarily due to a decrease in our stock price since January 1, 2007. See "The
Effect of Derivative Liabilities on Our Financial Statements" appearing later in
this section.

         Interest expense and interest expense-related party

         Interest expense and interest expense - related party represents
interest incurred on various notes payable, including a $200,000 principal
amount note payable due to Arlington Investment Group, an entity controlled by
one of our directors. The interest expense consists primarily of the
amortization of debt discount as well as interest accrued, whether paid in cash
or stock, pursuant to such notes payable. While interest expense - related party
was unchanged for the three months ended March 31, 2007 from the comparable
period in fiscal 2006, interest expense, which relates to notes due
non-affiliated third parties, increased $75,391, or approximately 66%, during
the first quarter of fiscal 2007 as compared to the first quarter of fiscal
2006. This increase represents the amortization of debt discount on callable 6%
secured convertible notes which was offset by a lower value attributed to the
shares issued as payment of interest on notes payable as a result of a lower
fair market value of our common stock.

NET INCOME (LOSS)

         We reported a net loss of $2,498 for first quarter of fiscal 2007 as
compared to net income of $4,659,735 for the comparable period in fiscal 2006.
The net loss reflects the impact of the non-cash other income - derivative
liabilities which had the effect of offsetting our substantially all of our
operating losses and interest expense.

LIQUIDITY AND CAPITAL RESOURCES

         Liquidity is the ability of a company to generate funds to support its
current and future operations, satisfy its obligations and otherwise operate on
an ongoing basis. The following table provides certain selected balance sheet
comparisons between March 31, 2007 (unaudited) and December 31, 2006:
<TABLE>
<CAPTION>
                                                          MARCH 31,                           CHANGE
                                                            2007        DECEMBER 31,       (2007 V 2006)
                                                         (UNAUDITED)        2006           $           %
                                                         -----------    -----------    ---------    ------
<S>                                                      <C>            <C>            <C>          <C>
Working capital (deficit) ............................   $(2,419,032)   $(2,400,040)      18,992        NM
Cash .................................................   $   164,645    $   171,964       (7,319)    -4.3%
Other current assets .................................   $    18,732    $         0       18,732     +100%
Property and equipment, net ..........................   $    17,347    $    17,513         (166)       NM
Deferred financing fees, net .........................   $   209,209    $   181,986       27,223    +15.0%
Security deposits ....................................   $    23,500    $         0       23,500     +100%
Total assets .........................................   $   433,433    $   388,063       45,370    +11.7%

Accounts payable and accrued expenses ................   $    82,338    $    93,585      (11,247)   -12.0%
Deferred revenues ....................................   $     6,799    $    20,466      (13,667)   -66.8%
Derivative liabilities ...............................   $ 1,166,536    $ 1,521,667     (355,131)       NM
Due to- related party ................................   $   188,350    $   118,350            0       n/a
Note payable to related party and accrued interest ...   $   408,667    $   410,567       (1,900)       NM
Convertible promissory notes and accrued interest, net   $   345,357    $    83,248      262,109     +315%
Notes payable and accrued interest ...................   $   474,362    $   540,220      (65,858)   -12.2%
Total current liabilities ............................   $ 2,602,409    $ 2,788,103     (185,694)    -6.6%
Total liabilities ....................................   $ 2,602,409    $ 2,788,103     (185,694)    -6.6%
</TABLE>
NM = not meaningful

                                       23
<PAGE>

         At March 31, 2007 our working capital deficit remained relatively
constant at $2,419,032 from $2,400,040 at December 31, 2006. Our total assets at
March 31, 2007 increased by $45,370, or approximately 12%, from December 31,
2006. This increase is attributable to increases in other current assets,
security deposits and deferred financing fees, offset by a slight reduction in
cash. Other current assets includes security deposits from distributors. The
increase in security deposits reflects amounts paid to network carriers, and the
increase in deferred financing fees reflects the payment of a finder's fee of
$50,000 in connection with the sale of our callable 6% secured convertible
notes.

         Our total liabilities at March 31, 2007 declined from December 31,
2006, primarily a result of the effect of the decrease in derivative liabilities
at December 31, 2006 period as described below. Other changes in our total
liabilities from period to period included an increase in accounts payable and
accrued expenses which was offset by decreases in deferred revenues and notes
payable and accrued interest. Deferred revenues represents a deposit from
resellers of our services which we apply against the usage fees as incurred. Due
to related party, which was unchanged at March 31, 2007 from December 31, 2006,
represents amounts accrued as rent expense under the sublease for our previous
principal executive offices. In addition, at March 31, 2007 our balance sheet
reflects convertible promissory notes and accrued interest, net of discount of
$1,180,728, of $345,357. This aggregate amount, including the discount,
represents the amounts due under the callable 6% secured convertible notes
described below.

         Note payable to related party and accrued interest at each of March 31,
2007 and December 31, 2006 is an amount due an entity wholly-owned by Mr.
Vincent Landis, a member of our Board of Directors. During June 2005, we issued
a note payable to Arlington Investment Group, Inc. for $200,000. We used the
funds for working capital. During March 2007 the due date of the note was
extended from March 1, 2007 to September 1, 2007 in consideration of a $20,000
extension fee. The note bears interest at 14% per annum and accrued interest,
together with a cash premium payment of $200,000, are due at maturity. We
recognized $7,000 and $28,000, respectively, of interest expense in connection
with this note during the three months ended March 31, 2007 and fiscal 2006.

         Net cash used in operating activities for the three months ended March
31, 2007 was $388,122 as compared to $159,012 for the comparable period in
fiscal 2006, an increase of $299,110. During the first quarter of fiscal 2007 we
used cash in operating activities to fund increases in security deposits
$(6,900), other current assets, which included security deposits from
distributors ($18,732) and accounts payable and accrued expenses ($11,247), and
we had non-cash income of $353,935. These increases were offset by decreases in
deferred revenues ($13,667), accrued interest on promissory notes - related
party ($1,900) and accrued interest and premiums on promissory notes $(20,757).
For the comparable period in fiscal 2006 we used cash in operating activities to
fund increases in accounts receivable ($226), accounts payable - related party
($16,050), deferred revenues ($652), accounts payable and accrued expenses
($5,202), accrued interest on promissory notes - related party ($2,334) and
accrued interest and premiums on promissory notes ($24,689) and we had non-cash
income of $4,869,929.

         Net cash used in investing activities for the three months ended March
31, 2007 was $2,531 as compared to $0 for the comparable period in fiscal 2006.
This increase reflects the purchase of property and equipment during the
quarter.

         Net cash provided by financing activities for the three months ended
March 31, 2007 was $383,334 as compared to $159,532 for the three months ended
March 31, 2006, an increase of $223,802. During the first quarter of fiscal 2007
we received net proceeds of $450,000 from the issuance of callable 6% secured
convertible notes, after payment of deferred financing costs of $50,000, which
was offset by principal repayment of notes totaling $66,666. During the first
quarter of fiscal 2006 we received proceeds of $125,000 from the issuance of
promissory notes and utilized a bank overdraft of $34,532.

                                       24
<PAGE>

         We have generated minimal revenues since inception. Our revenues are
not sufficient to pay our operating expenses and we have relied upon short-term
borrowings to provide funds for working capital. Exclusive of the $1,500,000
principal amount callable 6% secured convertible notes we issued in fiscal 2006
in the transaction described below, we have an aggregate of approximately
$907,000 due under short term notes, of which $507,000 is past due as of May 14,
2007. The balance of the outstanding notes become due in September 2007. Some of
these outstanding notes include terms which either require principal repayments
in excess of the original amount lent, as well as shares of our common stock
upon maturity. We do not presently have sufficient funds to pay any of these
notes. We have granted one of the holders of these short-term notes a security
interest in our assets. If we were unable to pay the note when it becomes due
and the note holder was to seek to collect this note, this note holder would be
entitled to foreclose on our assets. This event could also cause a default in
our callable 6% secured convertible notes. If we default on the callable 6%
secured convertible notes the note holders we are subject to a number of
penalties in addition to the obligation to repay the principal and accrued
interest. In either event, we would be unable to continue our operations.

6% CALLABLE SECURED CONVERTIBLE NOTES

         On August 31, 2006, we completed a financing to four accredited
investors of our callable 6% secured convertible notes and seven year common
stock purchase warrants to purchase 10,000,000 shares of common stock at an
exercise price of $0.40 per share. During fiscal 2006 $1,000,000 principal
amount of the notes were issued, including $500,000 principal amount of notes
were issued and paid for at the closing and an additional $500,000 principal
amount of notes was issued and paid for within three days from the date we filed
the registration statement with the Securities and Exchange Commission
registering the shares underlying the notes. The remaining $500,000 principal
amount of notes was issued and paid for during the first quarter of fiscal 2006
following the January 11, 2007 effective date of the registration statement. The
notes mature on August 29, 2009.

         The notes are convertible at the holder's option into shares of our
common stock at a variable price equal to 50% of the average of the lowest three
trading prices for our common stock as reported on the OTCBB during the 20
trading day period ending one trading day prior to the date the conversion
notice is sent to us by the note holder. Since the effective date of the
registration statement through March 31, 2007 the holders have converted an
aggregate of $6,850 principal amount and accrued interest due under the callable
6% convertible promissory notes into an aggregate of 400,000 shares of our
common stock with an average conversion price of $0.02 per share. Since March
31, 2007 through May 14, 2007 the holders have converted an additional $2,000
principal amount and accrued interest due under the callable 6% convertible
promissory notes into an aggregate of 350,000 shares of our common stock with an
average conversion price of $0.01 per share.

         The ability of the note holders to convert the notes is limited in that
no note holder has the right to convert its callable 6% secured convertible note
if, by virtue of such conversion, the holder and its affiliates would become the
beneficial owner of more than 4.99% of our common stock or during any month
immediately succeeding a determination date on which a note holder exercises its
prepayment option. The purchasers of the callable 6% secured convertible notes
are affiliates. This restriction significantly limits the note holders' ability
to convert the notes into equity. While the notes remain outstanding we continue
to accrue interest on the obligations.

         The notes are secured by a security interest in all of our assets
including our intellectual property. The notes also contain certain restrictive
covenants which provide that so long as the notes are outstanding we are
prohibited from taking certain actions without the consent of the note holders
including borrowing any money except for indebtedness to trade creditors or
borrowings for which the proceeds will be used to satisfy the notes. In
addition, until July 10, 2007, we have agreed that without

                                       25
<PAGE>

the prior written consent of a majority in interest of the note holders we will
not enter into an equity financing transaction, including a debt financing with
an equity component, which involves the issuance of (i) any shares of common
stock at a discount to the market price of our common stock on the date of
issuance, (ii) any securities which are convertible into an indeterminate number
of shares of our common stock, or (iii) any warrants.

         In addition, unless there are further postponements by the Securities
and Exchange Commission of the enactment of Section 404 of the Sarbanes-Oxley
Act of 2002 as it relates to small business issuers such as our company, in
connection with our annual report for our fiscal year ending December 31, 2007
our management will be required to provide an assessment of the effectiveness of
our internal control over financial reporting, including a statement as to
whether or not internal control over financial reporting is effective. In order
to comply with this requirement we will need to engage a consulting firm to
undertake an analysis of our internal controls as we do not have the expertise
to conduct the necessary evaluation. While we have yet to engage such a
consulting firm, we expect to incur consulting fees in developing the necessary
documentation and testing procedures required. We are unable at this time to
predict the amount of these fees.

         Our ability to continue as a going concern is dependent upon our
ability to obtain the necessary financing to meet our obligations and repay our
current and future liabilities when they become due until such time, if ever,
that we are able to generate sufficient revenues to attain profitable
operations. In addition to funds necessary to fund our recurring operating
expenses, fund our compliance with the phase in of Section 404 of the
Sarbanes-Oxley Act of 2002 as it relates to small business issuers and satisfy
our obligations, we will require significant additional capital to continue to
implement our business model. Our future capital requirements depend primarily
on the rate at which we can increase our revenues and thereby decrease our use
of cash to fund operations.

         We do not have any commitments for additional capital and there are no
assurances that we will be successful in raising working capital given the early
stage of our operations and the terms of the callable 6% secured convertible
notes. There are no assurances that we will have sufficient funds to pay our
operating expenses and our obligations as they become due, fund compliance with
Section 404 of the Sarbanes-Oxley Act of 2002 or continue to implement our
business model for the next 12 months. If we are unable to raise additional
capital, we may be unable to continue our operations and our stockholders could
lose their entire investment in our company.

THE EFFECT OF DERIVATIVE LIABILITIES ON OUR FINANCIAL STATEMENTS

         During March 2005 we issued a convertible promissory note in the
principal amount of $100,000, the terms of which permitted the lender to convert
the principal and accrued interest into shares of our common stock at a 25%
discount of the fair value of the shares at the date of conversion. In addition,
as described earlier in this section in fiscal 2006 and the first quarter of
fiscal 2007 we issued the callable 6% secured convertible notes which are also
convertible into equity at a discount to market. Because the conversion price of
the notes is tied to the market value of our common stock and therefore there is
no explicit number of shares that are to be delivered upon satisfaction of the
convertible promissory note, we are unable to assert that we have sufficient
authorized and unissued shares to settle such note. Accordingly, as required
under generally accepted accounting principles, all of our instruments which are
convertible into shares of our common stock, such as warrants and options, were
classified as derivative liabilities on our financial statements.

                                       26
<PAGE>

         The application of EITF Issue No. 00-19 on our financial statements for
the three months ended March 31, 2007 and 2006 resulted in other income to us of
$710,331 and $4,963,083, respectively. While this income item is non-cash, the
application of the accounting standard has a significant impact on our
consolidated statement of operations for the periods and, in both periods,
served to offset our operating losses. In addition, at March 31, 2007 our
balance sheet reflected a current liability of $1,166,536 related to the
derivative liability which represents a non-cash liability. Both of these
non-cash items are tied to the market value of our common stock and, if the
price declines, we could be required to report a non-cash expense associated
with the derivative liability in future periods and the carrying value of the
liability could increase. While we cannot predict the impact of this accounting
standard on our financial statement in future periods as the income/expense
calculation is based upon a current market value of our common stock, it is
likely that it will have similar impacts on our financial statement in future
periods.

ITEM 3.  CONTROLS AND PROCEDURES

         As required by Rule 13a-15 under the Securities Exchange Act of 1934,
as of March 31, 2007, the end of the period covered by this report, our
management concluded its evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures. Disclosure controls and
procedures are controls and procedures designed to reasonably assure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, such as this report, is recorded, processed, summarized
and reported within the time periods prescribed by SEC rules and regulations,
and to reasonably assure that such information is accumulated and communicated
to our management, including our Chief Executive Officer who also acts as our
principal financial and principal accounting officer, to allow timely decisions
regarding required disclosure.

         Our management does not expect that our disclosure controls and
procedures will prevent all error and all fraud. A control system, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance
that the control system's objectives will be met. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, 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. The design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions.

         There have been no changes in our internal control over financial
reporting during our last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

                                       27
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

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

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS

31.1     Rule 13a-14(a)/15d-14(a) certification of CEO
31.2     Rule 13a-14(a)/15d-14(a) certificate of principal accounting officer
32.1     Section 1350 certification of CEO and principal accounting officer


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
has caused his report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                        Tradequest International, Inc.

                                        By: /s/ Luis Alvarez
                                            ----------------
May 15, 2007                            Luis Alvarez, CEO,
                                        principal executive officer and
                                        principal accounting officer

                                       28