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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB/A



Amendment No. 1

(Amending Items 1
and 6)



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(Mark One)

|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended March 31, 2005.



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------



For the transition period from



Commission file number: 0-27704



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i2 Telecom International, Inc.

(Exact Name of Small Business Issuer as
Specified in its Charter)



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|                                                               |  |                                                 
|-------------------------------------------------------------- |  | ------------------------------------------------
|Washington                                                     |  | 91-1426372                                      
|(State or Other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification No.)               
|                                                               | 
|1200 Abernathy Rd. Suite 1800 Atlanta, GA 30328                |  | (770) 512-7174                                  
|(Address of Principal Executive Offices)                       |  | (Issuers Telephone Number, Including Area Code)



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



As of May 16, 2005, the registrant had 36,903,522 shares of common stock outstanding.



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EXPLANATORY NOTE



This Report on Form 10-QSB/A amends Items 1 and 6 of the Quarterly Report on Form 10-QSB (the Quarterly Report)
of i2 Telecom International, Inc. (the Company) filed with the Securities and Exchange Commission on May 16, 2005.



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PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements



i2 TELECOM INTERNATIONAL, INC.

CONSOLIDATED
BALANCE SHEETS

(Unaudited)



LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)



|                                                                                                                                       |  |                |             |   |                   |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                       |  | March 31, 2005 |             |   | December 31, 2004 |  
|Current Liabilities                                                                                                                    |  |                |             |   |                   |   |             |  
|Accounts Payable and Accrued Expenses                                                                                                  |  | $              | 1,745,822   |   |                   | $ | 1,303,656   |  
|Deferred Revenue                                                                                                                       |  |                | 99,827      |   |                   |   | 99,901      |  
|Notes Payable-Current                                                                                                                  |  |                | 300,000     |   |                   |   | 100,000     |  
|                                                                                                                                       |  |                |             |   |                   |   |             |  
|Total Current Liabilities                                                                                                              |  |                | 2,145,649   |   |                   |   | 1,503,557   |  
|                                                                                                                                       |  |               
|Long-Term Debt  Notes Payable                                                                                                         |  |                | -0-         |   |                   |   | -0-         |  
|                                                                                                                                       |  |                |             |   |                   |   |             |  
|Total Liabilities                                                                                                                      |  |                | 2,145,649   |   |                   |   | 1,503,557   |  
|                                                                                                                                       |  |                |             |   |                   |   |             |  
|Stockholders Equity (Deficit)                                                                                                         |  |                |             |   |                   |   |             |  
|Preferred Stock, No Par Value, 5,000,000 Shares Authorized, 4,185 Shares and 4,175 Shares Issued and Outstanding, respectively         |  |                | 4,160,000   |   |                   |   | 4,175,000   |  
|Common Stock, No Par Value, 10,000,000 Shares Authorized, 36,977,008 Shares and 34,491,402 Shares Issued and Outstanding,
respectively |  |                | 14,387,040  |   |                   |   | 13,035,158  |  
|Restricted Common Stock (related to no par value above), 661,239 and 991,858, Issued and Outstanding                                   |  |                | 331,764     |   |                   |   | 497,646     |  
|Additional Paid-In Capital                                                                                                             |  |                | 789,835     |   |                   |   | 404,100     |  
|Accumulated Deficit During The Development Stage                                                                                       |  |                | (15,835,987 | ) |                   |   | (13,732,435 | )
|                                                                                                                                       |  |                |             |   |                   |   |             |  
|Total Stockholders Equity (Deficit)                                                                                                   |  |                | 3,832,652   |   |                   |   | 4,379,469   |  
|                                                                                                                                       |  |                |             |   |                   |   |             |  
|Total Liabilities and Stockholders Equity (Deficit)                                                                                   |  | $              | 5,978,301   |   |                   | $ | 5,883,026   |  
|                                                                                                                                       |  |                |             |   |                   |   |             |  





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i2 TELECOM INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|-------------------------------------------------------------------------------- |  | ------------------------------------------- | ----------- | - | ----------------------------------------- | - | ---------- | ----------------------------------------- |  | - | ---------- | -
|                                                                                 |  | Cumulative From Inception to March 31, 2005 |             |   | For the Three Months Ended March 31, 2005 |   |            | For the Three Months Ended March 31, 2004 | 
|Cash Flows From Operations                                                       |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Net Loss From Continuing Operations                                              |  | $                                           | (15,716,098 | ) |                                           | $ | (2,027,646 | )                                         |  | $ | (1,485,300 | )
|Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Bad Debts                                                                        |  |                                             | 75,000      |   |                                           |   | -0-        |                                           |  |   | -0-        |  
|Depreciation and Amortization                                                    |  |                                             | 963,992     |   |                                           |   | 138,307    |                                           |  |   | 106,294    |  
|Interest Paid Via Issuance of Stock                                              |  |                                             | 192,604     |   |                                           |   | -0-        |                                           |  |   | -0-        |  
|Gain on Forbearance of Debt                                                      |  |                                             | (27,643     | ) |                                           |   | -0-        |                                           |  |   | -0-        |  
|Loss on Disposal of Assets                                                       |  |                                             | 593         |   |                                           |   | -0-        |                                           |  |   | -0-        |  
|Stock Compensation                                                               |  |                                             | 1,430,170   |   |                                           |   | 45,618     |                                           |  |   | -0-        |  
|Cumulative Effect of Accounting Change                                           |  |                                             | 340,117     |   |                                           |   | 340,117    |                                           |  |   | -0-        |  
|(Increase) Decrease In:                                                          |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Accounts Receivable                                                              |  |                                             | (351,316    | ) |                                           |   | (43,945    | )                                         |  |   | (96,285    | )
|Inventories                                                                      |  |                                             | (957,025    | ) |                                           |   | (190,731   | )                                         |  |   | (21,673    | )
|Prepaid Expenses                                                                 |  |                                             | (222,546    | ) |                                           |   | (34,523    | )                                         |  |   | (209,074   | )
|Other Assets                                                                     |  |                                             | (71,552     | ) |                                           |   | 6,612      |                                           |  |   | (2,913     | )
|Increase (Decrease) In:                                                          |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Accounts Payable and Accrued Expenses                                            |  |                                             | 1,510,680   |   |                                           |   | 442,166    |                                           |  |   | 133,349    |  
|Deferred Revenue                                                                 |  |                                             | 99,827      |   |                                           |   | (74        | )                                         |  |   | 1,329      |  
|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Net Cash Used In Operating Activities                                            |  |                                             | (12,733,197 | ) |                                           |   | (1,324,099 | )                                         |  |   | (1,574,273 | )
|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Cash Flows From Investing Activities                                             |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Proceeds from Disposal of Assets                                                 |  |                                             | 6,433       |   |                                           |   | -0-        |                                           |  |   | -0-        |  
|Equipment Purchases                                                              |  |                                             | (1,677,833  | ) |                                           |   | (31,631    | )                                         |  |   | (62,934    | )
|Payments for Patents and Trademarks                                              |  |                                             | (141,344    | ) |                                           |   | (16,176    | )                                         |  |   | (16,325    | )
|Investment in Subsidiary                                                         |  |                                             | (1,239,422  | ) |                                           |   | -0-        |                                           |  |   | -0-        |  
|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Net Cash Used In Investing Activities                                            |  |                                             | (3,052,166  | ) |                                           |   | (47,807    | )                                         |  |   | (79,259    | )
|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Cash Flows From Financing Activities                                             |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Proceeds From Shareholder Loans                                                  |  |                                             | 405,500     |   |                                           |   | 174,500    |                                           |  |   | -0-        |  
|Payments of Shareholder Loans                                                    |  |                                             | (305,500    | ) |                                           |   | (74,500    | )                                         |  |   | (225,000   | )
|Proceeds from Issuance of Convertible Notes                                      |  |                                             | 6,885,000   |   |                                           |   | -0-        |                                           |  |   | -0-        |  
|Proceeds From Notes Payable                                                      |  |                                             | 300,000     |   |                                           |   | 200,000    |                                           |  |   | -0-        |  
|Payment of Notes Payable                                                         |  |                                             | (390,943    | ) |                                           |   | -0-        |                                           |  |   | -0-        |  
|Issuance of Common Stock                                                         |  |                                             | 3,027,502   |   |                                           |   | 496,000    |                                           |  |   | -0-        |  
|Issuance of Preferred Stock                                                      |  |                                             | 6,090,000   |   |                                           |   | 575,000    |                                           |  |   | 2,000,000  |  
|Proceeds from Stock Notes Receivable                                             |  |                                             | 46,491      |   |                                           |   | -0-        |                                           |  |   | -0-        |  
|Dividends Paid                                                                   |  |                                             | (119,889    | ) |                                           |   | (75,906    | )                                         |  |   | -0-        |  
|Cash From Subsidiary Acquired Via Stock Exchange                                 |  |                                             | 1,517       |   |                                           |   | -0-        |                                           |  |   | -0-        |  
|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Net Cash Provided By Financing Activities                                        |  |                                             | 15,939,678  |   |                                           |   | 1,295,094  |                                           |  |   | 1,775,000  |  
|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Increase (Decrease) in Cash                                                      |  |                                             | 154,315     |   |                                           |   | (76,812    | )                                         |  |   | 121,468    |  
|Balance, Beginning of Period                                                     |  |                                             | -0-         |   |                                           |   | 231,127    |                                           |  |   | 671,421    |  
|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  
|Balance, End of Period                                                           |  | $                                           | 154,315     |   |                                           | $ | 154,315    |                                           |  | $ | 792,889    |  
|                                                                                 |  |                                             |             |   |                                           |   |            |                                           |  |   |            |  





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Item 6. Exhibits



The exhibits
required to be filed with this Quarterly Report are set forth on the Exhibit Index filed herewith.





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SIGNATURE



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



|                    |  |                                            
|------------------- |  | -------------------------------------------
|                    |  | i2 TELECOM INTERNATIONAL, INC.             
|                    | 
|Date: June 17, 2005 |  | /s/ David C. Burns                         
|                    |  | David C. Burns                             
|                    |  | Chief Financial Officer                    
|                    |  | (duly authorized signatory and             
|                    |  | Principal Financial and Accounting Officer)





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EXHIBIT INDEX



|4.1 | Warrant dated April 7, 2005 to purchase 125,000 shares of the Companys common stock granted to Hubert G. Phipps. (Incorporated by reference to Exhibit 4.1 to the
Companys Current Report on Form 8-K filed on April 12, 2005.)
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.2 | Registration Rights Agreement dated as of April 7, 2005 between the Company and Hubert G. Phipps. (Incorporated by reference to Exhibit 4.2 to the Companys Current Report on
Form 8-K filed on April 12, 2005.)
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.3 | Warrant dated April 19, 2005 to purchase 52,083 shares of the Companys common stock granted to Midsouth Investor Fund, LP. (Incorporated by reference to Exhibit 4.1 to the
Companys Current Report on Form 8-K filed on April 25, 2005.)
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.4 | Registration Rights Agreement dated as of April 19, 2005 between the Company and Midsouth Investor Fund, LP. (Incorporated by reference to Exhibit 4.2 to the Companys Current
Report on Form 8-K filed on April 25, 2005.)
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.5 | Warrant dated April 25, 2005 to purchase 156,249 shares of the Companys common stock granted to Vestal Venture Capital. (Incorporated by reference to Exhibit 4.3 to the
Companys Current Report on Form 8-K filed on April 25, 2005.)
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.6 | Registration Rights Agreement dated as of April 25, 2005 between the Company and Vestal Venture Capital. (Incorporated by reference to Exhibit 4.4 to the Companys Current
Report on Form 8-K filed on April 25, 2005.)
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.1 | Settlement Agreement dated February 24, 2005, between the Company and Anthony F. Zalenski. (Incorporated by reference to Exhibit 99.1 to the Companys Current Report on Form
8-K filed on March 2, 2005.)
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.2 | Employment Agreement dated as of April 6, 2005, between the Company and James Rose. Represents an executive compensatory plan or arrangement. (Incorporated by reference to Exhibit
99.1 to the Companys Current Report on Form 8-K filed on April 11, 2005.)
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.3 | Promissory Note dated April 7, 2005 issued by the Company in favor of Hubert G. Phipps in principal amount of $250,000. (Incorporated by reference to Exhibit 99.1 to the
Companys Current Report on Form 8-K filed on April 12, 2005.)
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.4 | Promissory Note dated April 19, 2005 issued by the Company in favor of Midsouth Investor Fund, LP in principal amount of $100,000. (Incorporated by reference to Exhibit 99.1 to the
Companys Current Report on Form 8-K filed on April 25, 2005.)
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.5 | Promissory Note dated April 25, 2005 issued by the Company in favor of Vestal Venture Capital in principal amount of $300,000. (Incorporated by reference to Exhibit 99.2 to the
Companys Current Report on Form 8-K filed on April 25, 2005.)
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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|10.6 | Employment Agreement between the Company and James R. Fultz dated May 2, 2005. (Incorporated by reference to Exhibit 99.1 to the Companys Current Report on Form 8-K filed on
May 6, 2005.)
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|31.1 | Rule 13a-14(a)/15d-14(a) Certification by the Companys Chief Executive Officer.
|---- | --------------------------------------------------------------------------------



|31.2 | Rule 13a-14(a)/15d-14(a) Certification by the Companys Chief Financial Officer.
|---- | --------------------------------------------------------------------------------



|32.1 | Section 1350 Certification by the Companys Chief Executive Officer.
|---- | --------------------------------------------------------------------



|32.2 | Section 1350 Certification by the Companys Chief Financial Officer
|---- | -------------------------------------------------------------------