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

                                   FORM 10-QSB

(Mark One)

 [ X ]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934
             For the quarterly period ended September 30, 2006.

[     ]     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

                         i2 Telecom International, Inc.
        (Exact Name of Small Business Issuer as Specified in its Charter)

Washington                                                    91-1426372
(State or Other Jurisdiction of                               (IRS Employer
Incorporation or Organization)                               Identification No.)

5070 Old Ellis Pointe
Suite 110
Roswell, GA  30076
(Address of Principal Executive Offices)
(Issuer's Telephone Number, Including Area Code)  (678) 538-0500

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 [ ]

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


As of December 4, 2006, the registrant had 161,564,855 shares of common stock
outstanding.

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



<PAGE>





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                                   INDEX
                                                                        Page

PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements                                    3

Item 2.           Management's Discussion and Analysis of or Plan        20
                  of Operation

Item 3.           Controls and Procedures                                23

PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings                                      24

Item 2.           Unregistered Sales of Equity Securities and            24
                  Use of Proceeds

Item 3.           Default Upon Senior Securities                         26

Item 6.           Exhibits                                               26

SIGNATURE PAGE                                                           29

CERTIFICATIONS                                                           30


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                                      2
<PAGE>



<TABLE>

<CAPTION>



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                         i2 TELECOM INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)





                                                          ASSETS

                                                                                  September 30, 2006      December 31, 2005
                                                                                  ..................... ......................
Current Assets
<S>                                                                                         <C>                       <C>
  Cash                                                                                      $ 12,579                  $ 238
  Restricted Cash                                                                                -0-                168,965
  Accounts Receivable, net of Allowance for Doubtful Accounts of
     $235,000 and $235,000, respectively                                                      18,732                 69,927
  Inventories                                                                                691,081                732,663
  Prepaid Expenses and Other Current Assets                                                  196,800                 84,407
.................................................................................. ..................... ......................
    Total Current Assets                                                                     919,192              1,056,200
.................................................................................. ..................... ......................


Property and Equipment, Net                                                                  982,192              1,206,982


Other Assets

  Intangible Assets                                                                        3,353,199              3,349,834
  Deposits                                                                                    27,840                 61,540
.................................................................................. ..................... ......................
  Total Other Assets                                                                       3,381,039              3,411,374
.................................................................................. ..................... ......................


      Total Assets                                                                       $ 5,282,423             $5,674,556
--------------------------------------------------------------------------------- --------------------- ----------------------


                                      3
</TABLE>

<PAGE>


<TABLE>
<CAPTION>





                         i2 TELECOM INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)




                                       LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

                                                                                   September 30, 2006     December 31, 2005
                                                                                   ..................... .....................
Current Liabilities
<S>                                                                                      <C>                     <C>
     Accounts Payable and Accrued Expenses                                               $ 3,690,204             $ 3,797,814
      Deferred Revenue                                                                        49,000                     -0-
     Notes Payable-Current                                                                 2,951,927              2,780,625
................................................................................... .................... .......................
     Total Current Liabilities                                                             6,691,131              6,578,439

Long-Term Debt - Convertible Bonds                                                         1,500,000                     -0-
................................................................................... .................... .......................
     Total Liabilities                                                                     8,191,131             6,578,439
................................................................................... .................... .......................

Shareholders' Equity (Deficit)
     Preferred Stock, No Par Value, 5,000,000
       Shares Authorized, 4,495 Shares and 4,910 Shares Issued
   and                Outstanding, respectively                                           4, 470,000               4,885,000
Common Stock, No Par Value, 250,000,000 Shares Authorized, 62,994,546 Shares and
   37,460,159 Shares Issued and Outstanding, respectively                                 16,882,447              14,651,858
 Restricted Common Stock (related to No Par Value above),
 2,628,784 Shares and 382,568  respectively                                                  253,473                 191,846
  Additional Paid-In Capital                                                               1,242,228               1,092,126
    Accumulated Deficit                                                                  (25,756,856)            (21,724,813)
................................................................................... .................... .......................
    Total Shareholders' Equity (Deficit)                                                 (2,908,708)                (903,883)
................................................................................... .................... .......................

     Total Liabilities and Shareholders'  Equity (Deficit)                                $5,282,423             $ 5,674,556
---------------------------------------------------------------------------------- -------------------- -----------------------

                                      4
</TABLE>
<PAGE>





<TABLE>

<CAPTION>

                         i2 TELECOM INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                   For the           For the           For the          For the
                                                     Three             Three              Nine             Nine
                                                    Months            Months            Months           Months
                                                     Ended             Ended             Ended            Ended
                                             September 30,     September 30,     September 30,    September 30,
                                                      2006              2005              2006             2005
                                              ................ ................. ................. ................
<S>                                                  <C>               <C>               <C>              <C>

Revenue                                          $ 252,546          $ 49,851         $ 529,524        $ 502,389

Cost of Revenue                                    166,072           369,492           376,126          775,589
............................................. ................ ................. ................. ................

Gross Profit (Loss)                                 86,474          (319,641)          153,398         (273,200)


General and Administrative Expenses                822,964         2,295,520         3,626,822        5,890,031
............................................. ................ ................. ................. ................

Loss From Operations                              (736,490)        (2,615,161)      (3,473,424)      (6,163,231)
............................................. ................ ................. ................. ................

Other Income (Expense)
  Interest Income                                        0               295               942            2,153
  Interest Expense                                (158,702)           (8,511)         (301,511)         (26,454)
  Gain on Forbearance of Debt                          -0-               -0-               -0-          350,960
  Loss on Disposal of Assets                             0               -0-               -0-              -0-
  Loss on Subscription List                            -0-               -0-               -0-              -0-
............................................. ................ ................. ................. ................
     Total Other Income (Expense)                 (158,702)           338,673         (300,569)         326,659
............................................. ................ ................. ................. ................
Loss Before Cumulative Effect of
    Accounting                                    (895,192)       (2,276,488)       (3,773,993)      (5,836,572)
    Change
............................................. ................ ................. ................. ................
Cumulative Effect of Accounting Change on
    Years Prior to 2005, Net of Income
    Tax of $-0-                                        -0-               -0-               -0-         (340,117)
............................................. ................ ................. ................. ................
Net Loss                                         $(895,192)      $(2,276,488)     $ (3,773,993)     $(6,176,689)
Dividends on Preferred Stock                       (79,900)          -0-              (258,050)        (222,237)
                                             ................ ................. ................. ................

Net Loss Available to Common Shareholders        $(975,092)      $(2,276,488)      $(4,032,043)     $(6,398,926)
-------------------------------------------- ---------------- ----------------- ----------------- ----------------

Weighted Average Common Shares:
  Basic                                         52,996,306        37,337,737        45,102,752       36,609,532
  Diluted                                       92,438,070        59,579,681        73,115,545       48,075,234
............................................. ................ ................. ................. ................
Basic Earnings Per Common Share:
   Loss Before Cumulative Effect of
        Accounting Change                         $   (.02)         $   (.06)         $   (.09)           $(.17)
  Cumulative Effect of Accounting Change          $   (.00)         $   (.00)         $   (.00)           $(.01)
............................................. ................ ................. ................. ................
Net Loss                                          $   (.02)         $   (.06)         $   (.09)           $(.18)
------------------------------------------- ---------------- ----------------- ----------------- ----------------
Diluted Earnings Per Common Share:
   Loss Before Cumulative Effect of
        Accounting Change                          $  (.02)          $  (.05)       $    (.06)    $       (.12)
  Cumulative Effect of Accounting Change           $  (.00)          $  (.00)       $    (.00)    $       (.01)
............................................. ................ ................. ................. ................
Net Loss                                           $  (.02)          $  (.05)       $    (.06)    $       (.13)
-------------------------------------------- ---------------- ----------------- ----------------- ----------------

                                      5
</TABLE>
<PAGE>


<TABLE>

<CAPTION>

                         i2 TELECOM INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                         For the Nine     For the Nine
                                                         Months Ended     Months Ended
                                                         September 30,    September 30,
                                                               2006           2005
                                                        ..................................
Cash Flows From Operations
<S>                                                      <C>              <C>
    Net Loss From Continuing Operations                  $ (4,032,043)   $ (6,398,926)
    Adjustments to Reconcile Net Income to Net Cash
      Provided By Operating Activities
    Bad Debts                                                     -0-             -0-
        Depreciation and Amortization                         296,320         166,520
        Interest Paid Via Issuance of Stock                       -0-         432,661
       Gain of Forbearance of Debt                                -0-        (350,960)
       Loss on Disposal of Assets                                 -0-              -0-
       Stock Compensation                                     590,102         119,899
      Cumulative Effect of Accounting Change                      -0-         340,117
       (Increase) Decrease In:
         Accounts Receivable                                   51,195        (152,163)
         Inventories                                           41,582         145,271
         Prepaid Expenses                                    (112,393)       (159,140)
         Other Assets                                          33,700          10,615
     Increase (Decrease) In:
     Accounts Payable and Accrued Expenses                    952,490       1,841,218
         Deferred Revenue                                      49,000            (125)
.........................................................................................
    Net Cash Used In Operating Activities                  (2,130,047)     (4,005,013)
..........................................................................................
Cash Flows From Investing Activities
     Proceeds from Disposal of Assets                             -0-              -0-
     Equipment Purchases                                      (71,530)       (608,945)
    Payments for Patents and Trademarks                        (3,365)        (26,259)
    Investment in Subsidiary                                       -0-            -0-

..........................................................................................
     Net Cash Used In Investing  Activities                   (74,895)        (635,204)
.........................................................................................
Cash Flows From Financing Activities
    Proceeds From Shareholder Loans                               -0-             -0-
    Payments of Shareholder Loans                                  -0-       (225,000)
    Proceeds from Issuance of Convertible Notes             1,750,000              -0-
    Proceeds From Notes Payable                               358,349         985,000
    Payment of Notes Payable                                 (335,047)       (272,463)
    Issuance of Common Stock                                  275,016         150,016
    Issuance of Preferred Stock                                   -0-       5,545,224
    Loan Financing Cost                                           -0-              -0-
    Dividends Paid                                                -0-              -0-
    Cash From Subsidiary Acquired Via Stock Exchange              -0-              -0-
..........................................................................................
         Net Cash Provided By Financing Activities          2,048,318       6,182,967
..........................................................................................

Increase (Decrease) in Cash                                  (156,624)       1,069,510
Balance, Beginning of Period                                  169,203          671,421
..........................................................................................
Balance, End of Period                                       $ 12,579      $ 1,740,931
-----------------------------------------------------------------------------------------
                                      6

</TABLE>
<PAGE>




            UNAUDITED CONDENSENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLOCIES


Background of the Company

i2 Telecom  International,  Inc., a  Washington  corporation  formerly  known as
Digital Data  Networks,  Inc.  (the  "Company"),  was  incorporated  as "Transit
Information Systems,  Inc." under the laws of the State of Washington on October
17, 1988. In July 1995, the Company  changed its name to "Digital Data Networks,
Inc." In March 2004, the Company changed its name to "i2 Telecom  International,
Inc." The  Company's  offices are  currently  located at 5070 Old Ellis  Pointe,
Suite 110, Roswell, GA 30076, and the Company's telephone number at that address
is (770)  512-7174.  The Company  maintains a website at  www.i2telecom.com  and
www.Voicestick.com.

         From October 17, 1988, until February 27, 2004, the Company was a
wireless, passenger communication and advertising company, principally engaged
in selling digital advertising space through the operation of a digital
information network, utilizing digital radio transmission technology to display
current news, information and advertising to riders on-board public transit
vehicles. From 1991 through February 2004, the Company operated a digital
information network in Dallas, Texas under the assumed name "The Transit
Network" on the Dallas Area Rapid Transit ("DART") bus and rail system.

         In February 1996, the Company completed an initial public offering of
shares of its common stock, no par value per share (the "Common Stock"), and
raised net cash proceeds of approximately $5.8 million.

         On February 26, 2004, a newly-formed, wholly-owned subsidiary of the
Company merged with and into i2 Telecom International, Inc., a Delaware
corporation ("i2Telecom Delaware"), with i2 Delaware surviving the merger as a
wholly-owned subsidiary of the Company (the "Merger"), pursuant to that certain
Agreement and Plan of Merger dated as of January 30, 2004, among the Company, a
wholly-owned subsidiary of the Company, i2 Delaware and certain Shareholders of
the Company and i2Telecom Delaware signatory thereto (the "Merger Agreement").
In connection with the Merger, former Shareholders of i2Telecom Delaware became
entitled to receive shares of Common Stock and shares of various classes and
series of the Company's preferred stock, no par value per share (collectively,
the "Preferred Stock"), constituting of up to 88.44% of the voting securities of
the Company, assuming the issuance of all contingent consideration such
Shareholders may become entitled to receive pursuant to the Merger Agreement
upon the resolution of a certain legal proceeding pending against i2Telecom
Delaware. In connection with the Merger, effective February 26, 2004, (i) the
Company's Board of Directors (the "Board of Directors") appointed Paul R. Arena,
Chief Executive Officer and Chairman of the Board of i2Telecom Delaware, to
serve as a director of the Company; (ii) all individuals serving as officers of
the Company immediately prior to the Merger resigned their positions with the
Company; and (iii) the officers of i2Telecom Delaware were appointed as officers
of the Company.

                                      7
<PAGE>

         On February 27, 2004, the Company sold substantially all of its
operating assets relating to the operations of The Transit Network to Intransit
Media, Inc. ("InTransit Media") in exchange for InTransit Media assuming certain
obligations and liabilities relating to such assets (the "Asset Sale"), pursuant
to that certain Asset Purchase Agreement dated as of January 30, 2004, as
amended by the First Amendment thereto dated as of February 26, 2004, between
the Company and InTransit Media (the "Asset Purchase Agreement").

         On March 5, 2004, in connection with the Merger and the Asset Sale, the
Company changed its name from "Digital Data Networks, Inc." to "i2 Telecom
International, Inc." and changed its ticker symbol on the over-the-counter
electronic bulletin board from "DIDA" to "ITUI".

         On December 8, 2004, the Company relocated its corporate headquarters
to Atlanta, Georgia in order to be closer to more technology driven companies
and to aide in the Company's recruitment of technology workers.

         As a result of the Merger and the Asset Sale, the Company's operations
now consist of the operations of i2Telecom Delaware. The Company's operations as
currently conducted are described below.

Nature of Business

         The Company, through its subsidiary, i2Telecom Delaware, provides
low-cost telecommunications services employing next-generation Voice over
Internet Protocol ("VoIP") technology. These operations are based in Roswell,
Georgia. Through i2Telecom Delaware, the Company controls its own proprietary
technology and outsources the majority of its production and service functions
with strategic partners. The Company, through i2Telecom Delaware, provides the
VoiceStick(TM), micro gateway adapters (InternetTalker(TM)), VoIP long distance
and other enhanced communication services to subscribers. The Company's
proprietary technology platform is built to the Session Initiation Protocol
("SIP") standard. The Company's revenue model now includes revenue from the sale
of the VoiceStick(TM) and other integrated access devices ("IADs") along with
recurring monthly subscriptions and call minute termination. The Company
believes its proprietary technology provides meaningful advantages particularly
in the areas of quality of service, cost of service, features and ease of use.

         The Company's proprietary technology platform is built to the SIP
standard and offers the end user the following primary benefits:
     o  near carrier grade quality of service;

     o  low cost long distance calling worldwide;

     o  broadband access via laptop with the Company's VoiceStick(TM);

     o  broadband and dial-up technology in the Company's InternetTalker(TM)IAD;

                                      8
<PAGE>

     o plug  and  play  technology  using  traditional  phones  without
       professional installation; and

     o  unlimited global calling among VoiceStick(TM) and InternetTalker(TM) IAD
        users with a minimal monthly subscription.

The  Company's  management  intends to focus  solely upon VoIP as the  Company's
primary line of business.  In addition,  the Company's  management is constantly
exploring  various  strategic  alternatives,  including  partnering  with  other
telecommunication   companies,  both  foreign  and  domestic,  and  engaging  in
acquisitions  of  strategic   competitors   and/or   telecommunication   service
providers.  There can be no assurances that such efforts will be successful. The
Company may finance these new business  opportunities  through a combination  of
equity and/or debt. If the Company determines to finance these  opportunities by
issuing  additional  equity,  then such equity may have  rights and  preferences
superior to the outstanding  Common Stock and Preferred  Stock, and the issuance
of such equity will dilute the ownership  percentage  of the Company's  existing
shareholders.  If the  Company  determines  to finance  these  opportunities  by
incurring  debt, then such debt may not be available to the Company on favorable
terms, if at all.

Liquidity and Going Concern
It is  imperative  that the Company  raise  capital in the near-term in order to
continue as a going concern.  Without raising  additional  capital,  the Company
likely will not be able to satisfy its current and other  liabilities due in the
near-term unless they are modified or  restructured.  There is no guarantee that
(i)  additional  capital will be available  to the extent  required,  or that if
available,  it will be available on terms acceptable to the Company, or (ii) the
Company's  current and other liabilities due in the near-term can be modified or
restructured.  If the  Company  cannot  raise  additional  capital  or modify or
restructure  such  liabilities,  then the  Company  may be unable to pursue  its
business plan and may be forced to cease doing business.

As can be seen from the  Company's  filings  with the  Securities  and  Exchange
Commission  (the "SEC") over the past year,  the  Company  has  experienced  net
losses and negative cash flows from operations and has an accumulated deficit at
September 30, 2006 of  approximately  $25,756,856 and a negative working capital
position.  The  ability of the  Company  to  generate  positive  cash flows from
operations  and  net  income  is  dependent,   among  other  things,  on  market
conditions,  the recovery of recorded  assets,  cost  control,  identifying  and
securing additional revenue sources,  and the Company's ability to raise capital
under acceptable terms. The accompanying financial statements do not include any
adjustments that might result from the outcome of these uncertainties.  As noted
in an  explanatory  paragraph  in the  Report of  Independent  Certified  Public
Accountants  on the Company's  consolidated  financial  statements  for the year
ended  December 31, 2005,  as set forth in the  Company's  Annual Report on Form
10-KSB for the year ended  December  31,  2005,  (the  "Annual  Report"),  these
conditions have raised substantial doubt about the Company's ability to continue
as a going concern.

                                      9
<PAGE>

Critical Accounting Policies

The  policies  identified  below are  considered  as critical  to the  Company's
business   operations  and  the   understanding  of  the  Company's  results  of
operations.  The impact of and any associated risks related to these policies on
the  Company's  business  operations  is  discussed   throughout   "Management's
Discussion and Analysis or Plan of Operation." For a detailed  discussion on the
application of these and other accounting  policies,  see Note 1 in the Notes to
the Company's  consolidated financial statements for the year ended December 31,
2005,  included in the Annual Report.  Preparation  of this Quarterly  Report on
Form 10-QSB for the quarter ended September 30, 2006 (this  "Quarterly  Report")
requires the Company to make estimates and assumptions  that affect the reported
amount  of  assets  and  liabilities,   disclosure  of  contingent   assets  and
liabilities,  and the reported amounts of revenue and expenses.  There can be no
assurance that actual results will not differ from those estimates.


Basis of Consolidation

The consolidated financial statements include the accounts of i2Telecom Delaware
and SuperCaller Community, Inc. ("SuperCaller"),  both of which are, directly or
indirectly,   wholly-owned   subsidiaries   of  the  Company.   All  significant
intercompany  accounts and transactions  have been eliminated in  consolidation.
Accounting Estimates

The preparation of financial statements in conformity 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 revenue and expenses during the reporting
period. Estimates are used when accounting for allowances for doubtful accounts,
revenue reserves,  inventory  reserves,  depreciation and  amortization,  taxes,
contingencies  and  impairment  allowances.  Such  estimates  are reviewed on an
on-going basis and actual results could differ from those estimates.
Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting  Bulletin
("SAB") No. 101, "Revenue Recognition in Financial  Statements" ("SAB No. 101"),
as amended by SAB No.  101A and SAB No.  101B.  SAB No. 101  requires  that four
basic  criteria must be met before  revenue can be  recognized:  (i)  persuasive
evidence  of an  arrangement  exists;  (ii)  delivery  has  occurred or services
rendered;  (iii) the fee is fixed and determinable;  and (iv)  collectibility is
reasonably  assured.  Determination  of  criteria  (iii)  and (iv) are  based on
management's  judgments  regarding  the  fixed  nature  of the fee  charged  for
services rendered and products  delivered and the  collectibility of those fees.
Should changes in conditions  cause  management to determine  these criteria are
not met for certain future  transactions,  revenue  recognized for any reporting
period could be adversely affected. The Company has concluded

                                      10
<PAGE>

that its  revenue  recognition  policy is  appropriate  and in  accordance  with
accounting principles generally accepted in the United States of America and SAB
No. 101.

Impairment of Long-Lived Assets

The  Company  evaluates  its  long-lived  assets for  financial  impairment  and
continues to evaluate them as events or changes in  circumstances  indicate that
the  carrying  value of such assets may not be fully  recoverable.  The carrying
value  of  long-lived  assets  is  considered   impaired  when  the  anticipated
undiscounted  cash flows from an asset is less than its carrying  value. In that
event,  a loss is recognized  for the amount by which the carrying value exceeds
the fair value of the  long-lived  asset.  The  Company has not  recognized  any
impairment losses.

Recent Accounting Pronouncements

In March 2005, the SEC released Staff  Accounting  Bulletin No 107, "Share Based
Payment"  ("SAB  107"),  which  provides  interpretive  guidance  related to the
interaction  between SFAS 123(R) and certain SEC rules and regulations.  It also
provides  the SEC staff's  views  regarding  valuation  of  share-based  payment
regulations.  In April  2005,  the SEC  amended  the  compliance  dates for SFAS
123(R),  to allow  companies to implement  the standard at the  beginning of the
next fiscal year,  instead of the next reporting period beginning after June 15,
2005. The impact of SAB 107 had no effect on our financial statements.

In March 2005,  the FASB  issued  FASB  Interpretation  No. 47,  Accounting  for
Conditional Asset Retirement  Obligations"  ("FIN 47"). FIN 47 provides guidance
relating to the identification of and financial  reporting for legal obligations
to perform an asset retirement activity. The Interpretation requires recognition
of a liability for the fair value of a conditional  asset retirement  obligation
when incurred if the liability's fair value can be reasonably estimated.  FIN 47
also defines  when an entity would have  sufficient  information  to  reasonably
estimate  the fair value of an asset  retirement  obligation.  The  provision is
effective no later than the end of fiscal years ending after  December 15, 2005.
The Company  adopted FIN 47 beginning  the first quarter of fiscal year 2006 and
the adoption had no material impact on its financial statements.

In May 2005,  the FASB issued FASB  Statement No. 154,  "Accounting  Changes and
Error  Corrections."  This new standard replaces APB Opinion No. 20, "Accounting
Changes,  and FASB  Statement  No. 3,  Reporting  Accounting  Changes in Interim
Financial  Statements,"  and  represents  another  step  in the  FASB's  goal to
converge  its  standards  with those  issued by the IASB.  Among other  changes,
Statement  154  requires  that a voluntary  change in  accounting  principle  be
applied  retrospectively with all prior period financial statements presented on
the new accounting principle, unless it is impracticable to do so. Statement 154
also  provides  that (1) a change in  method of  depreciating  or  amortizing  a
long-lived  non-financial  asset  be  accounted  for  as a  change  in  estimate
(prospectively) that was effected by a change in accounting  principle,  and (2)
correction of errors in previously issued financial  statements should be termed
a  "restatement".  The new  standard is  effective  for  accounting  changes and
correction  of errors made in fiscal years  beginning  after  December 15, 2005.
Early  adoption  of this  standard  is  permitted  for  accounting

                                      11
<PAGE>

changes and  correction of errors made in fiscal years  beginning  after June 1,
2005. The Company has adopted Statement 154 and it did not have an impact on the
Company's overall results of operation of financial position.

In February of 2006,  the FASB  issued  SFAS No.  155,  "Accounting  for Certain
Hybrid Financial Instruments"("SFAS NO. 155"), which is intended to simplify the
accounting  and improve the  financial  reporting  of certain  hybrid  financial
instruments.  (i.e.,  derivatives embedded in other financial instruments).  The
statement  amends SFAS No.  133,  "Accounting  for  Derivative  Instruments  and
Hedging  Activities",  and SFAS No. 140, "Accounting for Transfers and Servicing
of Financial Assets and  Extinguishments  of Liabilities - a replacement of FASB
Statement  No. 125.  SFAS No. 155 is  effective  for all  financial  instruments
issued or acquired  after the  beginning  of an entity's  first fiscal year that
begins after September 15, 2006. The Company is currently  evaluating the impact
of SFAS No. 155 will have on its financial statements, if any.


Quantitative and Qualitative Disclosure about Market Risk

The Company believes that it does not have any material  exposure to interest or
commodity  risks.  The Company does not own any derivative  instruments and does
not engage in any hedging transactions.

Comprehensive Income or Loss

The  Company  has no  components  of other  comprehensive  income  or loss,  and
accordingly, net loss equals comprehensive loss for all periods presented.

Earnings Per Share

For the  third  quarter  of 2006 and  2005,  net loss per  share is based on the
weighted average number of shares of Common Stock outstanding.  At September 30,
2006 and September 30, 2005, the Company had, on a weighted average,  45,102,752
shares and 36,609,532 shares of Common Stock outstanding, respectively.

At September 30, 2006, the Company had outstanding  65,623,330  shares of Common
Stock and options and warrants to purchase  48,863,753  shares of Common  Stock.
Consequently,  on an as-converted,  fully-diluted  basis, the Company would have
73,115,545 shares of Common Stock outstanding at September 30, 2006.

Stock Compensation

During 2004,  the  Company's  shareholders  approved a stock option plan for its
officers, directors and certain key employees. Generally, the options vest based
on the  attainment  of  certain  performance  criteria  set forth in the  option
agreements. In addition, the Company has issued stock warrants to key employees,
consultants,  and certain investors, with expiration dates of one to five years.
Effective  January 1, 2005,  the Company  adopted early  application of SFAS No.
123R.

                                      12
<PAGE>

SFAS No. 123R  supersedes  APB Opinion No. 25 which was  previously  used by the
Company.  Generally,  the  approach in SFAS No. 123R is similar to the  approach
described  in SFAS No. 123.  However,  SFAS No. 123R  requires  all  share-based
payments  to  employees,  including  grants of  employee  stock  options,  to be
recognized in the income statement based on their fair values. Under APB Opinion
No.  25,  compensation  expense  was  recorded  on the date of grant only if the
current market price of the  underlying  stock exceeds the exercise  price,  the
intrinsic value method.  Under SFAS No. 123R, the Company  recognizes an expense
over the vesting period of the fair value of all stock-based  awards on the date
of grant. Beginning January 1, 2005, all stock-based awards to non-employees are
accounted for at their fair value in  accordance  with SFAS No. 123R and related
interpretations.

Additionally,  the  Company has adopted  early  application  of SFAS No. 123R on
January 1, 2005.  The cumulative  effect of this change in accounting  principle
for periods prior to 2005 was $340,117,  net of income tax and has been included
on the statement of operations for the three months ended March 31, 2005.

Stock  compensation  expense  is  comprised  of  the  amortization  of  deferred
compensation  resulting from the grant of stock options to employees at exercise
or sale  prices  deemed to be less than fair value of the Common  Stock at grant
date, net of forfeitures  related to such employees who terminated service while
possessing unvested stock options, as these terminated employees have no further
service obligations.


Reclassifications

         Certain prior year amounts have been reclassified to conform to the
current year presentation.

Interim Financial Data

In the opinion of management,  the accompanying unaudited condensed consolidated
financial statements have been prepared by the Company pursuant to the rules and
regulations  of the SEC.  These  financial  statements do not include all of the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial   statements.   These  statements  should  be  read  in
conjunction with the Company's audited consolidated financial statements for the
year ended  December  31,  2005,  set forth in the Annual  Report.  The  interim
financial information included herein has not been audited. However,  management
believes the accompanying  unaudited  interim financial  statements  contain all
adjustments,  consisting  of only normal  recurring  adjustments,  necessary  to
present fairly the consolidated  financial position of i2 Telecom International,
Inc. and  Subsidiaries  as of September 30, 2006 and September 30, 2005, and the
results of their  operations and cash flows for the three months ended September
31, 2006 and 2005.  The results of operations  and cash flows for the period are
not  necessarily  indicative of the results of operations or cash flows that can
be expected for the year ending December 31, 2006.

                                      13
<PAGE>

<TABLE>
<CAPTION>

NOTE 2: NOTES PAYABLE

Notes Payable as of September 30, 2006 and December 31, 2005:

<S>                                                                                   <C>                <C>
                                                                                      2006               2005
                                                                              ----------------- ------------------
     a. 8% note payable due to an individual previously affiliated with
     SuperCaller. The principal and all accrued interest are due and payable
     upon the Company obtaining certain levels of equity funding. These funding
     levels are expected to be met prior to
     December 31, 2006.                                                           $ 50,000          $  50,000
     b. 6% note payable due to an individual  previously affiliated with
     SuperCaller.  The  principal  and all accrued  interest are due and
     payable  upon  the  Company  obtaining  certain  levels  of  equity
     funding.  These  funding  levels  are  expected  to be met prior to
     December 31, 2006.                                                             50,000             50,000
     c. 8%  note  payable  to a  bank.  The  principal  and all  accrued
     interest  were  due on  July  31 31,  2005.  In  August  2006,  the
     maturity  date was extended  until  December 31,  2006.The  note is
     unsecured and guaranteed by an officer of the Company.                         65,349             80,625
     d.  12%  note  payable  due  to an  individual  shareholder  of the
     company.  The  principal  and all accrued  interest were due on May
     31, 2006.  The note is unsecured  and  guaranteed  by an officer of
     the Company.  In August 2006,  the maturity date was extended until
     August 31, 2007.                                                              245,000            250,000
     e. 12% note payable due to a  corporation.  The  principal  and all
     accrued  interest  were  due on  September  30,  2005.  The note is
     unsecured and guaranteed by an officer of the Company.                        100,000            100,000
     f. 12% note payable due to an  individual.  The  principal  and all
     accrued  interest  were due on September 15, 2006. In October 2006,
     the maturity date was extended until January 15, 2007.                        300,000                  0
     g. 12% note payable to an officer & director of the Company. The principal
     and accrued interest were due on September 15, 2006. The note is unsecured.
     In October 2006, the maturity date was extended
     until January 15, 2007.                                                        75,000            175,000
     h. 12% note payable due to an  corporation.  The  principal and all
     accrued  interest  were  due on  September  15,  2006.  The note is
     unsecured  and  guaranteed  by an officer of the Company In October           300,000            300,000
     2006, the maturity date was extended until January 15, 2007.
     i. 12% note payable due to an individual. The principal and all accrued
     interest were due on September 15, 2006. The note is unsecured and
     guaranteed by an officer of the Company. In October
     2006, the maturity date was extended until January 15, 2007.                   50,000             50,000
     j. 12% note payable due to an  individual.  The  principal  and all
     accrued  interest  were  due  on  August  15,  2006.  The  note  is
     unsecured and  guaranteed by an officer of the Company.  In October
     2006, the maturity date was extended until January 15, 2007.                   50,000             50,000
     k. 12% note payable due to an corporation controlled by a director of the
     Company. The principal and all accrued interest were due on August 31,
     2006. In August 2006, the maturity date was
     extended until January 15, 2007. The note is unsecured.                        50,000             50,000

                                      14
<PAGE>


     l. 12% note payable due to an  individual  who is a director of the
     Company.  The  principal  and  all  accrued  interest  were  due on
     August  31,  2006.  The note is  unsecured.  In October  2006,  the
     maturity date was extended until January 15, 2007.                             50,000             50,000
     m.  10%  note  payable  due to a  corporation.  The  principal  and
     interest  payments  are due weekly  for  $3,000  till paid in full.
     The note is  unsecured.  In  August  2006,  the  maturity  date was
     extended until December 31, 2006.                                             148,578            200,000
     n. 13% note payable due to a corporation. The principal and all accrued
     interest were due on November 15, 2006. The note is
     secured. The maturity date was extended until March 15, 2007.               1,000,000          1,000,000
     o. 13% note payable due to an  individual.  The  principal  and all
     accrued  interest  were  due on  November 15,  2006.  The note is
     secured.  The maturity date was extended until March 15 2007.                 100,000            100,000
     p. 13% note payable due to an  individual.  The  principal  and all
     accrued  interest  were  due on  November  15,  2006.  The note is
     secured. The maturity date was extended until March 15, 2007                  100,000            100,000
     q. 8% note  payable due to a  corporation.  The  principal  and all
     accrued  interest  were due on May 31, 2006.  The note is unsecured
     and  guaranteed by an officer of the Company.  In October 2006, the            25,000             25,000
     maturity was extended until January 15, 2007.
     r. 8% note payable to an individual. The principal and all accrued interest
     were due on May 31, 2006. The note is
     unsecured.  In  October  2006,  the  maturity  was  extended  until            25,000             25,000
     January 15, 2007.
     s. 7.5% note payable to a corporation. The principal and all
     accrued interest are due on April 1, 2007.  The note is unsecured.            168,000                  0
     t. 12% note payable to a corporation. The note was paid in full
     during the first quarter of 2006.                                                   0             75,000
     u. 12% note payable to a individual.  On April 17(,) 2006, the note
     was paid down  $15,000 and the  remainder  was  converted to common
     stock of the company.                                                               0             50,000
     ..................................................................... ................. ..................
     Total Long Term Debt                                                        2,951,927          2,780,625
     Less:  Current Portion                                                      2,951,927          2,780,625
     Long-Term Portion                                                            $    -0-           $    -0-
</TABLE>



NOTE 3: CONVERTIBLE BONDS

On January 9, 2006, the Company closed a financing transaction in which it sold
10% secured convertible debentures (the "Debentures") to Cornell Capital
Partners, LP ("Cornell") to raise $1,750,000 pursuant to a Securities Purchase
Agreement dated thereof (the "Securities Purchase Agreement"). The Company
received $600,000 upon closing. On April 6, 2006, the Company closed a financing
transaction in which it sold 10% secured convertible debentures to Cornell. The
Company received $600,000 upon closing. On May 10, 2006, the Company closed a
financing transaction in which it sold 10% secured convertible debentures to
Cornell. The Company received $550,000 upon closing.

                                      15
<PAGE>


The Debentures mature on January 9, 2009, April 13, 2009 and May 10, 2009,
respectively. The Debentures are convertible from time to time into the common
stock of the Company by Cornell at the price per share equal to the lesser of
(1) ninety percent (95%) of the lowest volume weighted average price of the
Company's common stock, as quoted by Bloomberg, LP, for the thirty (30) trading
days immediately preceding the conversion date or (2) $0.10. In the event that
the volume weighted average price of the Company's common stock, as quoted by
Bloomberg, LP, is below Four Cents ($0.04) for ten (10) consecutive Trading
Days, Cornell shall not, unless waived by the Company, convert more than Two
Hundred Thousand Dollars ($200,000) of principal and interest due and
outstanding under the Debentures into shares of the Company's common stock in
any thirty (30) calendar day period. Additionally, Cornell may not convert the
Debentures or exercise the Warrant (as defined below) if such conversion or
exercise would result in Cornell, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1933 and the rules promulgated thereunder) in excess
of 4.9% of the then issued and outstanding shares of the Company's common stock.
The Company has an option to redeem a portion or all of the outstanding
principle convertible Debentures, provided that the price of the Company's
common stock is trading below the Fixed Conversion Price, with the redeem price
of one hundred twenty percent (120%) of the amount redeemed plus accrued
interest.


     Convertible bonds at September 30, 2006 and December 31, 2005:

                                     2006                             2005
---------------------------- -------------------------- ----------------------
10% Convertible Bonds              $1,500,000            $                -
---------------------------- -------------------------- ----------------------

<TABLE>
<CAPTION>


NOTE 4: STOCK OPTIONS AND WARRANTS

                                                            September 30, 2006                     December 31, 2005
                                                    ------------------------------------- -------------------------------------
                                                         Weighted                             Weighted
                                                        Number of           Average           Number of           Average
                                                         Options/           Exercise          Options/           Exercise
                                                         Warrants            Price            Warrants             Price
                                                    --------------------- --------------- -------------------- ----------------
     Outstanding at Beginning of
<S>                                                         <C>                  <C>             <C>                     <C>
       Period                                               27,784,602           $ .56           22,757,921              .67
     Options Granted                                         7,570,523           $ .10            4,175,771            $ .53
     Warrants Granted                                       17,818,313           $ .09            9,467,015            $ .34
     Exercised                                             (4,261,389)           $ .17           (6,337,688)             .56
     Forfeited                                                (48,296)           $ .01           (2,278,417)           $ .55
     .............................................. ..................... ............... .................... ................
     Outstanding at End of Period                           48,863,753           $ .36           27,784,602            $ .57
    ---------------------------------------------- --------------------- --------------- -------------------- ----------------
     Options Exercisable at End of
       Period                                               46,014,974           $ .19           16,918,676              .60
     Weighted-average Fair Value of
       Options Granted During the Period                                         $ .07                                 $ .32
</TABLE>


                                      16
<PAGE>

As of September 30, 2006,  the range of option and warrant  exercise  prices for
outstanding  and  exercisable  options  and  warrants  was $.01 to $1.00  with a
weighted average remaining contractual life of 1.91 years.

NOTE 4:  STOCK APPRECIATION RIGHTS AND RESTRICTED SHARE UNITS

On December 31, 2003,  the Company  terminated its stock  appreciation  plan and
cancelled all outstanding rights granted. As consideration for the consideration
of rights cancelled,  each employee received restricted stock or cancellation of
their notes  receivable  at rate of $3.00 per right.  On December 31, 2003,  the
Company  amended its 2002 Stock Option Plan to properly  administer the granting
of restricted stock.  Under the amended plan,  employees are granted  restricted
share units without cost to the employee.  Each restricted share unit awarded to
a participant represents an unfunded,  unsecured right, which is nontransferable
except in the event of death,  of the  employee  to receive  one share of common
stock, $.01 par value, of i2Telecom Delaware on the date specified in the grant.
As a result of the  Merger  each  such  right  was  converted  into the right to
receive  shares of Common Stock,  no par value per share,  and  Preferred  Stock
Series B, no par value per share (the  "Preferred  Stock Series B"), as outlined
in the Merger Agreement.  The restricted share units granted under the plan vest
evenly over three years, with immediate vesting upon termination.


         Information with respect to restricted share units as of September 30,
2006 and 2005 is as follows:

<TABLE>
<CAPTION>

                                                                                       2006                   2005
                                                                       ....................... ......................
<S>                                                                                 <C>                  <C>
     Restricted Units-Beginning of Year                                             382,588              1,102,088
     Restricted Units Granted                                                     6,500,000                    -0-
     Transfer to Common Stock Due to Lapse of Restrictions                       (4,253,784)                   -0-
                                                                       ....................... ......................
                                                                       ....................... ......................
     Restricted Units-End of period                                               2,628,784              (367,363)
                                                                       ----------------------- ----------------------
                                                                       ----------------------- ----------------------
     Weighted Average Fair Value of Shares                                           $  .07                734,725
     Pre-Tax Compensation Expense Charged to                                                                $  .45
       Earnings, net of cancellations                                                $  -0-
</TABLE>



NOTE 5:  SUBSEQUENT EVENTS
     In December 2006, the Company had issuable 6,785,714 shares of Common Stock
in the  aggregate and an additional  6,785,714  shares of Common Stock  issuable
upon exercise of warrants  exercisable  until December 1, 2009 to 5 individuals,
Mssrs.  Arena (an officer and director of the Company),  Braswell (a director of
the Company),  Barnes,  Purcell and Rapp, 2 Corporations,  Pamplona  Capital and
Yeh's  Mechanical  Service and 1 trust,  Hayes Family,  at an exercise  price of
$0.07 per share (subject to customary  adjustments in accordance  with the terms
thereof).  The shares and the warrants are issuable in lieu of $475,000 invested
into the Company.  The shares and the warrants are issuable without registration
under the Securities Act in reliance upon the exemptions from  registration  set
forth in Section 4(2) and  Regulation  D. The Company  based such  reliance upon
factual  representations by the recipients of the shares and the warrants to the
Company  regarding their  investment  interest and  sophistication,  among other
things.  However,  these shares and warrants are entitled to registration rights
upon filing of the Company's next  registration  statement  which is required in
the first quarter of 2007.

Item 2. Management's Discussion and Analysis or Plan of Operation

Certain statements in this Quarterly Report and in future filings by the Company
with  the SEC and in the  Company's  written  and oral  statements  that are not
statements  of  historical  facts are  "forward-looking  statements"  within the
meaning of the  Private  Securities  Litigation  Reform  Act of 1995.  The words
"believe," "expect,"  "anticipate," "intend," "will" and similar expressions are
examples  of words that  identify  forward-looking  statements.  Forward-looking
statements  include,   without  limitation,   statements  regarding  our  future
financial  position,   business  strategy  and  expected  cost  savings.   These
forward-looking  statements  are  based  on our

                                      17
<PAGE>

current  beliefs,  as well as  assumptions  we have made based upon  information
currently available to us.

Each forward-looking statement reflects our current view of future events and is
subject  to risks,  uncertainties  and other  factors  that could  cause  actual
results  to differ  materially  from any  results  expressed  or  implied by our
forward-looking statements. Important factors that could cause actual results to
differ materially from the results  expressed or implied by any  forward-looking
statements include:

      o our ability to fund future growth;
      o our ability to become profitable;
      o the volatility of the price of our Common Stock;
      o market demand for and market acceptance for our products;
      o our ability to protect our intellectual property rights;
      o new regulation and legislation;
      o trends for the continued growth of our business and other businesses we
        may acquire;
      o our ability to successfully  market existing  products and services and
        develop and market new products and
        services;
      o our ability to expand our market for existing products and services;
      o the effects of our accounting policies and general changes in accounting
        principles  generally accepted in
        the United States of America;
      o General economic  conditions of the  telecommunications  market,
        including the new and evolving market for next-generation
        communications solutions; and
      o other risks and uncertainties disclosed in our Annual Report.

On Monday, November 7, the Federal Communications Commission (FCC) (www.fcc.gov)
Enforcement Bureau issued further revisions to E911 compliance  requirements for
interconnected VoIP service providers.

In the latest policy,  VoIP providers won't be forced to cut off subscribers who
don't receive E911 services by November 28, 2005.  However,  VoIP companies will
be expected to stop  marketing  their  service and  accepting  new  customers in
service areas that aren't equipped to do E911 call routing,  even if subscribers
would be able to get "basic" 911 service.  The FCC document states  "Although we
do not require  providers that have not achieved full 911 compliance by November
28, 2005, to  discontinue  the provision of  interconnected  VoIP service to any
existing customers,  we do expect that such providers will discontinue marketing
VoIP service,  and accepting new customers for their service, in all areas where
they are not  transmitting  911 calls to the appropriate PSAP in full compliance
with the Commission's rules."

As of the date of this  report,  the Company has only partly met the FCC's order
for E911 compliance.

All subsequent  forward-looking  statements relating to the matters described in
this  document  and  attributable  to us or to persons  acting on our behalf are
expressly  qualified in their entirety by such factors. We have no obligation to
publicly  update or revise  these

                                      18
<PAGE>

forward-looking  statements  to  reflect  new  information,  future  events,  or
otherwise,  except as required by applicable  Federal  securities  laws,  and we
caution you not to place undue reliance on these forward-looking statements.

Business of the Company

The Company,  through its  subsidiary,  i2Telecom  Delaware,  provides  low-cost
telecommunications  services employing  next-generation  VoIP technology.  These
operations  are based in  Roswell,  Georgia.  Through  i2Telecom  Delaware,  the
Company  controls its own proprietary  technology and outsources the majority of
its production  and service  functions  with  strategic  partners.  The Company,
through i2Telecom Delaware, provides the VoiceStick(TM),  micro gateway adapters
(InternetTalker(TM)),  VoIP  long  distance  and  other  enhanced  communication
services to subscribers.  The Company's proprietary technology platform is built
to the Session Initiation Protocol ("SIP") standard. The Company's revenue model
now includes  revenue from the sale of the  VoiceStick(TM)  and other integrated
access  devices  ("IADs") along with recurring  monthly  subscriptions  and call
minute  termination.  The Company believes its proprietary  technology  provides
meaningful  advantages  particularly  in the areas of ease of use,  high quality
service, and low cost and robust features.

The Company's  proprietary  technology platform is built to the SIP standard and
offers the end user the following primary benefits:
     o  near carrier grade quality of service;

     o  low cost long distance calling worldwide;

     o  broadband access via laptop with the Company's VoiceStick(TM);

     o  broadband technology in the Company's InternetTalker(TM) IAD;

     o  plug and play technology using traditional phones (including cellular)
        without professional installation; and

     o  unlimited global calling among VoiceStick(TM) and InternetTalker(TM) IAD
        users with a minimal monthly subscription.

The  Company's  management  intends to focus  solely upon VoIP as the  Company's
primary line of business.  In addition,  the Company's  management is constantly
exploring  various  strategic  alternatives,  including  partnering  with  other
telecommunication   companies,  both  foreign  and  domestic,  and  engaging  in
acquisitions  of  strategic   competitors   and/or   telecommunication   service
providers.  There can be no assurances that such efforts will be successful. The
Company may finance these new business  opportunities  through a combination  of
equity and/or debt. If the Company determines to finance these  opportunities by
issuing  additional  equity,  then such equity may have  rights and  preferences
superior to the outstanding  Common Stock and Preferred  Stock, and the issuance
of such equity will dilute the ownership

                                      19
<PAGE>

percentage of the Company's existing shareholders.  If the Company determines to
finance  these  opportunities  by  incurring  debt,  then  such  debt may not be
available to the Company on favorable terms, if at all.

RESULTS OF OPERATIONS

Results of operations for the three months ended September 30, 2006 compared
with the results of operations for the three months ended September 30, 2005.

Revenues  increased  from $49,851 for the third  quarter of 2005 to $252,546 for
the third quarter of 2006.  The increase in revenues was driven by the Company's
reorganization focusing from product to service offerings.

Cost of revenues  decreased  from $369,492 for third quarter of 2005 to $166,072
for  third   quarter  of  2006.   The  decrease  was  driven  by  the  Company's
reorganization focusing from product to service offerings.

Gross  profit for the third  quarter of 2006 was  $86,474 as compared to a gross
loss of $319,641 for the third quarter of 2005.

Sales,  general and  administrative  expenses for the third quarter of 2006 were
$822,864 as compared to  $2,295,520  for the same period in 2005.  This decrease
was  attributable  to reductions of payroll and related  expenses  including the
closing of the Company's  Redwood City,  California office and the downsizing of
its Atlanta office.

Loss from  operations  for the third  quarter of 2006 as  compared  to the third
quarter of 2005  decreased  from  $2,615,161  to $736,490 due to the decrease in
sales, general and administrative expenses for the third quarter.

Net loss for the third  quarter of 2006 was  $895,192  as compared to a net loss
for the same  period in 2005 of  $2,276,488.  The  decrease  in net loss for the
third  quarter  2006  as  compared  to the  same  period  in  2005 is due to the
Company's continued reduction in operating costs.

The Company's net accounts  receivable  balance  decreased between September 30,
2005 and September 30, 2006 by approximately  $427,000.  This decrease is due to
the increase in reserves for doubtful  accounts quarter over quarter of $50,000.
The Company's  inventory  decreased by approximately  $327,000 between September
30, 2005 and September 30, 2006. The inventory decrease was primarily due to the
write off`s of obsolete inventory.

                                      20
<PAGE>
<TABLE>
<CAPTION>

                                                                       For the Three Months Ended
                                                                              September 30,
                                               ----------------------------------------------------------------------------

                                                     2006                     2005             Variance          Percentage
                                                     ----                     ----             --------          ----------
<S>                                                <C>                      <C>                 <C>                <C>
Gross Revenue                                      $252,546                 $49,851             $202,695           406.60%
Cost of Sales                                      166,072                  369,492            (203,420)          (55.05)%
                                                   -------                  -------            ---------          --------
Gross Profit                                       $86,474               ($319,641)             $406,115           127.05%
Operating Expenses:
General and Administrative Expenses                $822,964              $2,295,520         $(1,472,556)          (64.15)%
Other Income (Expense) Net                        (158,702)                 338,673            (497,375)          (146.8)%
                                                  ---------                 -------            ---------          --------
Net Loss                                           $895,192              $2,276,488         $(1,381,296)            60.68%
</TABLE>

RESULTS OF OPERATIONS

Results of operations for the nine months ended September 30, 2006 compared with
the results of operations as for the nine months ended September 30, 2005

Revenues increased from $502,389 for the nine months ended September 30, 2005 to
$529,524 for the nine months ended September 30, 2006. Revenues increased as a
result of a change from a product driven business model to a service model with
recurring revenues.

Cost of revenues decreased from $775,589 for the nine months ended September 30,
2005 to $376,126 the nine months ended September 30, 2006. This decrease is
again attributable a change from a product driven business model to a service
model with recurring revenues during the nine months ended September 30, 2006 as
compared to the nine months ended September 30, 2005.

Gross profit for the nine months ended September 30, 2006 was $153,398 as
compared to gross loss of $273,200 for the nine months ended September 30, 2005.
The increase is due primarily to a change from a product driven business model
to a service model with recurring revenues.

Loss from operations for nine months ended September 30, 2006 was $3,473,424
compared to $6,163,231 for the nine months ended September 30, 2005. Total
selling, general and administrative expenses for the nine months ended September
30, 2006 was $3,626,822 compared to $5,890,031 for the nine months ended
September 30, 2005. The majority of the selling, general and administrative
expense decrease came from decreased personnel costs and decreased costs
associated with product development.

Finally, net loss for the nine months ended September 30, 2006 was $895,192 as
compared to a net loss for the nine months ended September 30, 2005 of
$6,176,689. The decrease in net loss is a result of the Company's continued
reduction spending on overhead and the costs associated with the continued
research and development expenditures on the Company's products.

                                      21
<PAGE>
<TABLE>
<CAPTION>

                                                                         For the Nine Months Ended
                                                                               September 30,
                                                  -------------------------------------------------------------------------

                                                       2006               2005              Variance          Percentage
                                                       ----               ----              --------          ----------
<S>                                                  <C>                  <C>                   <C>                 <C>
Gross Revenue                                        $529,524             $502,389              $27,135             5.40%
Cost of Sales                                         376,126              775,589             (399,463)          (51.50)%
                                                      -------           -----------            ---------          --------
Gross Profit                                         $153,398            $(273,200)            $426,598           156.15%
Operating Expenses:
General and Administrative Expenses                $3,626,822           $5,890,031          ($2,263,209)          (38.42)%
Other Income (Expense)  Net                          (300,569)             326,659             (627,228)         (192.01%)
                                                    ---------              -------             ---------         ---------
Net Loss                                            3,773,993           $6,176,689          ($2,402,696)           38.90%
</TABLE>



RESULTS OF OPERATIONS-CONTINUED
LIQUIDITY AND CAPITAL RESOURCES



Liquidity and capital resources as of September 30, 2006 as compared with
liquidity and capital resources as of September 30, 2005.

On  September  30,  2006,  the  Company  had  a  working   capital   deficit  of
approximately  $5,771,000  compared to September 30, 2005 when the Company had a
working  capital  deficit of  approximately  $3,783,000.  The Company's  working
capital  position  decreased by  approximately  $1,988,000  for the period ended
September  30, 2006 as compared to the period  ended  September  30,  2005.  The
decrease in working capital was primarily due to a increase in Accounts  payable
of  approximately  $1,000,000  and a increase in Notes Payable of  approximately
$400,000.  Net cash used in operating  activities  was  $2,130,000  for the nine
months ended  September 30th of 2006. Net cash used in operating  activities was
$4,005,000 for the nine months ended September 30, of 2005.  Again, the decrease
in net  cash  used in  operating  activities  between  September  30,  2006  and
September 30, 2005 is  attributable  to a reduction in operating  expenses.  Net
loss of  approximately  $4,032,000 is reduced by non-cash items of  depreciation
and amortization  amounting to approximately  $296,000.  Primary sources of cash
inflows from  operations  are from sales of the  VoiceStick(TM),  VoiceStick(TM)
activation charges and pre-paid charges and receivables  collected from sales to
customers  for the  Company's  IAD,  as well as the  collection  of revenue  for
carrying long distance calls and from monthly service fees.  Future cash inflows
from sales are subject to the Company's  pricing and ability to procure business
at existing market conditions.

Net cash used in investing activities was approximately ($74,000) for the nine
months ended September 30, of 2006 as compared to approximately ($635,200) for
the same period in 2005.

                                      22
<PAGE>

Both periods investing  activities were primarily due to equipment purchases and
payment for patents and trademarks.

Cash flows provided by financing  activities were  approximately  $2,048,300 for
the nine months ended  September 30, of 2006 as compared to  $6,183,000  for the
same period in 2005. The principal  source of cash for the third quarter of 2006
was from the Sale of common stock of $275,000

OFF BALANCE SHEET ARRANAGEMENTS

None.

Item 3:  Controls and Procedures

The  Company's  Chief  Executive  Officer and  principal  financial  officer has
evaluated  the  Company's  controls and  procedures  (as such term is defined in
Rules 13a-15(e) and 15d-15(c) of the Securities Exchange Act of 1934, as amended
(the  "Exchange  Act")),  as of the end of the period  covered by this Quarterly
Report,  as required by paragraph  (b) of Rules 13a-15 or 15d-15 of the Exchange
Act. Based on such evaluation, such officer has concluded that, as of the end of
the  period  covered  by this  Quarterly  Report,  the  Company's  controls  and
procedures  are effective in timely  alerting  them to the material  information
relating to us for our consolidated subsidiaries; required to be included in our
periodic filings with the SEC.

There were no significant  changes made in our internal  controls over financial
reporting  during the nine  month  period  ended  September  30,  2006 that have
materially  affected  or  are  reasonably  likely  to  materially  affect  these
controls. Thus, no corrective actions with regard to significant deficiencies or
material weaknesses were necessary.

                                      23
<PAGE>



                            PART II-OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is not a party to any material legal proceedings other than ordinary
routine claims and  proceedings  incidental to its business and the Company does
not expect these ordinary claims and proceedings,  either individually or in the
aggregate, to have a material adverse effect on the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


In July 2006,  the Company  issued to one investor  Vestal  Venture  Capital and
University Bank three-year  warrants to purchase  aggregate of 300,000 shares of
Common Stock at an exercise price of $0.10 per share,  vested  immediately  upon
the date of grant with a three-year  expiration period. The warrants were issued
in lieu of additional  consideration  for loan  extensions  to the Company.  The
warrants were issued without  registration  under the Securities Act in reliance
upon the exemptions from  registration  set forth in Section 4(2) and Regulation
D.  The  Company  based  such  reliance  upon  factual  representations  by  the
recipients of the warrants to the Company  regarding their  investment  interest
and sophistication, among other things.



In August 2006, 75,000 shares of Common Stock were issued to one individual,  an
investor of the  Company's  Series D  convertible  preferred  shares  which were
converted.  The shares were issued without registration under the Securities Act
in reliance upon the exemptions from  registration set forth in Section 4(2) and
Regulation D. The Company based such  reliance upon factual  representations  by
the recipients of the shares to the Company regarding their investment  interest

                                      24
<PAGE>

and sophistication,  among other things. However, a portion of these shares have
been registered with the Company's last registration statement now in effect.

Also in August 2006, the Company issued to a consultant  three-year  warrants to
purchase an aggregate of 1,000,000  shares of Common Stock at an exercise  price
of $0.07 per share,  vested immediately upon the date of grant with a three-year
expiration  period.  The warrants were issued in  consideration  of  consultancy
agreement with the Company.  The warrants were issued without registration under
the Securities Act in reliance upon the exemptions from  registration  set forth
in Section 4(2) and  Regulation  D. The Company based such reliance upon factual
representations by the recipients of the warrants to the Company regarding their
investment  interest and  sophistication,  among other things.  In addition,  an
aggregate  of 500,000  shares of Common  Stock are  pending  issuance in lieu of
$20,000  in fees due over a twelve  month  period in  connection  with  services
provided to the Company.  The shares will be issued without  registration  under
the Securities Act in reliance upon the exemptions from  registration  set forth
in Section 4(2) and  Regulation  D. The Company based such reliance upon factual
representations  by the recipients of the shares to the Company  regarding their
investment  interest and  sophistication,  among other  things.  However,  these
shares are  entitled  to  "piggyback  registration"  rights  upon  filing of the
Company's next registration statement.

In October 2006, 2,100,000 shares of Common Stock in the aggregate were issuable
upon exercise of warrants  exercisable  until  October,  2009 to 6  individuals,
Mssrs.  Arena (an officer and director of the Company),  Braswell (a director of
the Company),  Falkner,  Purcell,  Ranzini and Rapp and 2  Corporations,  Vestal
Ventures and Mena Investments,  at an exercise price of $0.07 per share (subject
to customary  adjustments in accordance  with the terms  thereof).  The warrants
were issued in lieu of  additional  consideration  for a loan  extension  to the
Company.  The warrants were issued without registration under the Securities Act
in reliance upon the exemptions from  registration set forth in Section 4(2) and
Regulation D. The Company based such  reliance upon factual  representations  by
the  recipients  of the  warrants  to the  Company  regarding  their  investment
interest and sophistication, among other things.

Also in October 2006, the Company issued to one consultant  three-year  warrants
to purchase  aggregate of 225,000 shares of Common Stock at an exercise price of
$0.01 per share,  vested  immediately  upon the date of grant with a  three-year
expiration period. The warrants were issued in lieu of $9,000 in consulting fees
for  services  rendered  to  the  Company.  The  warrants  were  issued  without
registration  under the  Securities  Act in reliance  upon the  exemptions  from
registration  set forth in Section 4(2) and Regulation D. The Company based such
reliance upon factual  representations  by the recipients of the warrants to the
Company  regarding their  investment  interest and  sophistication,  among other
things.  However,  these shares are entitled to "piggyback  registration" rights
upon filing of the Company's next registration statement.

      In November 2006, the Company issued to two consultants five-year warrants
to purchase an aggregate of 1,500,000 shares of Common Stock at an exercise
price of $0.07 per share, vested immediately upon the date of grant with a
five-year expiration period. The warrants were issued in lieu of a twelve month
marketing and consulting agreement for services to be rendered to the Company.
The warrants were issued without registration under the Securities Act in
reliance upon the exemptions from registration set forth in Section 4(2) and
Regulation D. The Company based such reliance upon factual representations by
the recipients of the warrants to the Company regarding their investment
interest and sophistication, among other things. However, these shares are
entitled to "piggyback registration" rights upon filing of the Company's next
registration statement.

     In December 2006, the Company issued to Troon and Mssrs.  McGraw and Glazov
three-year warrants to purchase aggregate of 1,600,000 shares of Common Stock at
an exercise price of $0.07 per share,  vested immediately upon the date of grant
with a  three-year  expiration  period.  The  warrants  were  issued  in lieu of
additional  consideration for a loan extension to the Company. The warrants were
issued  without  registration  under the  Securities  Act in  reliance  upon the
exemptions  from  registration  set forth in Section 4(2) and  Regulation D. The
Company based such reliance upon factual  representations  by the  recipients of
the  warrants  to  the  Company   regarding   their   investment   interest  and
sophistication,  among other things.

     In December 2006, the Company had issuable 6,785,714 shares of Common Stock
in the  aggregate and an additional  6,785,714  shares of Common Stock  issuable
upon exercise of warrants  exercisable  until December 1, 2009 to 5 individuals,
Mssrs.  Arena (an officer and director of the Company),  Braswell (a director of
the Company),  Barnes,  Purcell and Rapp, 2 Corporations,  Pamplona  Capital and
Yeh' s Mechanical  Service and 1 trust,  Hayes Family,  at an exercise  price of
$0.07 per share (subject to customary  adjustments in accordance  with the terms
thereof).  The shares and the warrants are issuable in lieu of $475,000 invested
into the Company.  The shares and the warrants are issuable without registration
under the Securities Act in reliance upon the exemptions from  registration  set
forth in Section 4(2) and  Regulation  D. The Company  based such  reliance upon
factual  representations by the recipients of the shares and the warrants to the
Company  regarding their  investment  interest and  sophistication,  among other
things.  However,  these shares and warrants are entitled to registration rights
upon filing of the Company's next  registration  statement  which is required in
the first quarter of 2007.
                                      25
<PAGE>



Item 3.  Defaults Upon Senior Securities

As of September 30, 2006, the Company is in arrears in the payment of dividends
in the amount of $196,000 owed in respect of the Company's outstanding Preferred
Stock Series D and Preferred  Stock Series E. Interest was 7% annual  percentage
rate ("APR") year 1 from 8/11/04,  then 8% APR for year 2 and 9% APR for year 3.
Interest rate calculation varies during the first quarter period March 31, 2006.
Default  interest rate accrues at 13% per annum.  On April 17, 2006, the Company
issued  1,663,611 shares of common stock in lieu of $251,234 of interest owed in
respect of the  Company's  outstanding  Preferred  Stock Series D and  Preferred
Stock Series E.

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

None.

Item 5. Other Information
None.

Item 6.  Exhibits

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




                                      26
<PAGE>



                                    SIGNATURE

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

                         i2 TELECOM INTERNATIONAL, INC.




Date: December 4, 2006           /S/  Paul R. Arena
                            ---------------------------------------------------
                                      Paul R. Arena
                                      Chief Executive Officer
                                      (duly authorized signatory and
                                      Principal Financial Officer)




                                      27
<PAGE>




                                  EXHIBIT INDEX









3.1  Articles of Incorporation, as amended          Incorporated by reference to
                                                    Exhibit 3.1 to the Company's
                                                    Annual Report on Form 10-KSB
                                                    for the year ended December
                                                    31, 2003.

3.2  Bylaws, as amended.                            Incorporated by reference to
                                                    Exhibit 3.1 to the
                                                    Company's Annual Report on
                                                    Form 10-KSB for the year
                                                    ended December 31, 2003.

3.3 Certificate of Designations of Rights           Incorporated by reference to
    and Preferences Incorporated by Preferred       Exhibit 3.1 to the
    Stock Series D of i2 Telecom International,     Company'sCurrent Report on
    Inc.                                            Form 8-K filed August 13,
                                                    2004

3.4 Amendment to the Company's Articles of          Incorporated by reference to
    Incorporation filed June 3, 2004.               Exhibit 3.1 to the Company's
                                                    Quarterly Report on Form
                                                    10-QSB for the quarter
                                                    ended June 30, 2004.

3.5 Amendment to the Company's Articles             Incorporated by reference to
    of Incorporation by reference filed             Exhibit 3.2 to the
    August 10, 2004.                                Company's Quarterly Report
                                                    on Form 10-QSB for the
                                                    quarter ended June 30, 2004.

3.6 Certificate of Designation to series            Incorporated by reference to
    E Preferred Stock                               Exhibit 3.1 to the Company's
                                                    Current Report on Form
                                                    8-K filed November 22, 2004

3.7 Amendment to Articles of Incorporation          Incorporated by reference to
    Filed on March 30, 2006.                        Exhibit 3.7 to the Company's
                                                    Registation Statement on
                                                    Form SB-2 filed on April 13.
                                                    2006

3.8 Amendment to Certificate of Designation         Incorporated by reference
    for Series D Preferred Stock.                   To Exhibit 3.8 to the
                                                    Company's Registation
                                                    Statement on Form SB-2
                                                    filed on April 13. 2006

3.9 Amendment to Certificate of Designation         Incorporated by reference
    for Series E Preferred Stock.                   To Exhibit 3.9 to the
                                                    Company's Registation
                                                    Statement on Form SB-2
                                                    filed on April 13, 2006.

3.10 Articles of Correction to the                  Incorporated by reference
     Company's Articles of Incorporation            To Exhibit 3.1.8 to the
     filed April 17, 2006.                          Company's Quarterly Report
                                                    for the quarter ended March
                                                    31, 2006

4.1     Form of Warrant filed herewith

 4.2     Form of Registration Rights Agreement filed herewith

10.1     Form of Subscription Booklet filed herewith.

31.1     Rule  13a-14(a)/15d-14(a)  Certification  by the  Company's  Chief
         Executive  Officer and Principal  Financial  Officer filed herewith
         filed herewith.

32.1     Section 1350 Certification by the Company's Chief Executive Officer and
         Principal Financial Officer filed herewith

<PAGE>


                                                                   Exhibit 31.1
                                  Certification

I, Paul R. Arena, Chief Executive Officer and Principal  Financial Officer of i2
Telecom International, Inc. certify that:

1.       I have reviewed this  Quarterly  Report on Form 10-QSB for the quarter
         ended  September 30, 2006 of i2 Telecom  International,Inc.;

2.                Based on my knowledge, this report does not contain any untrue
                  statement of a material fact or omit to state a material fact
                  necessary to make the statements made, in light of the
                  circumstances under which such statements were made, not
                  misleading with respect to the period covered by this report;

3.                Based on my knowledge, the financial statements, and other
                  financial information included in this report, fairly present
                  in all material respects the financial condition, results of
                  operations and cash flows of the small business issuer as of,
                  and for, the periods presented in this report;

4.                As the sole certifying officer, I am are responsible for
                  establishing and maintaining disclosure controls and
                  procedures (as defined in Exchange Act Rules 13a-15(e) and
                  15d-15(e)) for the small business issuer and have:

(a)               Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the small business issuer, including its consolidated
                  subsidiaries, is made known to us by others within those
                  entities, particularly during the period in which this report
                  is being prepared;

(b)               Evaluated the effectiveness of the small business issuer's
                  disclosure controls and procedures and presented in this
                  report our conclusions about the effectiveness of the
                  disclosure controls and procedures, as of the end of the
                  period covered by this report based on such evaluation; and

(c)               Disclosed in this report any change in the small business
                  issuer's internal control over financial reporting that
                  occurred during the registrant's most recent fiscal quarter
                  (the registrant's fourth fiscal quarter in the case of an
                  annual report) that has materially affected, or is reasonably
                  likely to materially affect, the small business issuer's
                  internal control over financial reporting; and

5.                As the small business issuer's other certifying officer(s) and
                  I have disclosed, based on my most recent evaluation of
                  internal control over financial reporting, to the registrant's
                  auditors and the audit committee of the registrant's board of
                  directors (or persons performing the equivalent functions):

(a)               All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

(b)               Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the small
                  business issuer's internal control over financial reporting.

Date: December 4, 2006
                                   /S/  Paul R. Arena
                                ----------------------------------------------
                                    Paul R. Arena,
                                    Chairman of the Board,
                                    Chief Executive Officer and
                                    Principal Financial Officer


<PAGE>




                                                                   Exhibit 32.1

                           SECTION 1350 CERTIFICATION

I, Paul R.  Arena,  Chairman  of the Board,  Chief  Executive  Officer and Chief
Financial Officer of i2 Telecom International,  Inc. (the "Company"),  do hereby
certify in accordance with 18 U.S.C. ss.1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.       The Quarterly Report on Form 10-QSB of the Company for the period ended
         September 30, 2006 (the "Periodic Report") fully complies with the
         requirements of section 13(a) or 15(d) of the Securities Exchange Act
         of 1934 (15 U.S.C. ss.ss.78m or 78o(d)); and

2.       The information contained in the Periodic Report fairly presents, in
         all material respects, the financial condition and results of
         operations of the Company.

Dated: December 4, 2006

                                /S/  Paul R. Arena
                              -------------------------------------------------
                                 Paul R. Arena,
                                 Chairman of the Board,
                                 Chief Executive Officer and
                                 Principal Financial Officer