U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


   [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
           EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 2006


   [ ]     TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                          Commission File No. 000-33327


                            Y-TEL INTERNATIONAL, INC.
                 (Name of Small Business Issuer in its Charter)


                  DELAWARE                               13-4151225
       ------------------------------           -----------------------------
      (State or other jurisdiction of                 (I.R.S. Employer
           Identification Number)               incorporation of organization)


                      806 O'Neal Lane Baton Rouge, LA 70816
                      -------------------------------------
                     (Address of principal executive office)

                                 (225) 273-1100
                            -------------------------
                           (Issuer's telephone number)

                           1100 NW 163 Drive, Suite B2
                                 Miami, FL 33169
                                (former address)


Check  whether  the issuer has (1) filed all  reports  required by Section 12 or
5(d) of the Exchange Act during the past 12 months, and (2) been subject to such
filing requirements for the past ninety (90) days.            Yes (X)   No ( )


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

As of May 22, 2006, there were 18,799,791 shares of Common Stock outstanding.

Transitional small business format (check one)                Yes (  )  No (X)








                                       i

<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                                   FORM 10-QSB
                                TABLE OF CONTENTS

   PART I             FINANCIAL INFORMATION

      Item 1          Financial Statements                                  1

      Item 2          Management's Discussion and Analysis or Plan
                      of Operation                                         11

      Item 3          Controls and Procedures                              14


   PART II            OTHER INFORMATION

      Item 1          Legal Proceedings                                    15

      Item 2          Unregistered Sales of Equity Securities and
                      Use of Proceeds                                      15

      Item 3          Defaults upon Senior  Securities                     15

      Item 4          Submission of Matters to a Vote of Security Holders  15

      Item 5          Other Information                                    15

      Item 6          Exhibits                                             15


   SIGNATURES                                                              16



























                                      ii

<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES

                                            CONDENSED CONSOLIDATED BALANCE SHEET
                                                                     (UNAUDITED)

                                                                  March 31, 2006

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

ASSETS

Current assets:
      Cash                                                          $     4,118
      Accounts receivable                                                22,295
      Prepaid expenses                                                   26,607
      Note receivable                                                    24,000
                                                                    -----------
           Total current assets                                          77,020

Property and equipment, net                                             149,860
                                                                    -----------

                                                                    $   226,880
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
      Accounts payable                                              $   952,191
      Accrued expenses                                                  210,671
                                                                    -----------

           Total current liabilities                                  1,162,862
                                                                    -----------


Commitments and contingencies

Stockholders' deficit:
      Preferred stock, $0.0001 par value,
         5,000,000 shares authorized;
         no shares issued and outstanding                                  --
      Common stock, $0.0001 par value,
         50,000,000 shares authorized;
         17,149,791 shares issued and outstanding                         1,715
      Additional paid in capital                                      8,469,913
      Accumulated deficit                                            (9,407,610)
                                                                    -----------

         Total stockholders' deficit                                   (935,982)
                                                                    -----------

                                                                    $   226,880
                                                                    ===========


--------------------------------------------------------------------------------
          See accompanying notes to condensed consolidated financial statements.

                                       1

<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                     (UNAUDITED)

                              For the Three Months Ended March 31, 2006 and 2005

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

                                                         2006            2005
                                                   ------------    ------------
Net sales                                          $     88,965    $    254,038

Cost of sales                                            83,675          66,093
                                                   ------------    ------------

Gross profit                                              5,290         187,945

Operating expenses:
   Satellite, bandwidth and other
       telecommunications expenses                       24,851          25,642
   Contract labor                                         5,289          75,585
   Salaries and related expenses                         45,092          90,604
   Noncash compensation                                  32,411       1,137,875
   Other general and administrative expenses            137,473         278,919
                                                   ------------    ------------

     Total operating expenses                           245,116       1,608,625
                                                   ------------    ------------

Net loss                                           $   (239,826)   $ (1,420,680)
                                                   ============    ============



Basic and diluted loss per common share            $      (0.01)   $      (0.09)
                                                   ============    ============

Weighted average number of common shares
 outstanding - basic and diluted                     17,105,132      15,833,003
                                                   ============    ============













--------------------------------------------------------------------------------
          See accompanying notes to condensed consolidated financial statements.

                                       2

<PAGE>
                                       YTEL INTERNATIONAL, INC. AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     (UNAUDITED)

                              For the Three Months Ended March 31, 2006 and 2005

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

                                                           2006          2005
Cash flows from operating activities:                 -----------   -----------
      Net loss                                        $  (239,826)  $(1,420,680)
      Adjustments to reconcile net loss to net
        cash used in operating activities:
          Depreciation                                      7,497        18,470
          Estimated fair value of common stock
             issued for services                              600        48,500
          Amortization of prepaid services and
             intangible assets                             17,186       447,000
          Estimated fair value of options granted
             for consulting services                         --         613,125
          Estimated fair value of warrants issued
             for services                                  14,625        29,250
          Changes in operating assets and
             liabilities:
             Accounts receivable                          (12,458)       50,289
             Prepaid expenses                                --          (3,609)
             Due from stockholders                           --           1,963
             Other assets                                    --          25,000
             Accounts payable and accrued expenses        165,368      (115,239)
                                                      -----------   -----------
      Net cash used in operating activities               (47,008)     (305,931)
                                                      -----------   -----------
Cash flows from investing activities:

      Proceeds from note receivable                        24,000          --
      Purchase of intangible assets                          --         (25,000)
      Purchases of property and equipment                    --         (22,980)
                                                      -----------   -----------
      Net cash provided by (used in) investing
         activities                                        24,000       (47,980)
                                                      -----------   -----------
Cash flows from financing activities:

      Issuance of common stock for cash                    20,655       569,681
      Payments on note payable to related party              --         (10,000)
      Proceeds from the exercise of warrants                 --           2,100
                                                      -----------   -----------

      Net cash provided by financing activities            20,655       561,781
                                                      -----------   -----------
Increase (decrease) in cash                                (2,353)      207,870

Cash at beginning of period                                 6,471        19,833
                                                      -----------   -----------
Cash at end of period                                       4,118   $   227,703
                                                      ===========   ===========
                                       3

<PAGE>

                                       YTEL INTERNATIONAL, INC. AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     (UNAUDITED)
                                                                     (Continued)

                              For the Three Months Ended March 31, 2006 and 2005

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

                                                           2006          2005
                                                      -----------   -----------
Supplemental disclosure of cash flow information
      - Cash paid during the period for:

          Interest                                    $      --     $      --
                                                      ===========   ===========
          Income taxes                                $      --     $      --
                                                      ===========   ===========

Supplement schedule of noncash investing and
      financing activities:

      Forgiveness of amounts due to related parties   $      --     $   227,000
                                                      ===========   ===========
      Issuance of common stock for prepaid services   $      --     $   126,250
                                                      ===========   ===========




























--------------------------------------------------------------------------------
          See accompanying notes to condensed consolidated financial statements.

                                       4


<PAGE>
                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006


NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------------------

Company Description and Nature of Operations
--------------------------------------------

Management's Representation

The management of Y-Tel  International,  Inc. (the "Company")  without audit has
prepared the condensed  consolidated  financial  statements included herein. The
accompanying  unaudited condensed  consolidated  financial  statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America for interim financial information.  Certain information
and note disclosures normally included in the consolidated  financial statements
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America have been omitted.  In the opinion of the management of
the Company,  all adjustments  considered necessary for fair presentation of the
condensed  consolidated  financial  statements  have been included and were of a
normal recurring nature, and the accompanying  condensed  consolidated financial
statements  present fairly the consolidated  financial  position as of March 31,
2006,  and the results of  operations  for the three months ended March 31, 2006
and 2005.

It is suggested these unaudited condensed  consolidated  financial statements be
read in conjunction with the audited financial  statements and notes thereto for
the year ended  December 31, 2005,  included in the  Company's  Annual Report on
Form 10-KSB  filed with the  Securities  and  Exchange  Commission.  The interim
results are not necessarily indicative of the results for a full year.

Nature of Business

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

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

The Company is a wholesale and retail provider of telecommunication,  Voice over
Internet Protocol (VoIP), and Wi-Fi services and devices.

Going Concern

The accompanying  condensed consolidated financial statements have been prepared
assuming that the Company will  continue as a going concern which  contemplates,

                                       5

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------


among other things, the realization of assets and satisfaction of liabilities in
the ordinary course of business.  The Company has incurred  operating losses and
had negative cash flows from  operations  through March 31, 2006, and has a lack
of operational history which, among other factors, raise substantial doubt about
its ability to continue as a going concern.

Management  recognizes the Company must generate additional  resources to enable
it to continue  operations.  The Company will  continue to seek working  capital
through  the public  markets.  The  successful  outcome of future  fund  raising
activities cannot be determined at this time, and there is no assurance that, if
achieved,  the  Company  will have  sufficient  funds to  execute  its  intended
business plan or generate positive operating results.

Principles of Consolidation

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

Concentration of Credit Risk and Foreign Operations

The Company offers its services predominantly to international customers located
outside  the United  States  and  extends  credit  based on an  evaluation  of a
customer's financial condition, generally without collateral. Exposure to losses
on accounts  receivable is principally  dependent on each  customer's  financial
condition.  The Company  monitors its exposure for credit  losses and  maintains
allowances for anticipated losses, if required.  Although the Company expects to
collect amounts due, actual collections may differ from the estimated amounts.

One  customer  accounted  for 47% and 100% of the  total net sales for the three
months  ended  March  31,  2006  and  2005,  respectively.  At March  31,  2006,
approximately 64% of accounts receivable was due from this customer.


Long-Lived Assets

The Company's management assesses the recoverability of its long-lived assets by
determining  whether the depreciation of long-lived  assets over their remaining
lives can be recovered  through  projected  undiscounted  future cash flows. The
amount of long-lived asset  impairment,  if any, is measured based on fair value
and is charged to operations in the period in which  long-lived asset impairment
is  determined  by  management.  At March 31,  2006,  the  Company's  management
believes  there is no  impairment  of its  long-lived  assets.  There  can be no
assurance,  however,  that market  conditions  will not change or demand for the
Company's products and services will continue,  which could result in additional
impairment of long-lived assets in the future.

                                       6
<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006

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


Revenue and Expense Recognition

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

Stock-Based Compensation

At March 31, 2006, the Company had one stock-based  compensation plan (the "2001
Plan").  Prior to January 1, 2006, the Company accounted for the 2001 Plan under
the  recognition  and  measurement  provisions  of Accounting  Principles  Board
("APB")  Opinion No. 25,  Accounting for Stock Issued to Employees,  and related
interpretations,  as permitted by  Statement of Financial  Accounting  Standards
("SFAS")  No. 123,  Accounting  for Stock  Based  Compensation.  No  stock-based
employee  compensation  cost was  recognized in the statements of operations for
the three months ended March 31, 2006 and 2005, as all options granted under the
2001 Plan were fully  vested  prior to  January  1, 2005.  The number of options
under the 2001 Plan available for grant at March 31, 2006 was 1,000,000.

Effective  January 1,  2006,  the  Company  adopted  the fair value  recognition
provisions   of   SFAS   No.   123(R),   Share   Based   Payments,   using   the
modified-prospective   transition   method.   Under  this   transition   method,
compensation  cost required to be recognized in the periods ended  subsequent to
December  31,  2005 will  include:  (a)  compensation  cost for all  share-based
payments  granted  subsequent to December 31, 2005 based on the grant-date  fair
value  estimated  in  accordance  with the  provisions  of SFAS No.  123(R).  As
stock-based  compensation  expense recognized in the statement of operations for
each  quarter  subsequent  to December  31,  2005 is based on awards  ultimately
expected to vest,  it will be reduced  for  estimated  forfeitures.  SFAS 123(R)
requires  forfeitures  to be  estimated  at the time of grant  and  revised,  if
necessary,  in  subsequent  periods  if actual  forfeitures  differ  from  those
estimated.

The Company calculates stock-based  compensation by estimating the fair value of
each  option  using  the  Black-Scholes  option  pricing  model.  The  Company's
determination  of fair value of  share-based  payment awards is made as of their
respective dates of grant using that option pricing model and is affected by the
Company's  stock price as well as  assumptions  regarding a number of subjective
variables.  These  variables  include,  but are  not  limited  to the  Company's


                                       7

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006

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


expected  stock  price  volatility  over the term of the  awards  and actual and
projected  employee stock option exercise  behavior.  The  Black-Scholes  option
pricing model was developed  for use in estimating  the value of traded  options
that have no vesting or hedging restrictions and are fully transferable. Because
the  Company's  employee  stock  options have certain  characteristics  that are
significantly  different from traded options,  the existing valuation models may
not  provide an  accurate  measure of the fair value of the  Company's  employee
stock  options.  Although the fair value of employee stock options is determined
in accordance with SFAS No. 123(R) using an option-pricing model, that value may
not be indicative of the fair value observed in a willing  buyer/willing  seller
market  transaction.  The calculated  compensation  cost will be recognized on a
straight-line basis over the vesting period of the option.

The Company has issued  stock  options to  employees  and  directors  whose only
condition  for vesting are continued  employment  or service  during the related
vesting  period.  Option  awards  are  granted  with an  exercise  price  deemed
appropriate by the board of directors.

Prior to the adoption of SFAS No. 123(R), the Company presented all tax benefits
of deductions  resulting  from the exercise of stock  options as operating  cash
flows in the statement of cash flows.  Statement  123(R) requires the cash flows
resulting  from the tax benefits  resulting from tax deductions in excess of the
compensation  cost  recognized  for those  options  (excess  tax  benefit) to be
classified as financing  cash flows.  As there were no stock  options  exercised
during the three  month  periods  ended  March 31,  2006 and 2005,  there was no
excess tax benefit to the Company.

For the three  months  ended  March 31,  2006,  the  Company  did not  recognize
compensation  cost as a result of the adoption of SFAS No. 123(R), as no options
were  granted  during the three  months  ended  March 31,  2006 and all  options
previously  granted  under the 2001 Plan were fully  vested  prior to January 1,
2005.

The following  table  illustrates  the effect on net loss and net loss per share
for the three months ended March 31, 2005 as if the Company had applied the fair
value recognition  provisions of SFAS 123 to options granted under the Company's
stock option plans. For purposes of this pro forma disclosure, the fair value of
the  options  is  estimated  using the Black  Scholes  option-pricing  model and
amortized on a straight-line basis to expense over the options' vesting period:








                                       8

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------
                                                            Three Months
                                                                Ended
                                                           March 31, 2005
                                                           -------------

          Net loss - as reported                           $  (1,420,680)
          Add:  Share-based employee compensation
           expense included in net loss, net
           of related tax effects - as reported                     --
          Deduct:  Share-based employee compensation
           expense determined under fair value method,
           net of related tax effects - pro forma                   --
                                                           -------------
          Net loss - pro forma                                (1,420,680)
                                                           =============
          Basic and diluted loss available to common
             stockholders per common share - as reported   $       (0.09)
                                                           =============
          Basic and diluted loss available to common
             stockholders per common share - pro forma     $       (0.09)
                                                           =============

The fair value of each  share-based  award is  estimated on the grant date using
the Black Scholes  option-pricing  model. Expected volatilities are based on the
historical volatility of the Company's stock price. The expected term of options
granted  subsequent  to the  adoption  of SFAS No.  123R is  derived  using  the
simplified  method  as  defined  in the SEC's  Staff  Accounting  Bulletin  107,
Implementation  of FASB 123R and is derived  from  historical  data on  employee
exercises and post-vesting  employment  termination behavior. The risk-free rate
for  periods  within  the  contractual  life of the  option is based on the U.S.
Treasury  interest  rates in effect at the time of grant.  There were no options
granted during the three months ended March 31, 2006 and 2005.

A summary of option activity under the stock option plans and changes during the
three months ended March 31, 2006 are presented below:
<TABLE>
                                                                       March 31, 2006
                                                ---------------------------------------------------------
                                                                        Weighted-Average
                                                                 --------------------------------
                                                                               Remaining        Aggregate
                                                                 Exercise      Contractual      Intrinsic
                                                Shares           Price         Term (Years)     Value
                                                ---------------------------------------------------------
<S>                                             <C>        <C>                 <C>              <C>
    Outstanding at December 31, 2005            2,500,000  $       0.55
    Granted                                             -             -
    Cancelled/forfeited                                 -             -
    Exercised                                           -             -
                                                --------------------------------
    Outstanding and exercisable at March        2,500,000  $       0.55        1.5              $    -
    31, 2006
                                                =========================================================
</TABLE>
                                       9
<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006

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


Issuance of Stock for Non-Cash Consideration

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

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

Loss Per Share

Basic  earnings  per share  ("BEPS") is computed by dividing  loss  available to
common  stockholders by the weighted average number of outstanding common shares
during the period of  computation.  Diluted  earnings per share  ("DEPS")  gives
effect to all dilutive  potential common shares outstanding during the period of
computation.  The  computation of DEPS does not assume  conversion,  exercise or
contingent  exercise of securities  that would have an  anti-dilutive  effect on
earnings. As of March 31, 2006 and 2005, the Company had no potentially dilutive
securities that would affect loss per share.

Recent Accounting Pronouncements

In February  2006,  the FASB  issued a final FASB Staff  Position  ("FSP"),  FAS
123(R)-4,  "Classification of Options and Similar Instruments Issued as Employee
Compensation  That Allow for Cash Settlement upon the Occurrence of a Contingent
Event" . The guidance in this FSP FAS 123(R)-4 amends  paragraphs 32 and A229 of
SFAS No. 123(R) to  incorporate  the concept  articulated in footnote 16 of SFAS
No. 123(R).  As a result,  a cash settlement  feature that can be exercised only

                                      10

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006

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


upon the occurrence of a contingent event that is outside the employee's control
does not meet the condition in paragraphs 32 and A229 until it becomes  probable
that the event will occur.  Originally  under SFAS No. 123(R),  a provision in a
share-based  payment plan that required an entity to settle outstanding  options
in cash upon the occurrence of any contingent event required  classification and
accounting  for the share  based  payment as a  liability.  This caused an issue
under  certain  awards that require or permit,  at the holder's  election,  cash
settlement of the option or similar  instrument  upon (a) a change in control or
other  liquidity  event of the entity or (b) death or  disability of the holder.
With this new FSP,  these  types of cash  settlement  features  will not require
liability  accounting  so long as the  feature  can be  exercised  only upon the
occurrence of a contingent event that is outside the employee's control (such as
an initial public offering) until it becomes probable that event will occur. The
guidance in this FSP shall be applied upon initial  adoption of SFAS No. 123(R).
We do not  anticipate  that  this new FSP will have any  material  impact on our
consolidated financial condition or results of operations.

In February  2006, the FASB issued SFAS No. 155  "Accounting  for Certain Hybrid
Financial  Instruments,  an amendment of FASB Statements No. 133 and 140" . SFAS
No. 155 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."  This statement resolves
issues addressed in SFAS No. 133  Implementation  Issue No. D1,  "Application of
Statement 133 to Beneficial  Interests in Securitized  Financial  Assets." Among
other things,  this statement permits fair value  re-measurement  for any hybrid
financial  instrument that contains an embedded  derivative that otherwise would
require bifurcation.  This statement is effective for all financial  instruments
acquired or issued  after the  beginning  of an entity's  first fiscal year that
begins  after  September  15,  2006.  Earlier  adoption is  permitted  as of the
beginning  of an entity's  fiscal  year,  provided the entity has not yet issued
financial statements,  including financial statements for any interim period for
that fiscal year.  Provisions of this  statement  may be applied to  instruments
that an  entity  holds at the date of  adoption  on an  instrument-by-instrument
basis. We are in the process of evaluating the impact of SFAS No. 155.

NOTE 2 - PROPERTY AND EQUIPMENT
-------------------------------

Property and equipment consists of the following at March 31, 2006:


     Equipment                                       $    169,681
     Less accumulated depreciation                        (19,821)
                                                     ------------
     Fixed assets, net                                    149,860
                                                     ============

                                      11
<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006

NOTE 3 - EQUITY
---------------

Common Stock

During the three months ended March 31, 2006 the Company issued 92,600 shares of
restricted common stock for cash totaling $20,655.

On December 1, 2005, the Company  entered into a stock  purchase  agreement with
Marcatus & Partners  regarding the purchase of 2,625,000  shares of common stock
for $1,200,000.  The stock certificates have been issued and are currently being
held in escrow until receipt of funds. As the shares are in escrow,  the Company
has not recorded the shares as issued and  outstanding  at March 31, 2006. As of
May 23, 2006, the Company has not received any funds.

Stock for Services

During the three months ended March 31, 2006, the Company issued 1,200 shares of
restricted common stock to a consultant for services  rendered.  The shares were
valued at $600 (based on the fair value of the common  stock at the  measurement
date) and  recorded as noncash  compensation  expense  during the quarter  ended
March 31, 2006.

During the year ended  December 31, 2005,  the Company  issued  62,500 shares of
restricted   common  stock  to  various   consultants  in  connection  with  the
performance  of  consulting  services to be performed  through  March 2006.  The
62,500  shares were  valued at  $126,250  (based on the fair value of the common
stock at the  respective  measurement  dates) and recorded the shares as prepaid
services.  Such amount was  amortized  to expense  over the lives of the related
agreements,  of which  $17,186 was expensed  during the three months ended March
31, 2006.

Warrants

During  the year  ended  December  31,  2005,  the  Company  issued a warrant to
purchase 50,000 shares of restricted  common stock to a consultant in connection
with the  performance  of consulting  services to be performed  through  January
2006.  The  warrant was valued at $175,500  (based on the Black  Scholes  option
pricing  model),  has an exercise price of $4.00,  vests monthly through January
2006 and expires in January 2008. Such amount is being expensed over the life of
the related  agreement,  of which $14,625 was expensed  during the quarter ended
March 31, 2006.











                                      12

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006


NOTE 4 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

Indemnities and Guarantees

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

Litigation

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

However, the Company is currently involved in settling the following claims:
o        Y-Tel has  agreed  to a  settlement  offer of  $15,000  related  to the
         Company's  failure to complete an acquisition.  Such amount is included
         in accrued expenses in the accompanying  condensed consolidated balance
         sheet.

o        Y-Tel is currently in negotiations  with the former CEO regarding final
         settlement  of unpaid  wages  and  claims.  The  Company  has  included
         approximately $50,000 in accrued expenses in the accompanying condensed
         consolidated balance sheet related to these claims.

Employment Agreements

The Company has employment agreements with two officers.  Effective November 28,
2005, the Company terminated the employment  agreement with the CEO, pursuant to
the termination  provisions within the contract.  The remaining  employment with
the CFO is through  September  2006 and  continues  in effect  from year to year
thereafter unless otherwise terminated,  pursuant to the terms of such contract.
Future annual  minimum  payments  under this  employment  agreement  approximate
$144,000, with potential annual increases, as defined.



                                      13
<PAGE>

                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2006

NOTE 5 - SUBSEQUENT EVENTS
--------------------------

In May 2006,  the Executive  Committee of the Board of Directors  authorized the
issuance of 1,000,000  shares of its  restricted  common stock to Todd  Wallace,
board member,  and 650,000 shares of its restricted common stock to Alan Tracey,
board member, for services  rendered.  The shares were valued at $247,500 (based
on the fair  value of the common  stock at the  measurement  date) and  expensed
during the quarter ended June 30, 2006.


In May 2006, the Company borrowed $50,000 from a stockholder for working capital
purposes. The loan is non-interest bearing and due on demand.









































                                      14

<PAGE>

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

The following  discussion  of our financial  condition and results of operations
should be read in  connection  with our financial  statements  and notes thereto
appearing elsewhere herein.

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

General

Use of Estimates and Critical Accounting Policies

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

Allowance for Doubtful Accounts

Management believes all customer  receivables are fully collectible at March 31,
2006 and  therefore,  an  allowance  for bad debts has not been  recorded in the
financial  statements.   As  the  Company  expands,   management  will  continue
monitoring  financial  indicators  and cash flow patterns and will  establish an
allowance should the need arise.

Revenue Recognition

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

Stock-Based Compensation

The Company accounts for non-employee  stock-based  compensation under Statement
of Financial  Accounting  Standards ("SFAS") No. 123 "Accounting for Stock-Based
Compensation.  On January  1, 2006,  we  adopted  SFAS No. 123  (revised  2004),
Share-Based  Payment,   ("SFAS  123(R)")  which  requires  the  measurement  and
recognition of compensation  expense for all share-based  payment awards made to


                                      15

<PAGE>

our  employees  and directors  based on estimated  fair values.  We adopted SFAS
123(R) using the modified  prospective  transaction  method,  which requires the
application of the  accounting  standard as of January 1, 2006, the first day of
our fiscal year 2006. In  accordance  with the modified  prospective  transition
method,  our  financial  statements  for prior periods have not been restated to
reflect, and do not include, the impact of SFAS 123(R). The value of the portion
of any  award  that is  ultimately  expected  to vest will be  recognized  as an
expense over the requisite service periods in our statement of operations. Prior
to the adoption of SFAS 123(R), we accounted for stock-based awards to employees
and  directors  using the intrinsic  value method in  accordance  with APB 25 as
allowed under SFAS No. 123,  (SFAS 123).  As  stock-based  compensation  expense
recognized  in the  statement  of  operations  for each  quarter  subsequent  to
December  31, 2005 is based on awards  ultimately  expected to vest,  it will be
reduced for  estimated  forfeitures.  SFAS  123(R)  requires  forfeitures  to be
estimated at the time of grant and revised, if necessary,  in subsequent periods
if actual forfeitures differ from those estimated.

Issuance of Stock for Non-cash Consideration

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

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

Results of Operations -  Quarter Ended March 31, 2006  Compared to Quarter Ended
March 31, 2005

Summary

The Company completed the relocation of its telecommunications HUB from Miami to
Dallas in December  2005.  Administration  and all  corporate  functions  of the
Company are currently being performed in Baton Rouge,  Louisiana. As a result of
the delay in funding from Mercatus and  Partners,  the Company has curtailed its
operations during the first five months of 2006 in order to conserve its limited
cash. The Company requires  additional funding to implement its current business
plan of developing its VOIP infrastructure, products and services.


                                      16

<PAGE>

Net Sales

Net sales were $88,965 for the quarter ended March 31, 2006 compared to $254,038
for the quarter ended March 31, 2005.  This represents a decrease of $165,073 or
65%. The decrease is primarily attributed to the loss of port rental charges and
domestic  traffic  originating  from Jamaica  totaling  $209,940 for the quarter
ended March 31, 2005. However, revenue for the quarter ended March 31, 2006 also
reflects a 100%  increase in  international  traffic  when  compared to the same
revenue incurred during the quarter ended March 31, 2005.

Cost of Sales

Cost of sales were  $83,675  for the quarter  ended  March 31, 2006  compared to
$66,093 for the quarter  ended March 31, 2005.  This  represents  an increase of
$17,582 or 26.6%.  The variance is attributed  to the increase in  international
traffic and related termination  expenses. It also underscores the vulnerability
of the  wholesale  business  sector  and the need to focus  resources  on retail
products.

Operating Expenses

Operating  expenses  were $245,116 for the quarter ended March 31, 2006 compared
to $1,608,625 for the quarter ended March 31, 2005.  This  represents a decrease
of $1,363,509 or 84.8%. Of this decrease,  approximately  $1,105,464 is non-cash
related and is attributed to the completion of amortizing the prepaid  services,
whereby  various  consultants  received stock for services in 2004 and 2005. The
decrease also reflects the non cash expenses  related to stock options issued to
consultants  during the quarter  ended March 31,  2005.  No such  expenses  were
incurred during the quarter ended March 31, 2006.

Operating  expenses  also  include  Other G&A  expenses of $137,473  compared to
$278,919  for the  quarters  ended March 31, 2006 and 2005,  respectively.  This
represents  a decrease of $141,446 or 50.7% when  compared to G&A  expenses  for
2005. Of this decrease,  approximately $99,350 is attributed to the reduction in
consulting fees. Additionally,  the Company decreased its legal and professional
fees for the  quarter  ended  March 31,  2006 by $53,448  when  compared  to the
expenses incurred during the quarter ended March 31, 2005.


Liquidity and Capital Resources

The Company  has a net working  capital  deficit of  $1,085,842  as of March 31,
2006.  Management  recognizes the Company must generate additional  resources to
enable it to continue  operations.  The Company  will  continue to seek  working
capital  through  the equity  markets.  The  successful  outcome of future  fund
raising  activities cannot be determined at this time, and there is no assurance
that,  if  achieved,  the  Company  will have  sufficient  funds to execute  its
intended business plan or generate positive operating results.

On December 1, 2005,  the Company  executed two stock purchase  agreements  with
Mercatus & Partners,  reflecting the potential  sale of 2,625,000  shares of its
common stock for  $1,200,000.  The stock  certificates  have been issued and are
currently  held in escrow until  receipt of funds.  As the shares are in escrow,
the Company has not  recorded the shares as issued and  outstanding  at December
31, 2005. As of May 23, 2006, the Company has not received any funds.


                                      17

<PAGE>

During the three months ended March 31, 2006,  the Company  issued 92,600 shares
of common  stock for  proceeds of $20,655.  In  addition,  the Company  received
proceeds of $24,000 from the collection on a note receivable.


The Company has curtailed its operations during the first five months of 2006 in
order to conserve its limited cash. The Company requires  additional  funding to
implement  its current  business  plan of  developing  its VOIP  infrastructure,
products and services.

Going Concern

The Company's independent  registered public accounting firm has stated in their
report  included in the  Company's  Form 10-KSB for the year ended  December 31,
2005,  that the Company  incurred an operating  loss and had negative cash flows
from  operations  for the year ended  December 31, 2005,  and had an accumulated
deficit of $9,167,784 at December 31, 2005. These factors,  among others,  raise
substantial doubt about the Company's ability to continue as a going concern.

Trends, Risks and Uncertainties

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

We Have a Limited History

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

We Require Additional Capital for Production of Wifi Phones

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

We Require Additional Capital for Acquiring Other Companies

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

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

We will likely need to raise money through the sale of additional  equity within
the  next  twelve  months,  in one or  more  private  placements  and/or  public
offerings.  If we do so, all of the then current existing stockholders and their


                                      18

<PAGE>

stock  holdings will be  proportionately  diluted.  In addition,  we will likely
acquire companies using our common stock as  consideration.  If we do so, all of
our  existing  stockholders  at such  time  and  their  stock  holdings  will be
proportionately diluted.

  Our Business Depends on:
     A.  The Company's  ability to secure adequate funding to ensure the Company
         meets its financial objectives.
     B.  The Company's  ability to acquire  strategic  companies that complement
         the company's business model.
     C.  The Company's ability to offer competitive rates to our customers.

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

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

We Are Heavily Dependent on Our Senior Management.

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

We Have a History of Losses.

We  incurred  consolidated  net losses of  $239,826  and  $1,420,680  during the
quarters ended March 31, 2006, and 2005,  respectively.  Our management believes
the new business plan will be successful and we will become profitable; however,
there  can be no  assurance  that we  will be  successful  in  implementing  our
business plan or that we will be profitable now or in the future.

Because Our Competition Has Greater  Experience and Resources Than We Do, We May
Be at a Competitive Disadvantage.

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

Item 3 - Controls and Procedures.

As of March 31, 2006, an evaluation  was carried out under the  supervision  and
with the participation of the Company's  management,  including the acting Chief
Executive  Officer and Chief  Financial  Officer,  of the  effectiveness  of the


                                      19

<PAGE>

design and operation of our  disclosure  controls and  procedures (as defined in
Rule 13a-15(e) and 15d-15(e) under Securities  Exchange Act of 1934.) Based upon
that  evaluation,  the Chief Executive  Officer and the Chief Financial  Officer
concluded  that the  design  and  operation  of these  disclosure  controls  and
procedures  were  effective.  No  significant  changes were made in our internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to December 31, 2005.

(a) Evaluation of Disclosure Controls and Procedures. The Company carried out an
evaluation  under the  supervision and with the  participation  of the Company's
management,  including the Company's acting Chief Executive  Officer ("CEO") and
Chief  Financial  Officer  ("CFO"),   of  the  effectiveness  of  the  Company's
disclosure controls and procedures.  Based upon that evaluation,  the acting CEO
and CFO  concluded  that as of  March  31,  2006  our  disclosure  controls  and
procedures  were effective in timely  alerting them to the material  information
relating to the Company (or the Company's consolidated subsidiaries) required to
be included  in the  Company's  periodic  filings  with the SEC,  subject to the
various  limitations  on  effectiveness  set  forth  below  under  the  heading,
"LIMITATIONS  ON  THE   EFFECTIVENESS  OF  INTERNAL   CONTROL,"  such  that  the
information relating to the Company, required to be disclosed in SEC reports (i)
is  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in SEC rules and forms,  and (ii) is accumulated  and  communicated to
the Company's  management,  including our acting CEO and CFO, as  appropriate to
allow timely decisions regarding required disclosure.

(b) Changes in internal  control  over  financial  reporting.  There has been no
change in the Company's internal control over financial  reporting that occurred
during the fiscal quarter ended March 31, 2006 that has materially affected,  or
is reasonably likely to materially  affect,  the Company's internal control over
financial reporting.

LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS

The Company's management, including the acting CEO and CFO, does not expect that
our disclosure  controls and  procedures or our internal  control over financial
reporting will  necessarily  prevent all fraud and material  error.  An internal
control  system,  no matter how well  conceived and  operated,  can provide only
reasonable,  not absolute,  assurance  that the objectives of the control system
are met.  Further,  the design of the control  system must reflect that the fact
that  there are  resource  constraints  and the  benefits  of  controls  must be
considered  relative to their costs.  Because of the inherent  limitation in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control issues and instances of fraud,  if any, within the Company have been
detected.  These  inherent  limitations  include the realities that judgments in
decision-making  can be faulty,  and that breakdowns can occur because of simple
error or mistake.  Additionally,  controls can be circumvented by the individual
acts of some  persons,  by  collusion of two or more  people,  or by  management
override of the internal  control.  The design of any system of controls also is
based in part upon certain assumption about the likelihood of future events, and
there can be no assurance  that any design will succeed in achieving  its stated
goals  under all  potential  future  conditions.  Over time,  control may become
inadequate  because of changes in  conditions,  and/or the degree of  compliance
with the policies or procedures may deteriorate.




                                      20

<PAGE>

                                     PART II

Item 1 - Legal Proceedings

While the Company is not formally engaged in any litigation,  legal  proceedings
or claims, it is involved in resolving the following issues:

Y-Tel has agreed to the  settlement  offer of $15,000  from  creditor's  council
related to the Company's  failure to complete the  acquisition of SunGlobe.  The
Company  did  not  follow  through  on  the  purchase  of  SunGlobe  because  of
misrepresentations  made by Seller.  Such amount is included in accrued expenses
in the accompanying condensed consolidated balance sheet.

Y-Tel  is  currently  in  negotiations  with  the  former  CEO  regarding  final
settlement  of unpaid wages and claims.  The Company has included  approximately
$50,000 in accrued expenses in the accompanying  condensed  consolidated balance
sheet related to these claims.

Item 2 - Unregistered Sale of Equity Securities and Use of Proceeds

For the period ended March 31, 2006, the Company issued the following  shares of
its common stock  without  registration  under the  Securities  Act of 1933,  as
amended (the "Securities Act"):

     1.  January 2006, the Company issued 1,200 shares of common stock to Osprey
         Partners in connection with consulting services;

     2.  During the period ended March 31, 2006 the Company issued 92,600 shares
         of restricted common stock for cash totaling $20,655.

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

Item 3 - Defaults upon Senior Securities

     Not applicable.

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

     Not applicable.

Item 5 - Other Information

     None.

Item 6 - Exhibits

     (a) Exhibits
                  Section 302 Certification
                        31.1     Certification of Chief Executive Officer
                        31.2     Certification of Chief Financial Officer

                  Section 906 Certification
                        32.1     Certification of Chief Executive Officer
                                 and Chief Financial Officer

                                      21

<PAGE>

                                   SIGNATURES


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




                          Y-Tel International, Inc.
                                 (Registrant)
         By:    /s/ John Conroy
                -------------------------------------------
                    John Conroy, acting President and CEO
       Date:    May 31, 2006










































                                      22