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 September 30, 2005


       [ ] 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
  incorporation of organization)                     Identification Number)

              1100 NW 163rd Drive, North Miami Beach, Florida 33169
              -----------------------------------------------------
                     (Address of principal executive office)

                                 (305) 623-1140
                                 --------------
                           (Issuer's telephone number)

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 check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).        Yes       No  X
                                                       ----     ----

As of October 31, 2005 there were 16,786,533 shares of Common Stock outstanding.
















                                       1
<PAGE>
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                            Y-TEL INTERNATIONAL, INC.
                                   FORM 10-QSB
                                TABLE OF CONTENTS

PART I   FINANCIAL INFORMATION
------
Item 1   Financial Statements                                             3
------   --------------------

Item 2   Management's Discussion and Analysis or Plan of Operation       18
------   ---------------------------------------------------------

Item 3   Controls and Procedures                                         23
------   -----------------------

PART II  OTHER INFORMATION
-------  -----------------

Item 1   Legal Proceedings                                               24
------   -----------------


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

Item 3   Defaults upon Senior Securities                                 25
------   -------------------------------

Item 4   Submission of Matters to a Vote of Security Holders             25
------   ---------------------------------------------------

Item 5   Other Information                                               25
------   -----------------

Item 6   Exhibits                                                        25
------   --------

SIGNATURES                                                               26
----------

















                                       2
<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES

                                            CONDENSED CONSOLIDATED BALANCE SHEET
                                                                     (UNAUDITED)

                                                              September 30, 2005
--------------------------------------------------------------------------------
ASSETS

Current assets:
 Cash                                                            $      26,581
 Accounts receivable, net                                               27,360
 Prepaid expenses                                                       13,528
 Prepaid services                                                      169,166
 Due from stockholders                                                  44,800
 Assets held for sale                                                  300,000
                                                                 -------------
    Total current assets                                               581,435

Property and equipment, net                                            566,593

Other assets                                                             7,500
                                                                 -------------
                                                                 $   1,155,528
                                                                 =============
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
 Accounts payable                                                $     704,986
 Accrued expenses                                                      130,578
 Current portion of note payable to related party                      222,500
                                                                 -------------
    Total current liabilities                                        1,058,064
                                                                 -------------
Long term liabilities:
 Convertible note payable                                               70,000
 Note payable to related party, net of current portion                  87,598
                                                                 -------------
Total liabilities                                                $   1,215,662
                                                                 -------------
Commitments and contingencies

Stockholders' deficit:
 Preferred stock, $0.0001 par value, 5,000,000 authorized;
      no shares  issued and outstanding                                      -
 Common stock, $0.0001 par value, 50,000,000 authorized;
         16,658,816 issued and outstanding                               1,666
 Additional paid in capital                                          8,129,709

 Accumulated deficit                                                (8,191,509)
                                                                 -------------
    Total stockholders' deficit                                        (60,134)
                                                                 -------------
                                                                     1,155,528


--------------------------------------------------------------------------------
                                       3
<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                     (UNAUDITED)

                           For the Nine Months Ended September 30, 2005 and 2004
--------------------------------------------------------------------------------
                                                          2005         2004
                                                    ------------- -------------
Net sales                                           $    737,503  $    886,351

Cost of sales                                            203,632       445,356
                                                    ------------  ------------
Gross profit                                             533,871       440,995

Operating expenses:
 Satellite, bandwidth and other
   telecommunications expenses                            92,535       209,166
 Contract labor                                          136,354        64,918
 Contract labor paid to related
   party                                                       -       172,989
 Salaries and related expenses                           380,187        28,764
 Noncash compensation                                  2,774,558       420,000
 Impairments                                             531,665             -
 Other general and administrative
   expenses                                              883,827       472,324
                                                    ------------  ------------
   Total operating expenses                            4,799,126     1,368,161
                                                    ------------  ------------
Net loss                                            $ (4,265,255) $   (927,166)
                                                    ============  ============
Basic and diluted loss per
  common share and member
  unit, respectively                                $      (0.26)       $(0.09)
                                                    ============  ============
Weighted average number of common
  shares and member units
  outstanding, respectively                           16,290,404    10,000,000
                                                    ============  ============

















--------------------------------------------------------------------------------
                                       4
<PAGE>
                                      Y-TEL INTERNATIONAL, INC. AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                     (UNAUDITED)

                          For the Three Months Ended September 30, 2005 and 2004
--------------------------------------------------------------------------------
                                                         2005          2004
                                                    ------------- -------------
Net sales                                           $    249,738  $    364,914

Cost of sales                                            100,579       181,372
                                                    ------------  ------------
Gross profit                                             149,159       183,542

Operating expenses:
 Satellite, bandwidth and other
   telecommunications expenses                            39,803        42,782
 Contract labor                                           20,149        52,693
 Contract labor paid to related
   party                                                       -        38,417
 Salaries and related expenses                           163,685        12,969
 Noncash compensation                                    363,769       134,000
 Impairments                                                   -             -
 Other general and administrative
   expenses                                              250,367       157,841
                                                    ------------  ------------
 Total operating expenses                                837,773       438,702
                                                    ------------  ------------
Net loss                                            $   (688,614) $   (255,160)
                                                    ============  ============
Basic and diluted loss per common
  share and member unit,
  respectively                                      $      (0.04) $      (0.03)
                                                    ============  ============
Weighted average number of common
  shares and member units
  outstanding, respectively                           16,574,586    10,000,000
                                                    ============  ============

















--------------------------------------------------------------------------------
                                       5
<PAGE>
                                       YTEL INTERNATIONAL, INC. AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     (UNAUDITED)

                           For the Nine Months Ended September 30, 2005 and 2004
--------------------------------------------------------------------------------
                                                         2005          2004
                                                    ------------- -------------
Cash flows from operating activities:
 Net loss                                           $ (4,265,255) $   (927,166)
 Adjustments to reconcile net loss to net
  cash used in operating activities:
   Depreciation                                           61,338        39,350
   Bad debt expense                                       55,000        39,800
   Estimated fair value of common stock
    issued for services                                  316,932             -
   Impairment of intangible asset                        222,000             -
   Amortization of prepaid services and
    intangible assets                                  1,117,180             -
   Amortization of deferred compensation                       -        41,000
   Impairment loss on prepaid services                   150,000             -
   Impairment loss on property and equipment             159,665             -
   Estimated fair value of services rendered by
    members                                                    -       460,000
   Estimated fair value of options granted for
    consulting services                                 1,226,250            -
   Estimated fair value of warrants issued for
    services                                              117,000            -
   Changes in operating assets and liabilities:
     Accounts receivable                                   36,880       11,191
     Deposits                                                   -      (47,962)
     Prepaid expenses                                       7,447       (9,509)
     Due from stockholders                                  1,963            -
     Due from members                                           -            -
     Other assets                                          27,100            -
     Accounts payable and accrued expenses                 30,763      367,744
     Due to related parties                                     -            -
     Unearned income                                            -       18,427
                                                    ------------- ------------
 Net cash used in operating activities                   (735,737)      (7,125)
                                                    ------------- ------------
Cash flows from investing activities:
 Purchase of intangible assets                            (25,000)           -
 Purchases of property and equipment                      (90,834)    (139,241)
                                                    ------------- ------------
 Net cash used in investing activities                   (115,834)    (139,241)
                                                    ------------- ------------
Cash flows from financing activities:
 Issuance of common stock for cash                        803,719            -
 Payments on note payable to related party                (17,500)           -
 Proceeds from the exercise of warrants                     2,100            -
 Proceeds from the issuance of convertible debt            70,000
 Proceeds from issuance of member units                         -      152,000
 Purchase of member units                                       -      (15,000)
                                                    ------------- ------------
--------------------------------------------------------------------------------
                                       6
<PAGE>
                                       YTEL INTERNATIONAL, INC. AND SUBSIDIARIES

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

                           For the Nine Months Ended September 30, 2005 and 2004
--------------------------------------------------------------------------------
                                                         2005          2004
                                                    ------------- -------------
 Net cash provided by financing activities                858,319      137,000
                                                    ------------- ------------
Increase (decrease) in cash                                 6,748       (9,366)

Cash at beginning of period                                19,833       45,680
                                                    ------------- ------------
Cash at end of period                               $      26,581 $     36,314
                                                    ============= ============
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 $          -
                                                    ============= ============
 Write off of intangible related to termination
  of intangible asset agreement                     $     404,696 $          -
                                                    ============= ============
 Receivable in connection with the termination
  of intangible asset agreement                     $      55,000 $          -
                                                    ============= ============
 Notes payable converted to member units            $           - $    190,000
                                                    ============= ============
 Repurchase of member units                         $           - $    242,000
                                                    ============= ============
















--------------------------------------------------------------------------------
                                       7
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------------------
Company Description and Nature of Operations
--------------------------------------------
Management's Representation

The management of YTel  International,  Inc. (the  "Company")  without audit has
prepared the 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 September
30,  2005,  and the results of  operations  for the three and nine months  ended
September 30, 2005 and 2004.

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, 2004,  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,
among other things, the realization of assets and satisfaction of liabilities in
the ordinary course of business.  The Company has incurred  operating losses and


                                       8
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------
had negative cash flows from  operations  through  September 30, 2005, 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 raise working  capital
through the public  markets.  Specifically,  the  Company  has  entered  into an
agreement with Revlon Holdings and Omega Financial  Services  regarding the sale
of the  Company's  restricted  common  stock to  non-U.S.  persons as defined in
Regulation S,  promulgated  under the  Securities  Act of 1933, as amended,  for
amounts up to  $2,000,000.  The  Company  has  received  proceeds  approximating
$799,279 and issued  1,212,266  shares of the Company's  common stock under such
agreement.  Additionally,  on  August  30,  2005  the  Company  entered  into an
agreement  with  Gizbex  Clearing  Corp  regarding  the  sale  of the  Company's
restricted  common  stock to  non-U.S.  persons  as  defined  in  Regulation  S,
promulgated  under the  Securities  Act of 1933,  as  amended.  The  Company has
received  $4,440 and issued 10,000  shares of the  Company's  common stock under
such agreement.

The successful outcome of future fund raising activities cannot be determined at
this time,  and there is no assurance  that, if achieved,  the Company will have
sufficient  funds to execute its  intended  business  plan or generate  positive
operating results.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Y-Tel
International,   Inc.  and  its  wholly  owned  subsidiaries.   All  significant
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.

Long-Lived Assets

The Company's management assesses the recoverability of its long-lived assets by
determining  whether the depreciation and amortization of long-lived assets over
their remaining lives can be recovered  through  projected  undiscounted  future
cash flows. The amount of long-lived asset impairment, if any, is measured based
on fair  value and is charged to  operations  in the period in which  long-lived
asset  impairment  is  determined  by  management.  For the  nine  months  ended

                                       9
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------
September 30, 2005, the Company recorded  impairment  charges totaling  $531,665
relating to the decline in market value of the stock received in connection with
the  cancellation  of its  agreement  with  EBI  Communications  (see  note  3),
valuation of property and  equipment in Panama (see note 2), and the  assessment
of the  valuation of prepaid  services  (see Note 5). 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.

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 two sources:
1) 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;  and 2) port rental  charges  resulting  from  leasing a
portion of the DMS switch to Digicel,  whereby the revenue is recognized  during
the month in which the revenue applies.

Stock-Based Compensation

The Company  uses the  intrinsic  value  method of  accounting  for  stock-based
compensation to employees in accordance with Accounting Principles Board Opinion
("APB")  No.  25,  "Accounting  for Stock  Issued  to  Employees,"  and  related
Interpretations.  The Company accounts for non-employee stock-based compensation
under Statement of Financial  Accounting Standards ("SFAS") No. 123, "Accounting
for  Stock-Based  Compensation."  At  September  30,  2005,  the Company has one
stock-based  employee  compensation plan. No stock-based  employee  compensation
cost is reflected in the September 30, 2005 and 2004 consolidated  statements of
operations.  The following table illustrates the effect on net loss and loss per
share if the Company had applied the fair value  recognition  provisions of SFAS
No. 123 to stock-based employee compensation:












                                       10
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
---------------------------------------------------------
ACCOUNTING POLICIES (Continued)
-------------------------------
                                                  9 months ended 9 months ended
                                                      9/30/05       9/30/04
                                                  -------------- --------------
Net loss, as reported                             $ (4,265,255)  $   (927,166)
Deduct:
  Total stock-based employee compensation
    under APB No. 25, net of related
    tax expense                                              -              -
Add:
  Total stock-based employee compensation
    expense under fair value based method
    for all awards, net of related tax effect                -              -
                                                  ------------   ------------
Pro forma net loss                                $ (4,265,255)  $   (927,166)
                                                  ============   ============
Basic and diluted loss per share and
  member unit, respectively - as reported         $      (0.26)  $      (0.09)
                                                  ============   ============
Basic and diluted loss per share and member
  unit, respectively - pro forma                  $      (0.26)  $      (0.09)
                                                  =============  ============

                                                  3 months ended 3 months ended
                                                     9/30/05        9/30/04
                                                  -------------- --------------
Net loss, as reported                             $   (688,614)  $   (255,160)
Deduct:
  Total stock-based employee compensation
    under APB No. 25, net of related
    tax expense                                              -              -
Add:
  Total stock-based employee compensation
    expense under fair value based method
    for all awards,net of related tax effect                 -              -
                                                  ------------   ------------
Pro forma net loss                                $   (688,614)  $   (255,160)
                                                  ============   ============
Basic and diluted loss per share and
  member unit,respectively - as reported          $      (0.04)  $      (0.03)
                                                  ============   ============
Basic and diluted loss per share and
  member unit, respectively - pro forma           $      (0.04)  $      (0.03)
                                                  ============   ============






                                       11
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

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.
Accordingly,  the Company recorded the fair value of the common stock issued for
consulting  services as prepaid services in its consolidated  balance sheet (see
Note 5).

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  September  30, 2005 and 2004,  the Company had no  potentially
dilutive  securities  that  would  affect  loss per  share or per  member  unit,
respectively.

Reclassifications

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


                                       12
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

NOTE 2 - PROPERTY AND EQUIPMENT
-------------------------------
Property and equipment consists of the following at September 30, 2005:

   Equipment                                                    $     690,552
   Furniture                                                            3,000
                                                                -------------
                                                                      693,552

   Less accumulated depreciation                                     (126,959)
                                                                -------------
   Fixed assets, net                                                  566,593

   Equipment installation in process (Panama)                         300,000
                                                                -------------
   Property and equipment, net                                  $     866,593
                                                                =============

On August 3, 2005,  the Company  entered  into an agreement to sell its property
and equipment in Panama for $300,000. Management has concluded the opportunities
in Panama have  significantly  changed and no longer  require a DMS  platform to
generate revenue. Accordingly, the Company has recorded an impairment expense of
$159,665  based on the book value of such assets.  As of September 30, 2005, the
transaction  to  sell  the  property  and  equipment  had  not  been  completed.
Depreciation and amortization expense for property and equipment for the periods
ended September 30, 2005 and 2004 was $61,338 and $39,350 respectively.


NOTE 3 - INTANGIBLE ASSET
-------------------------
In October 2004, the Company  entered into an exclusive  worldwide  distribution
agreement (the "Distribution Agreement") with EBI Communications,  Inc. ("EBI").
In accordance  with the  Distribution  Agreement,  the Company  agreed to pay an
exclusive  marketing  fee of  $100,000,  $5,000  payable  upon  execution of the
Distribution  Agreement and $95,000 within 60 days thereafter,  of which $25,000
was paid during the six months ended June 30, 2005. Also, in  consideration  for
receiving  the exclusive  distribution  rights,  the Company  issued EBI 300,000
shares of restricted common stock valued at approximately $675,000 (based on the
estimated fair market value on the date of issuance) and recorded such amount as
an intangible asset in the accompanying  condensed  consolidated  balance sheet.
The Company was  amortizing  such amount to expense over the 10-year life of the
agreement.

Effective June 2005, the Company terminated the contract with EBI, canceling all
shares and  requiring  EBI to refund all advances  made by the Company under the
Distribution  Agreement,  which totaled  $55,000 at June 30, 2005 due to alleged
breach of contract by EBI. In  connection  with the  contract  termination,  the
Company  cancelled the 300,000 shares of common stock issued to EBI and recorded
the  decrease  in the fair  value of the stock  cancelled  by the  Company as an
impairment loss of $222,000 in the accompanying condensed consolidated financial
statements.  In addition, the Company recorded a reserve against the amounts due
from EBI of $55,000, due to the potential uncollectibility of such amounts.

                                       13
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

NOTE 4 - RELATED PARTY TRANSACTIONS
-----------------------------------
On February  18, 2004,  the Company  repurchased  2,474,581  member units from a
majority  member for  $242,000  for the purpose of  reissuing  such units to new
members. At December 31, 2004, the remaining balance to be paid was $227,000. In
January 2005, as part of a settlement agreement (see below), all amounts payable
to the related  party were  forgiven and the $227,000 was recorded as additional
paid in capital.

During the year ended  December  31,  2004 and the  period  from  August 8, 2003
through  December 31, 2003,  the Company  purchased  several pieces of equipment
(totaling  $3,472 and  $132,000  in 2004 and 2003,  respectively)  and  received
contract  labor and other services  (totaling  $197,949 and $172,437 in 2004 and
2003,  respectively) from a company owned by a stockholder of the Company.  Such
amounts totaled $327,598, net of amounts due from the related party of $178,260.
In January  2005,  the Company and the related  party  entered into a settlement
agreement  (the  "Settlement")  for all amounts owed and amounts due between the
parties.  In  accordance  with the  Settlement,  the Company is required to make
payments of $20,000 per month  beginning in February 2005 and a final payment of
$12,402 in June 2006. Due to the Company's  working  capital  restrictions,  the
Company is in default  under its  obligations  of the  Settlement.  There are no
default  provisions per the Settlement.  However,  the Company intends to resume
its required payments at such time as its working capital permits. In connection
with the Settlement,  the Company was relieved from $227,000 owed to the related
party (see above), which was credited to additional paid in capital in 2005.

The Company  entered into  consulting  agreements  with three  stockholders  for
services to be provided through June 2005 (see Note 6).


NOTE 5 - EQUITY
---------------
During the  nine-month  period  ended  September  30,  2005 the  Company  issued
1,222,266 shares of restricted common stock for cash totaling $803,719.

During the three  months ended  September  30,  2005,  the Company  issued 3,600
shares  of  restricted  common  stock to a  consultant  in  connection  with the
performance  of  consulting  services.  The 3,600  shares  were valued at $4,956
(based  on the fair  value of the  common  stock at the  respective  measurement
dates) and expensed during the three month period ended September 30, 2005.

During the three months ended  September  30, 2005,  the Company  issued  25,000
shares of restricted  common stock to the Company's new Chief Technical  Officer
as part of an  employment  agreement.  The 25,000  shares were valued at $34,000
(based  on the fair  value of the  common  stock at the  respective  measurement
dates) and expensed during the period ended September 30, 2005.

Stock for Services:

During the year ended  December 31, 2004,  the Company  issued 510,000 shares of
restricted   common  stock  to  various   consultants  in  connection  with  the


                                       14
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

NOTE 5 - EQUITY (Continued)
---------------------------
performance of consulting  services to be performed  through  December 2005. The
510,000 shares were valued at $1,470,000  (based on the fair value of the common
stock at the respective  measurement  dates) and recorded as prepaid services in
the consolidated  balance sheet.  Such amount is being amortized to expense over
the lives of the related  agreements,  of which $249,375 was expensed during the
three month period ended  September 30, 2005.  Effective  June 2005, the Company
terminated  the contract with Van Orten & Partners.  The Company has recorded an
impairment loss of $150,000 in the accompanying condensed consolidated financial
statements  based on the carrying  value of the prepaid  services at the time of
the contract termination.

During the three months ended March 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 as prepaid services in
the accompanying  consolidated  balance sheet. Such amount is being amortized to
expense over the lives of the related agreements,  of which $31,563 was expensed
during the three month period ended September 30, 2005.

Stock Options

For the three month period ended  September 30, 2005,  the Company did not incur
any stock compensation  expense for the vesting of options issued to consultants
during  fiscal  2004.  In  connection  with  consulting  agreements  with  three
stockholders  (see Note 6), the Company  issued options to purchase an aggregate
of 1,500,000 shares of common stock, with an exercise price of $0.55, which vest
immediately and expire through September 2007. The options were valued using the
Black Scholes option  pricing model at an aggregate of  $1,635,000.  The Company
amortized such amount over the lives of the related consulting  agreements which
ended on June 30, 2005.

Warrants

During the three months ended March 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),  vests monthly through January 2006 and expires in January 2008.
Such amount is being recorded as noncash  compensation  expense over the life of
the related  agreement,  of which  $43,875 was expensed  during the  three-month
period ended September 30, 2005.

NOTE 6 - 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


                                       15
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
                               September 30, 2005

NOTE 6 - COMMITMENTS AND CONTINGENCIES (Continued)
--------------------------------------------------
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.

Employment Agreements

During 2004, the Company entered into  employment  agreements with two officers.
Such agreements are in effect through September 2006 and continue in effect from
year to year thereafter  unless otherwise  terminated,  pursuant to the terms of
such contracts. Future annual minimum payments under these employment agreements
approximate $288,000, with potential annual increases, as defined.

Consulting Agreements

In October  2004,  the Company  entered into  consulting  agreements  with three
stockholders.  Such agreements were in effect through June 2005 and provided for
aggregate monthly consulting fees of $36,000.  In connection with the consulting
agreements,  the Company  issued  options to purchase an  aggregate of 1,500,000
shares of common stock (see Note 5).


NOTE 7 - DEBT
-------------

The Company  entered into a secured  line-of-credit  agreement (the "Line") with
Barclay Asset  Management  on June 29, 2005,  secured by shares of the Company's
common stock  ("Security  Interest").  The Line provides for borrowings of up to
$5,000,000  at LIBOR  plus 2%. The Line  requires  quarterly  interest  payments
beginning  with the  completion  of the draws  against  the credit line with one
principal payment on July 31, 2010, the maturity date. The Company may borrow up
to 50% of the  value  of the  Security  Interest.  The  Company  has  designated
approximately  7,000,000 shares of its common stock as security for the Line and

                                       16
<PAGE>
                            Y-TEL INTERNATIONAL, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                         September 30, 2005 (unaudited)

NOTE 7 - DEBT (Continued)
-------------------------
has placed  such  shares in escrow.  The  shares are not  recorded  as issued or
outstanding in the accompanying condensed consolidated financial statements.  In
accordance with the terms of the Line, the Company has approximately  $5,000,000
available  under the Line. As of October 17, 2005,  the Company had not received
any proceeds  under the Line. On October 17, 2005,  the  agreement  with Barclay
Asset  Management  was  terminated  as a result of Barclay's  failure to perform
under the terms of the  agreement.  The  Company is in the process of having the
shares returned. Upon receipt of such shares, the Company will cancel the shares
and return them to authorized but unissued status.

In June 2005,  the Company issued a convertible  note payable (the  "Convertible
Note")  totaling  $70,000,  bearing  interest  at 8% per  annum.  Principal  and
interest are due on June 22, 2007, the maturity date. The  Convertible  Note may
be converted to 17,500  shares of common stock of the Company at any time during
the term of the note.


NOTE 8 - SUBSEQUENT EVENTS
--------------------------

During the month ended  October 31, 2005 the Company  issued  127,717  shares of
shares of restricted common stock for cash totaling $73,822.





























                                       17
<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 June 30,
2005 and  therefore,  an  allowance  for bad debts has not been  recorded in the
financial  statements.  For the quarter  ended  September  30, 2005,  93% of the
Company's  revenue  was  provided  from one  customer  and  there  have  been no
indications the customer's financial condition has deteriorated.  As the Company
expands,  management will continue monitoring financial indicators and cash flow
patterns and will establish 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 currently generated from two sources:
1) 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;  and 2) port rental  charges  resulting  from  leasing a
portion of the DMS switch to Digicel,  whereby the revenue is recognized  during
the month for which the revenue applies.




                                       18
<PAGE>
Stock-Based Compensation

The Company  uses the  intrinsic  value  method of  accounting  for  stock-based
compensation to employees in accordance with Accounting Principles Board Opinion
("APB") No. 25, as amended,  "Accounting  for Stock  Issued to  Employees."  The
Company accounts for non-employee  stock-based  compensation  under Statement of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-Based
Compensation."  At September 30, 2005, the Company had one stock-based  employee
compensation  plan. The Company accounts for this plan under the recognition and
measurement principles of APB No. 25, and related  interpretations.  The Company
has  applied  the  disclosure  provisions  in SFAS No.  148 in its  consolidated
financial statements and the accompanying notes.

Issuance of Stock for Non-cash Considerations

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

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

Results of Operations - Period Ended September 30, 2005 Compared to Period Ended
September 30, 2004

Summary

The third quarter of 2005 was a strategic quarter for planning the new direction
of the Company.  The Company is in the final stages of finishing its contractual
obligations to Digicel and completing the  convergence  from the DMS platform to
the new Voip environment,.  This new infrastructure will become the backbone for
the Company's new wholesale and retail products and services while significantly
reducing the Company's operating costs.  Management  continues to finalize plans
to relocate the base of operations from Miami, Florida to Dallas, Texas.



                                       19
<PAGE>
During the third quarter,  the Company completed the installation of the Nextone
equipment and added thirteen new carriers  related to expansion of the Company's
wholesale product. Additionally, the technical team continued development of the
retail  infrastructure  in preparation for product launch targeted for the first
quarter of 2006.

During the third quarter,  the Company also completed its trademark  application
for CellNet.  This new product  will  provide cell phone  customers a savings of
60%-70%, when making international long distance calls.  Management is currently
developing a new website and distribution channels for CellNet, which is part of
the retail launch scheduled for the first quarter 2006.

During the third quarter,  the Company completed  installation of its first wifi
mesh network in  Nacogdoches,  Texas.  The first network is a joint venture with
Dotcom,  a local  internet  provider in  Nacogdoches.  The two companies will be
testing various wifi phones and ATA devices over the next few months to identify
areas of opportunity for expansion into other markets.

Effective September 1, 2005 Dan Robison resigned from the Board of Directors and
as COO of the company.  The Board of Directors is  investigating  and addressing
the reasons for Mr. Robinson's resignation.

Net Sales

Net Sales were  $737,503 and $886,351  for the nine months ended  September  30,
2005 and 2004,  respectively,  resulting  in a 16.8%  decrease  in revenue  when
compared  to the same  period of time for the  previous  year.  The  incremental
decrease  in  revenue  reflects  the net  effect  for  increased  revenues  from
international  traffic related to new carriers and routes initiated in the third
quarter of 2005 and a decrease in domestic traffic from Digicel.

Net sales were $249,738 and $364,914 for the quarters  ended  September 30, 2005
and 2004,  respectively;  resulting in a 31.5% decrease in revenue when compared
to the same period of time for the previous  year. The  incremental  decrease in
revenue  is  directly  attributed  to  increased  international  traffic  and  a
significant decrease in domestic traffic from Digicel.

Cost of Sales

Cost of Sales were $203,632 and $445,356 for the nine months ended September 30,
2005 and 2004, respectively, resulting in a 54.27% decrease when compared to the
same  period of time for the  previous  year.  The  decrease in Cost of Sales is
largely attributed to lower terminating  expenses resulting from the elimination
of routes to Nigeria because of low margins and poor quality.  Additionally, the
Company experienced lower terminating  expenses resulting from a drop in traffic
volumes for Domestic routes during the third quarter of 2005.

Cost of sales were  $100,579 and $181,372 for the quarters  ended  September 30,
2005 and 2004, respectively; resulting in a 44.5% decrease in Cost of Sales when
compared  to the  same  period  of time for the  previous  year.  The  reduction
reflects lower terminating expenses resulting from a drop in traffic volumes for
Domestic routes.





                                       20
<PAGE>
Operating Expenses

Operating  Expenses were  $4,799,126  and  $1,368,161  for the nine months ended
September  30, 2005 and 2004,  respectively,  resulting in a 250%  increase when
compared to the same period of time for the  previous  year.  Of this  increase,
approximately  $2,774,558 is related to non-cash  expenses related to consulting
services and stock options for non-employees; and $531,665 related to impairment
losses  resulting  from  the  termination  of the EBI  Communications  contract,
impairment of prepaid services and a write-down of the assets in Panama.

Operating  Expenses were $837,773 and $438,702 for the quarters ended  September
30, 2005 and 2004,  respectively;  resulting in a 91% increase  when compared to
the same period of time for the previous year. Of this  increase,  approximately
$363,769 is related to non-cash  expenses  related to  consulting  services  and
stock options for non-employees.

Liquidity and Capital Resources

The Company  had net working  capital  deficit of $776,629 as of  September  30,
2005.  This is largely  attributed to the decrease in the amount  capitalized as
prepaid services  resulting from common stock issued for services to be rendered
through  March 2006.  The Company  believes  the funding  arrangements  provided
through the sale of common stock under Regulation S and expected cash flows from
increased  international  wholesale  traffic are  sufficient to meet its working
capital  needs for the next few months.  Management is  aggressively  working to
resolve the funding problem. However,  implementation of the Company's strategic
plan related to the  production  of the Company's  Wifi phones,  and ATA devices
will require additional capital.

Going Concern

The accompanying  condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern,  which contemplates,
among other things, the realization of assets and satisfaction of liabilities in
the ordinary course of business.  The Company has incurred  operating losses and
had negative cash flows from  operations  through  September 30, 2005, and has a
lack of operational  history,  which,  among other factors,  raises  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 raise working  capital
through the public  markets.  Specifically,  the  Company  has  entered  into an
agreement with Revlon Holdings and Omega Financial  Services  regarding the sale
of the  Company's  restricted  common  stock to  non-U.S.  persons as defined in
Regulation S,  promulgated  under the  Securities  Act of 1933, as amended,  for
amounts up to  $2,000,000.  The  Company  has  received  proceeds  approximating
$799,279 and issued  1,212,266  shares of the Company's  common stock under such
agreement for the nine month period ending September 30, 2005. Additionally,  on
August 30, 2005 the Company  entered into an agreement with Gizbex Clearing Corp
regarding the sale of the Company's restricted common stock to non-U.S.  persons
as defined in Regulation S,  promulgated  under the  Securities  Act of 1933, as
amended.  The Company has  received  $4,440 and issued  10,000 of the  Company's
common stock under such agreement.




                                       21
<PAGE>
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.

Trends, Risks and Uncertainties

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

We Have a Limited History

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

We Require Additional Capital for Production of Wifi Phones

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

We Require Additional Capital for Acquiring Other Companies

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

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

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

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

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

Implementation of our aggressive  acquisition  strategy will impose  significant
strains on our  management,  operating  systems  and  financial  resources.  The


                                       22
<PAGE>
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 certain 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.  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  $4,265,255  and  $927,166  during the
nine-month periods ended September 30, 2005 and 2004,  respectively.  Management
believes that our revised  business  plan will be successful  and we will become
profitable;  however,  there can be no assurance  that we will be  successful in
implementing  our  business  plan or that  we will be  profitable  now or in the
future.

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.

In addition to historical  information,  management's discussion and analysis or
plan of operation includes certain forward-looking  statements,  including,  but
not limited to, those  related to our growth and  strategies,  future  operating
results and financial position as well as economic and market events and trends.
All  forward-looking  statements made by us,  including such statements  herein,
include  material  risks and  uncertainties  and are subject to change  based on
factors beyond our control.


Item 3 - Controls and Procedures

As of September 30, 2005, an  evaluation  was carried out under the  supervision
and with the  participation  of the  Company's  management,  including our Chief
Executive Officer and our Chief Financial  Officer,  of the effectiveness of the
design and operation of our  disclosure  controls and  procedures (as defined in
Rule 13a-15(e) and 15d-15(e) under Securities  Exchange Act of 1934.) Based upon
that  evaluation,  the Chief Executive  Officer and the Chief Financial  Officer
conclude  that the  design  and  operation  of  these  disclosure  controls  and
procedures  were  effective.  No  significant  changes were made in our internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to September 30, 2005.



                                       23
<PAGE>
(a) Evaluation of Disclosure Controls and Procedures. The Company carried out an
evaluation  under the  supervision and with the  participation  of the Company's
management,  including the Company's Chief  Executive  Officer ("CEO") and Chief
Financial  Officer ("CFO"),  of the  effectiveness  of the Company's  disclosure
controls and procedures.  Based upon that evaluation,  the CEO and CFO concluded
that as of  September  30, 2005 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 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 September 30, 2005 that has materially affected,
or is reasonably  likely to materially  affect,  the Company's  internal control
over financial reporting.

LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS

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


                                     PART II

Item 1 - Legal Proceedings

     None

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



                                       24
<PAGE>
For the period ended September 30, 2005, the Company issued the following shares
of its common stock without  registration  under the  Securities Act of 1933, as
amended (the "Securities Act"):

1. On July 1, August 1 and September 1, 2005, the Company issued 3,600 shares of
   common stock to Osprey Partners in connection with consulting services;

2. On September  29, 2005,  the Company  issued 25,000 shares of common stock to
   Todd Wallace as part of his signing bonus for assuming  the position of Chief
   Technical Officer for the Company.

3. During the period ended  September 30, 2005 the Company issued 266,454 shares
   of restricted common stock for cash totaling $96,129.

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
                 32.2     Certification of Chief Financial Officer















                                       25
<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/ Steve Lipman
                          -------------------------------
                               Steve Lipman, President and CEO
                     Date: November 16, 2005










































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