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, 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 ( )


As of May 12, 2005, there were 16,300,225 shares of Common Stock outstanding.
















                                       1

<PAGE>




                                    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     16

Item 3         Controls and Procedures                                       20




PART II        OTHER INFORMATION

Item 1         Legal Proceedings                                             22

Item 2         Unregistered Sales of Equity Securities and Use of Proceeds   22

Item 3         Defaults upon Senior Securities                               22

Item 4         Submission of Matters to a Vote of Security Holders           22

Item 5         Other Information                                             22

Item 6         Exhibits                                                      22


SIGNATURES                                                                   23





















                                       2

<PAGE>


                                       Y-TEL INTERNATIONAL, LLC AND SUBSIDIARIES

                                            CONDENSED CONSOLIDATED BALANCE SHEET
                                                                     (UNAUDITED)

                              For the Three Months Ended March 31, 2005 and 2004
================================================================================

ASSETS
Current assets:
                                                                    $   227,703
     Accounts receivable, net                                            13,951
     Prepaid expenses                                                    24,584
     Prepaid services                                                   971,042
     Due from stockholders                                               44,800
                                                                    -----------
          Total current assets                                        1,282,080

Property and equipment, net                                           1,001,272

Intangible assets, net                                                  700,000

Other assets                                                              9,600
                                                                    -----------
                                                                    $ 2,992,952
                                                                    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
                                                                    $   574,957
     Accrued expenses                                                   114,605
     Current portion of note payable to related party                   230,000
                                                                    -----------
          Total current liabilities                                     919,562
                                                                    -----------
Long term liabilities
     Note payable to related party, net of current portion               87,598
                                                                    -----------
Total liabilities                                                     1,007,160
                                                                    -----------
Commitments and contingencies

Stockholders' equity:
     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; 16,274,238 issued and outstanding                     1,627
     Additional paid in capital                                       7,331,099

     Accumulated deficit                                             (5,346,934)
                                                                    -----------
        Total stockholders' equity                                    1,985,792
                                                                    -----------
                                                                    $ 2,992,952
                                                                    ===========
See Notes to Financial Statements
                                       3

<PAGE>


                                       Y-TEL INTERNATIONAL, LLC AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                     (UNAUDITED)

                              For the Three Months Ended March 31, 2005 and 2004
================================================================================

                                                        2005            2004
                                                   ------------    ------------
  Net sales                                        $    254,038    $    220,685

  Cost of sales                                          66,093         163,355
                                                   ------------    ------------
  Gross profit                                          187,945          57,330

  Operating expenses:
    Satellite, bandwidth and other
       telecommunications expenses                       25,642          57,534
    Contract labor                                       75,585           1,500
    Contract labor paid to related party                   --            64,785
    Salaries and related expenses                        90,604          11,812
    Noncash compensation                              1,137,875         146,100
    Other general and administrative expenses           278,919         163,277
                                                   ------------    ------------

       Total operating expenses                       1,608,625         445,008
                                                   ------------    ------------

  Net loss                                         $ (1,420,680)   $   (387,678)
                                                   ============    ============

  Basic and diluted loss per common share and
  member unit, respectively                        $      (0.09)   $      (0.05)
                                                   ============    ============

  Weighted average number of common shares
      and member units outstanding, respectively     15,833,003       7,868,889
                                                   ============    ============










See Notes to Financial Statements





                                       4

<PAGE>
                                       Y-TEL INTERNATIONAL, LLC AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     (UNAUDITED)

                              For the Three Months Ended March 31, 2005 and 2004
================================================================================

Cash flows from operating activities:
     Net loss                                          $(1,420,680) $  (387,678)
     Adjustments to reconcile net loss to net cash used
       in operating activities:

        Depreciation and amortization                       18,470       10,347
        Estimated fair value of common stock issued for
           services                                         48,500         --
        Amortization of prepaid services and intangible
           assets                                          447,000         --
        Estimated fair value of services rendered by
           members                                            --        146,100
        Estimated fair value of options granted for
           consulting services                             613,125         --
        Estimated fair value of warrants issued for
           services                                         29,250         --
        Write off of note receivable from related party       --         39,800
        Changes in operating assets and liabilities:
           Accounts receivable                              50,289       22,958
           Prepaid expenses                                 (3,609)      (3,500)
           Due from stockholders                             1,963         --
           Other assets                                     25,000      (47,962)
           Accounts payable and accrued expenses          (115,239)     195,301
                                                       -----------  -----------
     Net cash used in operating activities                (305,931)     (24,634)
                                                       -----------  -----------
Cash flows from investing activities:
     Purchase of intangible assets                         (25,000)        --
     Purchases of fixed assets                             (22,980)     (67,855)
                                                       -----------  -----------
     Net cash used in investing activities                 (47,980)     (67,855)
                                                       -----------  -----------
Cash flows from financing activities:
     Payments for the repurchase of member units              --        (15,000)
     Issuance of common stock for cash                     569,681         --
     Payments on note payable to related party             (10,000)        --
     Proceeds from the exercise of warrants                  2,100         --
     Proceeds from the issuance of member units               --         67,000
                                                       -----------  -----------
     Net cash provided by financing activities             561,781       52,000
                                                       -----------  -----------

Increase (decrease) in cash                                207,870      (40,489)

Cash at beginning of period                                 19,833       45,680
                                                       -----------  -----------
Cash at end of period                                  $   227,703  $     5,191
                                                       ===========  ===========
See Notes to Financial Statements
                                       5

<PAGE>

                                       Y-TEL INTERNATIONAL, LLC AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     (UNAUDITED)

                              For the Three Months Ended March 31, 2005 and 2004
================================================================================

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  $      --
                                                       ===========  ===========

     Notes payable converted to member units           $      --    $   190,000
                                                       ===========  ===========


     Repurchase of member units                        $      --    $   242,000
                                                       ===========  ===========





















See Notes to Financial Statements


                                       6

<PAGE>


                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2005

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

Nature of Business

The accompanying 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 provides long-distance and other telecom related services to phone
companies. The Company is currently targeting markets in the rapidly developing
Americas region (Caribbean, Central and South Americas).

Going Concern

The accompanying 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 March 31, 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
$570,000 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



                                       7

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2005

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


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.

Use of Estimates

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 the contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates made by management include,
among others, the realizability of accounts receivable, recoverability of
property and equipment, prepaid services, intangible asset and the valuation of
deferred tax assets. Actual results could differ from these estimates.

Concentration of Credit Risk and Foreign Operations

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist of cash and receivables. The Company places its cash
with high quality financial institutions and at times may exceed the Federal
Deposit Insurance Corporation ("FDIC") $100,000 insurance limit. At March 31,
2005, the Company had $226,203 in domestic bank accounts which exceeded FDIC
insurance limits.

The Company offers its services predominately 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 100% and 18% of the total net sales for the periods
ended March 31, 2005 and March 31, 2004, respectively and 100% and 99% of the
accounts receivable as of March 31, 2005 and March 31, 2004, respectively. All
accounts receivable have subsequently been collected.

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


                                       8

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2005

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


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, 2005, 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
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 for 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 March 31, 2005, the Company has one
stock-based employee compensation plan. No option-based employee compensation
cost is reflected in the March 31, 2005 and 2004 consolidated statements of
operations, as no options were granted or vested during the period ended March
31, 2005. 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:









                                       9

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2005


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


                                      3 months ended          3 months ended
                                          3/31/05                 3/31/04
                                      --------------         ----------------

Net loss, as reported                 $   (1,420,680)        $      (387,678)
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                    $   (1,420,680)        $      (387,678)
                                      ==============         ===============
Basic and diluted loss per
  share and member unit,
  respectively - as reported          $        (0.09)        $        (0.05)
                                      ==============         ==============
Basic and diluted loss per
  share and member unit,
  respectively - proforma             $        (0.09)        $        (0.05)
                                      ==============         ==============

Issuance of Stock for Non-cash Considerations

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


                                       10

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2005

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


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 March 31, 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
consolidated financial statements in order to conform to the current year
presentation. These reclassifications have no effect on previously reported
results of operations.















                                       11

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2005

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

Property and equipment consists of the following at March 31, 2005:



Equipment                                                       $     622,697
Furniture                                                               3,000
                                                                 ------------
                                                                      625,697

Less accumulated depreciation                                        ( 84,090)
                                                                 ------------
                                                                      541,607

Equipment installation in process (Panama)                            459,665
                                                                 ------------
Property and equipment, net                                     $   1,001,272
                                                                 ============



Depreciation expense for the period ended March 31, 2005 and 2004 was $18,470
and $10,347 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 consideration of 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
agreed to pay $100,000 and has recorded the amounts paid as an intangible asset
in the accompanying consolidated balance sheet. The Company is amortizing such
amount to expense over the 10-year life of the agreement. The Company has
amortized $18,250 to expense in 2005.













                                       12

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 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. 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 5).


NOTE 5 - EQUITY
---------------
During the period ended March 31, 2005 the Company issued 769,888 shares of
restricted common stock for cash totaling $569,681.

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 will be amortized to
expense over the lives of the related agreements, of which $14,375 was expensed
during the period ended March 31, 2005.

During the three months ended March 31, 2005, the Company issued 12,400 shares
of restricted common stock to various consultants in connection with the
performance of consulting services. The 12,400 shares were valued at $48,500
(based on the fair value of the common stock at the respective measurement
dates) and expensed during the period ended March 31, 2005.

Stock for Services



                                       13

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2005

NOTE 5 - EQUITY (Continued)
---------------------------

During the year ended December 31, 2004, the Company issued 510,000 shares of
restricted common stock to various consultants in connection with the
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 accompanying consolidated balance sheet. Such amount will be amortized to
expense over the lives of the related agreements, of which $428,750 was expensed
during the period ended March 31, 2005.

Stock Options

For the period ended March 31, 2005, the Company expensed $613,125 as stock
compensation expenses related to the amortization of stock options issued to
consultants during FY 2004. In connection with the consulting agreements (see
Note 6), with three stockholders, 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 at an aggregate of $1,635,000 using the Black Scholes option pricing
model. The Company is amortizing such amount over the life of the related
consulting agreements which expire on June 30, 2005.

Warrants

During the period ended March 31, 2005 a total of 1,200 Class A Warrants and 600
Class B Warrants were exercised for a total of $2,100.

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 consulting agreement, of which $29,250 was expensed during the
period ended March 31, 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
certain transactions. The Company indemnifies its directors, officers, employees
and agents to the maximum extent permitted under the laws of the State 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


                                       14

<PAGE>

                            Y-TEL INTERNATIONAL, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                                 March 31, 2005

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

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 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 financial position or results of
operations.

Employment Agreements

During 2004, the Company has 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 are in effect through June 2005 and provide 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).

Approximately $108,000 of consulting expense related to the monthly consulting
fees was recorded during the period ended March 31, 2005.

Operating Leases

The Company leases its facilities under non-cancelable operating lease
agreements. The leases expire on various dates through February 2006 and provide
for monthly rents ranging from approximately $1,100 to $10,200. Rental expenses
for the period ended March 31, 2005 and 2004 was $14,805 and $45,509,
respectively.

Future minimum lease payments under non-cancelable operating leases are as
follows:
            Years Ending March 31,
            2006                                       $      73,000
                                       15

<PAGE>



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

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,
2005 and therefore, an allowance for bad debts has not been recorded in the
financial statements. For the quarter ended March 31, 2005, all 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.

Stock-Based Compensation



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<PAGE>

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 March 31, 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 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, 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 March 31, 2005 Compared to Period Ended
March 31, 2004

Net Sales

Net sales were $254,038 and $220,685 for the quarters ended March 31, 2005 and
2004, respectively; resulting in a 15.1% increase in revenue when compared to
the same period of time for the previous year. The incremental increase in
revenue is the result of having a full quarter's effect of port rental revenue
related to the Digicel contract compared to only a partial quarter in FY 2004.
The effective date of the Digicel contract was January 21, 2004 and included a
ramp up period continuing through April 2004.

Additionally, revenue from international carrier traffic decreased $105,787


                                       17

<PAGE>

during the first quarter of 2005, compared to traffic revenue for the same
period of time during the previous year. This is the result of dedicating all
available resources to servicing Digicel and eliminating the routes to Nigeria
due to poor quality and low profit margins.

Cost of Sales

Cost of sales were $66,093 and $163,355 for the quarters ended March 31, 2005
and 2004, respectively; resulting in a 59% decrease in cost of sales when
compared to the same period of time for the previous year. The reduction is the
direct result of eliminating the routes to Nigeria because of low margins, poor
quality and the need to expand services related to Digicel.

Operating Expenses

Operating expenses were $1,608,625 and $445,008 for the quarters ended March 31,
2005 and 2004, respectively; resulting in a 261% increase. Of this increase,
approximately $1,137,875 is related to non-cash expenses related to consulting
services and stock options for non-employees.

Liquidity and Capital Resources

The Company has net working capital of $362,518 as of March 31, 2005. This is
largely attributed to 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 are sufficient to meet its working capital needs for the next
twelve months. However, implementation of the Company's strategic plan related
to acquisitions and production of the Company's Wifi phones, will require
additional capital.

Going Concern

The accompanying 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 March 31, 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. During the first quarter ended March 31, 2005, the
Company sold 769,888 shares of restricted common stock for cash approximating
$569,000.

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



                                       18

<PAGE>

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
acquisitions that we are currently contemplating would involve substantial


                                       19

<PAGE>

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, including our Chief Executive Officer and our Chief Financial
Officer. We cannot guarantee that 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 $1,420,680 and $387,678 during the period
ended March31, 2005 and 2004, respectively. Our 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.

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.

Item 3 - Controls and Procedures

As of March 31, 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


                                       20

<PAGE>

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 March 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 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 March 31, 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 March 31, 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.






                                       21

<PAGE>
                                     PART II

Item 1 - Legal Proceedings

     None

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

For the period ended March 31, 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 January 25, 2005, the Company issued 2,400 shares of common stock to
         Osprey Partners in connection with consulting services. Additionally,
         Osprey Partners was granted 50,000 warrants to purchase the Company's
         common stock at an exercise price of $4.00/share. The warrants vest
         monthly over the next twelve months;

2.       On February 1, 2005, the Company issued 10,000 shares of common stock
         to Lynx Consulting Group in connection with consulting services;

3.       On February 2, 2005, the Company issued 12,500 shares of common stock
         to Waterville Investment Research in connection with consulting
         services;

4.       On March 9, 2005, the Company issued 50,000 shares of common stock to
         Bartholomew International Investments in connection with consulting
         services.

5.       During the period ended March 31, 2005 the Company issued 769,888
         shares of restricted common stock for cash totaling $569,681.

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

                                       22
<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:    May 16, 2005





























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