SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                  FORM 10-QSB/A
                                (Amendment No.1)

          [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2004

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the transition period from ........to........

                        Commission File Number 001-31718

                           Q COMM INTERNATIONAL, INC.
                 (Name of small business issuer in its charter)

                     Utah                           87-0674277
                     ----                           ----------
        (State or other jurisdiction            (I.R.S. Employer
       of incorporation or organization)        Identification No.)

            510 East Technology Avenue, Building C, Orem, Utah 84097
            --------------------------------------------------------
                     (Address of principal executive office)

                    Issuer's telephone number: (801) 226-4222

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period  that the issuer was  required  to file such  reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

Number of shares  outstanding of each of the issuer's  classes of common equity,
as of the latest practicable date:

As of July 27, 2004, there were 4,609,044 shares of common stock outstanding.

Transitional Small Business Disclosure Format. Yes |_| No |X|


<PAGE>


EXPLANATORY NOTE

         Q Comm  International,  Inc., (the "Company") is filing this amendment,
on Form 10-QSB/A (the "Form 10-QSB/A"),  to our Quarterly Report on Form 10-QSB,
which was originally  filed with the Securities and Exchange  Commission on July
30, 2004. As required by Rule 12b-15 under the Securities  Exchange Act of 1934,
as amended,  numbered  items of Form 10-QSB that are affected by this  amendment
have been set forth in their entirety,  as amended and restated.  This amendment
is being filed to solely  correct  errors within Part I., Item 2.  "Management's
Discussion and Analysis or Plan of  Operations".  Specifically,  in the eleventh
paragraph  under  "Sources of Revenue",  the Company  reported that, for the six
months  ended June 30, 2004 and 2003,  our profit  margins were 72.6% and 74.8%,
respectively. The correct numbers are 27.4% and 25.2%, respectively.

         This filing  amends only the Item 2 and does not  otherwise  update the
other items in the Form 10-QSB as originally  filed. As so modified,  Item 2 now
reads in its entirety as follows:


PART I

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

         This  Management's  Discussion and Analysis of Financial  Condition and
Results  of  Operations  ("MD&A")  and other  parts of this  Form  10-Q  contain
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities
Exchange  Act of 1934,  as amended (the  "Exchange  Act").  In some cases,  such
forward-looking  statements  may be  identified  by the  use of  words  such  as
"estimate," "believe," "project," "anticipate" and similar expressions, together
with other  discussion  of future  trends or results,  are  intended to identify
forward-looking statements. Such statements,  which include our statements about
the level of  anticipated  expenses  during 2004 and our liquidity  position are
subject to certain risks and uncertainties, including those discussed below that
could cause actual  results to differ  materially  from those  projected.  These
forward-looking  statements speak only as of the date hereof and we disclaim any
obligation to update them. All of these forward-looking  statements are based on
estimates and assumptions made by our management,  which although believed to be
reasonable, are inherently uncertain and difficult to predict.  Therefore, undue
reliance  should not be placed upon such  estimates.  There can be no  assurance
that the  benefits  anticipated  in  these  forward-looking  statements  will be
achieved.  The following important factors,  among others, could cause us not to
achieve the benefits  contemplated  herein,  or  otherwise  cause our results of
operations  to be  adversely  affected  in  future  periods:  (i)  continued  or
increased competitive pressures from existing competitors and new entrants; (ii)
unanticipated costs related to our growth and operating  strategies;  (iii) loss
or retirement of key members of  management;  (iv) increase in interest rates of
our cost of  borrowing,  or a default  under any material  debt  agreement;  (v)
adverse state or federal  legislation  or regulation  that increases the cost of
compliance,  or  adverse  findings  by a  regulator  with  respect  to  existing
operations;  (vi) loss of customers;  (vii)  inability to achieve  future sales;
(viii)  the  unavailability  of  sufficient  funds  for  operations  or  capital
expenditures;  and (ix) inability to introduce new products as planned.  Many of
such factors are beyond our control. Please refer to our SEC Form 10-KSB for the
fiscal year ended December 31, 2003 for additional cautionary statements.

Overview

         The following is a discussion of certain factors  affecting our results
of operations,  liquidity and capital  resources.  You should read the following
discussion and analysis in conjunction with our consolidated condensed financial
statements and related notes that are included herein.

         Our   business   consists  of  the   purchase  and  resale  of  prepaid
telecommunication   and  other  products  through  our  proprietary   electronic
point-of-sale system,  Qxpress. The key components of the Qxpress system include
the  Qxpress  200  terminals,  our data  center and the  software  that runs the
terminals and the data center and the  communication  protocols that connect the
terminals to the data center.  The Qxpress  system was  introduced  in September
2002. Prior to that date, we used third party equipment and software.  We expect
to experience  substantial growth in our historical business while expanding our
product line to include a broad range of other  prepaid  products and to provide
transaction  processing and information  management services to other vendors of
prepaid products, both in the United States and abroad.

         Historically, revenues from international operations have accounted for
less than 1% of annual  revenues.  In 2003,  we began  generating  revenues from
customers  in Canada,  France,  the  Bahamas  and  Australia.  In July 2004,  we
acquired our Canadian  customer and will begin  recognizing  revenues  from this
business  under our  traditional  broker model.  (See further  discussion of our
business  models under "Sources of Revenue"  below.) During the six months ended
June 30, 2004,  international  revenues  were 1.5% of total  revenues.  However,
considering  the  acquisition   just  completed  in  Canada  and  the  increased
acceptance  of  prepaid in areas  outside  North  America,  we  anticipate  that
international  revenues will  increase as a percentage of our total  revenues in
the future.

                                       -2-
<PAGE>


         The Qxpress system is designed to replace the traditional  distribution
system for prepaid products, which consists of vouchers and hard cards that must
be  purchased  by the  retail  merchant  and that  are  subject  to a number  of
problems,  including loss, theft and inventory  financing and management issues.
The Qxpress system can support the sale of a broad range of prepaid  products in
electronic format from a single terminal placed in convenience  stores and other
retail establishments. Using an appropriately enabled Qxpress terminal, a retail
merchant  can sell  wireless  telephone  time,  long  distance  service or other
telephone products,  add credit to a prepaid credit card, add wireless time to a
customer's  account by electronic bill payment,  sell other prepaid  products or
process debit/credit card transactions.  The prepaid product is sold in the form
of a personal  identification number, or "PIN," that the customer can use to add
telephone  time or credit card credit by calling the  provider of the product or
to transfer  cash by providing the PIN to the  recipient.  The consumer pays for
the product by paying the retail establishment in which the terminal is located.
Revenue from these purchases is split among the retail merchant, the broker that
placed the  terminal  with the retail  merchant,  the  provider  of the  prepaid
product and us.

         Our system is designed to accommodate  transactions involving virtually
any prepaid  product  that can be delivered  electronically.  Within the prepaid
transaction market, our initial focus has been on the telecommunications market.
National  telecommunication  carriers,  such  as  Verizon,  Cingular,  AT&T  and
T-Mobile,  as well as  regional  carriers,  such as Iowa  Wireless  and  Hargray
Wireless,  sell their  prepaid  wireless  services  either  directly  or through
distributors who purchase these products at rates significantly lower than those
that could be obtained  by  individual  consumers  and small  businesses.  These
distributors  often purchase prepaid  telecommunication  products from different
carriers,  then resell these products in smaller quantities to their established
networks of retail outlets,  such as convenience  stores,  check cashing stores,
newsstands, grocery stores and discount stores. Qxpress can also be used to sell
and reload  prepaid  credit cards and to pay  wireless  phone bills for selected
carriers that do not offer PIN-based prepaid programs.

         In the first  quarter of 2004 we announced  that we have also  modified
our software to run on a VeriFone 3750 terminal.  We began beta testing in March
2004 and announced the commercial  launch in June 2004. This terminal is capable
of providing both our prepaid application, which calls into our data center, and
standard  debit/credit card processing through the merchant's processor for such
transactions.  The ability to offer our prepaid  solution to the market  through
this  alternative  hardware option provides us with an opportunity to expand our
market share.  In 2004, we plan to further  expand the devices  through which we
distribute prepaid products,  such as additional  debit/credit  terminal models,
ATMs,  electronic cash register systems and PC based  point-of-sale  systems. We
believe  that  expanding  the number and type of devices that can connect to our
data center and sell our prepaid  products  will  provide  access to  additional
customers and increased revenues to us in the future.

Sources of Revenue

         Our  principal  source  of  revenue  has been  the  resale  of  prepaid
telecommunication products, including wireless, long distance and other products
that we purchase  directly  from carriers or indirectly  from  distributors  who
purchase these products from the carriers.

         Our standard business model is referred to as our broker model. In this
model,  we provide a full  range of  products  and  services  to our  customers,
including our product  library,  PIN  management,  transaction  processing,  and
customer  service to the retail  locations.  We recognize  revenues at the gross
sales price of the  products,  cost of goods sold  representing  the cost of the
products and commission expenses paid to brokers and retailers.

         Beginning in 2003, we began offering our service bureau business model.
Under this model,  our customers  license our data center  software and purchase
Qxpress terminals from us. These customers are responsible for functions such as
inventory  management,  product  ownership,  report  generation,  and ACH  funds
transfer.  Our agreements  with these  customers  also provide  ongoing fees for
software maintenance and transactions processed through their system. Because we
do not provide or control the products sold, we do not meet the  requirements to
record these sales at "gross." Transaction processing,  license, and maintenance
fees are all recorded on a "net" basis.  Sales of terminals  are recorded at the
sales price and a corresponding cost of sale is recognized.

         The table below  illustrates the revenues we derived from our principal
products and services and the percentage of total  revenues  represented by this
amount.  The discussion  that follows  focuses on the sources of revenue that we
believe are the most important to our present and future results of operations.


                                      -3-
<PAGE>

<TABLE>
<CAPTION>
                               Three months ended June 30,                         Six months ended June 30,
                        ---------------------------------------            --------------------------------------
                               2004                  2003                        2004                     2003
                      ---------------------  ----------------------      ---------------------    --------------------
                        Amount   Percentage    Amount    Percentage        Amount   Percentage      Amount  Percentage
<S>                  <C>         <C>        <C>          <C>            <C>         <C>          <C>        <C>
Wireless             $7,581,383     85.5%   $5,686,909      95.9%       $15,031,276   86.6%      $11,108,757   95.1%
Other products          396,876      4.5        35,483       0.6            710,602    4.1            55,710    0.5
Credit card             357,314      4.0        30,760       0.5            594,093    3.4            48,392    0.4
Long distance           196,382      2.2        94,241       1.3            363,487    2.1           178,052    1.5
Fees                    144,325      1.6        42,729       0.7            302,858    1.7            67,848    0.6
Service bureau          111,865      1.3        29,090       0.5            257,288    1.5            40,190    0.4
Miscellaneous            82,313      0.9        31,624       0.5             98,684    0.6           178,926    1.5
                      ---------    -----     ---------     -----         ----------  -----        ----------  -----
Totals               $8,870,458    100.0%   $5,930,836     100.0%       $17,358,288  100.0%      $11,677,875  100.0%
                      ---------    -----     ---------     -----         ----------  -----        ----------  -----
</TABLE>

         Prepaid  wireless  continues to be our largest  source of revenue.  The
prepaid  wireless  industry is projected  to continue to grow and we  anticipate
that it will continue to be our largest  revenue  source.  Our prepaid  wireless
products  include  many  major  national  carriers  and  many  smaller  regional
carriers. We frequently add new wireless products as the demand arises.

         Other products include items such as prepaid internet,  home dial tone,
custom ring tones and email that are downloaded to cellular phones,  gift cards,
blank cards used by  retailers,  fees from bill pay  applications,  and PINs and
cellular phones that we sell to other distributors outside our customer network.

         Prepaid  credit  card is a  relatively  new  product  for  the  prepaid
industry. This product allows a user to load funds onto a stored value card that
will then  function the same as a typical  debit card.  We generate  revenues by
receiving  a share of the $4.95 to $9.95 load fee  charged to the  consumer.  We
currently  offer two products that bear the  MasterCard  logo and are evaluating
other  products.  We  believe  the  convenience  of a stored  value card for the
cash-based  consumer and increased  market awareness of this product will result
in increased revenues to us in the future.

         Prepaid long  distance  revenue is a focus of ours in 2004.  We believe
that our revenues  from this source  should grow both in terms of gross  dollars
and as a percentage  of total  revenues in the future.  Our  marketing  analysis
suggests that we can increase  prepaid long  distance  revenues by improving our
product  offering  and by providing  informative  and  attractive  point of sale
advertising materials to our brokers and merchants.  In April 2004, we announced
our new long distance program and began promotion to our broker network.

         We offer the  brokers  through  whom we deploy the  Qxpress  system the
option either to buy the Qxpress 200 terminals at a fixed price or to lease them
under a rental  program.  The sale of the terminal  will result in the immediate
recognition of revenue,  the immediate  recovery of capital for the terminal and
gross  profit from the sale.  The rental  program has the  advantage  of ongoing
rental  income  over the life of the  contract  and  higher  margins  due to the
premium we are able to charge under this  alternative.  Our ability to offer the
rental option over the long-term  depends on the availability of capital to fund
the cost of the  terminals.  Substantially  all of the  terminals  in our broker
model are currently under the rental program.  Other types of fee income include
performance fees that are charged when weekly rentals from a terminal fall below
the agreed-upon  minimum level and other miscellaneous fees. Our fee income will
continue to increase as we deploy more units into the market.

         We first began setting up service  bureau  customers in 2003. We expect
the majority of revenues from service  bureau  customers  will be from customers
outside the United States since that is the only business  model we have offered
them  to  date.  This  revenue  model  will  provide  higher  margins  than  our
traditional  broker model since there are few direct costs to offset against the
fee revenues.  However,  we anticipate  significantly  lower average revenue per
unit for these  customers  since they are  performing  many of the  services  we
provide to our  broker  customers.  Accordingly,  even if gross  profit  remains
relatively  stable,  or increases at a relatively  constant  rate from period to
period,  revenues and gross profit margins may experience substantial volatility
based on changes in the  percentage of our business  undertaken on a service fee
basis compared to the percentage undertaken as a product reseller. We anticipate
this source of revenue to increase in 2004 and beyond.  We established our first
service bureau customer in Canada in early 2003. In late 2003, we set up service
bureaus for new  customers in France,  Australia,  and the Bahamas.  Most of the
revenue we have recorded from our service bureaus in 2003 and 2004 was for sales
of  terminals  and for license  fees.  In July 2004,  we acquired  our  Canadian
service bureau customer.  Revenues from this source will begin to be reported as
broker revenue beginning in the third quarter.


                                      -4-
<PAGE>


         Historically,  our results of  operations  have been  characterized  by
relatively  high revenues but  relatively  low gross  profits.  Under our broker
model,  we book the entire value of the  transaction  as  revenues.  Our cost of
sales  includes the amount we pay for the product;  it does not include the fees
and commissions we pay the broker and the retailer who participated in the sale.
Our gross profit margin was approximately  27.6% for the three months ended June
30, 2004 and 25.3% for the  comparable  period in 2003. For the six months ended
June 30, 2004 and 2003, our profit  margins were 27.4% and 25.2%,  respectively.
However,  after further subtracting the commissions and fees paid to the brokers
and retailers (which vary substantially directly with revenues in our historical
sales  model),  our margins were  approximately  4.2% for the three months ended
June 30,  2004 and 2.2% for the  comparable  period in 2003.  For the six months
ended June 30, 2004 and 2003, our margins after  commissions  and fees were 3.8%
and 2.4%, respectively.  In the second quarter of 2004, we recognized $80,000 in
software  license  fees for  service  bureau  customers  located  in France  and
Australia. These fees were paid in 2003 but were deferred until the requirements
for revenue  recognition  were met. The effects of this revenue were to increase
our margin by approximately  1.0% for the three-month period ended June 30, 2004
and .46% for the six-month period.  The remaining increase of approximately 1.0%
in our margin after  commissions and fees for the three and six-month periods in
2004 is  attributable  to increased  rental and other fees charged in 2004. Such
fees do not  have a direct  cost  associated  with  them  and  therefore  have a
dollar-for-dollar  impact on the margin after  commissions and fees.  Because of
these  relatively  small  margins,  a minor  change in the price that we pay for
products  would have a  substantial  effect on our margins and profit if we were
not able to (or, in the case of price decreases,  were not required to) pass the
difference on to our customers.

         The resale of prepaid telecommunication  products has historically been
a commodity  market with most price  increases or decreases being passed through
the distribution chain to the end user. However,  the amount of margin available
to each  participant  in the  distribution  chain  can be  affected  by  various
factors,  such as the functions provided and risk assumed by the participant and
the volume and payment  terms on which the  participant  can  purchase  product.
Historically,  our ability to purchase  products  at  attractive  rates has been
negatively  impacted by our inability to purchase in volume and our status as an
uncertain  credit,  which,  in some  cases,  has  resulted in our  inability  to
purchase product  directly from the supplier.  In those cases, we have purchased
product  from a  reseller  at a markup  from the  supplier  price.  We will seek
opportunities  to increase  margins by  purchasing a greater  percentage  of our
product directly from the carrier and by purchasing in greater volume.  However,
the  telecommunications  business  in  general,  and the  wireless  business  in
particular,  are changing rapidly and it is not possible to anticipate potential
changes that may occur in the distribution chain.

         Substantially  all of our  revenues  are  collected  through  automated
clearinghouse,  or ACH, transactions initiated by us within 72 hours of the sale
of the product. In an ACH transaction, funds are electronically transferred from
the  merchants'  accounts to our  accounts.  As a result,  we have  virtually no
receivables  from retailers and we do not have expenses  associated with billing
and  collection.   The  brokers  through  whom  we  distribute  our  system  are
responsible  for any unpaid ACH  transactions  from  retailers so we  experience
virtually no bad debt expense.  We generate  receivables from sales of terminals
and from license fees and consulting  services provided to assist service bureau
customers in setting up and operating data centers.

Operating Metrics

         We monitor our  business and measure  performance  in a number of ways.
Several  of these  key  measures  are shown in the table  below  along  with the
results for our last two quarters.  These are historical  amounts and should not
be used as a projection for future results.
<TABLE>
<CAPTION>
                                                          For the         For the           For the
                                                       Quarter Ended   Quarter Ended     Quarter Ended
Broker Model                                           June 30, 2004   March 31, 2004  December 31, 2003
------------                                           -------------   --------------  -----------------
<S>                                                    <C>             <C>             <C>
  Gross Qxpress terminal shipments                          1,627           1,478               889
  Company cancellation of inactive terminals                 (184)           (300)               --
  Net Qxpress terminals shipped                             1,443           1,178               889
  Qxpress terminals canceled                                 (379)           (123)             (172)
                                                          -------         -------           -------
  Net Qxpress terminals placed                              1,064           1,055               717
  Ending Qxpress terminals in service                       3,962           2,898             1,843
  LDC terminals in service                                    183             248               280
                                                          -------         -------           -------
  Total terminals in service (1)                            4,145           3,146             2,123

  Average monthly net revenue per terminal                $    24(3)      $    34(3)        $    39(4)
  Average monthly net revenue per terminal for
    terminals in service more than 90 days (2)            $    33(3)      $    45(3)        $    46(4)

  Acquisition cost per broker units shipped               $   126         $    89           $    61
  Acquisition cost per total units shipped                $   126         $    69           $    34
  Cash cost per unit in service (excluding acquisition)   $     6         $     8           $    10


                                      -5-
<PAGE>


                                                          For the         For the           For the
                                                       Quarter Ended   Quarter Ended     Quarter Ended
Service Bureau Model                                   June 30, 2004   March 31, 2004  December 31, 2003
--------------------                                   -------------   --------------  -----------------
 Terminals shipped                                             --             453               625
 Terminals canceled                                            --              --                --
 Net terminals placed                                          --             453               625
 Total terminals in service                                 1,462           1,462             1,009

 Average monthly net revenue per terminal (4)             $     6         $     4           $     4
 Average monthly net revenue per terminal for
   terminals in service more than 90 days (4)             $     8         $     8           $     9

 Blended average monthly net revenue per terminal         $    22         $    26           $    38
</TABLE>
          (1)  Terminals in service include terminals that have been shipped to
               brokers or merchants.
          (2)  Calculated by excluding terminals shipped within 90 days and the
               net revenue associated with those terminals.
          (3)  Includes gross revenues less cost of goods sold and commissions
               paid to brokers and retailers.
          (4)  Excludes one-time revenues from terminal sales, installation
               fees, and license fees.


         The  exact  timing of cash  flow  break  even  depends  on many  items,
including how aggressively we add to our sales organization, which increases our
short-term  burn rate,  our actual sales  results,  the pace of our growth,  the
relative  numbers of broker terminals in service and service bureau terminals in
service,  and how quickly  terminals  are  installed  and become  fully  revenue
producing after shipment.  Based on our current sales organization growth plans,
we  believe  our cash flow break  even  point  will  likely be at  approximately
9,000-10,000  installed broker units plus 4,000-5,000  installed  service bureau
units in service.  These break even points assume  terminals  that have achieved
full  revenue  potential,  which  typically  occurs  in 90-120  days.  Given the
differing economics of these two models,  different combinations of these two in
service unit numbers will yield different cash flow break-even points.

         The  VeriFone  3750  terminal  adds  another  element to the break even
analysis.  We  anticipate  that the majority of the VeriFone  terminals  will be
sold,  meaning we do not have the capital cost but will also not receive  rental
fees.  We believe the monthly net revenues for the VeriFone will be in the range
of $15-$20  per  terminal.  When  factoring  a certain  percentage  of  Verifone
terminals into the breakeven  analysis,  we could see another breakeven point at
approximately  9,000  broker  units in service  for our Qxpress  product,  2,000
VeriFone  units in  service  and 3,000  service  bureau  units in  service.  The
breakeven points again would likely be met after at least 90 days in service.

         Our broker model revenues depend on the following factors: i) number of
terminals in service,  ii) average gross sales per terminal,  iii) net margin on
product sales,  and iv) fees and other  ancillary  charges.  The first factor is
shown in the data on units  shipped,  exchanged,  canceled and net units placed.
The other  factors  are  captured  in the  measurement  of average  revenue  per
terminal (referred to as "ARPU").

          During the second  quarter of 2004,  we had a higher  rate of returned
units  than  anticipated,  which  was due to our  decision  to pull  back  under
performing or  non-performing  terminals from a particular  broker.  This broker
filed for  bankruptcy  during the second  quarter  and we are in the  process of
transitioning as many performing  locations as possible to be serviced  directly
by us.

         Our  strategy  to  increase  the  number of units in  service  includes
significantly  increasing  our sales  force in order for us to gain more  market
exposure.  During 2004, we have hired a new vice president of sales and five new
sales  personnel.  We  anticipate  adding more sales  personnel  in the next six
months.  We anticipate that our selling expenses will increase more rapidly than
revenues  in the near  term,  but  expect  that the  long-term  benefits  of the
additional sales personnel will outweigh the costs.

         As discussed above, we plan to develop other  distribution  methods for
distributing  products  using our back-end data center.  As we add customers who
use distribution  methods other than our Qxpress terminal (e.g.  electronic cash
registers)  our focus  will  shift from  terminals  in  service to total  retail
locations regardless of the method of product  distribution.  We anticipate that
ARPU for locations that do not involve a Qxpress  terminal will fall between the
broker model and service bureau model currently experienced.

         Our strategy  with  average  revenue per terminal is to focus our sales
efforts on quality  brokers and retail  chains with  established  prepaid  sales
history,  maintain or better the pricing in our contracts with new brokers, gain
better  discounts from  suppliers by securing  direct  relationships  and buying
larger quantities, and to continue to charge rental and minimum performance fees


                                      -6-
<PAGE>


on all  terminals  placed.  We show  average  revenue per  terminal  for average
terminals  outstanding during the year and for average terminals excluding those
shipped  within the last 90 days since our  experience  shows that it  generally
takes 90-120 days for a terminal to ramp up to full revenue potential.

         We evaluate  our  service  bureau  model in  different  ways.  While we
measure ARPU for these  customers,  the revenues  from  software  licensing  and
profits  from  terminal  sales  are  likely  to be  more  significant  than  the
transaction fees from sales of products.  The total net profit on a per-customer
basis is the measure we focus on rather than  transaction  fees per unit. As our
service bureau customers  continue to grow, we will have more meaningful data of
this nature to report.

         Our strategy with respect to service bureau  revenues is to selectively
choose opportunities that will bring us the most net revenues.

Critical Accounting Policies and Estimates

         The discussion  and analysis of our financial  condition and results of
operations  are  based on our  financial  statements  that  have  been  prepared
according to accounting  principles  generally  accepted in the United States of
America.  In  preparing  these  financial  statements,  we are  required to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues,  and  expenses  and  related  disclosures  of  contingent  assets  and
liabilities.  We evaluate these  estimates on an on-going  basis.  We base these
estimates on  historical  experience  and on various other  assumptions  that we
believe are reasonable  under the  circumstances,  the results of which form the
basis for making  judgments about the carrying values of assets and liabilities.
Actual results may differ from these estimates  under  different  assumptions or
conditions.  We  consider  the  following  accounting  policies  to be the  most
important to the portrayal of our financial  condition and that require the most
subjective judgment.

         Revenue recognition

         We record  revenue at the time of  product  sale or when  services  are
provided.  Under our broker model,  sales of our prepaid  products are generally
made directly to end-users. There is no right of return for products sold and we
are  not  obligated  for  further   performance  after  the  sale.  These  sales
transactions  are  accounted  for at "gross"  since  they meet the  requirements
specified by Securities and Exchange  Commission Staff  Accounting  Bulletin No.
101 -- Revenue Recognition in Financial Statements (SAB 101) and Emerging Issues
Task Force No. 99-19 (EITF 99-19).  Revenues generated from other sources,  such
as from the sale or rental of terminals,  minimum  performance fees and software
license fees are recorded  when earned,  net of any sales  discounts.  Under our
service bureau model, software license,  transaction processing, and maintenance
fees are all recorded on a net basis when earned.

         Cost of goods sold

         Cost of  goods  sold  primarily  represents  the  cost of the  personal
identification  number,  or PIN, or other product sold. The cost of a PIN is set
by the carrier  and is  expressed  in terms of a  percentage  discount  from the
denomination  value.  This discount ranges from 12% to 25% for cellular and home
dial tone  products and 40% to 50% for long  distance  products.  We do not have
minimum  purchase   contracts  or  exclusivity   agreements  with  any  carrier.
Historically,  price  increases  are passed on to customers in the form of lower
broker and merchant  commissions,  which are  recognized  as operating  expenses
under the caption "commissions and fees" on our statement of operations. Cost of
goods sold and resulting  gross  profits  fluctuate due to changes in the mix of
our products and discount rates offered by carriers. As already noted, we expect
to experience  greater  fluctuations in revenues and margins as we introduce our
service bureau revenue model.

         Software development costs

         We have invested a  considerable  amount of capital in our  proprietary
Qxpress  200  terminal  and data  center.  We  account  for this  investment  in
accordance with Statement of Financial  Accounting Standards No. 86, "Accounting
for the Costs of Computer Software to Be Sold,  Leased,  or Otherwise  Marketed"
and Statement of Accounting  Standards No. 142,  "Goodwill and Other  Intangible
Assets." Costs incurred before we established the  technological  feasibility of
the  project  were  recorded  as  research  and   development   expenses.   Once
technological  feasibility was  established,  costs incurred to develop the data
center  software and the embedded  software in the  terminal  were  capitalized.
These costs include salaries paid to software  engineers employed by us and fees
paid to third parties for software  development.  Once the new system was placed
in service,  maintenance costs are expensed while costs of new software projects
under  development  are  capitalized.  Capitalized  costs are amortized over the
estimated  useful life of the software of three years. We periodically  evaluate
the  recoverability of our capitalized  software  development costs based on the
expected future cash flows from this asset.


                                      -7-
<PAGE>


         Stock options and warrants

         We have  adopted  the  disclosure-only  requirements  of  Statement  of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation,"  as  provided  by  Statement  of  Accounting  Standards  No. 148,
"Accounting  for  Stock-Based  Compensation  -- Transition  and Disclosure -- an
amendment to FASB  Statement No. 123." As a result,  no  compensation  costs are
recognized for stock options granted to employees.  Options and warrants granted
to  non-employees  are  recorded as an expense on the date of grant based on the
then estimated fair value of the security in question.

         Income taxes

         At June 30, 2004, we had an accumulated  net operating loss for federal
and state corporate income tax purposes of approximately $13.8 million.  Because
our ability to use this net operating loss depends on our ability to earn future
taxable  income,  we have  established  a valuation  allowance  equal to the net
deferred tax asset. The amount of and ultimate  realization of the benefits from
these  deferred  tax  assets  for  income  tax  purposes  depends,  in part,  on
applicable tax laws in effect, our future earnings, and other future events, the
effects  of which  cannot be  determined.  However,  our  ability  to offset our
accumulated  net  operating  loss against  future  taxable  income may cause our
future reported  earnings and  profitability to be greater than they would be if
fully taxable.

Results of Operations

         The following table sets forth for the periods  presented  statement of
operations data as a percentage of revenues.  The trends suggested by this table
may not be indicative  of future  operating  results.  As noted  earlier,  these
percentages  can  be  expected  to  change  substantially  as a  result  of  our
implementation of different sales models and other factors.

                                             Three Months         Six Months
                                            Ended June 30,      Ended June 30,
                                           ---------------     ----------------
                                            2004      2003      2004      2003
                                           ------    ------    ------    ------
Revenues                                   100.0%    100.0%    100.0%    100.0%
Cost of goods sold                          72.4      74.7      72.6      74.8
                                           ------    ------    ------    ------
Gross profit                                27.6      25.3      27.4      25.2
Commissions and fees .                      23.4      23.1      23.6      22.8
Selling expenses                             1.8       1.4       1.7       1.5
General and administrative expenses          7.2       6.4       8.2       7.6
Depreciation and amortization                4.7       3.2       4.7       3.0
Non-cash compensation                        0.0       0.3       0.0       0.4
                                           ------    ------    ------    ------
Loss from operations                        (9.5)     (9.1)    (10.8)    (10.1)
Other income (expense) - net                (0.4)    (10.2)     (2.0)     (6.3)
                                           ------    ------    ------    ------
Net loss                                    (9.9)    (19.3)    (12.8)    (16.4)
                                           ------    ------    ------    ------


Three months ended June 30, 2004 and 2003

The following table presents our statement of operations showing dollar and
percentage changes from 2003 to 2004.
<TABLE>
<CAPTION>
                                       Three Months Ended June 30,     Increase (Decrease)
                                      ---------------------------      -------------------
                                           2004           2003            $             %
                                           ----           ----            -             -
<S>                                   <C>            <C>            <C>            <C>
Revenues                              $ 8,870,458    $ 5,930,836    $ 2,939,622       49.6%
Cost of goods sold                      6,425,999      4,427,377      1,998,622       45.1
                                      -----------    -----------    -----------      -----
Gross profit                            2,444,459      1,503,459        941,000       62.6
Commissions and fees                    2,079,983      1,369,569        710,414       51.9
Selling expenses                          156,751         81,257         75,494       92.9
General and administrative expenses       642,987        379,553        263,434       69.4
Depreciation and amortization             417,559        191,871        225,688      117.6
Non-cash compensation                        --           21,666        (21,666)    (100.0)
                                      -----------    -----------    -----------      -----
Total operating expense                 3,297,280      2,043,916      1,253,364       61.3
Loss from operations                     (852,821)      (540,457)      (312,364)     (57.8)
Other income (expense) - net              (30,118)      (605,855)       575,737       95.0
                                      -----------    -----------    -----------      -----
Net loss                              $  (882,939)   $(1,146,312)   $   263,373       23.3%
                                      -----------    -----------    -----------      -----

</TABLE>

                                      -8-
<PAGE>


         Revenues.  Our 2004 revenues  increased  over the 2003 amount due to an
increase in the number of terminals in service and to increasing  our sources of
revenues.  Our second  quarter  revenues  were the  highest in our  history  and
represent  nearly a 5%  increase  from the first  quarter  of 2004,  in which we
reported our previous high. We expect the following factors to positively impact
revenues in 2004: i) continuing to increase our installed base of terminals;  2)
our  expanded  sales  force  that  will be in place  for much of 2004;  iii) the
advantages  we are able to offer  the  market  with our  proprietary  system  as
previously described; and iv) the addition of new means of product distribution,
such as debit/credit card terminals, electronic cash registers, etc.

         Cost of goods sold.  Our cost of goods sold for the three  months ended
June 30,  2004 as  percentage  of  revenues  was 72.4%  compared to 74.7% in the
comparable  period in 2003.  Changes  in cost of goods sold as a  percentage  of
revenues are attributable to our mix of sales. Wireless products generally carry
lower  discounts  than long  distance  and  other  products.  In 2004,  wireless
revenues represented 85.5% of revenues compared to 95.9% in 2003. In the future,
we expect our gross margin to fluctuate as our product mix changes, our level of
fees charged and as discount rates offered by carriers change. Gross margin will
also be  influenced  by the  relative  growth  experienced  in our two  business
models, the traditional broker model and the service bureau model.

         Commissions and fees.  These expenses are principally  commissions paid
to retailers and brokers for product sales through the Qxpress terminals and are
a fixed  percentage  of the product  sales price.  Commissions  and fees for the
three months ended June 30, 2004 were higher than the comparable  period in 2003
due to the  increase in  revenues.  Also,  a portion of the  decrease in cost of
goods sold as a percentage  of revenues was passed on to brokers and  retailers.
Our contracts with brokers  generally  protect us from any price  decreases from
carriers.  A component of commissions  and fees is a transaction  processing fee
paid to LDC for  transactions  processed  through the LDC terminals.  These fees
were  approximately  $7,600 in 2004 compared to $45,000 in 2003. These fees have
been  consistently in the range of 1% of gross revenues  processed  through that
system.  Since most of our revenue growth will come from transactions  generated
by the new Qxpress 200  terminal,  these  expenses  are not expected to increase
from their current level in terms of absolute  dollars and will likely  continue
to decrease as existing customers are transitioned to our new terminal.

         Selling expenses.  Selling expenses for the three months ended June 30,
2004 increased by approximately  $75,000 when compared to 2003. This increase is
a result of  adding  five new sales  personnel  in 2004 and to a new  commission
program  introduced  in  January  2004.  Sales  staff are  eligible  to  receive
commission  pay based on the number of terminals  placed in a month  compared to
the individual's quota and on the plan level the terminals were placed under. We
expect selling  expenses to remain  significantly  higher  throughout  2004 when
compared  to 2003 due to these  additions  to our sales  force  and to  possible
further additions to our sales force in the future.

         General  and  administrative.   General  and  administrative   expenses
increased by  approximately  $265,000 during the second quarter of 2004 compared
to the same period in 2003. As a percentage of revenues, such expenses were 7.2%
of revenues 2004 and 6.4% of revenues in 2003. The increase can be attributed to
a number of factors.  Our  general  and  administrative  salaries  and  benefits
increased by $100,000 for the three months ended June 30, 2004 when  compared to
2003. This increase is due to approximately  $30,000 higher base salary costs in
2004 compared to 2003,  an accrual of $17,500  toward a team bonus program which
will be paid according to our  performance  during 2004, an increase in employee
benefit  costs  of  $15,000  and to  $25,000  less in  salaries  eligible  to be
capitalized as software development costs in 2004 compared to 2003. While we are
still  developing  new  applications  for our system and some of the salaries of
software  engineers are  capitalized,  we expect that the amount of  capitalized
salaries  in 2004 will be less  than  those  capitalized  in 2003.  Other  items
contributing to the increase in general and administrative expenses are Board of
Directors' fees and expenses and Directors and Officers insurance  ($45,000) and
an  increase  in  professional  services  such as  legal,  accounting,  investor
relations  and  consulting  fees  ($105,000).   In  order  to  support  expanded
operations,  we expect to increase general and administrative  expense. As gross
profit increases, we expect general and administrative expenses to decrease as a
percentage of gross profit, thereby significantly improving operating margins.

         Depreciation and amortization.  Depreciation and amortization  expenses
for the three months ended June 30, 2004  increased  by  approximately  $225,000
when  compared  to 2003.  These  increases  are  attributable  primarily  to the
amortization of software  development costs and to higher depreciation  expenses
from an increased number of Qxpress 200 terminals in service. We also determined
in the fourth  quarter of 2003 to  decrease in the  expected  useful life of our
point  of sale  terminals  from  five  years  to  three  years,  causing  higher
depreciation  expenses in the first  quarter of 2004 compared to the same period
in 2003. As we continue to amortize  software  development costs and we increase
significantly  the  number  of  Qxpress  200  terminals  in  service,  we expect
depreciation and amortization expenses to increase in the future.

         Other  expense - net.  Other income and expense  consists  primarily of
interest income,  interest  expense and a loss on disposal of assets.  Net other
expense  for the three  months  ended June 30,  2004 and 2003 were  $30,000  and
$605,000,  respectively.  The decrease in net other expense represents  interest
expense  related to notes we issued and debentures we sold in 2003. Most of this
interest  expense,  $520,000 for the three months ended June 30, 2003, is in the
form of  amortization  of discount on these debt  instruments and therefore does
not represent an amount paid in cash.  Since the debentures  were repaid in full


                                      -9-
<PAGE>


on March 31, 2004, the discount on debt was fully  amortized as of that date and
there was no comparable expense for the second quarter of 2004.  Presently,  our
debt  consists  of a  $250,000  note to our  former  CEO and  $48,000 in capital
leases.  Based on this relatively low level of debt, we expect interest expenses
to be significantly less in 2004 compared to 2003.

         Income  tax  expense.   At  June  30,  2004  we  had   operating   loss
carryforwards of approximately  $13.8 million that may be applied against future
taxable  income in years through 2023.  The loss  carryforwards  and other items
result in net deferred tax asset of  approximately  $4.7 million.  The amount of
and ultimate realization of the benefits from this deferred tax asset for income
tax purposes  depends,  in part,  on applicable  tax laws in effect,  our future
earnings, and other future events, the effects of which cannot be determined. As
a result of the  uncertainty  surrounding  the  realization  of the deferred tax
asset,  at  year-end  we  established  a  valuation  allowance  equal to the net
deferred  tax asset and no income tax benefit from our  operating  loss has been
recognized for any of the periods presented.

Six months ended June 30, 2004 and 2003

The following  table  presents our statement of  operations  showing  dollar and
percentage changes from 2003 to 2004.
<TABLE>
<CAPTION>
                                        Six Months Ended June 30,      Increase (Decrease)
                                        -------------------------      -------------------
                                          2004            2003              $          %
                                          ----            ----              -          -
<S>                                   <C>             <C>             <C>            <C>
Revenues                              $ 17,358,288    $ 11,677,875    $  5,680,413    48.6%
Cost of goods sold                      12,600,527       8,735,876       3,864,651    44.2
                                      ------------    ------------    ------------   -----
Gross profit                             4,757,761       2,941,999       1,815,762    61.7
Commissions and fees                     4,104,890       2,668,082       1,436,808    53.9
Selling expenses                           299,448         175,063         124,385    71.1
General and administrative expenses      1,425,626         890,236         535,390    60.1
Depreciation and amortization              816,750         351,038         465,712   132.7
Non-cash compensation                         --            43,332         (43,332) (100.0)
                                      ------------    ------------    ------------   -----
Total operating expense                  6,646,714       4,127,751       2,518,963    61.0
Loss from operations                    (1,888,953)     (1,185,752)       (703,201)  (59.3)
Other income (expense) - net              (340,485)       (733,064)        392,579    53.6
                                      ------------    ------------    ------------   -----
Net loss                              $ (2,229,438)   $ (1,918,816)   $    310,622    16.2%
                                      ------------    ------------    ------------   -----
</TABLE>
         Revenues.  Our 2004 revenues  increased  over the 2003 amount due to an
increase in the number of terminals in service and to increasing  our sources of
revenues.  The increase of $5,680,413  represents a 48.6% increase for the first
six months of 2004 compared to 2003.

         Cost of goods  sold.  Our cost of goods sold for the six  months  ended
June 30,  2004 as  percentage  of  revenues  was 72.6%  compared to 74.8% in the
comparable  period in 2003.  Changes  in cost of goods sold as a  percentage  of
revenues are attributable to our mix of sales. Wireless products generally carry
lower  discounts  than long  distance  and  other  products.  In 2004,  wireless
revenues represented 86.6% of revenues compared to 95.1% in 2003.

         Commissions  and fees.  Commissions  and fees for the six months  ended
June 30, 2004 were higher than the comparable period in 2003 due to the increase
in revenues. A component of commissions and fees is a transaction processing fee
paid to LDC for  transactions  processed  through the LDC terminals.  These fees
were approximately  $20,000 in 2004 compared to $90,000 in 2003. These fees have
been  consistently in the range of 1% of gross revenues  processed  through that
system.  Since most of our revenue growth will come from transactions  generated
by the new Qxpress 200  terminal,  these  expenses  are not expected to increase
from their current level in terms of absolute  dollars and will likely  continue
to decrease as existing customers are transitioned to our new terminal.

         Selling  expenses.  Selling  expenses for the six months ended June 30,
2004 increased by approximately $125,000 when compared to 2003. This increase is
a result of  adding  five new sales  personnel  in 2004 and to a new  commission
program  introduced in January 2004. Selling expenses as a percentage of revenue
were relatively flat,  representing  1.7% of revenue in 2004 compared to 1.5% of
revenue in 2003.

         General  and  administrative.   General  and  administrative   expenses
increased by  approximately  $535,000  during the first half of 2004 compared to
the same period in 2003. As a percentage of revenues, such expenses were 8.2% of
revenues 2004 and 7.6% of revenues in 2003.  The increase can be attributed to a
number  of  factors.  Our  general  and  administrative  salaries  and  benefits
increased by $275,000  for the six months  ended June 30, 2004 when  compared to
2003.  This increase is due  approximately  $25,000  higher base salary costs in
2004 compared to 2003, an accrual of $150,000  toward a team bonus program which


                                      -10-
<PAGE>


will be paid according to our  performance  during 2004, an increase in employee
benefit  costs  of  $50,000  and to  $50,000  less in  salaries  eligible  to be
capitalized as software  development costs in 2004 compared to 2003. Other items
contributing to the increase in general and administrative expenses are Board of
Directors' fees and expenses and Directors and Officers insurance  ($65,000) and
an  increase  in  professional  services  such as  legal,  accounting,  investor
relations and consulting fees ($200,000).

         Depreciation and amortization.  Depreciation and amortization  expenses
for the six months ended June 30, 2004 increased by approximately  $465,000 when
compared to 2003. These increases are attributable primarily to the amortization
of  software  development  costs and to  higher  depreciation  expenses  from an
increased number of Qxpress 200 terminals in service.  We also determined in the
fourth  quarter of 2003 to decrease in the expected  useful life of our point of
sale  terminals  from five years to three  years,  causing  higher  depreciation
expenses in the first half of 2004 compared to the same period in 2003.

         Other  expense - net.  Other income and expense  consists  primarily of
interest income,  interest  expense and a loss on disposal of assets.  Net other
expense  for the six  months  ended  June 30,  2004 and 2003 were  $340,000  and
$735,000,  respectively.  Most of this  expense is interest  expense  related to
notes we issued and debentures we sold in 2003. Of the interest expense amounts,
$300,000 for the first half of 2004 and $610,000  for the  comparable  period in
2003 is in the form of  amortization  of discount on these debt  instruments and
therefore does not represent an amount paid in cash.

Liquidity and Capital Resources

         Historically, we have financed our working capital requirements through
cash  flow  from  operations,  the  sale of  equity,  proceeds  from  short-term
borrowings, and proceeds from the sale of convertible debentures and notes.

         In 2003 we entered  into a number of financing  transactions,  the most
significant of which was a registered  public  offering.  The offering closed in
June 2003 and was for 1,265,000 units including the overallotment  option,  each
unit  consisting  of two shares of common  stock and one common  stock  purchase
warrant.  The units were priced at $13.00  each,  yielding us gross  proceeds of
$16.445  million.  Net proceeds to us after  underwriter  discount and estimated
offering costs were approximately $13.6 million.

         Before  completing  this  offering,  we raised a total of $2.7  million
through the sale of (a) a $200,000  unsecured  convertible note due February 28,
2004 and bearing interest at 12%; (b) $1.5 million aggregate principal amount of
secured  convertible  debentures  due  June  30,  2004;  and  (c)  an  unsecured
promissory  note in the original  principal  amount of $1,000,000 due August 31,
2004 bearing interest at 12%.

         We used  these  funds  to  repay  and  cash  collateralize  debt in the
aggregate amount of $3.59 million, decrease current liabilities by $1.1 million,
fund  purchases of capital  equipment and software  development in the amount of
$3.09 million, fund an increase in inventory and accounts receivable of $974,000
and fund our operations.

         In July 2004 we raised $2.4 million in cash from a private placement of
our stock to existing investors.  We sold a total of 600,000 shares at $4.00 per
share. The investors have registration rights for the stock after 180 days. This
additional  capital will be used to fund the cost of new  terminals.  As of June
30, 2004, we have paid for approximately  4,000 new terminals that are available
for orders in coming months. This supply of terminals in inventory will at least
partially defray capital expenditures required in the future.

         As of June 30,  2004,  we had working  capital of  approximately  $3.16
million and a working capital ratio of 3.1 to 1. The funding we received in July
2004 further strengthened these ratios.

         Existing  commitments  for cash in 2004 include  another  6,500 Qxpress
terminals in the amount of $1.8 million,  total  payments of $63,000  toward our
capital and operating leases and payments on a note payable to our former CEO in
the amount of $45,000. We anticipate that our inventory of PINs, which was $1.74
million at June 30, 2004, will continue to grow as our business expands.  Due to
the  short  order  time  required  for these  products,  we are able to keep our
inventory in the range of 10 day's sales. We are also exploring  adding features
to our system to aid in minimizing  PIN inventory  required for  terminals.  Our
future capital  requirements  will also depend both on the rate of growth of our
business and the mix of revenue models that we employ. Models that require us to
maintain a large  inventory of prepaid  products or to continue to own terminals
and/or to invest in transaction  processing  facilities will require  relatively
large  amounts of capital.  The capital  requirements  of a pure service  bureau
model are, in comparison, substantially less.

         At this time we believe our available  resources are sufficient to fund
our operations and capital requirements through the end of 2004.


                                      -11-
<PAGE>


Recent Accounting Pronouncements

         Statement of Financial Accounting Standards SFAS No. 149, "Amendment of
Statement 133 on Derivative  Instruments and Hedging  Activities",  and SFAS No.
150, "Accounting for Certain Financial  Instruments with Characteristics of both
Liabilities  and Equity",  were  recently  issued.  SFAS No, 149 and 150 have no
current  applicability  to us or their effect on the financial  statements would
not have been significant.

















                                      -12-
<PAGE>


PART II

Item 6.  Exhibits and Reports on Form 8-K

a. Exhibits:

Exhibit No.      Description
-----------      -----------

  31.1           Chief Executive Officer Certification pursuant to section
                 302 of the Sarbanes-Oxley Act of 2002.

  31.2           Chief Financial Officer Certification pursuant to section
                 302 of the Sarbanes-Oxley Act of 2002.

  32.1           Chief Executive Officer Certification pursuant to section
                 906 of the Sarbanes-Oxley Act of 2002.

  32.2           Chief Financial Officer Certification pursuant to section
                 906 of the Sarbanes-Oxley Act of 2002.

b. Reports on Form 8-K:

On May 10, 2004, we filed a current report a form 8-K under items 5 and 7.













                                      -13-
<PAGE>


                                   SIGNATURES

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


                                           Q Comm International, Inc.
                                           (Registrant)

Date   September 13, 2004                  /s/Terry D. Kramer
       ------------------                  ------------------
                                           Terry D. Kramer
                                           Chief Executive Officer

Date   September 13, 2004                  /s/ Michael K. Openshaw
       ------------------                  -----------------------
                                           Michael K. Openshaw
                                           Chief Financial Officer
                                           (Principal Accounting Officer)




















                                      -14-