Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2002










<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY




                                    CONTENTS

                                                                           PAGE
                                                                           ----

--       Unaudited Condensed Consolidated Balance Sheets,
            March 31, 2002 and December 31, 2001                            1


--       Unaudited Condensed Consolidated Statements of
            Operations, for the three months ended March 31,
            2002 and 2001                                                   2


--       Unaudited Condensed Consolidated Statements of Cash
             Flows, for the three months ended March 31, 2002
             and 2001                                                     3 - 4


--        Notes to Unaudited Condensed Consolidated Financial
              Statements                                                 5 - 12




<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                        March 31,  December 31,
                                                          2002         2001
                                                      -----------  -----------
CURRENT ASSETS:
     Cash in bank                                     $   313,262   $     2,422
     Certificates of deposit                              100,000       100,000
     Accounts receivable                                   82,350        29,313
     Inventory                                             12,478        22,509
     Prepaid expenses                                      90,000          --
     Deferred taxes                                       303,790       303,790
                                                      -----------   -----------
               Total Current Assets                       901,880       458,034
                                                      -----------   -----------

PROPERTY & EQUIPMENT, net                                 910,601       647,683
                                                      -----------   -----------
OTHER ASSETS:
     Goodwill, net                                        144,580       144,580
     Capitalized software development costs               845,058       636,220
     Deposits                                               3,558         3,558
                                                      -----------   -----------
               Total Other Assets                         993,196       784,358
                                                      -----------   -----------
                                                      $ 2,805,677   $ 1,890,075
                                                      ===========   ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
     Bank overdraft                                   $   391,872   $   188,920
     Accounts payable                                     474,170       758,426
     Accrued expenses                                     119,718       253,268
     Related party obligations                            415,943       413,300
     Notes payable                                        241,033       601,474
     Convertible notes payable - current portion          239,208       237,885
     Capital lease obligation - current portion             5,284         5,044
     Contingent liability                                 159,235       159,235
                                                      -----------   -----------
               Total Current Liabilities                2,046,463     2,617,552
                                                      -----------   -----------
LONG TERM OBLIGATIONS:
     Convertible notes payable                            200,842       211,262
     Capital lease obligation                              19,232        20,645
     Deferred taxes                                       303,790       303,790
                                                      -----------   -----------
               Total Long-term Obligations                523,864       535,697
                                                                    -----------
               Total Liabilities                        2,570,327     3,153,249
                                                      -----------   -----------
STOCKHOLDERS' EQUITY (DEFICIT):
     Common stock, $.001 par value, 50,000,000
       shares authorized, 14,484,488 and 13,089,719
       shares issued and outstanding, respectively         14,485        13,090
     Capital in excess of par value                     5,778,204     4,094,273
     Retained deficit                                  (5,423,689)   (5,235,537)
                                                      -----------   -----------
                                                          369,000     1,128,174
     Less stock subscription receivable                  (133,650)     (135,000)
                                                      -----------   -----------
               Total Stockholders' Equity (Deficit)       235,350    (1,263,174)
                                                      -----------   -----------
                                                      $ 2,805,677   $ 1,890,075
                                                      ===========   ===========

    The accompanying notes are an integral part of these unaudited condensed
                       consolidated financial statements.

                                       1
<PAGE>


                Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



                                                    For the Three
                                                     Months Ended
                                                       March 31,
                                              --------------------------
                                                  2002           2001
                                              -----------    -----------
SALES, net of returns and allowances          $ 6,275,593    $ 1,853,930

COST OF GOODS SOLD                              4,659,069      1,240,724
                                              -----------    -----------
GROSS PROFIT                                    1,616,524        613,206
                                              -----------    -----------
OPERATING EXPENSES:
     Commissions and fees                       1,461,116        516,636
     Selling expenses                              64,017         50,598
     General and administrative                   241,006        287,480
     Depreciation and amortization                 29,099         31,096
                                              -----------    -----------
               Total Operating Expenses         1,795,238        885,810
                                              -----------    -----------
LOSS FROM OPERATIONS                             (178,714)      (272,604)
                                              -----------    -----------
OTHER INCOME (EXPENSE):
     Other income                                   1,315            661
     Interest and other expense                   (12,865)       (21,574)
                                              -----------    -----------
               Total Other Income (Expense)       (11,550)       (20,913)
                                              -----------    -----------
LOSS BEFORE INCOME TAXES
     AND EXTRAORDINARY ITEM                      (190,264)      (293,517)

CURRENT TAX EXPENSE                                  --             --

DEFERRED TAX EXPENSE                                 --             --
                                              -----------    -----------
LOSS BEFORE EXTRAORDINARY ITEM                   (190,264)      (293,517)

EXTRAORDINARY ITEM - Gain on
     extinguishment of debt                         2,112          2,224
                                              -----------    -----------

NET LOSS                                      $  (188,152)   $  (291,293)
                                              -----------    -----------
BASIC LOSS PER COMMON SHARE:
     Loss from continuing operations          $      (.01)   $      (.03)
     Extraordinary item                              --             --
                                              -----------    -----------

BASIC LOSS PER COMMON SHARE                   $      (.01)   $      (.03)
                                              -----------    -----------




 The accompanying notes are an integral part of these unaudited condensed
                    consolidated financial statements.


                                       2
<PAGE>
<TABLE>
<CAPTION>


                             Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                     UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                              For the Three
                                                                              Months Ended
                                                                                March 31,
                                                                       --------------------------
                                                                           2002           2001
                                                                       -----------    -----------
<S>                                                                    <C>            <C>
Cash Flows from Operating Activities:
     Net loss                                                          $  (188,152)   $  (291,293)
     Adjustments to reconcile net
       loss to net cash used by
       operating activities:
        Gain on extinguishment of debt                                      (2,112)        (2,224)
        Loss on disposal of property and equipment                          21,878           --
        Depreciation and amortization expense                               29,099         31,096
        Stock and options/warrants issued for non-cash consideration          --          200,229
        Change in assets and liabilities:
           (Increase) decrease in accounts receivable                      (53,037)       175,549
           Increase in prepaid expenses                                       --         (121,323)
           (Increase) decrease in inventory                                 10,031        (35,640)
           Increase other assets                                              --          (87,518)
           Increase (decrease) in accounts payable                        (218,355)       183,596
           Increase (decrease) in accrued expenses                        (133,550)        53,162
           Increase in related party obligations                             2,643         47,835
                                                                       -----------    -----------
               Net Cash Provided (Used) by Operating Activities           (531,555)       153,469
                                                                       -----------    -----------
Cash Flows from Investing Activities:
     Purchase of property & equipment                                     (377,684)      (203,040)
     Capitalized software development costs                               (208,838)          --
                                                                       -----------    -----------
               Net Cash Used by Investing Activities                      (586,522)      (203,040)
                                                                       -----------    -----------
Cash Flows from Financing Activities:
     Issuance of common stock                                            1,645,575         40,000
     Payment of stock offering costs                                       (48,899)          --
     Net increase in lines of credit                                          --           19,800
     Payments on notes payable                                            (360,441)          --
     Payments on convertible notes payable                                  (9,097)          --
     Payments on capital lease obligation                                   (1,173)          --
     Increase in cash overdraft                                            202,952           --
                                                                       -----------    -----------
               Net Cash Provided by Financing Activities                 1,428,917         59,800
                                                                       -----------    -----------
Net Increase in Cash                                                       310,840         10,229

Cash, Beginning of Period                                                    2,422         97,740
                                                                       -----------    -----------
Cash, End of Period                                                    $   313,262    $   107,969
                                                                       -----------    -----------

Supplemental Disclosures of Cash Flow Information:
     Cash paid during the period for:
       Interestexpense                                                 $    21,618    $     5,565
       Capitalized interest                                            $    18,031    $      --
       Income taxes                                                    $      --      $      --





</TABLE>

                                            3
<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)

Supplemental Schedule of Non-cash Investing and Financing Activities:

     In 2002, the Company issued 50,544 shares of common stock for stock
     offering costs valued at $50,544.

     In 2002, the Company issued 46,632 shares of common stock for future legal
     services valued at $90,000.

     In 2002, the Company issued 43,368 shares of common stock in a cashless
     exercise of a common stock option.

     In 2002, the Company canceled 400,000 shares of common stock which had been
     issued as collateral for a loan.

     In 2001, the Company issued 626,000 shares of common stock for services
     rendered valued at $200,229, including stock offering costs of $87,518 and
     a reduction in accounts payable of $72,719.







              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       4
<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization  - Q Comm  International,  Inc. (the Company) was organized on
     February 7, 1986 as Four Rivers Development,  Inc. This name was changed on
     August  3,  1998 to Q Comm  International  Inc.  in  conjunction  with  the
     purchase of three  operating  companies.  Substantially  all operations are
     conducted through the Company's wholly owned  subsidiary,  Q Comm, Inc. The
     Company  is  headquartered  in Orem,  Utah but  provides  telecommunication
     products  and  services  to end users  throughout  the United  States.  The
     Company has, at the present time,  not paid any dividends and any dividends
     that may be paid in the future will depend upon the financial  requirements
     of the Company and other relevant factors.

     Unaudited  Condensed  Financial  Statements  - The  accompanying  financial
     statements  have been prepared by the Company without audit. In the opinion
     of  management,  all  adjustments  (which  include  only  normal  recurring
     adjustments) necessary to present fairly the financial position, results of
     operations  and  cash  flows  at March  31,  2002  and for all the  periods
     presented have been made.

     Certain information and footnote disclosures normally included in financial
     statements  prepared  in  accordance  with  generally  accepted  accounting
     principles in the United States of America have been  condensed or omitted.
     These condensed financial statements should be read in conjunction with the
     financial  statements and notes thereto included in the Company's  December
     31, 2001 audited  financial  statements.  The results of operations for the
     periods ended March 31, 2002 and 2001 are not necessarily indicative of the
     operating results for the full year.

     Cash and Cash Equivalents - For purposes of the financial  statements,  the
     Company  considers  all highly  liquid debt  investments  purchased  with a
     maturity of three months or less to be cash equivalents.

     Certificates of Deposits - The Company accounts for investments in debt and
     equity  securities in  accordance  with  Statement of Financial  Accounting
     Standard (SFAS) 115, "Accounting for Certain Investments in Debt and Equity
     Securities".  Under SFAS 115 the  Company's  certificates  of deposit (debt
     securities)  have been classified as  held-to-maturity  and are recorded at
     amortized cost. Held-to-maturity securities represent those securities that
     the  Company  has  both the  positive  intent  and  ability  to hold  until
     maturity.

     Depreciation  and  Amortization - Depreciation of property and equipment is
     provided on the straight-line method over the estimated useful lives of the
     assets of five years.

     Loss Per Share - The Company  computes  loss per share in  accordance  with
     Statement of Financial  Accounting  Standards  (SFAS) No. 128 "Earnings Per
     Share," which  requires the Company to present basic earnings per share and
     dilutive earnings per share when the effect is dilutive (see Note 11).




                                       5
<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Revenue  Recognition - The Company provides  electronic delivery of prepaid
     telecommunication  products through a variety of retail locations.  Revenue
     is  recognized  at the  time  of  product  sale.  Sales  of  the  Company's
     electronic  products and services are generally made directly to end-users.
     There  is no right of  return  for  products  sold and the  Company  is not
     obligated for further  performance after the sale. These sales transactions
     are  accounted  for at "gross"  since the  Company  meets 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).  In the event of sales
     where the Company  does not have  ownership of the product sold and another
     entity has such risk and reward of product  ownership  and/or where certain
     other  requirements  of SAB 101 or EITF  99-19  are not  met,  the  Company
     records revenues on a "net" basis.

     The  Company  also  provides  non-electronic   telecommunication   products
     primarily  to others for  resale.  These  sales are  recorded  net of sales
     discounts and allowances.

     Income Taxes - The Company  accounts for income  taxes in  accordance  with
     Statement of Financial Accounting Standards No. 109, "Accounting for Income
     Taxes."  This  statement  requires  an asset  and  liability  approach  for
     accounting for income taxes.

     Research  and  Development  - Research  and  development  costs are for the
     purpose of new product development and are expensed as incurred.

     Intangible  Assets - During the three  months  ended  March 31,  2002,  the
     Company adopted  Statement of Accounting  Standards No. 142,  "Goodwill and
     Other  Intangible  Assets"  (SFAS  142).  The Company  has  classified  its
     goodwill as an indefinite-life intangible asset and accordingly has stopped
     recording amortization.

     The Company  capitalizes  software  development  costs  incurred to develop
     certain of the  Company's  new  products and  services in  accordance  with
     Statement of Financial  Accounting  Standards No. 86,  "Accounting  for the
     Costs of Computer  Software to Be Sold,  Leased,  or  Otherwise  Marketed".
     Costs are  capitalized  only  after the  technological  feasibility  of the
     project has been established.  In accordance with SFAS 142, the Company has
     recorded its software development costs as a definite-life intangible asset
     and  will  amortize  these  costs  over  five  years  once the  project  is
     completed.

     The Company regularly  reviews the carrying value of intangible  assets. At
     the  time  a  determination  is  made  that  capitalized  amounts  are  not
     recoverable  based on the  estimated  cash flows to be  generated  from the
     asset, any remaining  capitalized  amounts are written off (see Notes 3 and
     4).

     Inventory - Inventory consists of prepaid  telecommunication  products sold
     by the Company and is carried at the lower of cost or market.

     Advertising Costs - Advertising costs are expensed as incurred.  Such costs
     amounted to $5,230 and $4,156  during the three months ended March 31, 2002
     and 2001, respectively.


                                       6
<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Consolidation  - All  intercompany  balances and  transactions  between the
     parent and subsidiary have been eliminated in consolidation.

     Accounting   Estimates  -  The  preparation  of  financial   statements  in
     conformity  with  generally   accepted   accounting   principles   requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and liabilities, the disclosures of contingent assets and
     liabilities  at the  date of the  financial  statements,  and the  reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results could differ from those estimated by management.

     Reclassifications  - Certain  amounts in the financial  statements  for the
     three  months  ended  March 31, 2001 have been  reclassified  to conform to
     headings  and  classifications   used  in  the  March  31,  2002  financial
     statements.

NOTE 2 - PROPERTY & EQUIPMENT

     The following is a summary of property and equipment:

                                                  March 31,    December 31,
                                                    2002           2001
                                                -----------    -----------
                Point of sale equipment         $   942,387    $   702,609
                Office and computer equipment       103,090         88,242
                                                -----------    -----------
                Total cost                        1,045,477        790,851
                Accumulated depreciation           (134,876)      (143,168)
                                                -----------    -----------
                Property & equipment, net       $   910,601    $   647,683
                                                ===========    ===========

     Depreciation expense for the three months ended March 31, 2002 and 2001 was
     $29,099 and $19,868, respectively.

     Included  in the cost of  property  and  equipment  at March 31,  2002 is a
     $400,000 deposit for various components of equipment to be manufactured for
     the Company.

NOTE 3 - GOODWILL

     At March 31, 2002, the Company has $144,580 in goodwill  remaining from the
     acquisition   of   Azore   Acquisition   Corporation   classified   as   an
     indefinite-life  intangible  asset.  In  accordance  with SFAS No. 142, the
     Company  completed its initial test of goodwill for  impairment  during the
     period  ended March 31, 2002.  The Company used the quoted  market price of
     its  common  stock  to test  the  remaining  goodwill  for  impairment  and
     determined that the Company's goodwill was not impaired. Accordingly, there
     was no amortization  expense  recorded for the three months ended March 31,
     2002.

     Previous to the adoption of SFAS No. 142 on January 1, 2002,  the Company's
     goodwill was being  amortized on a  straight-line  basis over the estimated
     useful life of five years, in accordance with Accounting  Principles  Board
     Opinion No. 17,  "Intangible  Assets".  During the three months ended March
     31, 2001, the Company recorded amortization expense of $11,228.


                                       7
<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - GOODWILL (Continued)

     If SFAS No. 142 had been  applied in all periods  presented,  it would have
     the following effects:
<TABLE>
<CAPTION>

                                                          For the Three Months Ended
                                                                    March 31,
                                                            ----------------------
                                                              2002         2001
                                                            ---------    ---------
     <S>                                                    <C>          <C>
     Loss from continuing operations                        $(178,714)   $(272,604)
     Add amortization of assets no longer being amortized        --         11,228
                                                            ---------    ---------
     Adjusted loss from continuing operations               $(178,714)   $(272,604)
                                                            ---------    ---------

     Net loss as reported                                   $(188,152)   $(291,293)
     Add amortization of assets no longer being amortized        --         11,228
                                                            ---------    ---------
     Adjusted net loss                                      $(188,152)   $(280,065)
                                                            ---------    ---------

     Net loss as reported per common share                  $    (.01)   $    (.03)
     Add amortization of assets no longer being amortized        --           --
                                                            ---------    ---------
     Adjusted net loss per common share                     $    (.01)   $    (.03)
                                                            ---------    ---------
</TABLE>

NOTE 4 - CAPITALIZED SOFTWARE DEVELOPMENT COSTS

     During the three  months ended March 31, 2002,  the Company  completed  its
     initial test of capitalized  software  development costs in accordance with
     SFAS No. 142. The Company used the  estimated  future cash flows related to
     its capitalized  software  development costs and determined that such costs
     were not impaired.  The Company has  classified  its  capitalized  software
     development  costs as a  definite-life  intangible  asset.  The capitalized
     costs at March 31, 2002 are related to projects in process and accordingly,
     no amortization expense has been recorded.

     Information  related  to  capitalized  software  development  costs  is  as
     follows:

                Balance, beginning of period            $636,220
                Capitalized during the period            208,838
                                                        --------
                Balance, end of period                  $845,058
                                                        ========

     Of the  balance at March 31,  2002,  approximately  $280,000  was paid to a
     third-party  software  development  company.  The remaining costs represent
     capitalized  internal  costs,  which are  primarily  employee  salaries and
     benefits, and related capitalized interest of approximately $45,000.


                                       8
<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - BANK OVERDRAFT

     The Company  receives payment on  substantially  all its sale  transactions
     through the automated  clearinghouse  system (ACH system) on either a daily
     or weekly basis. Once the payment has been received,  the Company disburses
     funds via the ACH  system  for the cost of  products  sold and  commissions
     according to the  respective  agreements,  generally  ranging from 1-4 days
     after funds are received.  This timing difference  between receipt of funds
     and payment of product costs and commissions  creates an ongoing balance of
     available  funds in the Company's  bank  accounts.  At March 31, 2002,  the
     Company has utilized a portion of this  available  balance in the amount of
     $391,872, which created an overdraft for accounting purposes.

NOTE 6 - RELATED PARTY OBLIGATIONS

     Accrued  Expenses - At March 31, 2002, the Company owes the Chief Executive
     Officer $228,583, principally consisting of unpaid equipment lease expenses
     and deferred salary.

     Notes  Payable - At March 31,  2002,  the Company has notes  together  with
     accrued interest totaling $187,360 payable to the Company's Chief Executive
     Officer. The notes are payable on demand and bear interest at 10%.

NOTE 7 - LONG-TERM DEBT

     Notes Payable - During November 2001, the Company issued a note payable in
     the amount of $200,000, with interest at prime plus 3% (7.75% at March 31,
     2002), due June 1, 2002. The note is collateralized by the Company's
     accounts and intellectual property.

     During December 2000, the Company issued a note payable for $100,000,  with
     interest  payable  monthly at 15% per annum,  due  January  31,  2002.  The
     Company  pledged  400,000 common shares as collateral for the loan.  During
     the three months ended March 31, 2002, the note was repaid according to its
     terms and the shares collateralizing the loan were canceled.

     During  November 2000, the Company issued a note payable for $50,000,  with
     interest at 12% per annum.  The note has a  remaining  balance at March 31,
     2002 of $31,350 and is due November 27, 2002.

     During March 2000, the Company issued a note payable for $50,000.  The note
     bears  interest at 18%, with monthly  payments of $4,950  through May 2002.
     The outstanding balance of the note at March 31, 2002 is $9,683.

     During January 2000, the Company borrowed $292,000 from certain  investors.
     During 2001,  the Company  repaid a total of $120,000 of the borrowings and
     structured the remaining  amount plus accrued interest of $59,446 as a note
     payable in the  amount of  $231,446  with  interest  at 18% per annum,  due
     January 31, 2002.  During the three  months ended March 31, 2002,  the note
     was repaid according to its terms.



                                       9
<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - LONG-TERM DEBT (Continued)

     Convertible  Notes Payable - During November and December 2001, the Company
     borrowed a total of $250,000 in the form of a convertible note payable. The
     outstanding balance of the note may be converted into common stock at $1.25
     per  share  after  one year at the  option of the  holder.  The note  bears
     interest at 14% and requires  monthly  payments of $5,865 through  November
     2006. The note is secured by the Company's  tangible and intangible assets,
     and the proceeds  therefrom.  The outstanding  balance of the note at March
     31, 2002 is $224,561.

     During August 2001, the Company issued $200,000 in convertible  notes which
     may be  converted  to common  stock at $.30 per share at the  option of the
     Company. The note bears interest at 6% and is due May 31, 2002. The note is
     secured by certain  equipment with a remaining book value of  approximately
     $110,000 at March 31, 2002.

NOTE 8 - LITIGATION AND CONTINGENCIES

     During the year ended  December 31,  2000,  the Company  purchased  certain
     software and hardware from an unrelated  party for  $1,000,000,  payable at
     various dates through October 2001.  Subsequently,  the Company  determined
     through due  diligence to exercise  its right of recision  specified in the
     contract  and  return  the  items to the  seller.  Under  the  terms of the
     contract,  the Company  may be liable for  amounts due the seller  prior to
     notification of termination.  Management of the Company believes the amount
     that will ultimately be paid to the seller, if any, is not determinable but
     will be immaterial to the financial statements at March 31, 2002.

     During the year ended December 31, 1999, the Company sold certain  services
     to a third  party who in turn sold these  services to  consumers.  When the
     third  party  failed  to  deliver  as  anticipated,  some of the  consumers
     reversed the charges  that had been made on their  credit card  accounts to
     purchase the services.  These reversals were ultimately  covered by charges
     made  to the  Company's  merchant  account  with a  bank,  resulting  in an
     overdraft of that account. The Company,  under the agreement with the third
     party, is entitled to be reimbursed 50% of the amount of the  charge-backs.
     During 2000, the bank filed suit claiming  damages of $175,477.  Management
     of the Company believes the bank reversed charges that should not have been
     under the terms and  conditions of the  consumers'  agreement and therefore
     disputes the bank's claim.

     At March  31,  2002,  the  Company's  CEO was  party to a suit in which the
     plaintiff claims the CEO agreed to sell to the plaintiff  300,000 shares of
     the  Company's  common  stock at $.03 per share.  The Company has agreed to
     indemnify  the CEO by replacing  his shares  through the issuance of shares
     from treasury if the plaintiff is successful in his claim.

     During  January 2002, the Company filed an action against an individual for
     non-payment of funds owed for the purchase of common stock in the amount of
     $135,000.  The  outstanding  balance owed is reflected in the  accompanying
     financial statements as an offset to stockholders' equity.

     The Company has recorded a contingent  liability in  connection  with these
     matters.


                                       10
<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - CAPITAL STOCK

     A summary of common stock  transactions  for the three-month  periods ended
     March 31, 2002 and 2001 is as follows:

     During  February  2002,  the Company sold  2,000,000  shares of  restricted
     common stock at $1.00 per share through  private  placements for $1,839,225
     cash and $160,775 in  subscriptions  receivable.  Stock  offering  costs of
     approximately  $99,000 were recorded in connection with the sale, including
     50,544 shares of restricted common stock valued at $1.00 per share.

     During February 2002, the Company issued 25,000 shares of restricted common
     stock upon the exercise of stock options at $.60 per share ($15,000).

     During February 2002, the Company issued 43,368 shares of common stock upon
     the cancellation of 90,000 stock options at $1.00 per share.

     During  February 2002, the Company issued 46,632 shares of common stock for
     future legal services at $1.93 per share ($90,000).

     During  January 2002, the Company  canceled  400,000 shares of common stock
     which had been issued as collateral for a loan.

     During  February  2001,  the Company  issued  133,333  shares of restricted
     common stock at $.30 per share ($40,000).

     During February and March 2001, the Company issued 626,000 shares of common
     stock (526,000 of which were restricted) for legal, consulting services and
     finders  fees at $.28 to $.39 per share  ($200,229,  including  $87,518  in
     stock offering costs).

NOTE 10 - STOCK OPTIONS

     At March 31,  2002,  the  Company  has  outstanding  3,750,000  options  to
     employees under various  agreements with exercise prices ranging from $1.00
     to $1.56 per share,  expiring  between May 2005 and December  2006.  Of the
     options  outstanding at March 31, 2002,  2,190,782 are vested and 1,030,000
     are exercisable.  During the three months ending March 31, 2002, no options
     were granted or exercised and 40,000 options expired.

     At March 31, 2002, the Company has  outstanding  2,113,112 stock options to
     non-employees  under various  agreements  with exercise prices ranging from
     $.40 to $1.50 per share,  expiring  between  June 2003 and  November  2008.
     During  the  three  months  ended  March 31,  2002,  115,000  options  were
     exercised by  non-employees  at prices ranging from $.60 to $1.00 per share
     and 345,271 options expired or were canceled.


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<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - LOSS PER SHARE

     The  following  data show the amounts used in computing  loss per share and
     the weighted  average number of shares of common stock  outstanding for the
     three months presented:

                                                    For the Three Months Ended
                                                             March 31,
                                                   ----------------------------
                                                       2002            2001
                                                   ------------    ------------
     Loss from continuing operations available
       to common shareholders (numerator)          $   (190,264)   $   (293,517)
                                                   ------------    ------------

     Gain on extinguishment of debt  (numerator)   $      2,112    $      2,224
                                                   ------------    ------------
     Weighted average number of common
       shares outstanding during the period
       used in per share calculations (denominator)  13,453,771       9,469,810
                                                   ------------    ------------

     Because the Company  incurred  losses for the three  months ended March 31,
     2002 and  2001,  the  effect  of  options/warrants  and  convertible  notes
     totaling 6,795,362 and 3,739,716 equivalent shares, respectively,  has been
     excluded  from  the loss  per  share  computation  as its  impact  would be
     antidilutive.

NOTE 12 - GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles, which contemplate continuation of
     the  Company  as  a  going  concern.  However,  the  Company  has  incurred
     significant  losses in recent years,  has current  liabilities in excess of
     current assets and has not yet been successful in  establishing  profitable
     operations.  These factors raise substantial doubt about the ability of the
     Company to continue as a going concern. In this regard, management plans to
     raise   additional   funds  through  debt  and/or   equity   offerings  and
     substantially  increase sales.  There is no assurance that the Company will
     be successful in achieving profitable operations.  The financial statements
     do not include any adjustments  that might result from the outcome of these
     uncertainties.




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