SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

                        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.)

                   1145 South 1680 West, Orem, Utah 84058-4930
                     (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 November 4, 2003, there were 3,995,250 shares of common stock outstanding.

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




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                                    Q COMM INTERNATIONAL, INC.
                                        FORM 10-QSB REPORT

                                        September 30, 2003

                                        TABLE OF CONTENTS

                                                                                            PAGE
PART I - FINANCIAL INFORMATION
<S>      <C>
         Item 1.  Interim condensed financial statements (unaudited)

                Condensed Consolidated Balance Sheets, September 30, 2003 (unaudited)
                and December 31, 2002                                                         1

                Unaudited Condensed Consolidated Statements of Operations, for the three
                and nine months ended September 30, 2003 and 2002                             2

                Unaudited Condensed Consolidated Statements of Cash Flows, for the nine
                months ended September 30, 2003 and 2002                                      3

                Notes to Unaudited Condensed Consolidated Financial Statements                5

         Item 2. Management's Discussion and Analysis or Plan of Operation                   12

         Item 3. Controls and Procedures                                                     17

PART II - OTHER INFORMATION

         Item 1. Legal Proceedings                                                           18

         Item 2. Changes in Securities and Use of Proceeds                                   18

         Item 6. Exhibits and Reports on Form 8-K                                            18

SIGNATURES                                                                                   19

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<PAGE>

Item 1.  Interim condensed financial statements (unaudited)


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                           Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                              CONDENSED CONSOLIDATED BALANCE SHEET

                                                                (Unaudited)
                                                                September 30,     December 31,
                                                                    2003              2002
                                                                ------------      ------------
<S>                                                             <C>               <C>
                                       ASSETS
Current Assets:
   Cash in bank                                                 $  9,244,931      $    115,609
   Restricted cash                                                 1,620,583              --
   Accounts receivable, net                                          382,153            51,699
   Inventory                                                         561,384           165,491
   Deferred taxes                                                    539,228           539,228
                                                                ------------      ------------
     Total Current Assets                                         12,348,279           872,027
                                                                ------------      ------------

Property & Equipment, net                                          1,524,115           522,598
                                                                ------------      ------------
Deposits on Equipment to be Purchased                                896,167           512,904
                                                                ------------      ------------
Other Assets:
   Capitalized software development costs, net                     1,491,634         1,330,053
   Goodwill, net                                                     144,580           144,580
   Deferred stock offering costs                                        --              67,115
   Deposits                                                           26,587            24,074
                                                                ------------      ------------
     Total Other Assets                                            1,662,801         1,565,822
                                                                ------------      ------------
     Total Assets                                               $ 16,431,362      $  3,473,351
                                                                ------------      ------------
                        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Bank overdraft                                                  $     74,102      $    595,544
   Accounts payable                                                  710,147         1,229,701
   Accrued expenses                                                  480,016           226,635
   Notes payable                                                        --              31,350
   Convertible notes and debentures - current portion (net)        1,191,487            43,557
   Capital lease obligations - current portion                        28,560             5,892
   Related party obligations - current portion                        15,759
   Contingent liabilities                                            359,235           359,235
                                                                ------------      ------------
     Total Current Liabilities                                     2,859,306         2,491,914
                                                                ------------      ------------
Long-term Obligations:
   Convertible notes payable                                            --             167,690
   Capital lease obligations                                          40,194            14,754
   Related party obligations                                         244,933           410,692
   Deferred taxes                                                    539,228           539,228
                                                                ------------      ------------
     Total Long-term Obligations                                     824,355         1,132,364
                                                                ------------      ------------
     Total Liabilities                                             3,683,661         3,624,278
                                                                ------------      ------------
Stockholders' Equity (Deficit):
   Common stock, $.001 par value, 50,000,000 shares
     authorized, 3,995,250 and 1,268,443 shares
     issued and outstanding, respectively                              3,995             1,268
   Capital in excess of par value                                 23,812,400         7,511,857
   Retained deficit                                              (10,980,817)       (7,533,102)
                                                                ------------      ------------
                                                                  12,835,578           (19,977)
   Less stock subscription receivable                                (87,877)         (130,950)
                                                                ------------      ------------
     Total Stockholders' Equity (Deficit)                         12,747,701          (150,927)
                                                                ------------      ------------
     Total Liabilities and Stockholders' Equity (Deficit)       $ 16,431,362      $  3,473,351
                                                                ------------      ------------

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

                                               1

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                                   Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                                     CONSOLIDATED STATEMENTS OF OPERATIONS



                                                 For the Three Months              For the Nine Months
                                                 Ended September 30,               Ended September 30,
                                           ------------------------------      ------------------------------
                                              2003               2002             2003               2002
                                           ------------      ------------      ------------      ------------
<S>                                        <C>               <C>               <C>               <C>
Revenues                                   $  6,767,516      $  5,640,639      $ 18,445,391      $ 19,070,257

Cost of Goods Sold                            5,011,059         4,227,654        13,746,935        14,188,967
                                           ------------      ------------      ------------      ------------
Gross Profit                                  1,756,457         1,412,985         4,698,456         4,881,290
                                           ------------      ------------      ------------      ------------
Operating Expenses:
   Commissions and fees                       1,593,930         1,282,201         4,262,012         4,442,659
   Selling expenses                             157,210            92,616           332,273           221,767
   General and administrative expenses          398,621           322,330         1,288,857           806,347
   Depreciation and amortization                190,754            30,742           541,792            90,024
   Non-cash compensation                         21,666           450,000            64,998           450,000
                                           ------------      ------------      ------------      ------------
     Total Operating Expenses                 2,362,181         2,177,889         6,489,932         6,010,797
                                           ------------      ------------      ------------      ------------
Loss from Operations                           (605,724)         (764,904)       (1,791,476)       (1,129,507)
                                                                                                 ------------
                                           ------------      ------------      ------------      ------------
Other Income (Expense):
   Other Income                                  20,440                52            20,536             3,950
   Interest and Other Expense                  (943,615)          (18,468)       (1,676,775)          (42,019)
                                           ------------      ------------      ------------      ------------
     Total Other Income (Expense)              (923,175)          (18,416)       (1,656,239)          (38,069)
                                           ------------      ------------      ------------      ------------
Loss Before Income Taxes                     (1,528,899)         (783,320)       (3,447,715)       (1,167,576)

Income Tax Expense                                 --                --                --                --
                                           ------------      ------------      ------------      ------------
Net Loss                                   $ (1,528,899)     $   (783,320)     $ (3,447,715)     $ (1,167,576)
                                           ------------      ------------      ------------      ------------
Basic Loss per Common Share                $      (0.39)     $      (0.81)     $      (1.53)     $      (1.16)
                                           ------------      ------------      ------------      ------------







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

                                                       2
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                               Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                              For the Nine Months
                                                                              Ended September 30,
                                                                        ------------------------------
                                                                            2003              2002
                                                                        ------------      ------------
<S>                                                                     <C>               <C>
Cash Flows from Operating Activities:
   Net loss                                                             $ (3,447,715)     $ (1,167,576)
     Adjustments to reconcile net loss to
     net cash used by operating activities:
       Loss on disposal of property and equipment                             11,818            21,878
       Depreciation and amortization                                         541,792            90,024
       Amortization of discount on debentures and notes                    1,436,941              --
       Non-cash compensation                                                  64,998           450,000
       Change in assets and liabilities:
         (Increase) decrease in accounts receivable                         (330,454)           17,895
         Increase in inventory                                              (395,893)          (53,502)
         Increase in other assets                                             (2,513)           (9,975)
         Increase (decrease) in accounts payable                            (519,554)          207,671
         Increase (decrease) in accrued liabilities                          188,383           (44,413)
                                                                        ------------      ------------
           Net Cash Used by Operating Activities                          (2,452,197)         (487,998)
                                                                        ------------      ------------
Cash Flows from Investing Activities:
   Increase in restricted cash                                            (1,620,583)             --
   Decrease in certificates of deposit                                          --             100,000
   Purchase of property and equipment, including equipment deposits       (1,575,645)         (473,753)
   Capitalized software development costs                                   (524,326)         (712,022)
                                                                        ------------      ------------
           Net Cash Used by Investing Activities                          (3,720,554)       (1,085,775)
                                                                        ------------      ------------
Cash Flows from Financing Activities:
   Issuance of common stock                                               16,465,000         2,410,125
   Cash received from subscription receivable                                 43,073              --
   Payment of stock offering costs                                        (2,740,069)         (104,599)
   Proceeds from notes and debentures                                      2,700,000              --
   Payments on convertible notes and debentures                             (511,247)         (227,993)
   Payment on notes payable                                                  (31,250)         (570,124)
   Proceeds from capital leases                                               66,992              --
   Payments on capital lease obligations                                     (18,884)           (4,136)
   Increase in (payments on) related party obligations                      (150,000)            7,597
   Decrease in bank overdraft                                               (521,442)          176,069
                                                                        ------------      ------------
           Net Cash Provided by Financing Activities                      15,302,073         1,686,939
                                                                        ------------      ------------
Net Increase in Cash                                                       9,129,322           113,166

Cash, Beginning of Period                                                    115,609             2,422
                                                                        ------------      ------------
Cash, End of Period                                                     $  9,244,931      $    115,588
                                                                        ------------      ------------
Supplemental Disclosures of Cash Flow Information:
   Cash paid during the period for:
   Interest expense                                                     $     87,996      $      8,938
   Capitalized interest                                                 $       --        $     41,543
   Income taxes                                                         $       --        $       --









                                                   3


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<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)

Supplemental Schedule of Non-cash Investing and Financing Activities:


                  For the nine months ended September 30, 2003:

The Company issued 169,231 shares of common stock and warrants to purchase
169,231 shares of common stock in connection with the sale of convertible
debentures. The stock and warrants were valued at an aggregate of $1,500,000. Of
this amount, $826,056 was amortized to interest expense during the period and
$674,944 is unamortized.

The Company issued 24,242 shares of common stock in connection with the sale of
a convertible note. The common stock was valued at $145,454. The note was repaid
during the period and the amount was recorded as interest expense.

The Company issued warrants to purchase 238,095 shares of common stock in
connection with a note payable. The warrants were valued at $1,000,000. Of this
amount, $466,431 was amortized to interest expense during the period and
$533,569 is unamortized.


                  For the nine months ended September 30, 2002:

The Company issued 100,000 shares of common stock for investor relations
services valued at $450,000.

The Company issued 4,948 shares of common stock for stock offering costs valued
at $74,217.

The Company issued 3,109 shares of common stock for future legal services valued
at $90,000.

The Company issued 5,016 shares of common stock in cashless exercises of common
stock options.

The Company canceled 26,667 shares of common stock, which had been issued as
collateral for a loan.






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

                                        4


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                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       Nature of Business - The Company's business involves purchasing and
       reselling prepaid telecommunication and other products through a
       proprietary electronic point-of-sale activation system. The Company
       provides its products to end users throughout the United States as well
       as Canada, France, Australia and Puerto Rico. The Company has 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. Substantially all operations are conducted through the Company's
       wholly owned subsidiary, Q Comm, Inc. The Company is headquartered in
       Orem, Utah.

       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 September 30, 2003 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, 2002 audited financial statements. The results
       of operations for the periods ended September 30, 2003 and 2002 are not
       necessarily indicative of the operating results for the full year.

       Cash and Cash Equivalents - For purposes of the financial statements, the
       Comp any considers all highly liquid debt investments purchased with an
       original maturity of three months or less to be cash equivalents.
       Approximately $127,000 of our cash was insured by the Federal Deposit
       Insurance Corporation and the remainder was uninsured.

       Accounts Receivable - Accounts receivable consists of trade receivables
       arising in the normal course of business. At September 30, 2003, the
       Company has established an allowance for doubtful accounts of
       approximately $24,600, which reflects the Company's best estimate of
       probable losses in the accounts receivable balance. The Company
       determines the allowance based on the status and age of the accounts,
       historical experience, and other currently available evidence. Amounts
       written off as bad debt for the periods presented are insignificant.

       Inventory - Inventory consists of prepaid telecommunication products sold
       by the Company and is carried at the lower of cost or market value on the
       first-in, first-out method.

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

       Intangible Assets - During the year ended December 31, 2002, the
       Company adopted Statement of Financial Accounting Standards No. 142,
       "Goodwill and Other Intangible Assets" (SFAS No. 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 No. 142, the
       Company has recorded its software development costs as a definite-life
       intangible asset is amortizing these costs over the estimated useful life
       of the software of three years.

       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, the difference between the carrying amount and the estimated
       valued based on cash flows are written off. (See Notes 3 and 4).

       Revenue Recognition - The Company provides electronic delivery of prepaid
       telecommunication products through a variety of retail locations. Revenue
       is recognized at the time products are sold. Sales of the Company's
       products 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 generates revenue from the sale or rental of terminals,
       minimum performance fees and sales of other products. These sales are
       recorded net of sales discounts and allowances.

       Cost of Goods Sold - The cost of goods sold is primarily the cost of the
       prepaid telecommunication and other miscellaneous products sold at retail
       as well as the cost of terminals sold to merchants. The full cost of the
       product, as well as all direct costs associated with the sale of the
       product, are recorded at the time of sale. Cost of goods sold does not
       include commissions and fees paid to brokers and other intermediaries and
       transaction processing fees paid to a third party.


                                        5


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                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

       Loss Per Share - The Company computes loss per share in accordance with
       Statement of Financial Accounting Standards No. 128 "Earnings Per Share,"
       which requires the Company to present basic earnings per share and
       dilutive earnings per share when the effect of options/warrants and
       convertible notes is dilutive. (See Note 12).

       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.

       Stock Options - In December 2002, the Financial Accounting Standards
       Board (FASB) issued SFAS No. 148, "Accounting for Stock-Based
       Compensation -- Transition and Disclosure, an amendment of FASB Statement
       No. 123" (SFAS 148). This Statement amends SFAS 123 to provide
       alternative methods of transition for a voluntary change to the fair
       value method of accounting for stock-based employee compensation. In
       addition, SFAS 148 amends the disclosure requirements of SFAS 123 to
       require prominent disclosures in both annual and interim financial
       statements. Certain of the disclosure modifications are required for
       fiscal years ending after December 15, 2002 and are included in the notes
       to these consolidated financial statements.

       The Company has stock option plans that provide for stock-based employee
       compensation, including the granting of stock options, to certain key
       employees. The plans are more fully described in Note 11 The Company
       accounts for the stock options plans in accordance with the recognition
       and measurement principles of APB Opinion No. 25, "Accounting for Stock
       Issued to Employees", and related Interpretations. Under this method,
       compensation expense is recorded on the date of grant only if the current
       market price of the underlying stock exceeded the exercise price.

       During the periods presented in the accompanying financial statements,
       the Company has granted options under the 2000 and 2002 Stock Options
       Plans. The Company has adopted the disclosure-only provisions of
       Statement of Financial Accounting Standards No. 123, "Accounting for
       Stock-Based Compensation." Accordingly, no compensation cost under SFAS
       No. 123 has been recognized for the stock option plans or other
       agreements in the accompanying unaudited statements of operations. Had
       compensation cost for the Company's stock option plans and agreements
       been determined based on the fair value at the grant date for awards in
       2003 and 2002 consistent with the provisions of SFAS No. 123, the
       Company's net loss and basic loss per share would have been reduced to
       the pro forma amounts indicated below:
<TABLE>
<CAPTION>

                                                                For the Three Months             For the Nine Months
                                                                Ended September 30,              Ended September 30,
                                                          -----------------------------     ---------------------------
                                                             2003               2002          2003              2002
                                                          -----------        ---------      ----------       ---------
             <S>                                        <C>                 <C>           <C>             <C>
             Net loss, as reported                      $(1,528,899)        $(783,320)    $(3,447,715)    $(1,167,576)

             Add: Stock-based employee compensation
               expense included in employee income               -                  -              -                -
             Deduct: Total stock-based employee
               compensation expense determined under
               fair value based method                     (255,476)         (123,542)       (766,429)       (370,626)
                                                          ----------        ----------      ----------      ----------
             Pro forma net loss                         $(1,784,375)        $(906,862)    $(4,214,144)    $(1,538,202)
                                                          ----------        ----------      ----------      ----------
             Basic loss per share As reported               $(.39)            $(.81)           $(1.53)        $(1.16)
                                  Pro forma                 $(.45)            $(.94)           $(1.87)        $(1.52)

</TABLE>


       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 in the United
       States of America 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
       nine months ended September 30, 2002 have been reclassified to conform to
       headings and classifications used in the September 30, 2003 financial
       statements.

       Recently Enacted Accounting Standards - Statement of Financial
       Accounting Standards ("SFAS") No. 146, "Accounting for Costs
       Associated with Exit or Disposal Activities" and SFAS No. 147,
       "Acquisitions of Certain Financial Institutions - an Amendment of FASB
       Statements No. 72 and 144 and FASB Interpretation No. 9". SFAS No. 146
       and 147 have no current applicability to the Company or their effect
       on the financial statements would not have been significant.

       Reverse Stock Split - All references to the number of shares, price per
       share, and earnings per share have been retroactively adjusted to reflect
       a 1-for-15 reverse stock split that was effective June 4, 2003.


                                        6

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                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - PROPERTY & EQUIPMENT

       The following is a summary of property and equipment:

                                                    September 30,   December 31,
                                                        2003           2002
                                                    -----------    -----------
                  Point of sale equipment            $1,744,443    $   622,057
                  Office and computer equipment         161,039        140,349
                                                     ---------      ---------
                  Total cost                          1,905,482        762,406
                  Accumulated depreciation            (381,367)       (239,808)
                                                     ---------      ---------
                  Property & equipment, net          $1,524,115       $522,598
                                                     ---------      ---------

       Depreciation expense for the three months ended September 30, 2003 and
       2002 was $69,839 and $30,742, respectively, and for the nine months ended
       September 30, 2003 and 2002 was $179,047 and $79,196, respectively.

NOTE 3 - GOODWILL

       At September 30, 2003, the Company had $144,580 in goodwill remaining
       from a purchase acquisition 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 year ended December 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 during the nine months ended September 30, 2003 and 2002.

NOTE 4 - CAPITALIZED SOFTWARE DEVELOPMENT

       Information related to capitalized software development costs at
       September 30, 2003 is as follows:

                    Capitalized software, January 1, 2003       $1,450,968
                    Capitalized during the period                  524,326
                                                                ---------
                    Capitalized software, September 30, 2003     1,975,294
                    Accumulated amortization                     (483,660)
                                                                ---------
                    Capitalized software, net                   $1,491,634
                                                                ---------
       Of the balance at September 30, 2003, approximately $500,000 was paid to
       a third-party software development company and other outside entities.
       The remaining costs represent capitalized internal costs, which are
       primarily employee salaries and benefits, and related capitalized
       interest of approximately $100,000.

       During the year ended December 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 project was
       placed in service during September 2002, and the Company began recording
       amortization expense. During the nine months ended September 30, 2003,
       the Company recorded amortization expense of $362,745.

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 (float) in the Company's bank
       accounts. The Company utilized a portion of this available balance at
       September 30, 2003 in the amount of $74,102, which created an overdraft
       in the Company's books and records while the balance on the bank's
       records was positive.







                                        7



<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - RELATED PARTY OBLIGATIONS

       At December 31, 2002 the Company owed its CEO a total of $410,692
       consisting principally of unpaid equipment lease expenses, deferred
       salary, notes payable and accrued interest. In February 2003 the amounts
       were combined into a single note payable due the earlier of December 31,
       2007 or upon a change in control of the Company or a sale or liquidation
       of the Company's assets. Interest on the note is at 10% and is calculated
       on the outstanding amount retroactive to January 1, 2003. Pursuant to the
       terms of the note, $150,000 was paid to the CEO in July 2003 out of the
       proceeds from the public offering that was effective June 24, 2003. (See
       Note 13). In addition, all accrued but unpaid interest on the note
       through June 30, 2004 will be due on that date and, beginning July 31,
       2004 monthly payments in the amount required to fully amortize the
       remaining principal amount of the note and interest by December 31, 2007
       will begin. At September 30, 2003 the outstanding balance of the note was
       $260,692.

       For the three months ended September 30, 2003 and 2002, the Company
       recorded interest expense on the notes of $10,267 and $2,413,
       respectively, and for the nine months ended September 30, 2003 and 2002,
       the Company recorded interest expense on the notes of $30,801 and
       $10,062, respectively.

NOTE 7 - LONG-TERM DEBT

       NOTES PAYABLE
       During November 2000, the Company issued an unsecured note payable for
       $50,000 with interest at 12% and a due date of November 27, 2001. The due
       date was later partially repaid and extended to November 30, 2003. In
       connection with obtaining the note, the Company issued options to
       purchase 1,667 shares of common stock at $9.00 per share expiring
       November 2003, with demand registration rights. The Company repaid the
       remaining balance of the note of $31,150 and related accrued interest of
       $2,247 during the period ended September 30, 2003.

       During May 2003, the Company issued a note payable in the amount of
       $1,000,000 with interest at 12%, due August 31, 2004. In connection with
       the note, the Company issued warrants to purchase 238,095 shares of
       restricted common stock, which were valued at $1,264,285 using the
       Black-Scholes pricing model and the following assumptions: $5.25 exercise
       price, $6.50 underlying stock price, 132% volatility, 3.5 year expected
       life, 1.67% risk free interest rate and expected dividend yield of zero.
       The value of the warrants was reduced to the $1,000,000 note amount and
       recorded as a discount against the note and will be amortized as interest
       expense over the term of the note. The unamortized discount at September
       30, 2003 was $533,569 and is offset against the outstanding balance of
       the note in the accompanying unaudited balance sheet.

       CONVERTIBLE NOTES AND DEBENTURES
       During November and December 2001, the Company borrowed a total of
       $250,000 in the form of a convertible note, with interest at 14% and
       monthly payments of $5,865 through November 2006. In connection with the
       note, the Company issued warrants for the purchase of 10,000 shares of
       common stock at $18.75 per share, expiring in 2008. The exercise price of
       the warrants was later reduced to $11.25. The Company repaid the
       remaining balance of the note of $190,195 during the period ended
       September 30, 2003.

       In January 2003, the Company issued a 12% unsecured convertible note with
       a principal amount of $200,000, due February 28, 2004. The Company also
       issued 24,242 shares of restricted common stock, which were valued at
       $145,454 or $6.00 per share, the value of similar restricted common
       shares sold for cash. The Company repaid the note together with accrued
       interest totaling $211,769 and recorded the discount as interest expense
       during the period ended September 30, 2003.

       From February through April 2003, the Company issued (a) 12% secured
       convertible debentures due March 31, 2004 in the aggregate principal
       amount of $1.5 million, (b) 169,231 shares of restricted common stock and
       (c) warrants to purchase 169,231 shares of common stock. The total amount
       raised by the Company from the sale of these securities was $1.5 million.
       The debentures are secured by a lien on all of the Company's assets. The
       conversion price on the debentures is $6.50 and the exercise price of the
       warrants is $9.75. The exercise price and the number of shares covered by
       the warrants will be adjusted in the case of stock splits, stock
       combinations, stock dividends, mergers and consolidations and stock
       issuances at a discount to the market price of the stock.

       The Company may prepay the debentures without premium or penalty after
       giving the holders thereof 90 days prior written notice. Such notice may
       be given at any time after the debentures have been outstanding for nine
       months. Alternatively, the Company has the right to prepay the debentures
       at any time by paying a 35% premium. The completion of the Company's
       public offering gave the holders the right to demand prepayment at any
       time out of the escrow described below. During the period ended September
       30, 2003, $100,000 of the debentures was repaid under the holder's right
       for prepayment. Subsequent to September 30, 2003, and additional $180,000
       was repaid under such rights.





                                        8



<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - LONG-TERM DEBT (Continued)

       On July 1, 2003, in accordance with the terms of the agreements relating
       to the issuance of the convertible debentures, the Company transferred
       $1.725 million out of the proceeds of the public offering that was
       effective June 24, 2003 to an escrow agent as collateral security for the
       repayment of the debentures. This amount is shown as "Restricted cash" in
       the accompanying unaudited balance sheet. As a result, interest on the
       debentures is accruing at a rate equal to the prime rate, currently 4%.
       The Company also agreed to file a registration statement on behalf of the
       holders of the debentures covering the shares issuable upon conversion of
       the debentures as well as the shares issued to them in connection with
       their purchase of the debentures and the shares issuable upon exercise of
       the warrants issued in connection with the debentures. A registration
       statement on Form S-3 was filed by the Company on July 9, 2003 and was
       declared effective on August 4, 2003. As a result, the lien on the
       Company's assets in favor of the debenture holders was terminated.

       The 169,231 restricted common shares were valued at $1,015,386, or $6.00
       per share, the value of similar restricted common shares sold for cash.
       The 169,231 warrants were valued at $845,562 using the Black-Scholes
       pricing model and the following assumptions: $14.63 exercise price, $6.00
       underlying stock price, 140% volatility, five year expected life, 2.9%
       risk free interest rate and expected dividend yield of zero. The value of
       the shares and warrants were reduced on a pro-rata basis to the $1.5
       million in debentures and recorded as a discount against the debentures,
       and will be amortized as interest expense over the term of the
       debentures. The unamortized discount at September 30, 2003 was $674,944
       and is offset against the outstanding balance of the debentures in the
       accompanying unaudited balance sheet.

NOTE 8 - LEASES

       During 2001, the Company entered into a capital lease for the purchase of
       certain computer equipment. The lease requires monthly payments of $820
       through September 2005 and has an outstanding principal balance at
       September 30, 2003 of $15,111. The lease is collateralized by equipment
       with a remaining book value of approximately $15,000 at September 30,
       2003. Depreciation expense of $7,172 was recognized on this equipment
       during each of the periods ended September 30, 2003 and 2002.

       In January 2003, the Company entered into a capital lease for certain
       equipment. The lease requires monthly payments of $2,842 through January
       2006 and has an outstanding principal balance of $51,452 at September 30,
       2003. The lease is collateralized by equipment with a remaining book
       value of approximately $50,000 at September 30, 2003. Depreciation
       expense of $9,750 was recognized on this equipment during the nine months
       ended September 30, 2003.

       The Company leases office and warehouse space under an operating lease
       agreement with an expiration date of December 31, 2003. The Company's
       future minimum rental under this operating lease amounts to $9,900 at
       September 30, 2003.

NOTE 9 - LITIGATION AND CONTINGENCIES

       In 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 believes the bank
       reversed charges that should not have been reversed under the terms and
       conditions of the consumers' agreement and therefore disputes the bank's
       claim.

       At September 30, 2003, the Company's CEO was party to a suit in which the
       plaintiff claims the CEO agreed to sell to the plaintiff 20,000 shares of
       the Company's common stock at $.45 per share. The CEO disputes the
       plaintiff's claim that this option is valid. Since the CEO's actions were
       for the benefit of the Company, the Board of Directors has agreed to
       indemnify the CEO by replacing his shares through the issuance of shares
       from treasury or otherwise compensate the CEO for any monetary loss if
       the plaintiff is successful in his claim. In March 2003, the court
       granted the plaintiff's motion for partial summary judgment. In August
       2003 the court awarded damages of approximately $493,000 to the
       plaintiff, including interest. The CEO is currently in the process of
       appealing this decision as well as the method used to calculate the
       plaintiff's loss. The Company has posted a bond ensuring payment of the
       eventual damage awarded in this case after the appeal has been heard.

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

       In 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 Company has been awarded summary judgment in this matter
       and expects to receive the remaining outstanding amount, which was
       $87,877 at September 30, 2003. This amount is reflected in the
       accompanying unaudited balance sheet as an offset to stockholders'
       equity.

       In December 2002, the Company granted a total of 43,334 shares of
       restricted common stock as a bonus payable to four executives and key
       employees. 21,667 of the shares were for past services and are
       distributable anytime after January 31, 2003 at the election of the
       employee. These 21,667 shares were valued at $130,000 and recorded as
       non-cash compensation during the year ended December 31, 2002. The
       remaining 21,667 shares are to be issued in June 2004 or upon a change in
       control of the Company. The employee must remain in the continuous
       employment of the Company until the time the shares become distributable
       in order to receive them. During the nine months ended September 30,
       2003, the Company accrued $64,998 in non-cash compensation related to
       these agreements based on a price per share of common stock at the time
       of grant of $6.00.

                                        9


<PAGE>


                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - CAPITAL STOCK

       A summary of common stock transactions for the periods ended September
       30, 2003 and 2002 is as follows:

                      Nine Months Ended September 30, 2003

       The Company sold 1,265,000 units in an underwritten public offering for
       $16,445,000 in cash, or $13.00 per unit. (See Note 13). Underwriter
       discount and offering costs of $2,809,714 were recognized on the sale.
       Each unit consisted of two shares of common stock and a warrant to
       purchase one share of common stock for $9.75 per share, expiring in 2008.
       The stock and the warrants included in the units traded only as a unit
       for the first 30 days following the effective date of the offering, after
       which the units were delisted and the stock and warrants included in the
       units began trading separately.

       The Company sold 3,333 shares of restricted common stock at $6.00 per
       share through a private placement for $20,000 in cash.

       The Company issued 24,242 shares of restricted common stock in connection
       with a convertible note in the amount of $200,000 (see Note 7). The
       shares were valued at $6.00 per share, or $145,454.

       The Company issued 169,231 shares of restricted common stock and warrants
       to purchase 169,231 shares of restricted common stock in connection the
       sale of $1,500,000 of debentures (see Note 7). The shares of common stock
       and the warrants were valued at an aggregate of $1,500,000.

                      Nine Months Ended September 30, 2002

       The Company sold 97,689 shares of restricted common stock at $4.50 per
       share through private placements for $438,135 in cash. Stock offering
       costs of approximately $27,000 were recorded in connection with the sale.

       The Company issued 100,000 shares of restricted common stock for investor
       relations services valued at $4.50 per share, or $450,000.

       The Company sold 130,278 shares of restricted common stock at $15.00 per
       share through private placements for $1,954,175 in cash. Stock offering
       costs of approximately $125,000 were recorded in connection with the
       sale, including 4,948 shares of restricted common stock valued at $15.00
       per share.

       The Company issued 1,667 shares of restricted common stock upon the
       exercise of common of stock options for $15,000 in cash.

       The Company issued an aggregate of 5,016 shares of restricted common
       stock in cashless exercises of common stock options. The underlying
       agreements were for a total of 10,296 common stock options with exercise
       prices ranging from $9.00 to $15.00 per share.

       The Company issued 3,109 shares of common stock for future legal services
       valued at $90,000.

       The Company canceled 26,667 shares of common stock, which had been issued
       as collateral for a loan.

NOTE 11 - STOCK OPTIONS AND WARRANTS

       At September 30, 2003, the Company had outstanding 190,104 options to
       employees under various agreements with exercise prices ranging from
       $15.00 to $16.50 per share, expiring between May 2005 and February 2008.
       Of the options outstanding at September 30, 2003, 158,750 were vested and
       68,667 were exercisable. During the nine months ending September 30,
       2003, 6,333 options were granted, 16,979 options were forfeited and no
       options were exercised.

       At September 30, 2003, the Company had outstanding options and warrants
       to purchase 1,722,826 shares of common stock that were issued to
       non-employees under various agreements with exercise prices ranging from
       $5.25 to $27.00 per share, expiring between June 2004 and November 2008.
       During the nine months ended September 30, 2003, options and warrants to
       purchase 491,660 shares were issued, 88,578 options and warrants expired
       and no options or warrants were exercised.





                                       10



<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - 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
       periods presented:
<TABLE>
<CAPTION>

                                                                  For the Three                  For the Nine
                                                                 Months Ended                   Months Ended
                                                                  September 30,                   September 30,
                                                              -----------------------       -------------------------
                                                                 2003          2002             2003          2002
                                                              ---------      --------       ---------      ---------
              <S>                                           <C>             <C>           <C>            <C>
              Loss from continuing operations available
                to common shareholders (numerator)          $(1,528,899)    $(783,320)    $(3,447,715)   $(1,167,576)

              Weighted average number of common
                shares outstanding during the period used
                in per share calculations (denominator)        3,945,033      963,739        2,251,630     1,009,506
</TABLE>


       Because the Company incurred losses for the periods ended September 30,
       2003 and 2002, the effect of options/warrants and convertible notes
       totaling 2,142,332 and 384,047 equivalent shares, respectively, has been
       excluded from the loss per share computation since its impact would be
       antidilutive.

NOTE 13 - PUBLIC OFFERING

       In February 2003 the Company's Board of Directors approved the filing by
       the Company with the Securities and Exchange Commission of a registration
       statement on Form SB-2 registering the sale of up to 500,000 units, each
       unit consisting of two shares of stock and one warrant. The registration
       statement was filed April 1, 2003. Subsequently, the Board authorized the
       filing of an amendment to the registration so that it would cover up to
       1,100,000 units before taking into account the underwriter's over
       allotment option. The registration statement was amended accordingly and
       was declared effective June 24, 2003. Net proceeds to the Company were
       approximately $11,850,000 after underwriter discount and offering
       expenses. During July 2003, the underwriter exercised its overallotment
       option and sold an additional $2,145,000 in securities, which resulted in
       net proceeds to the Company of approximately $1,785,000 after underwriter
       discount and offering expenses.

       In connection with the offering, the Company's issued and outstanding
       securities, including common stock, warrants and units, were listed on
       the American Stock Exchange.

       In connection with its authorization of the filing of a registration
       statement, the Company's Board of Directors also authorized, subject to
       stockholder approval, a reverse split of the Company's common stock. On
       May 19, 2003, the stockholders authorized the Board to determine the
       precise ratio of the split and the timing thereof. The Board approved a
       1-for-15 reverse stock split that became effective on June 4, 2003.

NOTE 14 - SUBSEQUENT EVENTS

        During October 2003, $180,000 in debentures was repaid (see Note 7).







                                       11



<PAGE>




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

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 telephone 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, 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, and Australia. We expect that revenues from international
operations will grow over the next few years and will represent a more
meaningful portion of our overall revenues, particularly as prepaid wireless is
much more common and accepted in Europe, Asia and Latin America than it is in
North America.

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 new
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 200 terminal, a
retail merchant can sell wireless telephone time, wireline long distance service
or other telephone products, add credit to a prepaid credit card, facilitate
cash transfers or sell other prepaid products. In general, 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, Q Comm and the provider of the prepaid product.

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.
Telecommunication carriers, such as Verizon, Cingular, T Mobile and AT&T 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 for money transfer services.

Our principal source of revenue has been the resale of prepaid telecommunication
products that we purchase from suppliers of wireless, long distance and other
products or from distributors who purchase these products from suppliers. The
table below illustrates the revenues we derived from our principal products and
the percentage of total revenues represented by this amount:
<TABLE>
<CAPTION>

                                      Three months ended September 30,                   Nine months ended September 30,
                            -------------------------------------------------  -------------------------------------------------

                                    2003                      2002                      2003                      2002
                                    ----                      ----                      ----                      ----

                               Amount    Percentage     Amount     Percentage     Amount     Percentage     Amount    Percentage
                               ------    ----------     ------     ----------     ------     ----------     ------    ----------
<S>                         <C>          <C>         <C>           <C>         <C>           <C>         <C>           <C>
Wireless................... $6,303,995     93.15%    $5,385,230     95.47%     $17,543,841     95.12%    $17,338,150    90.92%
Long distance..............    177,248     2.62         175,305      3.11          367,915      1.99         778,063    4.08
Home dial tone.............      1,262     0.02           6,446      0.11            7,880      0.04         265,970    1.39
Other......................    285,011     4.21          73,658      1.31          525,755      2.85         688,074    3.61
                               -------     ----          ------      ----          -------      ----         -------    ----

Totals..................... $6,767,516    100.00%    $5,640,639    100.00%     $18,445,391     100.0%    $19,070,257    100.0%
                            ==========    =======    ==========    =======     ===========     ======    ===========    ======
</TABLE>

Historically, our results of operations have been characterized by relatively
high revenues but relatively low gross profits. As a reseller of prepaid
telecommunication products, 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 25.5% for
the nine months ended September 30, 2003 and 25.6% for the comparable period in
2002. 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 2.4% for the nine months
ended September 30, 2003 and 2.3% for the comparable period in 2002. 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.





                                       12


<PAGE>



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 believe that, as
our business expands and our financial condition becomes more stable, there may
be opportunities to increase margins in our historical business by purchasing a
greater percentage of our product directly from the supplier and by purchasing
in greater volume. However, the telecommunications business in general, and the
wireless business in particular, is changing rapidly and it is not possible to
anticipate potential changes that may occur in the distribution chain.

Our business plan contemplates adding new products rapidly and adopting other
sales models. With some of these products and sales models, rather than
purchasing and reselling prepaid products, we will facilitate the purchase of
the product by others, sell or lease terminals and provide transaction
processing services for a fee. In particular, we have developed an alternative
revenue model that we refer to as a "service bureau." Under this model, we
replicate our data center for and license our proprietary transaction processing
software to our customer who is responsible for functions such as inventory
management, product ownership, report generation, and funds transfer. We
generate license fees and ongoing revenues from transaction processing and
management services. While we expect our traditional model, which we refer to as
the "broker model," to continue to be our primary means of business, we also
expect the service bureau model to grow in 2003. We expect that substantially
all of our international expansion will be based on this model and that domestic
customers may also choose to operate in this way. We recently set up service
bureaus for new customers in France and Australia and are in the process of
establishing one in the Bahamas.

Under the service bureau model, since we do not assume an ownership risk with
respect to the product, we will record as revenue only the amount of the fee, as
opposed to the entire value of the transaction. This will result in lower
revenues per transaction. On the other hand, cost of sales should be minimal and
fees and commissions payable to brokers and retailers should be nonexistent. As
a result, we believe our gross profit margin under the service bureau model will
be significantly higher than it is under our broker model. 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 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
"rent-to-own" 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 rent-to-own 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
rent-to-own option depends on the availability of capital to fund the cost of
the terminals.

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 expect that transaction fees earned under our service bureau model will be
collected in essentially the same manner. However, we may generate receivables
from sales of terminals and from consulting services provided to assist
customers in setting up and operating data centers.

In order to support expanded operations, we expect to increase sales and
marketing and general and administrative expense. We expect to continue to
invest in product development and improvement, although the rate of such
investment may not equal the rate of expenditure we experienced to develop our
Qxpress system. As gross profit increases, we expect general and administrative
expenses, selling expenses and research and development expenditures to decrease
as a percentage of gross profit, thereby significantly improving operating
margins. However, in the immediate future, we expect to incur substantial costs
in advance of the business growth that they are intended to support.
Accordingly, operating margins may initially decrease and will not achieve the
expected improvement unless and until business in fact expands on a profitable
basis.

Our future capital requirements will 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.

In 2003 we entered into a number of financing transactions, the most significant
of which was a registered public offering of units consisting of stock and
warrants. Gross proceeds from the offering were approximately $16.5 million.
Other financings included private sales involving the sale of investment units
consisting of notes, convertible debentures, stock and warrants. The total
amount raised in these private transactions was $2.7 million. The value of the
stock and warrants issued in these transaction was determined to be in excess of
$2.6 million, which will be amortized over the lives of the debt instruments,
generally 12 months. As a result we will have significant interest expense for
2003 and the first quarter of 2004. We believe that the proceeds from offerings
have provided us with the capital that we anticipate needing to fund our growth
and allow us to take advantage of market opportunities.




                                       13



<PAGE>


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. 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. 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 sales of
blank cards, are recorded when earned, net of any sales discounts. We expect in
the future to record revenues from technology licensing and consulting fees and
will record these fees when they are 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 15% 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, which is three years. We periodically evaluate the recoverability
of our capitalized software development costs based on the expected future cash
flows from this asset.

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 September 30, 2003, we had an accumulated net operating loss for federal and
state corporate income tax purposes of approximately $9 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.





                                       14


<PAGE>


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.

<TABLE>
<CAPTION>

                                              Three months ended       Nine months ended
                                                September 30,            September 30,
                                              -----------------       -----------------
                                               2003       2002         2003        2002
                                              ------     ------       ------      ------
     <S>                                      <C>        <C>          <C>         <C>
     Revenues..............................    100.0%      100.0%     100.0%      100.0%
     Cost of goods sold....................    74.1        75.0       74.5        74.4
                                               ----        ----       ----        ----

     Gross profit..........................    25.9        25.0       25.5        25.6
     Commissions and fees..................    23.6        22.7       23.1        23.3
     Selling expenses......................     2.3         1.6        1.8         1.2
     General and administrative expenses...     5.9         5.7        7.0         4.2
     Depreciation and amortization.........     2.8         0.6        2.9         0.5
     Non-cash compensation.................     0.3         8.0        0.4         2.3
                                                ---         ---        ---         ---

     Loss from operations..................    (9.0)     (13.6)       (9.7)       (5.9)
     Other income (expense) - net..........   (13.6)      (0.3)       (9.0)       (0.2)
                                              ------      -----       -----       -----

     Net loss..............................   (22.6)     (13.9)      (18.7)       (6.1)
                                              ------     ------      ------       -----
</TABLE>


Three and nine-month periods ended September 30, 2003 and 2002

Revenues. Revenues for the three months ended September 30, 2003 were $6.77
million compared to $5.64 million for the same period in 2002, an increase of
$1.13 million, or 20.0%. Revenues for the nine months ended September 30, 2003
were $18.45 million compared to $19.07 million for the same period in 2002, a
decrease of $625,000, or 3.3%. The second quarter of 2002 was the highest
revenue quarter in our history at $7.15 million, almost $2 million of which was
derived from a single customer that terminated its relationship with us in the
third quarter of 2002. We had hoped that this revenue loss would have been
offset by the roll-out of our new Qxpress 200 terminal in the third quarter of
2002. However, the development of the terminal and related software took longer
than expected. When the development was finally completed, our lack of liquidity
prevented us from contract-manufacturing a sufficient number of the terminals
that would have enabled us to increase our revenues significantly. Starting in
the first quarter of 2003 and continuing into the third quarter of 2003, we
addressed our liquidity issue through the sale of various debt and equity
securities that yielded gross proceeds of in excess of $19 million. As a result,
we have ordered approximately 7,500 Qxpress 200 terminals since the beginning of
the second quarter of 2003 -- 2,500 in April 2003 and 5,000 in July 2003. We
have taken delivery of approximately 60% of these terminals and anticipate that
they will all be ready to be placed in service by the end of 2003.

Cost of goods sold. Cost of goods sold for the three months ended September 30,
2003 was $5.01 million compared to $4.23 million for 2002, an increase of
$783,000, or 16.5%. Cost of goods sold for the nine months ended September 30,
2003 was $13.75 million compared to $14.19 million for the same period in 2002,
a decrease of $442,000, or 3.1%. As a percentage of revenues, cost of goods sold
for the 3-month and 9-month periods in 2003 was 74.1% and 74.5%, respectively,
compared to 75.0% and 74.4% for the 3-month and 9-month periods in 2002. The
changes in cost of goods sold are related to changes in revenues. 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.
Also, fees we charge for the Qxpress units, such as rental or minimum
performance fees, directly affect this ratio since they increase revenues
without a corresponding increase in cost of goods sold. Wherever possible,
increases in cost of goods sold are passed on to brokers and retailers in the
form of lower commissions.

Gross profit. Gross profit for the three months ended September 30, 2003 was
$1.76 million compared to $1.41 million for the same period in 2002, an increase
of $343,000, or 24.3%. Gross profit for the nine months ended September 30, 2003
was $4.70 million compared to $4.88 million for the same period in 2002, a
decrease of $182,000, or 3.7%. Gross margin for the 3-month and 9-month periods
ended September 30, 2003 was 25.9% and 25.5%, respectively, compared to 25.0%
and 25.6% for the 3-month and 9-month periods ended September 30, 2002. As
discussed above, the largest factor affecting gross profit is cost of goods
sold. In addition, our gross margin also depends on our product mix, the extent
to which our service bureau model, which has higher gross margins, grows at a
faster rate than our traditional broker model, and the extent to which we
generate rental fees and minimum performance fees for our terminals.

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 September 30, 2003 were $1.59 million compared to $1.28 million for
the same period in 2002, an increase of $312,000, or 24.3%. For the nine months
ended September 30, 2003 and 2002, commissions and fees were $4.26 million and
$4.44 million, respectively, a decrease of $181,000 or 4.1%. As a percentage of
revenues, commissions and fees for the 3-month and 9-month periods ended
September 30, 2003 were 23.6% and 23.1%, respectively, compared to 22.7% and
23.3% for the 3-month and 9-month periods ended September 30, 2002. Changes in
commissions and fees tend to offset changes in cost of goods sold. After further
subtracting the commissions and fees paid to the brokers and retailers, our
margins were approximately 2.4% for the nine months ended September 30, 2003 and
2.3% for the comparable period in 2002. A component of commissions and fees is
transaction processing fees paid to a third party for transactions processed
through our prior terminal. These fees were approximately $129,000 in the first
nine months of 2003 compared to $180,000 in the first nine months of 2002. 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.

                                       15


<PAGE>


Selling expenses. Selling expenses for the three months ended September 30, 2003
were $157,000 compared to $93,000 for the same period in 2002, an increase of
$65,000, or 69.7%. Selling expenses for the nine months ended September 30, 2003
were $332,000 compared to $222,000 for the same period in 2002, an increase of
$111,000, or 49.8%. As a percentage of revenues, selling expenses for the
3-month and 9-month periods ended September 30, 2003 were 2.3% and 1.8%,
respectively, compared to 1.6% and 1.2% for the 3-month and 9-month periods
ended September 30, 2002. These increases are due to higher travel expenses,
reflecting the sales efforts associated with building an expanded network for
the selling and distribution of our products, and to the cost of a new employee
added to our sales force in 2003. While our selling expenses may continue to
increase in the future, we expect that our revenues will grow at a faster rate.

General and administrative. General and administrative expenses for the three
months ended September 30, 2003 were $399,000 compared to $322,000 for the same
period in 2002, for an increase of $77,000, or 23.7%. General and administrative
expenses for the nine months ended September 30, 2003 were $1.29 million
compared to $806,000 for 2002, an increase of $483,000, or 59.8%. As a
percentage of revenues, general and administrative expenses for the 3-month and
9-month periods ended September 30, 2003 were 5.9% and 7.0%, respectively,
compared to 5.7% and 4.2% for the 3-month and 9-month periods ended September
30, 2002. These increases can be attributed to a number of factors. The first
factor is an increase in our general and administrative salaries and benefits of
approximately $75,000 for the three months ended September 30, 2003 and $200,000
for the 9-month period. This increase is not due to higher gross salaries paid
but to lower salaries eligible to be capitalized as software development costs
in 2003. As previously noted, we placed our data center in service in September
2002. While we are still developing new applications for our system and some of
the salaries of software engineers are capitalized, this amount is lower in 2003
and we expect that trend to continue in future periods. A second factor is a
consulting expense of $150,000 that we recorded in the first quarter of 2003
relating to financial advisory services. We do not expect to incur similar
expenses during future periods. Additional factors causing the increase in the
nine-month period not explained above include increases in investor relation
expenses ($36,000), telephone ($32,000) and postage and delivery expenses
($26,000).

Depreciation and amortization. Depreciation and amortization expenses for the
three months ended September 30, 2003 were $191,000, compared to $31,000 for the
same period for 2002. Depreciation and amortization expenses for the nine months
ended September 30, 2003 were $542,000 compared to $90,000 in 2002. These
increases are attributable primarily to the amortization of software development
costs, which began in the fourth quarter of 2002 and to higher depreciation
expenses from Qxpress 200 units deployed since that time. The quarterly amount
of software development costs amortized in 2003, $121,000, is the single
greatest contributor to the increase in the 3-month and 9-month periods. The
additional increase is due to depreciation expenses incurred in 2003 related to
the deployment of Qxpress 200 units, which also began the fourth quarter of
2002. As we continue to amortize software development costs and we increase
significantly the number of Qxpress 200 units in service, we expect depreciation
and amortization expenses to increase in the future.

Non-cash compensation. In December 2002, we granted a bonus payable in stock to
four executives and key employees. Of the total grant of 43,333 shares, 50% of
those were for past services and accrued as expense in 2002. The other 50% is
payable in June 2004 provided that the employee has been continuously employed
by us. We accrued $21,666 toward this future issuance of stock in each of the
first three quarters of 2003. In the three months ended September 30, 2002, we
granted a consultant 100,000 shares of common stock that were valued at
$450,000.

Loss from operations. Loss from operations for the three months ended September
30, 2003 was $606,000 compared to $766,000 for the comparable period in 2002.
The loss from operations for the nine months ended September 30, 2003 was $1.79
million compared to $1.13 million for the same period in 2002. For the 3-month
period, the decrease is attributable to the factors discussed above,
specifically the $450,000 non-cash consulting expense recorded in 2002 which
more than offset the increases in general and administrative expenses,
depreciation and amortization expenses, and selling expenses recorded in 2003.
For the 9-month period, the increase is attributable to these same factors
except that the increases in expenses for 2003 more than offset the consulting
expense in 2002. We expect our investment in an expanded distribution network to
result in significantly higher revenues in the future while our ongoing
operating expenses, other than commissions and fees, to increase by a smaller
percentage. We believe these factors will contribute to continuing improvement
in the results from operations in the foreseeable future.

Other expense - net. Other income and expense consists primarily of interest
income and expense. Net other expense for the three months ended September 30,
2003 and 2002 was $923,000 and $18,000, respectively. Net other expenses for the
nine months ended September 30, 2003 and 2002 were $1.66 million and $38,000,
respectively. The increases in net other expense represent interest expense
related to the unsecured note, convertible note and debentures we sold in 2003.
Most of this interest expense, $825,000 for the 3-months and $1.44 million for
the 9-months ended September 30, 2003, is in the form of amortization of
discount on these debt instruments and therefore does not represent an amount to
be paid in cash. The remainder of the amount is related to the actual interest
either paid or to be paid on our debt. In July 2003 we repaid over $570,000 of
debt prior to their maturity dates in order to save interest expense in future
quarters. The interest rates on these debt instruments ranged from 10-14%. In
addition, on June 30, 2003 we transferred $1.725 million to an escrow account as
cash collateral for the repayment of $1.5 million aggregate principal amount,
and accrued interest thereon, of our 12% secured convertible debentures due
March 31, 2004. As of July 1, 2003, the interest rate on the debentures
decreased to the prime rate, currently 4%. Based on these factors, we expect to
continue to recognize the amortization of discount on debt during future
quarters of 2003 but our interest expense that represents cash payments should
decline significantly in future quarters.

Income tax expense. At September 30, 2003 we had operating loss carryforwards of
approximately $9 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 $3 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.

Net loss. Net loss for the three months ended September 30, 2003 was $1,529,000
compared to $783,000 for the same period in 2002. Net loss for the nine months
ended September 30, 2003 was $3,448,000 compared to $1,168,000 for the same
period in 2002. The increased net loss is attributable to the foregoing factors.

                                       16



<PAGE>


Liquidity and Capital Resources

Historically, we have financed our working capital requirements through cash
flow from operations, the sale of shares of our common stock, proceeds from
short-term bank borrowings, and proceeds from the sale of convertible debentures
and notes. Since the end of 2001, we have not had any working capital credit
facility.

In June 2003 we successfully completed a registered public offering of 1,100,000
units, 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 $14.3. In July 2003, the underwriter of the offering exercised its
overallotment option to acquire another 165,000 units, yielding additional gross
proceeds of $2,145,000. Net proceeds to us after underwriter discount and
estimated offering costs were approximately $13.6 million. A portion of the net
proceeds has been utilized to repay debt and purchase new Qxpress 200 units. The
balance of the offering proceeds is available to us to use in the longer-term
and allow us to evaluate market opportunities that previously we were unable to
consider. The proceeds will also provide us with significant balance sheet
strength, which can be used to further expand our financial resources in the
areas of equipment financing and other credit facilities should the need arise.
As of September 30, 2003, we had working capital of approximately $9.5 million.

Prior to the completion of 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 March 31, 2004; and (c) an unsecured
promissory note in the original principal amount of $1,000,000 due August 31,
2004 bearing interest at 12%. During July 2003, we i) repaid a five-year
amortizing convertible note with a remaining principal balance of approximately
$190,000 with interest at 14%; ii) repaid the $200,000 convertible note, due
February 28, 2004, iii) repaid a note with an outstanding balance of $31,350
with interest at 12%, due November 30, 2003, and iv) paid a $150,000 scheduled
installment on a loan from our CEO. The completion of our public offering gave
the holders of our debentures the right to demand prepayment at any time. During
September and October 2003 we repaid an aggregate of $280,000 of debentures
under the holders' exercise of such rights. Our remaining outstanding debt
includes the $1 million, 12% unsecured note due August 31, 2004 and $1,220,000
in convertible debentures, due March 31, 2004. The debentures will accrue
interest at the prime rate (currently 4%) since we cash collateralized the debt
by transferring $1.725 million to an escrow account.

For the nine months ended September 30, 2003, net cash used by operating
activities was approximately $2.5 million. The primary components of our
operating cash flows are our net loss, depreciation and amortization, interest
recorded from amortization of discount on debt, increases in inventory and
accounts receivable and a reduction in accounts payable.

Capital expenditures include capitalized software development costs and purchase
of property and equipment. For the nine months ended September 30, 2003,
capitalized software development costs were $524,000 and purchases of property
and equipment were $1,576,000. We expect that capital expenditures will increase
significantly in the remainder of 2003 and in 2004 as we place more terminals in
service.

For the nine months ended September 30, 2003, net cash provided by financing
activities was $15,302,000. Net cash provided by financing activities primarily
reflects sales of stock and debt instruments, offset by repayments of existing
indebtedness. The single largest contributor to net cash provided by financing
activities was the proceeds of the public offering.

Recent Accounting Pronouncements

Statement of Financial Accounting Standards ("SFAS") 146, "Accounting for Costs
Associated with Exit or Disposal Activities" and SFAS No. 147, "Acquisitions of
Certain Financial Institutions - an Amendment of FASB Statements No. 72 and 144
and FASB Interpretation No. 9", were recently issued. SFAS No. 146 and 147 have
no current applicability to us or their effect on our financial statements is
not significant.

Item 3.  Controls And Procedures

     a) Evaluation of Disclosure Controls and Procedures. The Company's
     management, with the participation of the chief executive officer and the
     chief financial officer, carried out an evaluation of the effectiveness of
     the Company's "disclosure controls and procedures" (as defined in the
     Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e) and
     15-d-15(e)) as of the end of the period covered by this quarterly report
     (the "Evaluation Date"). Based upon that evaluation, the chief executive
     officer and the chief financial officer concluded that, as of the
     Evaluation Date, the Company's disclosure controls and procedures are
     effective, providing them with material information relating to the Company
     as required to be disclosed in the reports the Company files or submits
     under the Exchange Act on a timely basis.

     b) Changes in Internal Control over Financial Reporting. There were no
     changes in the Company's internal controls over financial reporting, known
     to the chief executive officer or the chief financial officer, that
     occurred during the period covered by this report that has materially
     affected, or is reasonably likely to materially affect, the Company's
     internal control over financial reporting.




                                       17



<PAGE>


PART II

Item 1. Legal Proceedings

As of November 1, 2003, we are not a party to any legal proceedings, except as
set forth below.

On October 10, 2000, First Security Bank, N.A. filed suit in the Fourth Judicial
District Court of Utah County, claiming breach of a Merchant Agreement. The
complaint relates to charge-backs of customer credit card purchases, which
resulted in overdrafts of our merchant account with First Security. First
Security claims $175,477 in damages. We believe that First Security honored
charge-backs inappropriately, based on the terms and conditions of the
customers' credit card agreements and the terms and conditions of their
contracts with us. First Security recently filed a motion for summary judgment,
which we are contesting. We anticipate that this case will not be resolved until
after trial, which has not yet been scheduled, but which will likely be
scheduled to take place within the next four to nine months. We have recorded a
contingent liability in connection with this matter and believe the resolution
of this suit will not have a material impact on our financial condition or
results of operations.

In January 2002, we filed a lawsuit against an individual for non-payment of
funds owed relating to the purchase of common stock. We have been awarded
summary judgment in the amount of $135,000, of which $88,000 remained
uncollected at September 30, 2003.

We have agreed to indemnify our chief executive officer, Paul Hickey, against
any and all costs, fees, expenses, damages and liabilities that he may incur in
connection with the matter of Dallin Bagley v. Paul Hickey, filed on October 22,
2001 and pending in the Third District Court in Salt Lake County, Utah. We
indemnified Mr. Hickey because the plaintiff's allegations relate to a matter in
which Mr. Hickey acted in the interests of Q Comm. Specifically, the lawsuit
relates to a financing transaction. Mr. Bagley, who was a Q Comm stockholder at
the time, threatened to revoke his consent to the transaction unless Mr. Hickey
agreed to give him an option to purchase 20,000 shares of Q Comm stock at a
nominal price. Since we needed the financing, Mr. Hickey agreed. When Bagley
tried to exercise his option, Mr. Hickey claimed the option was unenforceable.
Bagley then sued Mr. Hickey, claiming breach of contract and that, as a result,
he had suffered damages to the extent of $450,000. On March 31, 2003, at a
hearing, the court granted plaintiff's motion for partial summary judgment that
the option agreement was enforceable and denied defendant's motion for leave to
file an amended answer and counterclaim. On August 12, 2003, the court awarded
damages of approximately $493,000 to the plaintiff, including interest. Mr.
Hickey is currently in the process of appealing this decision as well as the
method used to calculate the plaintiff's loss. We have posted a bond ensuring
payment of the eventual damage awarded in this case after our appeal has been
heard.

Item 2. Changes in Securities and Use of Proceeds

Recent Sales of Unregistered Securities.

Since January 1, 2003, we have entered into the following financing
transactions:

     (a) We sold 3,333 shares of common stock to a single investor for $20,000
     in cash.

     (b) We sold a 12% unsecured convertible note in the principal amount of
     $200,000 and 24,242 shares of common stock for an aggregate purchase price
     of $200,000. The entire principal amount of the note and all accrued
     interest is due and payable on February 28, 2004. The note and accrued
     interest thereon of $11,769 was paid in July 2003.

     (c) We sold (a) $1.5 million aggregate principal amount of our 12% secured
     convertible debentures due March 31, 2004, (b) 169,231 shares of common
     stock and (c) warrants to purchase 169,231 shares of common stock. The
     gross proceeds to us from the sale of all of these securities were $1.5
     million. During September and October 2003, a total of $280,000 of the
     debentures was repaid. See Note 7 to the unaudited interim financial
     statements for more information regarding the terms of the debentures.

    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 July 2, 2003 and August 20, 2003, we filed current reports on form 8-K
under item 5 and item 7, respectively.

                                       18


<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: November 7, 2003                        /s/ Paul Hickey
                                              ---------------
                                              Paul Hickey
                                              Chief Executive Officer

Date: November 7, 2003                        /s/ Michael Openshaw
                                              --------------------
                                              Michael Openshaw
                                              Chief Financial Officer
                                              (Principal Accounting Officer)







                                       19