<PAGE>
===============================================================================



                       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 MARCH 31, 2003



                        Commission File Number 000-28885

                           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 May 12, 2003, there were 21,615,116 shares of common stock outstanding,
including 363,636 unissued shares, which were issuable as of March 31, 2003.

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



===============================================================================


<PAGE>

                               TABLE OF CONTENTS

                               FORM 10-QSB REPORT

                                 March 31, 2003
                                                                           PAGE
PART I - FINANCIAL INFORMATION

         Item 1.  Interim condensed financial statements
                  (unaudited)                                                2

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

         Item 3.  Controls and Procedures                                    8

PART II - OTHER INFORMATION

         Item 1. Legal Proceedings                                           9

         Item 2. Changes in Securities and Use of Proceeds                   9

         Item 6. Exhibits and Reports on Form 8-K                            9

SIGNATURES                                                                  10



                                        1



<PAGE>


Part I

Item 1. Financial Statements

The financial statements of the Company required by this item are set forth
beginning on page F-1 and are incorporated herein by reference.

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 the Company's consolidated condensed
financial statements and related notes that are included herein.

   Our historical business has consisted of the purchase and resale of prepaid
telephone products through point of sale terminals that we provide and that are
located in retail establishments in the United States. Having initially used
third-party software and equipment to support these sales, in September 2002 we
introduced our new proprietary Qxpress system, which includes the Qxpress 200
terminal and the software used in our data center to process purchases of
prepaid products. 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.

   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.

   Transaction processing and information management services are used by many
different businesses in a variety of contexts. For example, credit card
companies are significant users of these services for post-paid transactions.
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 we anticipate that it will be able to accommodate money
transfer services by the end of May 2003.

   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>

                                                                        Period ended March 31,
                                                         ----------------------------------------------------
                                                                   2003                        2002
                                                         ------------------------    ------------------------
                                                           Amount      Percentage      Amount      Percentage
                                                        -----------    ----------    -----------   ----------
<S>                                                     <C>            <C>           <C>           <C>
Wireless ............................................   $5,568,540         96.9%     $5,663,594        90.3%
Long distance .......................................       97,426          1.7         315,939         5.0
Home dial tone ......................................        4,618           .1         136,610         2.2
Other ...............................................       76,455          1.3         159,450         2.5
                                                        -----------       -----      -----------      -----
 Totals .............................................   $5,747,039        100.0%     $6,275,593       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 25.0% in
2003 and 25.8% 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% in
2003 and 2.5% in 2002. Because of these relatively small margins, a minor change
in the price that we pay for products

                                        2
<PAGE>
would have a substantial effect on our margins and profit if we were not able to
(or, in the case of price decreases, were not required to) pass the difference
on to our customers.

   The resale of prepaid telecommunication products has historically been a
commodity market with most price increases or decreases being passed through the
distribution chain to the end user. However, the amount of margin available to
each participant in the distribution chain can be affected by various factors,
such as the functions provided and risk assumed by the participant and the
volume and payment terms on which the participant can purchase product.
Historically, our ability to purchase products at attractive rates has been
negatively impacted by our inability to purchase in volume and our status as an
uncertain credit, which, in some cases, has resulted in our inability to
purchase product directly from the supplier. In those cases, we have purchased
product from a reseller at a markup from the supplier price. We 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. We recently established our first service bureau data
center for a customer. 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.

   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 clearing
house, 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 license fees to be 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

                                        3

<PAGE>
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.

   In the first quarter of 2003 we entered into a number of financing
transactions involving the sale of investment units consisting of convertible
debt, stock and warrants. The value of the stock and warrants issued in these
transaction was determined to be in excess of $1.6 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, only a small portion
of which was recorded in the first quarter.

   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. We anticipate that various
commercial credit options will be available to us to cover many of these capital
requirements. However, we have no such arrangements in place and cannot assure
you that we will be able to make commercially satisfactory credit arrangements.

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

                                        4
<PAGE>
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 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 March 31, 2003, we had an accumulated net operating loss for federal
and state corporate income tax purposes of approximately $8 million. Because
our ability to use this net operating loss depends on our ability to earn future
taxable income, we have established a valuation allowance equal to the net
deferred tax asset. The amount of and ultimate realization of the benefits from
these deferred tax assets for income tax purposes depends, in part, on
applicable tax laws in effect, our future earnings, and other future events, the
effects of which cannot be determined. However, our ability to offset our
accumulated net operating loss against future taxable income may cause our
future reported earnings and profitability to be greater than they would be if
fully taxable.


                                        5

<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>

                                                                          Period ended
                                                                            March 31,
                                                                          -------------
                                                                         2003        2002
                                                                        -----       -----
      <S>                                                               <C>         <C>
      Revenues ......................................................   100.0%      100.0%
      Cost of goods sold ............................................    75.0%       74.2%
      Gross profit ..................................................    25.0%       25.8%
      Commissions and fees ..........................................    22.6%       23.3%
      Selling expenses ..............................................     1.6%        1.0%
      General and administrative expenses ...........................     8.9%        3.8%
      Depreciation and amortization .................................     2.8%        0.5%
      Non-cash compensation .........................................     0.4%          -
      Loss from operations ..........................................   -11.2%       -2.8%
      Other income (expense) - net ..................................    -2.2%       -0.2%
      Net loss ......................................................   -13.4%       -3.0%
</TABLE>


Periods ended March 31, 2003 and 2002

   Revenues. Revenues for 2003 were $5.75 million compared to $6.28 million for
2002, a decrease of $530,000, or 8.4%. This decrease is due to the loss of a
significant customer in the third quarter of 2002 and the delay in introducing
the Qxpress 200 terminal. The revenues from these terminals were not sufficient
to offset the revenues lost from the significant customer. In April 2003, we
ordered 1500 new Qxpress 200 terminals, of which approximately 300 were deployed
by May 10, 2003. The balance are expected to be deployed before June 30,2003. We
expect these new terminals to begin generating additional revenue immediatey.

   Cost of goods sold. Cost of goods sold for 2003 was $4.31 million compared to
$4.66 million for 2002, a decrease of $350,000, or 7.5%. The majority of the
decrease is due to decrease in revenues during the period. As a percentage of
revenues, cost of goods sold in 2003 was 75.0% compared to 74.2% in 2002. This
increase is attributable to the fact that some of our newer wireless products
carry lower discounts. This increase was offset by a decrease in commissions and
fees, as we were able to pass on this lower discount to brokers and retailers in
the form of lower commissions.

   Gross profit. Gross profit for 2003 was $1.44 million compared to $1.62
million for 2002, a decrease of $178,000, or 11.0%. Gross margin was 25.0%
in 2003 compared to 25.8% in 2002. As discussed above, this decrease is
attributable to lower discounts offered by our suppliers, which translates into
higher costs for us. In the future, we expect our gross margin to fluctuate as
our product mix changes and as discount rates offered by carriers change. Gross
margin will also be influenced by the relative growth experienced in our two
business models, the traditional broker model and the service bureau model.

   Commissions and fees. These expenses are principally commissions paid to
retailers and brokers for product sales through the Qxpress terminals and are a
fixed percentage of the product sales price. Commissions and fees for 2003 were
$1.30 million compared to $1.46 million for 2002, a decrease of $163,000,
or 11.1%. As a percentage of revenues, these expenses decreased to 22.6% in 2003
from 23.3% in 2002. This decrease reflects the fact that we successfully reduced
the commissions we pay to brokers as a result of a lower discounts we received
from our suppliers. A component of commissions and fees is transaction
processing fees paid to a third party. These fees were approximately $48,000 in
2003 compared to $58,000 in 2002. These fees have been consistently in the range
of 1% of gross revenues. 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 decrease as existing customers are transitioned to our new terminal.


                                        6

<PAGE>
   Selling expenses. Selling expenses for 2003 were $94,000 compared to $64,000
in 2002, an increase of $30,000, or 46.5%. The increase is 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. As a percentage of revenues,
selling expenses increased to 1.6% in 2003 from 1.0% in 2002.

   General and administrative. General and administrative expenses in 2003 were
$511,000 compared to $241,000 in 2002, for an increase of $270,000, or 111.9%.
The increase can be primarily attributed to two factors. First, we recorded a
consulting expense of $150,000 in 2003 related to financial advisory business
development services. We do not expect to incur similar expenses during future
periods. Second, our general and administrative salaries and benefits were
approximately $75,000 higher in 2003 than 2002. This increase is not due to
higher gross salaries paid but to lower salaries eligible to be capitalized as
software development 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.

   Depreciation and amortization. Depreciation and amortization expenses for
2003 were $159,000, compared to $29,000 for 2002. This increase is attributable
primarily to the amortization of software development costs, which began in the
fourth quarter of 2002. The amount amortized in 2003, $121,000, explains most
of the increase. As we continue to amortize software development costs and we
increase significantly the number of Qxpress 200 units in use, 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 650,000 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 the first
quarter of 2003. No expenses of this nature were recorded in 2002.

   Loss from operations. Loss from operations for 2003 was $645,000 compared to
$179,000 for 2002. This increase is attributable to factors discussed above,
specifically (i) lower revenues, (ii) higher general and administrative expenses
resulting from an increase in consulting expenses and a decrease in capitalized
salaries and benefits, (iii) higher depreciation and amortization expenses, (iv)
an increase in selling expenses, and (v) non-cash compensation recorded in 2003.
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 2003 and 2002 was $127,000 and $9,000,
respectively. The increase in net other expense is the result of more interest
expense related to the convertible note and debentures we sold in 2003.
Approximately $90,000 of this amount is from the amortization of discount on
these debt instruments and therefore does not represent an amount to be paid in
cash.


                                        7

<PAGE>
   Income tax expense. At March 31, 2003 we had operating loss carryforwards
of approximately $8 million that may be applied against future taxable income
in years through 2023. The loss carryforwards and other items result in net
deferred tax asset of approximately $2.6 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 2003 was $772,500 compared to $188,000 for 2002. The
increased net loss is attributable to the foregoing factors.

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.

   Since January 1, 2003 we have raised $1.72 million by selling stock, warrants
and convertible debt instruments. All but $250,000 of this amount was received
by March 31, 2003. The remaining amount was received in April, 2003. Our 12%
unsecured convertible note in the principal amount of $200,000 is due and
payable on February 28, 2004. Our 12% secured convertible debentures in the
aggregate principal amount of $1.5 million are due and payable March 31, 2004.
The interest rate on the debentures is reduced to the prime rate once we
cash collateralize the debt by transferring $1.725 million to an escrow account.
We will continue to seek to raise additional capital through the sale of equity,
debt and convertible securities.

   As of March 31, 2003, we had a working capital deficit of approximately
$1.3 million. Our working capital deficit takes into account a $359,000 reserve
for contingent liabilities arising in connection with lawsuits in which we are
either a defendant or have agreed to indemnify a defendant.

   For the period ended March 31, 2003, net cash used by operating activities
was $217,000. The primary components of our operating cash flows are our net
loss, increase in accounts payable, depreciation and amortization, and increases
in inventory and accounts receivable.

   Capital expenditures include capitalized software development costs and
purchase of property and equipment. For the period ended March 31, 2003,
capitalized software development costs were $168,000 and purchases of property
and equipment were $210,000. We expect that capital expenditures will increase
significantly in future periods of 2003 as we place more terminals in service.

   For the period ended March 31, 2003, net cash provided by financing
activities was $1,047,000. Net cash provided by financing activities primarily
reflects sales of common stock and convertible debt as well as repayments of
existing indebtedness.

   In the future, we may issue additional debt or equity securities in order to
satisfy our cash needs. Any debt incurred or issued may be secured or unsecured,
at a fixed or variable interest rates and may contain other terms and conditions
that our board of directors deems prudent. Any sales of equity securities may be
at or below current market prices. We expect the proceeds from these financing
activities to be used primarily to manufacture, market and sell additional
Qxpress 200 terminals and to reduce short-term liabilities. We cannot assure you
that we will be successful in generating sufficient capital to adequately fund
our liquidity needs.

Recent Accounting Pronouncement

   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", and SFAS 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure - And
Amendment of FASB Statement 123" were recently issued. SFAS No. 146, 147 and
148 have no current applicability to us or their effect on our financial
statements are not significant.

Item 3.  Controls And Procedures

a)  Evaluation of Disclosure. We maintain disclosure controls and procedures
    designed to provide reasonable assurance that information required to be
    disclosed in the reports we file with the SEC is recorded, processed,
    summarized and reported within the time periods specified in the rules of
    the SEC. Within 90 days prior to the filing of this Report on Form 10-QSB,
    we carried out an evaluation, under the supervision and participation of our
    management, including our Chief Executive Officer and Chief Financial
    Officer, of the design and operation of this disclosure controls and
    procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
    our Chief Executive Officer and Chief Financial Officer concluded that our
    disclosure controls and procedures are effective in timely alerting them to
    material information relating to the Company (including our consolidated
    subsidiary) required to be included in our periodic SEC filings.

b)  Changes in Internal Controls. There were no significant changes in our
    internal controls or in other factors that could significantly affect our
    disclosure controls and procedures subsequent to the Evaluation Date.


                                        8
<PAGE>
PART II

Item 1. Legal Proceedings

   As of May 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 six
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 $115,000 remained
uncollected at March 31, 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. In that lawsuit the plaintiff
claims that he had a right to purchase 20,000 shares of our common stock from
Mr. Hickey, individually, at a significant discount and that as a result of Mr.
Hickey's breach of their agreement, he suffered damages in the amount of
$400,000. Mr. Hickey contests the enforceability of the alleged agreement. On
March 31, 2003, at a hearing, the court granted summary judgment to the
plaintiff on his motion and denied Mr. Hickey's motion to amend his response and
to file a counterclaim. Mr. Hickey is currently in the process of appealing this
decision.

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 50,000 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 363,636 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 holder of the note may elect at any
time to convert all or a portion of the principal amount of the note into shares
of common stock. The conversion price is $0.55 per share. If the holder
exercises this right, the note would be converted into 363,636 shares of common
stock. We agreed to register for resale the 363,636 shares issued at closing by
August 15, 2003.

   (c) We sold (a) $1.5 million aggregate principal amount of our 12% secured
convertible debentures due March 31, 2004, (b) 2,538,465 shares of common stock
and (c) warrants to purchase 2,538,465 shares of common stock. The gross
proceeds to us from the sale of all of these securities was $1.5 million.

   The debentures are secured by a lien on all of our assets. We are required to
transfer $1.725 million out of the proceeds of a registered public offering to
an escrow agent as collateral security for the repayment of the debentures, at
which time the interest rate on the debentures will be reduced to the prime
rate, currently 4.25%. The debenture holders may demand prepayment of the
debentures at any time after a public offering is completed. We may prepay the
debentures beginning December 31, 2003, but only after giving the holders 90
days written notice. Alternatively, we have the right to prepay the debentures
at any time, by paying a 35% premium. The debenture holders can elect to convert
them at any time into shares of common stock. The conversion price is the lower
of the price of a share of our stock at the time we complete a public offering
or $0.65 per share. Based on the May 12, 2003 closing price of $0.48 per share,
the debentures are convertible into 3,125,000 shares of common stock. The
exercise price of the warrants is 150% of the conversion price of the
debentures. The exercise price and the number of shares covered by the warrant
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 warrants have a term of five years.

   We are obligated to register for resale the shares issued in connection with
the convertible debentures as well as shares underlying those debentures and the
shares underlying the warrants issued in connection with the debentures. We are
required to file a registration statement by July 15, 2003. If the resale
registration statement is not filed timely or is not effective within 120 days
of filing, then we are required to pay to the debenture holders 3% of the
aggregate principal amount, or $45,000, per month as a penalty.

   Under the terms of the agreement under which we sold the debentures, we are
prohibited from selling stock or other securities convertible into stock in
transactions, other than underwritten public offerings, at prices below the
market price in order to raise cash. This restriction terminates on the earlier
of the day on which either none of the debentures are outstanding or there is an
effective registration statement covering the sale of the shares issued in
connection with the debentures, the shares that would be issued when the
debenture holders exercise their conversion rights and the shares that would be
issued when the debenture holders exercise their warrants.

Item 6. Exhibits and Reports on Form 8-K

a. Exhibits:

   Exhibit No.        Description

      99.1            Chief Executive Officer Certification pursuant to 18
                      U.S.C. Section 1350, as adopted pursuant to section 906
                      of the Sarbanes-Oxley Act of 2002, filed with the
                      Securities and Exchange Commission on the date hereof.

      99.2            Chief Financial Officer Certification pursuant to 18
                      U.S.C. Section 1350, as adopted pursuant to section 906
                      of the Sarbanes-Oxley Act of 2002, filed with the
                      Securities and Exchange Commission on the date hereof.

b. Reports on Form 8-K:

         None.

                                       9

<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: May 15, 2003                   /s/ Paul Hickey
                                     ---------------
                                     Paul Hickey
                                     Chief Executive Officer

Date: May 15, 2003                   /s/ Michael Openshaw
                                     --------------------
                                     Michael Openshaw
                                     Chief Financial Officer
                                     (Principal Accounting Officer)


                                       10
<PAGE>

                                 CERTIFICATIONS

I, Paul Hickey, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Q Comm International,
   Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
   statement of material fact or omit to state a material fact necessary to make
   the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period covered by
   this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
   information included in this quarterly report, fairly present in all material
   respects the financial condition, results of operations and cash flows of the
   registrant as of, and for the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

   a) Designed such disclosure controls and procedures to ensure that material
      information relating to the registrant is made known to us particularly
      during the period in which this quarterly report is being prepared;

   b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and

   c) Presented in this quarterly report our conclusions about the effectiveness
      of the disclosure controls and procedures based on our evaluation as of
      the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
   most recent evaluation, to the registrant's auditors and the audit committee
   of registrant's board of directors (or persons performing the equivalent
   function):

   a) All significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

   b) Any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6. The registrant's other certifying officer and I have indicated in this
   quarterly report whether or not there were significant changes in internal
   controls or in other factors that could significantly affect internal
   controls subsequent to the date of our most recent evaluation, including any
   corrective actions with regard to significant deficiencies and material
   weaknesses.

Date: May 15, 2003
                                         /s/ Paul Hickey
                                         ---------------
                                         Paul Hickey
                                         Chief Executive Officer


                                       11
<PAGE>

I, Michael Openshaw, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Q Comm International,
   Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
   statement of material fact or omit to state a material fact necessary to make
   the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period covered by
   this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
   information included in this quarterly report, fairly present in all material
   respects the financial condition, results of operations and cash flows of the
   registrant as of, and for the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

   a) Designed such disclosure controls and procedures to ensure that material
      information relating to the registrant is made known to us particularly
      during the period in which this quarterly report is being prepared;

   b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and

   c) Presented in this quarterly report our conclusions about the effectiveness
      of the disclosure controls and procedures based on our evaluation as of
      the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
   most recent evaluation, to the registrant's auditors and the audit committee
   of registrant's board of directors (or persons performing the equivalent
   function):

   a) All significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

   b) Any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6. The registrant's other certifying officer and I have indicated in this
   quarterly report whether or not there were significant changes in internal
   controls or in other factors that could significantly affect internal
   controls subsequent to the date of our most recent evaluation, including any
   corrective actions with regard to significant deficiencies and material
   weaknesses.

Date: May 15, 2003

                                         /s/ Michael Openshaw
                                         --------------------
                                         Michael Openshaw
                                         Chief Financial Officer


                                       12
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY




                                    CONTENTS


                                                                            PAGE
                                                                            ----

Unaudited Condensed Consolidated Balance Sheets,
      March 31, 2003 and December 31, 2002                                   F-2


Unaudited Condensed Consolidated Statements of
      Operations, for the three months ended
      March 31, 2003 and 2002                                                F-3


Unaudited Condensed Consolidated Statements of
      Cash Flows, for the three months ended
      March 31, 2003 and 2002                                                F-4


Notes to Unaudited Condensed Consolidated Financial
      Statements                                                             F-6


<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET


                                                        March 31,   December 31,
                                                          2003          2002
                                                      -----------   -----------
                                     ASSETS
Current Assets:
       Cash in bank                                   $   566,887   $   115,609
       Accounts receivable, net                           191,946        51,699
       Inventory                                          336,026       165,491
       Deferred taxes                                     539,228       539,228
                                                      -----------   -----------
            Total Current Assets                        1,634,087       872,027
                                                      -----------   -----------

Property & Equipment, net                               1,196,251     1,035,502

Other Assets:
       Capitalized software development costs, net      1,377,442     1,330,053
       Goodwill, net                                      144,580       144,580
       Deferred stock offering costs                      314,857        67,115
       Deposits                                            24,074        24,074
                                                      -----------   -----------
            Total Other Assets                          1,860,953     1,565,822
                                                      -----------   -----------
            Total Assets                              $ 4,691,291   $ 3,473,351
                                                      ===========   ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
       Bank overdraft                                 $   253,074   $   595,544
       Accounts payable                                 1,810,041     1,229,701
       Accrued expenses                                   342,342       226,635
       Notes payable                                       31,350        31,350
       Convertible notes and debentures
        - current portion                                 101,294        43,557
       Capital lease obligations
        - current portion                                  26,295         5,892
       Contingent liabilities                             359,235       359,235
                                                      -----------   -----------
            Total Current Liabilities                   2,923,631     2,491,914
                                                      -----------   -----------

Long-term Obligations:
       Convertible notes payable                          245,826       167,690
       Capital lease obligations                           53,471        14,754
       Related party obligations                          420,959       410,692
       Deferred taxes                                     539,228       539,228
                                                      -----------   -----------
            Total Long-term Obligations                 1,259,484     1,132,364
                                                      -----------   -----------
            Total Liabilities                           4,183,115     3,624,278
                                                      -----------   -----------

Stockholders' Equity (Deficit):
       Common stock, $.001 par value,
        50,000,000 shares authorized, 21,555,674
        and 19,026,652 shares issued and
        outstanding, respectively                          21,556        19,027
       Capital in excess of par value                   8,907,024     7,494,098
       Retained deficit                                (8,305,606)   (7,533,102)
                                                      -----------   -----------
                                                          622,974       (19,977)
       Less stock subscription receivable                (114,798)     (130,950)
                                                      -----------   -----------
            Total Stockholders' Equity (Deficit)          508,176      (150,927)
                                                      -----------   -----------
            Total Liabilities and Stockholders'
             Equity (Deficit)                         $ 4,691,291   $ 3,473,351
                                                      -----------   -----------

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


                                       F-2
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                         For the Three Months
                                                             Ended March 31,
                                                   ----------------------------
                                                       2003             2002
                                                   -----------      -----------
Revenues                                           $ 5,747,039      $ 6,275,593

Cost of goods sold                                   4,308,499        4,659,069
                                                   -----------      -----------

Gross profit                                         1,438,540        1,616,524
                                                   -----------      -----------

Operating Expenses:
      Commissions and fees                           1,298,513        1,461,116
      Selling expenses                                  93,806           64,017
      General and administrative expenses              510,683          241,006
      Depreciation and amortization                    159,167           29,099
      Non-cash compensation                             21,666              -
                                                   -----------      -----------
           Total Operating Expenses                  2,083,835        1,795,238
                                                   -----------      -----------

Loss from Operations                                  (645,295)        (178,714)
                                                   -----------      -----------

Other Income (Expense):
      Other income                                          96            3,427
      Interest and other expense                      (127,305)         (12,865)
                                                   -----------      -----------
           Total Other Income (Expense)               (127,209)          (9,438)
                                                   -----------      -----------

Loss Before Income Taxes                              (772,504)        (188,152)

Income tax expense                                         -                -
                                                   -----------      -----------

Net Loss                                           $  (772,504)     $  (188,152)
                                                   ===========      ===========

Basic Loss per Common Share                        $     (0.04)     $     (0.01)
                                                   ===========      ===========

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


                                      F-3
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                         For the Three Months
                                                           Ended March 31,
                                                       -----------------------
                                                           2003         2002
                                                       ----------   ----------
Cash Flows from Operating Activities:
    Net loss                                           $ (772,504)  $ (188,152)
    Adjustments to reconcile net loss to
      net cash used by operating activities:
       Loss on disposal of property and equipment          10,888       21,878
       Depreciation and amortization                      159,167       29,099
       Non-cash compensation                               21,666          -
       Change in assets and liabilities:
          (Increase) decrease in accounts receivable     (140,247)     (53,037)
          Increase in inventory                          (170,535)      10,031
          Increase in accounts payable                    580,340     (216,243)
          Increase (decrease) in accrued liabilities       94,041     (133,550)
                                                       ----------   ----------
            Net Cash Used by Operating Activities        (217,184)    (531,555)
                                                       ----------   ----------
Cash Flows from Investing Activities:
    Purchase of property and equipment                   (209,888)    (377,684)
    Capitalized software development costs               (168,304)    (208,838)
                                                       ----------   ----------
            Net Cash Used by Investing Activities        (378,192)    (586,522)
                                                       ----------   ----------
Cash Flows from Financing Activities:
    Issuance of common stock                               20,000    1,645,575
    Cash received from subscription receivable             16,152          -
    Payment of stock offering costs                      (247,742)     (48,899)
    Proceeds from convertible notes and debentures      1,450,000          -
    Amortization of discount on debentures and notes       91,748          -
    Payments on convertible notes payable                 (10,421)      (9,097)
    Payment on notes payable                                  -       (360,441)
    Proceeds from capital leases                           66,992          -
    Payments on capital lease obligations                  (7,872)      (1,173)
    Increase (decrease) in related party obligations       10,267        2,643
    Increase (decrease) in bank overdraft                (342,470)     202,952
                                                       ----------   ----------
            Net Cash Provided by Financing Activities   1,046,654    1,428,917
                                                       ----------   ----------
Net Increase (Decrease) in Cash                           451,278      310,840
Cash, Beginning of Period                                 115,609        2,422
                                                       ----------   ----------
Cash, End of Period                                    $  566,887   $  313,262
                                                       ==========   ==========

Supplemental Disclosures of Cash Flow Information:
    Cash paid during the period for:
       Interest expense                                             $   21,618
       Capitalized interest                            $      -     $   18,031
       Income taxes                                    $      100   $      -


                                      F-4
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)

      Supplemental Schedule of Non-cash Investing and Financing Activities:

                   For the three months ended March 31, 2003:

The Company issued 2,115,386 shares of common stock and warrants to purchase
2,115,386 shares of common stock in connection with the sale of convertible
debentures.

The Company issued 363,636 shares of common stock in connection with the sale of
a convertible note.

                   For the three months ended March 31, 2002:

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

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

The Company issued 43,368 shares of common stock in a cashless exercise of a
common stock option.

The Company canceled 400,000 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.


                                      F-5
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization - Q Comm International, Inc. (the Company) was organized on
     February 7, 1986 as Four Rivers Development, Inc. This name was changed on
     August 3, 1998 to Q Comm International Inc. Substantially all operations
     are conducted through the Company's wholly owned subsidiary, Q Comm, Inc.
     The Company is headquartered in Orem, Utah. The Company's business involves
     purchasing and reselling prepaid telecommunication 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 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.

     Unaudited Condensed Financial Statements - The accompanying financial
     statements have been prepared by the Company without audit. In the opinion
     of management, all adjustments (which include only normal recurring
     adjustments) necessary to present fairly the financial position, results of
     operations and cash flows at March 31, 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 March 31, 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
     Company considers all highly liquid debt investments purchased with an
     original maturity of three months or less to be cash equivalents.

     Accounts Receivable - Accounts receivable consists of trade receivables
     arising in the normal course of business. At March 31, 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.


                                      F-6
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     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 products sold at retail and the cost of terminals
     and other miscellaneous products sold. 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.

     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.


                                      F-7
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Advertising Costs - Advertising costs are expensed as incurred. Such costs
     amounted to $5,574 and $5,230 during the three months ended March 31, 2003
     and 2002, respectively.

     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
     three months ended March 31, 2002 have been reclassified to conform to
     headings and classifications used in the March 31, 2003 financial
     statements.

     Recently Enacted Accounting Standards - Statement of Financial Accounting
     Standards ("SFAS") No. 146, "Accounting for Costs Associated with Exit or
     Disposal Activities", SFAS No. 147, "Acquisitions of Certain Financial
     Institutions - an Amendment of FASB Statements No. 72 and 144 and FASB
     Interpretation No. 9", and SFAS No. 148, "Accounting for Stock-Based
     Compensation - Transition and Disclosure - an Amendment of FASB
     Statement No. 123", were recently issued. SFAS No. 146, 147 and
     148 have no current applicability to the Company or their effect on
     the financial statements would not have been significant.

NOTE 2 - PROPERTY & EQUIPMENT

     The following is a summary of property and equipment:

                                             March 31,        December 31,
                                               2003               2002
                                            ----------        -----------

       Point of sale equipment              $1,290,422        $1,134,961
       Office and computer equipment           147,951           140,349
                                            ----------        ----------
       Total cost                            1,438,373         1,275,310
       Accumulated depreciation               (242,122)         (239,808)
                                            ----------        ----------
       Property & equipment, net            $1,196,251        $1,035,502
                                            ----------        ----------

     Depreciation expense for the three months ended March 31, 2003 and 2002 was
$38,252 and $29,099, respectively.


                                      F-8
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - PROPERTY & EQUIPMENT (Continued)

     Included in the cost of property and equipment at March 31, 2003 is a
     deposit in the amount of approximately $700,000 for various components of
     point of sale equipment to be manufactured for the Company. The deposit
     will be offset against the cost of the equipment to the Company as the
     point of sale equipment is purchased.

NOTE 3 - GOODWILL

     At March 31, 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 three months ended March 31, 2003 and 2002.


NOTE 4 - CAPITALIZED SOFTWARE DEVELOPMENT

     Information related to capitalized software development costs at March 31,
     2003 is as follows:

        Capitalized software, January 1, 2003                $1,450,968
        Capitalized during the period                           168,304
                                                             ----------
        Capitalized software, March 31, 2003                  1,619,272
        Accumulated amortization                               (241,830)
                                                             ----------
        Capitalized software, net                            $1,377,442
                                                             ----------

     Of the balance at March 31, 2003, approximately $400,000 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 three months ended March 31, 2003, the
     Company recorded amortization expense of $120,915.


                                      F-9
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - BANK OVERDRAFT

     The Company receives payment on substantially all its sale transactions
     through the automated clearinghouse system (ACH system) on either a daily
     or weekly basis. Once the payment has been received, the Company disburses
     funds via the ACH system for the cost of products sold and commissions
     according to the respective agreements, generally ranging from 1-4 days
     after funds are received. This timing difference between receipt of funds
     and payment of product costs and commissions creates an ongoing balance of
     available funds (float) in the Company's bank accounts. The Company
     utilized a portion of this available balance at March 31, 2003 in the
     amount of $253,074, which created an overdraft in the Company's books and
     records while the balance on the bank's records was positive.

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 with interest at 10%, 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. At March 31, 2003 the outstanding
     balance of the note and accrued interest thereon was $420,959. If the
     Company enters into a qualified financing (consisting of a transaction or
     series of related transactions in which the Company raises at least
     $4,000,000) i) a payment of $150,000 is due within three days of the
     financing; ii) accrued interest is due the last day of the 12th month
     following the financing; and iii) monthly payments in the amount required
     to fully amortize the remaining principal amount of the note and interest
     by December 31, 2007 will begin the last day of the 13th month following
     the financing. The entire balance of the note is reflected as a long-term
     liability in the accompanying unaudited condensed balance sheet as of March
     31, 2003.

     During the three months ended March 31, 2003 and 2002, the Company recorded
     interest expense on the notes of $10,267 and $4,570, respectively.

NOTE 7 - LONG-TERM DEBT

     CONVERTIBLE NOTES AND DEBENTURES
     During November and December 2001, the Company borrowed a total of $250,000
     in the form of a convertible note. The outstanding balance of the note may
     be converted into common stock at $1.25 per share after one year at the
     option of the holder. The note bears interest at 14% and requires monthly
     payments of $5,865 through November 2006. The note is secured by the
     Company's tangible and intangible assets, and the proceeds therefrom. In
     connection with the note, the Company issued warrants for the purchase of
     150,000 shares of common stock at $1.25 per share, expiring in 2008. At
     March 31, 2003, the outstanding balance of the note was $200,826. In
     February 2003, the borrower agreed to subordinate its security interest
     related to the note in favor of certain investors who purchased the
     Company's convertible debentures (see below). As consideration for this
     subordination of security interest, the Company decreased the exercise
     price of the warrants to $.75 per share. The effect of the decrease in the
     exercise price of the warrant was $2,490, which was recorded as interest
     expense in February 2003.


                                      F-10
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - LONG-TERM DEBT (Continued)

     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 363,636 shares of restricted common stock, which were valued at
     $145,454 or $.40 per share, the value of similar restricted common shares
     sold for cash, and has been recorded as a discount to the note and will be
     amortized to interest expense over the term of the note. The
     unamortized discount at March 31, 2003 was $123,618 and is offset against
     the outstanding balance of the note in the accompanying unaudited
     balance sheet. The note may be converted into common stock at the
     option of the holder at $.55 per share.

     In February and March 2003, the Company received commitments to purchase
     (a) $1.5 million aggregate principal amount of 12% secured convertible
     debentures due March 31, 2004, (b) 2,538,465 shares of restricted common
     stock and (c) warrants to purchase 2,538,465 shares of common stock,
     expiring in 2008. As of March 31, 2003, $1,250,000 of the expected gross
     proceeds of $1,500,000 from the sale of these securities had been received.
     The balance was received subsequent to March 31, 2003.

     The debentures are secured by a lien on all of the Company's assets. The
     Company is required to transfer $1.725 million out of the proceeds of any
     financing in excess of $5 million (a "Qualified Financing") to an escrow
     agent as collateral security for the repayment of the debentures, at which
     time the interest rate on the debentures will be reduced to the prime rate,
     currently 4.25%. The debenture holders may demand prepayment of the
     debentures at any time after a Qualified Financing is completed. The
     Company may prepay the debentures beginning December 31, 2003, but only
     after giving the holders 90 days written notice. Alternatively, the Company
     has the right to prepay the debentures at any time by paying a 35% premium.
     The debenture holders can elect to convert them at any time into shares of
     common stock. The conversion price is the lower of the price of a share of
     common stock as determined in connection with the proposed public offering
     (see Note 13) or $0.65 per share. The exercise price of the warrants is
     150% of the conversion price of the debentures. The exercise price and the
     number of shares covered by the warrant 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 2,538,465 restricted common shares were valued at $1,015,386, or $.40
     per share, the value of similar restricted common shares sold for cash. The
     2,538,465 warrants were valued at $845,562 using the Black-Scholes pricing
     model and the following assumptions: $.975 exercise price, $.40 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, resulting in relative fair values of $818,412 and $681,558,
     respectively. The $1.5 million discount recorded against the debentures
     will be amortized as interest expense over the term of the debentures.
     The unamortized discount at March 31, 2003 was $1,180,088 and is offset
     against the outstanding balance of the debentures in the accompanying
     unaudited balance sheet.

     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 extended to November 30, 2003. In connection with obtaining
     the note, the Company issued options to purchase 25,000 shares of common
     stock at $.60 per share expiring November 2003, with demand registration
     rights. The balance of the note at March 31, 2003 was $31,350.


                                      F-11
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 March
     31, 2003 of $18,745. The lease is collateralized by equipment with a
     remaining book value of approximately $18,300 at March 31, 2003.
     Depreciation expense of $5,285 was recognized on this equipment during each
     of the periods ended March 31, 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 $61,021 at March 31, 2003.
     The lease is collateralized by equipment with a remaining book value of
     approximately $62,000 at March 31, 2003. Depreciation expense of $3,250 was
     recognized on this equipment during the three months ended March 31, 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 $30,600 at
     March 31, 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 March 31, 2003, the Company's CEO was party to a suit in which the
     plaintiff claims the CEO agreed to sell to the plaintiff 300,000 shares of
     the Company's common stock at $.03 per share. The 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.

     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 $114,780 at
     March 31, 2003. This amount is reflected in the accompanying unaudited
     balance sheet as an offset to stockholders' equity.


                                      F-12
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - LITIGATION AND CONTINGENCIES (Continued)

     In December 2002, the Company granted a total of 650,000 shares of
     restricted common stock as a bonus payable to four executives and key
     employees. 325,000 of the shares were for past services and are
     distributable anytime after January 31, 2003 at the election of the
     employee. These 325,000 shares were valued at $130,000 and recorded as
     non-cash compensation during the year ended December 31, 2002. The
     remaining 325,000 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 three months ended March 31, 2003, the
     Company accrued $21,667 in non-cash compensation related to these
     agreements based on a price per share of common stock of $.40.

NOTE 10 - CAPITAL STOCK

     A summary of common stock transactions for the periods ended March 31, 2003
     and 2002 is as follows:

                        Three Months Ended March 31, 2003

     The Company sold 50,000 shares of restricted common stock at $.40 per share
     through a private placement for $20,000 in cash.

     The Company issued 363,636 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 $.40 per share, or $145,454.

     The Company issued 2,115,386 shares of restricted common stock and warrants
     to purchase 2,115,386 shares of restricted common stock in connection the
     sale of $1,250,000 of debentures. Subsequent to March 31, 2003, the Company
     issued an additional 423,078 shares of restricted common stock and warrants
     to purchase 423,078 shares of restricted common stock in connection with
     the sale of $250,000 of debentures (see Note 7). The 2,538,464 aggregate
     shares of common stock and the 2,538,464 aggregate warrants to purchase
     common stock were valued at $818,412 and $681,558, respectively.

                        Three Months Ended March 31, 2002

     The Company sold 1,917,175 shares of restricted common stock at $1.00 per
     share through private placements for $1,917,175 in cash. Stock offering
     costs of approximately $99,000 were recorded in connection with the sale,
     including 50,544 shares of restricted common stock valued at $1.00 per
     share.

     The Company issued 25,000 shares of restricted common stock upon the
     exercise of common of stock options for $15,000 in cash.

     The Company issued 43,368 shares of restricted common stock in a cashless
     exercise of common stock options. The underlying agreement was for a total
     of 90,000 common stock options with an exercise price of $1.00 per share.

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


                                      F-13
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - CAPITAL STOCK (Continued)

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

     At December 31, 2002 the Company's CEO was party to a suit in which the
     plaintiff claims the CEO agreed to sell to the plaintiff 300,000 shares of
     the Company's common stock at $.03 per share (see Note 9).

NOTE 11 - STOCK OPTIONS AND WARRANTS

     At March 31, 2003, the Company had outstanding 3,144,690 options to
     employees under various agreements with exercise prices ranging from $1.00
     to $1.10 per share, expiring between May 2005 and February 2008. Of the
     options outstanding at March 31, 2003, 2,382,190 were vested and 1,030,000
     were exercisable. During the three months ending March 31, 2003, 95,000
     options were granted, 30,000 options were forfeited and no options were
     exercised.

     At March 31, 2003, the Company had outstanding options and warrants to
     purchase 4,201,554 shares of common stock that were issued to non-employees
     under various agreements with exercise prices ranging from $.40 to $1.80
     per share, expiring between August 2003 and November 2008. During the three
     months ended March 31, 2003, the Company issued options and warrants to
     purchase 2,115,387 shares of common stock to non-employees at a price to be
     determined based on the price of a share of common stock issued in a public
     offering (see Note 13). Subsequent to March 31, 2003, 423,078 warrants to
     purchase common stock were issued under the same terms. During the three
     months ended March 31, 2003, no options or warrants to non-employees were
     exercised or expired.

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:

                                                      For the Three Months Ended
                                                               March 31,
                                                      --------------------------
                                                          2003          2002
                                                      -----------   -----------
     Loss from continuing operations available to
       common shareholders  (numerator)               $  (772,504)  $  (188,152)
                                                      -----------   -----------
     Weighted average number of common
       shares outstanding during the year
       used in per share calculations (denominator)    19,829,438    13,453,771
                                                      -----------   -----------

     Because the Company incurred losses for the years ended March 31, 2003 and
     2002, the effect of options/warrants and convertible notes totaling
     10,601,324 and 6,795,362 equivalent shares, respectively, has been excluded
     from the loss per share computation since its impact would be antidilutive.


                                      F-14
<PAGE>

                    Q COMM INTERNATIONAL, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - PUBLIC OFFERING

     On February 7, 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 by the Company of
     up to $10,000,000 worth of the Company's common stock and warrants. The
     registration statement was filed on April 1, 2003 and amended on May 6,
     2003. There is no assurance that the Company will successfully complete the
     offering.

     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. The
     stockholders will be asked to authorize the Board to determine, in its sole
     discretion, the precise ratio of the split and the timing thereof.

NOTE 14 - GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles in the United States of America,
     which contemplate continuation of the Company as a going concern.
     However, the Company has incurred significant losses in recent years,
     has current liabilities in excess of current assets and has not yet
     been successful in establishing profitable operations. These factors
     raise substantial doubt about the ability of the Company to continue as
     a going concern. In this regard, management plans to raise additional
     funds through debt and/or equity offerings (see Note 13) and
     substantially increase sales. There is no assurance that the Company
     will be successful in raising funds or in achieving profitable
     operations. The financial statements do not include any adjustments
     that might result from the outcome of these uncertainties.

NOTE 15 - SUBSEQUENT EVENTS

     In April 2003, the Company received $250,000 in the sale of debentures and
     issued 423,078 shares of common stock and 423,078 warrants to purchase
     common stock (See Note 7).



                                      F-15