<Page>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

               For the quarterly period ended MARCH 31, 2004

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

            For the transition period from ________ to ___________

                        Commission File No.: 33-55254-447

                          TOUCHTUNES MUSIC CORPORATION
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

            NEVADA                                             87-0485304
-------------------------------                          ----------------------
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                          Identification Number)

                              1800 E. SAHARA AVENUE
                                    SUITE 107
                             LAS VEGAS, NEVADA 89104
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (702) 792 -7405
                           ---------------------------
                           (Issuer's telephone number)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: AS OF MAY 17, 2004, 14,827,394 SHARES
OF CLASS A VOTING COMMON STOCK WERE OUTSTANDING.

Transitional Small Business Disclosure Format (check one): Yes __  No  X__
<Page>

                          TOUCHTUNES MUSIC CORPORATION

                                      INDEX

<Table>
<Caption>
                                                                           PAGE
                                                                           ----
PART I - FINANCIAL INFORMATION:
<S>                                                                        <C>

Item 1. Consolidated Balance Sheets (unaudited) as at March 31, 2004
        and December 31, 2003..............................................   1


        Consolidated Statements of Operations and Comprehensive Loss
        (unaudited) for the three-month periods ended March 31, 2004
        and 2003...........................................................   3

        Consolidated Statements of Cash Flows (unaudited) for the
        three-month periods ended March 31, 2004 and 2003..................   4

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations..........................................  12

Item 3. Controls and Procedures ...........................................  18


PART II - OTHER INFORMATION:

Item 1. Legal Proceedings..................................................  18

Item 6. Exhibits and Reports on Form 8-K...................................  19

Signatures.................................................................  20

Certifications.............................................................  21
</Table>
<Page>

                         PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

The accompanying unaudited financial statements for the quarter ended March 31,
2004 have been prepared in accordance with the instructions to Form 10-QSB and,
therefore, do not include all information and notes necessary for a complete
presentation of financial position, results of operations, cash flows and
stockholders' equity for the quarter then ended, in conformity with generally
accepted accounting principles in the United States. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the quarter
ended March 31, 2004 are not necessarily indicative of the results that can be
expected for the fiscal year ending December 31, 2004. For further information,
refer to the financial statements and the notes thereto included in the Annual
Report for TouchTunes Music Corporation (the "Company") on Form 10-KSB, for the
fiscal year ended December 31, 2003. Note that all dollar amounts set forth in
this quarterly report on Form 10-QSB are in United States dollars, except where
otherwise indicated, and references herein to "dollars" or "$" are to United
States dollars and references to "CDN" are to Canadian dollars.

                          TOUCHTUNES MUSIC CORPORATION
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                 MARCH 31, 2004

                           CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
[In U.S. dollars]                                                       AS AT              As at
                                                               MARCH 31, 2004  December 31, 2003
                                                                            $                  $
-------------------------------------------------------------------------------------------------
                                                                  (UNAUDITED)            (Note*)
<S>                                                            <C>             <C>
ASSETS (note 5)
CURRENT
Cash and cash equivalents                                             654,856            338,614
Trade accounts receivable                                           7,316,371          6,640,992
Other receivables                                                     276,193            454,192
Prepaid expenses and deposits                                       1,545,678          1,392,572
Inventory                                                           2,786,480          2,671,917
Current portion of investment in sales-type leases                  1,176,109          1,121,219
-------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                               13,755,687         12,619,506
-------------------------------------------------------------------------------------------------
Investment in sales-type leases                                       521,038            834,941
Property, plant and equipment, net                                  2,390,731          2,040,302
Intangibles                                                           389,302            438,557
Other assets                                                        1,175,039            821,970
-------------------------------------------------------------------------------------------------
                                                                   18,231,797         16,755,276
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
</Table>

* Note: The balance sheet as at December 31, 2003 has been derived from the
audited financial statements at that date but does not include all of the
information and notes required by generally accepted accounting principles in
the United States for complete financial statements.


                                       1
<Page>

TOUCHTUNES MUSIC CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                                    [CONT'D]

<Table>
<Caption>
[In U.S. dollars]                                                        AS AT              As at
                                                                MARCH 31, 2004  December 31, 2003
                                                                             $                  $
--------------------------------------------------------------------------------------------------
                                                                   (UNAUDITED)            (Note*)
<S>                                                             <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Bank indebtedness (note 5)                                           1,557,679          1,900,000
Accounts payable and accrued liabilities                             6,195,462          5,454,544
Current portion of long-term debt (note 5)                             955,111            777,636
Notes payable                                                          966,728            652,535
--------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                            9,674,980          8,784,715
--------------------------------------------------------------------------------------------------

Long-term debt (note 5)                                                644,889                 --
--------------------------------------------------------------------------------------------------
                                                                    10,319,869          8,784,715
--------------------------------------------------------------------------------------------------


STOCKHOLDERS' EQUITY (NOTE 6)
Series A preferred stock, voting and participating,
$0.001 par value
  Authorized: 15,000,000 shares
  Issued and outstanding: 12,843,960 shares                             12,844             12,844
Series B preferred stock, voting and participating,
$0.001 par value
  Authorized: 10,000,000 shares
  Issued and outstanding: 8,888,889 shares                               8,889              8,889
Series C preferred stock, $0.001 par value
  Authorized: 30,000,000 shares
  Issued and outstanding: 25,000,000 shares                             25,000             25,000
Class A voting common stock, $0.001 par value
  Authorized: 100,000,000 shares
  Issued and outstanding: 14,827,394 shares                             14,828             14,828
Additional paid-in capital (note 6)                                  8,420,910          8,420,910
Accumulated deficit (note 6)                                                --                 --
   Net of elimination totaling $82,667,696                            (570,543)          (511,910)
--------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY                                           7,911,928          7,970,561
--------------------------------------------------------------------------------------------------
                                                                    18,231,797         16,755,276
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</Table>

CONTINGENCIES (NOTE 8)

SUBSEQUENT EVENT (NOTE 10)

SEE ACCOMPANYING NOTES.

* Note: The balance sheet as at December 31, 2003 has been derived from the
audited financial statements at that date but does not include all of the
information and notes required by generally accepted accounting principles in
the United States for complete financial statements.


                                       2
<Page>

TOUCHTUNES MUSIC CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS

<Table>
<Caption>
[In U.S. dollars]                                                        THREE MONTH       Three month
                                                                        PERIOD ENDED      period ended
                                                                      MARCH 31, 2004    March 31, 2003
                                                                                   $                 $
-------------------------------------------------------------------------------------------------------
                                                                         (UNAUDITED)       (unaudited)
<S>                                                                   <C>               <C>
REVENUES
Jukebox sales and music service revenues                                   7,859,238         5,567,375
Jukebox leasing and financing  revenues                                      360,281           500,306
Gain on disposal of assets and investment in sales-type leases                 2,210           135,800
-------------------------------------------------------------------------------------------------------
                                                                           8,221,729         6,203,481
-------------------------------------------------------------------------------------------------------
EXPENSES
Cost of jukebox revenues
   And direct operating costs                                              4,841,830         3,650,523
Research and development                                                     935,308           668,415
Investment tax credits                                                       (52,644)               --
General and administrative                                                 1,227,597         1,253,070
Sales and marketing                                                          737,455           638,759
Interest expense                                                              88,773           350,492
Depreciation and amortization                                                360,709           375,291
Foreign exchange losses                                                      141,334            15,386
-------------------------------------------------------------------------------------------------------
                                                                           8,280,362         6,951,936
-------------------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS                                              (58,633)         (748,455)
  Dividends and accretion of mandatorily redeemable Series B
  preferred stock (note 6)                                                        --         1,049,490
-------------------------------------------------------------------------------------------------------

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS AND HOLDERS OF COMMON
  STOCK EQUIVALENTS                                                          (58,633)       (1,797,945)
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Per common stock and common stock equivalents
BASIC AND DILUTED NET LOSS PER SHARE (NOTE 4)                                  (0.00)            (0.12)
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF COMMON STOCK AND COMMON STOCK
  EQUIVALENTS                                                             93,359,274        14,758,644
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
</Table>

                             SEE ACCOMPANYING NOTES.


                                       3
<Page>

TOUCHTUNES MUSIC CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
[In U.S. dollars]                              THREE MONTH          Three month
                                              PERIOD ENDED         period ended
                                            MARCH 31, 2004       March 31, 2003
                                                         $                    $
--------------------------------------------------------------------------------
                                               (UNAUDITED)          (unaudited)
<S>                                         <C>                  <C>
OPERATING ACTIVITIES
Net loss and comprehensive loss                    (58,633)            (748,455)
ADJUSTMENTS TO RECONCILE NET LOSS TO
  NET CASH USED IN OPERATING
  ACTIVITIES:
Non-cash portion of cost of                         35,735               35,735
  jukebox revenues and direct
  operating costs
Unpaid interest charge on unsecured                     --              254,203
  loans from principal stockholders
Depreciation and amortization                      360,709              375,291
Gain on disposal of assets                          (2,210)             (88,366)
Non-cash portion of jukebox                             --              (51,351)
  financing revenues
Gain on disposal of investment in                       --              (47,434)
  sales-type leases
CHANGES IN OPERATING ASSETS AND
  LIABILITIES:
Accounts and other receivables                    (497,380)             (82,133)
Prepaid expenses and deposits                     (153,106)             (53,854)
Inventory                                         (114,563)            (311,287)
Other assets                                        22,112              (37,916)
Accounts payable and accrued                       740,918             (540,455)
  liabilities
Proceeds from disposal of investment                22,924              721,626
  in sales-type leases
Investment in sales-type leases                    236,089              373,318
--------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) OPERATING               592,595             (201,078)
  ACTIVITIES
--------------------------------------------------------------------------------

INVESTING ACTIVITIES
Proceeds from disposition of                         3,457              254,606
   property, plant and equipment
Addition to intangibles                            (40,031)                (486)
Purchase of property, plant, and                  (623,099)             (51,918)
  equipment
Increase in deferred charges                      (410,916)                  --
--------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) INVESTING            (1,070,589)             202,202
  ACTIVITIES
--------------------------------------------------------------------------------
</Table>


                                       4
<Page>

<Table>
<Caption>
[In U.S. dollars]                              THREE MONTH          Three month
                                              PERIOD ENDED         period ended
                                            MARCH 31, 2004       March 31, 2003
                                                         $                    $
--------------------------------------------------------------------------------
                                               (UNAUDITED)          (unaudited)
<S>                                         <C>                  <C>
FINANCING ACTIVITIES
Decrease  in bank indebtedness                    (342,321)            (450,000)
Repayment of capital lease                              --              (25,012)
  obligations
Proceeds of long-term debt                       1,600,000                   --
Repayment of long-term debt                       (777,636)            (673,866)
Proceeds from notes payable                        532,245                   --
Repayment of notes payable                        (218,052)                  --
--------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) FINANCING               794,236           (1,148,878)
  ACTIVITIES
--------------------------------------------------------------------------------

NET CHANGE IN CASH AND CASH                        316,242           (1,147,754)
  EQUIVALENTS
Cash and cash equivalents, beginning               338,614
  of period                                                           1,458,094
--------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF                  654,856              310,340
  PERIOD
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SUPPLEMENTARY INFORMATION
Interest paid                                       63,987               72,180
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</Table>

                            SEE ACCOMPANYING NOTES.


                                       5
<Page>

TOUCHTUNES MUSIC CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

March 31, 2004
[In U.S. dollars]

1.       ORGANIZATION AND OPERATIONS OF THE COMPANY

TouchTunes Music Corporation (the "Company") is involved in the digital
distribution of interactive music to music-on-demand applications. The first
such music-on-demand application developed by the Company were its digital
jukeboxes (the "Digital Jukeboxes"), which utilize digitally compressed audio
technology to distribute music titles through a proprietary distribution
network. The Company is also developing its technology for other music-on-demand
applications.

2.       BASIS OF FINANCIAL STATEMENT PRESENTATION

The consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the United States.

The consolidated financial statements at March 31, 2004, and for the three-month
period ended March 31, 2004 and 2003, are unaudited and reflect all adjustments
(consisting only of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the Company's financial
position and operating results for the interim periods in accordance with
accounting principles generally accepted in the U.S. for interim financial
statements. Accordingly, these interim consolidated financial statements do not
include all information and footnotes required by generally accepted accounting
principles for complete financial statements.

These consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto, together with
management's discussion and analysis of financial condition and results of
operations, contained in the Company's Annual Report on Form 10-KSB, for the
fiscal year ended December 31, 2003. The results of operations for the
three-month period ended March 31, 2004 are not necessarily indicative of the
results for the fiscal year ending December 31, 2004 or any other future
periods.

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary TouchTunes Digital Jukebox, Inc. ("TouchTunes
Digital"). All significant inter-company balances and transactions since
acquisition of control have been eliminated on consolidation.

3.       WARRANTY PROVISION

The change in the warranty provision recorded in the Company's balance sheet for
the quarter was as follows:

<Table>
<Caption>
                                       THREE MONTH PERIOD    Three month period
                                                    ENDED                 ended
                                           MARCH 31, 2004        March 31, 2003
                                                        $                     $
--------------------------------------------------------------------------------
<S>                                    <C>                   <C>

Balance at the beginning of the                   696,784               450,000
  period
Charged to cost of jukeboxes                      125,444               109,631
Use of provision                                 (163,662)              (27,853)
--------------------------------------------------------------------------------
BALANCE AT THE END OF THE PERIOD                  658,566               531,778
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</Table>


                                       6
<Page>

4.       BASIC AND DILUTED LOSS PER SHARE

The calculation of basic and diluted net loss per share for the quarters ended
March 31, are as follows:

<Table>
<Caption>
                                   THREE MONTH PERIOD     Three month period
                                                ENDED                  ended
                                       MARCH 31, 2004         March 31, 2003
-----------------------------------------------------------------------------
<S>                                <C>                    <C>
Net loss attributable to common
   stockholders and holders of
   common stock equivalents                   (58,633)            (1,797,945)
-----------------------------------------------------------------------------
Weighted average common shares
   and common share equivalents
   outstanding  used to compute
   basic and diluted net loss
   per common share                        93,359,274             14,758,644
-----------------------------------------------------------------------------
Basic and diluted netloss                       (0.00)                 (0.12)
  per common share
-----------------------------------------------------------------------------
</Table>

The impact of the conversion of 12,843,960 shares of the Company's Series A
preferred stock, voting and participating, into 38,531,880 Class A voting common
stock, the 8,888,889 shares of the Company's Series B preferred stock, voting
and participating, into 40,000,000 voting common stock are being included in the
weighted average common shares outstanding, using the as-if-converted method, to
compute the basic and diluted net loss per share since June 10, 2003, the date
of the capital restructuring (see note 6), because since that date they have
characteristics similar to the common shares.

The options and warrants to purchase the Company's Class A voting common stock,
were not included in the computation of the diluted loss per share, as the
effect would be anti-dilutive.

5.       BANK INDEBTEDNESS AND LONG-TERM DEBT

The Company's bank indebtedness consists of an operating line of credit (the
"Line of Credit") of $2 million (December 31, 2003 - $2 million). The
collateralization provided to the bank by the Company on the Line of Credit and
the loans described below is in the form of charges on past, present and future
assets of the Company. The Line of Credit bears interest at the U.S. prime rate
of the bank plus 1.25%, representing a rate of 5.75% as at March 31, 2004
(December 31, 2003 - 5.75%). The Company is in the process of obtaining an
extension of the line of credit. The Line of Credit is also collateralized by a
first charge on accounts receivable and inventories of $1,050,000 and a charge
on moveable property in the amount of $2,050,000. As at March 31, 2004,
$1,550,000 (December 31, 2003 - $1.9 million), was used on this facility.


                                       7

<Page>

Long-term debt consists of the following:

<Table>
<Caption>
                                MATURITY       MARCH 31, 2004     December 31, 2003
                                                            $                     $
                               -----------------------------------------------------
<S>                            <C>             <C>                <C>
CED Term Loan                       2004                   --                21,494
Jukebox Term Loan              2003-2004                   --               756,142
Music Advance Term Loan        2004-2007            1,600,000                    --
                                          ------------------------------------------
Total                                               1,600,000               777,636
Less: Current portion                                 955,111               777,636
                                          ------------------------------------------
Total                                                 644,889                    --
                                          ------------------------------------------
                                          ------------------------------------------
</Table>

Long-term debt as at March 31, 2004 consists of a music advance term loan
facility (the "Term Loan") with a major Canadian chartered bank, which is
collateralized by charges on present and future assets of the Company. The Term
Loan represents, in the aggregate, $2,000,000 and was entered into in January
2004 for purposes of financing the recoupable advances made to certain music
providers. The security provided to the bank by the Company was in the form of
charges on past, present and future assets of the Company. The Term Loan bears
interest at the U.S. base rate of the Bank plus 3%, representing a rate of 7.5%
as at March 31, 2004. The Term Loan is also collateralized by a certificate of
guarantee issued by La Financiere du Quebec covering 50% of the net loss risk
and a charge on moveable property in the amount of $ 2,400,000.

The CED Term Loan and the Jukebox Term Loan were repaid in full in February and
March 2004 respectively.

The agreements between the Company and the Bank governing the Term Loan and the
Line of Credit contain financial covenants including requirements that the
Company maintain a minimum stockholders' equity, as defined in the agreement, of
$7,500,000, and a minimum debt to equity ratio as defined therein. As at March
31, 2004, the Company's stockholders' equity, as defined in the Agreement, was
$7,522,626 and the Company did satisfy the covenant. If the Company fails to
comply with the Covenant, the Bank has the right to demand full repayment of the
Term Loan as well as any funds drawn down on the Line of Credit.

The principal payments of long-term debt are as follows:

<Table>
<Caption>
                                                     $
                                             ---------
       <S>                                   <C>
       2004                                    955,111
       2005                                    644,889
                                             ---------
                                             1,600,000
                                             ---------
                                             ---------
</Table>


                                       8

<Page>

6.       CAPITAL RESTRUCTURING

In July 2001, the Company's Board of Directors approved the terms of an
unsecured loan facility (the "Unsecured Loan Facility"), from CDP Capital
Communications and CDP Capital Technologies, for up to a maximum of $5 million.
Under these terms, CDP Capital Communications and CDP Capital Technologies
committed to lend up to $3 million and $2 million, respectively. As at March 31,
2003, $3.5 million had been advanced by CDP Capital Communications and CDP
Capital Technologies in the form of promissory notes ("CDP Notes") excluding
accrued interest of $1.0 million thereon, bearing interest at the rate of 20%
per annum, repayable 30 days after issuance unless exchanged earlier for
debentures issuable under the Unsecured Loan Facility.

On December 20, 2002, the Company issued convertible debentures ("Debentures")
to two principal stockholders, namely CDP Capital Communications and CDP Capital
Technologies, for a principal amount of $400,000 each, bearing interest at 20%
per annum and maturing on June 30, 2003.

On June 10, 2003 the Company completed a capital restructuring providing for
the conversion of the Unsecured Loan Facility and the Debentures and accrued
dividends and accretion on Series B Preferred Stock into a new series of
preferred stock.

As a result of this transaction, the Unsecured Loan Facility totaling $5,325,153
and dividends and accretion due on Series B Preferred Stock totaling $10,981,663
were converted into 25,000,000 Class C non-voting Preferred Stock with an
issuance price and liquidation value of $12,500,000.

The Company's Board of Directors and the requisite number of stockholders of the
Company also approved amendments to the Company's Second Amended and Restated
Articles of Incorporation necessary to effect this capital restructuring. These
amendments were to:

(1)  increase the aggregate number of authorized shares of Common Stock from
     50,000,000 shares to 100,000,000 shares;

(2)  create a new class of authorized preferred stock, consisting of 30,000,000
     authorized shares of Series C non-voting Preferred Stock, par value $0.001
     ("Series C Preferred Stock"). The Series C Preferred Stock has an issuance
     price of $0.50 per share and a liquidation preference over the Series A
     Preferred Stock, Series B Preferred Stock and Common Stock (as may be
     adjusted for stock splits, dividends, combinations or other
     recapitalizations with respect to such shares). The Series C Preferred
     Stock shall not be entitled to voting rights, dividend rights or redemption
     rights;

(3)  provide that the issuance of Series C Preferred Stock at a conversion price
     lower than that of Series A Preferred Stock or Series B Preferred Stock
     would trigger a reduction to such lower price of the exercise price of the
     Series A Preferred Stock and Series B Preferred Stock;

(4)  remove the right of holders of Series B Preferred Stock to receive a
     cumulative and preferred dividend;

(5)  remove the right of holders of Series B Preferred Stock to demand
     redemption by the Company and remove the Company's right to redeem the
     Series B Preferred Stock at its option;

(6)  reduce the voting rights of the Series A Preferred Stock and Series B
     Preferred Stock to one vote per each outstanding share of Preferred Stock,
     in lieu of one vote per share of Common Stock into which a holder's
     Preferred Stock could be converted; and

(7)  requires that dividends declared or any distribution even upon or on any
     liquidation, dissolution or winding-up be shared among Series A preferred
     stock, Series B preferred stock and Class A voting common stock holders
     without any distinction as to classes, as on an as-if-converted to Class A
     common stock.

This capital restructuring had the following impact on the financial statements:

o    Net loss attributable to common stockholders for the second quarter of 2003
     was increased by $39,265,940 with a corresponding increase to additional
     paid-in capital representing the effect of the beneficial conversion of the
     Series A preferred stock and Class B preferred stock;


                                       9
<Page>

o    As provided for in the Conversion Agreement, no interest on the Unsecured
     Loan Facility and no dividends and accretion on the Series B preferred
     stock were recorded subsequent to March 31, 2003;

o    The Series B preferred stock are now presented as part of shareholders'
     equity because of the elimination of the rights of holders to demand
     redemption and to receive a cumulative and preferred dividend. In addition,
     these shares are presented at their par value which increased the
     additional paid-in capital by $19,991,111;

Finally, in addition to the above capital restructuring, the Company's Board of
Directors voted to eliminate the accumulated deficit as of June 30, 2003 by a
corresponding decrease of the additional paid-in capital, in accordance with the
quasi-reorganization rules. In addition, the Company reviewed the fair values of
its assets and liabilities and determined that no adjustments were required to
the recorded amounts.

7.       STOCK OPTIONS

On April 19, 2000, the Company's Board of Directors authorized a Long-Term
Incentive Plan (the "Plan"), which provides for the grant to employees,
officers, consultants, and outside contractors of various types of stock options
and Common Stock.

On April 19, 2000, September 12, 2000, December 12, 2000, March 16, 2001, May
10, 2001 and June 4, 2002, the Board of Directors granted stock options to
purchase an aggregate of 2,510,018 shares, 571,500 shares, 73,000 shares,
862,630 shares, 175,000 shares and 1,500,000 shares, respectively, of the
Company's Class A voting Common Stock, with vesting provisions ranging up to
four years. Options granted under the Plan are exercisable for a period of ten
years, except for options granted to stockholders beneficially owning 5% or more
of the Company's Class A voting Common Stock, which are exercisable over a
period of five years. On March 31, 2004, an aggregate of 1,929,256 of Class A
voting Common Stock were reserved for future issuance under the Plan. The Plan
was approved by stockholders on February 8, 2001.

The Company accounts for options granted to employees and directors under the
Plan using APB No.25, under which no compensation cost has been recognized for
stock options granted. Had compensation cost for these stock options been
determined consistent with SFAS No. 123, the Company's pro forma loss per common
share would have been as follows:

<Table>
<Caption>
                                             THREE MONTH  Three month period
                                            PERIOD ENDED               ended
                                          MARCH 31, 2004      March 31, 2003
                                                       $                   $
                                          ----------------------------------
<S>                                       <C>             <C>

Net loss attributable to common                 (58,633)          (1,797,945)
  stockholders and holders of common
  stock equivalents
Pro Forma loss                                 (132,588)          (1,883,622)
Basic and diluted loss per common                 (0.00)               (0.12)
  share
Pro Forma basic and diluted loss                  (0.00)               (0.13)
   per common share
</Table>

The fair value of options at the date of grant was estimated using the
Black-Scholes pricing model with the following weighted average assumptions.


                                       10
<Page>

<Table>
<Caption>
                                    MARCH 31, 2004      March 31, 2003
                                    ----------------------------------
<S>                                 <C>                 <C>
Average expected life (years)                    8                   8
Risk-free interest rate                       3.83                3.10
Volatility                                    96.8                96.8
Dividend yield                                0.00                0.00
</Table>

8.       CONTINGENCIES

     In November 2001, a competitor filed a suit against the Company for
non-infringement of a patent (U.S. Patent No. 6,308,204 ("the '204 patent"))
held by the Company and for unfair competition and interference with contractual
relations. A second competitor was joined in the suit as an alleged infringer of
the '204 patent. The second competitor made the same claims against the Company
as the first competitor. The suit further involved the competitors' allegations
that the '204 patent is invalid, as well as a requested declaration from the
Court that the '204 patent is unenforceable. The competitors dismissed with
prejudice their unfair competition and intentional interference with contract
claims against the Company in October 2003. In December 2003, the Court found
that the first competitor infringed the '204 patent, at least through August 18,
2003. The patent claims with respect to the second competitor have been stayed
as a result of that competitor's bankruptcy proceedings.

     In December 2003, the first competitor filed a second suit against the
Company, alleging that the Company infringes U.S. Patent No. 5,341,350 ("the
'350 patent"). The Company responded with affirmative defenses and counterclaims
that the Company does not infringe the '350 patent and that, if read to cover
the Company's activities, the claims of the '350 patent are invalid. The Company
also asserted counterclaims against the first competitor and a third competitor
for infringement of the '204 patent. Those competitors have responded with
affirmative defenses and counterclaims that the '204 patent is not infringed,
invalid and unenforceable. The first competitor responded with additional
state-law counterclaims based upon statements allegedly made by the Company.
This litigation was settled in April 2004 (see note 10).

     In March 2004 the Company entered into ageements, effective July 1, 2003,
with the American Society of Composers, Authors and Publishers ("ASCAP") and
Broadcast Music Inc. ("BMI"), organizations representing performance rights for
musical composers and authors. The Company also entered in settlement agreements
with ASCAP and BMI for the periods prior to July 1, 2003. These settlements had
no impact on the Company's reported financial results.

     The Company remains in a dispute with the Society of European Stage Authors
and Composers ("SESAC"). An estimate of the possible loss or range of loss, if
any, cannot be determined at this time.


                                       11
<Page>

9.       PROPOSED TRANSACTION

On February 12, 2004, the Company filed with the Securities and Exchange
Commission a preliminary Schedule 13E-3 Transaction Statement with respect to a
going private transaction (the "Proposed Transaction"). In connection with the
Proposed Transaction, the Company intends to effect a reverse stock split of the
Class A voting common stock, par value $0.001 per share, of the Company (the
"Common Stock") at a ratio of between one to 2,000 and one to 1,500, inclusive
(the final ratio to be determined by the board of directors immediately prior to
effecting the reverse stock split). The purpose of such reverse stock split is
to reduce the number of stockholders of record of the Company to fewer than 300.
The Company then intends to terminate the registration of the Common Stock under
the Securities Exchange Act of 1934 and terminate the listing of the Common
Stock on the Nasdaq Stock Market Over-the-Counter Bulletin Board, thereby ending
the Corporation's obligations as a public company under the United States
securities laws.

On February 24, 2004, the Company received comments from the Securities and
Exchange Commission with respect to its preliminary Schedule 13E-3 Transaction
Statement. The Company is currently preparing a response to the Securities and
Exchange Commission's comments, together with an amended Schedule 13E-3
Transaction Statement. Once the Schedule 13E-3 Transaction Statement has
adequately addressed the Securities and Exchange Commission's comments and is in
definitive form, the Company will mail copies to all of its stockholders,
describing all of the material terms of the Proposed Transaction, and currently
intends to effect the Proposed Transaction as soon as possible thereafter.

10.      SUBSEQUENT EVENT

On April 23, 2004, the Company and Ecast, Inc., entered into a settlement
agreement (the "Agreement") with respect to the litigation between them as
described in note 8. Pursuant to the Agreement, the Company and Ecast, Inc.
agreed, amongst other things to cause the litigation to be terminated with
prejudice, and to cross-license the patents that were the subject of the
litigation. In addition, and Ecast, Inc. agreed to pay to the Company, a total
of $4,000,000 (the "Settlement Amount"). An initial payment of $500,000 was made
in respect ot the Settlement Amount on April 23, 2004. The remainder of the
Settlement Amount is payable quarterly in an amount equal to the greater of: (i)
$0.005 per play of any song on any digital jukebox or other device powered by
Ecast, Inc. during such quarter; and (ii) $100,000. Such future payments are
secured by a pledge of substantially all of Ecast, Inc.'s assets.

The discounted amount of these payments will be recorded as a gain in the second
quarter of 2004. Management is currently assessing the appropriate discount rate
to be applied. Legal costs of $411,000 incurred for the period January1, 2004
through March 31, 2004 have been deferred and will be recorded against such gain
along with other legal costs incurred relating to this settlement in April 2004.

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

THE DISCUSSION AND ANALYSIS BELOW CONTAINS TREND ANALYSIS AND OTHER
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (THE "EXCHANGE ACT"). WORDS SUCH AS "ANTICIPATES", "EXPECTS",
"INTENDS", "PLANS", "BELIEVES", "SEEKS", "ESTIMATES", VARIATIONS OF SUCH WORDS
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE
SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO
PREDICT. THEREFORE, ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED
OR FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF
FACTORS, WHICH ARE NOT WITHIN THE COMPANY'S CONTROL.


                                       12
<Page>

The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements, including the notes thereto,
contained in the Company's Annual Report on Form 10-KSB, as amended, for the
fiscal year ended December 31, 2003. Note that all dollar amounts set forth in
this quarterly report on Form 10-QSB are in United States dollars, except where
otherwise indicated, and references herein to "dollars" or "$" are to United
States dollars and references to "CDN" are to Canadian dollars.

BACKGROUND AND OVERVIEW

     The Company was a development-stage company until September 1998. Prior to
September 1998, the Company's financial resources were used to finance the
development of its digital jukeboxes (the "Digital Jukeboxes"), which utilize
digitally compressed audio technology to distribute music titles securely
through a proprietary distribution network. Revenues since September 1998 have
been generated from sales and leases of the Digital Jukeboxes to jukebox
operators in the United States, as well as from the music service contracts
associated with such sales and leases of the Digital Jukeboxes. As at March 31,
2004, the Company had delivered a total of approximately 8,235 Digital Jukeboxes
as compared with 6,366 Digital Jukeboxes delivered as at March 31, 2003.
Management intends to continue its development activities in applying its
technologies to other music-on-demand products and applications to other
industries.

     The Company plays over 17 million songs to an estimated audience of
approximately three million people each month. Management expects the base of
installed Digital Jukeboxes to continue to grow, thereby increasing the number
of plays and the audience exposure. This growth is expected to establish the
Digital Jukeboxes as a significant promotional medium for record labels and
their artists.

     Total assets of the Company were approximately $18,232,000 at March 31,
2004, an increase of approximately $1,477,000 from December 31, 2003. The
increase was primarily due to an increase in trade and other accounts receivable
of approximately $497,000, an increase in property, plant and equipment of
approximately $350,000 due to the capitalizing of equipment under the Company's
Tune Central program and an increase of approximately $353,000 in other assets
due to the deferral of legal costs totaling approximately $411,000 relating to
the litigation settlement referred to in note 10 to the financial statements.
Total liabilities of the Company also increased by approximately $1,535,000 as
compared to December 31, 2003, from approximately $8,785,000 to approximately
$10,320,000 at March 31, 2004, primarily as a result of the increase in
long-term debt in the amount of approximately $823,000 due to $1,600,000 drawn
on the Company's new Music Advance Term Loan offset by the repayment of the CED
Term Loan and Jukebox Term Loan during the quarter. In addition, accounts
payable and accrued liabilities increased by approximately $741,000.

RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2004 COMPARED
TO THE THREE-MONTH PERIOD ENDED MARCH 31, 2003

     The Company incurred a net loss of approximately $58,000 during the
three-month period ended March 31, 2004 ("the first quarter 2004") as compared
to net loss of approximately $748,000 for the corresponding three-month period
in 2003 ("the first quarter 2003").

     Net loss attributable to common stockholders and holders of common stock
equivalents was approximately $58,000 for the first quarter 2004, as compared to
a net loss of approximately $1,798,000 for the first quarter 2003. There was no
non-cash charge for dividends and accretion of the Company's mandatorily
redeemable Series B preferred stock for the first quarter 2004, as compared to
approximately $1,050,000 for the first quarter 2003 due to the Company's capital
restructuring which, amongst other things, removed the rights of Series B
Preferred Stockholders to receive a cumulative and preferred dividend.


                                       13
<Page>

     REVENUES

     Total revenues increased by approximately $2,019,000 or 33%, from
approximately $6,203,000 in the first quarter 2003 to approximately $8,222,000
in the first quarter 2004. There was a decrease in leasing and financing
revenues during the first quarter 2004 totaling approximately $140,000 which is
attributable to a reduction in Digital Jukeboxes under lease due to the sale of
both sales-type leases and jukeboxes for leasing. This decrease was, as
described below, more than offset by an increase in music service revenues, and
an overall increase in unit sales of Digital Jukeboxes.

     Revenues from the Digital Jukeboxes and parts increased by approximately
$1,272,000 or 41%, from approximately $3,072,000 for the three-month period
ended March 31, 2003 to approximately $4,344,000 for the three-month period
ended March 31, 2004.

     Music service revenues grew to approximately $3,516,000 for the first
quarter 2004 as compared with approximately $2,495,000 for the first quarter
2003. This increase in music service revenues resulted from an increase in the
total number of Digital Jukeboxes installed on the Company's Digital Jukebox
network, which generate recurring music service revenues.

     COST OF JUKEBOX REVENUES AND DIRECT OPERATING COSTS

     The cost of jukebox revenues and direct operating costs increased by
approximately $1,192,000, or 33%, from approximately $3,651,000 in the first
quarter 2003 to approximately $4,842,000 during the first quarter 2004. This
increase is due mainly to the increased number of Digital Jukeboxes sold which,
in addition, resulted in an increase in the commission paid to Distributors and
in the royalties paid to publishing and music companies. The overall increase in
the number of plays on the Digital Jukebox network resulted in additional
communication and maintenance costs due to the Company's increased installed
base of Digital Jukeboxes.

     GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses decreased by approximately $25,000 or
2%, from approximately $1,253,000 in the first quarter 2003 to approximately
$1,228,000 in the first quarter 2004. This decrease is principally attributable
to the legal fees deferred in connection with the settlement of the Ecast Inc.
and Rowe International Inc. litigation (the legal proceedings are described in
detail Part II, Item 1-Legal Proceedings) offset by additional legal costs in
connection with the Company's privatization efforts.

     RESEARCH AND DEVELOPMENT EXPENSES

     Research and development expenses increased by approximately $267,000, or
40%, from approximately $668,000 in the first quarter 2003 to approximately
$935,000 in the first quarter 2004. This increase in research and development
expense is in large part due to costs incurred in respect of ongoing development
and design of new projects.

     SALES AND MARKETING EXPENSES

     Sales and marketing expenses increased by approximately $99,000, or 15%,
from approximately $639,000 in the first quarter 2003 to approximately $738,000
in the first quarter 2004. This increase is mainly due to an increase in the
commissions paid to the Company's salesmen as a result of the overall increase
in unit sales of Digital Jukeboxes.


                                       14
<Page>

     INTEREST EXPENSE

     Interest expense decreased by approximately $261,000, or 75%, from
approximately $350,000 in the first quarter 2003 to approximately $89,000 in the
first quarter 2004. This decrease is primarily due to the repayment in full of
the Jukebox Term Loan in March 2004and the conversion of the Unsecured Loan
Facility in June 2003. The Jukebox Term Loan and the Unsecured Loan Facility are
described below under the caption "Liquidity and Capital Resources."

     DEPRECIATION AND AMORTIZATION EXPENSE

     Depreciation and amortization expense decreased by approximately $14,000,
or 4%, from approximately $375,000 in the first quarter 2003 to approximately
$361,000 in the first quarter 2004. This decrease in depreciation and
amortization charges resulted primarily from fewer Digital Jukeboxes being held
by the Company as capital assets offset by increased depreciation charges
relating to equipment capitalized under the Company's Tune Central program.

     FOREIGN EXCHANGE LOSSES

     The Company experienced a foreign exchange loss of approximately $141,000
during the first quarter 2004 as compared to a foreign exchange loss of
approximately $15,000 during the first quarter of 2003. Foreign exchange gains
or losses result from the Company paying certain expenditures in currencies
other than the United States dollar. The main foreign currency in which the
Company's wholly-owned subsidiary, TouchTunes Digital Jukebox, Inc., transacts
is the Canadian dollar.

     SEASONALITY

     The Company has experienced lower sales volume during the summer vacation
period of June, July and August, as well as during national holiday periods.
These seasonal fluctuations may result in significant decreases in the Company's
results of operations and have material adverse effects on its financial
condition.

     OTHER ASSETS

     Included in other assets are legal costs of approximately $411,000 incurred
for the period January 1 through March 31, 2004 relating to the litigation
settlement referred to in note 10 of the financial statements.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company's funding has come principally from a group of three investors:
Societe Innovatech du Grand Montreal, CDP Capital Technologies (formerly known
as CDP Sofinov) and CDP Capital Communications (formerly known as Capital
Communications CDPQ Inc.). To date, they have collectively invested
approximately $43 million in the Company, which has provided the Company with
sufficient capital resources to finance its start-up activities and to commence
commercial operations. Financing arrangements with the National Bank of Canada
are another significant source of funding for the Company's operations.


                                       15
<Page>

     In January 1999, TouchTunes Digital entered into the following loan
facilities with the National Bank of Canada to finance the Company's equipment
acquisitions, leasehold improvements, and research and development expenditures:
(1) a small business loan under the Small Business Loans Program sponsored by
the Government of Canada; (2) a general term loan; and (3) a term loan under the
Loan Program for Technology Firms sponsored by the Canada Economic Development
(the "CED TERM LOAN"). In August 2001, the Company repaid in full the total
amount owed under the small business loan and the general term loan. The CED
Term Loan was repaid in full in February 2004.

     In April 1999, TouchTunes Digital entered into a jukebox term loan facility
(the "JUKEBOX TERM LOAN") providing for loans aggregating approximately $10.4
million with the National Bank of Canada to finance the cost of manufacturing
the Digital Jukeboxes. The Jukebox Term Loan was repaid in full in March 2004.

     In May 2001, TouchTunes Digital obtained an operating line of credit (the
"LINE OF CREDIT") from the National Bank of Canada in the amount of $500,000
bearing interest at the National Bank of Canada's U.S. prime rate plus 1.25%,
which was subsequently increased in September 2001 to $1 million. The Line of
Credit is also secured with a lien on the past, present and future assets of
TouchTunes Digital and the Company as well as a guarantee from the Company for
the entire amount drawn down on the Line of Credit.

     In May 2003, the Line of Credit was increased from $1 million to $2
million.

     In January 2004, TouchTunes Digital entered into a term loan facility (the
"Term Loan") with the National Bank of Canada for an aggregate $2,000,000 for
purposes of financing the recoupable advances made to certain music providers.
The Term Loan bears interest at the U.S. base rate of the Bank plus 3%,
representing a rate of 7% as at March 31, 2004. The Term Loan is also
collateralized by a certificate of guarantee issued by La Financiere du Quebec
covering 50% of the net loss risk and a charge on moveable property in the
amount of $ 2,400,000.

     The Music Advance Term Loan is secured by a lien on the past, present and
future assets of TouchTunes Digital and the Company and a guarantee from the
Company for the entire amount due under each of these financing arrangements.

     In May 2000, the Company issued an aggregate of 8,888,889 shares of Series
B Preferred Stock to CDP Capital Technologies and CDP Capital Communications.
Specifically, the Company issued 2,222,222 shares of Series B Preferred Stock to
CDP Capital Technologies in exchange for the conversion of $5.0 million in prior
advances to the Company. The remaining 6,666,667 shares of Series B Preferred
Stock were issued to CDP Capital Communications in exchange for proceeds
consisting of (i) $14.0 million in cash and (ii) $1.0 million previously
advanced by CDP Capital Communications to the Company.

     In July 2001, the Company's Board of Directors approved the terms of an
unsecured loan facility (the "Unsecured Loan Facility"), from CDP Capital
Communications and CDP Capital Technologies, for up to a maximum of $5 million.
Under these terms, CDP Capital Communications and CDP Capital Technologies
committed to lend up to $3 million and $2 million, respectively. As at March 31,
2003, $3.5 million had been advanced by CDP Capital Communications and CDP
Capital Technologies in the form of promissory notes ("CDP Notes") excluding
accrued interest of $1.0 million thereon, bearing interest at the rate of 20%
per annum, repayable 30 days after issuance unless exchanged earlier for
debentures issuable under the Unsecured Loan Facility.

     On December 20, 2002, the Company issued convertible debentures
("Debentures") to two principal stockholders, namely CDP Capital Communications
and CDP Capital Technologies, for a principal amount of $400,000 each, bearing
interest at 20% per annum and maturing on June 30, 2003.

     On June 10, 2003 the Company completed a capital restructuring providing
for the conversion of the Unsecured Loan Facility and the Debentures and accrued
dividends and accretion on Series B Preferred Stock into a new series of
preferred stock.

     As a result of this transaction, the Unsecured Loan Facility totaling
$5,325,000 and dividends and accretion due on Series B Preferred Stock totaling
$10,981,663 were converted into 25,000,000 Class C non-voting Preferred Stock
with an issuance price of $12,500,000.


                                       16
<Page>

     The Company's Board of Directors and the requisite number of stockholders
of the Company also approved amendments to the Company's Second Amended and
Restated Articles of Incorporation necessary to effect this capital
restructuring. These amendments were to:

(1)  increase the aggregate number of authorized shares of Common Stock from
     50,000,000 shares to 100,000,000 shares;

(2)  create a new class of authorized preferred stock, consisting of 30,000,000
     authorized shares of Series C non-voting Preferred Stock, par value $0.001
     ("Series C Preferred Stock"). The Series B preferred stock has an issuance
     price of $0.50 per share and a liquidation preference over the Series A
     Preferred Stock, Series B Preferred Stock and Common Stock (as may be
     adjusted for stock splits, dividends, combinations or other
     recapitalizations with respect to such shares). The Series C Preferred
     Stock shall not be entitled to voting rights, dividend rights or redemption
     rights;

(3)  provide that the issuance of Series C Preferred Stock at a conversion price
     lower than that of Series A Preferred Stock or Series B Preferred Stock
     would trigger a reduction to such lower price of the exercise price of the
     Series A Preferred Stock and Series B Preferred Stock;

(4)  remove the right of holders of Series B Preferred Stock to receive a
     cumulative and preferred dividend;

(5)  remove the right of holders of Series B Preferred Stock to demand
     redemption by the Company and remove the Company's right to redeem the
     Series B Preferred Stock at its option;

(6)  reduce the voting rights of the Series A Preferred Stock and Series B
     Preferred Stock to one vote per each outstanding share of Preferred Stock,
     in lieu of one vote per share of Common Stock into which a holder's
     Preferred Stock could be converted; and

(7)  requires that dividends declared or any distribution even upon or on any
     liquidation, dissolution or winding-up be shared among Series A preferred
     stock, Series B preferred stock and Class A voting common stock holders
     without any distinction as to classes, as on an as-if-converted to Class A
     common stock.

     In addition to the above capital restructuring, the Company's Board of
Directors voted to eliminate the Company's accumulated deficit as of June 30,
2003 by a corresponding decrease of the additional paid-in capital.

     The agreements as amended between the Company and the National Bank of
Canada governing the Music Advance Term Loan and the Line of Credit contain
financial covenants including requirements that the Company maintains a minimum
net stockholders' equity, as defined in the agreement, of $7,500,000 and a
minimum debt to equity ratio of 1.5 to 1. As at March 31, 2004, the Company's
stockholders' equity, as defined in the Agreement, was $7,522,626 and the
Company did satisfy the covenant. If the Company fails to comply with these
covenants, the National Bank of Canada has the right to demand full repayment of
the Music Advance Term Loan as well as any funds drawn down on the Line of
Credit.

     The Company has contractual obligations totaling approximately $5,021,000.
These relate to payments due under the Company's long-term debt obligations
described above, notes payable and operating leases. The operating leases are
primarily related to office space.


                                       17
<Page>

<Table>
<Caption>
------------------------------------------------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                                PAYMENTS DUE BY PERIOD
                                         -------------------------------------------------------------
                                             TOTAL        LESS THAN 1 YEAR(1)      MORE THAN 1 YEAR(2)
------------------------------------------------------------------------------------------------------
<S>                                      <C>           <C>                         <C>
BANK INDEBTEDNESS                        1,557,679                  1,557,679                       --
------------------------------------------------------------------------------------------------------
LONG TERM DEBT(3)                        1,600,000                    955,111                  644,889
------------------------------------------------------------------------------------------------------
NOTES PAYABLE(4)                           966,728                    966,728                       --
------------------------------------------------------------------------------------------------------
OPERATING LEASES                           896,469                    284,811                  611,658
------------------------------------------------------------------------------------------------------
TOTAL CONTRACTUAL CASH OBLIGATIONS       5,020,876                  3,764,329                1,256,547
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
</Table>

      (1) Refers to "less than 1 year" from April 1, 2004.
      (2) Refers to "more than 1 year" from April 1, 2004.
      (3) Refers to Music Advance Term Loan.
      (4) Refers to Firestone Financing.

     The Company's capital requirements may vary based upon the success of its
Digital Jukeboxes, competitive developments or if its anticipated cash flow from
operations is less or more than expected and its development plans or
projections change or prove to be inaccurate. If any of the Company's material
assumptions prove to be wrong, or if management has failed to account for
material contingencies, the Company may not be able to satisfy these capital
requirements.

ITEM 3.  CONTROLS AND PROCEDURES

     The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation as of March 31, 2004, that the Company's
disclosure controls and procedures (as defined in Rule 13a-14 of the Exchange
Act) are effective in ensuring that all material information required to be
disclosed in this quarterly report has been made known to them in a timely
fashion. There have been no significant changes in the Company's internal
controls or in other factors, or any corrective actions with regard to
significant deficiencies and material weaknesses that could significantly affect
these controls subsequent to the date of their evaluation.

                           PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

     In November 2001, Ecast, Inc. filed a suit against the Company for
non-infringement of a patent (U.S. Patent No. 6,308,204 ("the '204 patent"))
held by the Company and for unfair competition and interference with contractual
relations. Rowe, Inc. was joined in the suit as an alleged infringer of the '204
patent. Rowe, Inc. made the same claims against the Company as Ecast, Inc.. The
suit further involved the competitors' allegations that the '204 patent is
invalid, as well as a requested declaration from the Court that the '204 patent
is unenforceable. Ecast, Inc. and Rowe, Inc. dismissed with prejudice their
unfair competition and intentional interference with contract claims against the
Company in October 2003. In December 2003, the Court found that Ecast, Inc.
infringed the '204 patent, at least through August 18, 2003. The patent claims
with respect to Rowe, Inc. have been stayed as a result of that competitor's
bankruptcy proceedings.

     In December 2003, Ecast, Inc. filed a second suit against the Company,
alleging that the Company infringes U.S. Patent No. 5,341,350 ("the '350
patent"). The Company responded with affirmative defenses and counterclaims that
the Company does not infringe the '350 patent and that, if read to cover the
Company's activities, the claims of the '350 patent are invalid. The Company
also asserted counterclaims against Ecast, Inc. and a third competitor for
infringement of the '204 patent. Those competitors have responded with
affirmative defenses and counterclaims that the '204 patent is not infringed,
invalid and unenforceable. Ecast, Inc. responded with additional state-law
counterclaims based upon statements allegedly made by the Company.


                                       18
<Page>

     On April 23, 2004, the Company and Ecast, Inc., entered into a settlement
agreement (the "Agreement") with respect to the litigation between them.
Pursuant to the Agreement, the Company and Ecast, Inc. agreed, amongst other
things to cause the litigation to be terminated with prejudice, and to
cross-license the patents that were the subject of the litigation. In addition,
Ecast, Inc. agreed to pay to the Company, a total of $4,000,000 (the "Settlement
Amount"). An initial payment of $500,000 was made in respect of the Settlement
Amount on April 23, 2004. The remainder of the Settlement Amount is payable
quarterly in an amount equal to the greater of: (i) $0.005 per play of any song
on any digital jukebox or other device powered by Ecast, Inc. during such
quarter; and (ii) $100,000. Such future payments are secured by a pledge of
substantially all of Ecast, Inc.'s assets.

     In March 2004 the Company entered into agreements, effective July 1, 2003
with the American Society of Composers, Authors and Publishers ("ASCAP") and
Broadcast Music Inc. ("BMI"), organizations representing performance rights for
musical composers and authors. The Company also entered in settlement agreements
with ASCAP and BMI for the periods prior to July 1, 2003. These settlements had
no impact on the Company's reported financial results.

     The Company remains in a dispute with the Society of European Stage Authors
and Composers ("SESAC").

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

     a.   The exhibits listed on the Index of Exhibits of this quarterly report
          are included in this filing or incorporated herein by reference to
          other filings, as specified in the Index of Exhibits.

     b.   The Company has filed the following reports on Form 8-K for the three
          month period ended March 31, 2004:

            i. Form 8-K dated February 27, 2004, including press release dated
               January 8, 2004 relating to summary judgment ruling and press
               release dated January 13, 2004 relating to the Company's
               counterclaims against Ecast, Inc. and Rockola.

           ii. Form 8-K dated March 9, 2004, including press release dated March
               5, 2004 relating to US District Court's denial of motion by
               Ecast, Inc. for preliminary injunction against the Company for
               infringement of `350 patent.

          iii. Form 8-K dated March 23, 2004, announcing agreements with
               American Society of Composers, Authors and Publishers ("ASCAP")
               and Broadcast Music, Inc. ("BMI").

           iv. Form 8-K dated April 29, 2004, including joint press release with
               Ecast, Inc. announcing settlement of patent litigation.

            v. Form 8-K dated April 29, 2004, setting out details of April 23,
               2004 settlement agreement with Ecast, Inc.


                                       19
<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.

                                                TOUCHTUNES MUSIC CORPORATION


Dated: May 17, 2004                         By: /s/ John Perrachon
                                                -----------------------------
                                                John Perrachon
                                                Chief Executive Officer,
                                                President and Director

Dated: May 17, 2004                         By: /s/ Matthew Carson
                                                -----------------------------
                                                Matthew Carson
                                                Vice President Finance and
                                                Chief Financial Officer
                                                (Principal Financial Officer)


                                       20
<Page>

                                 CERTIFICATIONS

I, John Perrachon, certify that:

     1.   I have reviewed this quarterly report on Form 10-QSB of TouchTunes
          Music Corporation;

     2.   Based on my knowledge, this report does not contain any untrue
          statement of a 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 report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this 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
          report;

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

               (a) Designed such disclosure controls and procedures, or caused
               such disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               registrant, including its consolidated subsidiaries, is made
               known to us by others within those entities, particularly during
               the period in which this report is being prepared;

               (b) Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

               (c) Disclosed in this report any change in the registrant's
               internal control over financial reporting that occurred during
               the registrant's most recent fiscal quarter (the registrant's
               fourth fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

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

               (a) All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial reporting
               which are reasonably likely to adversely affect the registrant's
               ability to record, process, summarize and report financial
               information; and

               (b) Any fraud, whether or not material, that involves management
               or other employees who have a significant role in the
               registrant's internal control over financial reporting.

Date: May 17, 2004

                                    /s/ John Perrachon
                                    ------------------------
                                    John Perrachon
                                    Chief Executive Officer,
                                    President and Director


                                       21
<Page>

                                 CERTIFICATIONS

I, Matthew Carson, certify that:

     1.   I have reviewed this quarterly report on Form 10-QSB of TouchTunes
          Music Corporation;

     2.   Based on my knowledge, this report does not contain any untrue
          statement of a 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 report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this 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
          report;

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

               (a) Designed such disclosure controls and procedures, or caused
               such disclosure controls and procedures to be designed under our
               supervision, to ensure that material information relating to the
               registrant, including its consolidated subsidiaries, is made
               known to us by others within those entities, particularly during
               the period in which this report is being prepared;

               (b) Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

               (c) Disclosed in this report any change in the registrant's
               internal control over financial reporting that occurred during
               the registrant's most recent fiscal quarter (the registrant's
               fourth fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

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

               (a) All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial reporting
               which are reasonably likely to adversely affect the registrant's
               ability to record, process, summarize and report financial
               information; and

               (b) Any fraud, whether or not material, that involves management
               or other employees who have a significant role in the
               registrant's internal control over financial reporting.

Date: May 17, 2004

                                    /s/  Matthew Carson
                                    --------------------------
                                    Matthew Carson
                                    Vice President Finance and
                                    Chief Financial Officer


                                       22
<Page>

                                INDEX OF EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER                              DESCRIPTION
<C>     <C>
3 (i)   Third Amended and Restated Articles of Incorporation. Reference is made
        to Exhibit 4.1 of the Company's Report on Form 8-K filed on June 13,
        2003, which Exhibit is incorporated herein by reference.

3 (ii)  Amended and Restated Bylaws. Reference is made to Exhibit 3.1 of the
        Company's Annual Report on Form 10-KSB (Amendment No. 1) for the fiscal
        year ending December 31, 2001, filed on April 16, 2002, which Exhibit
        is incorporated herein by reference.

4.1     Terms of Class A Voting Common Stock, included as part of Exhibit 4.1
        of the Company's Report on Form 8-K filed on June 13, 2003, which
        Exhibit is incorporated herein by reference.

4.2     Terms of Series A Preferred Stock, included as part of Exhibit 4.1 of
        the Company's Report on Form 8-K filed on June 13, 2003, which Exhibit
        is incorporated herein by reference.

4.3     Terms of Series B Preferred Stock, included as part Exhibit 4.1 of the
        Company's Report on Form 8-K filed on June 13, 2003, which Exhibit is
        incorporated herein by reference.

4.4     Terms of Series C Preferred Stock, included as part of Exhibit 4.1 of
        the Company's Report on Form 8-K filed on June 13, 2003, which Exhibit
        is incorporated herein by reference.

31.1    Certification of John Perrachon pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
        (filed herewith).

31.2    Certification of Matthew Carson pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
        (filed herewith).

32.1    CEO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (included
        herewith solely for the purposes of Section 906).

32.2    CFO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (included
        herewith solely for the purposes of Section 906).
</Table>


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