<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, 2003

[ ]  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 20, 2003, 14,758,644 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
                                                                                     ----
<S>                                                                         <C>

PART I - FINANCIAL INFORMATION:

Item 1. Consolidated Balance Sheets (unaudited) as at March 31, 2003
        and December 31, 2002......................................................    1

        Consolidated Statements of Operations and Comprehensive Loss (unaudited)
        for the three-month period ended March 31, 2003 and 2002...................    3

        Consolidated Statements of Cash Flows (unaudited) for the three-month
        period ended March 31, 2003 and 2002.......................................    4

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

Item 3. Controls and Procedures ...................................................   17


PART II - OTHER INFORMATION:

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

Item 2. Change in Securities.......................................................   18

Item 3. Defaults Upon Senior Securities............................................   18

Item 4. Submission of Matters to a Vote of Security Holders........................   18

Item 5. Other Information..........................................................   18

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

Signatures.........................................................................   19

Certifications.....................................................................   20
</TABLE>


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

The accompanying unaudited financial statements for the quarter ended March 31,
2003 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' deficiency 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, 2003 are not necessarily indicative of the results that can be
expected for the fiscal year ending December 31, 2003. 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, as
amended, for the fiscal year ended December 31, 2002. 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, 2003

                           CONSOLIDATED BALANCE SHEETS
                                    [NOTE 2]

<TABLE>
<CAPTION>
[In U.S. dollars]                                                             AS AT                    As at
                                                                     MARCH 31, 2003        December 31, 2002
                                                                                  $                        $
-------------------------------------------------------------- --------------------- ------------------------
                                                                        (UNAUDITED)                  (Note*)
<S>                                                                  <C>                   <C>
ASSETS
CURRENT
Cash and cash equivalents                                                   310,340                1,458,094
Trade accounts receivable                                                 5,378,778                5,264,655
Other receivables                                                           127,484                  159,474
Prepaid expenses and deposits                                             1,022,765                  968,911
Inventory                                                                 2,972,878                2,661,591
Current portion of investment in sales-type leases                        1,186,193                1,390,217
-------------------------------------------------------------- --------------------- ------------------------
TOTAL CURRENT ASSETS                                                     10,998,438               11,902,942
-------------------------------------------------------------- --------------------- ------------------------

Investment in sales-type leases                                           2,076,885                2,869,020
Property, plant and equipment, net                                        2,039,918                2,456,990
Intangibles, net                                                            483,854                  555,909
Other assets                                                                871,916                  869,735
-------------------------------------------------------------- --------------------- ------------------------
                                                                         16,471,011               18,654,596
-------------------------------------------------------------- --------------------- ------------------------
-------------------------------------------------------------- --------------------- ------------------------
</TABLE>

* Note: The balance sheet as at December 31, 2002 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]
                                    [NOTE 2]

<TABLE>
<CAPTION>
                                                                              AS AT                  As at
                                                                     MARCH 31, 2003      December 31, 2002
                                                                                  $                      $
--------------------------------------------------------------- -------------------- ----------------------
                                                                        (UNAUDITED)                (Note*)
<S>                                                                  <C>                 <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Bank indebtedness (note 5)                                                  550,000              1,000,000
Accounts payable and accrued liabilities                                  4,685,567              5,226,022
Current portion of long-term debt (note 5)                                1,683,019              1,945,350
Current portion of capital lease obligations                                 21,171                 46,183
--------------------------------------------------------------- -------------------- ----------------------
TOTAL CURRENT LIABILITIES                                                 6,939,757              8,217,555
--------------------------------------------------------------- -------------------- ----------------------

Long-term debt (note 5)                                                     413,169                824,704
Unsecured loans from principal stockholders (note 6)                      5,325,153              5,070,950
--------------------------------------------------------------- -------------------- ----------------------
                                                                         12,678,079             14,113,209
--------------------------------------------------------------- -------------------- ----------------------

Series B preferred stock, $0.001 par value (note 6)
Authorized: 10,000,000 shares
Issued and outstanding: 8,888,889 shares
Redeemable, retractable and convertible
Redeemable at $34,487,672                                                30,981,663             29,932,173
--------------------------------------------------------------- -------------------- ----------------------

STOCKHOLDERS' DEFICIENCY
Series A preferred stock, $0.001 par value
Authorized: 15,000,000 shares
Issued and outstanding: 12,843,960 shares                                    12,844                 12,844
Class A voting common stock, $0.001 par value
Authorized: 50,000,000 shares
Issued and outstanding: 14,758,644 shares (2002-14,758,644)                  14,759                 14,759
Additional paid-in capital                                               15,756,058             16,805,548
Accumulated deficit                                                     (42,972,392)           (42,223,937)
--------------------------------------------------------------- -------------------- ----------------------
TOTAL STOCKHOLDERS' DEFICIENCY                                          (27,188,731)           (25,390,786)
--------------------------------------------------------------- -------------------- ----------------------
                                                                         16,471,011             18,654,596
--------------------------------------------------------------- -------------------- ----------------------
--------------------------------------------------------------- -------------------- ----------------------
</TABLE>

CONTINGENCIES (NOTE 8)

SEE ACCOMPANYING NOTES.

* Note: The balance sheet as at December 31, 2002 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
                                    [NOTE 2]

<TABLE>
<CAPTION>
[In U.S. dollars]                                          THREE MONTH PERIOD      Three month period
                                                                        ENDED                   ended
                                                               MARCH 31, 2003          March 31, 2002
                                                                            $                       $
---------------------------------------------------- ------------------------- -----------------------
                                                                  (UNAUDITED)             (unaudited)
<S>                                                        <C>                     <C>
REVENUES
Jukebox sales revenues                                              3,071,985               2,949,548
Music service revenues                                              2,495,390               1,662,498
Jukebox leasing and financing revenues                                500,306               1,080,060
Gain on disposal of assets and investment in
  sales-type leases                                                   135,800                 220,789
---------------------------------------------------- ------------------------- -----------------------
                                                                    6,203,481               5,912,895
---------------------------------------------------- ------------------------- -----------------------

EXPENSES
Cost of jukebox revenues
  and direct operating costs                                        3,650,523               3,031,741
Research and development                                              668,415                 529,155
General and administrative                                          1,253,070               1,008,106
Sales and marketing                                                   638,759                 539,550
Interest expense                                                      350,492                 261,426
Depreciation and amortization                                         375,291                 441,305
Restructuring cost (note 9)                                                --                 262,808
Foreign exchange losses                                                15,386                  34,607
---------------------------------------------------- ------------------------- -----------------------
                                                                    6,951,936               6,108,698
---------------------------------------------------- ------------------------- -----------------------

NET LOSS AND COMPREHENSIVE LOSS                                      (748,455)               (195,803)

Dividends and accretion of mandatorily
  redeemable Series B preferred stock                               1,049,490               1,002,601
---------------------------------------------------- ------------------------- -----------------------

NET LOSS ATTRIBUTABLE
     TO COMMON STOCKHOLDERS                                        (1,797,945)             (1,198,404)
---------------------------------------------------- ------------------------- -----------------------
---------------------------------------------------- ------------------------- -----------------------

Per common share
BASIC AND DILUTED NET LOSS PER SHARE  (NOTE 4)                          (0.12)                  (0.08)
---------------------------------------------------- ------------------------- -----------------------
---------------------------------------------------- ------------------------- -----------------------
</TABLE>

          SEE ACCOMPANYING NOTES.


                                       3
<PAGE>

TOUCHTUNES MUSIC CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
[In U.S. dollars]                                       THREE MONTH PERIOD      Three month period
                                                                     ENDED                   ended
                                                            MARCH 31, 2003          March 31, 2002
                                                                         $                       $
------------------------------------------------- ------------------------- -----------------------
                                                               (UNAUDITED)             (unaudited)
<S>                                                     <C>                     <C>
OPERATING ACTIVITIES
Net loss and comprehensive loss                                   (748,455)               (195,803)

Adjustments to reconcile net loss to net cash
used in operating activities:
  Non-cash  portion of cost of jukebox  revenues
    and direct operating costs                                      35,735                      --
  Unpaid interest charge on unsecured loans                        254,203                 177,808
    from principal stockholders
  Depreciation and amortization                                    375,291                 441,305
  Gain on disposal of assets                                       (88,366)                (33,200)
  Non-cash portion of jukebox financing revenues                   (51,351)                     --
  Gain on disposal of investment in sales-type
    leases                                                         (47,434)               (187,589)
Changes in operating assets and liabilities:
  Accounts and other receivables                                   (82,133)             (1,127,618)
  Prepaid expenses and deposits                                    (53,854)               (172,012)
  Inventory                                                       (311,287)                674,309
  Other assets                                                     (37,916)                  1,262
  Accounts payable and accrued liabilities                        (540,455)             (1,279,465)
  Proceeds from disposal of investment in
    sales-type leases                                              721,626                 891,288
  Investment in sales-type leases                                  373,318                 257,166
------------------------------------------------- ------------------------- -----------------------
CASH USED IN OPERATING ACTIVITIES                                 (201,078)               (552,549)
------------------------------------------------- ------------------------- -----------------------

INVESTING ACTIVITIES
Proceeds from disposition of property, plant                       254,606                 153,777
  and equipment
Increase in cost of intangibles                                       (486)                (24,981)
Purchase of property, plant, and equipment                         (51,918)                (13,681)
Increase in deferred charges                                            --                (348,333)
------------------------------------------------- ------------------------- -----------------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                    202,202                (233,218)
------------------------------------------------- ------------------------- -----------------------

FINANCING ACTIVITIES
Increase (decrease) in bank indebtedness                          (450,000)                279,838
Repayment of capital lease obligations                             (25,012)                (30,299)
Proceeds from unsecured loans from  principal                           --               1,000,000
  stockholders
Repayment of long-term debt                                       (673,866)               (781,404)
------------------------------------------------- ------------------------- -----------------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                 (1,148,878)                468,135
------------------------------------------------- ------------------------- -----------------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                         (1,147,754)               (317,632)
Cash and cash equivalents, beginning of period                   1,458,094                 317,632
------------------------------------------------- ------------------------- -----------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                           310,340                      --
------------------------------------------------- ------------------------- -----------------------
------------------------------------------------- ------------------------- -----------------------

SUPPLEMENTARY INFORMATION
Interest paid                                                       72,180                 126,585
------------------------------------------------- ------------------------- -----------------------
------------------------------------------------- ------------------------- -----------------------
</TABLE>

SEE ACCOMPANYING NOTES.


                                       4
<PAGE>

TOUCHTUNES MUSIC CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

March 31, 2003
[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 is its digital
jukeboxes (the "Digital Jukeboxes"), which utilize digitally compressed audio
technology to distribute music titles through a proprietary distribution
network. Revenues are derived from selling and leasing the Digital Jukeboxes, as
well as providing music services and advertising through its network of Digital
Jukeboxes. The Company is also developing its technology for other
music-on-demand applications.

2.   BASIS OF FINANCIAL STATEMENT PRESENTATION AND GOING CONCERN ASSUMPTION

The consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the United States on
a going concern basis which presumes the realization of assets and the discharge
of liabilities in the normal course of business for the foreseeable future.
Accordingly, these financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classifications of
assets or the amounts and classification of liabilities that may be necessary
should the Company be unable to continue its business in the normal course.

Certain conditions and events cast doubt upon the validity of this assumption.
The Company has incurred recurring operating losses and, with the exception of
2002, generated negative cash flow from operations, which required the Company
to raise additional financing and to obtain amendments to its debt covenants.
During the last quarter of 2001, and the first quarter of 2002, the Company
undertook a significant restructuring of its operations in order to reduce its
ongoing operating costs. In addition, the Company's revenues are expected to
benefit from the introduction of new products and applications in the
marketplace. The Company expects to repay its debts as they become due and
remain in compliance with its debt covenants.

The Company's ability to continue as a going concern is dependent principally
upon its ability to achieve profitable operations, generate positive cash flows
from operations, renew its line of credit as appropriate, obtain the continued
support of its principal stockholders and repay its debts as they become due.

The outcome of these matters cannot be predicted at this time.

The consolidated financial statements at March 31, 2003, and for the three-month
periods ended March 31, 2003 and 2002, 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, as amended,
for the fiscal year ended December 31, 2002. The results of operations for the
three-month period ended March 31, 2003 are not necessarily indicative of the
results for the fiscal year ending December 31, 2003 or any other future
periods.


                                       5
<PAGE>

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.

COMPARATIVE FIGURES

Certain figures in the 2002 financial statements have been reclassified to
conform with the presentation used in 2003.

3.   NEW ACCOUNTING PRONOUNCEMENTS

ASSET RETIREMENT OBLIGATIONS

In August 2001, the FASB issued Statement No. 143 "Accounting for Asset
Retirement Obligations" that provides accounting guidance for the costs of
retiring long-lived assets and is effective for fiscal years beginning after
June 15, 2002. The adoption of this standard had no impact on the Company's
financial position or results of operations.

GUARANTOR'S ACCOUNTING FOR GUARANTEES

In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (the Interpretation). The Interpretation will
significantly change current practice in the accounting for, and disclosure of,
guarantees. Guarantees meeting the characteristics described in the
Interpretation, which are not included in a long list of exceptions, are
required to be initially recorded at fair value, which is different from the
general current practice of recording a liability only when a loss is probable
and reasonably estimable, as those terms are defined in FASB Statement No. 5,
Accounting for Contingencies. The Interpretation also requires a guarantor to
make significant new disclosures for virtually all guarantees even if the
likelihood of the guarantor's having to make payments under the guarantee is
remote. The initial recognition and initial measurement provisions of the
Interpretation are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. Accounting for guarantees issued prior to
December 31, 2002 should not be revised or restated. The change of accrued
warranty recorded in the Company's balance sheet for the quarter was as
follows:

<TABLE>
<CAPTION>
                                                        THREE MONTH PERIOD ENDED
                                                                  MARCH 31, 2003
                                                                               $
-------------------------------------------------- ------------------------------
<S>                                                        <C>
Balance at the beginning of the period                                   450,000
Charged to cost of jukeboxes                                             109,631
Use of provision                                                         (27,853)
-------------------------------------------------- ------------------------------
BALANCE AT THE END OF THE PERIOD                                         531,778
-------------------------------------------------- ------------------------------
-------------------------------------------------- ------------------------------
</TABLE>


                                       6
<PAGE>

STOCK BASED COMPENSATION TRANSITION AND DISCLOSURE

In December 2002, SFAS No. 148 ("SFAS 148"), ACCOUNTING FOR STOCK-BASED
COMPENSATION-TRANSITION AND DISCLOSURE was issued to amend SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION. SFAS 148 provides alternative
methods of transition for a voluntary change to the fair value based method
of accounting for stock-based employee compensation. In addition, SFAS 148
amends the disclosure requirements of Statement 123 to require more prominent
and more frequent disclosures in financial statements about the effects of
stock-based compensation. The transition guidance and annual disclosure
provisions of SFAS 148 are effective for fiscal years ending after December
15, 2002. The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods beginning after
December 15, 2002. The adoption of SFAS 148 did not have a material impact on
the Company's financial position, results of operations, or cash flows,
because the Company continues to follow the guidance of APB 25 in recognizing
stock compensation expense. The effect of stock based compensation is
included in note 7 to the consolidated financial statements.

4.   BASIC AND DILUTED LOSS PER SHARE

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

<TABLE>
<CAPTION>
                                              THREE MONTH PERIOD      Three month period
                                                           ENDED                   ended
                                                  MARCH 31, 2003          March 31, 2002
----------------------------------------- ----------------------- -----------------------
<S>                                           <C>                     <C>
Net loss attributable to common
  stockholders                                         1,797,945               1,198,404
----------------------------------------- ----------------------- -----------------------
Weighted average shares outstanding
  used to compute basic and diluted
  net loss per share                                  14,758,644              14,658,644
----------------------------------------- ----------------------- -----------------------
Basic and diluted net loss per share                       (0.12)                  (0.08)
----------------------------------------- ----------------------- -----------------------
</TABLE>

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.

The impact of the conversion of 12,843,960 shares of the Company's Series A
preferred stock, the 8,888,889 shares of the Company's Series B preferred stock
and 250,000 warrants was not included in the computation of the diluted loss per
share, as the effect would be anti-dilutive.


                                       7
<PAGE>

5.   BANK INDEBTEDNESS AND LONG-TERM DEBT

The Company's bank indebtedness consists of an operating line of credit (the
"Line of Credit") in the amount of $1 million. The collateralization provided
to the bank by the Company on the Line of Credit and the loans described
below was 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 6.00% as at March 31, 2003 and was
renewable on April 30, 2003. The Company is presently in negotiations with
the bank for the renewal of the Line of Credit. The Line of Credit is also
collateralized by a charge on moveable property in the amount of $2,250,000.

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                         MATURITY      MARCH 31, 2003     December 31, 2002
                                                                                    $                     $
                                                 ----------------- ------------------- ---------------------
<S>                                                     <C>            <C>                <C>
CED Term Loan [CDN $152,777.75 ] (i)                         2004             103,966               123,066
Jukebox Term Loan (ii)                                  2003-2004           1,992,222             2,646,988
                                                                   ------------------- ---------------------
Total                                                                       2,096,188             2,770,054
Less:  Current portion                                                      1,683,019             1,945,350
                                                                   ------------------- ---------------------
Total                                                                         413,169               824,704
                                                                   ------------------- ---------------------
                                                                   ------------------- ---------------------
</TABLE>

Long-term debt consists of term loan facilities with a major Canadian chartered
bank, which are collateralized by charges on present and future assets of the
Company. The terms of these loans are as follows:

(i)  The CED term loan (the "CED Term Loan") is a term loan under the Loan
     Program for Technology Firms sponsored by Canada Economic Development. The
     loan bears interest at the Canadian prime rate plus 3.50%, representing a
     rate of 8.25% as at March 31, 2003. Principal repayment is over a
     thirty-six month period which commenced in March 2001 in equal payments of
     $9,451 [CDN$13,889]. The loan is collateralized by a certificate of
     guarantee issued by Canada Economic Development covering 80% of the net
     loss risk and by a charge in the amount of $340,252 [CDN$500,000] on all
     moveable property.

(ii) The jukebox term loan facility (the "Jukebox Term Loan") represents, in the
     aggregate, $10,012,000 and was entered into for purposes of financing the
     cost of manufacturing Digital Jukeboxes. 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 Jukebox Term Loan bears interest at the U.S.
     base rate of the Bank plus 2.55%, representing a rate of 7.30% as at March
     31, 2003. Additional compensation must be paid to the Bank each year in an
     amount equal to 0.5% of the Company's annual gross revenues, as defined.
     The Jukebox Term Loan is also collateralized by a certificate of guarantee
     issued jointly by Investissement Quebec and the Export Development
     Corporation covering 67% of the net loss risk and a charge on moveable
     property in the amount of $10,400,000. Each Jukebox Term Loan is granted
     for a maximum term of 48 months and the facility must be paid in full by
     November 2004.

The agreements between the Company and the Bank governing the CED Term Loan, the
Jukebox Term Loan and the Line of Credit contain financial covenants including
requirements that the Company maintain a minimum stockholders' equity and a
minimum debt to equity ratio as defined therein. As at March 31, 2003 the
Company was in compliance with these covenants.

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

<TABLE>

                                                                 $
           <S>                                           <C>
           2003                                          1,683,019
           2004                                            413,169
                                          -------------------------
                                                         2,096,188
                                          -------------------------
                                          -------------------------
</TABLE>


                                       8
<PAGE>

6.   UNSECURED LOANS FROM PRINCIPAL STOCKHOLERS

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, provided the Company entered into a
debenture subscription agreement by January 6, 2003. Unless repaid in full at
maturity, or earlier upon the occurrence of an event of default, the Debentures
are convertible at the option of CDP Capital Communications and CDP Capital
Technologies into Series B preferred shares at a conversion price of $0.50 per
share.

As a result of on-going negotiations aimed at recapitalizing the Company by way
of conversion of all of these principal stockholders' loans and the Company's
retractable Series B Preferred Stock into permanent capital stock, the Unsecured
Loan Facility agreement and the Debentures' subscription agreement had not been
executed as initially contemplated by December 31, 2002 and January 6, 2003,
respectively.

On March 28, 2003, CDP Capital Communications and CDP Capital Technologies
reconfirmed that the requirements to execute the Unsecured Loan Facility
agreement in regard to the CDP Notes were effectively waived on a timely basis.
Moreover, CDP Capital Communications and CDP Capital Technologies waived the
requirement, under the Debentures to execute the Debentures' subscription
agreement by January 6, 2003, and the Company agreed to enter into the
Debentures' subscription agreement on or before June 15, 2003, failure of which
will provide CDP Capital Communications and CDP Capital Technologies with
repayment and conversion rights. Furthermore, the maturity date under the CDP
Notes and the Debentures was extended to April 1, 2004.

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, 2003, an aggregate of 4,359,000 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 share
would have been as follows:


                                        9
<PAGE>

<TABLE>
<CAPTION>
                                                  THREE MONTH PERIOD     Three month period
                                                               ENDED                  ended
                                                      MARCH 31, 2003         March 31, 2002
                                                                   $                      $
                                             -----------------------------------------------
<S>                                               <C>                    <C>
Net loss attributable to common stockholders              (1,797,945)            (1,198,404)
Pro Forma loss                                            (1,883,622)            (1,389,150)
Basic and diluted loss per share                               (0.12)                 (0.08)
Pro Forma basic and diluted loss per share                     (0.13)                 (0.09)
</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.

<TABLE>
<CAPTION>
                                                      MARCH 31, 2003         March 31, 2002
                                                                   %                      %
                                              ----------------------------------------------
<S>                                                   <C>                    <C>
Average expected life (years)                                   8.00                   8.00
Risk-free interest rate                                         3.10                   2.23
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 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 Company's patent. The second competitor has
made the same allegations against the Company as the first competitor and is
seeking a declaration from the court that the Company's patent is invalid and
unenforceable. The Company believes it has meritorious claims and defenses
against the competitor for patent infringement. An estimate of the possible loss
or range of loss, if any, cannot be determined at this time.

The Company is presently involved in a dispute with the American Society of
Composers, Authors and Publishers ("ASCAP"), the Society of European Stage
Authors and Composers ("SESAC") and Broadcast Music Inc. ("BMI"), organizations
representing performance rights for musical composers and authors. The dispute
revolves around the music publishers' desire for the Company to negotiate music
licensing rights directly with ASCAP, SESAC and BMI as opposed to the Company's
current approach of negotiating such rights directly with the publishers. The
dispute does not involve the Company's licensing rights to music but the
financial terms of these rights.


                                       10
<PAGE>

9.   RESTRUCTURING COSTS

During the first quarter of the year ended December 31, 2002, the Company
completed a restructuring of its operations it had begun in the last quarter of
2001 in order to reduce the company's ongoing operating costs. Severance costs
attributable to employees terminated as a result of the restructuring totaled
approximately $183,000.


                                       11
<PAGE>

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.

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, 2002. 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,
2003, the Company had delivered a total of approximately 6,366 Digital Jukeboxes
as compared with 4,925 Digital Jukeboxes delivered as at March 31, 2002.
Management plans to devote significant resources to continue its aggressive
sales and marketing efforts within the jukebox industry. Management also 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 14 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 $16,471,011 at March 31, 2003, a decrease
of $2,183,585 from December 31, 2002. The decrease was primarily due to a
reduction in cash and cash equivalents of approximately $1,148,000 which were
used to reduce bank indebtedness by approximately $450,000, repay long-term debt
of approximately $674,000 and repay capital lease obligations of approximately
$25,000. In addition, investment in sales-type leases was reduced by
approximately $996,000, and property, plant and equipment decreased by
approximately $417,000, which was primarily attributable to the sale of both
sales-type leases and jukeboxes for leasing to third parties. These decreases
were offset by an increase in trade accounts receivable in the amount of
approximately $114,000 and an increase in inventory of approximately $311,000.
Total liabilities of the Company also decreased as compared to December 31,
2002, from $14,113,209 to $12,678,079 at March 31, 2003, primarily as a result
of reductions in accounts payable and accrued liabilities of approximately
$540,000, and the repayment of long-term debt in the amount of approximately
$674,000.


                                       12
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2003 COMPARED
TO THE THREE-MONTH PERIOD ENDED MARCH 31, 2002

     The Company incurred a net loss of approximately $748,000 during the
three-month period ended March 31, 2003 ("the first quarter 2003") as compared
to a net loss of approximately $196,000 for the corresponding three-month period
in 2002 ("the first quarter 2002").

     Net loss attributable to common stockholders was approximately $1,798,000
for the first quarter 2003, as compared to approximately $1,198,000 for the
first quarter 2002. The non-cash charge for dividends and accretion of the
Company's mandatorily redeemable Series B preferred was approximately $1,049,000
for the first quarter 2003, as compared to $1,003,000 for the first quarter
2002.

     REVENUES

     Total revenues increased by approximately $290,000, or 4.9%, from
approximately $5,913,000 in the first quarter 2002 to approximately $6,203,000
in the first quarter 2003. There was a decrease in revenues from leasing and
financing of Digital Jukeboxes during the first quarter 2003 totaling
approximately $580,000, which is attributable 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.

     Music service revenues grew to approximately $2,495,000 for the first
quarter 2003 as compared with approximately $1,662,000 for the first quarter
2002. 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. Revenue from Digital
Jukebox sales amounted to approximately $3,072,000 for the first quarter 2003 as
compared with approximately $2,950,000 for the first quarter 2002, with the
increase primarily due to proceeds on the sale of jukeboxes for leasing which
were sold to third parties.

     Digital Jukebox leasing and financing revenues declined to approximately
$500,000 for the first quarter 2003, as compared to $1,080,000 for the first
quarter 2002. This decrease is attributable to the sale of capital leases and
jukeboxes for leasing to third parties, including the Company's customers.

     COST OF JUKEBOX REVENUES AND DIRECT OPERATING COSTS

     The cost of Digital Jukebox revenues and direct operating costs increased
by approximately $619,000, or 20%, from approximately $3,032,000 in the first
quarter 2002 to approximately $3, 651,000 during the first quarter 2003. Of this
increase, approximately $100,000 is attributable to the carrying cost of
jukeboxes for leasing which were sold to third parties. The remaining increase
is due to the increase in the royalties paid to record music companies as a
result of an overall increase in the number of plays on the Digital Jukebox
network and an increase in the rate charged per play by the record music
companies as well as additional warranty costs due to the Company's increased
installed base of Digital Jukeboxes.

     GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses increased by approximately $245,000, or
24%, from approximately $1,008,000 in the first quarter 2002 to approximately
$1,253,000 in the first quarter 2003. This increase is principally attributable
to the professional costs in connection with the Ecast Inc. and Rowe
International Inc. litigation. The legal proceedings are described in detail
Part II, Item 1-Legal Proceedings.

     RESEARCH AND DEVELOPMENT EXPENSES

     Research and development expenses increased by approximately $139,000, or
26%, from approximately $529,000 in the first quarter 2002 to approximately
$668,000 in the first quarter 2003. This increase in research and development
expense is in large part due to costs incurred in respect of ongoing development
and design of existing projects.


                                       13
<PAGE>

     SALES AND MARKETING EXPENSES

     Sales and marketing expenses increased by approximately $99,000, or 18%,
from approximately $540,000 in the first quarter 2002 to approximately $639,000
in the first quarter 2003. This increase was principally due to increased
incentive sale programs introduced in the first quarter of 2003 as well as a
stronger marketing promotional effort.

     INTEREST EXPENSE

     Interest expense increased by approximately $89,000, or 34%, from
approximately $261,000 in the first quarter 2002 to approximately $350,000 in
the first quarter 2003. This increase is due primarily to interest payable on
the $4.3 million of principal that the Company drew down on its Unsecured
Loan Facility provided by two of the Company's principal stockholders. This
increase is offset in part by the overall reduction in the capital amount of
the jukebox term loans. The jukebox term loan and the unsecured loan facility
are described in detail below under the caption "Liquidity and Capital
Resources."

     DEPRECIATION AND AMORTIZATION EXPENSE

     Depreciation and amortization expense decreased by approximately $66,000,
or 15%, from approximately $441,000 in the first quarter 2002 to approximately
$375,000 in the first quarter 2003. This decrease in depreciation and
amortization costs resulted primarily from fewer Digital Jukeboxes being held by
the Company as capital assets.

     FOREIGN EXCHANGE LOSSES

     The Company experienced a foreign exchange loss of approximately $15,000
during the first quarter 2003 as compared to a foreign exchange loss of
approximately $35,000 during the first quarter of 2002. 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.

     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.


                                       14
<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. As at March
31, 2003, approximately $0.1 million was outstanding under the CED Term Loan.
The CED Term Loan bears interest at the National Bank of Canada's Canadian prime
rate plus 3.5%. Principal repayment of the loan is in equal payments of $9,451
over a 36-month period that will end 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 interest rate on the Jukebox Term Loan is priced at
the National Bank of Canada's U.S. base rate, plus 2.55%. Additional
compensation must be paid to the National Bank of Canada each year equal to 0.5%
of the Company's annual gross revenues as defined under the Jukebox Term Loan.
The Jukebox Term Loan must be repaid in full by November 2004.

     The CED Term Loan and Jukebox Term Loan are each 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 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 which
was renewable on April 30, 2003. The Company is presently in negotiations
with the bank for the renewal of the Line of Credit.

     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, provided the Company
entered into a debenture subscription agreement by January 6, 2003. Unless
repaid in full at maturity, or earlier upon the occurrence of an event of
default, the Debentures are convertible at the option of CDP Capital
Communications and CDP Capital Technologies into Series B preferred shares at a
conversion price of $0.50 per share.

     As a result of on-going negotiations aimed at recapitalizing the Company by
way of conversion of all of these principal stockholders' loans and the
Company's retractable Series B Preferred Stock into permanent capital stock, the
Unsecured Loan Facility agreement and the Debentures' subscription agreement had
not been executed as initially contemplated by December 31, 2002 and January 6,
2003, respectively.


                                       15
<PAGE>

     On March 28, 2003, CDP Capital Communications and CDP Capital Technologies
reconfirmed that the requirements to execute the Unsecured Loan Facility
agreement in regard to the CDP Notes were effectively waived on a timely basis.
Moreover, CDP Capital Communications and CDP Capital Technologies waived the
requirement, under the Debentures to execute the Debentures' subscription
agreement by January 6, 2003, and the Company agreed to enter into the
Debentures' subscription agreement on or before June 15, 2003, failure of which
will provide CDP Capital Communications and CDP Capital Technologies with
repayment and conversion rights. Furthermore, the maturity date under the CDP
Notes and the Debentures was extended to April 1, 2004.

     The agreements as amended between the Company and the National Bank of
Canada governing the CED Term Loan, the Jukebox Term Loan and the Line of
Credit, each contain a covenant that requires the Company to maintain a minimum
net stockholders' equity, as defined in the agreement, of $8,000,000 and a
minimum debt to equity ratio of 1.5 to 1. If the Company fails to comply with
these covenants, the National Bank of Canada has the right to demand full
repayment of the loans outstanding under the CED Term Loan and the Jukebox Term
Loan, as well as any funds drawn down on the Line of Credit. The Company was in
compliance with its debt covenants as at March 31, 2003.

     The Company has contractual obligations totaling approximately $9,158,000.
These relate to payments due under the Company's long-term debt obligations
described above, capital lease obligations, and operating leases. The capital
leases are principally for computer equipment, while the operating leases are
primarily related to office space.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                          PAYMENTS DUE BY PERIOD
                              -----------------------------------------------------------------------------
CONTRACTUAL OBLIGATIONS                      TOTAL        LESS THAN 1 YEAR(1)           MORE THAN 1 YEAR(2)
------------------------------ -------------------- -------------------------- ----------------------------
<S>                                      <C>              <C>                           <C>
BANK INDEBTEDNESS                          550,000                    550,000                           --
------------------------------ -------------------- -------------------------- ----------------------------
LONG TERM DEBT(3)                        7,421,341                  1,683,019                    5,738,322
------------------------------ -------------------- -------------------------- ----------------------------
CAPITAL LEASE OBLIGATIONS                   21,171                     21,171                           --
------------------------------ -------------------- -------------------------- ----------------------------
OPERATING LEASES                         1,080,032                    287,161                      792,871
------------------------------ -------------------- -------------------------- ----------------------------
SEVERANCE PAYMENTS                          85,680                     85,680                           --
------------------------------ -------------------- -------------------------- ----------------------------
TOTAL CONTRACTUAL CASH
OBLIGATIONS                              9,158,224                  2,627,031                    6,531,193
-----------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Refers to "less than 1 year" from April 1, 2003.

(2)  Refers to "more than 1 year" from April 1, 2003.

(3)  The long-term debt refers to the Company's obligations under the CED Term
     Loan, the Jukebox Term Loan, the Unsecured Loan Facility and convertible
     debentures.

     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.

     The Company's ability to continue as a going concern is dependent
principally on its ability to achieve profitable operations, generate positive
cash flows from operations, renew its line of credit as appropriate, obtain the
continued support of its principal stockholders and repay its debts as they
become due. The outcome of these matters cannot be predicted at this time.


                                       16
<PAGE>

ITEM 3.   CONTROLS AND PROCEDURES

     The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation as of a date within 90 days of the filing
date of this report, 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.


                                       17
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

The Company is currently in a dispute with Ecast Inc. and Rowe International
Inc., competitors of the Company, over whether Ecast and Rowe are infringing the
Company's U.S. Patent No. 6,308,204, which covers a digital jukebox system that
allows for the jukebox operating software to be updated remotely. The dispute
also involves Ecast's and Rowe's allegations that the Company engaged in unfair
competition and intentional interference with contract, as well as Rowe's
request for a declaration from the Court that U.S. Patent No. 6,308,204 is
invalid and unenforceable. For more information regarding this dispute, see Part
I, Item 3 of the Company's Annual Report on Form 10-KSB, as amended, for the
fiscal year ended December 31, 2002.

     The Company is presently involved in a dispute with the American Society of
Composers, Authors and Publishers ("ASCAP"), the Society of European Stage
Authors and Composers ("SESAC") and Broadcast Music Inc. ("BMI"), organizations
representing performance rights for musical composers and authors. For more
information regarding this dispute, see note 21 of the Financial Statements
contained in Part III of the Company's Annual Report Form 10-KSB, as amended,
for the fiscal year ended December 31, 2002.

ITEM 2.   CHANGE IN SECURITIES

          Not applicable.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          Not applicable.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          Not applicable.

ITEM 5.   OTHER INFORMATION

          Not applicable.

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)  No reports on Form 8-K were filed during the quarter ended March 31, 2003.


                                       18
<PAGE>

                                   SIGNATURES

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

                                            TOUCHTUNES MUSIC CORPORATION

Dated: May 20, 2003                         By: /S/ JOHN PERRACHON
                                                -----------------------
                                                John Perrachon
                                                Chief Executive Officer,
                                                President and Director

Dated: May 20, 2003                         By: /S/ MATTHEW CARSON
                                                ------------------
                                                Matthew Carson
                                                Vice President Finance and
                                                Chief Financial Officer
                                                (Principal Financial Officer)


                                       19
<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 quarterly 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 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 officers 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, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, 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 officers 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 functions):

     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 officers 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 20, 2003

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


                                       20
<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 quarterly 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 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 officers 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, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, 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 officers 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 functions):

     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 officers 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 20, 2003

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


                                       21
<PAGE>

                                INDEX OF EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                              DESCRIPTION
-------                             -----------
<S>            <C>
3(i)           Second Amended and Restated Articles of Incorporation. Reference
               is made to Exhibit 3.1 of the Company's Quarterly Report on Form
               10-QSB for the quarterly period ended September 30, 2000, filed
               on November 14, 2000, 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
               3.1 of the Company's Quarterly Report on Form 10-QSB, for the
               quarterly period ended September 30, 2000, filed on November 14,
               2000, which Exhibit is incorporated herein by reference.

4.2            Terms of Series A Preferred Stock, included as part of Exhibit
               3.1 of the Company's Quarterly Report on Form 10-QSB, for the
               quarterly period ended September 30, 2000, filed on November 14,
               2000, which Exhibit is incorporated herein by reference.

4.3            Terms of Series B Preferred Stock, included as part Exhibit 3.1
               of the Company's Quarterly Report on Form 10-QSB, for the
               quarterly period ended September 30, 2000, filed on November 14,
               2000, which Exhibit is incorporated herein by reference.

99.1           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).

99.2           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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