SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB



[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2002

[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to _________

Commission File Number 0-30161

DICUT, INC.



(Exact name of registrant as specified in its charter)

|DELAWARE                 | 52-2204952                          
|------------------------ | ------------------------------------
|(State of Incorporation) | (I.R.S. Employer Identification No.)



2150 Northwest Parkway, N.E., Suite H, Marietta, Georgia 30067

(Address of Principal Executive Offices) (Zip Code)

(770) 952-2654

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No__

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock at the latest practicable date: as of September 30, 2002, the registrant had 16,603,333 shares of common stock, $0.001 par value, issued and outstanding.



DICUT, INC

FORM 10-QSB REPORT INDEX

|                                                                                                        | Page No.
|------------------------------------------------------------------------------------------------------- | --------
|PART 1.  FINANCIAL INFORMATION                                                                          | 3       
|Item 1.  Financial Statements                                                                           | 3       
|Consolidated Balance Sheet as of September 30, 2002                                                     | 3       
|Consolidated Statement of Operations for the three months ended September 30, 2002 and 2001 (unaudited) | 4       
|Consolidated Statement of Operations for the six months ended September 30, 2002 and 2001 (unaudited)   |         
|Consolidated Statement of Cash Flows for the six months ended September 30, 2002 and 2001 (unaudited)   | 5       
|Notes to Financial Statements                                                                           | 6       
|Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operation           | 8       
|PART II.  OTHER INFORMATION                                                                             | 10      
|Item 1.  Legal Proceedings                                                                              | 10      
|Item 2.  Changes in Securities                                                                          | 10      
|Item 3.  Defaults on Senior Securities                                                                  | 10      
|Item 4.  Submission of Matters to a Vote of Security Holders                                            | 11      
|Item 5.  Other Information                                                                              | 11      
|Item 6.  Exhibits and Reports on Form 8-K                                                               | 11      
|Signatures                                                                                              | 11      

The Company's independent auditors have not completed their review of this Form 10-QSB, and therefore the Company may file an amended version in the event its independent auditors recommend changes to this Form 10-QSB.

PART I.  FINANCIAL INFORMATION.

Item 1.  Financial Statements.



DICUT, INC.

(a Development Stage Company)

Consolidated Balance Sheet



|                                                                                                       | September 30, 2002       
|------------------------------------------------------------------------------------------------------ | -------------------------
|ASSETS                                                                                                 |                          
|                                                                                                       |                          
|Current Assets                                                                                         |                          
|Cash                                                                                                   | $                       -
|Accounts receivable                                                                                    | 189,978                  
|Investments                                                                                            | 100,000                  
|Employee advances                                                                                      | 9,942                    
|Deposits                                                                                               | 1,650                    
|Prepaid expenses                                                                                       | 1,935                    
|Other current assets                                                                                   | 3,139                    
|Total current assets                                                                                   | 306,644                  
|                                                                                                       |                          
|Fixed assets, net                                                                                      | 257,303                  
|                                                                                                       |                          
|Total Assets                                                                                           | $            563,947     
|                                                                                                       |                          
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                  |                          
|                                                                                                       |                          
|Current Liabilities                                                                                    |                          
|Checks written in excess of available cash                                                             | $               63,964   
|Accounts payable                                                                                       | 296,366                  
|Accrued salaries and wages                                                                             | 45,562                   
|Accrued executive compensation                                                                         | 262,500                  
|Loans from shareholders - related party                                                                | 203,473                  
|Notes payable                                                                                          | 513,750                  
|Payroll taxes payable                                                                                  | 317,168                  
|Employee benefit programs                                                                              | 14,641                   
|Accrued interest payable                                                                               | 567                      
|Total current liabilities                                                                              | 1,717,991                
|                                                                                                       |                          
|Stockholders' (Deficit)                                                                                |                          
|Common stock, $0.001 par value, 20,000,000 shares authorized, 16,603,333 shares issued and outstanding | 16,603                   
|Additional paid-in capital                                                                             | 292,139                  
|Treasury stock                                                                                         | 4,230                    
|(Deficit) accumulated during development stage                                                         | (1,467,016)              
|                                                                                                       | (1,254,044)              
|                                                                                                       |                          
|Total Liabilities and Stockholders' Equity                                                             | $               563,947  



The accompanying Notes are an integral part of these financial statements.



DICUT, INC.

(a Development Stage Company)

Consolidated Statement of Operations

(unaudited)



|                                                                       | Three Months Ending September 30, 2002 | Three Months Ending September 30, 2001
|---------------------------------------------------------------------- | -------------------------------------- | --------------------------------------
|                                                                       |                                        |                                       
|Revenue                                                                | $                 451,959              | $                            -        
|Cost of sales                                                          | 79,862                                 | -                                     
|                                                                       |                                        |                                       
|Gross profit                                                           | 372,097                                | -                                     
|                                                                       |                                        |                                       
|Expenses                                                               |                                        |                                       
|General and administrative                                             | 168,786                                | -                                     
|Salaries and wages                                                     | 362,441                                | -                                     
|Executive compensation                                                 | 72,917                                 | -                                     
|Consulting expense                                                     | 11,200                                 |                                       
|Commission expense                                                     | 10,882                                 |                                       
|Depreciation                                                           | 15,489                                 | -                                     
|Total Expenses                                                         | $                 642,075              | $                            -        
|                                                                       |                                        |                                       
|Net operating income (loss)                                            | (269,978)                              | -                                     
|                                                                       |                                        |                                       
|Other income (expense)                                                 |                                        |                                       
|Settlement of Section 16 action                                        | 83,467                                 | -                                     
|Interest expense                                                       | (5,597)                                | -                                     
|Net other income (expense)                                             | 77,870                                 | -                                     
|                                                                       |                                        |                                       
|Net (loss)                                                             | $              (192,108)               | $                            -        
|                                                                       |                                        |                                       
|Weighted number of common shares outstanding - basic and fully diluted | 16,414,637                             | -                                     
|                                                                       |                                        |                                       
|Net (loss) per share - basic and fully diluted                         | $                    (0.02)            | $                            -        









The accompanying Notes are an integral part of these financial statements.





DICUT, INC.

(a Development Stage Company)

Consolidated Statement of Operations

(unaudited)



|                                                                       | Six Months Ending September 30, 2002 | Six Months Ending September 30, 2001
|---------------------------------------------------------------------- | ------------------------------------ | ------------------------------------
|                                                                       |                                      |                                     
|Revenue                                                                | $                 851,059            | $                            -      
|Cost of sales                                                          | 122,619                              | -                                   
|                                                                       |                                      |                                     
|Gross profit                                                           | 728,440                              | -                                   
|                                                                       |                                      |                                     
|Expenses                                                               |                                      |                                     
|General and administrative                                             | 308,004                              | -                                   
|Salaries and wages                                                     | 1,022,688                            | -                                   
|Executive compensation                                                 | 160,417                              | -                                   
|Consulting expense                                                     | 111,867                              |                                     
|Commission expense                                                     | 43,748                               |                                     
|Depreciation                                                           | 27,388                               | -                                   
|Total Expenses                                                         | $              1,674,112             | $                            -      
|                                                                       |                                      |                                     
|Operating income (loss)                                                | (945,672)                            | -                                   
|                                                                       |                                      |                                     
|Other expense                                                          |                                      |                                     
|Settlement of Section 16 action                                        | 83,467                               | -                                   
|Interest expense                                                       | (6,164)                              | -                                   
|                                                                       | 77,303                               | -                                   
|                                                                       |                                      |                                     
|Net (loss)                                                             | $              (868,369)             | $                            -      
|                                                                       |                                      |                                     
|Weighted number of common shares outstanding - basic and fully diluted | 15,541,366                           | -                                   
|                                                                       |                                      |                                     
|Net (loss) per share - basic and fully diluted                         | $                    (0.06)          | $                            -      









The accompanying Notes are an integral part of these financial statements.



DICUT, INC.

(a Development Stage Company)

Consolidated Statement of Cash Flows

(unaudited)



|                                                                                | Six Months Ended September 30, 2002 | Six Months Ended September 30, 2001
|------------------------------------------------------------------------------- | ----------------------------------- | -----------------------------------
|                                                                                |                                     |                                    
|Cash Flows From Operating Activities                                            |                                     |                                    
|Net (loss)                                                                      | $        (868,369)                  | $                        -         
|Shares issued for services                                                      | 233,867                             | -                                  
|Depreciation                                                                    | 27,388                              | -                                  
|Noncash settlement of Section 16 action                                         | (83,467)                            |                                    
|Adjustments to reconcile net (loss) to net cash (used) by operating activities: |                                     |                                    
|Decrease in undeposited funds                                                   | 152,890                             | -                                  
|(Increase) in accounts receivable                                               | (189,978)                           | -                                  
|(Increase) in employee advances                                                 | (1,942)                             |                                    
|(Increase) in prepaid expenses                                                  | (1,935)                             | -                                  
|(Increase) in other current assets                                              | (1,561)                             |                                    
|Increase in accounts payable                                                    | 78,245                              | -                                  
|(Decrease) in accrued salaries and wages                                        | (214,385)                           | -                                  
|Increase in accrued executive compensation                                      | 160,417                             | -                                  
|Increase in payroll taxes payable                                               | 307,437                             | -                                  
|Increase in employee benefit programs                                           | 14,641                              | -                                  
|Net cash (used) by operating activities                                         | (386,752)                           | -                                  
|                                                                                |                                     |                                    
|Cash Flows From Investing Activities                                            |                                     |                                    
|Purchase of fixed assets                                                        | (105,992)                           | -                                  
|Investments                                                                     | (100,000)                           |                                    
|Net cash (used) by investing activities                                         | (205,992)                           | -                                  
|                                                                                |                                     |                                    
|Cash Flows From Financing Activities                                            |                                     |                                    
|Checks written in excess of available cash                                      | 63,964                              | -                                  
|Decrease in loans from shareholders - related Party                             | 23,794                              | -                                  
|Increase in notes payable                                                       | 479,750                             |                                    
|Increase in accrued interest payable                                            | 340                                 | -                                  
|Net cash provided by financing activities                                       | 567,848                             | -                                  
|                                                                                |                                     |                                    
|Net decrease in cash                                                            | (24,896)                            | -                                  
|Cash - beginning                                                                | 24,896                              | -                                  
|Cash - ending                                                                   | $                      -            | $                      -           
|                                                                                |                                     |                                    
|Supplemental disclosures                                                        |                                     |                                    
|Interest paid                                                                   | $               5,824               | $                      -           
|Income taxes paid                                                               | $                      -            | $                      -           
|                                                                                |                                     |                                    
|Non-cash transactions                                                           | $          233,867                  | $                      -           
|Number of shares issued for services                                            | $       1,963,333                   | $                      -           



The accompanying Notes are an integral part of these financial statements.

DICUT, INC.

(a Development Stage Company)

Notes

Note 1 - Basis of Presentation

The interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended March 31, 2002 and notes thereto included in the Company's Form 10-KSB.  The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim periods are not indicative of annual results.

Note 2 - Going Concern

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.  As at September 30, 2002, the Company has recognized minimal revenue to date and has accumulated operating losses of approximately ($1,550,483) since inception.  The Company's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations.  Management plans to raise equity capital to finance the operating and capital requirements of the Company.  Amounts raised will be used to further development of the Company's products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes.  While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.  These financial statements do not include any adjustments that might arise from this uncertainty.

Note 3 - Fixed Assets

Fixed assets are recorded at cost.  Depreciation is computed using the straight-line method.  Estimated service lives of fixed assets range from 3 to 7 years.

The Company acquired fixed assets totaling $105,992 and recorded depreciation expense of $27,388 during the period ended September 30, 2002.

Note 4 - Accrued Executive Compensation

On December 12, 2001, the Company entered into a three year Employment Agreement with Raj Kalra, it's CEO, director and shareholder, whereby the Company is to pay Mr. Kalra an annual base salary of $175,000 for the first year, $200,000 in the second year and $225,000 in the third year.  For the six-months ended September 30, 2002, the amount accrued was $87,500 and as of September 30, 2002 the total balance due is $80,209.  In addition, Mr. Kalra will receive a bonus equal to 10% of the adjusted net profits beginning with the year ended March 31, 2002.  As of September 30, 2002, no accruals have been made for bonuses.

On December 12, 2001, the Company entered into a three year Employment Agreement with Pierre Quilliam, it's President, director and shareholder, whereby the Company is to pay Mr. Quilliam an annual base salary of $175,000 for the first year, $200,000 in the second year and $225,000 in the third year.  For the period ended September 30, 2002, the amount accrued was $87,500 and as of September 30, 2002 the total balance due is $80,209.  In addition, Mr. Quilliam will receive a bonus equal to 10% of the adjusted net profits beginning with the year ended March 31, 2002.  As of September 30, 2002, no accruals have been made for bonuses.

Note 5 - Loans from Shareholders - Related Party

As of September 30, 2002, the Company is indebted to Raj Kalra, the Company's CEO, director and shareholder, in the aggregate amount of $173,585.  The loans are due upon demand and bear zero interest.

As of September 30, 2002, the Company is indebted to Pierre Quilliam, the Company's president, director and shareholder, in the aggregate amount of $14,888.  The loans are due upon demand and bear zero interest.

As of September 30, 2002, the Company is indebted to A.J. Galiano, the Company's Chief Technical Officer, in the amount of $15,000.  The note is due upon demand and bears zero interest.

Note 6 - Notes Payable

On January 31, 2002, the Company received a loan of $39,000 from Partner's Group.  The loan is evidenced by a note that is due on January 31, 2003 and bears interest at 4% per annum.  As of September 30, 2002, the Company has a balance of accrued interest in the amount of $567.

During July 2002, the Company was loaned $425,000 from George F. Kettle, an individual.  The note bears interest at 10% per annum, is due on January 1, 2003, and provides for monthly payments of $3,541.67.

On August 30, 2002, the Company received a loan of $25,000 from Richard Pruett.  The loan is payable in one year without interest or, at the Company's option, by the issuance of 1,250,000 shares of the Company's $0.001 par value common stock.  To date, the Company has not elected to repay the note by the issuance of shares of common stock due to the low valuation on the common stock.

Note 7 - Stockholder's Equity

On February 25, 2002, the Company filed a registration statement on Form S-8 to register the issuance of up to 1,500,000 shares under its 2002 Employee, Consultant and Advisor Stock Compensation Plan, and up to 1,500,000 options under its 2002 Stock Option Plan. On March 21, 2002, the registration statement was amended to register an additional 1,200,000 shares under the 2002 Employee, Consultant and Advisor Stock Compensation Plan.  During the quarter ended September 30, 2002, the Company issued 883,333 shares under the 2002 Employee, Consultant and Advisor Stock Compensation Plan, which are all of the shares that have been issued under the Plan to date.  To date, the Company has not issued any options under its 2002 Stock Option Plan. During the quarter ended September 30, 2002, the Company issued the following shares of common stock under the Plan:

- On April 26, 2002, the Company issued a total of 250,000 shares of its $0.001 par value common stock at $0.10 to the Blount Family for consulting services rendered in the amount of $25,000.
- On May 20, 2002, the Company issued 333,333 shares of its $0.001 par value common stock at $0.08 to James Spitzer for consulting services rendered in the amount of $26,667.
- On May 20, 2002, the Company issued 300,000 shares of its $0.001 par value common stock at $0.15 to Jamie Spangler for consulting services rendered in the amount of $45,000.
- On September 10, 2002, the Company issued 280,000 shares of its $0.001 par value common stock at $0.04 to Bruce DeDominicis for consulting services rendered in the amount of $11,200.

During the quarter ended September 30, 2002, the Company issued the following shares of restricted common stock for services rendered:

- On April 1, 2002, the Company issued 200,000 shares of its $0.001 par value common stock at $0.20 per shares to Leslea Barrett to cancel accounts payable in the amount of $40,000 due to Leslea Barrett for consulting services rendered.
- On April 1, 2002, the Company issued 100,000 shares of its $0.001 par value common stock at $0.10 per share to Doug and Mary King to cancel accounts payable in the amount of $10,000 due to Mr. and Mrs. King for consulting services rendered.
- On May 16, 2002, the Company issued 100,000 shares of its $0.001 par value common stock at $0.20 per share to Joe Monarsky for consulting services rendered in the amount of $20,000.
- On May 16, 2002, the Company issued 100,000 shares of its $0.001 par value common stock at $0.20 per share to Bryan Dear for consulting services rendered in the amount of $20,000.
- On May 16, 2002, the Company issued 100,000 shares of its $0.001 par value common stock at $0.20 per share to Capland Management for consulting services rendered in the amount of $20,000.
- On May 22, 2002, the Company issued 200,000 shares of its $0.001 par value common stock at $0.08 to Andrew Dyer for consulting services rendered in the amount of $16,600.

Note 8 - Issuance of Warrants

On June 19, 2002, the Company issued a warrant to purchase 480,000 shares of common stock at $0.03 per share at any time until June 19, 2005 in consideration for $14,400.

Note 9 - Related Party Transactions

As of September 30, 2002, the Company is indebted to Raj Kalra, the Company's CEO, director and shareholder, in the aggregate amount of $173,585.  The loans are due upon demand and bear zero interest.

As of September 30, 2002, the Company is indebted to Pierre Quilliam, the Company's president, director and shareholder, in the aggregate amount of $14,888.  The loans are due upon demand and bear zero interest.  During the quarter ended September 30, 2002, the Company and Mr. Quilliam settled certain liability that he may have had to the Company under Section 16 of the Securities Exchange Act of 1934 by applying $83,467 of indebtedness by the Company to him against such liability.

As of September 30, 2002, the Company is indebted to A.J. Galiano, the Company's Chief Technical Officer, in the amount of $15,000.  The note is due upon demand and bears zero interest.

On February 4, 2002, the Company's board of directors approved a resolution to issue Messrs. Kalra and Quilliam stock purchase warrants upon the completion of each acquisition by the Company.  Under the resolution, the value of the stock purchase warrants would be equal to fifty percent (50%) of the value of the consideration paid for each such acquisition.  However, the resolution contains no method for determining the value of noncash consideration paid for an acquisition, the terms of the stock purchase warrants that are to be issued to Messrs. Kalra and Quilliam, or the method of valuing those warrants.  To date, no stock purchase warrants have been issued to Messrs. Kalra and Quilliam under the resolution.

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities.  If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests.  The Company has not formulated a policy for the resolution of such conflicts.

Note 10 - Contracts and Agreements

On December 12, 2001, the Company has assumed a lease for office space with future minimum annual rental payments as follows:

|Year   | Annual Rent
|------ | -----------
|2002   | 58,413     
|2003   | 60,166     
|2004   | 61,971     
|Total: | 180,550    



During the six months ended September 30, 2002, the Company has paid a total of $15,100 for rent expense.

On February 21, 2002, the Company signed a Contract for Sale and Purchase of Business to acquire 100% of the shares of DataAssure Systems, Inc. in exchange for shares of the Company's common stock having a market value of $300,000 on the date of closing.  In addition, in the event closing occurred, the Company would be further obligated to repay loans by certain DataAssure Systems, Inc. shareholders in the amount of $85,000, and accounts payable of DataAssure Systems, Inc. in the approximate amount of $40,000. Closing under the Contract for Sale was contingent on the Company's decision to complete the acquisition after a due diligence review of DataAssure Systems, Inc.  The Company decided not to complete the acquisition after its due diligence review, and on July 26, 2002, the Company terminated the Contract for Sale.

On March 24, 2002, the Company signed a Purchase Agreement to acquire 100% of the ownership of Arcore Technologies, LLC (Arcore) in exchange for $2,000,000 to be paid in installments.  In addition, Arcore would receive royalties equal to 5% of the net sales of any software products and technology acquired.  The Company determined that it was not feasible to proceed with the purchase of Arcore after Arcore could not provide proof of ownership of certain technology owned by it, and because certain technology did not operate at commercially acceptable levels. Accordingly, on June 6, 2002, the Company cancelled the Purchase Agreement with Arcore Technologies, LLC.

On April 5, 2002, the Company signed a Management and Option to Purchase Agreement with Expidant, Inc. (Expidant).  Under the Agreement, the Company was appointed general manager of Expidant until July 1, 2006 and had the option to purchase Expidant for $10 through July 1, 2006.  In addition, the Company would be obligated to pay all liabilities of Expidant.  Subsequently, the Company determined that Expidant had made certain material misrepresentations concerning its financial statements and condition, and as a result the Company terminated the Agreement.

On August 1, 2002, the Company entered into a Development and Licensing Agreement with CDEX, Inc., under which the Company licensed for further development certain technology owned by CDEX.  Under the Agreement, the Company agreed to purchase a total of 1,500,000 shares of common stock in CDEX for $750,000, of which $75,000 was paid prior to the entry of the Agreement, with remainder payable in installments of $225,000 each on August 23, 2002, September 13, 2002, and September 30, 2002.  The Company invested a total of $100,000 in CDEX, and believed it had funding for the balance of the investment, but the Company was not able to close on the funding.  As a result, CDEX notified the Company on October 31, 2002 that it was terminating the Agreement as a result of the Company's failure to fulfill its obligations thereunder.

Note 11 - Contingencies

The Company and Pierre Quilliam, the Company's president and director, have been named in an action to recover alleged short swing profits under Section 16(b) of the Securities Exchange Act of 1934 with respect to purchases and sales of the Company's securities in the period from August 2001 to March 2002.  Mr. Quilliam has agreed to repay any short swing profits by offsetting personal loans made to the Company and accrued salary owed pursuant to his employment agreement.  On July 30, 2002, the disinterested members of the board of directors of the Company agreed to settle such liability by applying $83,467 in indebtedness due Mr. Quilliam against such liability.  In addition, the plaintiff in the action has requested that a default judgment be rendered against the Company for approximately $12,000 for legal fees incurred by the plaintiff in the action.   The Company has elected not to appear in the action on the grounds that the court lacks jurisdiction over the Company.  The Company believes that existing law will entitle it to challenge the validity of the judgment on jurisdictional grounds in the event legal action is ever taken to collect it.

On September 27, 2002, Fifth Third Bank sued the Company and Raj Kalra, the Company's chairman and chief executive officer, for $556,950. The plaintiff made a loan to Expidant in the amount of approximately $800,000 that was secured by all of Expidant's assets.  The plaintiff contends that the Company unlawfully converted the proceeds of its collateral by receiving collateral proceeds in the amount of $556,950 from Expidant.  The Company believes that all funds received from Expidant were lawful and authorized, and intends to defend the action vigorously.

On September 13, 2002, the Company was sued in small claims court in Indiana by an employee of Expidant claiming $6,000, the maximum jurisdictional amount of the court, for failure to pay $4,600 in wages.  The Company is not defending the action, and it is likely that a default judgment has been rendered against the Company for the full amount due.

Note 12 - Subsequent Events

On October 31, 2002, CDEX, Inc. terminated its Development and Licensing Agreement with the Company as a result of the Company's failure to purchase shares of common stock of CDEX under the Agreement.

On November 18, 2002, the Company was awarded the Patient Medical Information Printing and Mailing BPA by the Department of Veteran's Affairs with respect to the Consolidated Mail Outpatient Pharmacy in Mufreesboro, Tennessee. Under the BPA, the VA has outsourced certain printing, mailing and recordkeeping requirements associated with mail delivery of prescribed medication. The contract is effective for one year from the date of award, with four one-year option periods. In addition, the Company is actively pursuing similar awards for CMOP's operated by the VA.

Item 2.  Management's Plan of Operation.

Certain Statements in this Form 10-QSB may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the  "Reform Act").  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performances or achievements of the Company to differ materially.  Examples of forward-looking statements that involve risks and uncertainties include the Company's evaluation of the potential return on current investments as well as speculation regarding the future performance of newly appointed Board Members and Officers.  Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date the statement was made.

RESULTS OF OPERATIONS

During the three and six months ended September 30, 2002, the Company had revenues of $451,959 and $851,059, respectively.  Most of the Company's revenues were derived from the Company's management agreement with Expidant, which the Company terminated in July 2002, a large part of which consisted of reimbursement of expenses paid or incurred on behalf of Expidant.  Therefore, revenues in subsequent periods will be substantially lower due to the termination of the Expidant contract. In addition, the Company may record a bad debt expense of approximately $125,000 in the next quarter for accounts receivable from Expidant that may be uncollectible.  However, revenues for the current quarter will be positively effected by contracts with the Veterans Administration that should bring in approximately $125,000 in net revenues, and the rollout of the Company's data security and backup services division, which now has contracts for recurring revenue of approximately $15,000 per month.  In the prior year's period, the Company did not have any operations or revenues.

During the three and six months ended September 30, 2002, the Company incurred operating expenses of $642,075 and $1,674,112, respectively. Operating expenses were adversely affected by payroll costs associated with the Expidant contract, and by general and administrative expenses associated with the startup nature of the Company's business. General and administrative expenses should be materially lower in future periods due to the termination of the Expidant contract.

During the three and six months ended September 30, 2002, the Company had an operating loss of ($269,978) and ($1,945,67), respectively. In the three and six months, the Company had net other income of $77,870 and $77,303, respectively, which consisted largely of a nonrecurring gain the amount of $83,467 from the settlement of litigation, offset by increased interest costs resulting from increased loans from investors.  As a result, net loss during the three and six months was ($192,108) and ($868,369), respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2002, the Company's current assets were $306,644 and its current liabilities were $1,717,991, which resulted in a working capital deficiency of ($1,411,347).  In addition, the Company had no cash, and checks written in excess of available cash of $63,964.  On the other hand, a substantial portion of the Company's current liabilities are held by employees and related parties who have agreed to defer payment until the Company is able to generate cash.  On the other hand, $100,000 of current assets consists of a stock investment in CDEX, Inc. for which no market exists, and approximately $125,000 of accounts receivable are due from Expidant, and may be uncollectible as a result of the termination of the Management and Option to Purchase Agreement dated April 5, 2002.  The Company anticipates reviewing the collectibility of the accounts receivable from Expidant in the quarter ended December 31, 2002, and writing off such amount if it appears uncollectible.

The Company's working capital is currently insufficient for the Company to implement its business plan, and therefore the Company is exploring alternatives to raise capital.  The Company has relied upon loans from third parties for working capital, and expects that it will need to obtain additional loans in order to continue in business. Until the Company is able to raise capital, the Company is deferring the salary of its key employees and payment to some vendors.

PART II.  OTHER INFORMATION.

ITEM 1.  Legal Proceedings.

On November 19, 2001, a legal proceeding was commenced under Section 16 of the Securities Exchange Act of 1934 in United States District Court, Southern New York, against the Company and Pierre Quilliam, President of the Company by Deborah Donoghue for short swing profits allegedly realized by Mr. Quilliam.  On July 30, 2002, the disinterested board of directors approved a settlement with Mr. Quilliam under which his liability was settled by applying $83,467 in loans due Mr. Quilliam in satisfaction of the claim.  The court indicated by letter that it was inclined to dismiss Mr. Quilliam from the action based on Mr. Quilliam's payment of the amount due; however, Mr. Quilliam has not received a formal dismissal of the action to date.  The Company elected not to appear in the action on the grounds that the court lacks jurisdiction over it.  The plaintiff's attorney has submitted a request that a default judgment be entered against the Company for approximately $12,000 in reimbursement of the plaintiff's attorneys fees in the action.  The Company has not opposed the request for a default judgment on the grounds that existing law will entitle it to challenge the validity of the judgment on jurisdictional grounds in the event legal action is ever taken to collect it.

In July 2002, a lawsuit was filed in Cobb County (Georgia) Magistrate Court against the Company by Meadows, Ichter and Bowers for $17,581.12.  The plaintiff alleges that the Company assumed the debt in connection with the purchase of DataAssure Systems, Inc. The Company contended that the Company is not obligated on the debt because it never completed the purchase of DataAssure Systems, Inc.  In October 2002, plaintiff voluntarily dismissed the lawsuit.

On September 27, 2002, Fifth Third Bank sued the Company and Raj Kalra, the Company's chairman and chief executive officer, for $556,950. The plaintiff made a loan to Expidant in the amount of approximately $800,000 that was secured by all of Expidant's assets.  The plaintiff contends that the Company unlawfully converted the proceeds of its collateral by receiving collateral proceeds in the amount of $556,950 from Expidant.  The Company believes that all funds received from Expidant were lawful and authorized, and intends to defend the action vigorously.

On September 13, 2002, the Company was sued in small claims court in Indiana by an employee of Expidant claiming $6,000, the maximum jurisdictional amount of the court, for failure to pay $4,600 in wages.  The Company is not defending the action, and it is likely that a default judgment has been rendered against the Company for the full amount due.

ITEM 2.  Changes in Securities and Use of Proceeds.

On June 19, 2002, the Company issued a warrant to purchase 480,000 shares of common stock at $0.03 per share at any time until June 19, 2005 in consideration for $14,400.

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)	Exhibits.  None.

(b)	Reports on Form 8-K.

On August 9, 2002, the Company filed a Form 8-K/A reporting in Item 2 on the termination of the Company's agreement to acquire DataAssure Systems, Inc. and the termination of the Company's Management and Option to Purchase Agreement with Expidant, Inc.



SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                         | DICUT, INC.                   
|------------------------ | ------------------------------
|                         |                               
|Dated: November 21, 2002 | /s/ Pierre Quilliam           
|                         | By: Pierre Quilliam, President