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, 2003

[ ] 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, 2003, the registrant had 49,194,194 shares of common stock, $0.001 par value, issued and outstanding.

DICUT, INC AND SUBSIDIARIES

FORM 10-QSB REPORT INDEX

|                                                                                                         | Page No.
|-------------------------------------------------------------------------------------------------------- | --------
|PART 1. FINANCIAL INFORMATION                                                                            | 3       
|Item 1. Financial Statements                                                                             | 3       
|Consolidated Balance Sheets as of September 30, 2003 (unaudited)                                         | 3       
|Consolidated Statements of Operations for the nine months ended September 30, 2003 and 2002 (unaudited)  | 4       
|Consolidated Statements of Operations for the three months ended September 30, 2003 and 2002 (unaudited) | 5       
|Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002 (unaudited)  | 6       
|Notes to Financial Statements                                                                            | 8       
|Item 2. Management's Discussion and Analysis and plan of operation                                       | 13      
|Item 3. Controls and Procedures                                                                          | 15      
|PART II. OTHER INFORMATION                                                                               | 15      
|Item 1. Legal Proceedings                                                                                | 15      
|Item 2. Changes in Securities                                                                            | 16      
|Item 3. Defaults on Senior Securities                                                                    | 17      
|Item 4. Submission of Matters to a Vote of Security Holders                                              | 17      
|Item 5. Other Information                                                                                | 17      
|Item 6. Exhibits and Reports on Form 8-K                                                                 | 18      
|Signatures                                                                                               | 19      
|Certifications                                                                                           | 20      

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. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2003

(Unaudited)

|                                                                                                        |            
|------------------------------------------------------------------------------------------------------- | -----------
|ASSETS                                                                                                  |            
|                                                                                                        |            
|Current Assets                                                                                          |            
|Accounts receivable                                                                                     | $ 36,270   
|Note receivable                                                                                         | 100,000    
|Costs and estimated earnings not yet billed on uncompleted contracts                                    | 102,600    
|Deposits and other                                                                                      | 153,406    
|Total current assets                                                                                    | 392,276    
|                                                                                                        |            
|Property and Equipment                                                                                  |            
|Computer and software                                                                                   | 151,126    
|Furniture and fixtures                                                                                  | 145,194    
|                                                                                                        | 296,320    
|Accumulated depreciation                                                                                | (106,308)  
|                                                                                                        | 190,012    
|Other Assets                                                                                            |            
|Investment                                                                                              | 5,000      
|Intangible assets                                                                                       | 1,104,683  
|                                                                                                        |            
|Total Assets                                                                                            | $ 1,691,971
|                                                                                                        |            
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                   |            
|                                                                                                        |            
|Current Liabilities                                                                                     |            
|Cash overdraft                                                                                          | $ 61,716   
|Notes payable                                                                                           | 1,092,327  
|Accounts payable                                                                                        | 1,512,527  
|Accrued expenses                                                                                        | 640,057    
|Payroll taxes payable                                                                                   | 537,342    
|Due to officers                                                                                         | 254,131    
|Total liabilities (all current)                                                                         | 4,098,100  
|                                                                                                        |            
|Stockholders' (Deficit)                                                                                 |            
|Common stock, $0.001 par value, 200,000,000 shares authorized, 49,194,194 shares issued and outstanding | 49,192     
|Common stock to be issued                                                                               | 165,000    
|Additional paid-in capital                                                                              | 5,129,800  
|Accumulated deficit                                                                                     | (7,750,121)
|                                                                                                        | (2,406,129)
|                                                                                                        |            
|Total Liabilities and Stockholders' Deficit                                                             | $ 1,691,971
|                                                                                                        |            

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

DICUT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

(Unaudited)



|                                                     | 2003          | 2002         
|---------------------------------------------------- | ------------- | -------------
|                                                     |               | Restated     
|                                                     |               |              
|Revenue                                              | $ 1,887,756   | $ 475,532    
|Cost of sales                                        | 1,751,511     | 114,056      
|Gross profit                                         | 136,245       | 361,476      
|                                                     |               |              
|Selling, general and administrative expenses         | 5,002,597     | 2,071,630    
|                                                     |               |              
|Loss from operations                                 | (4,866,352)   | (1,710,154)  
|                                                     |               |              
|Interest expense                                     | (50,302)      | (28,514)     
|Amortization of unearned compensation                | (94,251)      | -0-          
|Other income                                         | -0-           | 83,467       
|                                                     | (144,553)     | 54,953       
|                                                     |               |              
|Net loss                                             | $ (5,010,905) | $ (1,655,201)
|                                                     |               |              
|Net loss per common share - basic and fully diluted  | $ (0.20)      | $ (0.11)     
|                                                     |               |              
|Weighted average number of common shares outstanding | 24,879,506    | 15,254,615   
|                                                     |               |              
|                                                     |               |              
|                                                     |               |              







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





DICUT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

(Unaudited)



|                                                     | 2003          | 2002       
|---------------------------------------------------- | ------------- | -----------
|                                                     |               | Restated   
|Revenue                                              | $ 271,892     | $ 247,530  
|Cost of sales                                        | 347,685       | 79,862     
|Gross profit                                         | (75,793)      | 167,668    
|                                                     |               |            
|Selling, general and administrative expenses         | 2,304,215     | 520,261    
|                                                     |               |            
|Loss from operations                                 | (2,380,008)   | (352,593)  
|                                                     |               |            
|Interest expense                                     | (703)         | (27,947)   
|Other income                                         | -             | 83,467     
|                                                     | (703)         | 55,520     
|                                                     |               |            
|Net loss                                             | $ (2,380,711) | $ (297,073)
|                                                     |               |            
|Net loss per common share - basic and fully diluted  | $ (0.07)      | $ (0.02)   
|                                                     |               |            
|Weighted average number of common shares outstanding | 36,177,119    | 15,754,615 
|                                                     |               |            
|                                                     |               |            
|                                                     |               |            







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



DICUT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

(Unaudited)



|                                                           | 2003          | 2002         
|---------------------------------------------------------- | ------------- | -------------
|                                                           |               | Restated     
|Cash Flows From Operating Activities                       |               |              
|Net loss                                                   | $ (5,010,905) | $ (1,655,201)
|Adjustments:                                               |               |              
|Depreciation                                               | 53,055        | 37,151       
|Issuance of common stock for services                      | 2,485,834     | 233,867      
|Non-cash settlement of Section 16 action                   | -             | (83,467)     
|Issuance of common stock warrants for services             | 542,739       | -            
|Amortization of unearned compensation                      | 94,251        | -            
|Changes in:                                                |               |              
|Accounts receivable                                        | 663,137       | (342,868)    
|Deposits and other current assets                          | (143,712)     | (16,598)     
|Accounts payable                                           | 648,567       | 455,699      
|Accrued expenses                                           | 90,130        | 405,921      
|Costs and estimated earnings not yet billed                |               |              
|on uncompleted contracts                                   | (173,033)     | -            
|Payroll taxes payable                                      | 105,729       | 317,168      
|Net cash used in operating activities                      | (644,208)     | (648,328)    
|Cash Flows From Investing Activities                       |               |              
|Purchase of property and equipment                         | (7,383)       | (109,217)    
|Investment                                                 | -             | (100,000)    
|Net cash used) in investing activities                     | (7,383)       | (209,217)    
|Cash Flows From Financing Activities                       |               |              
|Proceeds from issuance of common stock                     | 20,000        | -            
|Proceeds from common stock to be issued                    | 285,000       | -            
|Proceeds from issuance of notes payable, net of repayments | 214,527       | 557,550      
|Increase in due to officers                                | 93,989        | 299,995      
|Net cash provided by financing activities                  | 613,516       | 857,545      
|Net (decrease) increase in cash                            | (38,075)      | -            
|Cash - beginning of period                                 | 38,075        | -            
|Cash - end of period                                       | $ -           | $ -          
|                                                           |               |              
|Supplemental disclosures of cash flow information          |               |              
|Cash paid for interest                                     | $ 29,134      | $ -          

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

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES

During the nine months ended September 30, 2003:

The Company issued 19,835,273 shares of common stock, valued at $1,961,912 as payment for consulting and employment services.

The Company issued 866,004 shares of restricted common stock, valued at $173,922 as payment for accounts payable, which were accrued at December 31, 2002.

The Company issued 100,000 shares of common stock in satisfaction of notes payable to a former officer in the amount of $10,000.

The Company issued 833,333 shares of common stock to an employee for $250,000 cash.

During the three months ended September 30, 2003, the Company issued 2,000,000 shares of its restricted common stock valued at $360,000 to two of its officers in settlement of accrued compensation.

During the three months ended September 30, 2003, the Company issued 1,000,000 shares of its restricted common stock valued at $100,000 to one of its officers in exchange for a promissory note.

During the three months ended September 30, 2003, the Company issued 3,378,333 shares of its restricted common stock valued at $1,013,500 in exchange for assets of Aurora Biometrics, Inc. (Note 10).

During the three months ended September 30, 2003, the Company issued 4,150,000 shares of its restricted common stock valued at $195,000 subscribed to during the second quarter ended June 30, 2003.

DICUT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2003

(Unaudited)



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.

The consolidated financial statements include the accounts of Dicut, Inc and its wholly-owned subsidiaries, National Data, Inc., Detect-X, Inc. and Vericentrix, Inc.

Effective April 1, 2002, the Company changed its fiscal year end to December 31 from March 31.

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 nine months ended December 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 of September 30, 2003, the Company has accumulated operating losses of approximately ($7,750,121) since inception. The Company also has a working capital deficiency of ($3,705,824) and an equity deficiency of ($2,406,129).

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 has raised capital to finance its day-to-day operations and plans to raise additional equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used to further develop 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 financial statements do not include any adjustments that might arise from this uncertainty.

Note 3 - Interest Expense

Stock and stock warrants issued during the nine months ended December 31, 2002 as debt costs associated with short-term financing were charged to unearned compensation and will be recognized over the life of the related loans. During the nine months ended September 30, 2003, amortization of unearned compensation of $94,251 was charged to interest expense.

Note 4 - Related Party Transactions

As of September 30, 2003, the Company owed approximately $254,000 to certain officers/directors of the Company. The Company may settle these amounts with the issuance of the Company's common stock in the future. During the quarter ended September 30, 2003, Pierre Quilliam, the Company's president, director and shareholder, advanced the Company an additional $61,758, which amount is due upon demand and bear zero interest.

At September 30, 2003, the Company had outstanding a note payable in the amount of $130,424 to a company that is jointly owned by the Company's Chairman and Chief Executive Officer and a director of the Company. The loan was for working capital purposes.

At September 30, 2003, the Company had outstanding a note payable in the amount of $43,800 to a company that is owned by the daughter of the Company's President, who is also a director of the Company. The loan was for working capital purposes.

During the three months ended September 30, 2003, the Company issued 136,000 shares of its common stock valued at $27,298, to one of its officers in settlement of expenses.

During the three months ended September 30, 2003, the Company issued 2,000,000 shares of its restricted common stock valued at $360,000 to two of its officers in settlement of accrued compensation.

During the three months ended September 30, 2003, the Company issued 1,000,000 shares of its restricted common stock valued at $100,000 to one of its officers in exchange for a promissory note.

Note 5 - Costs And Estimated Earnings Not Yet Billed On Uncompleted Contracts

At September 30, 2003, Costs and recognized income not yet billed on uncompleted contracts consisted of approximately $472,000 of costs, $178,000 of estimated earnings, less $547,000 of billings.

Note 6 - Stockholder's Equity

During the three months ended September 30, 2003, the Company issued 736,000 shares of restricted common stock for payment of accounts payable in the amount of $132,298.

During the three months ended September 30, 2003, the Company issued 4,155,000 shares of restricted common stock valued at $644,250 for services rendered.

During the three months ended September 30, 2003, the Company issued 14,035,702 shares of its common stock valued at $842,142 for consulting services.

During the three months ended September 30, 2003, the Company issued 3,378,333 shares of its restricted common stock valued at $1,104,683 in exchange for assets of Aurora Biometrics, Inc. (Note 10).

During the three months ended September 30, 2003, the Company issued 4,150,000 shares of its restricted common stock valued at $195,000 subscribed to during the second quarter ended June 30, 2003.

Note 7 - Payroll Taxes Payable

At December 31, 2002, the Company was delinquent in the payment of both trust fund payroll taxes and employer payroll taxes due to the United States Treasury and various states. The amount of payroll taxes due was approximately $432,000. As of September 30, 2003, the Company has made payments totaling $215,752 to the United States Treasury related to these delinquent amounts.

Note 8 - Contingencies

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. Subsequently, Expidant and the Company entered into a management agreement, under which the Company was retained to manage Expidant. In fulfillment of its management duties, the Company moved Expidant's employees to its payroll system, and was reimbursed by Expidant for payroll costs of Expidant employees that were paid through the Company's payroll system. The plaintiff contends that the payroll reimbursements made by Expidant to the Company were unauthorized transfers of its collateral, and accordingly that both the Company and Mr. Kalra, as the Company's chief executive officer, are liable for conversion under Indiana law. The plaintiff contends that $556,950 was improperly transferred from Expidant to the Company. On the other hand, the Company contends that the transfers were authorized, and that the plaintiff suffered no damages since the funds were spent to reimburse payroll costs of Expidant that would have been paid otherwise. The Company intends to defend the action vigorously. The case is currently in the discovery phase and is being actively defended by the Company. There can be no assurance, however, that the Company will be successful in its defense or that the final resolution of this matter will not have a material adverse effect on the financial condition or operation of the Company.

On December 6, 2002, Qwest Communications Corporation, another creditor of Expidant, filed a suit against the Company to recover $137,124. The plaintiff performed services for Expidant and is claiming that the Company is obligated to pay all liabilities of Expidant. The Company believes that it has no obligation to pay Expidant's liability to the plaintiff and intends to defend the action vigorously. There can be no assurance, however, that the Company will be successful in its defense or that the final resolution of this matter will not have a material adverse effect on the financial condition or operation of the Company.

During the quarter ended June 30, 2003, the Company entered into a consent judgment to pay $39,000 to Accutech in three equal installments of $13,000. The Company defaulted on its obligations under the consent judgment, and accordingly Accutech has the right to collect the judgment. Accutech recently filed a garnishment action against the Company.

Note 9 - Restatement of 2002 Results

In conjunction with the Company's audit for the nine months ended December 31, 2003, the Company's independent auditors made a number of adjustments to the results of operations reported for the quarters ended June 30, 2002 and September 30, 2002. The adjustments made by the auditors are summarized below:



|Reclassify to selling, general and administrative expenses payroll reimbursements relating to the Expidant agreement, of which $204,429 and $399,100 were recorded as revenues in the quarters ended September 30, 2002 and June 30, 2002, respectively | $603,529
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------
|Record payroll accruals relating to the Expidant agreement that were assumed/incurred during the quarter ended June 30, 2002                                                                                                                            | $163,673
|Reverse adjustment made in the quarter ended June 30, 2002 to reduce wage expense that should have been recorded to common stock and additional paid-in capital for stock issued in payment of accounts payable                                         | $ 72,000
|Record directors compensation, of which $55,000 was related to the quarter ended September 30, 2002 and $55,000 was related to the quarter ended June 30, 2002                                                                                          | $110,000
|Reverse compensation expense related to shares issued for services that was improperly recorded in the quarter ended June 30, 2002                                                                                                                      | $ 27,500
|Reverse payroll tax expense that was improperly accrued in the quarter ended June 30, 2002                                                                                                                                                              | $ 27,475
|Record interest expense related to stock warrants issued for short-term financing that related to the quarter ended September 30, 2002                                                                                                                  | $ 22,350
|Record accrual for unpaid salaries related to Expidant employees that was unpaid in the quarter ended September 30, 2002                                                                                                                                | $ 27,615

As a result, the comparative statement of operations and statement of cash flows included in this report for the period ended September 30, 2002 have been restated to incorporate the foregoing adjustments.

Note 10 - Purchase of assets of Aurora Biometrics, Inc.

On July 17, 2003, the Company entered into an Asset Purchase Agreement to purchase certain assets of Aurora Biometrics, Inc. ("Aurora") The principal asset purchased by the Company was Aurora's provisional patent application for an automated face recognition system (#60/396,751), and related intellectual property. The purchase price for the assets consisted of 2,675,548 shares of common stock of the Company, plus the assumption of $91,182.76 of accounts payable and accrued expenses of Aurora, plus 85,000 shares of common of the Company for use by Aurora in repaying $25,500 in loans made by Aurora's directors to Aurora, and 593,333 shares of common stock of the Company for use by Aurora in satisfying $178,000 in deferred compensation to the two founders of Aurora. Under the Asset Purchase Agreement, 1,337,774 shares of common stock were place in escrow for one year, and will be returned to the Company in the event the Aurora's patent application is denied within one year of closing by the United States Patent Office due to irrefutable preexisting patent claims, and otherwise to Aurora.

In connection with the acquisition of the assets, the Company entered into an employment agreement with Dr. Helena S. Wisniewski to be an executive of the subsidiary of the Company formed to acquire the assets and operate the business acquired from Aurora. Dr. Wisniewski's employment agreement provides, among other things, for an annual salary of $170,000 per year, an initial term of one year, and the issuance of 1,000,000 options under the Company's 2002 Stock Option Plan. The Company also entered into an employment agreement with Phillip Chesson, the husband of Dr. Wisniewski, to be an executive of the subsidiary of the Company formed to acquire the assets and operate the business acquired from Aurora. Mr. Chesson's employment agreement provides, among other things, for an annual salary of $90,000 per year, an initial term of one year, and the issuance of 500,000 options under the Company's 2002 Stock Option Plan.

Note 11 - Shareholder Meeting/Amendment to Certificate of Incorporation

On July 23, 2003, the Company held its annual meeting of shareholders. At the annual meeting, the Company's shareholders a) elected Raj Kalra, Pierre Quilliam and Kerry Moody as directors of the Company, b) approved the Company's 2002 Stock Option Plan, and c) ratified the appointment of Tauber and Balser, P.C. as the Company's independent public accountants.

At the shareholder meeting, a shareholder proposed the following additional resolutions that were approved by a voice vote of those shareholders in attendance at the meeting: a) that the Company's Certificate of Incorporation be amended to increase the number of authorized common shares to 200,000,000 from 20,000,000; b) that the Company enter into new three year employment agreements with Raj Kalra and Pierre Quilliam as of August 1, 2003, to replace and supersede their existing employment agreements; c) that the Company's Certificate of Incorporation be amended to rename the Company's existing common stock as "Class A Common Stock" and to create a new class of common stock called "Class B Common Stock" that would have equal rights to dividends and distributions as the Class A Common Stock, but would have forty (40) votes per share; d) that Mr. Kalra be permitted to exchange 1,000,000 shares of Class A Common Stock for 1,000,000 shares of Class B Common Stock; and e) that Mr. Quilliam be permitted to exchange 1,000,000 shares of Class A Common Stock for 1,000,000 shares of Class B Common Stock. All of the resolutions proposed by the shareholder were approved by shareholders subject to the subsequent ratification and approval thereof by Kerry Moody, a director of the Company that was not in attendance at the meeting. Mr. Moody subsequently ratified and approved all of the resolutions.

Item 2. Management's Discussion and Analysis and plan of Operation.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

This report on Form 10-QSB includes 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 ("Forward Looking Statements"). All statements other than statements of historical fact included in this report are Forward Looking Statements. In the normal course of its business, the Company, in an effort to help keep its shareholders and the public informed about the Company's operations, may from time to time issue certain statements, either in writing or orally, that contain or may contain Forward Looking Statements. Although the Company believes that the expectations reflected in such Forward Looking Statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, past and possible future, of acquisitions and projected or anticipated benefits from acquisitions made by or to be made by the Company, or projections involving anticipated revenues, earnings, levels of capital expenditures or other aspects of operating results. All phases of the Company operations are subject to a number of uncertainties, risks and other influences, many of which could materially affect the results of the Company's proposed operations and whether Forward Looking Statements by the Company ultimately prove to be accurate. Such important factors ("Important Factors") and other factors could cause actual results to differ materially from the company's expectations as disclosed in this report. All prior and subsequent written and oral forward Looking Statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Important Factors described below that could cause actual results to differ materially from the Company's expectations as set forth in any Forward looking Statement made by or on behalf of the Company.

RESULTS OF OPERATIONS

Financial Condition

Total assets at September 30, 2003 increased $704,111 to $1,691,971 from $987,860 at December 31, 2002. The increase is primarily due to the purchase of the assets of Aurora Biometrics, Inc. Current liabilities at September 30, 2003 increased $1,173,667 to $4,098,100 from $2,924,433 at December 31, 2002. The increase is primarily due to an increase in accounts payable of $739,750. Stockholders' deficit at September 30, 2003 increased $469,556 to $2,406,129 from $1,936,573 at December 31, 2002. This increase is primarily due to the net loss for the nine months ended September 30, 2003 of $5,010,905, offset by common stock and warrants issued for services of $3,312,245 in addition to common stock issued for the assets of Aurora Biometrics, Inc.valued at $1,013,500.

Nine months ended September 30, 2003 compared to the nine months ended September 30, 2002

Revenue increased $1,412,224 or 297% to $1,887,756 for the nine months ended September 30, 2003, from $475,532 for the same period in 2002. Revenue during the nine months of $1,714,723 resulted from a new contract with the U.S. Veterans Administration to automate and supply printing services for the distribution of secure patient medical information in connection with the distribution of prescription drugs by the U.S. Department of Veterans Affairs Consolidated Outpatient Pharmacy in Murfreesboro, Tennessee. In addition, revenue of $173,033 resulted from the continued progress on the contract to provide computer and network software and services to the Department of Veterans Affairs in Dallas, Texas.

Gross profit for the nine months ended September 30, 2003 and 2002 was $136,245 and $361,476, respectively. Cost of sales during the nine months ended September 30, 2003 related to the new contract with the U.S. Veterans reflect an adjustment to reduce certain printing services costs by $200,000 due to overcharges in the first quarter ended March 31, 2003.

Gross profit for the same period in 2002 is higher due to the indirect costs related to revenue classified in Selling, general and administration expenses as apposed to Cost of sales.

During the nine months ended September 30, 2003 and 2002, the Company incurred operating expenses of $5,002,597 and $2,071,630, respectively. The increase of $2,930,967 is primarily due to increased consulting fees and payroll costs associated with implementation of the contract with the U.S. Veterans Administration, consulting fees associated with the diversification of the Company's product offerings, and compensation expense of $542,764 related to the issuance of warrants for services.

During the nine months ended September 30, 2003 and 2002, the Company incurred an operating loss of ($4,866,352) and ($1,710,154), respectively. During the nine months ended September 30, 2003 and 2002, the Company incurred interest expense of ($144,553) and ($28,514), respectively, an increase of $116,039. The increase is due to interest of $21,788 on notes payable and compensation expense of $94,251 related to warrants issued in connection with certain financing.

Net loss for the nine months ended September 30, 2003 and 2002 was ($5,010,905) and ($1,655,201), respectively.

Three months ended September 30, 2003 compared to the three months ended September 30, 2002

Revenue was $271,892 for the three months ended September 30, 2003 compared to $247,530 for the same period in 2002, a 10% increase. Revenue during the quarter resulted from a new contract with the U.S. Veterans Administration to automate and supply printing services for the distribution of secure patient medical information in connection with the distribution of prescription drugs by the U.S. Department of Veterans Affairs Consolidated Outpatient Pharmacy in Murfreesboro, Tennessee.

Gross profit for the three months ended September 30, 2003 and 2002 was ($75,793) and $167,668, respectively. The costs associated with the printing services contract have been reduced through operational changes including a new, more favorable contract for printing services.

During the three months ended September 30, 2003 and 2002, the Company incurred operating expenses of $2,304,215 and $520,261, respectively. The increase of $1,783,954 is primarily due to increased consulting fees and payroll costs associated with implementation of the contract with the U.S. Veterans Administration, consulting fees associated with the diversification of the Company's product offerings, and compensation expense of $542,764 related to the issuance of warrants for services.

During the three months ended September 30, 2003 and 2002, the Company incurred an operating loss of ($2,380,008) and ($352,593), respectively. During the three months ended September 30, 2003 and 2002, the Company incurred interest expense of ($703) and ($27,947), respectively, a decrease of $27,244.

During the three months ended September 30, 2003 and 2002, the Company had other income of $83,467 resulting from the settlement of a Section 16 action.

Net loss for the three months ended September 30, 2003 and 2002 was ($2,380,711) and ($297,073), respectively.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2003, the Company's current assets were $392,276 and its current liabilities were $4,098,100, a working capital deficiency of ($3,705,824). In addition, the Company had a cash overdraft of $61,716. 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.

The Company's working capital is currently insufficient for the Company to implement its business plan. Therefore, the Company is actively working with potential investors in the Company who have expressed an interest in investing in common stock or convertible securities, and the Company expects to be able to raise sufficient capital to meet its liquidity needs until it achieves profitable operations. To date, the Company has relied upon investment proceeds as well as loans from officers and the deferral of management salaries to satisfy its working capital needs. Until the Company is able to raise more capital, the Company plans to continue deferring the salary of its key employees and payment to some vendors and to negotiate payment extensions and payment deferral agreements with significant creditors.

ITEM 3. Controls and Procedures

At this time, the Company lacks sufficient internal controls and procedures. Because the Company only began operations recently, and has a limited accounting staff, the Company has not developed adequate internal procedures to insure that all transactions are properly handled by its accounting department. In addition, the Company needs to institute internal procedures to create checks and balances within its accounting department. The Company has retained an outside consultant to assist it in the preparation of financial statements and to advise it on the creation of internal controls and procedures. However, at this time, the Company may not have sufficient cash flow or capital to increase the size of its accounting staff on a permanent basis. Until the Company is able to reorganize its accounting department and hire additional skilled personnel, the Company may continue to experience delays in generating final financial statements by the deadlines required by securities regulations.

PART II. OTHER INFORMATION.

ITEM 1. Legal Proceedings.

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. Subsequently, Expidant and the Company entered into a management agreement, under which the Company was retained to manage Expidant. In fulfillment of its management duties, the Company moved Expidant's employees to its payroll system, and was reimbursed by Expidant for payroll costs of Expidant employees that were paid through the Company's payroll system. The plaintiff contends that the payroll reimbursements made by Expidant to the Company were unauthorized transfers of its collateral, and accordingly that both the Company and Mr. Kalra, as the Company's chief executive officer, are liable for conversion under Indiana law. The plaintiff contends that $556,950 was improperly transferred from Expidant to the Company. On the other hand, the Company contends that the transfers were authorized, and that the plaintiff suffered no damages since the funds were spent to reimburse payroll costs of Expidant that would have been paid otherwise. The Company intends to defend the action vigorously. The case is currently in the discovery phase and is being actively defended by the Company. There can be no assurance, however, that the Company will be successful in its defense or that the final resolution of this matter will not have a material adverse effect on the financial condition or operation of the Company.

On December 6, 2002, Qwest Communications Corporation, another creditor of Expidant, filed a suit against the Company to recover $137,124. The plaintiff performed services for Expidant and is claiming that the Company is obligated to pay all liabilities of Expidant. The Company believes that it has no obligation to pay Expidant's liability to the plaintiff and intends to defend the action vigorously. There can be no assurance, however, that the Company will be successful in its defense or that the final resolution of this matter will not have a material adverse effect on the financial condition or operation of the Company.

During the quarter ended June 30, 2003, the Company entered into a consent judgment to pay $39,000 to Accutech in three equal installments of $13,000. The Company defaulted on its obligations under the consent judgment, and accordingly Accutech has the right to collect the judgment. Accutech recently filed a garnishment action against the Company.

ITEM 2. Changes in Securities and Use of Proceeds.

During the three months ended September 30, 2003, the Company issued 736,000 shares of restricted common stock for payment of accounts payable in the amount of $132,298.

During the three months ended September 30, 2003, the Company issued 4,155,000 shares of restricted common stock valued at $644,250 for services rendered.

During the three months ended September 30, 2003, the Company issued 14,035,702 shares of its common stock valued at $842,142 for consulting services.

During the three months ended September 30, 2003, the Company issued 2,000,000 shares of its restricted common stock valued at $360,000 to two of its officers in settlement of accrued compensation.

During the three months ended September 30, 2003, the Company issued 1,000,000 shares of its restricted common stock valued at $100,000 to one of its officers in exchange for a promissory note.

During the three months ended September 30, 2003, the Company issued 3,378,333 shares of its restricted common stock valued at $1,104,683 in exchange for assets of Aurora Biometrics, Inc. (Note 10).

During the three months ended September 30, 2003, the Company issued 4,150,000 shares of its restricted common stock valued at $195,000 subscribed to during the second quarter ended June 30, 2003.

All of these shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. Specifically, the shares were issued without public solicitation or advertising to persons who the Company believes had familiarity with the Company's business and financial condition, and were issued with restrictive legends thereon.

ITEM 3. Defaults Upon Senior Securities.

At September 30, 2003, the Company was indebted on a note in the original principal amount of $425,000 to an individual investor that matured in June 2003. The note holder was unwilling to extend the maturity date of the note on terms agreeable to the Company; therefore, the Company is in default under the note by virtue of its failure to the note on its maturity date. At September 30, 2003, the Company is also indebted on a note in the original principle amount of $375,000 to an entity that is owned or controlled by the individual investor, which note matured in August 2003. The investor has indicated that he is unwilling to further extend the maturity date of this note on terms acceptable to the Company, and therefore, the Company is in default under this note as well.

ITEM 4. Submission of Matters to a Vote of Security Holders.

On July 23, 2003, the Company held its annual meeting of shareholders. At the annual meeting, the Company's shareholders a) elected Raj Kalra, Pierre Quilliam and Kerry Moody as directors of the Company, b) approved the Company's 2002 Stock Option Plan, and c) ratified the appointment of Tauber and Balser, P.C. as the Company's independent public accountants.

At the shareholder meeting, a shareholder proposed the following additional resolutions that were approved by a voice vote of those shareholders in attendance at the meeting: a) that the Company's Certificate of Incorporation be amended to increase the number of authorized common shares to 200,000,000 from 20,000,000; b) that the Company enter into new three year employment agreements with Raj Kalra and Pierre Quilliam as of August 1, 2003, to replace and supersede their existing employment agreements; c) that the Company's Certificate of Incorporation be amended to rename the Company's existing common stock as "Class A Common Stock" and to create a new class of common stock called "Class B Common Stock" that would have equal rights to dividends and distributions as the Class A Common Stock, but would have forty (40) votes per share; d) that Mr. Kalra be permitted to exchange 1,000,000 shares of Class A Common Stock for 1,000,000 shares of Class B Common Stock; and e) that Mr. Quilliam be permitted to exchange 1,000,000 shares of Class A Common Stock for 1,000,000 shares of Class B Common Stock. All of the resolutions proposed by the shareholder were approved by shareholders subject to the subsequent ratification and approval thereof by Kerry Moody, a director of the Company that was not in attendance at the meeting. Mr. Moody subsequently ratified and approved all of the resolutions.

ITEM 5. Other Information.

Not applicable.

ITEM 6. Exhibits and Reports on Form 8-K.

(a)	Exhibits.

Ex-99.01- Certifications of the Chief Fiancial Officer/ Chief Executive Officer

(b)	Reports on Form 8-K. None.

SIGNATURES

In accordance with Section 13 of 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Date: November 17 , 2003

|Dated: November 17, 2003                    
|--------------------------------------------
|/s/Raj Kalra
-------------------------------

Raj Kalra,

Chairman and Chief Executive Officer



Date: November 17 , 2003

/s/ Pierre Quilliam,

-----------------

Pierre Quilliam,

Chief Financial Officer



CERTIFICATION(S)

Raj Kalra, Chairman and Chief Executive Officer of the Company, certify that:

(1) I have reviewed this quarterly report on Form 10-QSB of Dicut, Inc.;

(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 we 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.

|Dated: November 17, 2003
|------------------------
|/s/ Raj Kalra           

Raj Kalra, Chairman and Chief Executive Officer

CERTIFICATION

I, Pierre Quilliam ,certify that:

1.  I have reviewed this quarterly report on Form 10-QSB of DICUT, INC.;

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.  Exchange Act Rules 13a - 14 and 15d - 14) for the registrant and we 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 function):

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

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

.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: November 17 , 2003

/s/ Pierre Quilliam,

-----------------

Pierre Quilliam

Chief Financial Officer