<PAGE>

                                   FORM 10-QSB

                       Securities and Exchange Commission
                              Washington D.C. 20549

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


                  For the fiscal quarter ended: March 31, 2003

                      Commission file number: 333-60186


                             GRAPHCO HOLDINGS CORP.
                            f/k/a RCM INTERESTS, INC.
             (Exact name of registrant as specified in its charter)

               Delaware                          75-2926438
    (State or other jurisdiction of            (I.R.S. Employer
    Incorporation or organization)           Identification No.)


                               41 University Drive
                           Newton, Pennsylvania, 18940
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (215) 497-9170
              (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                         No          X
                    -----                             ----

         Indicate the number of shares  outstanding of each of the  registrant's
classes of common stock: As of June 15, 2003,  there were  19,127,293  shares of
the Issuer's  common stock,  par value $0.001,  issued and  outstanding of which
17,351,553  shares  are  in  the  name  of  our  operating  subsidiary,  Graphco
Technologies,  Inc.  and are intended to be  distributed  pro rata to the former
shareholders of Graphco Technologies, Inc.


<PAGE>




<TABLE>
<CAPTION>

                                      INDEX
PART I.  FINANCIAL INFORMATION

<S>                                                                              <C>
Item 1.  Financial Statements

Condensed Consolidated Balance Sheets
March 31, 2003 (unaudited) And December 31, 2002 ............................    2

Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2003 and 2002 and period from
January 1, 1998 (date of Inception) to March 31, 2003 (unaudited)............    3

Condensed Consolidated Statements of Changes in Stockholders' Deficiency
Three Months ended March 31, 2003 and 2002
period from January 1, 1998 (date of Inception) to March 31, 2003 (unaudited)   4-7

Condensed Consolidated Statements of Cash Flows
Three Months ended March 31, 2003 and
Period from January 1, 1998 (date of Inception) to March 31, 2003 (unaudited)   8-9


Notes to Condensed Consolidated Financial Statements (unaudited) ............ 10-17

Item 2.  Management's Discussion and Analysis on Plan of Operation........... 18-21

Item 3. Controls and Procedures .............................................    22

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings ...................................................    23

Item 2. Changes in Securities ...............................................    23

Item 3. Defaults upon Senior Securities .....................................    23

Item 4. Submission of Matters to a Vote of Security Holders .................    24

Item 5. Other Information ...................................................    24

Item 6. Exhibits and Reports on Form 8-K ....................................    24

Signatures ..................................................................    25

Certifications .............................................................. 26-30
</TABLE>

<PAGE>


                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                MARCH 31, 2003 (UNAUDITED) AND DECEMBER 31, 2002


<TABLE>
<CAPTION>

                                                                      March          December
                                       ASSETS                       31, 2003         31,  2002
                                       ------                     -------------    ------------
                                                                             (Unaudited)
Current assets:
<S>                                                                <C>             <C>
     Cash                                                          $        400    $        955
     Accounts receivable                                                  1,808           1,808
     Prepaid expenses                                                    97,683          65,708
                                                                   ------------    ------------
                  Total current assets                                   99,891          68,471
Property and equipment, net of accumulated depreciation
     and amortization of $234,493 and $247,820                          135,774         149,101
Investments, at equity                                                     --              --
Other assets                                                             22,432          22,432
                                                                   ------------    ------------

                  Totals                                           $    258,097    $    240,004
                                                                   ============    ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Convertible notes payable                                     $  2,574,908    $  2,574,908
     Accounts payable and other accrued expenses                      4,033,532       3,465,059
     Other notes payable                                                212,000         204,000
                                                                   ------------    ------------
                  Total liabilities                                   6,820,440       6,243,967
                                                                   ------------    ------------

Commitments and contingencies

Stockholders' deficiency:
     Preferred stock, no par value; 5,000,000 shares authorized:
         Series A convertible preferred stock; 333,333 shares
              authorized; 225,029 shares issued and outstanding
              (aggregate liquidation preference - $3,537,756 and
               $3,495,563)                                            3,265,383       3,265,383
         Series B convertible preferred stock, no par value;
              4,500,000 shares authorized; 469,000 shares issued
              and outstanding (aggregate liquidation preference
              $    938,000)                                                             415,760
         Subscription receivable for 53,000 shares of Series B
              convertible preferred stock                                               (53,000)
     Common stock, par value $.001 per share; 40,000,000
         shares authorized; 19,127,293 and 18,511,793 shares
         issued and outstanding                                          19,127          18,512
     Additional paid-in capital                                      15,386,982      14,444,637
     Unearned compensation                                             (283,276)       (328,891)
     Accumulated deficit, including $24,081,798 and $22,946,232
         accumulated in the development stage                       (24,950,559)    (23,766,364)
                                                                   ------------    ------------
                  Total stockholders' deficiency                     (6,562,343)     (6,003,963)
                                                                   ------------    ------------

                  Totals                                           $    258,097    $    240,004
                                                                   ============    ============
</TABLE>

           See Notes to Condensed Consolidated Financial Statements.


                                          2

<PAGE>


                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 THREE MONTHS ENDED MARCH 31, 2003 AND 2002 AND
                 PERIOD FROM JANUARY 1, 1998 (DATE OF INCEPTION)
                          TO MARCH 31, 2003 (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                    Cumulative -
                                                                                    Development
                                                       2003             2002            Stage
                                                   ------------    -------------   ------------
<S>                                                <C>             <C>
Revenues                                                           $     62,119    $  1,532,975
Cost of revenues                                                         10,356         713,002
                                                                   ------------    ------------
Gross profit                                                             51,763         819,973
                                                                   ------------    ------------
Operating expenses:
     Selling, general and administrative           $    956,447         775,439      15,704,322
     Research and development                            91,690         123,283       4,826,903
                                                   ------------    ------------    ------------
              Totals                                 (1,048,137)        898,722      20,531,225
                                                   ------------    ------------    ------------
Loss from operations                                 (1,048,137)       (846,959)    (19,711,252)
                                                   ------------    ------------    ------------
Other income (expense):
     Interest income                                                         62         184,354
     Interest expense, including amortization of
         deferred loan fees and debt discount of
         $-, $818,362 and $2,807,284                   (136,058)       (901,251)     (3,627,357)
     Loss from equity investees                                                        (949,420)
     Other                                                                               21,877
                                                                   ------------    ------------
              Totals                                   (136,058)       (901,189)     (4,370,546)
                                                   ------------    ------------    ------------
Net loss                                           $ (1,184,195)   $ (1,748,148)   $(24,081,798)
                                                   ============    ============    ============
Basic loss per common share                        $       (.06)   $       (.10)
                                                   ============    ============


Basic weighted average number of common
     shares outstanding                              19,099,460      17,323,353
                                                   ============    ============


</TABLE>


           See Notes to Condensed Consolidated Financial Statements.


                                          3

<PAGE>


                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
        THREE MONTHS ENDED MARCH 31, 2003 AND PERIOD FROM JANUARY 1, 1998
                (DATE OF INCEPTION) TO MARCH 31, 2003 (Unaudited)


<TABLE>
<CAPTION>
                                                   Series A Convertible
                                                      Preferred Stock                Common Stock
                                                 -------------------------    ---------------------------    Additional
                                                 Number of                    Number of                        Paid-in
                                                   Shares         Amount         Shares         Amount         Capital
                                                 ------------   -----------   ------------    ------------   -------------
<S>              <C>                             <C>                             <C>          <C>             <C>
Balance, January 1, 1998                         1,000,000                       3,721,695    $      3,722    $   418,750
2.68975-for-1 stock split                                                        6,282,378           6,282         (6,282)
Stock issued for services                                                          360,000             360           (360)
Detachable warrants issued in connection
   with bridge financing                                                                                           86,064
Retirement of preferred shares                  (1,000,000)
Net loss
                                                ----------                     ----------     ------------     ----------
Balance, December 31, 1998                            --                        10,364,073          10,364        498,172
Stock issued in connection with private
   placement                                                                     5,881,054           5,881      6,389,287
Stock issued in connection with
   acquisition                                                                      23,810              24         31,644
Stock exchanged for the retirement of
   bridge notes                                                                    474,506             474        564,618
Net loss
                                                ----------                     ----------     ------------     ----------
Balance, December 31, 1999                            --                        16,743,443          16,743      7,483,721
Stock issued in connection with
   private placement                               225,029    $  3,265,383
Stock warrants exercised                                                           246,659             247        327,809
Stock issued in connection with acquisition                                        143,999             144        191,375
Stock issued for services                                                           50,000              50         66,450
Warrants issued for services                                                                                       31,280
Net loss
                                                 ------------   -----------   ------------    ------------   -------------
Balance, December 31, 2000                         225,029       3,265,383      17,184,101          17,184      8,100,635
</TABLE>

<TABLE>
<CAPTION>
                                                   Accumulated
                                                    Deficit           Total
                                                  -------------    ------------
<S>              <C>                             <C>              <C>
Balance, January 1, 1998                         $    (820,132)   $   (397,660)
2.68975-for-1 stock split
Stock issued for services
Detachable warrants issued in connection
   with bridge financing                                                86,064
Retirement of preferred shares
Net loss                                              (742,295)       (742,295)
                                                    ----------      -----------
Balance, December 31, 1998                          (1,562,427)     (1,053,891)
Stock issued in connection with private
   placement                                                         6,395,168
Stock issued in connection with
   acquisition                                                          31,668
Stock exchanged for the retirement of
   bridge notes                                                        565,092
Net loss                                            (1,489,397)     (1,489,397)
                                                    ----------      -----------
Balance, December 31, 1999                          (3,051,824)      4,448,640
Stock issued in connection with
   private placement                                                 3,265,383
Stock warrants exercised                                               328,056
Stock issued in connection with acquisition                            191,519
Stock issued for services                                               66,500
Warrants issued for services                                            31,280
Net loss                                            (7,157,185)     (7,157,185)
                                                    ----------      -----------
Balance, December 31, 2000                         (10,209,009)      1,174,193
</TABLE>

                                          4
<PAGE>
                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
        THREE MONTHS ENDED MARCH 31, 2003 AND PERIOD FROM JANUARY 1, 1998
                (DATE OF INCEPTION) TO MARCH 31, 2003 (Unaudited)

<TABLE>
<CAPTION>
                                                    Series A Convertible
                                                       Preferred Stock            Common Stock
                                                 --------------------------   ------------------------      Additional
                                                  Number of                    Number of                     Paid-in
                                                    Shares         Amount        Shares         Amount       Capital
                                                 -----------     ----------   ----------       --------    -----------
<S>                                              <C>               <C>          <C>            <C>         <C>
Sales of common stock through
   private placement                                                             120,000     $      120   $    299,880
Compensatory stock options issued
   to employees and directors                                                                                1,922,305
Amortization of unearned compen-
   sation
Warrants issued for payment of
   interest                                                                                                     19,053
Issuance of beneficial conversion
   rights in connection with private
   placement of convertible notes
   payable                                                                                                   1,336,054
Sale of warrants as part of private
   placement of convertible notes
   payable                                                                                                   1,002,775
Warrants issued for payment of fees
   in connection with private placement
   applicable to convertible notes payable                                                                     299,004
Expenses in connection with private
   placement applicable to sale of
   warrants                                                                                                    (43,294)
Dividends accrued on Series A
   convertible preferred stock
Common stock issued as payment
   of accrued dividends                                                           19,452             19         48,609
Net loss
                                                 -----------     ----------   ----------       --------    -----------
Balance, December 31, 2001                         225,029       3,265,383    17,323,553         17,323     12,985,021
</TABLE>

<TABLE>
<CAPTION>
                                                       Unearned       Accumulated
                                                     Compensation        Deficit          Total
                                                    ---------------   ------------     -----------
<S>                                                  <C>              <C>             <C>
Sales of common stock through
   private placement                                                                  $   300,000
Compensatory stock options issued
   to employees and directors                        $(1,771,040)                         151,265
Amortization of unearned compen-
   sation                                                183,153                          183,153
Warrants issued for payment of
   interest                                                                                19,053
Issuance of beneficial conversion
   rights in connection with private
   placement of convertible notes
   payable                                                                              1,336,054
Sale of warrants as part of private
   placement of convertible notes
   payable                                                                              1,002,775
Warrants issued for payment of fees
   in connection with private placement
   applicable to convertible notes payable                                                299,004
Expenses in connection with private
   placement applicable to sale of
   warrants                                                                               (43,294)
Dividends accrued on Series A
   convertible preferred stock                                        $   (48,628)        (48,628)
Common stock issued as payment
   of accrued dividends                                                                    48,628
Net loss                                                               (6,292,623)     (6,292,623)
                                                    ---------------   ------------     -----------
Balance, December 31, 2001                            (1,587,887)     (16,550,260)     (1,870,420)

</TABLE>

                                          5

<PAGE>



                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
        THREE MONTHS ENDED MARCH 31, 2003 AND PERIOD FROM JANUARY 1, 1998
                (DATE OF INCEPTION) TO MARCH 31, 2003 (Unaudited)


<TABLE>
<CAPTION>

                                       Series A Convertible      Series B Convertible Stock
                                         Preferred Stock               Preferred Stock            Common Stock
                                       ---------------------    ------------------------------ -------------------
                                       Number of                Number of          Subscription Number of
                                         Shares     Amount       Shares   Amount   Receivable   Shares       Amount
                                       ---------   ---------    -------   ------   ---------  ----------    --------
<S>                                    <C>         <C>          <C>       <C>      <C>         <C>        <C>
Effects of reverse acquisition                                                                   938,240  $     939

Compensatory stock options issued to
   employees and directors

Cancellation of compensatory stock options
   issued to employees and directors

Amortization of unearned compensation

Warrants issued for payment of interest

Warrants issued for services

Exercise of warrants

Sale of Series B preferred stock, net
   of expenses of $65,740                                       469,000  $415,760  $(53,000)

Common stock issued for services                                                                 250,000        250

Net loss

                                       ---------   ---------    -------   ------   ---------  ----------    --------
Balance, December 31, 2002              225,029    3,265,383    469,000   415,760   (53,000)  18,511,793     18,512

</TABLE>
<TABLE>
<CAPTION>

                                                   Additional
                                                     Paid-in    Unearned    Accumulated
                                                     Capital  Compensation   Deficit        Total
                                                   --------- ------------ -----------   -----------
<S>                                               <C>          <C>          <C>         <C>
Effects of reverse acquisition                   $  (154,935)                          $  (153,996)

Compensatory stock options issued to
   employees and directors                           418,148 $(130,000)                    288,148

Cancellation of compensatory stock options
   issued to employees and directors                (923,455)  923,455

Amortization of unearned compensation                          465,541                     465,541

Warrants issued for payment of interest              189,193                               189,193

Warrants issued for services                       1,652,915                             1,652,915

Exercise of warrants                                  28,000                               28,000

Sale of Series B preferred stock, net
   of expenses of $65,740                                                                  362,760

Common stock issued for services                     249,750                               250,000

Net loss
                                                                        $  (7,216,104)   (7,216,104)
                                       ---------   ---------   --------   -----------   -----------
Balance, December 31, 2002                        14,444,637  (328,891)   (23,766,364)  (6,003,963)
</TABLE>

                                          6

<PAGE>



                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
        THREE MONTHS ENDED MARCH 31, 2003 AND PERIOD FROM JANUARY 1, 1998
                (DATE OF INCEPTION) TO MARCH 31, 2003 (Unaudited)



<TABLE>
<CAPTION>
                                        Series A Convertible        Series B Convertible        Common
                                          Preferred Stock              Preferred Stock          Stock
                                       --------------------- -------------------------------- ----------
                                       Number of              Number of          Subscription Number of
                                         Shares    Amount      Shares    Amount    Receivable  Shares
                                       --------  ------------ ---------  ------     -------  ----------
<S>                                     <C>       <C>          <C>          <C>        <C>      <C>

Sale of Series B preferred stock through
   private placement, net of expenses
   of $16,390                                                $  46,500    36,610

Conversion of Series B preferred stock
   into common stock                                          (515,500) (452,370)              515,500

Compensatory stock options issued to
   employees

Amortization of unearned compensation

Warrants issued for payment of interest

Common stock issued for services                                                                100,000

Payments of subscription receivable                                                 $53,000

Net loss
                                       --------  ------------ ---------  ------     -------  ----------
Balance, March 31, 2003                 225,029   $3,265,383     -       $     -    $    -   19,127,293
                                        =======   ==========   ========  =======    =======  =========
</TABLE>


<TABLE>
<CAPTION>

                                                             Additional
                                                              Paid-in     Unearned   Accumulated
                                                    Amount    Capital   Compensation   Deficit        Total
                                                    -------  ----------- ---------   ------------  ------------
<S>                                                   <C>      <C>         <C>         <C>           <C>

Sale of Series B preferred stock through
   private placement, net of expenses
   of $16,390                                                                                     $     36,610

Conversion of Series B preferred stock
   into common stock                               $    515   $  451,855

Compensatory stock options issued to
   employees                                                     100,845                               100,845

Amortization of unearned compensation                                     $ 45,615                      45,615

Warrants issued for payment of interest                           59,745                                59,745

Common stock issued for services                        100      329,900                               330,000

Payments of subscription receivable                                                                     53,000

Net loss                                                                             $ (1,184,195)  (1,184,195)
                                                    -------  ----------- ---------   ------------  ------------
Balance, March 31, 2003                             $19,127  $15,386,982 $(283,276)  $(24,950,559) $(6,562,343)
                                                    =======  =========== =========   ============  ============
</TABLE>


           See Notes to Condensed Consolidated Financial Statements.

                                          7

<PAGE>


                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 THREE MONTHS ENDED MARCH 31, 2003 AND 2002 AND
                 PERIOD FROM JANUARY 1, 1998 (DATE OF INCEPTION)
                          TO MARCH 31, 2003 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                                Cumulative
                                                                                                               Development
                                                                          2003               2002                  Stage
                                                                    ---------------    ---------------         -------------
<S>                                                                    <C>                <C>                  <C>
     Net loss                                                          $(1,184,195)       $(1,748,148)         $(24,081,798)
     Adjustments to reconcile net loss to net
         cash used in operating activities:
         Depreciation and amortization of
              property and equipment                                        13,327            138,016             1,673,470
         Write-off of impaired property and equipment                                                               377,004
         Note payable issued for services                                                                           129,000
         Warrants issued for payment of interest                            59,745                                  248,938
         Warrants issued for services                                      100,845                                1,344,845
         Common stock issued for services                                  330,000                                  646,500
         Compensatory options and warrants issued
              to employees and directors                                                                            963,445
         Amortization of unearned compensation                              45,615                                  694,309
         Charges to interest expense for amortization of:
              Deferred loan costs                                                             178,574               468,455
              Debt discount                                                                   639,788             2,338,829
         Equity in net loss of equity investee                                                                      949,420
         Acquired research and development
              expenses                                                                                              200,000
         Gain on sale of marketable securities                                                                      (40,949)
         Unrealized loss on marketable securities                                                                   108,249
         Changes in operating assets and liabilities:
              Accounts receivable                                                               9,881                 2,041
              Prepaid expenses                                             (31,975)           125,491              (111,363)
              Other assets                                                                                           22,163
              Accounts payable and other accrued
                  expenses                                                 568,473            644,563             3,819,090
                                                                     -------------      -------------        --------------
                      Net cash used in operating activities                (98,165)           (11,835)          (10,248,352)
                                                                    --------------     --------------         -------------

Investing activities:
     Purchases of marketable securities                                                                            (540,210)
     Proceeds from maturities of marketable securities                                                              473,716
     Purchases of property and equipment                                                                         (1,813,319)
     Loan to related party                                                                                         (150,000)
     Acquisition of interest in equity investee                                                                    (750,000)
     Acquisition of technology license                                                                              (23,776)
                                                                                                            ---------------
                      Net cash used in investing activities                                                      (2,803,589)
                                                                                                             --------------
</TABLE>
                                          8

<PAGE>


                  GRAPHCO HOLDINGS CORP. INC. AND SUBSIDIARIES
                          (A Development Stage Company)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 THREE MONTHS ENDED MARCH 31, 2003 AND 2002 AND
                 PERIOD FROM JANUARY 1, 1998 (DATE OF INCEPTION)
                          TO MARCH 31, 2003 (Unaudited)



<TABLE>
<CAPTION>
                                                                                                                Cumulative
                                                                                                               Development
                                                                          2003               2002                  Stage
                                                                    ---------------    ---------------         -------------
<S>                                                                    <C>                <C>                  <C>
Financing activities:
     Payment for shares in connection with reverse
         acquisition                                                                                        $       (75,000)
     Proceeds from long-term debt                                   $       20,000                                1,180,000
     Repayments of long-term debt                                          (12,000)                              (1,108,891)
     Costs of sales of convertible notes and warrants
         allocable to sales of:
         Convertible notes                                                                                         (169,451)
         Warrants                                                                                                   (43,294)
     Repayment of convertible notes payable                                                                        (120,000)
     Proceeds from sales of convertible notes and
         warrants                                                                       $      11,000             2,620,000
     Proceeds from exercise of warrants                                                                              28,000
     Proceeds from private placements of preferred
         stock, net of expenses                                             36,610                                3,684,753
     Proceeds from private placements of common
         stock, net of expenses                                             53,000                                7,076,224
     Other                                                                                                          (20,000)
                                                                   ---------------     --------------        -------------
                  Net cash provided by financing activities                 97,610             11,000            13,052,341
                                                                    --------------     --------------         -------------

Net increase (decrease) in cash                                               (555)              (835)                  400

Cash, beginning of period                                                      955             76,299           -
                                                                  ----------------     -------------- ---------------------

Cash, end of period                                                $           400      $      75,464     $             400
                                                                   ===============      =============     =================


Supplemental disclosure of cash flow data:
     Interest paid                                                                                           $      141,113
                                                                                                          ================


</TABLE>


           See Notes to Condensed Consolidated Financial Statements.

                                          9

<PAGE>


                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1 - Business and basis of presentation:

                In  the  opinion  of  management,   the  accompanying  unaudited
                condensed   consolidated   financial   statements   reflect  all
                adjustments,  consisting of normal recurring accruals, necessary
                to present  fairly the  financial  position of Graphco  Holdings
                Corp.  and  Subsidiaries  (the  "Company") as of March 31, 2003,
                their results of operations  and cash flows for the three months
                ended March 31, 2003 and 2002,  their  changes in  stockholders'
                deficiency  for the three  months  ended  March 31, 2003 and the
                related  cumulative  amounts for the period from January 1, 1998
                (date of inception) to March 31, 2003. Pursuant to the rules and
                regulations  of  the  United  States   Securities  and  Exchange
                Commission  (the "SEC"),  certain  information  and  disclosures
                normally included in financial statements prepared in accordance
                with  accounting  principles  generally  accepted  in the United
                States of America  have been  condensed in or omitted from these
                financial statements unless significant changes have taken place
                since the end of the most recent fiscal year. Accordingly, these
                unaudited condensed  consolidated financial statements should be
                read in  conjunction  with the  audited  consolidated  financial
                statements  as of December  31,  2002 and for the periods  ended
                December 31, 2002 and 2001 and the notes  thereto (the  "Audited
                Financial Statements") and the other information included in the
                Company's  Annual Report on Form 10-KSB (the "Form  10-KSB") for
                the year ended December 31, 2002 that was previously  filed with
                the SEC.

                The results of  operations  for the three months ended March 31,
                2003  are  not  necessarily  indicative  of  the  results  to be
                expected for the full year ending December 31, 2003.

                The  accompanying  unaudited  condensed  consolidated  financial
                statements  have been  prepared  assuming  that the Company will
                continue as a going concern.  However,  the Company has incurred
                recurring  losses  and, as shown in the  accompanying  condensed
                consolidated  balance  sheet  as of  March  31,  2003,  it had a
                working  capital   deficit  of   approximately   $6,721,000,   a
                cumulative   net  loss  of  $24,951,000   and  a   stockholders'
                deficiency of $6,562,000.  It also had convertible notes payable
                with a principal  balance of $2,574,908  and other notes payable
                with a principal  balance of $212,000 that were in default as of
                March  31,  2003  and/or  June 13,  2003  (see  Notes 3, 4 and 6
                herein).   These  matters  raise  substantial  doubt  about  the
                Company's ability to continue as a going concern.


                                       10
<PAGE>


                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1 - Basis of presentation (concluded):

                Management  believes that the Company will continue to incur net
                losses and negative cash flows from operating activities through
                at least the twelve months ending March 31, 2004. In the absence
                of  operating  profits and cash flows,  management  believes the
                Company will need to limit its  expenditures,  obtain additional
                debt or equity  financing,  obtain agreements with creditors for
                the  conversion of  outstanding  obligations  into  preferred or
                common stock and/or obtain  agreements  with creditors for their
                forbearance  with  respect to past due  obligations.  Management
                plans to continue to  negotiate  the  extension of the due dates
                for or the  conversion  of the  Company's  obligations  and seek
                additional debt or equity financing  through private  placements
                or by other  means.  It will  also  continue  to seek  strategic
                partners  for the  Company  that  can  provide  it with  working
                capital.   Management  also  plans  to  continue  to  limit  the
                Company's  development  activities  where  necessary.   However,
                management cannot assure that the Company will be able to obtain
                the additional capital resources that will enable the Company to
                sustain  its  operations  and  planned  development   activities
                through at least March 31, 2004. If the Company cannot  generate
                sufficient   revenues   and/or  obtain   sufficient   additional
                financing, if necessary, by that date, the Company may be forced
                thereafter  to  restructure  its  operations,  merge,  sell  its
                operations, file for bankruptcy reorganization or entirely cease
                its operations.

                The  accompanying  unaudited  condensed  consolidated  financial
                statements  do  not  include  any  adjustments  related  to  the
                recoverability and  classifications of assets or the amounts and
                classifications  of liabilities  that might be necessary  should
                the Company be unable to continue as a going concern.


Note 2 - Earnings (loss) per share:

                The Company  presents  "basic"  earnings (loss) per common share
                and, if applicable, "diluted" earnings per common share pursuant
                to the provisions of Statement of Financial Accounting Standards
                No. 128,  "Earnings per Share." Basic earnings (loss) per common
                share is calculated by dividing net income or loss applicable to
                common stock by the  weighted  average  number of common  shares
                outstanding  during each period.  The weighted average number of
                common shares  outstanding  for the three months ended March 31,
                2003 includes the effects of the assumed conversion of shares of
                Series B  convertible  preferred  stock  that  were  subject  to
                automatic conversion


                                       11
<PAGE>

                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 2 - Earnings (loss) per share (concluded):

                from their  respective  dates of issuance (see Notes 2 and 10 to
                the Audited  Financial  Statements in the Form 10-KSB and Note 3
                herein). The calculation of diluted earnings per common share is
                similar to that of basic earnings per common share,  except that
                the denominator is increased to include the number of additional
                common   shares  that  would  have  been   outstanding   if  all
                potentially  dilutive common shares, such as those issuable upon
                the exercise of stock options and warrants and the conversion of
                convertible  notes, were issued during the period,  the treasury
                stock method had been applied to the proceeds  from the exercise
                of the options and warrants and the interest costs applicable to
                the  convertible  notes  payable  had  been  added  back  to the
                numerator.

                Diluted  per  share  amounts  have  not  been  presented  in the
                accompanying  unaudited  condensed  consolidated  statements  of
                operations  because  the  Company  had net  losses  in the three
                months ended March 31, 2003 and 2002 and the assumed  effects of
                the exercise of all of the Company's  stock options and warrants
                and the  conversion of the  convertible  notes payable that were
                outstanding  during all or part of those periods would have been
                anti-dilutive.  At March 31, 2003,  there were 8,701,140  shares
                issuable upon the exercise of the Company's  outstanding options
                and warrants and the conversion of its outstanding notes payable
                that were  excluded  from the  computation  of diluted  loss per
                common share because they were anti-dilutive.

Note 3 - Convertible notes payable:
               The  Company  sold  convertible  notes  and  warrants to purchase
               939,166 shares of common stock through a private placement during
               2001  that  had  a  net carrying value of $2,574,908 at March 31,
               2003  and  December 31, 2002 (see Note 5 to the Audited Financial
               Statements  in  the  Form  10-KSB).  The  convertible  notes were
               convertible  into  a total of 1,954,605 shares of common stock at
               conversion  rates  ranging  from  $1.50  to  $5.00  per  share.
               Convertible  notes  in  the  principal  amount  of $1,000,000 are
               secured  and  payable  (  in The Company`s discretion) by certain
               intellectual  property developed by the Company that is no longer
               used  and has no carrying value. The remainder of the convertible
               notes  are  unsecured. The Company has defaulted on the repayment
               of  all  of  its  convertible notes which were due on or prior to
               September  30,  2002.  As  a result of the defaults, the range of
               interest  rates  on  the  convertible notes, which had been 8% to
               12%,  increased  to  13.5%  to

                                       12
<PAGE>

                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



Note 3 - Convertible notes payable (concluded):

               18%.   Accrued   interest   on  the   convertible   notes   total
               approximately  $366,000  and  $290,000  at  March  31,  2003  and
               December 31, 2002, respectively.  In addition, the Company became
               obligated  to  issue  to  holders  of  convertible  notes  in the
               principal  amount of $165,000 a total of 46,816  warrants for the
               purchase  of  common  stock  every 30 days  until  principal  and
               interest are paid.  Such  warrants are  exercisable  at $2.50 per
               share  from  the date  they are  required  to be  issued  through
               November 2004.

               The Company was required to issue  warrants for the purchase of a
               total of 140,448  shares of common  stock during the three months
               ended March 31, 2003.  Pursuant to the provisions of Statement of
               Financial   Accounting   Standards  No.  123,   "Accounting   for
               Stock-Based  Compensation" ("SFAS 123"), the Company valued these
               warrants  at  approximately  $59,745  based on the  Black-Scholes
               option-pricing  model and charged  interest expense and increased
               additional paid-in capital by that amount during the three months
               ended  March 31,  2003.  The  issuances  of the  warrants  to the
               noteholders were noncash transactions and, accordingly,  they are
               not   reflected   in   the   accompanying   unaudited   condensed
               consolidated statements of cash flows.



Note 4 - Other notes payable:

               As of March 31, 2003, the Company had other notes payable with an
               aggregate  balance of $212,000,  including  notes payable with an
               aggregate  balance of $204,000 that bear interest at 10% and were
               required to be repaid on June 12, 2003 (see Note 6 to the Audited
               Financial  Statements  in the Form  10-KSB).  The Company was not
               able to repay those  notes.  During the three  months ended March
               31, 2003,  the Company  received  loan  proceeds of $20,000.  The
               related note payable was noninterest  bearing and was required to
               be repaid on March 7, 2003. The Company repaid $12,000 during the
               three  months ended March 31, 2003 and the  remaining  balance of
               $8,000 was in default as of March 31, 2003.

                                       13
<PAGE>




                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 5 - Income taxes:

               As explained in Note 7 to the Audited Financial Statements in the
               Form 10-KSB,  the Company is offsetting  its deferred tax assets,
               which are attributable primarily to the potential benefits of its
               net  operating  loss  carryforwards,   by  equivalent   valuation
               allowances due to, among other things, the uncertainties  related
               to the  changes in the  ownership  of the  Company,  which  could
               subject such net  operating  loss  carryforwards  to  substantial
               annual limitations,  and the uncertainties  related to the extent
               and timing of its future taxable income. Accordingly, the Company
               did  not   recognize   any  credits  for  income   taxes  in  the
               accompanying  unaudited  condensed  consolidated   statements  of
               operations to offset its pre-tax losses.


Note 6 - Commitments and contingencies:

               Litigation:

                  On May 31, 2002,  one of the holders of the Company's past due
                  convertible  notes  (see Note 3 herein)  obtained  a  judgment
                  against the  Company in the Supreme  Court of the State of New
                  York, County of New York, that requires the Company to pay her
                  approximately   $1,376,000   plus  any   applicable   interest
                  subsequent  to the date of the  judgment.  As of December  31,
                  2002,  the  Company  was  carrying  the  convertible  note  at
                  approximately $1,489,000, which was comprised of the principal
                  balance of $1,274,000  and accrued  interest of  approximately
                  $215,000.  The  Company  has been  attempting  to  negotiate a
                  forebearance  agreement  with the noteholder and as of May 31,
                  2003,  the  noteholder  had not  taken any  other  actions  to
                  enforce the judgment.  However,  management cannot assure that
                  the  Company  will be able to  reach  any  agreement  with the
                  noteholder for her continued forebearance and if she does take
                  additional actions against the Company such actions could have
                  a material adverse impact on the Company's financial condition
                  and its operations.

                  The Company is a party to various  other  claims and  lawsuits
                  incidental to its business. In the opinion of management,  the
                  resolution  of  such   contingencies  may   materially  affect
                  the consolidated financial position,  results of operations or
                  cash flows of the Company in subsequent years.


                                       14
<PAGE>

                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 6 - Commitments and contingencies (concluded):

               Unpaid wages:

                  As of March 31, 2003, accrued expenses included  approximately
                  $1,555,000 for amounts  payable to current and former officers
                  and other  current and former  employees  that the Company did
                  not have the resources to pay.  Although as of March 31, 2003,
                  the  Company  was not  subject  to and was  not  aware  of any
                  actions  related to the  enforcement of claims for such unpaid
                  amounts,  management  cannot  assure that the Company  will be
                  able to reach any  agreement  with the employees or the former
                  employees if they do take action to enforce their claims; such
                  actions could have a material  adverse impact on the Company's
                  financial condition and its operations.


Note 7 - Employee stock options:

               As explained in Note 9 to the Audited Financial Statements in the
               Form  10-KSB,   the  Company  had  issued  options  to  officers,
               directors  and other  employees  for the  purchase  of  2,065,000
               shares of common stock that remained  outstanding  as of December
               31, 2002.  Such options had exercise  prices ranging from $.60 to
               $1.33 per share and  expiration  dates from 2003 through 2012. No
               employee  stock  options were  exercised or cancelled  during the
               three months ended March 31, 2003.

               During the three months ended March 31, 2003, the Company granted
               options for the purchase of 40,500  shares of common  stock to an
               officer.  The fair value of the Company's  common stock  exceeded
               the aggregate  exercise price of the options  granted by $100,845
               at the date of the options were  granted.  As explained in Note 2
               to the  Audited  Financial  Statements  in the Form  10-KSB,  the
               Company  has  elected  to  continue  to  use  the  provisions  of
               Accounting Principles Board Opinion No. 25, "Accounting for Stock
               Issued  to   Employees"   ("APB  25")   whereby   it   recognizes
               compensation  costs as a result of the issuance of stock  options
               to  employees  based on the excess,  if any, of the fair value of
               the  underlying  stock at the  date of  grant or award  (or at an
               appropriate  subsequent  measurement  date)  over the  amount the
               employees must pay to acquire the stock (the "Intrinsic


                                       15
<PAGE>


                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 7 - Employee stock options (concluded):

               Value  Method").   The  options  issued  to  the  officer  became
               exercisable  from  the date of grant  and,  accordingly,  charged
               compensation  expense and increased additional paid-in capital by
               $100,845  during  the three  months  ended  March 31,  2003.  The
               issuance  of  these  options  was  a  noncash   transaction  and,
               accordingly,  it  is  not  reflected  in  the  accompanying  2003
               unaudited condensed consolidated statement of cash flows.

               The fair  value of each  option  granted  by the  Company  to its
               employees  has  exceeded  the  exercise  price of the option.  In
               accordance  with the Intrinsic  Value Method of accounting  under
               APB 25, the Company  has  recorded  such  excess as  compensation
               which has been charged to expense over the vesting  period of the
               related  option.  The Company  charged  $146,460 to  compensation
               expense  during the three months ended March 31, 2003 as a result
               of the option granted to the officer and $45,615 of  amortization
               of unearned  compensation arising from grants of options in prior
               periods that did not vest immediately. The Company did not record
               any  compensation   expense  related  to  grants  of  options  to
               employees during the three months ended March 31, 2002.

               Pro forma net loss and pro forma net loss per share for the three
               months ended March 31, 2003 and 2002 computed  using a fair value
               based method of accounting  for stock options as required by SFAS
               123 have not been presented because they do not differ materially
               from the related historical amounts reflected in the accompanying
               condensed consolidated statements of operations.


Note 8 - Outstanding warrants:

               As explained in Note 9 to the Audited Financial Statements in the
               Form 10-KSB,  the Company had issued warrants for the purchase of
               6,424,192 shares of common stock that remained  outstanding as of
               December 31, 2002.  Such options had exercise prices ranging from
               $1.00 to $5.00 per share and  expiration  dates from 2003 through
               2010.  No warrants were  exercised or cancelled  during the three
               months ended March 31, 2003. The Company issued warrants for the


                                       17
<PAGE>


                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 8 - Outstanding warrants (concluded):

               purchase of a total of 140,448  shares of common stock during the
               three  months  ended  March 31,  2003 to  certain  holders of its
               convertible notes (see Note 3 herein).


Note 9 - Other changes in stockholders' deficiency:

               As explained in Note 10 to the Audited  Financial  Statements  in
               the  Form  10-KSB,   the  Company's   Articles  of  Incorporation
               authorize  the  issuance of up to  5,000,000  shares of preferred
               stock,  of which 333,333  shares had been  designated as Series A
               convertible preferred stock ("Series A shares"), 4,500,000 shares
               designated as Series B  convertible  preferred  stock  ("Series B
               shares").

               During the three months  ended March 31,  2003,  the Company sold
               46,500 Series B shares  through  private  placements and received
               proceeds of  $36,610,  net of related  expenses  of $16,390.  The
               Company  had  sold  469,000  Series  B  shares  through   private
               placements  during  2002.  Holders  of  Series B shares  were not
               entitled to  dividends  and had no voting  rights.  Each Series B
               share sold by the Company was automatically  convertible into one
               share of the  Company's  common  stock when the Company  became a
               publicly-held  company  as  a  result  of  the  merger  that  was
               consummated  on  December  13,  2002 (see  Note 1 to the  Audited
               Financial  Statements in the Form 10-KSB) and its ratification by
               stockholders on March 19, 2003.

               In  addition  to the  issuances  of  shares  of  preferred  stock
               described  above  and  the  issuances  of  options  and  warrants
               described in Notes 3, 7 and 8, the Company  issued 100,000 shares
               of its common  stock as a payment for legal  services in February
               2003.  The  Company  charged  the  fair  value of the  shares  of
               $330,000 to  selling,  general and  administrative  expenses  and
               increased  additional paid-in capital by that amount in the three
               months ended March 31,  2003.  The issuance of these shares was a
               noncash transaction and, accordingly,  it is not reflected in the
               accompanying  unaudited condensed  consolidated statement of cash
               flows for the three months ended March 31, 2003. A principal of a
               law firm that received shares of common stock options with a fair
               value of approximately $165,000 is also a director and officer of
               the Company.

                                       18
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS ON PLAN OF OPERATIONS.


FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-QSB contains "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. All statements,
other than statements of historical facts, included in or incorporated by
reference in to this Form 10-QSB, are forward-looking statements. In addition,
when used in this document, the words "anticipate," "estimate," "project" and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements are subject to certain risks, uncertainties and
assumptions including risks relating to our limited operating history and
operations losses; significant capital requirements; development of markets
required for successful performance by the Company. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated
or projected. Although we believe that the expectations we include in such
forward-looking statements are reasonable, we cannot assure you that these
expectations will prove to be correct. The following discussion and analysis
should be read in conjunction with the unaudited financial statements contained
in Part I, Item 1, and the related notes.

OVERVIEW

Business and basis of presentation:

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, consisting of normal recurring
accruals, necessary to present fairly the financial position of Graphco Holdings
Corp. and Subsidiaries (the "Company") as of March 31, 2003, their results of
operations and cash flows for the three months ended March 31, 2003 and 2002,
their changes in stockholders' deficiency for the three months ended March 31,
2003 and the related cumulative amounts for the period from January 1, 1998
(date of inception) to March 31, 2003. Pursuant to the rules and regulations of
the United States Securities and Exchange Commission (the "SEC"), certain
information and disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States
of America have been condensed in or omitted from these financial statements
unless significant changes have taken place since the end of the most recent
fiscal year. Accordingly, these unaudited condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements as of December 31, 2002 and for the periods ended December 31, 2002
and 2001 and the notes thereto (the "Audited Financial Statements") and the
other information included in the Company's Annual Report on Form 10-KSB (the
"Form 10-KSB") for the year ended December 31, 2002 that was previously filed
with the SEC.

The results of operations for the three months ended March 31, 2003 are not
necessarily indicative of the results to be expected for the full year ending
December 31, 2003.

The accompanying unaudited condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. However,
the Company has incurred recurring losses and, as shown in the accompanying
condensed consolidated balance sheet as of March 31, 2003, it had a working
capital deficit of approximately $6,721,000, a cumulative net loss of
$24,951,000 and a stockholders' deficiency of $6,562,000. It also had
convertible notes payable with a principal balance of $2,574,908 and other notes
payable with a principal balance of $212,000 that were in default as of March
31, 2003 and/or June 13, 2003 (see Notes 3, 4 and 6 herein). These matters raise
substantial doubt about the Company's ability to continue as a going concern.

Management believes that the Company will continue to incur net losses and
negative cash flows from operating activities through at least the twelve months
ending March 31, 2004. In the absence of operating profits and cash flows,
management believes the Company will need to limit its expenditures, obtain
additional debt or equity financing,

                                       19
<PAGE>


obtain agreements with creditors for the conversion of outstanding obligations
into preferred or common stock and/or obtain agreements with creditors for their
forbearance with respect to past due obligations. Management plans to continue
to negotiate the extension of the due dates for or the conversion of the
Company's obligations and seek additional debt or equity financing through
private placements or by other means. It will also continue to seek strategic
partners for the Company that can provide it with working capital. Management
also plans to continue to limit the Company's development activities where
necessary. However, management cannot assure that the Company will be able to
obtain the additional capital resources that will enable the Company to sustain
its operations and planned development activities through at least March 31,
2004. If the Company cannot generate sufficient revenues and/or obtain
sufficient additional financing, if necessary, by that date, the Company may be
forced thereafter to restructure its operations, merge, sell its operations,
file for bankruptcy reorganization or entirely cease its operations.

The accompanying unaudited condensed consolidated financial statements do not
include any adjustments related to the recoverability and classifications of
assets or the amounts and classifications of liabilities that might be necessary
should the Company be unable to continue as a going concern.

Significant Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations
are based upon our unaudited condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these condensed consolidated
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, including those related to accounts receivable,
equipment, capitalized software development costs, stock based compensation,
income taxes and contingencies. We base our estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

The accounting policies and estimates used as of December 31, 2002 which were
explained in the notes to the consolidated financial statements in the Company`s
previously filed form 10-KSB for the year ended December 31, 2002, have been
applied consistently during the three months ended March 31, 2003.

RESULTS OF OPERATIONS:

Quarters ended March 31, 2003 as compared to March 31, 2002 and the period from
January 1, 1998 (date of inception) to March 31, 2003.

The Company generated revenues of approximately $-0-, $62,000 and $1,533,000 for
the quarters ended March 31, 2003, 2002 and the period from January 1, 1998
(date of inception) to March 31, 2003, respectively.

Selling general and administrative expenses for the quarters ended March 31,
2003, 2002 and the period from January 1, 1998 (date of inception) to March 31,
2003 were approximately $956,000, $775,000 and $15,704,000 respectively. Selling
general and administrative expenses primarily consists of the following; (i)
salaries, (ii) professional fees, (iii) depreciation and amortization of
property and equipment, and (iv) rent expense.

Research and development expenses for the quarters ended March 31, 2003, 2002
and the period from January 1, 1998 (date of inception) to March 31, 2003 were
approximately

                                       20
<PAGE>


$92,000, $123,000 and $4,827,000, respectively. Research and development expense
primarily consists of payroll.

Net loss from operations for the quarters ended March 31, 2003, 2002 and the
period from January 1, 1998 (date of inception) to March 31, 2003 were
approximately $1,048,000, $847,000 and $19,711,000, respectively

Interest expense for the quarters ended March 31, 2003 and 2002 and the period
from January 1, 1998 (date of inception) to March 31, 2003, was approximately
$136,000, $901,000 and $3,627,000, respectively. Interest expense primarily
consists of amortization relating to debt, which is a non-cash charge.

Net loss for the quarters ended March 31, 2003 and 2002 and the period from
January 1, 1998 (date of inception) to March 31, 2003, was approximately
$1,184,000, $1,748,000 and $24,082,000, respectively. The reasons for the net
losses are explained above.

Liquidity and Capital Resources:

Graphco Holdings Corp. consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has not
generated any revenue from its products and is in its development stage. As
shown in the consolidated financial statements the Company has incurred a
cumulative loss of approximately $24,951,000 through March 31, 2003 and had a
working capital deficiency of approximately $6,721,000 and a stockholders
deficiency of $6,562,000. It also had convertible notes payable with principal
balances of approximately $2,575,000 that were in default. These matters raise
substantial doubt about the Company's ability to continue as a going concern.

Management believes that the Company will continue to incur net losses and
negative cash flows from operating activities through at least the twelve months
ended March 31, 2004 . In the absence of operating profits and positive cash
flows, management believes the Company will need to limit its expenditures,
obtain additional debt or equity financing, obtain additional agreements with
creditors and note holders for the conversion of outstanding obligations into
preferred or common stock, and/or obtain agreements with creditors for the
forbearance with respect to past due obligations. Management plans to continue
to negotiate the extension of the due dates for or the conversion of the
Company's obligations and seek additional debt or equity financing through
private placements or by other means. It will also continue to seek strategic
partners for the Company that can provide it with working capital. However,
management cannot assure that the Company will be able to obtain the additional
capital resources that will enable the Company to sustain its operations and
planned development activities through at lease twelve months ended March 31,
2003. If the Company cannot generate sufficient revenues and/or obtain
sufficient additional financing, if necessary, by that date, the Company may be
forced thereafter to restructure its operations merge or sell, file for
reorganization or entirely cease its operations.

                                       21
<PAGE>

During 2001, the Company sold convertible notes and warrants to purchase 939,166
shares of common stock through a private placement and received gross proceeds
of $2,620,000. The Company recorded discounts for the fair value of the warrants
and beneficial conversions rights issued with these notes totaling approximately
$2,338,000 of which approximately $640,000 were amortized to interest expense in
2002, representing the balance to be amortized. The notes bear interest at
annual rates ranging from 8% to 12%. At December 31, 2001, the principal balance
and the interest on the notes had been scheduled to be paid, based on the
original provisions in the related loan agreements at various dates through
September 30, 2002.

We have defaulted on the repayment of these notes, therefore the interest rates
increased from 13.5% to 18%. In addition, we also became obligated to issue
these note holders warrants until the principal and interests are paid. (See
Note 3 to the Condensed Consolidated Financial Statements)

During 2002 and 2003 through March 31, the Company sold 530,500 shares of Series
B preferred stock through a private placement and received proceeds of $549,500.


FOR THE QUARTERS ENDED MARCH 31, 2003 AND 2002:

Quarter ended March 31, 2003

For the quarter ended March 31, 2003, we utilized cash from operations of
approximately $98,000. This was attributable to the following; (1) a net loss of
approximately $1,184,000, which was offset by, (2) depreciation and amortization
expense of approximately $13,000, (3) common stock and warrants issued for
services of approximately $431,000, (4) charges relating to options and warrants
issued to employees and directors totaling $60,000, (5) amortization of unearned
compensation totaling $46,000, and (6) increase in accounts payable and accrued
expenses totaling $568,000.

We generated cash from financing  activities of approximately  $98,000,primarily
attributable  to the net proceeds  received  from the sale of and  collection of
subscriptions receivable for Series B preferred stock.

Quarter ended March 31, 2002

For the quarter ended March 31, 2002, we utilized cash from operations of
approximately $12,000. This was attributable to the following; (1) a net loss of
approximately $1,748,000, which was offset by, (2) depreciation and amortization
expense of approximately $138,000, (3) amortization of deferred loan costs and
debt discount totaling $818,000, (4) increase in accounts payable and accrued
expenses totaling $645,000, and (5) decrease in accounts receivable and prepaid
expenses totaling $135,000.

We generated cash from financing activities of $11,000 attributable to the
exercise of warrants.

                                       22
<PAGE>



ITEM 3.   CONTROLS AND PROCEDURES



(a) Evaluation of disclosure controls and procedures.



We maintain disclosure controls and procedures designed to provide reasonable
assurance that information required to be disclosed in the reports we file with
the SEC is recorded, processed, summarized and reported within time periods
specified in the rules of the SEC. Within 90 days prior to the filing of this
Quarterly Report on Form 10-QSB, we carried out an evaluation, under the
supervision and the participation of our management including our Chief
Executive Officer of the design and operation of these disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon this evaluation,
management concluded that tighter controls and procedures need to be set in
place regarding our issuance of stock options or other equity instruments. The
issue has occurred largely as a result of our emerging Company status and
management is now taking steps to establish controls and procedures.





(b) Changes in internal controls.

There were no  significant  changes in internal  controls or other  factors that
could  significantly  affect our internal control  subsequent to the date or our
evaluation other than set forth in paragraph (a) above.




PART II - OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



None



ITEM 2. CHANGES IN SECURITIES



None



ITEM 3. DEFAULTS UPON SENIOR SECURITIES



None

                                       23
<PAGE>


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



Certain of our stockholders owning more than fifty percent (50%) of our total
voting shares, have given their written consent to amend the Certificate of
Incorporation to change the name our from RCM Interests, Inc. to Graphco
Holdings Corp. or a similar name approved by the Board of Directors. The
Amendment to our Certificate of Incorporation, changing our name to Graphco
Holdings Corp., was filed with the Department of State of Delaware and became
effective on May 15, 2003.

         No other matters were submitted to a vote of our stockholders as of the
date hereof.




ITEM 5. OTHER INFORMATION



None



ITEM 6. EXHIBITS AND REPORTS



(a) The  following  Report on Form 8-K has been filed  since the end of our last
fiscal year:

         March 17, 2003 - with respect to the  engagement  of JH Cohn LLP as our
new Independent  Accountants and The  replacement of S.W.  Hatfield,  CPA as our
Independent Accountants

(b)  The  following  list  sets  forth  the  applicable  exhibits  (numbered  in
accordance  with Item 601 of  Regulation  S-K)  required  to be filed  with this
Annual Report on Form 10-K:

 Exhibit Number      Description
 --------------     -------------------
 Exhibit 2.1         Merger Agreement by and among RCM Interests, Inc., RCM
                    Interests, Inc. Acquisition Corp., and Graphco Technologies,
                    Inc. (Schedules and exhibits omitted)incorporated by
                    reference to Form 8-K (previously filed with the Commission
                    on December 11, 2002).

                                       24
<PAGE>






                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:  June 16, 2003
                                                 Graphco Holdings Corp.
                                                       By: /s/ Cristian Ivanescu
                                                     -------------------------
                                                          Cristian Ivanescu
                                                          President, Chief
                                                          Executive Officer &
                                                          Chairman


                                                 Graphco Holdings Corp.
                                                       By: /s/ Rodger Wichterman
                                                     -------------------------
                                                        Rodger Wichterman
                                                        Chief Financial Officer

                                       25
<PAGE>



             Statement Under Oath Regarding Facts and Circumstances
                        Relating to Exchange Act Filings

         I, Cristian Ivanescu, certify that:

1. I have  reviewed  this  quarterly  report on Form 10-QSB of Graphco  Holdings
Corp.

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 l3a-14 and 15d-l4) for the registrant and have:

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

         b) evaluated the effectiveness of the registrant's  disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  data 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
<PAGE>

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly report whether 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 weakness.

                                                /s/ Cristian Ivanescu
                                                ------------------------
                                                Cristian Ivanescu

Date:  June 16, 2003



Sworn to before me this
16th day of June 2003

Lorraine Bruno
----------------------------
Notary Public

    Notarial Seal
     Lorraine Bruno, Notary Public
     Newton Twp., Bucks County
     My Commission Expires May 23, 2005

Member, Pennsylvania Association Notaries

                                       26
<PAGE>



                CERTIFICATION PURSUANT TO 18 US.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly  Report of Graphco Holdings Corp. (the
Company)  on Form  10-QSB for the  quarter  ended  March 31, 2003 filed with the
Securities  and  Exchange  Commission  (the  "Report"),  I,  Cristian  Ivanescu,
President,  Chief Executive Officer and Chairman,  certify pursuant to 18 U.S.C.
Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley  Act of
2002 that:

         (1) The Report fully complies with the requirements of Section 13(a) of
the Securities Exchange Act of 1934; and

         (2) The  information  contained in the Report fairly  presents,  in all
material respects, the consolidated financial condition of the Company as of the
dates  presented  and  consolidated  result of operations of the Company for the
period presented.

Dated: June 16, 2003
                                                  /s/ Cristian Ivanescu
                                                  ------------------------
                                                  Cristian Ivanescu



                                       27
<PAGE>


 Statement Under Oath Regarding Facts and Circumstances Relating to Exchange Act
                                     Filings

     I, Rodger Wichterman, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Graphco Holdings
Corp.

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 l3a-14 and 15d-l4) for the registrant and have:

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

         b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing data 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 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 weakness.

                                           /s/ Rodger Wichterman
                                          --------------------------------
                                               Rodger Wichterman
                                               Chief Financial Officer


Sworn to before me this
16th day of June 2003

Lorraine Bruno
----------------------------
Notary Public

    Notarial Seal
     Lorraine Bruno, Notary Public
     Newton Twp., Bucks County
     My Commission Expires May 23, 2005

Member, Pennsylvania Association Notaries

                                       28
<PAGE>

                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of Graphco Holdings Corp. (the
Company) on Form 10-QSB for the quarter ended March 31, 2003 filed with the
Securities and Exchange Commission (the "Report"), I, Rodger Wichterman, Chief
Financial Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

         (1) The Report fully complies with the requirements of Section 13(a) of
the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the consolidated financial condition of the Company as of the
dates presented and consolidated result of operations of the Company for the
period presented.

Dated: June 16, 2003
                                             /s/  Rodger Wichterman
                                             ---------------------------
                                             Rodger Wichterman
                                             Chief Financial Officer



                                       30
<PAGE>