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: SEPTEMBER 30, 2003
                        Commission file number: 333-60186

                             GRAPHCO HOLDINGS CORP.
             (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
                          NEWTOWN, 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  _X_                      No ___

        Indicate the number of shares  outstanding  of each of the  registrant's
classes of common stock: As of November 2, 2003, there were 20,675,316 shares of
the Issuer's common stock, par value $0.001,  issued and outstanding,  including
shares registered in the name of our operating subsidiary, Graphco Technologies,
Inc., which are being distributed pro rata to the former shareholders of Graphco
Technologies, Inc.

                                      INDEX

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                              <C>
         CONDENSED CONSOLIDATED BALANCE SHEETS
                  SEPTEMBER 30, 2003 (UNAUDITED) AND DECEMBER 31, 2002.......................... F-2

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 THREE AND NINE MONTHS ENDED  SEPTEMBER 30, 2003 AND 2002 AND PERIOD FROM
                 JANUARY 1, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30, 2003
                 (UNAUDITED).................................................................... F-3

            CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
            STOCKHOLDERS' DEFICIENCY
                 NINE MONTHS ENDED  SEPTEMBER  30, 2003 AND PERIOD FROM JANUARY
                 1, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30, 2003
                 (UNAUDITED).................................................................... F-4/7

            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 AND PERIOD
                 FROM JANUARY 1, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30,
                  2003 (UNAUDITED).............................................................. F-8/9

            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              (UNAUDITED)....................................................................... F-10/16

Item 2.  Management's Discussion and Analysis or Plan of Operations............................. 17-21

Item 3.  Controls and Procedures................................................................ 21

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings ..................................................................... 22

Item 2.  Changes in Securities ................................................................. 22

Item 3.  Defaults upon Senior Securities ....................................................... 22

Item 4.  Submission of Matters to a Vote of Security Holders.................................... 22

Item 5.  Other Information...................................................................... 22

Item 6.  Exhibits and Reports on Form 8-K....................................................... 23

Signatures...................................................................................... 24
</TABLE>



<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

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

                      CONDENSED CONSOLIDATED BALANCE SHEETS
              SEPTEMBER 30, 2003 (UNAUDITED) AND DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                        September          December
                                       ASSETS                           30, 2003          31, 2002
                                       ------                         ------------       ------------
                                                                       (Unaudited)
<S>                                                                   <C>                <C>
Current assets:
     Cash                                                             $      2,021       $        955
     Accounts receivable                                                     1,808              1,808
     Prepaid expenses                                                      137,646             65,708
                                                                      ------------       ------------
                  Total current assets                                     141,475             68,471
Property and equipment, net of accumulated depreciation
     and amortization of $287,801 and $247,820                             109,120            149,101
Investments, at equity                                                          --                 --
Other assets                                                                22,432             22,432
                                                                      ------------       ------------

                  Totals                                              $    273,027       $    240,004
                                                                      ============       ============

                        LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                        ----------------------------------------
Current liabilities:

     Convertible notes payable                                        $  2,574,908       $  2,574,908
     Accounts payable and other accrued expenses                         4,604,847          3,465,059
     Other notes payable                                                   236,500            204,000
                                                                      ------------       ------------
                  Total liabilities                                      7,416,255          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 - $3,622,140 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; 20,438,821 and 18,511,793 shares
         issued and outstanding                                             20,439             18,512
     Additional paid-in capital                                         16,726,841         14,444,637
     Unearned compensation                                                (237,661)          (328,891)
     Accumulated deficit, including $26,049,470 and $22,897,604
         accumulated in the development stage                          (26,918,230)       (23,766,364)
                                                                      ------------       ------------
                  Total stockholders' deficiency                        (7,143,228)        (6,003,963)
                                                                      ------------       ------------
                  Totals                                              $    273,027       $    240,004
                                                                      ============       ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                      F-2
<PAGE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 AND
                 PERIOD FROM JANUARY 1, 1998 (DATE OF INCEPTION)
                        TO SEPTEMBER 30, 2003 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Three Months                 Nine Months
                                                               Ended September 30,           Ended September 30,        Cumulative -
                                                           ---------------------------   ---------------------------    Development
                                                               2003           2002         2003              2002         Stage
                                                           ------------   ------------   ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>            <C>            <C>
Revenues                                                   $         --   $    148,702   $         --   $    426,688   $  1,532,975
Cost of revenues                                                     --             --             --         10,356        713,002
                                                           ------------   ------------   ------------   ------------   ------------
Gross profit                                                         --        148,702             --        416,332        819,973
                                                           ------------   ------------   ------------   ------------   ------------

Operating expenses:

     Selling, general and administrative                        949,441        510,336      2,521,332      1,937,284     17,269,207
     Research and development                                    42,354         66,131        222,363        263,894      4,957,576
                                                           ------------   ------------   ------------   ------------   ------------
              Totals                                            991,795        576,467      2,743,695      2,201,178     22,226,783
                                                           ------------   ------------   ------------   ------------   ------------

Loss from operations                                           (991,795)      (427,765)    (2,743,695)    (1,784,846)   (21,406,810)
                                                           ------------   ------------   ------------   ------------   ------------

Other income (expense):

     Interest income                                                 --             25             --            163        184,354
     Interest expense, including amortization of deferred
         loan fees and debt discount of $-0-, $217,321,
         $-0-, $1,319,266 and $2,807,284                       (136,057)      (243,911)      (408,171)    (1,555,540)    (3,899,471)
     Loss from equity investees                                      --             --             --             --       (949,420)
     Other                                                           --             --             --             --         21,877
                                                           ------------   ------------   ------------   ------------   ------------
              Totals                                           (136,057)      (243,886)      (408,171)    (1,555,377)    (4,642,660)
                                                           ------------   ------------   ------------   ------------   ------------

Net loss                                                   $ (1,127,852)  $   (671,651)  $ (3,151,866)  $ (3,340,223)  $(26,049,470)
                                                           ============   ============   ============   ============   ============

Basic loss per common share                                $       (.06)  $       (.04)  $       (.16)  $       (.19)
                                                           ============   ============   ============   ============

Basic weighted average number of common shares
     Outstanding                                             19,923,139     17,323,553     19,689,617     17,323,553
                                                           ============   ============   ============   ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                      F-3
<PAGE>

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

    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
      NINE MONTHS ENDED SEPTEMBER 30, 2003 AND PERIOD FROM JANUARY 1, 1998
              (DATE OF INCEPTION) TO SEPTEMBER 30, 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>
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

<CAPTION>
                                                   Accumulated
                                                    Deficit           Total
                                                  -------------    ------------
<S>                                              <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>


                                      F-4
<PAGE>

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

    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
      NINE MONTHS ENDED SEPTEMBER 30, 2003 AND PERIOD FROM JANUARY 1, 1998
              (DATE OF INCEPTION) TO SEPTEMBER 30, 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

<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>

                                      F-5
<PAGE>


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

    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
      NINE MONTHS ENDED SEPTEMBER 30, 2003 AND PERIOD FROM JANUARY 1, 1998
              (DATE OF INCEPTION) TO SEPTEMBER 30, 2003 (Unaudited)


<TABLE>
<CAPTION>

                                       Series A Convertible         Series B Convertible
                                         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

<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>

                                      F-6
<PAGE>

                     GRAPHCO HOLDINGS CORP. AND SUBSIDIARIES
                          (A Development Stage Company)
    CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
         NINE MONTHS ENDED SEPTEMBER 30, 2003 AND PERIOD FROM JANUARY 1, 1998
              (DATE OF INCEPTION) TO SEPTEMBER 30, 2003 (Unaudited)


<TABLE>
<CAPTION>
                                                              Series A Convertible
                                                                 Preferred Stock          Series B Convertible Preferred Stock
                                                          -------------------------   ----------------------------------------
                                                          Number of                     Number                   Subscriptions
                                                           Shares         Amount       of Shares       Amount      Receivable
                                                          ----------     ----------   -----------   ------------  ------------
<S>                                                       <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)

Sale of Common Stock through private placement,
  net of expenses of $3,000

Compensatory stock options issued to employees

Amortization of unearned compensation

Warrants issued for payment of interest

Exercise of warrants

Common stock issued for services

Common stock issued as payment of
 accounts payable

Payments of subscription receivable                                                                                 $     53,000

Net loss
                                                         -------       ------------      -----------     ------------   ------------
Balance, September 30, 2003                              225,029       $  3,265,383               --     $         --   $         --
                                                         =======       ============      ===========     ============   ============


<CAPTION>
                                                    Common Stock
                                                ----------------------
                                                                          Additional
                                                 Number of                  Paid-in      Unearned      Accumulated
                                                  Shares      Amount        Capital     Compensation      Deficit      Total
                                                ---------- -----------   ------------- --------------  ------------  -----------
<S>                                             <C>        <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                        515,500  $      515    $    451,855                                           --

Sale of Common Stock through private placement,
  net of expenses of $3,000                      648,931         649         406,448                                      407,097

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

Amortization of unearned compensation                                                  $     91,230                        91,230

Warrants issued for payment of interest                                      179,235                                      179,235

Exercise of warrants                              83,625          84          29,916                                       30,000

Common stock issued for services                 517,068         517         952,163                                      952,680

Common stock issued as payment of
  accounts payable                               161,904         162         161,742                                      161,904

Payments of subscription receivable                                                                                        53,000

Net loss                                                                                              $ (3,151,866)      (3,151,866)
                                               ---------- ----------    ------------   ------------   ------------     ------------
Balance, September 30, 2003                    20,438,821 $   20,439    $ 16,726,841   $   (237,661)  $(26,918,230)    $ (7,143,228)
                                               ========== ==========    ============   ============   ============     ============
</TABLE>

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-7
<PAGE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 AND
                 PERIOD FROM JANUARY 1, 1998 (DATE OF INCEPTION)
                        TO SEPTEMBER 30, 2003 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                        Cumulative -
                                                                                                        Development
                                                                     2003              2002                Stage
                                                                 ------------       ------------       ------------
<S>                                                              <C>                <C>                <C>
Operating activities:
     Net loss                                                    $ (3,151,866)      $ (3,340,223)      $(26,049,470)
     Adjustments to reconcile net loss to net
         cash used in operating activities:
         Depreciation and amortization of
              property and equipment                                   39,981            412,604          1,700,124
         Write-off of impaired property and equipment                                                       377,004
         Note payable issued for services                                                                   129,000
         Warrants issued for payment of interest                      179,235             59,745            368,428
         Warrants issued for services                                                                     1,244,000
         Common stock issued for services                             952,680                             1,269,180
         Compensatory options and warrants issued
              to employees and directors                              100,845                             1,064,290
         Amortization of unearned compensation                         91,230                               739,924
         Charges to interest expense for amortization of:
              Deferred loan expenses                                                     228,678            468,455
              Debt discount                                                            1,089,462          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                                                         15,881              2,041
              Prepaid expenses and other assets                       (71,938)           264,729           (151,326)
              Other assets                                                                (8,711)            42,163
              Accounts payable and other accrued
                  expenses                                          1,301,692          1,164,531          4,552,310
                                                                 ------------       ------------       ------------
                      Net cash used in operating activities          (558,141)          (113,304)       (10,688,328)
                                                                 ------------       ------------       ------------

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>


                                      F-8
<PAGE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 AND
                 PERIOD FROM JANUARY 1, 1998 (DATE OF INCEPTION)
                        TO SEPTEMBER 30, 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 short-term debt, net                          $     32,500                            32,500
     Proceeds from long-term debt                                                                     1,160,000
     Repayments of long-term debt                                                                    (1,096,891)
     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                                                                                     2,620,000
     Proceeds from exercise of warrants                                30,000       $     28,000         58,000
     Proceeds from private placements of preferred
         stock, net of expenses                                        36,610             22,500      3,664,753
     Proceeds from private placements of common
         stock, net of expenses                                       460,097                         7,483,321
     Other                                                                                              (20,000)
                                                                 ------------       ------------   ------------
                  Net cash provided by financing activities           559,207             50,500     13,493,938
                                                                 ------------       ------------   ------------

Net increase (decrease) in cash                                         1,066            (62,804)         2,021

Cash, beginning of period                                                 955             76,299             --
                                                                 ------------       ------------   ------------
Cash, end of period                                              $      2,021       $     13,495   $      2,021
                                                                 ============       ============   ============

Supplemental disclosure of cash flow data:

     Interest paid                                                                                 $    141,113
                                                                                                   ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                      F-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 September 30, 2003,
                their results of operations  for the three and nine months ended
                September  30,  2003 and 2002,  their  changes in  stockholders'
                deficiency for the nine months ended  September 30, 2003,  their
                cash flows for the nine months ended September 30, 2003 and 2002
                and the related  cumulative  amounts for the period from January
                1, 1998 (date of inception)  to September 30, 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  amended Annual Report on
                Form 10-KSB/A (the "Form  10-KSB/A") for the year ended December
                31, 2002 that was previously filed with the SEC.

                The results of  operations  for the three and nine months  ended
                September 30, 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 September  30, 2003, it had a
                working  capital   deficit  of   approximately   $7,275,000,   a
                cumulative   net  loss  of  $26,918,000   and  a   stockholders'
                deficiency of $7,143,000.  It also had convertible notes payable
                with total  principal  balances of $2,574,908 and a note payable
                with a principal  balance of $204,000 that were in default as of
                September 30, 2003 (see Notes 3, 4 and 6 herein).  These matters
                raise  substantial doubt about the Company's ability to continue
                as a going concern.


                                      F-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  September  30, 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 September 30, 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 and nine months ended
                September   30,  2003   includes  the  effects  of  the  assumed
                conversion  of shares of Series B  convertible  preferred  stock
                that were subject to automatic  conversion from their respective
                dates of issuance  (see Notes 2 and 10 to the Audited  Financial
                Statements  in  the  Form  10-KSB/A  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.


                                      F-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):

                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 and
                nine months  ended  September  30, 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  September  30,  2003,  there were
                10,468,204  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
                September  30,  2003 and  December  31,  2002 (see Note 5 to the
                Audited  Financial   Statements  in  the  Form  10-KSB/A).   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 (at the Company's discretion)
                solely 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 that
                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 18%.  Accrued
                interest on the convertible notes total  approximately  $518,000
                and  $290,000 at  September  30,  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 and 421,344  shares of common  stock during the
                three and nine months ended  September  30, 2003,  respectively.
                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 and $179,235,  respectively,  based on the Black-Scholes
                option-pricing  model and charged interest expense and increased
                additional paid-in capital by those amounts during the three and
                nine  months  ended  September  30,  2003,   respectively.   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.


                                      F-12
<PAGE>

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

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 4 - Other notes payable:

                As of September  30, 2003,  the Company had other notes  payable
                with an aggregate  balance of $236,500,  including notes payable
                with an aggregate  balance of $204,000 that bear interest at 10%
                and that were required to be repaid on June 12, 2003 (see Note 6
                to the Audited Financial  Statements in the Form 10-KSB/A).  The
                Company  was not  able to repay  those  notes  and they  were in
                default at  September  30,  2003.  During the nine months  ended
                September 30, 2003, the Company  borrowed an additional  $63,055
                and repaid  $30,555.  As of September  30,  2003,  $5,000 of the
                remaining  balance  of $32,500  notes  payable  was  noninterest
                bearing and had no specific  repayment  terms,  while $27,500 of
                the remaining  balance  bears  interest at 18% and is payable on
                November 28, 2003.

Note 5 - Income taxes:

                As explained in Note 7 to the Audited  Financial  Statements  in
                the Form  10-KSB/A,  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 September 30,
                  2003,  the  Company  was  carrying  the  convertible  note  at
                  approximately $1,577,000, which was comprised of the principal
                  balance of $1,274,000  and accrued  interest of  approximately
                  $303,000.  The  Company  has been  attempting  to  negotiate a
                  forbearance  agreement  with the noteholder and as of November
                  15, 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  forbearance 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 results of 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  will not materially  affect
                  the consolidated financial position,  results of operations or
                  cash flows of the Company in subsequent years.


                                      F-13
<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  September   30,  2003,   accrued   expenses   included
                  approximately  $1,860,000  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
                  September  30, 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 results of operations.

Note 7 - Employee stock options:

                As explained in Note 9 to the Audited  Financial  Statements  in
                the Form  10-KSB/A,  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 ranging from 2003 through
                2012.  During  the  nine  months  ended  September  30,  2003 no
                employee  stock  options  were  exercised;  however,  options to
                purchase  120,000 shares at exercise prices ranging from $.60 to
                $1.33 per share were cancelled.

                During the nine months ended  September  30,  2003,  the Company
                granted  options for the purchase  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 the options were  granted.  As explained in
                Note 2 to the Audited Financial Statements in the Form 10-KSB/A,
                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  Value
                Method").  The options issued to the officer became  exercisable
                from the date of grant and,  accordingly,  the  Company  charged
                compensation expense and increased additional paid-in capital by
                $100,845  during the nine months ended  September 30, 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.


                                      F-14
<PAGE>

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

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 7 - Employee stock options (concluded):

                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
                that has been charged to expense over the vesting  period of the
                related  option.  The Company  charged  $100,845 to compensation
                expense  during the nine months  ended  September  30, 2003 as a
                result of the  option  granted  to the  officer  and  $91,230 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 nine  months  ended
                September 30, 2002.

                Pro  forma  net loss and pro  forma  net loss per  share for the
                three and nine months ended September 30, 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/A,  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 warrants had exercise
                prices  ranging  from  $.001 to $5.00 per  share and  expiration
                dates ranging from 2003 through 2010.

                During the nine months ended  September  30,  2003,  the Company
                issued warrants for the purchase of a total of 421,344 shares of
                common stock  exercisable at $2.50 per share to certain  holders
                of its convertible notes (see Note 3 herein).

                During the nine months ended  September  30,  2003,  the Company
                issued  83,625  shares  of common  stock  upon the  exercise  of
                warrants.  It issued 30,000 shares upon the exercise of warrants
                at $1.00 per share for which it  received  $30,000  in cash.  It
                also  issued  53,625  shares  upon the  exercise  of warrants to
                purchase  71,500  shares  at $.60  per  share,  or an  aggregate
                exercise  price of  $42,900,  and it  effectively  retained  the
                remaining  17,875 shares,  which had an approximate  fair market
                value of $42,900,  in lieu of a cash  payment for the  aggregate
                exercise price.

Note 9 - Other changes in stockholders' deficiency:

                As explained in Note 10 to the Audited  Financial  Statements in
                the Form  10-KSB/A,  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") and 4,500,000
                shares had been  designated  as Series B  convertible  preferred
                stock ("Series B shares").


                                      F-15
<PAGE>

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

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 9 - Other changes in stockholders' deficiency (concluded):

                During the nine months ended  September  30,  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/A) 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 shares of common  stock,
                options and warrants  described in Notes 3, 7 and 8 herein,  the
                Company issued shares of its common stock during the nine months
                ended September 30, 2003 as described below.

                The  Company  sold  648,931  shares  of common  stock  through a
                private  placement  and received  proceeds of  $407,097,  net of
                related expenses of $3,000.

                The  Company  issued  517,068  shares of its  common  stock as a
                payment for legal and consulting  services.  It charged the fair
                value  of  the  shares  of  $952,680  to  selling,  general  and
                administrative   expenses   and   increased   common  stock  and
                additional  paid-in capital by that amount. A principal of a law
                firm that  received  shares of common stock with a fair value of
                approximately  $165,000  is also a director  and  officer of the
                Company.  It also issued  161,904  shares of its common stock as
                payment for accounts payable with an aggregate carrying value of
                $161,904.   The   issuances   of  these   shares  were   noncash
                transactions  and,  accordingly,  they are not  reflected in the
                accompanying  unaudited condensed consolidated statement of cash
                flows for the nine months ended September 30, 2003.

Note 10- Subsequent events:

                During the period  from  October 1, 2003  through  November  15,
                2003,  the Company  received  gross  proceeds  of  approximately
                $31,000 from sales of 236,495 shares of its common stock through
                private placements.


                                      F-16
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

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:

Graphco Holdings Corp.  ("GHC"),  a Delaware  corporation,  is a holding company
that was formerly  known as RCM  Interests,  Inc. GHC emerged from Chapter 11 of
Title  11 of the  United  States  Bankruptcy  Code on July 31,  2000.  GHC was a
publicly-held  company that had no significant assets,  liabilities or operating
activities  from the date of its emergence  from  bankruptcy  until December 13,
2002, the date of the merger with Graphco Technologies, Inc., and as of December
31, 2002.  Accordingly,  it was a "development  stage  enterprise" for financial
accounting purposes.

Graphco  Technologies,  Inc.  is a New Jersey  corporation  that is  referred to
herein  together with its  subsidiaries  as "G-TEC."  G-TEC has been  developing
since,  effectively,   January  1,  1998,  state-of-the-art  biometric  security
solutions  for  government,  industry and home  automation  along with  advanced
information exchange and data management systems for government, law enforcement
and corporate  security.  G-TEC has developed  biometric  software  products for
secure access, surveillance and authentication,  and an information exchange and
data  management  software  application   specifically   designed  for  the  law
enforcement  community and the corporate security  industry.  Biometrics measure
unique  physical  characteristics  of individuals for  authentication  purposes.
G-TEC's two biometric software products are VOICEPASS(R) for speaker recognition
and FRA(TM) for facial recognition. Management believes that speaker recognition
and facial  recognition  are the most user  friendly,  cost effective and widely
accepted  biometrics  currently  available.  G-TEC expects that it will generate
revenues  primarily  through  licenses  or  other  contracts  for the use of its
products over specified periods.

G-TEC had conducted and discontinued  certain unrelated  operations prior to the
commencement on January 1, 1998 of the development  stage  activities  described
above. G-TEC generated revenues primarily from a license agreement that has been
effectively  terminated  and a limited  number of sales of its  products  during
2002.  It  generated  revenues  primarily  from a  contract  with a  residential
community that used an application of its  technologies  during 2001.  G-TEC had
not generated any significant revenues from contracts for the sale or use of its
primary products on a recurring basis and, accordingly,  it also remained in the


                                       17
<PAGE>

development stage for financial accounting purposes as of December 13, 2002, the
date of the merger with GHC and as of September 30, 2003.  Upon  Consummation of
GHC's  merger  with  G-TEC  on  December  13,  2002,  approximately  95%  of the
outstanding  shares of common  stock of GHC was held by former  stockholders  of
G-TEC. Accordingly,  although GHC was the legal acquirer and G-TEC was the legal
acquiree,  the business  combination was accounted for as a reverse acquisition,
whereby, for accounting purposes, G-TEC was the accounting acquirer and GHC, the
inactive "shell" company, was the accounting acquiree.



                                       18
<PAGE>

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/A for the year ended December 31, 2002,  have been
applied consistently during the nine months ended September 30, 2003.

RESULTS OF OPERATIONS:

For the three and nine months ended  September 30, 2003 as compared to the three
and nine months  ended  September  30, 2002 and the period from  January 1, 1998
(date of inception) to September 30, 2003.

The Company generated revenues of approximately $-0-,  $149,000,  $-0-, $427,000
and $1,533,000  for the three and nine months ended  September 30, 2003 and 2002
and the period from January 1, 1998 (date of  inception)  to September 30, 2003,
respectively. Our revenues derived in prior periods were from certain operations
that were  discontinued  prior to the  development  activities that commenced on
January 1, 1998 that were previously discussed.

Selling, general and administrative expenses for the three and nine months ended
September  30,  2003 and 2002 and the  period  from  January  1,  1998  (date of
inception)  to  September  30,  2003  were  approximately  $949,000,   $510,000,
$2,521,000,  $1,937,000  and  $17,269,000  respectively.  Selling,  general  and
administrative  expenses primarily consist of the following;  (i) salaries, (ii)
professional   fees,  (iii)   depreciation  and  amortization  of  property  and
equipment,  and (iv) rent expense.  Although  overall  these  expenses have been
fairly  comparable,  our  professional  fees have  increased  as a result of our
becoming a public  entity.  This increase was offset  somewhat by a reduction in
our depreciation and amortization as our assets become fully depreciated.

Research and development  expenses for the three and nine months ended September
30, 2003 and 2002 and the period  from  January 1, 1998 (date of  inception)  to
September 30, 2003 were approximately $42,000, $66,000,  $222,000,  $264,000 and


                                       19
<PAGE>

$4,958,000, respectively. Research and development expense primarily consists of
payroll, which is fairly consistent.

Loss from  operations for the three and nine months ended September 30, 2003 and
2002 and the period from January 1, 1998 (date of  inception)  to September  30,
2003  was  approximately   $992,000,   $428,000,   $2,744,000,   $1,785,000  and
$21,407,000, respectively.

Interest expense for the three and nine months ended September 30, 2003 and 2002
and the period from January 1, 1998 (date of  inception)  to September  30, 2003
was  approximately  $136,000,  $244,000,  $408,000,  $1,556,000 and  $3,899,000,
respectively.  Interest expense in the three and nine months ended September 30,
2003 primarily consisted of the fair value of warrants issued for the payment of
interest.  Interest expense primarily  consists of amortization of deferred loan
fees and debt  discounts in the three and nine months ended  September 30, 2002.
These charges are primarily non-cash items.

Net loss for the three and nine months ended September 30, 2003 and 2002 and the
period  from  January 1, 1998 (date of  inception)  to  September  30,  2003 was
approximately  $1,128,000,  $672,000,  $3,152,000,  $3,340,000 and  $26,049,000,
respectively. The reasons for the net losses are explained above.

Liquidity and Capital Resources:

The  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 net loss
of  approximately  $26,918,000  through  September  30,  2003 and had a  working
capital deficiency of approximately $7,275,000 and a stockholders' deficiency of
$7,143,000.  It also had  convertible  notes payable with principal  balances of
approximately  $2,575,000  and other  notes  payable  of  $204,000  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 September 30, 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 September
30, 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  or  sell,  file for
reorganization or entirely cease its operations.

CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002:

Nine months ended September 30, 2003

For the nine months ended  September 30, 2003, we utilized cash from  operations
of approximately  $558,000.  This was  attributable to the following:  (1) a net
loss of  approximately  $3,152,000  and (2) an increase in prepaid  expenses and
other assets of $72,000,  which was offset by, (3) depreciation and amortization


                                       20
<PAGE>

expense of  approximately  $40,000,  (4) common  stock and  warrants  issued for
services of  approximately  $1,054,000,  (5) charges relating to warrants issued
for payment of interest of approximately  $179,000, (6) amortization of unearned
compensation  totaling  $91,000,  and (7) an increase  in  accounts  payable and
accrued expenses totaling $1,302,000.

We generated cash from financing activities of approximately $559,000, primarily
attributable  to the  following:  (1)  net  proceeds  of  approximately  $90,000
received from the sale of and collection of subscriptions  receivable for Series
B preferred stock,  (2) exercise of warrants for $30,000,  (3) net proceeds from
the sale of 648,931 shares of common stock totaling approximately  $407,000, and
(4) proceeds, net of repayments, from issuing short term debt of $32,500.

Nine months ended September 30, 2002

For the nine months ended  September 30, 2002, we utilized cash from  operations
of approximately  $113,000.  This was  attributable to the following;  (1) a net
loss of  approximately  $3,340,000,  which was offset by, (2)  depreciation  and
amortization expense of approximately $413,000, (3) charges relating to warrants
issued for payment of interest of  approximately  $60,000,  (4)  amortization of
deferred loan costs and debt  discount  totaling  $1,318,000  (5) an increase in
accounts payable and accrued expenses totaling  $1,165,000  and (6) a decrease
in accounts receivable and prepaid expenses totaling $281,000.

We generated cash from financing  activities of $51,000  attributable to (1) the
exercise of warrants for $28,000 and (2) net proceeds of  approximately  $23,000
from the sale of 12,500 shares of Series B preferred stock.

During the period from October 1, 2003 to November 15, 2003,  we received  gross
proceeds of  approximately  $31,000  from sales of 236,495  shares of our common
stock.

ITEM 3.  CONTROLS AND PROCEDURES

(a) As of the end of the period  covered by this report,  management,  including
our principal executive officer and principal  financial officer,  evaluated the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  Based upon,  and as of the date of that  evaluation,  our principal
executive  officer and principal  financial  officer  concluded  that other than
improvements  over controls with respect to the issuance of stock warrants,  our
disclosure controls and procedures  effectively  provided  reasonable  assurance
that information  required to be disclosed in the reports that we file or submit
under  the  Securities  and  Exchange  Act  of  1934  are  recorded,  processed,
summarized and reported within the time periods  specified by the Securities and
Exchange Commission's rules and forms.

(b) There was no change in internal controls over financial  reporting as of the
end of the period covered by this report that has materially  affected,  or that
is reasonably likely to materially  affect,  our internal control over financial
reporting.


                                       21
<PAGE>

PART II

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

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 September 30, 2003 and December 31, 2002 (see Note 5 to
the Audited  Financial  Statements in the Form 10-KSB/A).  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  (at the  Company's  discretion)
solely 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 18%.  Accrued interest on the convertible
notes  total  approximately  $518,000  and  $290,000 at  September  30, 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.

As of September 30, 2003,  the Company had other notes payable with an aggregate
balance of  $236,500,  including  notes  payable  with an  aggregate  balance of
$204,000  that bear  interest at 10% and that were required to be repaid on June
12, 2003 (see Note 6 to the Audited Financial  Statements in the Form 10-KSB/A).
The  Company  was not able to repay  those  notes  and they were in  default  at
September 30, 2003.

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


                                       22
<PAGE>

ITEM 6. EXHIBITS AND REPORTS

(a) The following reports have been filed since the end of our last fiscal year:

         Form 8-K filed on 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.

         Form 8-K/A filed on July 24,  2003 which  attaches  proforma  financial
information  for the  years  ended  December  31,  2002 and  2001 and  financial
statements of the business acquired as of December 31, 2002 and 2001 and for the
period from January 1, 1998 (date of inception) to December 31, 2002.

         Form 8-K/A filed on August 14, 2003 which attaches audited Consolidated
Financial  Statements of Graphco  Technologies,  Inc. and its subsidiaries as of
and for the year ended December 31, 2000 and which incorporates by reference the
financial information contained in the Form 8-K/A on July 24, 2003.

(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
Quarterly Report on Form 10-QSB:

         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).


                                       23
<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: November 19, 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