FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION ~~Washington, D.C. 20549~~

Washington, D.C. 20549

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

For quarter ended ~~June~~September 30, 2002

Commission File Number 0-17401

OPTIMUMCARE CORPORATION

(Exact name of registrant specified in its charter)

Delaware		33-0218003
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
30011 Ivy Glenn Drive, Ste 219 Laguna Niguel, CA		92677


Delaware (State of other jurisdiction of incorporation or organization)		33-0218003 (I.R.S. Employer Identification No.)









30011 Ivy Glenn Drive, Ste 219 Laguna Niguel, CA 92677

(949) 495-1100 (Registrants telephone number, including area code)

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report).

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 periods 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 issuer’s classes of common stock, as of ~~July___~~November 12 , 2002.

Class		Number of Shares Outstanding
Common Stock, $.001 par value			5,908,675


Class Common Stock, $.001 par value		Number of Shares Outstanding 5,908,675

TABLE OF CONTENTS

Independent Accountants’ Review Report
PART I FINANCIAL INFORMATION
	Item 1. Financial Statements
		Report on Review by Independent Certified Public Accountants
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
		Notes to Condensed Consolidated Financial Statements
	~~Management’s Discussion and Analysis of Financial Condition and Results of Operation~~	Management’s Discussion and Analysis of Financial Condition and Results of Operation
	~~Statement by Management Concerning Review of Interim Financial Information by Independent Certified Public Accountants~~	Statement by Management Concerning Review of Interim Financial Information by Independent Certified Public Accountants
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II OTHER INFORMATION
	ITEM 1 LEGAL PROCEEDINGS
	ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
	ITEM 3 DEFAULTS UPON SENIOR SECURITIES
	ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5 OTHER INFORMATION
	ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURE
CERTIFICATIONS
EXHIBIT INDEX
EXHIBIT 10.140
EXHIBIT 10.145
EXHIBIT 10.141
EXHIBIT 10.146
EXHIBIT 10.147
EXHIBIT 15
EXHIBIT 99.1

INDEX

OPTIMUMCARE CORPORATION

PART I FINANCIAL INFORMATION


		Page
PART I FINANCIAL INFORMATION









Item 1. Financial Statements









	Report on Review by Independent Certified Public Accountants		3




	Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001		4




	Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2002 and 2001		5




	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001		6




	Notes to Condensed Consolidated Financial Statements		7









Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			9









	Statement by Management Concerning Review of Interim Information by Independent Certified Public Accountants		12









Item 3. Quantitative and Qualitative Disclosures about Market Risk			12









Item 4. Controls and Procedures			12









PART II OTHER INFORMATION			13









SIGNATURE			15









CERTIFICATIONS			16









EXHIBITS			20

		Page
Item 1.	Financial Statements
	Report on Review by Independent Certified Public Accountants	3
	Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001	4
	Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2002 and 2001	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
	Statement by Management Concerning Review of Interim Information by Independent Certified Public Accountants	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	13
PART II	OTHER INFORMATION	14
SIGNATURE		15
ACCOUNTANTS’ ACKNOWLEDGMENT		16

~~July~~November 225, 2002

Independent Accountants’ Review Report

To the Board of Directors of OptimumCare Corporation:

We have reviewed the accompanying condensed consolidated balance sheet of OptimumCare Corporation and its subsidiaries as of ~~June~~September 30, 2002, and the related condensed consolidated statements of operations for the three months and ~~six~~nine months ended ~~June~~September 30, 2002 and 2001 and cash flows for the ~~six months~~nine months ended ~~June~~September 30, 2002 and 2001, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of OptimumCare Corporation.

A review of interim financial information consists principally of inquiries of Company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2001 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended (not presented herein), and in our report dated February 12, 2002, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2001 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.


		/s/ Lesley, Thomas, Schwarz & Postma, Inc. A Professional Accountancy Corporation Newport Beach, California

OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

				JUNE 30				DECEMBER 31
		SEPT 30,2002				DECEMBER 31,2001
				2002				2001
		(UNAUDITED)
				(UNAUDITED)
ASSETS
ASSETS
CURRENT ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS		$	961,075			$	1,646,891
	CASH AND CASH EQUIVALENTS			$	2,148,615			$	1,646,891
MARKETABLE SECURITIES			483,305				0
	SHORT-TERM INVESTMENTS				103,214				0
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE OF $0 AT SEPT 30, 2002 AND DECEMBER 31, 2001			747,149				1,217,353
	ACCOUNTS RECEIVABLE, NET OF ALLOWANCE OF $0 AT JUNE 30, 2002 AND DECEMBER 31, 2001				543,774				1,217,353
ADVANCES DUE FROM OFFICER			12,954				144,596
	ADVANCES DUE FROM OFFICER				1,136				144,596
NOTE RECEIVABLE FROM OFFICER			0				225,136
	NOTE RECEIVABLE FROM OFFICER				0				225,136
PREPAID EXPENSES			51,583				127,913
	PREPAID EXPENSES				71,423				127,913
PREPAID INCOME TAXES			199,956				582,430
	PREPAID INCOME TAXES				45,175				582,430
DEFERRED TAX ASSET			13,145				71,114
	DEFERRED TAX ASSET				73,287				71,114
TOTAL CURRENT ASSETS			2,469,167				4,015,433
		TOTAL CURRENT ASSETS			2,986,624				4,015,433
FURNITURE AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION OF $126,601 AT SEPT 30, 2002 AND $160,017 AT DECEMBER 31, 2001			33,046				18,757
FURNITURE AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION OF $123,523 AT JUNE 30, 2002 AND $160,017 AT DECEMBER 31, 2001					31,059				18,757
GOODWILL			194,934				0
OTHER ASSETS					15,594				19,760
DEFERRED TAX ASSET			84,287				0
		TOTAL ASSETS		$	3,033,277			$	4,053,950
OTHER ASSETS			15,594				19,760
CURRENT LIABILITIES
TOTAL ASSETS		$	2,797,028			$	4,053,950
	ACCOUNTS PAYABLE			$	76,003			$	206,046
CURRENT LIABILITIES
	ACCRUED VACATION				51,422				54,499
ACCOUNTS PAYABLE		$	88,173			$	206,046
	ACCRUED EXPENSES				66,232				211,016
ACCRUED VACATION			38,659				54,499
	ACCRUED PAYMENT TO OFFICER				0				700,000
ACCRUED EXPENSES			126,479				211,016
		TOTAL CURRENT LIABILITIES			193,657				1,171,561
ACCRUED PAYMENT TO OFFICER			0				700,000
STOCKHOLDERS’ EQUITY
TOTAL CURRENT LIABILITIES			253,311				1,171,561
	PREFERRED STOCK, $.001 PAR VALUE; AUTHORIZED 10,000,000 SHARES, 0 SHARES ISSUED, AND OUTSTANDING AT JUNE 30, 2002 AND DECEMBER 31, 2001
STOCKHOLDERS’ EQUITY
	COMMON STOCK, $.001 PAR VALUE; AUTHORIZED 20,000,000 SHARES, 5,908,675 SHARES ISSUED AND OUTSTANDING AT JUNE 30, 2002, AND DECEMBER 31, 2001				5,909				5,909
PREFERRED STOCK, $.001 PAR VALUE; AUTHORIZED 10,000,000 SHARES, 0 SHARES ISSUED, AND OUTSTANDING AT SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
	PAID-IN-CAPITAL				2,403,706				2,403,706
COMMON STOCK, $.001 PAR VALUE; AUTHORIZED 20,000,000 SHARES, 5,908,675 SHARES ISSUED AND OUTSTANDING AT SEPTEMBER 30, 2002, AND DECEMBER 31, 2001			5,909				5,909
	RETAINED EARNINGS				430,005				472,774
ADDITIONAL PAID-IN-CAPITAL			2,403,706				2,403,706
		TOTAL STOCKHOLDERS’ EQUITY		$	2,839,620			$	2,882,389
RETAINED EARNINGS			134,102				472,774
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				$	3,033,277			$	4,053,950
TOTAL STOCKHOLDERS’ EQUITY		$	2,543,717			$	2,882,389
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	2,797,028			$	4,053,950

See notes to condensed consolidated financial statements.

OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	THREE MONTHS ENDED						~~SIX MONTHS ENDED~~	NINE MONTHS ENDED
	JUNE 30,			JUNE 30,			JUNE 30,				JUNE 30,
	SEPT 30,2002				SEPT 30,2001			SEPT 30,2002				SEPT 30,2001
	2002			2001			2002				2001
CONTRACT REVENUES	$	756,573			$	1,888,994		$	3,393,181			$	5,843,578
REVENUES	$	1,247,750		$	1,892,694		$	2,636,608			$	3,954,584
TEMPORARY STAFFING REVENUES		486,170				0			486,170				0
INTEREST INCOME		76,~~845~~280			~~17,911~~	16,028		~~15,491~~	21,771			~~45,604~~	61,632
		1,255,595			1,910,605			2,652,099				4,000,188
		1,249,023				1,905,022			3,901,122				5,905,210
OPERATING EXPENSES:
COSTS OF SERVICES PROVIDED		~~713~~1,~~089~~023,966			~~1,310,518~~	1,313,048		~~1,963,551~~	2,987,517			~~2,714,476~~	4,027,524
GENERAL AND ADMINISTRATIVE		~~399~~699,~~023~~885			~~350,759~~	303,685		~~747,347~~	1,447,232			~~736,699~~	1,040,384
INTEREST		0			~~150~~	0		70	70			~~221~~	221
TOTAL OPERATING EXPENSES		1,~~112~~723,~~112~~851			~~1,661,427~~	1,616,733		~~2,710,968~~	4,434,819			~~3,451,396~~	5,068,129
INCOME (LOSS) BEFORE INCOME TAXES		~~143~~(474,~~483~~828	)		~~249,178~~	288,289		~~(58,869~~	)(533,697	)		~~548,792~~	837,081
INCOME TAX EXPENSE (BENEFIT)		60(178,~~101~~926	)		~~59,724~~	92,158		~~(16,100~~	)(195,026	)		~~183,792~~	275,950
NET INCOME (LOSS)	$	83(295,~~382~~902	)	$	~~189,454~~$	196,131		$~~(42,769~~	)(338,671	)	$	~~365,000~~$	561,131
BASIC EARNINGS (LOSS) PER SHARE	$	(0.0105	)	$	~~0.03~~$	0.03		$~~(0.01~~	)(0.06	)	$	~~0.06~~$	0.09
DILUTED EARNINGS (LOSS) PER SHARE	$	(0.0105	)	$	~~0.03~~$	0.03		$~~(0.01~~	)(0.06	)	$	~~0.06~~$	0.09

See notes to condensed consolidated financial statements.

OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

				SIX MONTHS ENDING
	NINE MONTHS ENDING
				JUNE 30			JUNE 30
	SEPT 30,2002			SEPT 30,2001
				2002			2001
CASH FLOW FROM OPERATING ACTIVITIES
CASH FLOW FROM OPERATING ACTIVITIES
Net Income/(Loss)	$	(338,671	)	$	561,131
	Net Income/(Loss)				$(42,769	)	$	365,000
Adjustments to reconcile net (loss)/income to net cash (used)/provided by operating activities:
	Adjustments to reconcile net (loss)/income to net cash (used)/provided by operating activities:
Depreciation & amortization		8,893			13,548
		Depreciation & amortization			5,815			9,485
Deferred taxes		(26,318	)		(19,158	)
		Deferred taxes			(2,173	)		(12,700	)
Changes in operating assets and liabilities:
		Changes in operating assets and liabilities:
Decrease/(Increase) in accounts receivable, net		470,204			(1,259,094	)
			Decrease/(Increase) in accounts receivable, net		673,579			(727,669	)
Decrease/(Increase) in advances due from officer		131,642			(78,962	)
			Decrease/(Increase) in advances due from officer		143,460			(88,460	)
Decrease in prepaid expenses		76,330			68,051
			Decrease in prepaid expenses		56,490			30,978
Decrease in prepaid income taxes		382,474			0
			Decrease in prepaid income taxes		537,255			0
Decrease/(Increase) in other assets		4,166			7,892
			Decrease in other assets		4,166			7,892
(Decrease) in accounts payable		(117,873	)		(26,058	)
			(Decrease) in accounts payable		(130,043	)		(44,305	)
(Decrease)/Increase in accrued vacation		(15,840	)		8,443
			(Decrease)/Increase in accrued vacation		(3,077	)		17,333
(Decrease)/Increase in accrued expenses		(84,537	)		5,437
			(Decrease) in accrued expenses		(144,784	)		(21,000	)
(Decrease) in accrued payment to officer		(700,000	)		0
			(Decrease) in accrued payment to officer		(700,000	)		0
CASH AND CASH EQUIVALENTS PROVIDED/(USED) BY OPERATING ACTIVITIES		(209,530	)		(718,770	)
			CASH AND CASH EQUIVALENTS PROVIDED/(USED) BY OPERATING ACTIVITIES		397,919			(463,446	)
CASH FLOW FROM INVESTING ACTIVITIES
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of marketable securities		(483,305	)		0
	Purchase of short-term investments				(103,214	)		0
Purchase of other assets		(12,930	)		(95,000	)
	Purchase of other assets				(12,930	)		0
Purchase of office furniture & computer equipment		(5,187	)		(1,505	)
	Purchase of office furniture & computer equipment				(5,187	)		(95,000	)
Payments on note receivable from officer		225,136			71,500
	Payments on note receivable from officer				225,136			71,500
Purchase of new business entity		(200,000	)		0
CASH AND CASH EQUIVALENTS PROVIDED/(USED) BY INVESTING ACTIVITIES		(476,286	~~CASH AND CASH EQUIVALENTS PROVIDED/(USED~~) ~~BY INVESTING ACTIVITIES~~		~~103~~(25,~~805~~005	)		~~(23,500~~	)
CASH AND CASH EQUIVALENTS PROVIDED BY FINANCING ACTIVITIES		0	~~CASH AND CASH EQUIVALENTS PROVIDED BY FINANCING ACTIVITIES~~		0			0
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(685,816	)		~~501~~(743,~~724~~775	)		~~(486,946~~	)
Cash and cash equivalents at beginning of period		1,646,891			12,~~646~~187,~~891~~322			~~2,187,322~~
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	~~CASH AND CASH EQUIVALENTS AT END OF PERIOD~~961,075		$	21,~~148~~443,~~615~~547		$	~~1,700,376~~

See notes to condensed consolidated financial statements.

OPTIMUMCARE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~June~~September 30, 2002

NOTE A — BASIS OF PRESENTATION

The accompanying unaudited financial statements include the accounts of the Company and its majority owned subsidiaries. All significant intercompany transactions, if any, have been eliminated. The unaudited financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine month periods ended ~~June~~September 30, 2002 are not necessarily indicative of ~~the~~ the results that may be expected for the year ended December 31, 2002. For ~~further~~ further information, refer to the financial statements and footnotes thereto ~~included~~ included in the Company’s Form 10-K for the year ended December 31, 2001.

NOTE B — ~~SHORT-TERM~~ ~~INVESTMENTS~~MARKETABLE SECURITIES

~~Included~~Marketable insecurities ~~short-term~~consist ~~investments~~of ~~are~~ federal home loan bank bonds, federal farm credit bonds and U.S. treasury notes with an aggregate principal amount of $~~100~~475,000 and $0 at ~~June~~September 30, 2002 and December 31, 2001 respectively. The bonds and notes bear interest ranging from 2.~~375~~150% to 5.755% and have maturity dates ~~during~~ranging ~~June,~~through ~~2003~~January 2004.

The Company believes that the carrying amount of these bonds ~~approximate~~approximates their fair value at ~~June~~September 30, 2002 ~~because of the short maturity of these instruments~~.

NOTE C — EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended					~~Six~~Nine Months Ended
	June 30, 2002			June 30, 2001		June 30, 2002			June 30, 2001
	September 30, 2002			September 30, 2001		September 30, 2002			September 30, 2001
Numerator	$	83(295,~~382~~902	)	$	~~189~~196,~~454~~131	$	$(42338,~~769~~671	)	$	~~365~~561,~~000~~131
Denominator:
Denominator for basic earnings per share - weighted-average shares		5,908,675			5,908,675		5,908,675			5,908,675
Denominator for basic earnings per share — weighted-average shares		5,908,675			5,908,675		5,908,675			5,908,675
Dilutive employee stock options		~~135,076~~			~~154~~13,~~872~~953		~~67,538~~			~~154~~13,~~872~~953
Denominator for diluted earnings per share		65,~~043~~908,~~751~~675			65,~~063~~922,~~547~~628		5,~~976~~908,~~213~~675			65,~~063~~922,~~547~~628
Basic earnings per share	$	(.0105	)	$	.03	$	$(.0106	)	$	.0609
Diluted earnings per share	$	(.0105	)	$	.03	$	$(.0106	)	$	.0609

NOTE D — - NEW BUSINESS

Effective ~~June~~July 1629, 2002, the Company ~~entered~~acquired ~~into~~the assets of a ~~marketing~~health care staffing company, through its wholly owned subsidiary, Associated Staffing Resources, Inc., for cash consideration of $150,000 and ~~management~~an accrued liability of $50,000 payable on August 31, 2003. Goodwill in the amount of $194,934 was recorded as of September 30, 2002. Additional amounts of $25,000, $27,500 and $30,000 are due on August 31, 2003, 2004 and 2005, respectively, contingent upon meeting certain revenue goals. As part of the purchase, the Company entered into a three year employment agreement with the previous owner for a salary ~~psychiatric~~of ~~inpatient~~$102,000 for the first year, $107,000 for the second year, and $112,000 ~~partial~~for ~~hospitalization~~the ~~program~~third atyear. LaThe employment agreement also stipulates a ~~Palma~~monthly ~~Intercommunity~~auto ~~Hospital~~allowance inand Labonuses ~~Palma~~based on exceeding certain revenue and net income goals. In addition, ~~California~~the Company issued 100,000 options to purchase common stock for $0.50 per share to the previous owner. The options are subject to vesting at 50,000 per year on the anniversary date of the closing for the next two years and expire in five years.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

Safe harbor statements under the Private Securities Litigation Reform Act of 1995

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements which are forward-looking in time and involve risks and uncertainties, including the risks associated with plans, the effects of changing economic and competitive conditions, government regulation which may affect facilities, licensing, healthcare reform which may affect payment amounts and timing, availability of sufficient working capital, Program development efforts and timing and market acceptance of new Programs which may affect future sales growth and/or costs of operations.

Material Changes in Financial Condition

At ~~June~~September 30, 2002 and December 31, 2001, the Company’s working capital was $2,~~792~~300,~~967~~143 and $2,843,872, respectively. The decrease in working capital for the period is primarily due to the Company’s net loss. The nature of the Company’s business requires significant working capital to fund operations of its programs as well as to fund corporate expenditures until receivables can be collected. Moreover, because each of the existing contracts represents a significant portion of the Company’s business, the inability to collect any of the accounts receivable could materially and adversely affect the Company’s liquidity. The Company evaluates the collectibility of its receivables on a case by case basis. Accounts receivable at ~~June~~September 30, 2002 has decreased ~~from~~ from those which existed at December 31, 2001. This is primarily due to the collection of receivables from two contracts with one hospital that were terminated April 30, 2002. At ~~June~~September 30, 2002, all accounts receivable are ninety days outstanding or less. Management believes that no collection problems with respect to these receivables exist. Accordingly, no allowance for doubtful accounts has been recorded at ~~June~~September 30, 2002.

Cash flows from operations were $~~397~~(209,~~919~~530) and $(~~463~~718,~~446~~770) for the periods ended ~~June~~September 30, 2002 and 2001, respectively. Cash flows during the ~~six~~nine months ~~ended~~ ~~June~~ended September 30, 2002 were primarily due to collections of accounts receivable and prepaid income taxes, partially offset by payments of amounts accrued at December 31, 2001.

Cash flows from investing activities were $~~103~~(476,~~805~~286) and ($23(25,~~500~~005) for the periods ended ~~June~~September 30, 2002 and 2001, respectively. Cash ~~provided~~used during the ~~six~~nine months ended ~~June~~September 30, 2002 primarily arose from the purchase of short-term federal bonds and U.S. treasury notes which was partially offset by the payment of a note receivable from one officer. ~~which~~In ~~was~~addition, ~~partially~~the ~~offset~~Company acquired by the ~~purchase~~assets of a health care staffing company for cash consideration of ~~short-term~~$150,000 ~~federal~~and ~~home~~an ~~loan~~accrued ~~bank~~liability ~~bonds~~of $50,000 payable on August 31, 2003.

No cash flows with respect to financing activities occurred during the ~~six~~nine month period ending ~~June~~September 30, 2002 and 2001. The Company has a line of ~~credit~~ credit which expires January 31, 2003. The maximum indebtedness is $1,500,000. Amounts allowable for draw are based on 80% of certain qualified ~~accounts~~ accounts receivable. As of ~~July~~September 1630, 2002, approximately $~~418~~586,000 is available for future draws on the line of credit agreement. It is expected that the line of credit will be renewed on similar terms. The Company’s principal sources of liquidity for the fiscal year 2002 are cash on hand, accounts receivable, a line of credit with a bank and continuing revenues from programs and from the recently acquired staffing business.

Material Changes in Results of Operations

Three Months Ended ~~June~~September 30, 2002 compared to Three Months Ended ~~June~~ September 30, 2001

The Company operated ~~six~~five (65) contract programs during the three months ended ~~June~~ September 30, 2002 and eight (8) contract programs during the three months ended ~~June~~September 30, 2001. ~~Of the six programs operated during the three months ended June 30, 2002, two programs were terminated April 30, 2002 and one program began June 16, 2002.~~ Net revenues were $1756,~~247,750~~573 and $1,~~892~~888,~~694~~994 for the three months ended ~~June~~September 30, 2002 and 2001, respectively. The decrease in net revenues among periods is primarily due to the decrease in the number ~~and duration~~ of operating programs. On July 29, ~~offset~~ by2002, the Company purchased a ~~$300,000~~health ~~early~~care staffing ~~termination~~company ~~fee~~whose ~~received~~revenues ~~from~~were ~~one~~$486,170 ~~hospital~~for ~~during~~the three months ended ~~April~~September 30, 2002.

Cost of services provided were $~~713~~1,~~089~~023,966 and $1,~~310~~313,~~518~~048 for the three months ended ~~June~~September 30, 2002 and 2001, respectively. The decrease in cost of ~~services~~ services provided among periods is due to the decrease in the number of programs, ~~the majority~~offset ofby ~~which~~increases ~~related~~for tothe ~~those~~new ~~programs~~staffing ~~closed~~company ~~during April, 2002~~acquisition.

Selling, general and administrative expenses were $~~399~~699,~~023~~885 and $~~350~~303,~~759~~685 for the three months ended ~~June~~September 30, 2002 and ~~June~~September 30, 2001, respectively. The increase in costs iswas primarily due to fees paid to business development ~~consultants~~ consultants assisting the Company in its expansion and acquisition endeavors and a bonus paid to its Chief Executive Officer due to a miscalculation of his previous bonus.

~~The~~Income ~~Company’s~~taxes ~~income~~have ~~taxes~~decreased substantially for the three months ~~ending~~ended ~~June~~ September 30, 2002 ~~have~~over the comparable three months ended September 30, 2001. The ~~remained~~decrease ~~relatively~~among ~~stable~~periods ~~with~~is ~~those~~primarily ~~estimated~~due ~~for~~to the ~~three~~net ~~months~~loss ~~ended~~generated ~~June~~by the ~~30,~~Company ~~2001~~during the current period.

Net (loss)/income ~~was~~were $83(295,~~382~~902) and $~~189~~196,~~454~~131 for the three months ending ~~June~~ September 30, 2002 and 2001, respectively. Lower net income occurred from a decrease in operating programs ~~offset by an early termination fee received from one hospital during April, 2002~~.

The Company is continuing to make efforts to expand the number of its operational programs. The Company currently has a proposal outstanding to expand the inpatient program at one location it currently serves and has contracted with a consulting firm managed by one of the Company’s directors to launch an aggressive marketing program. However, new rules adopted by the Centers for Medicare and Medicaid Services (CMS) are now requiring that facilities obtain “provider based status” before a provider can bill Medicare for services rendered at the facility. The ~~application of these rules are uncertain at this time, but the~~ Company anticipates that ~~changes will occur in~~ the ~~nature~~application of ~~its~~these ~~traditional~~rules ~~contract structure which~~ will ~~cause revenues per~~not ~~contract~~affect toexisting ~~decline. One hospital which hosted two~~ programs ~~terminated~~but ~~its contracts~~may ~~with~~affect ~~the~~efforts ~~Company effective April 30, 2002. The two contracts were scheduled~~ to ~~expire~~expand ~~December 31, 2002. A month to month consulting agreement~~ with ~~the~~future ~~hospital for utilization review services currently exists~~programs. In ~~addition, the Company has been in discussions with another hospital, which~~ ~~currently hosts one program to modify its arrangement with the Company causing both revenues and costs associated with managing this program to decline.~~

Concurrent with its strategy for expanding its contract business, the Company is in the process of developing a home health division and acquiring strategic businesses with complimentary health care services. Revenues from the home health division are expected to be generated by the end of 2002 or in early 2003. The Company acquired a health care staffing company during the three months ended September 30, 2002 and signed letters of intent to acquire two additional health care staffing companies, one of which was acquired on November 7, 2002.

~~Concurrent~~In ~~with~~the ~~its~~Company’s ~~strategy~~mental ~~for~~health ~~expanding~~disorder ~~its~~program ~~contract~~management business, the ~~Company~~ isCompany inhas ~~the~~a ~~process~~dependence on a small customer base, presently consisting of ~~developing~~four hospitals. aHowever, ~~home~~the ~~health~~Company ~~division~~has ~~and~~a ~~acquiring~~significant ~~strategic~~amount of variable expenses ~~businesses~~associated with ~~complimentary~~the ~~health~~production ~~care~~of ~~services~~its revenues, although certain fixed costs do exist. ~~Revenues~~To ~~from~~that end, the ~~home health~~loss ~~division~~of ~~are~~customers ~~expected~~has toa besignificant ~~generated~~adverse byeffect on the ~~end~~Company’s ofprofit ~~2002~~margin. The Company ~~recently~~ ~~signed~~expects a ~~letter~~loss on its core business operations and the development of ~~intent~~the tohome ~~acquire~~health aagency ~~medical~~for the remainder of 2002. However, the acquisition of the health care staffing company is anticipated to increase revenues and profits which should help to offset new expenses associated with developing programs, divisions and acquisitions, the aggregate costs of which are unknown at this time.

~~The~~Nine ~~Company~~Months ~~has~~Ended ~~a dependence on a small customer base~~September 30, presently consisting of four hospitals. However, the Company has a significant amount of variable expenses associated with the production of its revenues, although certain fixed costs do exist. To that end, the loss of customers has a significant adverse effect on the Company’s profit margin. The Company expects a small loss on its core business operations and the development of the home health agency for the remainder of 2002. ~~However,~~compared ~~the acquisition of the medical staffing company is anticipated~~ to ~~increase~~Nine ~~revenues~~Months ~~and~~Ended ~~profits which~~September ~~should help to offset new expenses associated with developing programs~~30, ~~divisions~~ ~~and acquisitions, the aggregate costs of which are unknown at this~~2001 ~~time.~~

The Company had six (6) operational Programs during the nine month period ended September 30, 2002 and nine (9) operational programs during the nine month period ended September 30, 2001. Of the six programs operated during the three months ended September 30, 2002, two programs were terminated April 30, 2002 and one program began June 16, 2002.

Net revenues decreased approximately 34% for the nine months ended September 30, 2002 over the comparable nine months ended September 30, 2001. The decrease among periods is due to the decrease in the number of programs offset by revenues from a new business entity acquired during the period.

Cost of services provided decreased approximately 26% for the nine months ended September 30, 2002 over the comparable nine months ended September 30, 2001. The decrease among periods is also due to the decrease in the number of programs offset by expenses from the new business acquired during the period as stated above.

General and administrative expenses have slightly increased for the nine months ended September 30, 2002 over the comparable nine months ended September 30, 2001. This was primarily due to fees paid to business development consultants assisting the Company in its expansion and acquisition endeavors and a bonus paid to its Chief Executive Officer due to a miscalculation of his previous bonus.

Income taxes have decreased substantially for the nine months ended September 30, 2002 over the comparable nine months ended September 30, 2001. The decrease among periods is primarily due to the net loss generated by the Company during the current period.

The Company incurred a net loss of $(338,671) for the nine months ended September 30, 2002 compared to net income of $561,131 for the nine months ended September 30, 2001. The decrease among periods is primarily due to the decrease in profits arising from a smaller number of operating programs.

Comparison of the Six Months Ended June 30, 2002 to Six Months Ended June 30, 2001

The Company had six (6) operational Programs during the six month period ended June 30, 2002 and nine (9) operational programs during the six month period ended June 30, 2001.

Net revenues decreased approximately 34% for the six months ended June 30, 2002 over the comparable six months ended June 30, 2001. The decrease among periods is due to the decrease in the number of programs.

Cost of services provided decreased approximately 28% for the six months ended June 30, 2002 over the comparable six months ended June 30, 2001. The decrease among periods is due to also due to the decrease in the number of programs stated above.

General and administrative expenses have slightly increased for the six months ended June 30, 2002 over the comparable six months ended June 30, 2001. This was primarily due to fees paid to business development consultants assisting the Company in its expansion and acquisition endeavors.

Income taxes have decreased substantially for the six months ended June 30, 2002 over the comparable six months ended June 30, 2001. The decrease among periods is primarily due to the net loss generated by the Company during the current period.

The Company incurred a net loss of $(42,769) for the six months ended June 30, 2002 compared to net income of $365,000 for the six months ended June 30, 2001. The decrease among periods is primarily due to the decrease in profits arising from a smaller number of operating programs.

Statement by Management Concerning Review of Interim Financial Information by Independent Certified Public Accountants

The ~~June~~September 30, 2002 condensed consolidated financial statements included in ~~this~~ this filing on Form 10-Q have been reviewed by Lesley, Thomas, Schwarz & Postma, Inc., independent certified public accountants, in accordance with ~~established~~ established professional standards and procedures for such review. The report of Lesley, Thomas, Schwarz & Postma, Inc. commenting upon their review accompanies the condensed consolidated financial statements included in Item 1 of Part 1.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Immaterial.

Item 4. Controls and Procedures

On November 5, 2002, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer/Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon and as of the date of that evaluation, the Company’s Chief Executive Officer/Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of November 5, 2002. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the internal controls subsequent to November 5, 2002.

PART II
OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

Not applicable.

ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5 OTHER INFORMATION

On November 7, 2002, the company, through its wholly owned subsidiary Associated Staffing Resources, Inc., acquired certain assets of Social Work Services, Inc., a healthcare staffing company, specializing in social workers. The assets were acquired for a purchase price of $66,678.48 and an earn out of up to an additional $40,007.09. The major assets of the business acquired are contractual relationships with healthcare agencies and social workers which will be matched and managed utilizing computer software previously acquired by the company. The acquisition is expected to add $750,000 in annual revenues to the company’s subsidiary. Associated Staffing Resources, Inc. has entered into a one year employment agreement with Kyle M. Krogh, the principal executive and sole stockholder of Social Work Services, Inc. who will work on the development of the staffing market in Northern California. Pursuant to the employment agreement, Ms. Krogh was granted options to purchase 10,000 shares of the company’s common stock exercisable for $0.50 per share, vesting over a two year period and expiring in 2007.

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K


(A) Exhibit 10.145:		Asset purchase agreement between the Associated Staffing Resources, Inc., a wholly owned subsidiary of OptimumCare Corporation and Social Work Services, Inc. dated November 1, 2002.









Exhibit 10.146:		Employment agreement between Associated Staffing Resources, Inc., a wholly owned subsidiary of OptimumCare Corporation and Kyle M. Krogh dated December 1, 2002.









Exhibit 10.147:		Non-compete agreement between Associated Staffing Resources, Inc., a wholly owned subsidiary of OptimumCare Corporation and Kyle M. Krogh dated November 7, 2002.

PART II






Exhibit 15:		Accountants’ Acknowledgment









Exhibit 99.1:		Press Release dated November 7, 2002

~~OTHER~~(B) The ~~INFORMATION~~Company filed a Current Report on Form 8-K dated July 29, 2002, announcing the acquisition of certain assets of Associated Social Resources, Inc., a healthcare staffing company through a newly formed wholly owned subsidiary, Associated Staffing Resources, Inc. The purchase price was $200,000 and an earn out of up to an additional $82,500. The major assets of the business acquired were its long term contractual relationships with hospitals and social workers which are matched and managed utilizing computer software. The Company also announced that Associated Staffing Resources, Inc. entered into a three year employment agreement with Meryl C. Stern, the principal executive and sole stockholder of Associated Social Resources, Inc. and granted Ms. Stern options to purchase 100,000 shares of the Company’s common stock exercisable for $.50 per share, vesting over a two year period and expiring in 2007.

ITEM 1		LEGAL PROCEEDINGS
		Not applicable.
ITEM 2		CHANGES IN SECURITIES AND USE OF PROCEEDS
		Not applicable.
ITEM 3		DEFAULTS UPON SENIOR SECURITIES
		Not applicable.
ITEM 4		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
		Not applicable.
ITEM 5		OTHER INFORMATION
		Not applicable.
ITEM 6		EXHIBITS AND REPORTS ON FORM 8-K

	(A)		Exhibit 10.140: Management services agreement between the Company and LaPalma Intercommunity Hospital dated June 16, 2002.
			Exhibit 10.141: Lease amendment between the Company and Laguna Niguel Office Center dated April 17, 2002 which supercedes the lease dated June 23, 1988.
			Exhibit 15: Accountants’ Acknowledgment
	(B)		Not applicable

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized.

	~~OPTIMUMCARE CORPORATION A Delaware Corporation~~	OPTIMUMCARE CORPORATION A Delaware Corporation
Dated: July 23, 2002	By:	/s/ Edward A. Johnson
Dated: November 12, 2002		By:	/s/Edward A. Johnson
		Edward A. Johnson Chairman of the Board & Principal Financial Officer
			Edward A. Johnson Chairman of the Board and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

CERTIFICATIONS

I, Edward A. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of OptimumCare Corporation.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

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

			b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

			c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

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

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

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002

/s/ Edward A. Johnson

Edward A. Johnson
Chief Executive Officer

CERTIFICATIONS

I, Edward A. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of OptimumCare Corporation.

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

			b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

			c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

			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

Date: November 12, 2002

/s/ Edward A. Johnson

Edward A. Johnson
Chief Financial Officer

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

In connection with the Quarterly Report of OptimumCare Corporation, (the “Company”) on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward A. Johnson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §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) or 15(d) of the Securities Exchange Act of 1934; and

			(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


		/s/Edward A. Johnson

		Edward A. Johnson Chief Executive Officer November 12, 2002

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

In connection with the Quarterly Report of OptimumCare Corporation, (the “Company”) on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward A. Johnson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §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) or 15(d) of the Securities Exchange Act of 1934; and

			(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


		/s/Edward A. Johnson

		Edward A. Johnson Chief Financial Officer November 12, 2002

EXHIBIT INDEX

Exhibit 10.140: Management services agreement between the Company and LaPalma Intercommunity Hospital dated June 16, 2002. Exhibit 10.141: Lease amendment between the Company and Laguna Niguel Office Center dated April 17, 2002 which supercedes the lease dated June 23, 1988. Exhibit 15: Accountants’ Acknowledgment


(A) Exhibit 10.145:		Asset purchase agreement between the Associated Staffing Resources, Inc., a wholly owned subsidiary of OptimumCare Corporation and Social Work Services, Inc. dated November 1, 2002.









Exhibit 10.146:		Employment agreement between Associated Staffing Resources, Inc., a wholly owned subsidiary of OptimumCare Corporation and Kyle M. Krogh dated December 1, 2002.









Exhibit 10.147:		Non-compete agreement between Associated Staffing Resources, Inc., a wholly owned subsidiary of OptimumCare Corporation and Kyle M. Krogh dated November 7, 2002.









Exhibit 15:		Accountants’ Acknowledgment









Exhibit 99.1:		Press Release dated November 7, 2002

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Filing Compare · OPTIMUMCARE CORP /DE/