10-Q/A 1 careerworth10qa263002.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2002 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________. Commission file number: 0-27557 CAREER WORTH, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Nevada 75-3016197 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3809 S. West Temple #1D, Salt Lake City, UT 84115 ------------------------------------------- ----------------- (Address of principal executive offices) (Zip Code) (801) 281-0001 ---------------------------------------------------- (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), Yes [X] No [ ] and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of each of the issuer's classes of common stock, was 15,848,408 shares of common stock, par value $0.001, as of June 30, 2002. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, stockholders' equity and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. The accompany unaudited financial statements have been restated to properly account for the 1-for-30 reverse split related to certain stock issuances for services and to correct an accounting error for deferred fees not being properly amortized. See Note 3 for the reverse split adn Note 8 for the error correction to the accompany consolidated financial statements. 2 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) RESTATED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2002 and December 31, 2001 3 INDEPENDENT ACCOUNTANTS REVIEW REPORT ------------------------------------- The Board of Directors Career Worth, Inc. and Subsidiaries (A Development Stage Company) Salt Lake City, Utah We have reviewed the accompanying consolidated balance sheet of Career Worth, Inc. and Subsidiaries (a development stage company) as of June 30, 2002 and the related consolidated statements of operations, stockholders' equity and cash flows for the period ended June 30, 2002 and 2001. These consolidated financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements (and Note 4 to the annual financial statements for the year ended December 31, 2001 (not presented herein)), the Company has a deficit in working capital, has experienced significant losses and has an accumulated deficit at June 30, 2002. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheet of Career Worth, Inc. (a development stage company) as of December 31, 2001, and the related statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated April 10, 2002, we expressed an unqualified opinion on those financial statements and included an explanatory paragraph concerning matters that raise substantial doubt about the Company's ability to continue as a going concern. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2001 is fairly stated, in all material respects, in relation to the balance sheet from which it was derived. HJ & Associates, LLC Salt Lake City, Utah August 20, 2002, except for Note 8 which is November 1, 2002 4 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Balance Sheets ASSETS ------ June 30, December 31, 2002 2001 ------------ ------------ (Unaudited) (Restated) CURRENT ASSETS Cash $ 11,988 $ - Prepaid expenses 25,478 - Related party receivables 5,390 - ------------ ------------ Total Current Assets 42,856 - ------------ ------------ PROPERY AND EQUIPMENT, NET (Note 4) 9,844,298 - ------------ ------------ OTHER ASSETS Website, net 8,333 - Investments 34,144 - Goodwill 30,648 - Construction in progress 70,774 - Undeveloped land - - ------------ ------------ Total Other Assets 143,899 - ------------ ------------ TOTAL ASSETS $ 10,031,053 $ - ============ ============ See accompanying notes and accountant's review report. 5 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) June 30, December 31, 2002 2001 ------------ ------------ (Unaudited) (Restated) CURRENT LIABILITIES Cash overdraft $ 632 $ 486 Accounts payable 200,336 170,976 Accrued expenses 509,192 735,157 Current portion - long-term debt 1,809,812 639,839 Convertible debentures 20,000 142,045 Notes payable - related parties 78,219 4,720 ------------ ------------ Total Current Liabilities 2,618,191 1,693,223 ------------ ------------ LONG-TERM DEBT 5,658,484 - ------------ ------------ Total Liabilities 8,276,675 1,693,223 ------------ ------------ MINORITY INTEREST 35,059 - ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock, 5,000,000 shares authorized at $0.001 par value; 599 shares issued or outstanding 1 - Common stock; 50,000,000 shares authorized at $0.001 par value; 24,056,165 and 85,666 shares issued and outstanding, respectively 24,056 85 Additional paid-in capital 22,508,696 8,669,881 Stock subscriptions receivable (508,594) (2,250) Treasury stock (2,700) - Deferred Fees (5,237,667) - Other comprehensive (loss) 124,272 184,872 Accum. deficit prior to development stage (6,466,659) (6,466,659) Accum. deficit during development stage (8,722,086) (4,079,152) ------------- ------------ Total Stockholders' Equity (Deficit) 1,719,319 (1,693,223) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 10,031,053 $ - ============ ============ See accompanying notes and accountant's review report. 6 6 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Operations (Unaudited)

See accompanying notes and accountant's review report. 7 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)

See accompanying notes and accountant's review report. 8 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 9 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 10 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 11 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 12 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 13 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 14 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 15 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 16 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)(Continued)

See accompanying notes and accountant's review report. 17 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Cash Flows (Unaudited)

See accompanying notes and accountant's review report. 18 18 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Cash Flows (Continued) (Unaudited)

See accompanying notes and accountant's review report. 19 CAREER WORTH, INC. AND SUBSIDIARIES A Development Stage Company Notes to the Consolidated Financial Statements June 30, 2002 and December 31, 2001 NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company's most recent audited financial statements and notes thereto included in its December 31, 2001 Annual Report on Form 10- KSB. Operating results for the three and six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. The accompanying consolidated financial statements include Career Worth, Inc. and it's wholly and majority owned subsidiaries acquired during the period ended June 30, 2002, The Internet Eye Doctor, Inc., Regency Development Corporation and AALL Finished Constructions, Inc. (collectively "the Company"). All significant intercompany accounts and transactions have been eliminated. NOTE 2 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has a deficit in working capital of $2,851,512, has experienced significant losses and has an accumulated deficit of $15,691,722 at June 30, 2002. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. It is the intent of the Company to generate cash flow by diversifying its business activities. During the period ended June 30, 2002, the Company acquired controlling or full interest in various businesses (See Note 3). In addition, the Company will continue to raise funds through short-term and medium-term debt as well as equity based investment instruments to provide funding for the optical business and expansion of construction activities. The Company also plans to continue its employment information and recruiting services business as operating funds become available. During the period ended June 30, 2002, the Company was able to reduce some of its debt through negotiations with its creditors and note holders. 20 CAREER WORTH, INC. AND SUBSIDIARIES A Development Stage Company Notes to the Consolidated Financial Statements June 30, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS Reverse Splits -------------- On February 20, 2002, the board of directors authorized a reverse stock split of the Company's common stock at a rate of 1 share for every 100 shares outstanding to be effective on February 25, 2002. On February 26, 2002, the board of directors authorized an additional reverse stock split of its common stock at a rate of 1 share for every 30 shares outstanding to be effective March 4, 2002. All shares of common stock reflected in the accompanying consolidated financial statements and these footnotes have been retroactively restated to reflect these reverse stock splits. The Internet Eye Doctor, Inc. ----------------------------- On February 28, 2002, the Company entered into a stock exchange agreement with The Internet Eye Doctor, Inc. (IED), a Nevada Corporation, wherein the Company issued 1,000,000 shares of common stock in exchange for 33,000,000 shares of IED's common stock. The Company's investment in IED represents approximately 55% of IED's issued and outstanding common stock and was valued at the par value of the 33,000,000 shares issued by IED or $33,000 and has been eliminated in consolidation in the accompanying consolidated financial statements. The 45% minority interest of the other shareholders of IED has been reflected separately, net of their share of the net loss of IED for the period from acquisition through March 31, 2002. Based on similar transactions, the 1,000,000 shares of Career Worth, Inc. common stock being held by IED have been revalued at $2,700 and have been reflected as treasury stock in the accompanying consolidated financial statements. The principal business of IED is the sale of contact lenses and other eye care products on the Internet. The primary asset of IED is a website that has been developed to transact it's business and is valued at $10,000 in the accompanying consolidated financial statements, net of $1,667 of accumulated amortization with the website being amortized over a 3 year period. Regency Development Corporation ------------------------------- On March 6, 2002, the Company acquired 100% of Regency Development Corporation (Regency), a Nevada Corporation, from officers and directors of the Company and other related entities in exchange for 10,000,000 shares of the Company's common stock. As of the date of the acquisition, Regency had a deficit net book value. Accordingly, the Company valued the shares issued at its par value or $10,000 with a net goodwill of $28,723 recognized in the accompanying consolidated financial statements as a result of this transaction. 21 CAREER WORTH, INC. AND SUBSIDIARIES A Development Stage Company Notes to the Consolidated Financial Statements March 31, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS (Continued) Regency Development Corporation (Continued) ------------------------------------------- Regency Development was incorporated in June 2001. It's principal asset is a 40-acre tract of undeveloped land in Oasis, Nevada and is zoned for commercial use, including casino, hotel or motel uses. This undeveloped land was acquired on January 15, 2002, for $2,000,000 from individuals and entities who were related parties in exchange for a $2,000,000 secured promissory note bearing interest at 10% with interest only payments due monthly beginning February 15, 2002 until January 15, 2005 at which time the full amount of the principal is due and payable. The purchase of this undeveloped land is recorded on a "cash basis" whereby the cost in the consolidated financial statements will reflect only the cash invested in the undeveloped land and related obligations. The secured promissory note has also been excluded because of the uncertainty of obtaining adequate development financing. Accordingly, at June 30, 2002, no asset value or related debt obligation have been included in the accompanying consolidated financial statements. H-Net.net,Inc. -------------- On March 8, 2002, the Company entered into a stock exchange agreement with H-Net. net, Inc. (H-Net), a Colorado Corporation. Pursuant to that agreement, the Company issued 2,000 shares of it's common stock in exchange for 2,000 shares of H-Net common stock. On May 24, 2002, the Company entered into another stock exchange agreement with H-Net. Pursuant to this agreement, the Company issued 10,000 shares of it's common stock in exchange for 10,000 shares of H-Net common stock, giving the Company a total of 12,000 shares of H-Net common stock. The shares that the Company has received are restricted. The value of the investment is based upon the par value of the Company's common stock, $0.001, for the investment. Accordingly, this investment has been valued at $12 in the accompanying consolidated financial statements at June 30, 2002. Market Media Corporation ------------------------ On March 12, 2002, the Company entered into a stock exchange agreement with Market Media Corporation (MMC), a Nevada Corporation, acquiring an approximate 9% interest in MMC for 1,000,000 shares of the Company's common stock. MMC is a privately held company and is engaged in the broadcast media industry through it's wholly owned subsidiary, FYM, Inc. The $31,282 investment value included in the accompanying consolidated financial statements represents approximately 9% of the net book value of FYM, Inc. based on the unaudited financial statements of FYM, Inc. as of December 31, 2002. 22 CAREER WORTH, INC. AND SUBSIDIARIES A Development Stage Company Notes to the Consolidated Financial Statements March 31, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS (Continued) Stem Genetics, Inc. ------------------- On April 16, 2002, pursuant to a Stock Exchange Agreement, the Company acquired 2,700,000 shares of Stem Genetics, Inc. common stock in exchange for 1,000,000 shares of Career Worth, Inc. common stock. The Company's ownership interest represents approximately 9% of the issued and outstanding common stock of Stem Genetics, Inc. Stem Genetics, Inc. is a development stage company organized in the state of Nevada on April 12, 2002, primarily for the purpose of conducting genetic research and any other lawful business. As of April 16, 2002, Stem Genetics, Inc. had no material assets or liabilities. As of June 30, 2002, the investment in Stem Genetics is valued at $2,700. ASGA, Inc. ---------- On March 12, 2002, the Company entered in to a sponsorship and stock exchange agreement with ASGA, Inc. (ASGA), a company involved in establishing an alternative senior golf tour. In connection with this transaction, the Company received an Event Presenting Sponsorship for 15 events, valued at $2,275,000. In addition, the Company received 1,300,000 shares of ASGA common stock. In exchange for the sponsorship and the ASGA common stock, the Company issued 1,300,000 shares of it's common stock to ASGA. The value of the sponsorship exceeds the value of the Company's common stock at the date of the transaction. In addition, ASGA has not yet established scheduled tour events and the value of it's common stock is not readily determinable. Accordingly, the full value of the sponsorship of $2,275,000 has been recognized in exchange for the shares of common stock issued by the Company with no value assigned to the shares of ASGA common stock. Since no events have taken place wherein the Company was a sponsor, the full amount of the sponsorship has been reflected as deferred in the accompanying consolidated financial statements and has been included with other stock based deferred fees. Effective March 20, 2002, Career Worth, Inc. assigned it's interest in this sponsorship agreement to The Internet Eye Doctor, Inc., which action was approved by ASGA. AALL Finished Construction -------------------------- On March 25, 2002, the Company acquired 100% of AALL Finished Construction, Inc. (AALL), a Utah Corporation, from officers and directors of the Company and other related entities in exchange for 1,125,000 shares of the Company's common stock. As of the date of the acquisition, AALL had a deficit net book value. Accordingly, the Company valued the shares issued at par or $1,125 with a net goodwill of $1,925 recognized in the accompanying consolidated financial statements as a result of this transaction. AALL was incorporated on March 5, 2002, to engage in the construction industry. On March 20, 2002, a shareholder of the Company executed a special warranty deed conveying his interest in 14 residential building lots located in Weber County, Utah along with the related debt. The building lots were acquired by the shareholder for $392,000 with corresponding notes payable totaling $415,000 less approximately $23,000 of interest reserves and closing costs. Subsequently, construction financing has been obtained and construction begun on several single family homes on the building lots with capitalized construction in progress totaling $70,774 included in the accompanying consolidated financial statements. 23 CAREER WORTH, INC. AND SUBSIDIARIES A Development Stage Company Notes to the Consolidated Financial Statements June 30, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS (Continued) AALL Finished Construction (Continued) -------------------------------------- On April 1, 2002, AALL Finished Construction, Inc. entered into a Stock Purchase Agreement with Friendly Bear Plaza, Inc. (Friendly Bear), a Nevada Corporation, acquiring 100% of the issued and outstanding common stock of Friendly Bear in exchange for 1,100,000 shares of Career Worth, Inc. common stock and $250,000 cash to be paid within 90 days of closing the transaction scheduled for April 25, 2002. The principal asset of Friendly Bear is Friendly Bear Plaza which is a 21,200 square foot retail shopping center located in Las Vegas, Nevada. The due date for paymnet of the $250,000 has been extended by 60 days by agreement of all parties. Also on April 1, 2002, AALL Finished Construction, Inc. entered into a Stock Purchase Agreement with P/R Business, Inc. (P/R), a Nevada Corporation, acquiring 100% of the issued and outstanding common stock of P/R in exchange for 3,100,000 shares of Career Worth, Inc. common stock and $250,000 cash to be paid within 90 days of closing the transaction scheduled for April 25, 2002. The principal asset of P/R is Pecos Russell Business Center which consists of three separate single story professional office buildings located in Las Vegas, Nevada, each having approximately 8,000 square feet of net rentable area. The due date for payment of the $250,000 has been extended by 60 days by agreeement of all parties. NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment, at cost, (primarily Friendly Bear Plaza and Pecos Russell Business Center) consists of the following: June 30, 2002 ---------- Buildings $ 7,108,966 Leasehold improvements 883,478 Land 2,427,390 --------- 10,419,834 Accumulated depreciation (575,536) ----------- Net property and equipment $ 9,844,298 =========== Depreciation expense for the six months ended June 30, 2002 was $73,178. 24 CAREER WORTH, INC. AND SUBSIDIARIES A Development Stage Company Notes to the Consolidated Financial Statements June 30, 2002 and December 31, 2001 NOTE 5 - EARNINGS PER SHARE The computation of basic income (loss) per share of common stock is based on the weighted average number of shares outstanding at the date of the consolidated financial statements as follows: For the For the Three Months Ended Six Months Ended June 30, June 30, ----------------------- ------------------------ 2002 2001 2002 2001 ------------ ---------- ----------- ---------- (Restated) (Restated) Loss before extraordinary item $ (0.20) $ (16.07) $ (0.37) $ (29.16) Extraordinary item 0.00 - 0.01 - ---------- ---------- ---------- ---------- BASIC LOSS PER SHARE $ (0.20) $ (16.07) $ (0.36) $ (29.16) ========== ========== =========== ========== WEIGHTED AVEAGE NUMBER OF SHARES OUTSTANDING 18,827,038 16,163 12,900,626 15,344 ========== ========== ========== ========== NOTE 6 - SEGMENT REPORTING The Company's reportable segments are business units that offer different products and services. The Company has three reportable business segments: internet retail, construction, and office and retail leasing. All significant intersegment transactions have been eliminated in the consolidated financial statements. Financial information as of and for the six months ended June 30, 2002 with respect to the reportable segments is as follows: Office & Internet Retail Corporate Retail Construction Leasing Unallocated Totals ---------- ------------ --------- ----------- ----------- External revenues $ 1,067 $ - $ 162,703 - $ 163,720 Cost of goods sold 523 - - - 523 Interest income - - - - - Interest expense - 8,051 147,829 127,142 283,022 Segment income (loss) before tax effect $ (7,628) $ (65,247) $(185,405) $(4,384,654) $(4,642,934) The following schedules are presented to reconcile amounts in teh forgoing segment information to the amounts reported in the Company's consolidated finacial statements. Profit -------------- Total loss of reportable segments $ (4,649,176) Minority interest in loss (6,242) -------------- $ (4,642,933) ============== 25 CAREER WORTH, INC. AND SUBSIDIARIES A Development Stage Company Notes to the Consolidated Financial Statements June 30, 2002 and December 31, 2001 NOTE 7 - SUBSEQUENT EVENTS On July 5, 2002, AALL Finished Construction, Inc. entered into a Stock Purchase Agreement with Casino Auto Spa, Inc., d/b/a Boulder Auto Spa, Inc. (Auto Spa), a Nevada Corporation, acquiring 100% of the issued and outstanding common stock of Auto Spa in exchange for 140,000 shares of Career Worth, Inc. common stock. The principal asset of Auto Spa is located in Las Vegas, Nevada. On July 31, 2002, the board of directors authorized the issuance of 500,000 shares of common stock to a consultant. The market price of the Company's common stock on the date of this transaction was $3.35 per share. On August 7, 2002, the board of directors authorized the issuance of 94,252 shares of common stock for services rendered. The market price of the Company's common stock on the date of this transaction was $3.10 per share. NOTE 8 - CORRECTION OF ERROR Subsequent to the original issuance of the June 30, 2002 consolidated financial atatements, the Company determined that certain deferred fees were not properly amortized for the recognition of services performed thereby understating general and administrative expenses by $298,200. Correction of this error had the following effect on hte previously reported net loss for ht esix and three months ended June 30, 2002 and has an equal understatement of the retained deficit as of June 30, 2002. Subsequent to the issuance of the restated June 30, 2002 consolidated financial statements, on August 20, 2002, the Company determined that certain consulting services provided by a related party adn the accompanying liability were overstated by $276,177 and certain consulting serveices to an unrelated third party were overstated by $525,000 and should have been amortixed over the remaining life of the consulting contract. Correction of this error had the following effect on the previously restated net loss for the three and six months ended June 30,2002 and has an equal overstatement of the retained deficit as of June 30, 2002. For the Three Months Ended June 30, 2002 ---------------------------------------- Originally As Reported Restated Difference -------------- ----------- ----------- Deferred Fees $ 5,010,867 $ 5,237,667 $ 226,800 (1) Note payable - related part 354,396 78,219 276,177 (2) Net Loss 4,278,750 3,775,773 502,977 (1) Loss per share $ (0.23) $ (0.20) $ 0.03 (3) 26 NOTE * - CORRECTION OF ERRORS (CONTINUED) For the Six Months Ended June 30, 2002 ---------------------------------------- Originally As Reported Restated Difference -------------- ----------- ----------- Deferred Fees $ 5,010,867 $ 4,712,667 $ 298,200 (1) Note payable - related party 354,396 78,219 279,177 (2) Net loss 5,145,911 4,642,934 502,977 (1) Loss per share $ (0.41) $ (0.36) $ 0.05 (4) (1) Relates to revised valuation of deferred fees. (2) Relates to the revised valuation of the payable - related party (3) Loss per share increased by $0.03 per share. (4) Loss per share decreased by $0.05 per share. 27 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS Cautionary Statement Regarding Forward-looking Statements --------------------------------------------------------- This report may contain "forward-looking" statements. The Company is including this cautionary statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. Examples of forward-looking statements include, but are not limited to: (a) projections of revenues, capital expenditures, growth, prospects, dividends, capital structure and other financial matters; (b) statements of plans and objectives of the Company or its management or Board of Directors; (c) statements of future economic performance; (d) statements of assumptions underlying other statements and statements about the Company and its business relating to the future; and (e) any statements using the words "anticipate," "expect," "may," "project," "intend" or similar expressions. Results of Operations --------------------- In December 2001 and January 2002, the Company retained two consultants, Elizabeth Colmenares and David Wolfson, to help CWI settle its debts, negotiate favorable debt workouts, maintain the Company's public reporting obligations, restructure corporate management, and oversee Company operations. Colmenares and Wolfson joined the Board of Directors. This transaction constituted control of the Company. Effective January 14, 2002, Career Worth Inc. relocated its corporate offices to 3809 South West Temple, Suite 1-D, Salt Lake City, Utah 84115. On February 25,2002 the Company reverse split its stock at a rate of 1 share for every 100 shares outstanding. On March 4, the Company again reverse split its stock at a rate of 1 share for every 30 shares outstanding. It is the intent of the Company to generate cash flow by diversifying its business activities. During the first quarter of 2002, the Company (1) acquired Regency Development ("Regency'), a Nevada corporation, which controlled 40 acres of property in Nevada, (2) secured a controlling interest in Internet Eye Doctor ("Eye Doctor"), (3) acquired AALL Finished Construction, Inc. ("AALL Finished"), and (4) executed a sponsorship agreement with the American Senior Golf Association, ASGA, Inc. In order to fund these enterprises, the Company will continue to raise funds through short-term and medium-term debt as well as equity based investment instruments to provide funding for the optical business and expansion of construction activities. The Company also plans to continue its employment information and recruiting services business as operating funds become available. During the period ended March 31, 2002, the Company was able to reduce some of its debt through negotiations with its creditors and note holders. Because of the significant change in operating activities and the business environment from 2001 to 2002, comparisons of the financial statements for the first quarters of those years may have limited significance. Quarter ended March 31, 2002 compared to quarter ended March 31, 2001 --------------------------------------------------------------------- No revenues were recorded for the quarter ended March 31, 2002 compared to $1,320 for the same period of 2001. This decrease was due to the change in corporate direction and management. During the first quarter, diversification began and the new subsidiaries were being put into place. Production from the new entities will be visible during the second and third quarters of this fiscal year as working capital is raised and invested in the Company. Cost of sales for the three months ended March 31, 2002 were $0 as compared to $1,557 for three months ended March 31, 2001. The reduction in direct costs was due to the change in the Company's business activities. 28 For the second quarter of fiscal year 2002, operating expenses were $4,661,539, consisting of salaries and wages of $0, depreciation and amortization expenses of $73,178 and general and administrative expenses of $4,588,361, resulting in a loss from operations of $4,498,292. Total operating expenses for the same period of 2001 were $355,260, consisting of salaries and wages of $111,192, depreciation and amortization expenses of $6,378, and general and administrative expenses of $237,690, resulting in a loss from operations of $350,347. The decrease in salaries and wages resulted from the changes taking place in personnel due to the change in management. Personnel expense will increase as the fiscal year progresses. The sizable increase in general and administrative expenses was due to the accounting treatment of common stock issued to pay consultants and make acquisitions. Total other expense for the first six months of 2002 netted an expense of $283,022 compared to an expense of $97,039 for the first six months of 2001. Other expense for the periods was comprised primarily of interest expense. The increase from the 2001 period to the 2002 period was due primarily to additional interest expense. The net loss before extraordinary items for the Company was $4,781,314 in the second quarter of 2002 compared to $447,386 for the same period of the prior year. During the first six months of the current year, the Company booked $132,138 as extraordinary income for forgiveness of debt and $6,242 as minority interest in a subsidiary. There were no comparable categories in the 2001 statement. The net loss was $4,642,934 for the second quarter of 2002, again compared to $447,386 in 2001. The Company experienced no comprehensive losses in either 2002 or 2001 leaving the net comprehensive losses equal to the net losses for the respective three-month periods. The basic loss per share for the second quarter 2002 was $0.36 as compared to $29.16 for the second quarter 2001, based on the weighted average number of shares outstanding for the respective periods adjusted for the reverse splits in the common stock that took place during February and March of 2002. Liquidity and Capital Resources ------------------------------- During the second quarter of 2002, the issuance of shares of the Company's common and preferred stock and some notes payable were utilized to fund the developmental operations, convert debt, pay professional services, and for other activities of the Company. The Company had a working capital deficit of $1,820,757, at June 30, 2002. The Company had a cash balance of $1,277. Cash used in operations for the quarter ended June 30, 2002 was $704,307 compared with $153,341 for the quarter ended June 30, 2001. Cash flows used in investing activities was $71,155 in the second quarter 2002 compared with $0 in the same period prior year. The increase was due to the activities in the Company's construction subsidiary in during the second quarter. Financing proceeds from related parties were $71,519 in the second quarter of 2002 compared to net financing proceeds from notes payable and convertible debentures of $165,391 in the second quarter of 2001. Because the Company has an accumulated deficit of $8,722,086, has a working capital deficit and limited internal financial resources, the report of the Company's auditor contains a going concern note as to the ability of the Company to continue. Since the end of 2001, new management has worked vigorously to put new enterprises into Career Worth that will begin to generate cash flow for working capital. Efforts have been made to reduce and restructure the Company's debt. In the meantime, the Company has significantly reduced its cash outflows. The Company continues the conversion of accrued liabilities and notes payable to preferred stock. The Company will rely on additional outside debt and equity funding as it executes its revised business plan. 29 At end of the second quarter 2002, accounts payable totaled $200,336 compared to $170,976 at year end. At June 30, 2002, the Company had recorded $509,192 in accrued expenses consisting of accrued salaries and wages, accrued interest and unpaid payroll taxes, and unemployment taxes, including reasonable interest and penalties for late payment. At December 31, 2001, accrued expenses totaled $735,157. The decrease was due to reductions in accrued interest and accrued salaries and wages. The Company is also working to settle its outstanding payroll tax obligations with the proper taxing authorities. At June 30, 2002, the Company had recorded notes payable, convertible debentures, and current portion of long-term liabilities totaling $1,908,031 compared with $786,604 at December 31,2001. In prior reports, the Company has recorded contingent liabilities with related accrued interest as a separate category. In this report, the $82,397 is included in accrued expenses. The total is unchanged from year-end 2001. This amount is owed to LaserVend, Inc. In January 1998, the Company entered into a "Letter Offer to Acquire" with LaserVend, Inc. whereby LaserVend would acquire all the issued and outstanding common stock of the Company. In anticipation of the proposed merger, LaserVend advanced the Company $286,572 during the year ended December 31, 1998. The merger failed to take place due to events occurring in LaserVend. LaserVend subsequently filed for bankruptcy. On July 31, 1998, the Trustee in bankruptcy filed a complaint that the advance was a loan to be repaid by DiSX, that it was a preferential transfer and that Laservend did not receive reasonably equivalent value for the advances. The Company filed an answer to the complaint. The Bankruptcy Court granted the Trustee's motion for summary judgment. The order granted judgment in the amount of $273,347 principal, together with prejudgment interest of $66,884. As of December 31, 1999, the Company paid the Bankruptcy Court $7,125. The Company has entered into a settlement agreement with the Trustee. Under the terms of the settlement agreement, the Company is obligated to make certain payments to the Trustee and during such time the Trustee agrees to forbear from obtaining writs of garnishment or executions or otherwise collect on the judgment. The Company also accrued an additional $35,876 in interest and other contingent expenses through the end of 1999 bringing the total contingent liability to $368,982. During early 2000, $18,135 has been sent to reduce the outstanding balance. At mid-year 2000, the Trustee credited $221,000 against the liability as the Company's holding in PLC stock was sold to partially repay the judgment. During the second quarter 2001 the Trustee credited $47,500 against the liability upon disposal of a Company assets. The balance of other funds forwarded to the Trustee through the end of the first quarter 2002 left a balance of $82,397 in accrued expenses. In November 2000, Mark Wolkos and MW Investments Marketing filed a complaint in the Superior Court of Maricopa County, Arizona against the Company for compensation relating to investor relations services. The complaint alleged compensation due for such services of $70,000 as well as stock options for 600,000 shares of stock. The Company has filed an answer denying the claims. Due the difficulties CWI experienced in late 2001, little was done on this claim. The Company has retained local counsel. Part II - Other Information ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None. 30 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION Events that have taken place subsequent to the end of the first quarter 2002 are noted below. On July 10, 2002 AALL Finished Construction entered into a purchase agreement with Casino Auto Spa, Inc. d/b/a Boulder Auto Spa ("Auto Spa") for the purchase of all of the shares of Auto Spa. The company approved the purchase of Auto Spa by AALL Finished on the same date. The shares of Auto Spa were held by Ed Webb and Chuck Reader. The Principal asset of the Auto Spa is a full service car wash, which includes a detailing unit, a convenience store and deli, located on property at Boulder Station and Casino in Las Vegas, Nevada. Currently, the Auto Spa is in Chapter 11 bankruptcy. AALL Finished is working with the Trustee and the Court to finalize a plan which will allow for the completion of the sale. If a plan is not worked out in the bankruptcy court, the deal will not go through and the parties will recind the purchase agreement. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS. Exhibit 99 - Certification in Accordance with Section 906 of the Sarbanes-Oxley Act of 2002. Additional Exhibits CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Career Worth, Inc., (the " Company") on Form 10-QSB for the period ending September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Elena Weissburd, Chif Executive Officer of the Company, certify, pursuant to 18 U.S.C.ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002. that, to the best of my knowledge and belief: (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 result of operations of the Company. By: /s/ Elena Weissburd Date: November 19, 2002 ------------------------ ------------------------- Elena Weissburd, CFO 31 Statement Under Oath of Principal Executive Officer and Principal Financial Officer Regarding Facts and Circumstances Relating to Exchange Act Filings Pursuant to Section 302 of the Sarbane-Oxley Act of 2002. I, David Wolfson, state and attest that: (1) To the best of my knowledge, based upon a review of the covered report of Career Worth, Inc., and, except as corrected or supplemented in a subsequent covered report: o no covered report contained an untrue statement of a material fact as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed). o no covered report omitted to state a material fact necessary to make the statements in the covered report, in light of the circumstances under which they were made, not misleading as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed). (2) I have reviewed the contents of this statement with the Company's audit committee. (3) In this statement under oath, each of the following, if filed on or before the date of this statement, is a "covered report": o the Annual Report on Form 10-K for the Fiscal Year ended December 31, 2001, of Career Worth, Inc. o all reports on form 10-Q, all reports on Form 8-K and all definitive proxy materials of Career Worth, Inc., filed with the Commission subsequent to the filing of the Form 10-K identified above; and o any amendments to any of the foregoing. By: /s/ David Wolfson Date: November 25, 2002 --------------------- ------------------------ David Wolfson 32 Statement Under Oath of Principal Executive Officer and Principal Financial Officer Regarding Facts and Circumstances Relating to Exchange Act Filings Pursuant to Section 302 of the Sarbane-Oxley Act of 2002. I, Elena Weissburd, state and attest that: (1) To the best of my knowledge, based upon a review of the covered report of Career Worth, Inc., and, except as corrected or supplemented in a subsequent covered report: o no covered report contained an untrue statement of a material fact as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed). o no covered report omitted to state a material fact necessary to make the statements in the covered report, in light of the circumstances under which they were made, not misleading as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed). (2) I have reviewed the contents of this statement with the Company's audit committee. (3) In this statement under oath, each of the following, if filed on or before the date of this statement, is a "covered report": o the Annual Report on Form 10-K for the Fiscal Year ended December 31, 2001, of Career Worth, Inc. o all reports on form 10-Q, all reports on Form 8-K and all definitive proxy materials of Career Worth, Inc., filed with the Commission subsequent to the filing of the Form 10-K identified above; and o any amendments to any of the foregoing. By: /s/ Elena Weissburd Date: November 25, 2002 ------------------------ ------------------------- Elena Weissburd, CFO 33 (b) REPORTS ON FORM 8-K. The Company filed a report on Form 8-K with the Commission on February 6, 2002 disclosing consulting agreements which led to the issuance of Company shares resulting in a change in control of the Company. David Wolfson and Elizabeth Colmenares joined the board of directors. Larry Heaps resigned as president and board member. The Company filed a report on Form 8-K with the Commission on March 22, 2002 disclosing a stock exchange agreement with Internet Eye Doctor, Inc., a Nevada corporation. This agreement gives the Company a majority ownership interest in Internet Eye Doctor, Inc. The Company filed a report on Form 8-K with the Commission on March 21, 2002 disclosing a stock exchange agreement for the acquisition of Regency Development Corporation, a Nevada Corporation. The purpose of the agreement was for the Company to obtain control of a parcel of land located in Oasis, Nevada, which Regency owns. BonnieJean Tippetts resigned as interim president and David Wolfson was named as president. SIGNATURES 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 duly authorized. CAREER WORTH, INC. [Registrant] Dated: Nov. 25, 2002 /S/ David Wolfson ----------------------------- President and Director 34

US HOMES & PROPERTIES INC 10-Q/A