##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For quarter ended September 30, 2002

Commission File Number 0-17401

OPTIMUMCARE CORPORATION

(Exact name of registrant specified in its charter)


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

(949) 495-1100
(Registrants 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 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 November 12 , 2002.

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

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TABLE OF CONTENTS



|                             |                                                                    |                                                                                                                        |  |  |  |  |  | 
|---------------------------- | ------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|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                                                                  
|                             |                                                                    | 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
|                             | 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 10.145              
|EXHIBIT 10.146              
|EXHIBIT 10.147              
|EXHIBIT 15                  
|EXHIBIT 99.1                



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INDEX

OPTIMUMCARE CORPORATION

|                                                                                              |                                                                                                                        |  |      |    | 
|--------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                              |                                                                                                                        |  | 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   |   
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |                                                                                                                        |  |      |   

2



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November 5, 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 September 30, 2002, and the
related condensed consolidated statements of operations for the three months
and nine months ended September 30, 2002 and 2001 and cash flows for the nine
months ended 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

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OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                   |  | SEPT 30,2002 |           | DECEMBER 31,2001
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | ----------------
|                                                                                                                                                   |  | (UNAUDITED)  |           |                 
|                                                                                                                                                   |  |              |           |                 
|ASSETS                                                                                                                                             |  |              |           |                 
|CURRENT ASSETS                                                                                                                                     |  |              |           |                 
|CASH AND CASH EQUIVALENTS                                                                                                                          |  | $            | 961,075   |                 
|MARKETABLE SECURITIES                                                                                                                              |  |              | 483,305   |                 
|ACCOUNTS RECEIVABLE, NET OF ALLOWANCE OF $0 AT SEPT 30, 2002 AND DECEMBER 31, 2001                                                                 |  |              | 747,149   |                 
|ADVANCES DUE FROM OFFICER                                                                                                                          |  |              | 12,954    |                 
|NOTE RECEIVABLE FROM OFFICER                                                                                                                       |  |              | 0         |                 
|PREPAID EXPENSES                                                                                                                                   |  |              | 51,583    |                 
|PREPAID INCOME TAXES                                                                                                                               |  |              | 199,956   |                 
|DEFERRED TAX ASSET                                                                                                                                 |  |              | 13,145    |                 
|                                                                                                                                                   |  |              |           |                 
|TOTAL CURRENT ASSETS                                                                                                                               |  |              | 2,469,167 |                 
|FURNITURE AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION
 OF $126,601 AT SEPT 30, 2002 AND $160,017 AT DECEMBER 31, 2001                             |  |              | 33,046    |                 
|GOODWILL                                                                                                                                           |  |              | 194,934   |                 
|DEFERRED TAX ASSET                                                                                                                                 |  |              | 84,287    |                 
|OTHER ASSETS                                                                                                                                       |  |              | 15,594    |                 
|                                                                                                                                                   |  |              |           |                 
|TOTAL ASSETS                                                                                                                                       |  | $            | 2,797,028 |                 
|                                                                                                                                                   |  |              |           |                 
|CURRENT LIABILITIES                                                                                                                                |  |              |           |                 
|ACCOUNTS PAYABLE                                                                                                                                   |  | $            | 88,173    |                 
|ACCRUED VACATION                                                                                                                                   |  |              | 38,659    |                 
|ACCRUED EXPENSES                                                                                                                                   |  |              | 126,479   |                 
|ACCRUED PAYMENT TO OFFICER                                                                                                                         |  |              | 0         |                 
|                                                                                                                                                   |  |              |           |                 
|TOTAL CURRENT LIABILITIES                                                                                                                          |  |              | 253,311   |                 
|                                                                                                                                                   |  |              |           |                 
|STOCKHOLDERS EQUITY                                                                                                                               |  |              |           |                 
|PREFERRED STOCK, $.001 PAR VALUE; AUTHORIZED 10,000,000
 SHARES, 0 SHARES ISSUED, AND OUTSTANDING AT SEPTEMBER 30, 2002 AND DECEMBER 31, 2001      |  |              |           |                 
|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     |                 
|ADDITIONAL PAID-IN-CAPITAL                                                                                                                         |  |              | 2,403,706 |                 
|RETAINED EARNINGS                                                                                                                                  |  |              | 134,102   |                 
|                                                                                                                                                   |  |              |           |                 
|TOTAL STOCKHOLDERS EQUITY                                                                                                                         |  | $            | 2,543,717 |                 
|                                                                                                                                                   |  |              |           |                 
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                         |  | $            | 2,797,028 |                 
|                                                                                                                                                   |  |              |           |                 

See notes to condensed consolidated financial statements.

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OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)



|                                  |  | THREE MONTHS ENDED |           | NINE MONTHS ENDED
|--------------------------------- |  | ------------------ | --------- | -----------------
|                                  |  | SEPT 30,2002       |           |                  
|                                  |  |                    |           |                  
|CONTRACT REVENUES                 |  | $                  | 756,573   |                  
|TEMPORARY STAFFING REVENUES       |  |                    | 486,170   |                  
|INTEREST INCOME                   |  |                    | 6,280     |                  
|                                  |  |                    |           |                  
|                                  |  |                    | 1,249,023 |                  
|                                  |  |                    |           |                  
|OPERATING EXPENSES:               |  |                    |           |                  
|COSTS OF SERVICES PROVIDED        |  |                    | 1,023,966 |                  
|GENERAL AND ADMINISTRATIVE        |  |                    | 699,885   |                  
|INTEREST                          |  |                    | 0         |                  
|                                  |  |                    |           |                  
|TOTAL OPERATING EXPENSES          |  |                    | 1,723,851 |                  
|                                  |  |                    |           |                  
|INCOME (LOSS) BEFORE INCOME TAXES |  |                    | (474,828  | )                
|INCOME TAX EXPENSE (BENEFIT)      |  |                    | (178,926  | )                
|                                  |  |                    |           |                  
|NET INCOME (LOSS)                 |  | $                  | (295,902  | )                
|                                  |  |                    |           |                  
|BASIC EARNINGS (LOSS) PER SHARE   |  | $                  | (0.05     | )                
|                                  |  |                    |           |                  
|DILUTED EARNINGS (LOSS) PER SHARE |  | $                  | (0.05     | )                
|                                  |  |                    |           |                  

See notes to condensed consolidated financial statements.

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OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)



|                                                                                                 |  | NINE MONTHS ENDING
|------------------------------------------------------------------------------------------------ |  | ------------------
|                                                                                                 |  | SEPT 30,2002      
|                                                                                                 |  |                   
|CASH FLOW FROM OPERATING ACTIVITIES                                                              |  |                   
|Net Income/(Loss)                                                                                |  | $                 
|Adjustments to reconcile net (loss)/income to net
 cash (used)/provided by operating activities: |  |                   
|Depreciation & amortization                                                                      |  |                   
|Deferred taxes                                                                                   |  |                   
|Changes in operating assets and liabilities:                                                     |  |                   
|Decrease/(Increase) in accounts receivable, net                                                  |  |                   
|Decrease/(Increase) in advances due from officer                                                 |  |                   
|Decrease in prepaid expenses                                                                     |  |                   
|Decrease in prepaid income taxes                                                                 |  |                   
|Decrease/(Increase) in other assets                                                              |  |                   
|(Decrease) in accounts payable                                                                   |  |                   
|(Decrease)/Increase in accrued vacation                                                          |  |                   
|(Decrease)/Increase in accrued expenses                                                          |  |                   
|(Decrease) in accrued payment to officer                                                         |  |                   
|                                                                                                 |  |                   
|CASH AND CASH EQUIVALENTS PROVIDED/(USED) BY OPERATING ACTIVITIES                                |  |                   
|                                                                                                 |  |                   
|CASH FLOW FROM INVESTING ACTIVITIES                                                              |  |                   
|Purchase of marketable securities                                                                |  |                   
|Purchase of other assets                                                                         |  |                   
|Purchase of office furniture & computer equipment                                                |  |                   
|Payments on note receivable from officer                                                         |  |                   
|Purchase of new business entity                                                                  |  |                   
|                                                                                                 |  |                   
|CASH AND CASH EQUIVALENTS PROVIDED/(USED) BY INVESTING ACTIVITIES                                |  |                   
|                                                                                                 |  |                   
|CASH AND CASH EQUIVALENTS PROVIDED BY FINANCING ACTIVITIES                                       |  |                   
|                                                                                                 |  |                   
|INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                                                 |  |                   
|Cash and cash equivalents at beginning of period                                                 |  |                   
|                                                                                                 |  |                   
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                       |  | $                 
|                                                                                                 |  |                   

See notes to condensed consolidated financial statements.

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OPTIMUMCARE CORPORATION




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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
nine month periods ended September 30, 2002 are not necessarily indicative of
the results that may be expected for the year ended December 31, 2002. For
further information, refer to the financial statements and footnotes thereto
included in the Companys Form 10-K for the year ended December 31, 2001.

NOTE B  MARKETABLE SECURITIES

Marketable securities consist of federal home loan bank bonds, federal farm
credit bonds and U.S. treasury notes with an aggregate principal amount of
$475,000 and $0 at September 30, 2002 and December 31, 2001 respectively. The
bonds and notes bear interest ranging from 2.150% to 5.755% and have maturity
dates ranging through January 2004.

The Company believes that the carrying
amount of these bonds approximates their
fair value at September 30, 2002.

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NOTE C  EARNINGS PER SHARE

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

|                                                                   |  |                    |           |                    |  |                    |           |                    |  |   |           |   |  |   |           | 
|------------------------------------------------------------------ |  | ------------------ | --------- | ------------------ |  | ------------------ | --------- | ------------------ |  | - | --------- | - |  | - | --------- | 
|                                                                   |  | Three Months Ended |           | Nine Months Ended 
|                                                                   |  |                    |           |                   
|                                                                   |  | September 30, 2002 |           | September 30, 2001 |  | September 30, 2002 |           | September 30, 2001
|                                                                   |  |                    |           |                    |  |                    |           |                   
|Numerator                                                          |  | $                  | (295,902  | )                  |  | $                  | 196,131   |                    |  | $ | (338,671  | ) |  | $ | 561,131   | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Denominator:                                                       |  |                    |           |                    |  |                    |           |                    |  |   |           |   |  |   |           | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|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                                    |  |                    |           |                    |  |                    | 13,953    |                    |  |   |           |   |  |   | 13,953    | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Denominator for diluted
earnings per share                         |  |                    | 5,908,675 |                    |  |                    | 5,922,628 |                    |  |   | 5,908,675 |   |  |   | 5,922,628 | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Basic earnings per share                                           |  | $                  | (.05      | )                  |  | $                  | .03       |                    |  | $ | (.06      | ) |  | $ | .09       | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Diluted earnings per
share                                         |  | $                  | (.05      | )                  |  | $                  | .03       |                    |  | $ | (.06      | ) |  | $ | .09       | 

NOTE D  NEW BUSINESS

Effective July 29, 2002, the Company acquired the assets of a health care
staffing company, through its wholly owned subsidiary, Associated Staffing
Resources, Inc., for cash consideration of $150,000 and 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 of $102,000 for the first year, $107,000 for the second year, and
$112,000 for the third year. The employment agreement also stipulates a
monthly auto allowance and bonuses based on exceeding certain revenue and net
income goals. In addition, 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.

8



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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 September 30, 2002 and December 31, 2001, the Companys working capital was
$2,300,143 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 September 30, 2002 has decreased
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 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 September 30, 2002.

Cash flows from operations were $(209,530) and $(718,770) for the periods ended
September 30, 2002 and 2001, respectively. Cash flows during the nine months
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 $(476,286) and $(25,005) for the
periods ended September 30, 2002 and 2001, respectively. Cash used during the
nine months ended 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. In addition, the Company
acquired the assets of a health care staffing company for cash consideration of
$150,000 and an accrued liability of $50,000 payable on August 31, 2003.

No cash flows with respect to financing activities occurred during the nine
month period ending September 30, 2002 and 2001. The Company has a line of
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 receivable. As of September 30, 2002, approximately $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.

9



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##### Table of Contents



Material Changes in Results of Operations

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

The Company operated five (5) contract programs during the three months ended
September 30, 2002 and eight (8) contract programs during the three months
ended September 30, 2001. Net revenues were $756,573 and $1,888,994 for the
three months ended September 30, 2002 and 2001, respectively. The decrease in
net revenues among periods is primarily due to the decrease in the number of
operating programs. On July 29, 2002, the Company purchased a health care
staffing company whose revenues were $486,170 for the three months ended
September 30, 2002.

Cost of services provided were $1,023,966 and $1,313,048 for the three months
ended September 30, 2002 and 2001, respectively. The decrease in cost of
services provided among periods is due to the decrease in the number of
programs offset by increases for the new staffing company acquisition.

Selling, general and administrative expenses were $699,885 and $303,685 for the
three months ended September 30, 2002 and September 30, 2001, respectively.
The increase in costs 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 three months ended September
30, 2002 over the comparable three months ended September 30, 2001. The
decrease among periods is primarily due to the net loss generated by the
Company during the current period.

Net (loss)/income were $(295,902) and $196,131 for the three months ending
September 30, 2002 and 2001, respectively. Lower net income occurred from a
decrease in operating programs.

The Company is continuing to make efforts to expand the number of its
operational programs. 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 Company anticipates that the application of these rules will not
affect existing programs but may affect efforts to expand with future programs.

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.

10



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##### Table of Contents



In the Companys mental health disorder program management business, the
Company has a dependence on a small customer base, 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 loss on its core business
operations and the development of the home health agency 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.

Nine Months Ended September 30, 2002 compared to Nine Months Ended September
30, 2001

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.

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

The September 30, 2002 condensed consolidated financial statements included in
this filing on Form 10-Q have been reviewed by Lesley, Thomas, Schwarz &
Postma, Inc., independent certified public accountants, in accordance with
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.

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##### Table of Contents






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.                    

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|              |  |                                     
|------------- |  | ------------------------------------
|             
|             
|             
|             
|Exhibit 15:   |  | Accountants Acknowledgment         
|             
|             
|             
|             
|              |  |                                     
|             
|             
|             
|             
|Exhibit 99.1: |  | Press Release dated November 7, 2002

(B) 
The 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.

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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
|                        
|                        
|                        
|                        
|                         |  |                                                |  |                                                                                                                                                                 
|                        
|                        
|                        
|                        
|                         |  |                                                |  |                                                                                                                                                                 
|                        
|                        
|                        
|                        
|Dated: November 12, 2002 |  | By:                                            |  | /s/Edward A. Johnson                                                                                                                                            
|                         |  |                                                |  |                                                                                                                                                                 
|                         |  |                                                |  | Edward A. Johnson
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer, Principal Financial
Officer, and Principal Accounting Officer)

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##### Table of Contents






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

16



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##### Table of Contents



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 Financial Officer

17



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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

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##### Table of Contents



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

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##### Table of Contents






EXHIBIT INDEX

|                    |  |                                                                                                                                                                                      
|------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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                                                                                                                                                 

20