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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 March 31, 2002

Commission File Number 0-17401

OPTIMUMCARE
CORPORATION

(Exact name of registrant specified in its charter)


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

(949) 495-1100

---

(Registrants telephone number, including area code)


Not Applicable

---

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


| |                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No

| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of May __, 2002.

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



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|                          |                                                                                                                        |                                                      |  |  |  |  |  | 
|------------------------- | ---------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|                          |                                                                                                                        | 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                                                    
|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                
|Exhibit Index            
|EXHIBIT 10.139           
|EXHIBIT 15               



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INDEX
 OPTIMUMCARE CORPORATION

|                            |                                                                                                              |    |   
|--------------------------- | ------------------------------------------------------------------------------------------------------------ | -- | --
|PART I                      | FINANCIAL INFORMATION                                                                                        |    |   
|                           
|                            | Page                                                                                                        
|                            |                                                                                                             
|                           
|Item 1.                     | Financial Statements                                                                                         |    |   
|                           
|                            | Report on Review by Independent Certified Public Accountants                                                 |    | 3 
|                           
|                            | Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001                             |    | 4 
|                           
|                            | Condensed Consolidated
Statements of Operations for the Three Months ended March 31, 2002 and 2001           |    | 5 
|                           
|                            | Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 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 |    | 11
|                           
|Item 3.                     | Quantitative and Qualitative Disclosures about Market Risk                                                   |    | 11
|                           
|PART II                     | OTHER INFORMATION                                                                                            |    | 12
|                           
|SIGNATURE                   |                                                                                                              | 13
|                           
|ACCOUNTANTS ACKNOWLEDGMENT |                                                                                                              |   



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May 8, 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 subsidiary as of March 31, 2002, and the
related condensed consolidated statements of operations and cash flows for the
three months ended March 31, 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

|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |           |           | 
|--------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | ----------- | --------- | ----------- | --------- | --------- | --------- | 
|                                                                            |                                                                                                                                               |                            |           | MARCH 31    |           | DECEMBER 31
|                                                                            |                                                                                                                                               |                            |           | 2002        |           | 2001       
|                                                                            |                                                                                                                                               |                            |           | (UNAUDITED)
|                                                                            |                                                                                                                                               |                            |           |             |           |            
|ASSETS                                                                      |                                                                                                                                               |                            |           |             |           |             |           |          
|CURRENT ASSETS                                                              |                                                                                                                                               |                            |           |             |           |             |           |          
|                                                                            | CASH AND CASH EQUIVALENTS                                                                                                                     |                            | $         | 1,000,789   |           |             | $         | 1,646,891 |          
|                                                                            | ACCOUNTS RECEIVABLE, NET OF ALLOWANCE OF $0 AT
MARCH 31, 2002 AND DECEMBER 31, 2001                                                           |                            |           | 1,149,946   |           |             |           | 1,217,353 |          
|                                                                            | ADVANCES DUE FROM OFFICER                                                                                                                     |                            |           | 42,267      |           |             |           | 144,596   |          
|                                                                            | NOTE RECEIVABLE FROM OFFICER                                                                                                                  |                            |           | 0           |           |             |           | 225,136   |          
|                                                                            | PREPAID EXPENSES                                                                                                                              |                            |           | 114,677     |           |             |           | 127,913   |          
|                                                                            | PREPAID INCOME TAXES                                                                                                                          |                            |           | 648,794     |           |             |           | 582,430   |          
|                                                                            | DEFERRED TAX ASSET                                                                                                                            |                            |           | 80,951      |           |             |           | 71,114    |          
|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |          
|                                                                            |                                                                                                                                               | TOTAL CURRENT ASSETS       |           |             | 3,037,424 |             |           |           | 4,015,433 | 
|FURNITURE AND EQUIPMENT, LESS ACCUMULATED
AND $160,017 AT DECEMBER 31, 2001 |                                                                                                                                               |                            | 28,735    |             |           |             | 18,757    |          
|OTHER ASSETS                                                                |                                                                                                                                               |                            | 16,010    |             |           |             | 19,760    |          
|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |          
|                                                                            |                                                                                                                                               | TOTAL ASSETS               |           | $           | 3,082,169 |             |           | $         | 4,053,950 | 
|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |          
|CURRENT LIABILITIES                                                         |                                                                                                                                               |                            |           |             |           |             |           |          
|                                                                            | ACCOUNTS PAYABLE                                                                                                                              |                            | $         | 163,976     |           |             | $         | 206,046   |          
|                                                                            | ACCRUED VACATION                                                                                                                              |                            |           | 55,462      |           |             |           | 54,499    |          
|                                                                            | ACCRUED EXPENSES                                                                                                                              |                            |           | 106,493     |           |             |           | 211,016   |          
|                                                                            | ACCRUED PAYMENT TO OFFICER                                                                                                                    |                            |           | 0           |           |             |           | 700,000   |          
|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |          
|                                                                            |                                                                                                                                               | TOTAL CURRENT LIABILITIES  |           |             | 325,931   |             |           |           | 1,171,561 | 
|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |          
|STOCKHOLDERS EQUITY                                                        |                                                                                                                                               |                            |           |             |           |             |           |          
|                                                                            | PREFERRED STOCK, $.001 PAR VALUE; AUTHORIZED
10,000,000 SHARES, 0 SHARES ISSUED, AND
OUTSTANDING AT MARCH 31, 2002
AND DECEMBER 31, 2001      |                            |           |             |           |             |           |           |          
|                                                                            | COMMON STOCK, $.001 PAR VALUE; AUTHORIZED
20,000,000 SHARES, 5,908,675 SHARES ISSUED
AND OUTSTANDING AT MARCH 31, 2002,
AND DECEMBER 31, 2001 |                            |           | 5,909       |           |             |           | 5,909     |          
|                                                                            | PAID-IN-CAPITAL                                                                                                                               |                            |           | 2,403,706   |           |             |           | 2,403,706 |          
|                                                                            | RETAINED EARNINGS                                                                                                                             |                            |           | 346,623     |           |             |           | 472,774   |          
|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |          
|                                                                            |                                                                                                                                               | TOTAL STOCKHOLDERS EQUITY |           | $           | 2,756,238 |             |           | $         | 2,882,389 | 
|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |          
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                  |                                                                                                                                               | $                          | 3,082,169 |             |           | $           | 4,053,950 |          
|                                                                            |                                                                                                                                               |                            |           |             |           |             |           |          

See notes to condensed consolidated financial statements.



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OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                                  |  |                    |           |       |  |   |           | 
|--------------------------------- |  | ------------------ | --------- | ----- |  | - | --------- | 
|                                  |  | THREE MONTHS ENDED
|                                  |  |                   
|                                  |  | MARCH              |           | MARCH
|                                  |  | 2002               |           | 2001 
|                                  |  |                    |           |      
|REVENUES                          |  | $                  | 1,388,858 |       |  | $ | 2,061,890 | 
|INTEREST INCOME                   |  |                    | 7,646     |       |  |   | 27,693    | 
|                                  |  |                    |           |       |  |   |           | 
|                                  |  |                    | 1,396,504 |       |  |   | 2,089,583 | 
|                                  |  |                    |           |       |  |   |           | 
|OPERATING EXPENSES:               |  |                    |           |       |  |   |           | 
|COSTS OF SERVICES PROVIDED        |  |                    | 1,250,462 |       |  |   | 1,403,958 | 
|GENERAL AND ADMINISTRATIVE        |  |                    | 348,324   |       |  |   | 385,940   | 
|INTEREST                          |  |                    | 70        |       |  |   | 71        | 
|                                  |  |                    |           |       |  |   |           | 
|TOTAL OPERATING EXPENSES          |  |                    | 1,598,856 |       |  |   | 1,789,969 | 
|                                  |  |                    |           |       |  |   |           | 
|(LOSS) INCOME BEFORE INCOME TAXES |  |                    | (202,352  | )     |  |   | 299,614   | 
|INCOME TAX (BENEFIT) EXPENSE      |  |                    | (76,201   | )     |  |   | 124,068   | 
|                                  |  |                    |           |       |  |   |           | 
|NET (LOSS) INCOME                 |  | $                  | (126,151  | )     |  | $ | 175,546   | 
|                                  |  |                    |           |       |  |   |           | 
|BASIC (LOSS) EARNINGS PER SHARE   |  | $                  | (0.02     | )     |  | $ | 0.03      | 
|                                  |  |                    |           |       |  |   |           | 
|DILUTED (LOSS) EARNINGS PER SHARE |  | $                  | (0.02     | )     |  | $ | 0.03      | 
|                                  |  |                    |           |       |  |   |           | 

See notes to condensed consolidated financial statements.



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OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |          |           |          |          |  
|------------------------------------------------ | ----------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------ | ---------------------------------------------------------- | --------- | ------------------- | --------- | -------- | --------- | -------- | -------- | -
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           | THREE MONTHS ENDING
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                    
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           | MARCH 31            |           | MARCH 31
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           | 2002                |           | 2001    
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|CASH FLOW FROM OPERATING ACTIVITIES              |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|                                                 | Net (Loss)/Income                                                                               |                                              | $                                                | (126,151                                                   | )         |                     | $         | 175,546  |          
|                                                 | Adjustments to reconcile net (loss)/income to net
cash (used)/provided by operating activities: |                                              |                                                  |                                                            |           |                     |           |          |          
|                                                 |                                                                                                 | Depreciation & amortization                  |                                                  |                                                            | 2,952     |                     |           |          | 5,141     |         
|                                                 |                                                                                                 | Deferred taxes                               |                                                  |                                                            | (9,837    | )                   |           |          | 2,470     |         
|                                                 |                                                                                                 | Changes in operating assets and liabilities: |                                                  |                                                            |           |                     |           |          |           |         
|                                                 |                                                                                                 |                                              | Decrease/(Increase) in accounts receivable, net  |                                                            |           | 67,407              |           |          |           | (932,819 | )       
|                                                 |                                                                                                 |                                              | Decrease/(Increase) in advances due from officer |                                                            |           | 102,329             |           |          |           | (48,782  | )       
|                                                 |                                                                                                 |                                              | Decrease/(Increase) in prepaid expenses          |                                                            |           | 13,236              |           |          |           | (1,201   | )       
|                                                 |                                                                                                 |                                              | (Increase) in prepaid income taxes               |                                                            |           | (66,364             | )         |          |           | 0        |         
|                                                 |                                                                                                 |                                              | Decrease in other assets                         |                                                            |           | 3,750               |           |          |           | 0        |         
|                                                 |                                                                                                 |                                              | (Decrease)/Increase in accounts payable          |                                                            |           | (42,070             | )         |          |           | 20,703   |         
|                                                 |                                                                                                 |                                              | Increase in accrued vacation                     |                                                            |           | 963                 |           |          |           | 4,000    |         
|                                                 |                                                                                                 |                                              | (Decrease)/Increase in accrued expenses          |                                                            |           | (104,523            | )         |          |           | 13,627   |         
|                                                 |                                                                                                 |                                              | (Decrease) in accrued payment to officer         |                                                            |           | (700,000            | )         |          |           | 0        |         
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|                                                 |                                                                                                 |                                              |                                                  | CASH AND CASH EQUIVALENTS (USED)
BY OPERATING ACTIVITIES   |           |                     | (858,308  | )        |           |          | (761,315 | )
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|CASH FLOW FROM INVESTING ACTIVITIES              |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|                                                 | Purchase of other assets                                                                        |                                              |                                                  | (12,930                                                    | )         |                     |           | 0        |          
|                                                 | Purchase of software                                                                            |                                              |                                                  | 0                                                          |           |                     |           | (95,000  | )        
|                                                 | Payments on note receivable from officer                                                        |                                              |                                                  | 225,136                                                    |           |                     |           | 71,500   |          
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|                                                 |                                                                                                 |                                              |                                                  | CASH AND CASH EQUIVALENTS (USED)
BY INVESTING ACTIVITIES   |           |                     | 212,206   |          |           |          | (23,500  | )
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|                                                 |                                                                                                 |                                              |                                                  | CASH AND CASH EQUIVALENTS PROVIDED
BY FINANCING ACTIVITIES |           |                     | 0         |          |           |          | 0        |  
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|(DECREASE)/INCREASE IN
CASH AND CASH EQUIVALENTS |                                                                                                 |                                              | (646,102                                         | )                                                          |           |                     | (784,815  | )       
|Cash and cash equivalents at beginning of period |                                                                                                 |                                              | 1,646,891                                        |                                                            |           |                     | 2,187,322 |         
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         
|                                                 |                                                                                                 | CASH AND CASH EQUIVALENTS AT END OF PERIOD   |                                                  | $                                                          | 1,000,789 |                     |           | $        | 1,402,507 |         
|                                                 |                                                                                                 |                                              |                                                  |                                                            |           |                     |           |         

See notes to condensed consolidated financial statements.



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OPTIMUMCARE CORPORATION
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 March 31, 2002
 NOTE A  BASIS OF PRESENTATION

The accompanying unaudited financial statements include the accounts of the
Company and its majority owned subsidiary, OptimumCare Source LLC. 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 month period ended March 31, 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  EARNINGS PER SHARE

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

|                                                                   |  |           |           |           |  |   |           | 
|------------------------------------------------------------------ |  | --------- | --------- | --------- |  | - | --------- | 
|                                                                   |  | MARCH 31, |           | MARCH 31,
|                                                                   |  | 2002      |           | 2001     
|                                                                   |  |           |           |          
|Numerator                                                          |  | $         | (126,151  | )         |  | $ | 175,546   | 
|Denominator:                                                       |  |           |           |           |  |   |           | 
|Denominator for basic earnings per share -
weighted-average shares |  |           | 5,908,675 |           |  |   | 5,908,675 | 
|Dilutive employee stock options                                    |  |           | 0         |           |  |   | 269,766   | 
|Denominator for diluted earnings per share                         |  |           | 5,908,675 |           |  |   | 6,178,441 | 
|Basic earnings per share                                           |  | $         | (.02      | )         |  | $ | .03       | 
|Diluted earnings per share                                         |  | $         | (.02      | )         |  | $ | .03       | 



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NOTE C  SUBSEQUENT EVENT

On April 23, 2002 the Company received an early termination fee of $300,000
from one Hospital which hosted two programs. The contracts were originally
scheduled to expire December 31, 2002. The Company will continue to manage the
programs through April 30, 2002. The Hospital has indicated that their desire
for early termination was due to new rules adopted by the Centers for Medicare
and Medicaid Services (CMS) which they believe would hinder their ability to
bill for medicare services under the existing contracts with the Company. A
short term consulting contract with the Hospital for utilization review
services is currently being negotiated.



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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 March 31, 2002 and December 31, 2001, the Companys working capital was
$2,711,493 and $2,843,872, respectively. The decrease in working capital for
the period is primarily due to the net operating loss for the period. 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 March 31, 2002
has remained relatively stable in amount and aging to those which existed at
December 31, 2001. At March 31, 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 March 31, 2002.

Cash flows from operations were ($858,308) and ($761,315) for the period ended
March 31, 2002 and 2001, respectively. Cash used during the three months ended
March 31, 2002 was primarily due to the payment of amounts accrued at
December 31, 2001. The remainder of the cash used occurred from the net
operating loss during the period.

Cash flows from investing activities were $212,206 and ($23,500) for the
periods ended March 31, 2002 and 2001, respectively. Cash provided during the
three months ended March 31, 2002 arose from the payment of a note receivable
from one officer.

No cash flows with respect to financing activities occurred during the three
month period ending March 31, 2002. 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 May 8, 2002 approximately $904,425 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.



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Material Changes in Results of Operations

Three Months Ended March 31, 2002 compared to Three Months Ended March 31, 2001

The Company operated six (6) programs during the three months ended March 31,
2002 and nine (9) programs during the three months ended March 31, 2001. Net
revenues were $1,388,858 and $2,089,583 for the three months ended March 31,
2002 and 2001, respectively. The decrease in net revenues among periods is
primarily due to the decrease in the number of operating programs. In
addition, one program which operated during the quarter ended March 31, 2002
generated no revenues for the Company during this period. The Company
terminated the contract for this program effective March 8, 2002 due to a
reduction in the Community Mental Health Centers (CMHC) interim reimbursement
rate which prevented the CMHCs ability to pay management fees they originally
contracted for.

Cost of services provided were $1,250,462 and $1,403,958 for the three months
ended March 31, 2002 and 2001, respectively. The decrease in cost of services
provided among periods is primarily due to the decrease in the number of
operating programs among quarters. This was partially offset by an increase in
costs at one program due to census increase. This program was terminated March
8, 2002, due to collection problems discussed above.

Selling, general and administrative expenses were $348,324 and $385,940 for the
three months ended March 31, 2002 and March 31, 2001, respectively. The
decrease among periods is primarily due to lower executive wages based on
profit orientated bonus programs.

The Companys income taxes have decreased for the three months ending March 31,
2002 over the three months ended March 31, 2001 due to the net operating loss
generated during the period.

Net loss was ($126,151) and net income was $175,546 for the three months
ending March 31, 2002 and 2001. A net loss occurred due to a decrease in
revenues partially offset by a decrease in cost of services provided and the
income tax benefits associated with the net operating loss.

The Company is continuing to make efforts to expand the number of its
operational programs. The Company currently has a proposal outstanding to
expand the inpatient program at one location it currently serves and has
contracted with a consulting firm managed by one of the Companys directors to
launch an aggressive marketing program. However new rules adopted by the
Centers for Medicare and Medicaid Services (CMS) are now requiring that
facilities obtain provider based status before a provider can bill Medicare
for services rendered at the facility. The application of these rules are
uncertain at this time, but the Company anticipates that changes will occur in
the nature of its traditional contract structure which will cause revenues per
contract to decline. One Hospital which hosts two programs has terminated its
contracts with the Company effective April 30, 2002. The two contracts were
scheduled to expire December 31, 2002. A short term consulting contract with
the Hospital for utilization review services is currently being negotiated. In
addition, the Company has been in discussions with one Hospital, which hosts
one program to modify its



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current arrangement with the Company causing both
revenues and costs associated with managing this program to decline.

Concurrent with its strategy for expanding its contract business, the Company
is in the process of developing a home health division and acquiring strategic
business with complimentary health care services. Consultants have been
retained to assist the Company in this endeavor. Revenues from the home health
division are expected to be generated by the third quarter of 2002.

The Company has a dependence on a small customer base, presently
consisting of two 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
to break even on its core business operations for the remainder of 2002. In
addition, the $300,000 early termination fee received during April, 2002 from
one Hospital should help to offset new expenses associated with developing
programs, divisions and acquisitions, the aggregate costs of which are unknown
at this time.




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

The March 31, 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.



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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

Not applicable.




ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

Exhibit 10.139 Services Termination Agreement between the Company and San
Fernando Community Hospital, a California nonprofit public benefit corporation
d/b/a Mission Community Hospital & San Fernando Community Hospital dated April
30, 2002.

Exhibit 15: Accountants Acknowledgement

(b)  Reports on Form 8-K

On January 23, 2002, the Company filed a Form 8-K and issued a press
release
reporting that it would take write-offs to 2001 operating results in the amount
of $1,090,000. The write-offs consisted of $380,000 previously capitalized as
software as a result of the Companys decision not to pursue the development of
an online therapy website and $710,000 as a reversal of management fees
previously recognized as a result of the decision of the Health Care Financial
Administration to reduce the reimbursement rate paid to a community mental
health center which affects the centers ability to pay the Company management
fees at the contracted rate.



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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: May 8, 2002 | By:                                                                   | /s/ Edward A. Johnson
|                   |                                                                      
|                   | Edward A. Johnson
Chairman of the Board
& Principal Financial Officer



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EXHIBIT INDEX

|               |  |                                                                                                                                                                                                                                   
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                       
|               |  |                                                                                                                                                                                                                                   
|Exhibit 10.139 |  | Services Termination Agreement between the Company and San
Fernando Community Hospital, a California nonprofit public benefit corporation
d/b/a Mission Community Hospital & San Fernando Community Hospital dated April
30, 2002.
|              
|              
|              
|              
|Exhibit 15     |  | Accountants
Acknowledgement.