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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 June 30, 2002

Commission File Number 0-17401

OPTIMUMCARE CORPORATION

---

(Exact name of registrant specified in its charter)


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

(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 July___, 2002.

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

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|                                       |                                                                                                                        |                                                                  |  |  |  |  |  | 
|-------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  | 
|Independent Accountants Review Report
|                                       |                                                                                                                        | CONDENSED CONSOLIDATED BALANCE SHEETS                           
|                                       |                                                                                                                        | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                 
|                                       |                                                                                                                        | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                 
|                                       |                                                                                                                        | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|                                       | 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             
|SIGNATURE                             
|EXHIBIT INDEX                         
|EXHIBIT 10.140                        
|EXHIBIT 10.141                        
|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 June 30, 2002 and December 31, 2001                                  |  | 4   
|                            |  | Condensed Consolidated Statements of Operations for the Three Months and Six
Months Ended June 30, 2002 and 2001 |  | 5   
|                            |  | Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2002 and 2001                  |  | 6   
|                            |  | Notes to Condensed Consolidated Financial Statements                                                             |  | 7   
|Item 2.                     |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                            |  | 9   
|                            |  | Statement by Management Concerning Review of Interim Information by Independent
Certified Public Accountants     |  | 13  
|Item 3.                     |  | Quantitative and Qualitative Disclosures about Market Risk                                                       |  | 13  
|PART II                     |  | OTHER INFORMATION                                                                                                |  | 14  
|SIGNATURE                   |  | 15                                                                                                              
|ACCOUNTANTS ACKNOWLEDGMENT |  | 16                                                                                                              

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July 22, 2002




Independent Accountants Review Report

To the Board of Directors of OptimumCare Corporation:

We have reviewed the accompanying condensed consolidated balance sheet of
OptimumCare Corporation and its subsidiaries as of June 30, 2002, and the
related condensed consolidated statements of operations for the three months
and six months ended June 30, 2002 and 2001 and cash flows for the six months
ended June 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

|                                                                                                                      |                                                                                                                                              |                            |           |             |           |             |           |           |           | 
|--------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | ----------- | --------- | ----------- | --------- | --------- | --------- | 
|                                                                                                                      |                                                                                                                                              |                            |           | JUNE 30     |           | DECEMBER 31
|                                                                                                                      |                                                                                                                                              |                            |           | 2002        |           | 2001       
|                                                                                                                      |                                                                                                                                              |                            |           |             |           |            
|                                                                                                                      |                                                                                                                                              |                            |           | (UNAUDITED) |           |             |           |          
|ASSETS                                                                                                                |                                                                                                                                              |                            |           |             |           |             |           |          
|CURRENT ASSETS                                                                                                        |                                                                                                                                              |                            |           |             |           |             |           |          
|                                                                                                                      | CASH AND CASH EQUIVALENTS                                                                                                                    |                            | $         | 2,148,615   |           |             | $         | 1,646,891 |          
|                                                                                                                      | SHORT-TERM INVESTMENTS                                                                                                                       |                            |           | 103,214     |           |             |           | 0         |          
|                                                                                                                      | ACCOUNTS RECEIVABLE, NET OF ALLOWANCE OF $0 AT
JUNE 30, 2002 AND DECEMBER 31, 2001                                                           |                            |           | 543,774     |           |             |           | 1,217,353 |          
|                                                                                                                      | ADVANCES DUE FROM OFFICER                                                                                                                    |                            |           | 1,136       |           |             |           | 144,596   |          
|                                                                                                                      | NOTE RECEIVABLE FROM OFFICER                                                                                                                 |                            |           | 0           |           |             |           | 225,136   |          
|                                                                                                                      | PREPAID EXPENSES                                                                                                                             |                            |           | 71,423      |           |             |           | 127,913   |          
|                                                                                                                      | PREPAID INCOME TAXES                                                                                                                         |                            |           | 45,175      |           |             |           | 582,430   |          
|                                                                                                                      | DEFERRED TAX ASSET                                                                                                                           |                            |           | 73,287      |           |             |           | 71,114    |          
|                                                                                                                      |                                                                                                                                              |                            |           |             |           |             |           |          
|                                                                                                                      |                                                                                                                                              | TOTAL CURRENT ASSETS       |           |             | 2,986,624 |             |           |           | 4,015,433 | 
|FURNITURE AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION OF $123,523 AT JUNE 30, 2002
AND $160,017 AT DECEMBER 31, 2001 |                                                                                                                                              |                            | 31,059    |             |           |             | 18,757    |          
|OTHER ASSETS                                                                                                          |                                                                                                                                              |                            | 15,594    |             |           |             | 19,760    |          
|                                                                                                                      |                                                                                                                                              |                            |           |             |           |             |           |          
|                                                                                                                      |                                                                                                                                              | TOTAL ASSETS               |           | $           | 3,033,277 |             |           | $         | 4,053,950 | 
|                                                                                                                      |                                                                                                                                              |                            |           |             |           |             |           |          
|CURRENT LIABILITIES                                                                                                   |                                                                                                                                              |                            |           |             |           |             |           |          
|                                                                                                                      | ACCOUNTS PAYABLE                                                                                                                             |                            | $         | 76,003      |           |             | $         | 206,046   |          
|                                                                                                                      | ACCRUED VACATION                                                                                                                             |                            |           | 51,422      |           |             |           | 54,499    |          
|                                                                                                                      | ACCRUED EXPENSES                                                                                                                             |                            |           | 66,232      |           |             |           | 211,016   |          
|                                                                                                                      | ACCRUED PAYMENT TO OFFICER                                                                                                                   |                            |           | 0           |           |             |           | 700,000   |          
|                                                                                                                      |                                                                                                                                              |                            |           |             |           |             |           |          
|                                                                                                                      |                                                                                                                                              | TOTAL CURRENT LIABILITIES  |           |             | 193,657   |             |           |           | 1,171,561 | 
|                                                                                                                      |                                                                                                                                              |                            |           |             |           |             |           |          
|STOCKHOLDERS EQUITY                                                                                                  |                                                                                                                                              |                            |           |             |           |             |           |          
|                                                                                                                      | PREFERRED STOCK, $.001 PAR VALUE; AUTHORIZED
10,000,000 SHARES, 0 SHARES ISSUED, AND
OUTSTANDING AT JUNE 30, 2002 AND DECEMBER 31, 2001      |                            |           |             |           |             |           |           |          
|                                                                                                                      | COMMON STOCK, $.001 PAR VALUE; AUTHORIZED
20,000,000 SHARES, 5,908,675 SHARES ISSUED
AND OUTSTANDING AT JUNE 30, 2002,
AND DECEMBER 31, 2001 |                            |           | 5,909       |           |             |           | 5,909     |          
|                                                                                                                      | PAID-IN-CAPITAL                                                                                                                              |                            |           | 2,403,706   |           |             |           | 2,403,706 |          
|                                                                                                                      | RETAINED EARNINGS                                                                                                                            |                            |           | 430,005     |           |             |           | 472,774   |          
|                                                                                                                      |                                                                                                                                              |                            |           |             |           |             |           |          
|                                                                                                                      |                                                                                                                                              | TOTAL STOCKHOLDERS EQUITY |           | $           | 2,839,620 |             |           | $         | 2,882,389 | 
|                                                                                                                      |                                                                                                                                              |                            |           |             |           |             |           |          
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                            |                                                                                                                                              | $                          | 3,033,277 |             |           | $           | 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 |           | SIX MONTHS ENDED
|                                  |  |                    |           |                 
|                                  |  | JUNE 30,           |           | JUNE 30,         |  | JUNE 30, |           | JUNE 30,
|                                  |  | 2002               |           | 2001             |  | 2002     |           | 2001    
|                                  |  |                    |           |                  |  |          |           |         
|REVENUES                          |  | $                  | 1,247,750 |                  |  | $        | 1,892,694 |          |  | $ | 2,636,608 |   |  | $ | 3,954,584 | 
|INTEREST INCOME                   |  |                    | 7,845     |                  |  |          | 17,911    |          |  |   | 15,491    |   |  |   | 45,604    | 
|                                  |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 
|                                  |  |                    | 1,255,595 |                  |  |          | 1,910,605 |          |  |   | 2,652,099 |   |  |   | 4,000,188 | 
|                                  |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 
|OPERATING EXPENSES:               |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 
|COSTS OF SERVICES PROVIDED        |  |                    | 713,089   |                  |  |          | 1,310,518 |          |  |   | 1,963,551 |   |  |   | 2,714,476 | 
|GENERAL AND ADMINISTRATIVE        |  |                    | 399,023   |                  |  |          | 350,759   |          |  |   | 747,347   |   |  |   | 736,699   | 
|INTEREST                          |  |                    | 0         |                  |  |          | 150       |          |  |   | 70        |   |  |   | 221       | 
|                                  |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 
|TOTAL OPERATING EXPENSES          |  |                    | 1,112,112 |                  |  |          | 1,661,427 |          |  |   | 2,710,968 |   |  |   | 3,451,396 | 
|                                  |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 
|INCOME (LOSS) BEFORE INCOME TAXES |  |                    | 143,483   |                  |  |          | 249,178   |          |  |   | (58,869   | ) |  |   | 548,792   | 
|INCOME
TAX EXPENSE (BENEFIT)      |  |                    | 60,101    |                  |  |          | 59,724    |          |  |   | (16,100   | ) |  |   | 183,792   | 
|                                  |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 
|NET INCOME (LOSS)                 |  | $                  | 83,382    |                  |  | $        | 189,454   |          |  |   | $(42,769  | ) |  | $ | 365,000   | 
|                                  |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 
|BASIC EARNINGS (LOSS) PER SHARE   |  | $                  | 0.01      |                  |  | $        | 0.03      |          |  |   | $(0.01    | ) |  | $ | 0.06      | 
|                                  |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 
|DILUTED EARNINGS (LOSS) PER SHARE |  | $                  | 0.01      |                  |  | $        | 0.03      |          |  |   | $(0.01    | ) |  | $ | 0.06      | 
|                                  |  |                    |           |                  |  |          |           |          |  |   |           |   |  |   |           | 

See notes to condensed consolidated financial statements.

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OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |         |         |           |          |  
|------------------------------------------------ |  | ----------------------------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------------------------------- | -------- | ----------------- | --------- | ------- | ------- | --------- | -------- | -
|                                                 |  |                                                                                                 |                                              |                                                                   |          | SIX MONTHS ENDING
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                  
|                                                 |  |                                                                                                 |                                              |                                                                   |          | JUNE 30           |           | JUNE 30
|                                                 |  |                                                                                                 |                                              |                                                                   |          | 2002              |           | 2001   
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|CASH FLOW FROM OPERATING ACTIVITIES              |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|                                                 |  | Net
Income/(Loss)                                                                               |                                              |                                                                   | $(42,769 | )                 |           | $       | 365,000 |          
|                                                 |  | Adjustments to reconcile net (loss)/income to net
cash (used)/provided by operating activities: |                                              |                                                                   |          |                   |           |         |         |          
|                                                 |  |                                                                                                 | Depreciation & amortization                  |                                                                   |          | 5,815             |           |         |         | 9,485     |         
|                                                 |  |                                                                                                 | Deferred taxes                               |                                                                   |          | (2,173            | )         |         |         | (12,700   | )       
|                                                 |  |                                                                                                 | Changes in operating assets and liabilities: |                                                                   |          |                   |           |         |         |           |         
|                                                 |  |                                                                                                 |                                              | Decrease/(Increase) in accounts receivable, net                   |          |                   | 673,579   |         |         |           | (727,669 | )
|                                                 |  |                                                                                                 |                                              | Decrease/(Increase) in advances due from officer                  |          |                   | 143,460   |         |         |           | (88,460  | )
|                                                 |  |                                                                                                 |                                              | Decrease in prepaid expenses                                      |          |                   | 56,490    |         |         |           | 30,978   |  
|                                                 |  |                                                                                                 |                                              | Decrease in prepaid income taxes                                  |          |                   | 537,255   |         |         |           | 0        |  
|                                                 |  |                                                                                                 |                                              | Decrease in other assets                                          |          |                   | 4,166     |         |         |           | 7,892    |  
|                                                 |  |                                                                                                 |                                              | (Decrease) in accounts payable                                    |          |                   | (130,043  | )       |         |           | (44,305  | )
|                                                 |  |                                                                                                 |                                              | (Decrease)/Increase in accrued vacation                           |          |                   | (3,077    | )       |         |           | 17,333   |  
|                                                 |  |                                                                                                 |                                              | (Decrease) in accrued expenses                                    |          |                   | (144,784  | )       |         |           | (21,000  | )
|                                                 |  |                                                                                                 |                                              | (Decrease) in accrued payment to officer                          |          |                   | (700,000  | )       |         |           | 0        |  
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|                                                 |  |                                                                                                 |                                              | CASH AND CASH EQUIVALENTS PROVIDED/(USED)
BY OPERATING ACTIVITIES |          |                   | 397,919   |         |         |           | (463,446 | )
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|CASH FLOW FROM INVESTING ACTIVITIES              |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|                                                 |  | Purchase of short-term investments                                                              |                                              |                                                                   | (103,214 | )                 |           |         | 0       |          
|                                                 |  | Purchase of other assets                                                                        |                                              |                                                                   | (12,930  | )                 |           |         | 0       |          
|                                                 |  | Purchase of office furniture & computer equipment                                               |                                              |                                                                   | (5,187   | )                 |           |         | (95,000 | )        
|                                                 |  | Payments on note receivable from officer                                                        |                                              |                                                                   | 225,136  |                   |           |         | 71,500  |          
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|                                                 |  |                                                                                                 |                                              | CASH AND CASH EQUIVALENTS PROVIDED/(USED)
BY INVESTING ACTIVITIES |          |                   | 103,805   |         |         |           | (23,500  | )
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|                                                 |  |                                                                                                 |                                              | CASH AND CASH EQUIVALENTS PROVIDED
BY FINANCING ACTIVITIES        |          |                   | 0         |         |         |           | 0        |  
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|INCREASE/(DECREASE) IN
CASH AND CASH EQUIVALENTS |  |                                                                                                 | 501,724                                      |                                                                   |          |                   | (486,946  | )      
|Cash and cash equivalents at beginning of period |  |                                                                                                 | 1,646,891                                    |                                                                   |          |                   | 2,187,322 |        
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |        
|                                                 |  |                                                                                                 | CASH AND CASH EQUIVALENTS AT END OF PERIOD   |                                                                   | $        | 2,148,615         |           |         | $       | 1,700,376 |         
|                                                 |  |                                                                                                 |                                              |                                                                   |          |                   |           |        

See notes to condensed consolidated financial statements.

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OPTIMUMCARE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2002

NOTE A  BASIS OF PRESENTATION

The accompanying unaudited financial statements include the accounts of the
Company and its majority owned subsidiaries. All significant intercompany
transactions, if any, have been eliminated. The unaudited financial statements
included herein have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
six month periods ended June 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   SHORT-TERM INVESTMENTS

Included in short-term investments are federal home loan bank bonds with an
aggregate principal amount of $100,000 and $0 at June 30, 2002 and December 31,
2001 respectively. The bonds bear interest ranging from 2.375% to 5.755% and
have maturity dates during June, 2003.

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

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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 |           | Six Months Ended
|                                                                   |  |                    |           |                 
|                                                                   |  | June 30, 2002      |           | June 30, 2001    |  | June 30, 2002 |           | June 30, 2001
|                                                                   |  |                    |           |                  |  |               |           |              
|Numerator                                                          |  | $                  | 83,382    |                  |  | $             | 189,454   |               |  |  | $(42,769  | ) |  | $ | 365,000   | 
|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                                    |  |                    | 135,076   |                  |  |               | 154,872   |               |  |  | 67,538    |   |  |   | 154,872   | 
|Denominator for diluted
earnings per share                         |  |                    | 6,043,751 |                  |  |               | 6,063,547 |               |  |  | 5,976,213 |   |  |   | 6,063,547 | 
|Basic earnings per share                                           |  | $                  | .01       |                  |  | $             | .03       |               |  |  | $(.01     | ) |  | $ | .06       | 
|Diluted earnings per share                                         |  | $                  | .01       |                  |  | $             | .03       |               |  |  | $(.01     | ) |  | $ | .06       | 

NOTE D  - NEW BUSINESS

Effective June 16, 2002, the Company entered into a marketing and management
agreement for a psychiatric inpatient and partial hospitalization program at La
Palma Intercommunity Hospital in La Palma, California.

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

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

Cash flows from investing activities were $103,805 and ($23,500) for the
periods ended June 30, 2002 and 2001, respectively. Cash provided during the
six months ended June 30, 2002 primarily arose from the payment of a note
receivable from one officer which was partially offset by the purchase of
short-term federal home loan bank bonds.

No cash flows with respect to financing activities occurred during the six
month period ending June 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 July 16, 2002, approximately $418,000 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.

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Material Changes in Results of Operations

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

The Company operated six (6) programs during the three months ended June 30,
2002 and eight (8) programs during the three months ended June 30, 2001. Of
the six programs operated during the three months ended June 30, 2002, two
programs were terminated April 30, 2002 and one program began June 16, 2002.
Net revenues were $1,247,750 and $1,892,694 for the three months ended June 30,
2002 and 2001, respectively. The decrease in net revenues among periods is
primarily due to the decrease in the number and duration of operating programs,
offset by a $300,000 early termination fee received from one hospital during
April, 2002.

Cost of services provided were $713,089 and $1,310,518 for the three months
ended June 30, 2002 and 2001, respectively. The decrease in cost of services
provided among periods is due to the decrease in the number of programs, the
majority of which related to those programs closed during April, 2002.

Selling, general and administrative expenses were $399,023 and $350,759 for the
three months ended June 30, 2002 and June 30, 2001, respectively. The increase
in costs is primarily due to fees paid to business development consultants
assisting the Company in its expansion and acquisition endeavors.

The Companys income taxes for the three months ending June 30, 2002 have
remained relatively stable with those estimated for the three months ended June
30, 2001.

Net income was $83,382 and $189,454 for the three months ending June 30, 2002
and 2001. Lower net income occurred from a decrease in operating programs
offset by an early termination fee received from one hospital during April,
2002.

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

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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. The Company
recently signed a letter of intent to acquire a medical staffing company.

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 small loss on its core business operations and the development of the home
health agency for the remainder of 2002. However, the acquisition of the
medical 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.

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

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

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

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

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

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

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

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

The June 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.

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

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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: July 23, 2002 | By:                                                                   | /s/ Edward A. Johnson
|                     |                                                                      
|                     | Edward A. Johnson
Chairman of the Board
& Principal Financial Officer

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EXHIBIT INDEX

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