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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, 2003
|                  |  |              

|                       |  |         | 
|---------------------- |  | ------- | 
|Commission File Number |  | 0-17401
|                       |  |        

|                                                   
|---------------------------------------------------
|OPTIMUMCARE CORPORATION                            
|                                                   
|(Exact name of registrant specified in its charter)

|                                |  |                     | 
|------------------------------- |  | ------------------- | 
|Delaware                        |  | 33-0218003         
|                                |  |                    
|(State of other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | 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 o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) Yes o No x

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of August 8, 2003.

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





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|                          |                                                                                               |                                                                                                                        |  |  |  |  |  | 
|------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|                          |                                                                                               | Independent Accounts' Review Report                                                                                   
|                          |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                                  
|                          | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                          |                                                                                               | Statement by Management Concerning Review of Interim Financial Information by Independent Certified Public Accountants
|                          | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                          | Item 4. Controls and Procedures                                                              
|PART II OTHER INFORMATION
|SIGNATURE                
|EXHIBIT INDEX            
|EXHIBIT 15               
|EXHIBIT 31.1             
|EXHIBIT 31.2             
|EXHIBIT 32               



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INDEX

OPTIMUMCARE CORPORATION

|                                                                                              |                                                                                                                  |  |      |    | 
|--------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                              |                                                                                                                  |  | Page
|                                                                                              |                                                                                                                  |  |     
|PART I                                                                                        | FINANCIAL INFORMATION                                                                                            |  |      |    | 
|Item 1. Financial Statements                                                                  |                                                                                                                  |  |      |   
|                                                                                              | Report on Review by Independent Certified Public Accountants                                                     |  |      | 3  | 
|                                                                                              | Condensed Consolidated Balance Sheets
as of June 30, 2003 and December 31, 2002                                  |  |      | 4  | 
|                                                                                              | Condensed Consolidated Statements of
Operations for the Three Months and Six Months Ended June 30, 2003 and 2002 |  |      | 5  | 
|                                                                                              | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002                  |  |      | 6  | 
|                                                                                              | Notes to Condensed Consolidated Financial Statements                                                             |  |      | 7  | 
|Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations |                                                                                                                  |  | 11   |   
|                                                                                              | Statement by Management Concerning Review of Interim Information by Independent Certified Public Accountants     |  |      | 14 | 
|Item 3. Quantitative and Qualitative Disclosures
about Market Risk                            |                                                                                                                  |  | 14   |   
|Item 4. Controls and Procedures                                                               |                                                                                                                  |  | 14   |   
|PART II                                                                                       | OTHER INFORMATION                                                                                                |  |      | 15 | 
|SIGNATURE                                                                                     |                                                                                                                  |  | 16   |   
|EXHIBITS                                                                                      |                                                                                                                  |  | 17   |   
|ACCOUNTANTS ACKNOWLEDGMENT                                                                   |                                                                                                                  |  | 18   |   
|CERTIFICATIONS                                                                                |                                                                                                                  |  | 19   |   

2



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August 8, 2003




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, 2003, and the
related condensed consolidated statements of operations for the three
months and six months
ended June 30, 2003 and 2002 and cash flows for the six months ended June 30,
2003 and 2002, 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, 2002 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 28, 2003, 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, 2002 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,
|                                                                                                                      |                                                                                                                                             |                            |           | 2003        |           | 2002        
|                                                                                                                      |                                                                                                                                             |                            |           | (UNAUDITED) |           |             
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |             
|ASSETS                                                                                                                |                                                                                                                                             |                            |          |             |           |              |          |          
|CURRENT ASSETS                                                                                                        |                                                                                                                                             |                            |           |             |           |              |           |          
|                                                                                                                      | CASH AND CASH EQUIVALENTS                                                                                                                   | $                          | 708,683   |             |           | $            | 779,235   |          
|                                                                                                                      | INVESTMENTS                                                                                                                                 |                            |           | 0           |           |              |           | 330,268   |          
|                                                                                                                      | ACCOUNTS RECEIVABLE, NET OF ALLOWANCE OF $0 AT
MARCH 31, 2003 AND DECEMBER 31, 2002                                                         |                            |           | 1,175,547   |           |              |           | 927,445   |          
|                                                                                                                      | PREPAID EXPENSES                                                                                                                            |                            |           | 71,396      |           |              |           | 116,030   |          
|                                                                                                                      | PREPAID INCOME TAXES                                                                                                                        |                            |           | 0           |           |              |           | 216,114   |          
|                                                                                                                      | DEFERRED TAX ASSET                                                                                                                          |                            |           | 40,446      |           |              |           | 27,948    |          
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |              |           |          
|                                                                                                                      |                                                                                                                                             | TOTAL CURRENT ASSETS       |           |             | 1,996,072 |              |           |           | 2,397,040 | 
|FURNITURE AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION OF $137,120 AT JUNE 30, 2003
AND $132,059 AT DECEMBER 31, 2002 |                                                                                                                                             |                            | 39,911    |             |           |              | 32,800    |          
|GOODWILL                                                                                                              |                                                                                                                                             |                            | 496,946   |             |           |              | 225,181   |          
|DEFERRED TAX ASSET                                                                                                    |                                                                                                                                             |                            | 80,867    |             |           |              | 80,867    |          
|OTHER ASSETS                                                                                                          |                                                                                                                                             |                            | 19,462    |             |           |              | 18,234    |          
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |              |           |          
|                                                                                                                      |                                                                                                                                             | TOTAL ASSETS               |           | $           | 2,633,258 |              |           | $         | 2,754,122 | 
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |              |           |          
|CURRENT LIABILITIES                                                                                                   |                                                                                                                                             |                            |           |             |           |              |           |          
|                                                                                                                      | ACCOUNTS PAYABLE                                                                                                                            | $                          | 112,271   |             |           | $            | 112,339   |          
|                                                                                                                      | ACCRUED VACATION                                                                                                                            |                            |           | 30,350      |           |              |           | 43,320    |          
|                                                                                                                      | ACCRUED EXPENSES                                                                                                                            |                            |           | 159,366     |           |              |           | 98,348    |          
|                                                                                                                      | ACCRUED BUSINESS ACQUISITION PAYMENT                                                                                                        |                            |           | 50,000      |           |              |           | 50,000    |          
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |              |           |          
|                                                                                                                      |                                                                                                                                             | TOTAL CURRENT LIABILITIES  |           |             | 351,987   |              |           |           | 304,007   | 
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |              |           |          
|STOCKHOLDERS
EQUITY                                                                                                  |                                                                                                                                             |                            |           |             |           |              |           |          
|                                                                                                                      | PREFERRED STOCK, $.001 PAR VALUE; AUTHORIZED
10,000,000 SHARES, 0 SHARES ISSUED AND
OUTSTANDING AT JUNE 30, 2003 AND
DECEMBER 31, 2002      |                            |           |             |           |              |           |           |          
|                                                                                                                      | COMMON
STOCK, $.001 PAR VALUE;
AUTHORIZED
20,000,000 SHARES, 5,908,675 SHARES ISSUED
AND OUTSTANDING AT JUNE 30, 2003
AND DECEMBER 31, 2002 |                            |           | 5,909       |           |              |           | 5,909     |          
|                                                                                                                      | ADDITIONAL PAID-IN-CAPITAL                                                                                                                  |                            |           | 2,403,706   |           |              |           | 2,403,706 |          
|                                                                                                                      | RETAINED EARNINGS                                                                                                                           |                            |           | (128,344    | )         |              |           | 40,500    |          
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |              |           |          
|                                                                                                                      |                                                                                                                                             | TOTAL STOCKHOLDERS EQUITY |           | $           | 2,281,271 |              |           | $         | 2,450,115 | 
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |              |           |          
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                            |                                                                                                                                             | $                          | 2,633,258 |             |           | $            | 2,754,122 |          
|                                                                                                                      |                                                                                                                                             |                            |           |             |           |              |           |          

See notes to condensed consolidated financial statements.

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OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 
|--------------------------------- | --------------------------------------------- |  | ------------ | --------- | ------------- |  | ------------- | --------- | ------------- |  | --------- | --------- |  | - | --------- | --------- | 
|                                  |                                               |  | SIX MONTHS   |           | SIX MONTHS    |  | THREE MONTHS  |           | THREE MONTHS 
|                                  |                                               |  | ENDED        |           | ENDED         |  | ENDED         |           | ENDED        
|                                  |                                               |  | JUNE 30 2003 |           | JUNE 30, 2002 |  | JUNE 30, 2003 |           | JUNE 30, 2002
|                                  |                                               |  |              |           |               |  |               |           |              
|REVENUES:                         |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |          
|                                  | CONTRACT REVENUES                             |  | $            | 1,371,494 |               |  | $             | 2,636,608 |               |  | $         | 684,602   |  |   | $         | 1,247,750 | 
|                                  | TEMPORARY STAFFING REVENUES                   |  |              | 1,945,186 |               |  |               | 0         |               |  |           | 1,213,228 |  |   |           | 0         | 
|                                  | INTEREST INCOME                               |  |              | 10,273    |               |  |               | 15,491    |               |  |           | 7,644     |  |   |           | 7,845     | 
|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 
|                                  |                                               |  | 3,326,953    |           |               |  | 2,652,099     |           |               |  | 1,905,474 |           |  |   | 1,255,595 |          
|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 
|OPERATING EXPENSES:               |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |          
|                                  | COSTS OF CONTRACT SERVICES PROVIDED           |  |              | 916,692   |               |  |               | 1,963,551 |               |  |           | 458,639   |  |   |           | 713,089   | 
|                                  | COSTS OF TEMPORARY STAFFING SERVICES PROVIDED |  |              | 1,988,787 |               |  |               | 0         |               |  |           | 1,245,595 |  |   |           | 0         | 
|                                  | GENERAL AND ADMINISTRATIVE                    |  |              | 677,173   |               |  |               | 747,347   |               |  |           | 357,696   |  |   |           | 399,023   | 
|                                  | INTEREST                                      |  |              | 3,281     |               |  |               | 70        |               |  |           | 2,499     |  |   |           | 0         | 
|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 
|TOTAL OPERATING EXPENSES          |                                               |  | 3,585,933    |           |               |  | 2,710,968     |           |               |  | 2,064,429 |           |  |   | 1,112,112 |          
|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 
|LOSS BEFORE INCOME TAXES          |                                               |  | (258,980     | )         |               |  | (58,869       | )         |               |  | (158,955  | )         |  |   | 143,483   |          
|INCOME TAX BENEFIT (EXPENSE)      |                                               |  | 90,136       |           |               |  | 16,100        |           |               |  | 61,793    |           |  |   | (60,101   | )        
|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 
|NET LOSS                          |                                               |  | ($168,844    | )         |               |  | ($42,769      | )         |               |  | ($97,162  | )         |  | $ | 83,382    |          
|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 
|BASIC EARNINGS (LOSS) PER SHARE   |                                               |  | ($0.03       | )         |               |  | ($0.01        | )         |               |  | ($0.02    | )         |  | $ | 0.01      |          
|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 
|DILUTED EARNINGS (LOSS) PER SHARE |                                               |  | ($0.03       | )         |               |  | ($0.01        | )         |               |  | ($0.02    | )         |  | $ | 0.01      |          
|                                  |                                               |  |              |           |               |  |               |           |               |  |           |           |  |   |           |           | 

See notes to condensed consolidated financial statements.

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OPTIMUMCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |          |        |          |         | 
|------------------------------------------------ | --------------------------------------------------------------------------- | -------------------------------------------- | ----------------------------------------------- | ----------------------------------------------------------------- | ------- | ---------------- | --------- | -------- | ------ | -------- | ------- | 
|                                                 |                                                                             |                                              |                                                 |                                                                   |         | SIX MONTHS ENDED
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                 
|                                                 |                                                                             |                                              |                                                 |                                                                   |         | JUNE 30,         |           | JUNE 30,
|                                                 |                                                                             |                                              |                                                 |                                                                   |         | 2003             |           | 2002    
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|CASH FLOW FROM OPERATING ACTIVITIES              |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|                                                 | Net Loss                                                                    |                                              | ($168,844                                       | )                                                                 |         |                  | ($42,769  | )       
|                                                 | Adjustments to reconcile net loss to net
cash used by operating activities: |                                              |                                                 |                                                                   |         |                  |           |          |       
|                                                 |                                                                             | Depreciation & amortization                  |                                                 |                                                                   | 7,529   |                  |           |          | 5,815  |         
|                                                 |                                                                             | Deferred taxes                               |                                                 |                                                                   | (12,499 | )                |           |          | (2,173 | )       
|                                                 |                                                                             | Changes in operating assets and liabilities: |                                                 |                                                                   |         |                  |           |          |        |         
|                                                 |                                                                             |                                              | Decrease/(Increase) in accounts receivable, net |                                                                   |         | (248,102         | )         |          |        | 673,579  |        
|                                                 |                                                                             |                                              | Decrease in advances due from officer           |                                                                   |         | 0                |           |          |        | 143,460  |        
|                                                 |                                                                             |                                              | Decrease in prepaid expenses                    |                                                                   |         | 44,634           |           |          |        | 56,490   |        
|                                                 |                                                                             |                                              | Decrease in prepaid income taxes                |                                                                   |         | 216,114          |           |          |        | 537,255  |        
|                                                 |                                                                             |                                              | Decrease/(Increase) in other assets             |                                                                   |         | (1,228           | )         |          |        | 4,166    |        
|                                                 |                                                                             |                                              | (Decrease)/Increase in accounts payable         |                                                                   |         | (68              | )         |          |        | (130,043 | )      
|                                                 |                                                                             |                                              | (Decrease)/Increase in accrued vacation         |                                                                   |         | (12,970          | )         |          |        | (3,077   | )      
|                                                 |                                                                             |                                              | (Decrease)/Increase in accrued expenses         |                                                                   |         | 61,018           |           |          |        | (144,784 | )      
|                                                 |                                                                             |                                              | Decrease in accrued payment to officer          |                                                                   |         | 0                |           |          |        | (700,000 | )      
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|                                                 |                                                                             |                                              |                                                 | CASH AND CASH EQUIVALENTS USED
BY OPERATING ACTIVITIES            |         |                  | (114,416  | )        |        |          | 397,919 | 
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|CASH FLOW FROM INVESTING ACTIVITIES              |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|                                                 | Purchase of investments                                                     |                                              |                                                 | 0                                                                 |         |                  |           | (103,214 | )     
|                                                 | Proceeds from sale of marketable securities                                 |                                              |                                                 | 330,268                                                           |         |                  |           | 0        |       
|                                                 | Purchase of other assets                                                    |                                              |                                                 | 0                                                                 |         |                  |           | (12,930  | )     
|                                                 | Purchase of office furniture and computer equipment                         |                                              |                                                 | 0                                                                 |         |                  |           | (5,187   | )     
|                                                 | Payments on note receivable from officer                                    |                                              |                                                 | 0                                                                 |         |                  |           | 225,136  |       
|                                                 | Purchase of new business entity                                             |                                              |                                                 | (286,404                                                          | )       |                  |           | 0        |       
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|                                                 |                                                                             |                                              |                                                 | CASH AND CASH EQUIVALENTS PROVIDED/(USED)
BY INVESTING ACTIVITIES |         |                  | 43,864    |          |        |          | 103,805 | 
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|CASH FLOW
FROM FINANCING ACTIVITIES              |                                                                             |                                              | 0                                               |                                                                   |         |                  | 0         |         
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|                                                 |                                                                             |                                              |                                                 | CASH AND CASH EQUIVALENTS PROVIDED
BY FINANCING ACTIVITIES        |         |                  | 0         |          |        |          | 0       | 
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|(DECREASE) IN CASH AND CASH EQUIVALENTS          |                                                                             |                                              | (70,552                                         | )                                                                 |         |                  | 501,724   |         
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |                                                                             |                                              | 779,235                                         |                                                                   |         |                  | 1,646,891 |         
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         
|CASH AND CASH EQUIVALENTS AT END OF PERIOD       |                                                                             | $                                            | 708,683                                         |                                                                   |         | $                | 2,148,615 |         
|                                                 |                                                                             |                                              |                                                 |                                                                   |         |                  |           |         

See notes to condensed consolidated financial statements.

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OPTIMUMCARE CORPORATION




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2003

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 six month
period ended June 30, 2003 are not necessarily indicative of the results that
may be expected for the year ended December 31, 2003. 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, 2002.

NOTE B  STOCK-BASED COMPENSATION

The Company accounts for its stock option plans under the recognition and
measurement principles of Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees(APB 25) and related
Interpretations. No stock-based employee compensation cost is reflected in net
income, as all options granted under its plans had an exercise price equal to
the market value of the underlying common stock on the date of grant. The
following table illustrates the effect on net income and earnings per share if
the Company had applied the fair value recognition provisions of FASB Statement
No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.

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|                                                                                                                                             |                      |   |                    |      |                  |   |               |     |               |   |          |      |   |  |          |       |  
|-------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | - | ------------------ | ---- | ---------------- | - | ------------- | --- | ------------- | - | -------- | ---- | - |  | -------- | ----- | -
|                                                                                                                                             |                      |   | Three Months Ended |      | Six Months Ended
|                                                                                                                                             |                      |   |                    |      |                 
|                                                                                                                                             |                      |   | June 30, 2003      |      | June 30, 2002    |   | June 30, 2003 |     | June 30, 2002
|                                                                                                                                             |                      |   |                    |      |                  |   |               |     |              
|Net income, as reported                                                                                                                      |                      | $ | (97,162            | )    |                  | $ | 83,382        |     |               | $ | (168,844 | )    |   |  | ($42,769 | )    
|Deduct: Total
stock-based employee
compensation expense
determined under fair
value based methods
for all awards, net of related tax effects |                      |   | (992               | )    |                  |   | (40,920       | )   |               |   | (992     | )    |   |  | (40,920  | )    
|Pro forma net income                                                                                                                         |                      |   | (98,154            | )    |                  |   | 42,462        |     |               |   | (169,836 | )    |   |  | (83,689  | )    
|                                                                                                                                             |                      |   |                    |      |                  |   |               |     |               |   |          |      |   |  |          |      
|Earnings per share:                                                                                                                          |                      |   |                    |      |                  |   |               |     |               |   |          |      |   |  |          |      
|                                                                                                                                             | Basic, as reported   |   | $                  | (.02 | )                |   | $             | .01 |               |   | $        | (.03 | ) |  |          | ($.01 | )
|                                                                                                                                             | Basic, pro forma     |   | $                  | (.02 | )                |   | $             | .01 |               |   | $        | (.03 | ) |  |          | ($.01 | )
|                                                                                                                                             | Diluted, as reported |   | $                  | (.02 | )                |   | $             | .01 |               |   | $        | (.03 | ) |  |          | ($.01 | )
|                                                                                                                                             | Diluted, pro forma   |   | $                  | (.02 | )                |   | $             | .01 |               |   | $        | (.03 | ) |  |          | ($.01 | )

NOTE C  - INVESTMENTS

Investments consist of federal home loan bank bonds and U.S. treasury notes
with an aggregate principal amount of $0 and $330,268 at June 30, 2003 and
December 31, 2002 respectively. The bonds were liquidated to fund working
capital needs and pay off an existing line of credit during the period ended
June 30, 2003.

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NOTE D  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, 2003      |           | June 30, 2002    |  | June 30, 2003 |           | June 30, 2002
|                                                                   |  |                    |           |                  |  |               |           |              
|Numerator                                                          |  | $                  | (97,162   | )                |  | $             | 83,382    |               |  | $ | (168,844  | ) |  |  | ($42,769  | )
|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                                    |  |                    | 0         |                  |  |               | 135,076   |               |  |   | 0         |   |  |  | 67,538    |  
|Denominator for diluted
earnings per share                         |  |                    | 5,908,675 |                  |  |               | 6,043,751 |               |  |   | 5,908,675 |   |  |  | 5,976,213 |  
|Basic earnings per share                                           |  | $                  | (.02      | )                |  | $             | .01       |               |  | $ | (.03      | ) |  |  | ($.01     | )
|Diluted earnings per
share                                         |  | $                  | (.02      | )                |  | $             | .01       |               |  | $ | (.03      | ) |  |  | ($.01     | )

NOTE E  BUSINESS SEGMENTS

The Companys principal business is to develop, market and manage hospital
based programs for the treatment of psychiatric disorders on both an inpatient
and outpatient basis. However, with the acquisition of three (3) healthcare
staffing companies during the past nine months, the Company adopted Statement
of Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information(SFAS 131). The Company has two (2)
segments, psychiatric programs and temporary staffing.

The Company evaluates segment performance and allocates resources based on
several factors, of which, net sales, accounts receivable and operating income
are the primary financial measures. The accounting policies of the reportable
segments are the same as those described in Note 1 to the consolidated
financial statements.

|                     |  |                                  |           |          |  |               |           |           |  |   |          |  
|-------------------- |  | -------------------------------- | --------- | -------- |  | ------------- | --------- | --------- |  | - | -------- | -
|                     |  | Three months ended June 30, 2003
|                     |  |                                 
|                     |  |                                  |           |          |  | Operating     |           | Operating
|                     |  | Net Sales                        |           | Expenses |  | Income/(Loss)
|                     |  |                                  |           |          |  |               |           |           |  |   |          |  
|Psychiatric Programs |  | $                                | 684,602   |          |  | $             | 458,639   |           |  | $ | 225,963  |  
|Temporary Staffing   |  |                                  | 1,213,228 |          |  |               | 1,245,595 |           |  |   | (32,367  | )
|Corporate            |  |                                  | 7,644     |          |  |               | 360,195   |           |  |   | (352,551 | )
|                     |  |                                  |           |          |  |               |           |           |  |   |          |  
|                     |  | $                                | 1,905,474 |          |  | $             | 2,064,429 |           |  | $ | (158,955 | )
|                     |  |                                  |           |          |  |               |           |           |  |   |          |  

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|                     |  |                                |           |          |  |               |           |           |  |   |          |  
|-------------------- |  | ------------------------------ | --------- | -------- |  | ------------- | --------- | --------- |  | - | -------- | -
|                     |  | Six months ended June 30, 2003
|                     |  |                               
|                     |  |                                |           |          |  | Operating     |           | Operating
|                     |  | Net Sales                      |           | Expenses |  | Income/(Loss)
|                     |  |                                |           |          |  |               |           |           |  |   |          |  
|Psychiatric Programs |  | $                              | 1,371,494 |          |  | $             | 916,692   |           |  | $ | 454,802  |  
|Temporary Staffing   |  |                                | 1,945,186 |          |  |               | 1,988,787 |           |  |   | (43,601  | )
|Corporate            |  |                                | 10,273    |          |  |               | 680,454   |           |  |   | (670,181 | )
|                     |  |                                |           |          |  |               |           |           |  |   |          |  
|                     |  | $                              | 3,326,953 |          |  | $             | 3,585,933 |           |  | $ | (258,980 | )
|                     |  |                                |           |          |  |               |           |           |  |   |          |  

|                     |  |                     |           |            |  |   |           | 
|-------------------- |  | ------------------- | --------- | ---------- |  | - | --------- | 
|                     |  | As of June 30, 2003
|                     |  |                    
|                     |  | Accounts            |           | Total     
|                     |  | Receivable          |           | Assets (1)
|                     |  |                     |           |            |  |   |           | 
|Psychiatric Programs |  | $                   | 222,200   |            |  | $ |          | 
|Temporary Staffing   |  |                     | 918,965   |            |  |   | 1,488,954 | 
|Corporate            |  |                     | 34,382    |            |  |   | 1,144,304 | 
|                     |  |                     |           |            |  |   |           | 
|                     |  | $                   | 1,175,547 |            |  | $ | 2,633,258 | 
|                     |  |                     |           |            |  |   |           | 



|(1) |  | The temporary staffing business is part of the Companys wholly owned
subsidiaries, which are accounted for separately internally. However, the
assets of the parent companys corporate offices are not maintained
separately from those that are associated with the psychiatric programs
such as, cash, fixed assets, etc. and therefore, cannot be reported
individually.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Item 2. 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, 2003 and December 31, 2002, the Companys working capital was
$1,644,085 and $2,093,033, respectively. The decrease in working capital for
the period is primarily due to the Companys net loss, growth in the temporary
staffing business and associated accounts receivable, and the acquisition of a
new business entity on March 12, 2003. 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 contract business, the inability to collect certain of
the accounts receivable could materially and adversely affect the Companys
liquidity. The accounts receivable of the temporary staffing business are less
concentrated, with no customer representing more than 25%. The Company
evaluates the collectibility of its receivables on a case-by-case basis.
Accounts receivable at June 30, 2003 have increased from those that existed at
December 31, 2002. This is due to growth in the existing staffing business and
the receivables from the new business entity acquired in March 2003. Temporary
staffing receivables at June 30, 2003 were $918,965 of which 8 accounts
comprise approximately 40%. Management believes that no collection problems
with respect to these receivables exist. Accordingly, no allowance for
doubtful accounts has been recorded at June 30, 2003.

Cash used in operations was $114,416 for the six month period ending June 30,
2003 compared to cash generated of $397,919 for the six month periods ended
June 30, 2002. Cash used during the six months ended June 30, 2003 was
primarily due to the Companys net loss for the period and an increase in
accounts receivable.

Cash provided by investing activities
was $43,864 for the six month period ended June 30, 2003
compared to cash provided by investing activities of $103,805 for the
same period of 2002. Cash was generated from the proceeds from sale
of marketable securities and was primarily used during the six months
ended June 30, 2003 for the purchase of a new business entity on
March 12, 2003.

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Cash flows from financing activities
were zero for the period ended ending June 30, 2003. The Company
has terminated its line of credit facility and is currently in
discussions with several lenders who could provide working capital
lines of credit on competitive terms. The Companys principal sources
of liquidity for fiscal year 2003 are cash on hand, accounts
receivable, and continuing revenues from programs and from the
recently acquired staffing businesses.

Material Changes in Results of Operations

Three Months Ended June 30, 2003 compared to Three Months Ended June 30, 2002

The Company operated four (4) contract programs during the three months ended
June 30, 2003 and six (6) contract programs during the three months ended June
30, 2002. Net revenues from the contract programs were $684,602 and $1,247,750
for the three months ended June 30, 2003 and 2002, respectively. The decrease
in net revenues among periods is primarily due to the decrease in the number of
operating programs. Cost of contract services provided were $458,639 and
$713,089 for the three months ended June 30, 2003 and 2002, respectively. The
decrease in cost of contract services provided among periods is due to the
decrease in the number of programs.

Revenues for temporary staffing
services were $1,213,228 for the three month
period ended June 30, 2003. Costs of providing these services were $1,245,595
for the same period. Revenues and operations for this business segment
commenced during the third quarter of 2002 and, therefore, there are no
corresponding amounts for the previous year.

General and administrative expenses
were $357,696 and $399,023 for the three
months ended June 30, 2003 and June 30, 2002, respectively. The decrease in
costs was primarily due to an aggressive effort on the part of management to
deliver services more cost effectively.

The companys income tax benefit has increased for the three months ended June
30, 2003 over the comparable three months ended June 30, 2002 due to a net loss
for the period.

Net loss was $97,162 for the three months ended June 30, 2003 compared to net
income of $83,382 for the three months ended June 30, 2002. The prior year
period included a one-time early termination fee from a hospital. The loss
before income taxes for the three months ended June 30,
2002 excluding the one-time fee would have been comparable to the
current quarter.

Six Months Ended June 30, 2003 compared to Six Months Ended June 30, 2002

The Company operated four (4) contract programs during the three months ended
June 30, 2003 and six (6) contract programs during the three months ended June
30, 2002. Net revenues from the contract programs were $1,371,494 and
$2,636,608 for the six months ended June 30, 2003 and 2002, respectively. The
decrease in net revenues among periods is primarily due to the decrease in the
number of operating programs. Cost of contract services provided were $916,692
and $1,963,551 for the six months ended June 30, 2003 and 2002, respectively.
The decrease in cost of contract services provided among periods is due to the
decrease in the number of programs.

Revenues for temporary staffing
services were $1,945,186 for the six month
period ended June 30, 2003. Costs of providing these services were $1,988,787
for the same period. Revenues and operations for this business segment
commenced during the third quarter of 2002 and, therefore, there are no
corresponding amounts for the previous year.

General and administrative expenses
were $677,173 and $747,347 for the six
months ended June 30, 2003 and June 30, 2002, respectively. The decrease in
costs was primarily due to an aggressive cost reduction effort and the reversal
of year end accruals made during the six months ended June 30, 2003.

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The companys income tax benefit has increased for the six months ended June
30, 2003 over the comparable three months ended June 30, 2002 due to a larger
net loss for the period.

Net loss was $168,844 and $42,769 six months ended June 30, 2003 and 2002,
respectively.

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
certain customers could have a significant adverse effect on the
Companys profit margin.

The Company is continuing to make
efforts to expand the number of its operational contract programs and
has contracted with a consulting firm managed by one of the
Companys previous directors to manage an aggressive marketing
program. The Companys contract business has a dependence on a
small customer base, presently consisting of three hospitals.

The health care temporary staffing
services segment has a fairly large customer base consisting of
approximately 80 active hospitals. The Company acquired two health
care temporary staffing businesses during 2002 and acquired an
additional health care staffing business in March 2003. The Company
has identified other acquisition candidates and intends to continue
to pursue this line of business.

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

The June 30, 2003 condensed consolidated financial statements included in this
filing on Form 10-Q have been reviewed by Lesley, Thomas, Schwarz & Postma,
Inc., independent certified public accountants, in accordance with established
professional standards and procedures for such review. The report of Lesley,
Thomas, Schwarz & Postma, Inc. commenting upon their review accompanies the
condensed consolidated financial statements included in Item 1 of Part 1.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

Immaterial.




Item 4. Controls and Procedures

Within the 90 days prior to the date of this report, an evaluation was
performed under the supervision and with the participation of the Companys
management, including the Chief Executive Officer/Chief Financial Officer, of
the effectiveness of the design and operation of the Companys disclosure
controls and procedures. Based upon and as of the date of that evaluation, the
Companys Chief Executive Officer/Chief Financial Officer concluded that the
Companys disclosure controls and procedures were effective. There have been no
significant changes in the Companys internal controls or in other factors that
could significantly affect the internal controls subsequent to the last day
they were evaluated.

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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 15:   |  | Accountants Acknowledgment                                                                                                                                                   
|       |  |                                                     |  |               |  |                                                                                                                                                                               
|       |  |                                                     |  | Exhibit 31.1: |  | Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                           
|       |  |                                                     |  |               |  |                                                                                                                                                                               
|       |  |                                                     |  | Exhibit 31.2: |  | Certification of Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                           
|       |  |                                                     |  |               |  |                                                                                                                                                                               
|       |  |                                                     |  | Exhibit 32:   |  | Certification of Chief Executive Officer and Chief
Financial Officer of Periodic Financial Reports pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, 18
U.S.C. § 1350
|       |  |                                                     |  |               |  |                                                                                                                                                                               
|       |  | (B)                                                 |  | None          |  |                                                                                                                                                                               

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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: August 8, 2003 |  | By:                                                                                                                                                              |  | /S/ Edward A. Johnson
|                      |  |                                                                                                                                                                  |  |                      
|                      |  |                                                                                                                                                                  |  |                      
|                      |  | Edward A. Johnson
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer)

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EXHIBIT INDEX

|              |  |                                                                                                                                                                               
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 15:   |  | Accountants Acknowledgment                                                                                                                                                   
|              |  |                                                                                                                                                                               
|Exhibit 31.1: |  | Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002                                                                            
|              |  |                                                                                                                                                                               
|Exhibit 31.2: |  | Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002                                                                            
|              |  |                                                                                                                                                                               
|Exhibit 32:   |  | Certification of Chief Executive Officer and Chief Financial
Officer of Periodic Financial Reports pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350

17