# U.S.
SECURITIES AND EXCHANGE COMMISSION

# Washington,
D.C. 20549

# FORM 10-QSB

| | [ X ] | QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | ----- | ---------------------------------------------------------------------------------------

For
the quarterly period ended September 30, 2002

| | [     ] | TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | ------- | ----------------------------------------------------------------------------------------

For the transition period from

Commission File No. 000-30440

THE AUXER GROUP, INC.(Exact name of small business issuer as specified in its charter)

|Delaware                        | 22-3537927         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)

18 B East 5th Street
Paterson, New Jersey    07524
(Address of Principal Executive Offices)

(973) 890-4925
(Issuer's telephone number)

12 Andrews Drive,
West Paterson, New Jersey    07424
(Former name, address and fiscal year, if changed since last report)

Check whether the issuer
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X]   No [  ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 19, 2002, the Company
had 236,291,066 shares of Common Stock outstanding, $0.001 par value.

THE AUXER GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTSINDEX

|Part
      I-- FINANCIAL INFORMATION                                      |  |  | 
|------------------------------------------------------------------------- |  |  | 
|Item
      1. Financial Statements                                        | 
|Item
      2. Management's Discussion and Analysis of Financial Condition |  |  | 
|Item
      3. Controls and Procedures                                     |  |  | 
|Part
      II-- OTHER INFORMATION                                         | 
|Item
      1. Legal Proceedings                                           |  |  | 
|Item
      2. Changes in Securities                                       |  |  | 
|Item
      3. Defaults Upon Senior Securities                             |  |  | 
|Item
      4. Submission of Matters to a Vote of Security Holders         |  |  | 
|Item
      5. Other Information                                           |  |  | 
|Item
      6. Exhibits and Reports on Form 8-K                            |  |  | 
|Signature                                                                 |  |  | 
|                                                                          | 

# PART I

## ITEM 1.      FINANCIAL STATEMENTS

The consolidated financial statements of The Auxer Group, Inc. and subsidiaries
(collectively, the "Company"), included herein were prepared, without audit, pursuant
to rules and regulations of the Securities and Exchange Commission. Because certain
information and notes normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America were
condensed or omitted pursuant to such rules and regulations, these financial statements
should be read in conjunction with the financial statements and notes thereto included
in the audited financial statements of the Company as included in the Company's Form
10-KSB for the year ended December 31, 2001.

---

TABLE OF CONTENTS

|                              | Page(s)
|----------------------------- | -------
|Balance sheets                | 3      
|                              |        
|Statements of operations      | 4      
|                              |        
|Statements of cash flows      | 5      
|                              |        
|Notes to financial statements | 6-7    

`THE AUXER GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS

                                                                  September 30,          December 31,
                                                                       2002                  2001
                                                                       ----                  ----
                         ASSETS                                    (unaudited)
Current Assets
     Cash                                                      $            8,614    $           27,616
     Accounts receivable, net                                              23,477               166,463
     Inventory                                                            207,473               479,928
                                                                 -----------------     -----------------
          Total Current Assets                                            239,564               674,007

Property plant and equipment, net of accumulated depreciation              89,564               474,360
Security deposit                                                           53,378                54,533
Prepaid expenses                                                           22,229                     -
Other receivables, net                                                     46,039               183,900
                                                                 -----------------     -----------------
          Total Assets                                         $          450,774    $        1,386,800
                                                                 =================     =================

                 LIABILITIES AND CAPITAL

Current Liabilities
     Bank loans                                                $          122,961    $                -
     Payroll taxes payable                                                105,727                     -
     Accounts payable and accrued expenses                                699,543               438,742
     Loan payable                                                          46,275                     -
     Deferred sales                                                        69,500               373,174
     Notes payable                                                        578,237               758,886
     Notes payable-shareholders                                           158,042               113,054
                                                                 -----------------     -----------------
          Total Current Liabilities                                     1,780,285             1,683,856

Long term debt, less current maturities                                   693,683               895,303
Common stock subject to rescission                                        509,000               509,000

Commitments and contingencies

Stockholders' Equity (Deficit)
  Common stock, 1,000,000,000 shares authorized $.001
    par value; issued and outstanding 236,237,030 at September
    30, 2002 and 138,117,072 at December 31, 2001                         236,237               138,117
  Preferred stock 25,000,000 shares authorized $.001
    par value; issued and outstanding 1,500,000 at September
    30, 2002 and 2,750,000 at December 31, 2001                             1,500                 2,750
Additional paid-in capital                                              9,696,553             9,585,421
Accumulated deficit                                                   (12,466,484)          (11,427,647)
                                                                 -----------------     -----------------
          Stockholders' (Deficit)                                      (2,532,194)           (1,701,359)
                                                                 -----------------     -----------------
          Total Liabilities and Capital                        $          450,774    $        1,386,800
                                                                 =================     =================


                        See Notes to Financial Statements
                                        3



                              THE AUXER GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                          For the Three Months Ended            For the Nine Months Ended
                                                September 30,                         September 30,
                                           2002               2001               2002               2001
                                           ----               ----               ----               ----
                                        (unaudited)        (unaudited)        (unaudited)        (unaudited)

Sales revenues                      $          60,848  $         588,875  $       1,279,680  $       2,170,597

Cost of sales                                 104,507            554,386            988,306          1,936,848
                                      ----------------   ----------------   ----------------   ----------------

Gross profit                                  (43,659)            34,489            291,374            233,749

General and administrative expenses           120,321            433,644            858,194          2,623,949
Impairment of fixed assets                          -                  -            270,000                  -
Depreciation and amortization                  31,994             35,333             98,653            104,392
Interest expenses                              34,671             43,605            103,364            481,349
                                      ----------------   ----------------   ----------------   ----------------
                                              186,986            512,582          1,330,211          3,209,690

    Loss from operations                     (230,645)          (478,093)        (1,038,837)        (2,975,941)

Other income and expenses
    Interest income                                 -                341                  -              2,445
                                      ----------------   ----------------   ----------------   ----------------

Net loss from continuing
     operations                              (230,645)          (477,752)        (1,038,837)        (2,973,496)

Loss from discontinued operations,
     net of taxes                                   -             11,041                  -            (64,183)
                                      ----------------   ----------------   ----------------   ----------------

Net loss                            $        (230,645) $        (466,711) $      (1,038,837) $      (3,037,679)
                                      ================   ================   ================   ================

Loss per common share from
     discontinued operations        $           (0.00) $            0.00  $           (0.00) $           (0.00)
                                      ================   ================   ================   ================

Net loss per common share           $           (0.00) $           (0.00) $           (0.00) $           (0.03)
                                      ================   ================   ================   ================

Weighted average shares outstanding       236,237,030        131,437,030        217,001,683        119,696,656
                                      ================   ================   ================   ================

                   See Notes to Financial Statements.
                                        4



                              THE AUXER GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                  For the Nine Months Ended
                                                                         September 30,
                                                                   2002               2001
                                                                (unaudited)       (unaudited)
Operating Activities
   Net loss from continuing operations                   $      (1,038,837)  $      (3,037,679)
   Adjustments to reconcile net loss to net cash
      provided/used by operating activities:
   Depreciation and amortization                                    98,653             104,392
   Common stock issued for services                                  7,500             933,100
   Convertible loan interest                                             -             390,722
   Impairment of fixed assets                                      270,000                   -
   Changes in operating assets and liabilities:
   (Increase) decrease in accounts receivable                      142,986             (65,563)
   (Increase) decrease in inventory                                272,455            (131,618)
   (Increase) decrease in prepaid expenses                         (22,229)             22,605
   (Increase) decrease in other receivables                        137,861            (181,942)
   (Increase) decrease in notes receivable                               -            (131,012)
   Increase (decrease) in accounts payable and
      accrued expenses                                             250,298             596,667
   Increase (decrease) in payroll tax liability                    105,727                   -
   Increase (decrease) in deferred sales                                 -             (98,313)
                                                           ----------------    ----------------
   Net cash provided/(used) by operating activities                224,414          (1,598,641)

Investing Activities
   Purchase property, inventory and equipment                            -               8,776
   Proceeds from sale of fixed assets                                    -             804,592
   Security deposit                                                 (1,155)             87,039
                                                           ----------------    ----------------
   Net cash provided (used) by investing activities                 (1,155)            900,407

Financing Activities
   Bank loans                                                      126,000                   -
   Payment of bank loan                                             (3,039)                  -
   Borrowings/payments under line of credit
      agreement, net                                                46,275              17,018
   Proceeds from long-term debt                                          -             911,685
   Payments on short-term debt                                    (381,663)           (843,322)
   Payments on long-term debt                                         (606)             (1,224)
   Shareholder loan payable                                        (29,228)            (29,228)
   Sale of common stock and exercise of options                          -             530,900
                                                           ----------------    ----------------
   Net cash provided (used) by financing activities               (242,261)            585,829
                                                           ----------------    ----------------
   Increase (decrease) in cash                                     (19,002)           (112,405)
   Cash at beginning of period                                      27,616             183,988
                                                           ----------------    ----------------
   Cash at end of period                                 $           8,614   $          71,583
                                                           ================    ================

Supplemental Disclosures of Cash Flow Information:
  Cash paid during year for:
     Interest                                            $               -   $               -
                                                           ================    ================
     Income taxes (benefits)                             $               -   $               -
                                                           ================    ================

                       See Notes to Financial Statements.
                                        5`

---

## THE AUXER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002

|Note 1- | Basic earnings
(loss) per common share (EPS) is computed as net earnings (loss)
divided by the weighted-average number of common shares outstanding for the
period. Diluted EPS representing the potential dilution that could occur from
common shares issuable through stock-based compensation including stock options,
restricted stock awards, warrants and other convertible securities is not
presented for the three and nine month periods ended September 30, 2002 and 2001
since there was no dilutive effect of potential common shares.
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 2- | During January 2002
one of the Companys subsidiaries obtained an unsecured $100,000 credit
line with a bank with an interest rate of 6.5% over the banks prime rate.
The loan is to be repaid at 2% of the principal balance outstanding ($250
minimum) per month plus accrued interest. The credit line is personally
guaranteed by the President of the Company. As of September 30, 2002 the Company
has borrowed $97,961 against this credit line.
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 3- | During the quarter
ended September 30, 2002, the Company borrowed $25,000 under a credit line from
a bank at an interest rate of prime plus one percent, currently 5 3/4%. Interest
is payable monthly.
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 4- | During February
2002 one of the Companys subsidiaries entered into an inventory and
security agreement with a funding corporation. The loan agreement provides for
advances of thirty percent (30%) of eligible inventory, not to
exceed $200,000. Interest will be charged at a rate of four and one half percent
(4.5%) over the prime rate but not less than six percent (6%). The funding
corporation will have a security interest in all inventory. This loan is
personally guaranteed by the President of the Company. As of September 30, 2002
the Company has borrowed $46,275 under this agreement.
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The same subsidiary also
entered into a factoring agreement with the funding corporation. The loan
agreement provides for a seventy percent (70%) advance on eligible
accounts receivable, not to exceed $300,000. The interest rate increases based
upon the length of time the receivable remains unpaid. This loan agreement is
personally guaranteed by the President of the Company. As of September 30, 2002
the Company has repaid all advances outstanding under the factoring agreement.
The factoring agreement was terminated during the quarter ended June 30, 2002.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In the event the President
of the Company has to repay the above loans, the Company will issue him
sufficient shares to cover the loan payments.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

|Note 5- | On March 18, 2002,  Auxer Telecom, Inc. was dissolved.
|------- | ------------------------------------------------------

6

## THE AUXER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002

|Note 6- | On April 24, 2002
the Company entered into a modification and payment restructuring agreement with
one of its creditors. The creditor will try to sell the underlying collateral
and offset the proceeds against an agreed upon amount, any shortfall will be
paid by the Company before September 2002. As of September 30, 2002 the
underlying collateral was not sold and the loan is in default.
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 7- | On May 2, 2002 the
Company entered into an agreement whereby the 8% convertible debentures totaling
$894,185 will be retired for one million dollars ($1,000,000) for principal and
accrued interest. The $1,000,000 is reduced by any proceeds received by the
debenture holder from the conversion of the debt into common stock and the sale
of common stock. For the nine months ended September 30, 2002 $162,150 of debt
was converted into 69,000,000 shares of common stock.
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

---

## Item 2.     Management's
Discussion and Analysis of Financial Conditions and Results
of Operations

The following discussion should be read in conjunction with the consolidated
financial statements and notes. In addition to historical information, this
discussion and analysis contains forward-looking statements that involve
risks, uncertainties and assumptions, which could cause actual results to differ
materially from management's expectations. Factors that could cause differences
include, but are not limited to, continued reliance on external sources on financing, expected market demand for the Auxer Group's
products, fluctuations in pricing for products distributed by the Auxer Group's subsidiaries and products offered by competitors, as
well as general conditions of the automotive marketplace.

The Auxer Group is a holding company that consists of (4) four wholly owned subsidiaries: CT Industries, Inc., Hardyston
Distributors, Inc. (doing business as The Mechanics Depot), Universal Filtration Industries, Inc., and Harvey Westbury Corp.  The
companies subsidiaries market products in the telecommunications and automotive industries under various trademarks to include the
X-Factor(TM)Prepaid Phone cards, Platinum Series(TM)Prepaid Phone cards, Garry's Royal Satin(TM)Waxes and Polishes, Easy-Test(R)automotive,
marine and aviation accessory products, and Formula 2000 Ultimate(TM)Engine Treatment.

As a result of the
companies inability to be able to raise additional sources of equity and debt
based funding during this period of operations, Auxers subsidiaries have
been unable to continue to fund the operations under managements plan.
Auxers operations and results have been impacted as a result of the
companies current difficulties in obtaining external financing.

Results of Operations for
the Three Months Ended September 30, 2001 and 2002.

The Auxer Group had sales
of $60,848 for the quarter ended September 30, 2002 as compared to sales of
$588,875 for the quarter ended September 30, 2001. The decrease in sales was
attributed to the decrease in prepaid phone card sales as well as the decrease
in automotive sales.

The Auxer Group had net
losses of $230,645 for the quarter ended September 30, 2002 as compared to net
losses of $466,711 for the quarter ended September 30, 2001. The decrease in net
losses was primarily attributed to the relative decrease in sales combined with
the reduced General and Administrative expenses initiated as part of the
restructuring in the first quarter of 2002.

The Auxer Group had general administrative expenses of $120,321 for the
quarter ended September 30, 2002 as compared to general administrative expenses of
$433,644 for the quarter ended September 30, 2001. The decrease in these expenses
was attributed to the restructuring initiative set forth in the first quarter of 2002.

The Auxer Group had
interest expenses of $34,671 for the quarter ended September 30, 2002 as
compared to $43,605 for the quarter ended September 30, 2001. The decrease in
these expenses was due to the reduction of the interest paid as a result of a
reduction in the convertible note and a decrease in Harvey Westburys
credit facility.

Results of Operations
for the Nine Months Ended September 30, 2001 and 2002

The Auxer Group had sales
of $1,279,680 for the nine-month period ended September 30, 2002 as compared to
sales of $2,170,597 for the nine-month period ended September 30, 2001. The
decrease in sales was attributed to the decrease in prepaid phone card sales as
well as the decrease in automotive sales.

The Auxer Group had net
losses of $1,038,837 for the nine-month period ended September 30, 2002 as
compared to net losses of $3,037,679 for the nine-month period ended September
30, 2001. The decrease in net losses was primarily attributed to the
restructuring initiative set forth in the first quarter of 2002.

The Auxer Group had general
administrative expenses of $858,194 for the nine-month period ended September
30, 2002 as compared to general administrative expenses of $2,623,949 for the
nine-month period ended September 30, 2001. The decrease in these expenses was
attributed to the restructuring initiative set forth in the first quarter of
2002.

The Auxer Group had
interest expenses of $103,364 for the nine-month period ended September 30, 2002
as compared to $481,349 for the nine-month period ended September 30, 2001. The
decrease in these expenses was due to the reduction of the interest from the
convertible note, which was a one-time expense.

Our principle source of
revenue for the three month period ending September 30, 2002 was the sale of the
automotive inventory. Additional funding was provided by an approved banking
credit line; as well as substantial loan contributions from the President and
CEO. Our telecommunications subsidiaries were unable to continue
to remain current on their terms with its carriers, which have resulted in the
loss of its carriers, causing a termination of service. As of the three month
period ended September 2002, our Telecommunications subsidiaries are inactive.

On January 3, 2002, The Auxer Group
announced restructuring to accommodate
future acquisition opportunities. The restructuring is to take place during the
first quarter. Management has agreed to defer compensation for Mr. Chiaramonte, our CEO.
 This restructuring phase has continued through
the third quarter of 2002.  To date, management's restructuring efforts have resulted in a
cumulative reduction of general &
administrative expenses in excess of $1,765,000.  Additionally, we have relocated our administrative and operational
facilities in a continuing effort to reduce current expenses.

On January 11, 2002, CT Industries introduced its new website, www.ctiprepaid.com.
This site is an informational site on CT Industries' products. We also plan
to introduce new sites for our investor and distributor companies as well. As of November 15, 2002, no new
sites have been introduced.

On March 15, 2002, the Board of Directors approved the dissolution of Auxer
Telecom and consolidation of the telecom assets into CT Industries.  Management's plan
was for CT Industries to continue to distribute
prepaid phone cards. Due to Auxers inability to raise additional external
financing, CT Industries has been unable to continue to remain current on their
terms with its carriers and has resulted in the loss of its carriers which
caused a termination of service. As of November of 2002, our Telecommunications
subsidiaries are inactive.

On April 15, 2002, Auxer
announced its initial phase of restructuring neared completion. We
announced a reduction in loss due to restructuring. The reduction in losses and
reduction in general administrative expenses continued during the three month
period ended June 30, 2002 as well as the three month period ended September 30,
2002.

On May 2, 2002, Auxer
announced it has entered into an agreement with certain debenture holders to
settle its convertible debentures for $1 Million. Under the terms of the
agreement, 92 Million shares of common stock which were registered under our Form
SB-2 registration statement were issued and placed in escrow based on a lock up arrangement. Upon the
debenture holders receiving the settlement payment, through a third party, the
registration and debenture agreements are to be retired. As of the three month
period ended September 30, 2002, the debenture holders have not received
adequate funds from the third party to retire their debenture. Furthermore, the
agreement has been terminated for lack of funding and is now in negotiations for
future settlement.

On May 7, 2002, Auxer
announced that the Board of Directors is focusing its corporate resources on
sourcing acquisition candidates in the telecommunications and technology
industry sectors. Management has since identified candidates to invest in and/or
acquire within the Transportation Industry. As of the third quarter ending
September 30, 2002, Auxer has engaged several discussions with merger candidates
and continues to negotiate.

On May 21, 2002, Auxer
announced an increase in revenues and a reduction of expenses due to its
restructuring initiatives. Our revenues have decreased and our
expenses continued to decrease in the three months ended September 30,
2002.

On June 20, 2002, Auxer
announced sales for products sold by its automotive group increased compared to
last year for the three month period ended March 31, 2002 and March 31, 2001,
respectively. Sales in the third quarter ended September 30, 2002 have decreased
compared to sales in the third quarter ended September 30, 2001. These results
are primarily a result of the operating subsidiaries inability to purchase
adequate inventory to grow and/or maintain sales of the telecommunications and
automotive products.

On July 3, 2002, Auxer
announced Harvey Westbury completed an agreement to produce, manufacture and
distribute a line of motor vehicle filters. We plan to introduce this
line at the 2002 AAPEX Show in Las Vegas. As of the third quarter ending
September 30, 2002, We have been successful in commencing our launch of our
new DiamondTM Oil & Air filter lines. However, the new product
lines were not introduced at the 2002 AAPEX Show due to financial restrictions
from the restructuring initiated in January 2002.

On September 12, 2002,
we announced that we launched a search for an interim CEO to focus on our
acquisition strategy. As of November 15, 2002, we have
reviewed several acquisition candidates, but have not made any final decisions
regarding the position.

Sources of Liquidity

We have obtained a
credit line, which currently permits borrowings of up to $25,000 at a variable
rate of prime plus 1.00%. Additionally, our subsidiary, Harvey
Westbury has a credit line agreement, which currently permits borrowings of up
to $100,000 at a variable rate of prime plus 6.50%.

For the quarter ended
September 30, 2002, we paid for operations through substantial loan
contributions by our President and CEO. We have Notes Payable to
shareholders of $158,042, had other notes payable of $578,237, and notes payable
convertible debt of $693,683 on September 30, 2002. We have a loan
outstanding against our inventory of $46,275 under a security agreement with
Quantum Corporate Funding Ltd. We have provided guarantees of the
repayment of loans. We did not sell or issue any common stock to
provide for services rendered, consulting requirements and operating and
investment activities during the quarter ended September 30, 2002.

In comparison for the quarter
ended September 30, 2001, we paid for operations by raising
$711,887 through debt borrowing after payment to short term debts. We
had Notes Payable to shareholders of $58,631, had Other Notes Payable of
$732,519 and notes payable convertible debt of $911,685 on September 30, 2001.
We had loans outstanding against its credit line of $0 under a security
agreement with Merchant Financial Corporation to borrow money secured by the
receivable evidenced by invoices of Harvey Westbury Corp. We have
provided guarantees of the repayment of loans. Merchant agreed to lend an amount
equal to 75% of the net value of all Harvey Westbury accounts. We
issued common stock of $1,436,600 to provide for services rendered and
consulting requirements.

Any forward-looking statements
included in this Form 10-QSB reflect management's
best judgement based on factors currently known and involve risks and
uncertainies. Actual results may vary materially.

## Item 3.     
Controls and Procedures

|(a) | Evaluation of disclosure controls and procedures.
|--- | -------------------------------------------------

| | Our Principal Executive Officer and Principal Financial Officer (collectively the "Certifying Officers")
maintain a system of disclosure controls and procedures that is designed to provide
reasonable assurance that information, which is required to be disclosed, is accumulated
and communicated to management timely. Under the supervision and with the participation
of management, the Certifying Officers evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)] under
the Exchange Act) within 90 days prior to the filing date of this report.  Based upon that
evaluation, the Certifying Officers concluded that our disclosure controls and procedures are
effective in timely alerting them to material information relative to our company required
to be disclosed in our periodic filings with the SEC.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Changes in internal controls.
|--- | -----------------------------

| | Our Certifying Officers have indicated that there were no significant changes in our
internal controls or other factors that could significantly affect such controls
subsequent to the date of their evaluation, and there were no such control
actions with regard to significant deficiencies and material weaknesses.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

## PART II - OTHER INFORMATION

|Item 1. | Legal Proceedings.                                      | The Auxer Group
has the following pending or threatened litigation:
(1)   The Auxer Group, Auxer Telecom, Inc. and CT Industries, Inc. vs. Husni Hassan, Clifton
Telecard Alliance, Kattosko Communications, Mohd Qattous and Mustafa Qattous -
Superior Court of New Jersey, Law Division, Passaic County - Index No. L1120-02,
filed on February 22, 2002. We are requesting a sum of $1,250,000 plus interest
for default of promissory note, violation of stock purchase agreement and
violation of employment contract. On April 12, 2002, Clifton Telecard Alliance,
Kattosko Communications, Mohd Qattous and Mustafa Qattous filed a counterclaim
for violation of stock purchase agreement. The parties have entered into
settlement negotiations.  The present proposal is for the defendant, Kattosko
Communications, to pay the plaintiffs $15,000.  In return for such consideration,
plaintiffs agree to allow Mustafa Qattous' stock to be traded and sold and undertake
certain filings and provide other financial information for Clifton Telecard, Inc.

(2)   Trans National Communications vs. Auxer Telecom Inc. dba Auxer Group-
Superior Court of New Jersey Law Division, Passaic County - Docket No. L793-02.  On
April 17, 2002, a judgment in the amount of $339,381.84 was obtained against the
defendants.  The plaintiff, Trans National Communications attached our bank account
even though the responsible party was Auxer Telecom.  Our litigation counsel successfully
separated the defendants in this case and the judgment is only against Auxer Telecom Inc.,
our inactive subsidiary.  The attachment on our bank account should be released shortly.  We
do not intend to contest the judgment against Auxer Telecom Inc. since it was dissolved
on March 18, 2002.

(3)   International Access dba Access International, Inc. v. CT
Industries, Inc. - Los Angeles Superior Court, Central District - Case No. BC 282393,
filed on September 30, 2002.  International Access ("IA") claims that CT Industries, Inc.,
our subsidiary, entered into an agreement (Switch Port Lease and Service Agreement)
with IA whereby IA would provide one year of telecommunications services to CT Industries.
IA claims it provided the services and was not paid because checks from CT Industries
were returned for insufficient funds.  IA is requesting payment of $76,095.34 plus
10% interest per annum from March 13, 2002.  We do not intend to respond to this lawsuit
and will allow a judgment to be entered against CT Industries, our inactive subsidiary.

(4)   Mahure, LLC vs. Auxer Group, Inc. - Superior Court of New Jersey,
Law Division, Passaic County; Docket No. L-4245-02.  Filed August 14, 2002.  Mahure, LLC,
was our landlord for the premises known as 12 Andrews Drive, West Patterson, New
Jersey, our former business address.  It is suing us for failure to pay our base rent
of $7,083.33 from October 2001 throught August 2002, plus 50% of real estate taxes,
insurance premiums and other fixed charges contained in our lease.  Mahure, LLC is requesting
$58,465.49 attorney's fees, cost of suit and interest.  We are trying to settle this matter.

(5)   Canete Landscape, Inc. vs. Auxer Group - Superior Court of New Jersey,
Law Division, Pasaic County - Docket No. DC-11893-02.  Filed October 25, 2002.  Plaintiff,
Canete Landscape claims that we owe them $2,353.90 together with interest and costs of suit.
We intend to settle this matter.

(6)   Colbie Pacific Capital - On April 24, 2002, we entered into a
Modification and Restructuring Agreement with Colbie Pacific Capital.  The agreement required
us tomake a $350,000 payment to Colbie by September 28, 2002.  We failed to make such
payment and the sum of $450,000 is now due to Colbie from us.  On October 8, 2002, we
received a settlement offer from Colbie's attorney whereby Colbie agreed to allow
us to sell certain assets and make our required payment.  We are trying to sell such assets,
specifically telecommunications switching equipment.

(7)   Abel Estrada vs. CT Industries, Inc. - Labor Commissioner, State of California -
State Case Number 06-67045 JAH - Hearing Date: November 20, 2002 in Los Angeles, California.
Abel Estrada, a former employee of our subsidiary, CT Industries, Inc. filed a claim against
CT in the amount of $10,376.08 with the Labor Commissioner, State of California, for the following
claims:  unpaid wages - $1,068; unpaid commissions - $8,000; unpaid vacation time - $861.33;
unpaid expenses $43.75; and unauthorized deduction from wages - $403.00.  CT Industries
does not intend to appear at the hearing and contest this matter.

(8)   Ronald Shaver and Ryan Shaver - (a)  On September 30, 2002, our
litigation counsel sent a letter to Ryan Shaver, our former employee, requesting the return of
equipment and a data base taken by Ryan and his brother, Ronald Shaver, our former officer;
(b)  On October 30, 2002, Ronald Shaver sent us a letter dated October 10, 2002,
from the State of New Jersey, Department of the Treasury, Division of Taxation
regarding outstanding tax liabilities for Clifton Telecard Inc., formerly owned by us; and
(c)  On August 30, 2002, we received letters from Ryan Shaver and Ronald Shaver
requesting payments we owed each of them under their terminated employment agreements,
continuation of healthcare, settlement of cash compensation and equity obligations.
They did not specify the amount owed.

(9)   Panel Prints Inc. v. Harvey Westbury Corporation - Superior Court of New
Jersey, Law Division, Passaic COunty - Docket No. DC-004164-02.  We agreed to pay Panel
Prints $3,000.  To date, we have paid it $1,500 and are paying the balance of $1,500 at a
rate of $500 per month.

(10)   One of our shareholders, Daniel Kahraman, has requested that we have an
annual shareholders meeting.  We have informed him that we do not have sufficient
funds to undertake our annual meeting.  Mr. Kahraman has responded that he will be taking
legal action against us in the future.

(11)   Paul R. Lydiate - Labor Claim in California against Auxer
Telecom Inc. for $20,192.  We did not appear at the hearing on May 6, 2002.
Auxer Telecom Inc. was dissolved on March 18, 2002.
|------- | ------------------------------------------------------- | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Item 2. | Changes in Securities.                                  | On May 2, 2002, we entered into an agreement whereby 8% convertible debentures totaling $894,185
will be retired for one million dollars ($1,000,000) for principal and accrued interest.
The $1,000,000 is reduced by any proceeds received by the debenture holder from the
conversion of the debt into common stock and the sale of common stock. For the nine
months ended September 30, 2002 $162,150 of debt was converted into 69,000,000 shares of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Item 3. | Defaults Upon Senior Securities.                        | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Item 4. | Submission of Matters
to a Vote of Security Holders.    | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Item 5. | Other Information.                                      | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Item 6. | Exhibits and Reports of Form 8-K.                       | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | (a)   
Exhibits required by Item 601 of Regulation S-B. | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | (b)   
Reports of Form 8-K.                             | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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## SIGNATURES

Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed in its
behalf by the undersigned, thereunto duly authorized, on November 19, 2002.

|                         | THE AUXER GROUP, INC.                                              
|------------------------ | -------------------------------------------------------------------
|                         |                                                                    
|Date:  November 19, 2002 | By:  /s/   Eugene Chiaramonte, Jr.
Eugene Chiaramonte, Jr.President
|                         |                                                                    

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# CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER
PRINCIPAL FINANCIAL OFFICER
PURSUANT TO18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Eugene Chiaramonte, Jr. certify that:

|1. | I have reviewed this quarterly report on Form 10-QSB of The Auxer Group, Inc.
|-- | -----------------------------------------------------------------------------

|2. | Based on my knowledge, the quarterly report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
included in the quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries, if any,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented in this quarterly report our conclusions about effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the
registrants auditors any material weakness in internal controls; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | I have indicated in the
quarterly report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated:     November 19, 2002

|/s/    Eugene Chiaramonte, Jr.
Eugene Chiaramonte, Jr.
Principal Executive Officer
Principal Financial Officer
|--------------------------------------------------------------------------------------------------------------