10-Q 1 careerworth10q93002.txt UNITED STATES 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 Commission file number: 0-27557 CAREER WORTH, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Nevada 75-3016197 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3809 S. West Temple #1D, Salt Lake City, UT 84115 ------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (801) 281-0001 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), Yes [X] No [ ] and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of each of the issuer's classes of common stock, was 28,850,417 shares of common stock, par value $0.001, as of September 30, 2002. CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 and December 31, 2001 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Balance Sheets ASSETS September 30, December 31, 2002 2001 ---- ---- (Unaudited) CURRENT ASSETS Cash $ 3,269 $ - Prepaid expenses 18,244 - Other receivable 4,850 - Related party receivables 5,390 - ----- - Total Current Assets 31,753 - ------ - PROPERTY AND EQUIPMENT, NET (Note 4) 9,772,785 - --------- - OTHER ASSETS Website, net 7,500 - Investments 52,144 - Goodwill 30,648 - Construction in progress 185,053 - Undeveloped land - - - - Total Other Assets 275,345 - ------- - TOTAL ASSETS $ 10,079,883 $ - = ========== = = The accompanying notes are an integral part of these consolidated financial statements. 5 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- September 30, December 31, 2002 2001 ---- ---- (Unaudited) CURRENT LIABILITIES Cash overdraft $ 6,884 $ 486 Accounts payable 171,586 170,976 Accrued expenses 579,185 735,157 Current portion - long-term debt 2,000,588 639,839 Convertible debentures 20,000 142,045 Payable - related parties 29,385 4,720 ------ ----- Total Current Liabilities 2,807,628 1,693,223 - ------- - LONG TERM DEBT 5,570,293 - --------- - Total Liabilities 8,377,921 1,693,223 --------- --------- COMMITMENTS AND CONTINGENCIES MINORITY INTEREST 28,700 - ------ - STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock, 5,000,000 shares authorized at $0.001 par value; 588 shares issued or outstanding 1 - Common stock; 500,000,000 shares authorized at $0.001 par value; 28,850,417 and 85,666 shares issued and outstanding, respectively 28,850 85 Additional paid-in capital 25,653,860 8,669,881 Stock subscriptions receivable (1,131,875) (2,250) Treasury stock (2,700) - Deferred fees (4,788,596) - Other comprehensive income 124,272 184,872 Accumulated deficit prior to the development stage(6,466,659) (6,466,659) Accumulated deficit during the development stage (11,743,891) (4,079,152) ------------ ----------- Total Stockholders' Equity (Deficit) 1,673,262 (1,693,223) --------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 10,079,883 - = ========== = The accompanying notes are an integral part of these consolidated financial statements. 6 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Operations (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements. 7 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit)

The accompanying notes are an integral part of these consolidated financial statements. 8 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 9

The accompanying notes are an integral part of these consolidated financial statements. 10 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 11 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 12 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 13 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 14 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 15 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 16 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 17 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 18 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company)IARIES Consolidated Statements of Cash Flows (Unaudited)d Statements of Cash Flows

The accompanying notes are an integral part of these consolidated financial statements. 19 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company)IARIES Consolidated Statements of Cash Flows (Continued) (Unaudited)d Statements of Cash Flows (Continued)

The accompanying notes are an integral part of these consolidated financial statements. 20 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company's most recent audited financial statements and notes thereto included in its December 31, 2001 Annual Report on Form 10-KSB. Operating results for the three and nine months ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. The accompanying consolidated financial statements include Career Worth, Inc. and it's wholly and majority owned subsidiaries acquired during the period ended September 30, 2002, The Internet Eye Doctor, Inc., Regency Development Corporation and AALL Finished Constructions, Inc. (collectively "the Company"). All significant intercompany accounts and transactions have been eliminated. NOTE 2 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has a deficit in working capital of $2,775,875, has experienced significant losses and has an accumulated deficit of $18,210,550 at September 30, 2002. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. It is the intent of the Company to generate cash flow by diversifying its business activities. During the period ended September 30, 2002, the Company acquired controlling or full interest in various businesses (See Note 3). In addition, the Company will continue to raise funds through short-term and medium-term debt as well as equity based investment instruments to provide funding for the optical business and expansion of construction activities. The Company also plans to continue its employment information and recruiting services business as operating funds become available. During the period ended September 30, 2002, the Company was able to reduce some of its debt through negotiations with its creditors and note holders. 21 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS Reverse Splits On February 20, 2002, the board of directors authorized a reverse stock split of the Company's common stock at a rate of 1 share for every 100 shares outstanding to be effective on February 25, 2002. On February 26, 2002, the board of directors authorized an additional reverse stock split of its common stock at a rate of 1 share for every 30 shares outstanding to be effective March 4, 2002. All shares of common stock reflected in the accompanying consolidated financial statements and these footnotes have been retroactively restated to reflect these reverse stock splits. The Internet Eye Doctor, Inc. On February 28, 2002, the Company entered into a stock exchange agreement with The Internet Eye Doctor, Inc. (IED), a Nevada Corporation, wherein the Company issued 1,000,000 shares of common stock in exchange for 33,000,000 shares of IED's common stock. The Company's investment in IED represents approximately 55% of IED's issued and outstanding common stock and was valued at the par value of the 33,000,000 shares issued by IED or $33,000 and has been eliminated in consolidation in the accompanying consolidated financial statements. The 45% minority interest of the other shareholders of IED has been reflected separately, net of their share of the net loss of IED for the period from acquisition through March 31, 2002. Based on similar transactions, the 1,000,000 shares of Career Worth, Inc. common stock being held by IED have been revalued at $2,700 and have been reflected as treasury stock in the accompanying consolidated financial statements. The principal business of IED is the sale of contact lenses and other eye care products on the Internet. The primary asset of IED is a website that has been developed to transact it's business and is valued at $10,000 in the accompanying consolidated financial statements, net of $1,667 of accumulated amortization with the website being amortized over a 3 year period. Regency Development Corporation On March 6, 2002, the Company acquired 100% of Regency Development Corporation (Regency), a Nevada Corporation, from officers and directors of the Company and other related entities in exchange for 10,000,000 shares of the Company's common stock. As of the date of the acquisition, Regency had a deficit net book value. Accordingly, the Company valued the shares issued at its par value or $10,000 with a net goodwill of $28,723 recognized in the accompanying consolidated financial statements as a result of this transaction. 22 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS (Continued) Regency Development Corporation (Continued) Regency Development was incorporated in June 2001. It's principal asset is a 40-acre tract of undeveloped land in Oasis, Nevada and is zoned for commercial use, including casino, hotel or motel uses. This undeveloped land was acquired on January 15, 2002, for $2,000,000 from individuals and entities who were related parties in exchange for a $2,000,000 secured promissory note bearing interest at 10% with interest only payments due monthly beginning February 15, 2002 until January 15, 2005 at which time the full amount of the principal is due and payable. The purchase of this undeveloped land is recorded on a "cash basis" whereby the cost in the consolidated financial statements will reflect only the cash invested in the undeveloped land and related obligations. The secured promissory note has also been excluded because of the uncertainty of obtaining adequate development financing. Accordingly, at September 30, 2002, no asset value or related debt obligation have been included in the accompanying consolidated financial statements. H-Net.net,Inc. On March 8, 2002, the Company entered into a stock exchange agreement with H-Net. net, Inc. (H-Net), a Colorado Corporation. Pursuant to that agreement, the Company issued 2,000 shares of it's common stock in exchange for 2,000 shares of H-Net common stock. On May 24, 2002, the Company entered into another stock exchange agreement with H-Net. Pursuant to this agreement, the Company issued 10,000 shares of it's common stock in exchange for 10,000 shares of H-Net common stock, giving the Company a total of 12,000 shares of H-Net common stock. The shares that the Company has received are restricted. The value of the investment is based upon the par value of the Company's common stock, $0.001, for the investment. Accordingly, this investment has been valued at $12 in the accompanying consolidated financial statements at September 30, 2002. Market Media Corporation On March 12, 2002, the Company entered into a stock exchange agreement with Market Media Corporation (MMC), a Nevada Corporation, acquiring an approximate 9% interest in MMC for 1,000,000 shares of the Company's common stock. MMC is a privately held company and is engaged in the broadcast media industry through it's wholly owned subsidiary, FYM, Inc. The $31,282 investment value included in the accompanying consolidated financial statements represents approximately 9% of the net book value of FYM, Inc. based on the unaudited financial statements of FYM, Inc. as of December 31, 2001. 23 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS (Continued) Stem Genetics On April 16, 2002, pursuant to a Stock Exchange Agreement, the Company acquired 2,700,000 shares of Stem Genetics, Inc. common stock in exchange for 1,000,000 shares of Career Worth, Inc. common stock. The Company's ownership interest represents approximately 9% of the issued and outstanding common stock of Stem Genetics, Inc. Stem Genetics, Inc. is a development stage company organized in the state of Nevada on April 12, 2002, primarily for the purpose of conducting genetic research and any other lawful business. As of April 16, 2002, Stem Genetics, Inc. had no material assets or liabilities. As of September 30, 2002, the investment in Stem Genetics is valued at $2,700. ASGA, Inc. On March 12, 2002, the Company entered in to a sponsorship and stock exchange agreement with ASGA, Inc. (ASGA), a company involved in establishing an alternative senior golf tour. In connection with this transaction, the Company received an Event Presenting Sponsorship for 15 events, valued at $2,275,000. In addition, the Company received 1,300,000 shares of ASGA common stock. In exchange for the sponsorship and the ASGA common stock, the Company issued 1,300,000 shares of it's common stock to ASGA. The value of the sponsorship exceeds the value of the Company's common stock at the date of the transaction. In addition, ASGA has not yet established scheduled tour events and the value of it's common stock is not readily determinable. Accordingly, the full value of the sponsorship of $2,275,000 has been recognized in exchange for the shares of common stock issued by the Company with no value assigned to the shares of ASGA common stock. Since no events have taken place wherein the Company was a sponsor, the full amount of the sponsorship has been reflected as deferred in the accompanying consolidated financial statements and has been included with other stock based deferred fees. Effective March 20, 2002, Career Worth, Inc. assigned it's interest in this sponsorship agreement to The Internet Eye Doctor, Inc., which action was approved by ASGA. AALL Finished Construction On March 25, 2002, the Company acquired 100% of AALL Finished Construction, Inc. (AALL), a Utah Corporation, from officers and directors of the Company and other related entities in exchange for 1,125,000 shares of the Company's common stock. As of the date of the acquisition, AALL had a deficit net book value. Accordingly, the Company valued the shares issued at par or $1,125 with a net goodwill of $1,925 recognized in the accompanying consolidated financial statements as a result of this transaction. AALL was incorporated on March 5, 2002, to engage in the construction industry. On March 20, 2002, a shareholder of the Company executed a special warranty deed conveying his interest in 14 residential building lots located in Weber County, Utah along with the related debt. The building lots were acquired by the shareholder for $392,000 with corresponding notes payable totaling $415,000 less approximately $23,000 of interest reserves and closing costs. Subsequently, construction financing has been obtained and construction begun on several single family homes on the building lots with capitalized construction in progress totaling $70,774 included in the accompanying consolidated financial statements. 24 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS (Continued) AALL Finished Construction (Continued) On April 1, 2002, AALL Finished Construction, Inc. entered into a Stock Purchase Agreement with Friendly Bear Plaza, Inc. (Friendly Bear), a Nevada Corporation, acquiring 100% of the issued and outstanding common stock of Friendly Bear in exchange for 1,100,000 shares of Career Worth, Inc. common stock and $250,000 cash to be paid within 90 days of closing the transaction scheduled for April 25, 2002. The principal asset of Friendly Bear is Friendly Bear Plaza which is a 21,200 square foot retail shopping center located in Las Vegas, Nevada. The Company is delinquent in the payment of the $250,000 note for the purchase and is in negotiations to extend the payment of the note. Also on April 1, 2002, AALL Finished Construction, Inc. entered into a Stock Purchase Agreement with P/R Business, Inc. (P/R), a Nevada Corporation, acquiring 100% of the issued and outstanding common stock of P/R in exchange for 3,100,000 shares of Career Worth, Inc. common stock and $250,000 cash to be paid within 90 days of closing the transaction scheduled for April 25, 2002. The principal asset of P/R is Pecos Russell Business Center which consists of three separate single story professional office buildings located in Las Vegas, Nevada, each having approximately 8,000 square feet of net rentable area. The Company is delinquent in the payment of the $250,000 note for the purchase and is in negotiations to extend the payment of the note. On July 5, 2002, AALL Finished Construction, Inc. entered into a Stock Purchase Agreement with Casino Auto Spa, Inc., d/b/a Boulder Auto Spa, Inc. (Auto Spa), a Nevada Corporation, acquiring 100% of the issued and outstanding common stock of Auto Spa in exchange for 140,000 shares of Career Worth, Inc. common stock. The principal asset of Auto Spa is located in Las Vegas, Nevada. This purchase has not been finalized due to the fact that Casino Auto Spa is in bankruptcy and the Bankruptcy Court has not given the go ahead to finalize the purchase. On September 1, 2002, the P/R Business, Inc. sold a building and land to Nicholas Investment Company, Inc. (Nicholas). P/R received 10,000,000 shares of Nicholas common stock, 600,000 shares of Nicholas preferred stock and a promissory note in the amount of $1,500,000 for a total purchase price of $2,500,000. Subsequent to September 30, 2002, an agreement was entered into between the two parties canceling this transaction. Accordingly, this transaction has not been included in the accompanying consolidated financial statements at September 30, 2002. Other Investments On August 19, 2002, the Company entered into a stock exchange agreement with Matrix Energy Services Corporation (Matrix), a Nevada Corporation. Pursuant to that agreement, the Company issued 2,000,000 shares of it's common stock in exchange for 2,000,000 shares of Matrix common stock. The shares that the Company has received are restricted. The value of the investment is based upon the par value of the Company's common stock, $0.001, for the investment. Accordingly, this investment has been valued at $2,000 in the accompanying consolidated financial statements at September 30, 2002. 25 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 NOTE 3 - SIGNIFICANT EVENTS (Continued) Other Investments (Continued) On August 19, 2002, the Company entered into a stock exchange agreement with Nicholas Investment Company, Inc. (Nicholas), a Nevada Corporation. Pursuant to that agreement, the Company issued 1,000,000 shares of it's common stock in exchange for 1,000,000 shares of Nicholas preferred stock. The shares that the Company has received are restricted. They are convertible in one year at 20% per year at a price of 50% of the bid at the time of conversion. The value of the investment is based upon the par value of the Company's common stock, $0.001, for the investment. Accordingly, this investment has been valued at $1,000 in the accompanying consolidated financial statements at September 30, 2002. NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment, at cost, (primarily Friendly Bear Plaza and Pecos Russell Business Center) consists of the following: September 30, 2002 Buildings $ 7,108,966 Leasehold improvements 883,478 Land 2,427,390 --------- 10,419,834 Accumulated depreciation (647,049) -------- Net property and equipment $ 9,772,785 = ========= Depreciation expense for the nine months ended September 30, 2002 was $145,524. NOTE 5 - LOSS PER SHARE The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding at the date of the consolidated financial statements as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, ------------- ------------- 2002 2001 2002 2001 ---- ---- ---- ---- Loss before extraordinary item $ (0.12) $ (2.64) $ (0.44) $ (27.21) Extraordinary item 0.00 - 0.00 - ---- - ---- - 26 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 BASIC LOSS PER SHARE $ (0.12) $ (2.64) $ (0.44) $ (27.21) = ====== = ====== = ====== = ======= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 24,878,288 26,153 17,482,125 18,986 ========== ====== ========== ====== NOTE 6 - SEGMENT REPORTING The Company's reportable segments are business units that offer different products and services. The Company has three reportable business segments: Internet retail, construction, and office & retail leasing. All significant intersegment transactions have been eliminated in the consolidated financial statements. Financial information as of and for the nine months ended September 30, 2002 with respect to the reportable segments is as follows: Office & Internet Retail Corporate Retail Construction Leasing Unallocated Totals ------ ------------ --------- ----------- ------ External revenues $ 1,195 $ - $ 295,446 - $296,641 Cost of goods sold 523 - - - 523 Interest income - - - - - Interest expense - 17,937 292,231 186,237 496,405 Segment income (loss) before tax effect $(17,442) $ (68,780) $(370,724) $(7,207,793) $(7,664,739) The following schedules are presented to reconcile amounts in the forgoing segment information to the amounts reported in the Company's consolidated financial statements. Total loss of reportable segments $(7,679,040) Minority interest in loss 14,301 ------ $(7,664,739) NOTE 7 - COMMITMENTS AND CONTINGENCIES Litigation Litigation has been initiated aginst the Company by two individuals (suing derivatively adn on behalf of Broadway Acacia LLC (Plaintiffs). The plaintiffs are seeking a cout order to overturn the purchase of Friendly Bear adn P/R Business. The plaintiffs claim that there was not adequate consideration given for the acquisition of Friendly Bear and P/R Business. Management of the Company believes that the claim of the plaintiffs is without merit. The outcome of this action is not presently determinably. Accodingly, there is no accrual for this claim reflected in the accomopanying consolidated financial statements. The Company is involved in litigation with an individual who claims that he is owed $85,843 under a verbal contract. The individual is suing for the $85,843 plus 17% interest per annum from December 16, 1998 plus legal and court costs. Managemetn is currently in negotiations to settle this matter. NO settlement has been reached and the ultimate resolution to thi smatter is not readily determinable. Accordingly, no related liabitlity has been reflected in the accompanying consolidated financial statements. NOTE 8 - SUBSEQUENT EVENTS On October 3, 2002, the Company granted 50,000 options which were exercised on that same day at $0.45 per share for a total of $22,500. The entire amount was exercised with the issuance of a subscription receivable. On October 22, 2002, the Company granted 50,000 options which were exercised on that same day at $0.45 per share for a total of $22,500. The entire amount was exercised with the issuance of a subscription receivable. 27 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, stockholders' equity and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS Cautionary Statement Regarding Forward-looking Statements This report may contain "forward-looking" statements. The Company is including this cautionary statement for the express purpose of availing itself of the protections of the safe harbor provided by the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. Examples of forward-looking statements include, but are not limited to: (a) projections of revenues, capital expenditures, growth, prospects, dividends, capital structure and other financial matters; (b) statements of plans and objectives of the Company or its management or Board of Directors; (c) statements of future economic performance; (d) statements of assumptions underlying other statements and statements about the Company and its business relating to the future; and (e) any statements using the words "anticipate," "expect," "may," "project," "intend" or similar expressions. Results of Operations. In December 2001 and January 2002, the Company retained two consultants, Elizabeth Colmenares and David Wolfson, to help CWI settle its debts, negotiate favorable debt workouts, maintain the Company's public reporting obligations, restructure corporate management, and oversee Company operations. Colmenares and Wolfson joined the Board of Directors. This transaction constituted control of the Company. Effective January 14, 2002, Career Worth Inc. relocated its corporate offices to 3809 South West Temple, Suite 1-D, Salt Lake City, Utah 84115. On February 25,2002 the Company reverse split its stock at a rate of 1 share for every 100 shares outstanding. On March 4, the Company again reverse split its stock at a rate of 1 share for every 30 shares outstanding. 28 It is the intent of the Company to generate cash flow by diversifying its business activities. During the first quarter of 2002, the Company (1) acquired Regency Development ("Regency"), a Nevada corporation, which controlled 40 acres of property in Nevada, (2) secured a controlling interest in Internet Eye Doctor ("Eye Doctor"), (3) acquired AALL Finished Construction, Inc. ("AALL Finished"), and (4) executed a sponsorship agreement with the American Senior Golf Association, ASGA, Inc. During the second quarter of 2002, AALL Finished Construction, Inc. acquired two real estate complexes located in Las Vegas, Nevada, namely Friendly Bear Plaza and P/R Business Center. Friendly Bear is a strip mall with 75% occupancy rate with a new management team expected to achieve 90% occupancy in the third quarter. P/R Business is a three building executive office building complex with a 70% occupancy rate. In order to fund these enterprises, the Company will continue to raise funds through short-term and medium-term debt as well as equity based investment instruments to provide funding for the optical business and expansion of construction activities. The Company also plans to continue its employment information and recruiting services business as operating funds become available. During the period ended Sptember 30, 2002, the Company was able to reduce some of its debt through negotiations with its creditors and note holders. Because of the significant change in operating activities and the business environment from 2001 to 2002, comparisons of the financial statements for the first two quarters of those years may have limited significance. Three month period and nine month period ended September 30, 2002 compared to the three month period and the nine month period ended September 30, 2001. Total revenues for the three month period and the nine month period ended September 30, 2002 were $132,871 and $296,641, respectively, compared to $0 and $6,470 for the same periods of 2001. This increase was due to revenues generated by AALL Finished Construction's Las Vegas Properties. 29 The Company hopes that additional production from the new entities will be visible during the four quarters of this fiscal year as working capital is raised and invested in the Company. Direct costs for the three months and the nine months ended September 30, 2002, were $0 and $523, respectively, as compared to $0 and $1,557 for the three months and nine months ended September 30, 2001. For the third quarter of fiscal year 2002, operating expenses were $2,985,515, consisting of salaries and wages of $0, depreciation and amortization expenses of $72,346, and general and administrative expenses of $2,913,169, resulting in a loss from operations of $2,852,644. Total operating expenses for the same period of 2001 were $49,544, consisting of salaries and wages of $23,825, depreciation and amortization expenses of $2,745, and general and administrative expenses of $22,974, resulting in a loss from operations of $49,544 for the quarter. For the first nine months of 2002, operating expenses were $7,647,054, consisting of salaries and wages of $0, depreciation and amortization expenses of $145,524, and general and administrative expenses of $7,501,530, resulting in a loss from operations of $7,350,936. Total operating expenses for the first nine months of 2001 were $404,804, consisting of salaries and wages of $135,017, depreciation and amortization expenses of $9,123 and general and administrative expenses of $260,664, resulting in a loss from operations of $399,891. The decrease in salaries and wages during fiscal year 2002 resulted from the changes taking place in personnel due to the change in management. Personnel expense will increase as the fiscal year progresses. The sizable increase in general and administrative expenses was due to the accounting treatment of common stock issued to pay consultants and make acquisitions. Total other income (expense) for the three month period and the nine month period ended September 30, 2002, netted expenses of ($213,383) and ($496,405) for the respective periods compared to expenses of ($19,608) and ($116,647) for the same periods of 2001. Other (expense) for the first three quarters of 2002 was comprised primarily of interest expenses. 30 The increase from the 2001 period to the 2002 period was due primarily to increased interest expense. The net loss before extraordinary items and minority interests for the Company was $3,066,027 in the third quarter of 2002 compared to $69,152 for the same period of the prior year. During the first nine months of the current year, the Company booked a net loss before extraordinary items and minority interests of $7,847,341 compared to $516,538 for the first nine months of 2001. In the three month and nine month periods ended September 30, 2002, the Company experienced an extraordinary item, the forgiveness of debt, of $36,163and $168,301, respectively. Minority interest in a subsidiary yielded proceeds of $8,059 and $14,301 respectively for the first three months, and nine months of 2002. There were no comparable categories for extraordinary items or minority interests in the 2001 statement. The net loss for the first three months ended September 30 2002 was $3,021,805, compared to $69,152 in 2001. The net loss for the first nine month period of fiscal year 2002 was $7,664,739 compared to $516,538 for the first nine months of 2001. The Company experienced comprehensive losses of $60,600 in the six and nine month periods ended September 30, 2002, leaving net comprehensive losses of $3,021,805 and $7,725,339 for the six and nine month periods of 2002, respectively. The basic loss per share for the third quarter of 2002 was $0.12 as compared to $2.64 for the Third quarter 2001, based on the weighted average number of shares outstanding for the respective periods adjusted for the reverse splits in the common stock that took place during February and March of 2002. The basic loss per share for the first three quarters of the fiscal year 2002 was $0.44 as compared to $27.21 for the third quarter of 2001, based on the weighted average number of shares outstanding for the respective periods adjusted for the reverse splits in the common stock that took place during February and March of 2002. 31 Liquidity and Capital Resources During the first three quarters of 2002, the issuance of shares of the Company's common and preferred stock and some notes payable were utilized to fund the developmental operations, convert debt, pay professional services, and for other activities of the Company. The Company had a working capital deficit of $2,775,975, at September 30, 2002. The Company had a cash balance of $3,269. Cash used in operations for the first three quarters ended September 30, 2002, was $875,145 compared with $178,272 for the first three quarters ended September 30, 2001. The year to year increase in cash flows used was due to the Company's sizeable net loss partially offset by common stock issued for services. Cash flows used in investing activities was $185,434 in the first three quarters of 2002 compared with $0 in the period prior year. The increase was due to the purchase of land in the Company's construction subsidiary in the first half of 2002. Cash flows from financing activities was $1,063,848 in the nine months ended September 30, 2002 compared to net financing activities from notes payable and convertible debentures of $177,995 in first three quarters of 2001. The year to year increase was due to proceeds from related parties and proceeds from stock subscription receivable. Because the Company has an accumulated deficit of $18,210,550 and has a working capital deficit and limited internal financial resources, the report of the Company's auditor contains a going concern note as to the ability of the Company to continue. Since the end of 2001, new management has worked vigorously to put new enterprises into Career Worth that will begin to generate cash flow for working capital. Efforts have been made to reduce and restructure the Company's debt. In the meantime, the Company has significantly reduced its cash outflows. The Company continues the conversion of accrued liabilities and notes payable to restricted common stock. The Company will rely on additional outside debt and equity funding as it executes its revised business plan. At end of the first three quarters of 2002, accounts payable totaled $171,586 compared to $170,976 at year end. At September 30, 2002, the Company had recorded $579,185 in accrued 32 expenses consisting of accrued salaries and wages, accrued interest and unpaid payroll taxes, and unemployment taxes, including reasonable interest and penalties for late payment. At December 31, 2001, accrued expenses totaled $735,157. The decrease was due to reductions in accrued interest and accrued salaries and wages. The Company is also working to settle its outstanding payroll tax obligations with the proper taxing authorities. At September 30, 2002, the Company had recorded notes payable, convertible debentures, and current portion of long-term liabilities totaling $2,049,973 compared with $786,604 at December 31,2001. The additions of current and long-term portions of debt during the first three quarters of the current fiscal year were due to the financing associated with the assets of businesses acquired by the Company. Long term debt as of September 30, 2002, was $5,570,293 compared to $0 at December 31,2001. The increase was due to additions made during the second quarter. Minority interest was $28,700 at the end of the third quarter compared to $0 at prior year end. In prior reports, the Company has recorded contingent liabilities with related accrued interest as a separate category. In this report, the $82,397 is included in accrued expenses. This amount is owed to LaserVend, Inc. The total is unchanged from year-end 2001. This amount is owed to LaserVend, Inc. In January 1998, the Company entered into a "Letter Offer to Acquire" with LaserVend, Inc. whereby LaserVend would acquire all the issued and outstanding common stock of the Company. In anticipation of the proposed merger, LaserVend advanced the Company $286,572 during the year ended December 31, 1998. The merger failed to take place due to events occurring in LaserVend. LaserVend subsequently filed for bankruptcy. On July 31, 1998, the Trustee in bankruptcy filed a complaint that the advance was a loan to be repaid by DiSX, that it was a preferential transfer and that Laservend did not receive reasonably equivalent value for the advances. The Company filed an answer to the complaint. The Bankruptcy Court granted the Trustee's motion for summary judgment. The order granted judgment in the amount of 33 $273,347 principal, together with prejudgment interest of $66,884. As of December 31, 1999, the Company paid the Bankruptcy Court $7,125. The Company has entered into a settlement agreement with the Trustee. Under the terms of the settlement agreement, the Company is obligated to make certain payments to the Trustee and during such time the Trustee agrees to forbear from obtaining writs of garnishment or executions or otherwise collect on the judgment. The Company also accrued an additional $35,876 in interest and other contingent expenses through the end of 1999 bringing the total contingent liability to $368,982. During early 2000, $18,135 has been sent to reduce the outstanding balance. At mid-year 2000, the Trustee credited $221,000 against the liability as the Company's holding in PLC stock was sold to partially repay the judgment. During the second quarter 2001 the Trustee credited $47,500 against the liability upon disposal of a Company assets. The balance of other funds forwarded to the Trustee through the end of the first quarter 2002 left a balance of $82,397 in accrued expenses. PART I. - ITEM 3. Controls and Procedures. Based on his evaluation of the Company's disclosure controls and procedures as of a date within 90 days of the filing of this Report, the President has concluded that such controls and procedures are effective. There were no significant changes in the Company's internal controls or in other factors that could significantly affect such controls subsequent to the date of their evaluation. Part II - Other Information Item 1. LEGAL PROCEEDINGS In November 2000, Mark Wolkos and MW Investments Marketing filed a complaint in the Superior Court of Maricopa County, Arizona against the Company for compensation relating to investor relations services. The complaint alleged compensation due for such services of $70,000 as well as stock options for 600,000 shares of stock. The Company has filed an answer denying the claims. Because of the prior management's neglect in defending this case, the Plaintiff obtained a default judgment against the Company. The Company's CEO is currently attempting to settle the debt with the Plaintiff. 34 On June 10, 2002 Gregory Grantham and John Saba (suing derivatively and on behalf of Broadway Acacia LLC) filed suit against Career Worth, Inc., AALL Finished Construction Inc., P/R Business, Inc., Friendly Bear Plaza, Inc. and Senior Care Industries, Inc. and John Does 1-100in the Superior Court of California, County of Orange. The Plaintiffs are seeking a court order over turning the purchase of P/R and Friendly Bear. Plaintiffs claim that the transfer of Friendly Bear and P/R was without adequate consideration and therefore improper. Defendants argue, that except for Senior Care, the California court lacks jurisdiction over the parties and therefore cannot enter any judgment against these defendants. On or about October 11, 2002 Ron Davis filed suit against the Company, in the Fourth Judicial District Court for Wasatch County, State of Utah. The Plaintiff alleges that he is owed $85,843.41 under an alleged verbal agreement between the Plaintiff and Dynamic Information System and eXchange, Inc. Plaintiff is seeking a judgment against the Company in the amount of $85,843.41 plus 17% interest per annum from December 16, 1998 through the time of trial and costs. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION Events that have taken place subsequent to the end of the first quarter 2002 are noted below. On July 10, 2002 AALL Finished Construction entered into a purchase agreement with Casino Auto Spa, Inc. d/b/a Boulder Auto Spa ("Auto Spa") for the purchase of all of the shares of Auto Spa. The company approved the purchase of Auto Spa by AALL Finished on the same date. The shares of Auto Spa were held by Ed Webb and Chuck Reader. The Principal asset of the Auto Spa is a full service car wash, which includes a detailing unit, a convenience store and deli, located on property at Boulder Station and Casino in Las Vegas, Nevada. Currently, the Auto Spa is in Chapter 11 bankruptcy. The Bankruptcy court has ruled that the lease agreement between the Auto Spa and Casino Stations was not accepted by the Auto Spa within the proper time limit of the bankruptcy. Therefore, the lease was voided by the court. At this date the lease hold entity does not want to work with AALL Finished to negotiate a new lease on the property. 35 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS. Exhibit 99 - Certification in Accordance with SEction 906 of the Sarbanes-Oxley Act of 2002. Additional Exhibits CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Career Worth, Inc., (the " Company") on Form 10-QSB for the period ending September 30, 2002, as filed with the SEcurities and Exchange Commission on the date hereof (the "Report"), I, Elena Weissburd, Chif Executive Officer of the Company, certify, pursuant to 18 U.S.C.ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002. that, to the best of my knowledge and belief: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ Elena Weissburd Date: November 19, 2002 ---------------------- -------------------- Elena Weissburd, CFO 36 Statement Under Oath of Principal Executive Officer and Principal Financial Officer Regarding Facts and Circumstances Relating to Exchange Act Filings Pursuant to Section 302 of the Sarbane-Oxley Act of 2002. I, David Wolfson, state and attest that: (1) To the best of my knowledge, based upon a review of the covered report of Career Worth, Inc., and, except as corrected or supplemented in a subsequent covered report: o no covered report contained an untrue statement of a material fact as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed). o no covered report omitted to state a material fact necessary to make the statements in the covered report, in light of the circumstances under which they were made, not misleading as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed). (2) I have received the contents of this statement with the Company's audit committee. (3) In this statement under oath, each of the following, if filed on or before the date of this statement, is a "covered report": o the Annual Report on Form 10-K for the Fiscal Year ended December 31, 2002 of Career Worth, Inc. o all reports on form 10-Q, all reports on Form 8-K and all definitive proxy materials of Career Worth, Inc., filed with the Commission subsequent to the filing of the Form 10-K identified above; and o any amendments to any of the foregoing. (4) Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all materail respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the period presented in this Quarterly Report. (5) The REgistrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the REgistrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared: b) evaluated the effectiveness of the REgistrant's disclosure controls and procedures as of a date wihtin 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented this Quarterly Report our conclusion about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (6) The Registrant's other certifying officer and I have indicated in this Quarterly Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weeknesses. By: /s/ David Wolfson Date: November 19, 2002 ---------------------------- -------------------------- David Wolfson, President 38 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 Statement Under Oath of Principal Executive Officer and Principal Financial Officer Regarding Facts and Circumstances Relating to Exchange Act Filings Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Elena Weissburd, state and attest that: (1) To the best of my knowledge, based upon a review of the covered report of Career Worth, Inc., and, except as corrected or supplemented in a subsequent covered report: o no covered report contained an untrue statement of a material fact as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed). o no covered report omitted to state a material fact necessary to make the statements in the covered report, in light of the circumstances under which they were made, not misleading as of the end of the period covered by such report (or in the case of a report on Form 8-K or definitive proxy materials, as of the date on which it was filed). (2) I have received the contents of this statement with the Company's audit committee. (3) In this statement under oath, each of the following, if filed on or before the date of this statement, is a "covered report": o the Annual Report on Form 10-K for the Fiscal Year ended December 31, 2002 of Career Worth, Inc. o all reports on form 10-Q, all reports on Form 8-K and all definitive proxy materials of Career Worth, Inc., filed with the Commission subsequent to the filing of the Form 10-K identified above; and o any amendments to any of the foregoing. (4) Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all materail respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the period presented in this Quarterly Report. 39 (5) The REgistrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the REgistrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared: b) evaluated the effectiveness of the REgistrant's disclosure controls and procedures as of a date wihtin 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented this Quarterly Report our conclusion about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (6) The Registrant's other certifying officer and I have indicated in this Quarterly Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weeknesses. By /s/ Elena Weissburd Date: November 19, 2002 ------------------------- ---------------------- Elena Weissburd, CFO 40 CAREER WORTH, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements September 30, 2002 and December 31, 2001 (b) REPORTS ON FORM 8-K. The Company filed a report on Form 8-K with the Commission on February 6, 2002 disclosing consulting agreements which led to the issuance of Company shares resulting in a change in control of the Company. David Wolfson and Elizabeth Colmenares joined the board of directors. Larry Heaps resigned as president and board member. The Company filed a report on Form 8-K with the Commission on March 22, 2002 disclosing a stock exchange agreement with Internet Eye Doctor, Inc., a Nevada corporation. This agreement gives the Company a majority ownership interest in Internet Eye Doctor, Inc. The Company filed a report on Form 8-K with the Commission on March 21, 2002 disclosing a stock exchange agreement for the acquisition of Regency Development Corporation, a Nevada Corporation. The purpose of the agreement was for the Company to obtain control of a parcel of land located in Oasis, Nevada, which Regency owns. BonnieJean Tippetts resigned as interim president and David Wolfson was named as president. On September 25, 2002 the Company filed an 8-K with the Commission disclosing the sale of one of the buildings included in P/R Business, Inc. to Nicholas Investment Company, Inc. At this time the Company and Nicholas are negotiating with each other to rescind the Agreement. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAREER WORTH, INC. [Registrant] Dated: November 19, 2002 /s/ David Wolfson --------------------------- President and Director 41

CAREER WORTH INC 10-Q