================================================================================
                                    FORM 10-Q
                             -----------------------
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     FOR THE PERIOD ENDED SEPTEMBER 30, 2002

                                       OR

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

     For the transition period from ___________ to ____________


                         Commission File Number: 0-22162

                                CARECENTRIC, INC.
             (Exact name of registrant as specified in its charter)


                   DELAWARE                                     22-3209241
         (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                    Identification No.)

         2625 CUMBERLAND PARKWAY, SUITE 310                       30339
                ATLANTA, GEORGIA                               (zip code)
              (Address of principal
                executive offices)

        (Registrant's telephone number, including area code)    (678) 264-4400


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


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


     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest practicable date:

                                                   Outstanding at
               Class                                 10/31/02
               -----                                 --------

               COMMON STOCK, $.001 PAR VALUE      4,371,350 SHARES

================================================================================



<PAGE>


                                CARECENTRIC, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX


     PART I.   FINANCIAL INFORMATION

     Item 1.   Consolidated Financial Statements

               Consolidated  Balance Sheets - September 30, 2002 (unaudited) and
               December 31, 2001 (audited).

               Consolidated  Statements  of  Operations  - Three Months and Nine
               Months Ended September 30, 2002 and 2001 (unaudited).

               Consolidated  Statements  of  Shareholders'  Equity - Nine Months
               Ended September 30, 2002 (unaudited).

               Consolidated  Statements  of Cash  Flows - Three  Months and Nine
               Months Ended September 30, 2002 and 2001 (unaudited).

               Notes to Consolidated  Financial  Statements - September 30, 2002
               (unaudited).

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

     Item 3.   Quantitative and Qualitative Disclosures About Market Risk

     Item 4.   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




                                       2
<PAGE>



PART I - FINANCIAL INFORMATION


ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared by CareCentric,  Inc.  ("CareCentric" or the "Company") pursuant to the
rules and  regulations of the Securities and Exchange  Commission.  Accordingly,
they do not include all of the information  and footnotes  required by generally
accepted accounting principles for complete financial statements. In the opinion
of the Company,  all adjustments  (consisting only of normal recurring  entries)
necessary  for the fair  presentation  of the Company's  results of  operations,
financial position and cash flows for the periods presented have been included.



                                       3
<PAGE>


<TABLE>
<CAPTION>
<S>                                                                          <C>                 <C>
                                                 CARECENTRIC, INC.
                                            CONSOLIDATED BALANCE SHEETS

                                                                               SEPTEMBER 30,         DECEMBER 31,
                                                                                   2002                 2001
                                                                              ---------------      ---------------
                                                                                (unaudited)           (audited)
                                                      ASSETS
 Current assets:
     Cash and cash equivalents                                                  $  1,058,000          $    201,000
     Accounts receivable, net of allowance for doubtful
       accounts of $1,299,000 and $1,042,000 respectively                          5,747,000             4,185,000
     Prepaid expenses and other current assets                                       590,000               608,000
     Notes receivable                                                                107,000               413,000
                                                                              ---------------       ---------------
       Total current assets                                                        7,502,000             5,407,000

Purchased software, furniture and equipment, net                                   1,154,000             1,533,000
Intangible assets, net                                                             4,590,000             5,437,000
Long term notes receivable                                                           431,000               431,000
                                                                              ---------------       ---------------
       Total assets                                                             $ 13,677,000          $ 12,808,000
                                                                              ===============       ===============

                   LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Line of credit                                                             $  5,125,000          $  5,572,000
     Accounts payable                                                              2,214,000             2,185,000
     Accrued compensation expense                                                    625,000               593,000
     Accrued liabilities                                                           6,408,000             6,574,000
     Customer deposits                                                             1,511,000             2,120,000
     Unearned revenues                                                             4,873,000             3,981,000
                                                                              ---------------       ---------------
       Total current liabilities                                                  20,756,000            21,025,000

Accrued liabilities, less current portion                                            300,000               750,000

Note payable long-term                                                             8,380,000             5,343,000

Commitments and contingencies

Shareholders' deficit
     Preferred Stock: 10,000,000 shares authorized
     Series B Preferred, $.001 par value;
       5,600,000  issued and outstanding; liquidation value $1.32                      6,000                 6,000
     Series C Preferred, $.001 par value;
       850,000  issued and outstanding; liquidation value $1.00                            -                 1,000
     Series D Preferred, $.001 par value;
       398,000  issued and outstanding; liquidation value $3.03                            -                     -
     Series E Preferred, $.001 par value;
       210,000 issued and outstanding; liquidation value $1.02                             -                     -
     Common stock, $.001 par value; 20,000,000 shares authorized;
       4,371,350 shares issued and outstanding at September 30, 2002 and
       December 31, 2001                                                               4,000                 4,000
     Unearned compensation                                                          (152,000)             (210,000)
     Additional paid-in capital                                                   20,430,000            21,280,000
     Stock warrants                                                                1,000,000             1,000,000
     Accumulated deficit                                                         (37,047,000)          (36,391,000)
                                                                              ---------------       ---------------
       Total shareholders' deficit                                               (15,759,000)          (14,310,000)
                                                                              ---------------       ---------------
       Total liabilities and shareholders' deficit                              $ 13,677,000          $ 12,808,000
                                                                              ===============       ===============

</TABLE>

                                  See notes to consolidated financial statements



                                       4
<PAGE>


                                CARECENTRIC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
<S>                                           <C>                <C>                 <C>                  <C>

                                               THREE MONTHS ENDED SEPTEMBER 30,        NINE MONTHS ENDED SEPTEMBER 30,
                                              ------------------------------------   -------------------------------------
                                                   2002                2001                2002               2001
                                              ----------------   -----------------   ------------------   ----------------
                                                (unaudited)        (unaudited)         (unaudited)         (unaudited)

Net revenues                                     $  5,646,000       $   5,096,000        $  16,747,000     $   16,481,000

Costs and expenses:
    Cost of revenues                                1,739,000           1,973,000            5,200,000          6,490,000
    Selling, general and administrative             2,064,000           2,550,000            7,352,000          8,086,000
    Research and development                          891,000           1,413,000            2,780,000          4,789,000
    Amortization and depreciation                     424,000           1,011,000            1,272,000          2,912,000
    Restructructuring Charge                                -                   -                    -            675,000
                                                --------------     ----------------     ---------------   ----------------
    Total costs and expenses                        5,118,000           6,947,000           16,604,000         22,952,000
                                                --------------     ----------------     ---------------   ----------------

Income (loss) from operations                         528,000          (1,851,000)             143,000         (6,471,000)

Other income (expense):
    Interest expense                                 (174,000)            (39,000)            (495,000)          (311,000)
    Interest and other income                          12,000              29,000               26,000            223,000
                                                --------------      ---------------     ---------------   ----------------
Income (loss) before taxes                            366,000          (1,861,000)            (326,000)        (6,559,000)
                                                --------------      ---------------     ---------------   ----------------
    Income tax benefit (expense)                            -                   -                    -                  -
                                                --------------      ---------------     ---------------   ----------------
Income (loss) from continuing operations              366,000          (1,861,000)            (326,000)        (6,559,000)
                                                --------------      ---------------     ---------------   ----------------


Discontinued operation
    Loss on disposal of discontinued             $          -       $  (2,632,000)       $           -     $   (2,632,000)
    operations

    Loss from operations of
         discontinued segment before taxes                  -            (226,000)                   -           (483,000)

                                                --------------     ----------------     ---------------    ---------------
Net loss from discontinued operations                       -          (2,858,000)                   -         (3,115,000)

Net Income (loss)                                     366,000          (4,719,000)            (326,000)        (9,674,000)
                                                ==============     ================     ===============    ===============

    Cumulative Preferred Dividends                   (184,000)           (180,000)            (330,000)          (534,000)
                                                --------------     ----------------     ---------------    ---------------
Net Profit (loss) available to common
shareholders                                     $    182,000       $  (4,899,000)       $    (656,000)    $  (10,208,000)
                                                ==============     ================     ===============    ===============

Net Income (loss) per share - basic and
diluted
    From continuing operations                   $       0.08       $       (0.43)       $       (0.07)    $        (1.55)
Net loss per share - basic and diluted
    From discontinued operations                 $          -       $       (0.65)       $           -     $        (0.73)
                                                --------------     ----------------   -----------------   ----------------
Net Income (loss) per share - basic and
diluted
    From operations                              $       0.08       $       (1.08)       $       (0.07)    $        (2.28)
                                                ===============    ================   =================   ================
Net Income (loss) per share - basic and
diluted available
    to common shareholders                       $       0.04       $       (1.12)       $       (0.15)    $        (2.41)
                                                ================   ================   =================   ================
Weighted average common shares -
    basic and diluted                               4,371,000           4,371,000            4,371,000          4,243,000
                                                ================   ================   =================   ================

                                                         See notes to consolidated financial statements

</TABLE>



                                       5
<PAGE>

<TABLE>
<CAPTION>
<S>                     <C>       <C>    <C>          <C>     <C>           <C>         <C>          <C>            <C>
                                                                          CARECENTRIC, INC.
                                                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                                            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
                                                                            (unaudited)

                                                                             ADDITIONAL                                TOTAL
                              COMMON            PREFERRED        UNEARNED      PAID-IN               ACCUMULATED    SHAREHOLDERS'
                         SHARES    STOCK    SHARES     STOCK   COMPENSATION    CAPITAL    WARRANTS     DEFICIT         DEFICIT
                       ---------- --------- --------- --------- ------------- ----------- ---------- -------------- --------------
Balance at
 December 31, 2001      4,371,000  $  4,000 7,058,000  $  7,000  $   (210,000)$21,280,000 $1,000,000  $ (36,391,000) $ (14,310,000)
                       ---------- --------- --------- --------- ------------- ----------- ---------- -------------- --------------
Amortization
 of unearned
 compensaton                                                           58,000                                               58,000

Cancellation
 of series C
 Preferred Stock                                         (1,000)                 (850,000)                                (851,000)

Net loss                                                                                                   (656,000)      (656,000)
                       ---------- --------- --------- --------- ------------- ----------- ---------- -------------- --------------
Balance at
 September 30, 2002     4,371,000  $  4,000 7,058,000  $  6,000  $   (152,000)$20,430,000 $1,000,000  $ (37,047,000) $ (15,759,000)
                       ========== ========= ========= ========= ============= =========== ========== ============== ==============


                                          See notes to Consolidated Financial Statements
</TABLE>




                                       6
<PAGE>
<TABLE>
<CAPTION>
<S>                                                          <C>             <C>                   <C>               <C>
                                                 CARECENTRIC, INC.
                                       CONSOLIDATED STATEMENTS OF CASH FLOW

                                                                Three Months ended September 30,     Nine Months ended September 30,
                                                              ----------------------------------   ---------------------------------
                                                                     2002           2001                 2002               2001
                                                              ---------------  ----------------    ---------------   ---------------
                                                                 (unaudited)     (unaudited)         (unaudited)        (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss)                                              $     182,000    $(4,899,000)        $   (656,000)     $ (10,209,000)

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES:
   Provision for doubtful accounts                                    56,000         99,000              300,000            252,000
   Amortization and depreciation                                     424,000      1,099,000            1,272,000          3,277,000
   Stock based compensation charge to earnings                        18,000              -               58,000                  -
   Loss on discontinued operations                                         -      2,632,000                    -          2,632,000


CHANGES IN ASSETS AND LIABILITIES, NET OF
ACQUISITIONS:
   Accounts receivable                                               310,000        649,000           (1,862,000)         1,025,000
   Prepaid expenses and other current assets                         (61,000)      (117,000)              18,000           (359,000)
   Notes receivable                                                  251,000       (660,000)             306,000           (799,000)
   Accounts payable                                                  (80,000)      (866,000)              29,000            691,000
   Accrued compensation                                               43,000        114,000               31,000            315,000
   Accrued liabilities                                              (193,000)       711,000             (588,000)           699,000
   Customer deposits                                                 375,000       (446,000)            (609,000)          (736,000)
   Unearned revenues                                                (223,000)       533,000              892,000           (859,000)
                                                              ---------------  ----------------    ---------------   ---------------
     Net cash provided by/(used in)
       operating activities                                        1,102,000     (1,151,000)            (809,000)        (4,071,000)
                                                              ---------------  ----------------    ---------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Assets and liabilities disposed of                                      -      1,715,000                    -          1,715,000
   Purchase of software, furniture
      and equipment                                                  (12,000)       (91,000)             (46,000)          (467,000)
                                                              ---------------  ----------------    ---------------   ---------------
     Net cash provided by/(used in)investing activities              (12,000)     1,624,000              (46,000)         1,248,000
                                                              ---------------  ----------------    ---------------   ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from notes payable                                     1,281,000       (487,000)           3,037,000          2,492,000
   Increase (decrease) in line of credit                            (757,000)             -             (447,000)                 -
   Payments on capital lease obligation                               (9,000)             -              (28,000)                 -
   Proceeds from Consulting note receivable                         (167,000)             -                    -                  -
   Cancellation of series C Preferred Stock                         (850,000)             -             (850,000)                 -
                                                              ---------------  ----------------    ---------------   ---------------
      Net cash provided by/(used in)financing activities            (502,000)      (487,000)           1,712,000          2,492,000
                                                              ---------------  ----------------    ---------------   ---------------

      Net change in cash and cash equivalents                        588,000        (14,000)             857,000           (331,000)

   Cash and cash equivalents, beginning of period                    470,000         45,000              201,000            362,000
                                                              ---------------  ----------------    ---------------   ---------------

   Cash and cash equivalents, end of period                    $   1,058,000    $    31,000         $  1,058,000      $      31,000
                                                              ===============  =================   ===============   ===============

   Cash paid during period for interest                        $      83,000    $    92,000         $    238,000      $     366,000

                      See notes to consolidated financial statements

</TABLE>





                                       7
<PAGE>


      CARECENTRIC NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

     The consolidated  financial  statements prepared by the Company include the
results of operations of the parent  company and its wholly owned  subsidiaries.
All inter-company balances and transactions have been eliminated.

     In the opinion of management, the financial statements include all material
adjustments  necessary for the presentation of the Company's financial position,
results  of  operations  and cash  flow.  The  results  of this  period  are not
necessarily indicative of the results for the entire year.

     These financial  statements do not include any adjustments  relating to the
recoverability and classification of recorded asset amounts or classification of
liabilities  that might be necessary should the Company be unable to continue to
operate  in the  normal  course  of  business.  See Note 12 to the  accompanying
Consolidated Financial Statements.

     Certain prior period amounts have been  reclassified to conform to the 2002
financial statement presentation.

DESCRIPTION OF BUSINESS

     The Company is a provider  of  information  technology  systems and related
services and consulting  services  designed to enable home health care providers
to more  effectively  operate their  businesses  and compete in the  prospective
payment system (PPS) and managed care  environments.  The Company's  focus is to
help home health care  providers  streamline  their  operations and better serve
their patients.  CareCentric offers several  comprehensive  software  solutions.
Each of these software solutions is designed to enable customers to generate and
utilize comprehensive financial, operational and clinical information.

MANAGEMENT ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  as well as the  reported  amounts  of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

REVENUE RECOGNITION

     The Company  recognizes  revenue under SOP 97-2 as amended by SOP 98-9. The
Company recognizes software license revenue when the following criteria are met:
(1) a signed and executed contract is obtained;  (2) delivery has occurred;  (3)
the license fee is fixed and determinable;  (4) collection is probable;  and (5)
remaining  obligations under the license  agreement are immaterial.  The Company
sells and invoices  software  licenses and maintenance fees as separate contract
elements,  except with  respect to first year  maintenance  which is sold in the
form of a bundled  turnkey system.  The Company has established  vendor specific
objective  evidence related to the value of maintenance  fees. Where applicable,
the Company uses the residual value method to allocate  software revenue between
licenses and first year maintenance.

     Revenues are derived from the licensing and sub-licensing of software,  the
sale of computer hardware, accessories and supplies, implementation and training
products  and  services,  forms and case plans,  and  software  maintenance  and
support  services.  For the nine months ended  September  30, 2002,  the Company
recorded total  revenues of $16.7  million.  The Company's core product lines of


                                       8
<PAGE>

STAT2 and MestaMed(R) accounted for 34.8% and 54.5%, respectively,  of the $16.7
million in revenues.

     To the extent that  software and  services  revenues  result from  software
support,  implementation,  training  and  technical  consulting  services,  such
revenues  are  recognized  monthly as the related  services are rendered or, for
software support revenues, over the term of the related agreement. To the extent
that  software and services  revenues  result from software  licenses,  computer
hardware and third-party  software  revenues,  such revenues are recognized when
the related products are delivered and  collectability  of fees is determined to
be probable, provided that no significant obligation remains under the contract.
Limited amounts of revenues derived from the sale of software licenses requiring
significant modification or customization are recorded based upon the percentage
of completion method using labor hours or contract milestones.  Software support
or  maintenance  allows  customers  to  receive  unspecified   enhancements  and
regulatory data updates in addition to telephone support.

     Third-party software and computer hardware revenues are recognized when the
related  products are  delivered.  Software  support  agreements  are  generally
renewable  for one-year  periods,  and revenue  derived from such  agreements is
recognized  ratably  over  the  period  of  the  agreements.   The  Company  has
historically  maintained high renewal rates with respect to its software support
agreements. The Company generally charges for software implementation,  training
and technical  consulting services as well as management  consulting services on
an hourly or daily basis. The Company offers "tiered pricing" for implementation
of new systems  whereby  the  customer  pays a fixed fee for a certain  level of
packaged services and daily fees for services beyond the package.

     Revenues for post-contract customer support are recognized ratably over the
term of the support period, which is typically one year.  Post-contract customer
support  fees  typically  cover  incremental  product  enhancements,  regulatory
updates  and  correction  of  software  errors.  Separate  fees are  charged for
significant product  enhancements,  new software modules,  additional users, and
migrations to different operating system platforms.

     Subsequent to delivery, the Company frequently delivers a variety of add-on
software and hardware components.  Revenues from these sales are recognized upon
delivery.

     In addition to software  licenses,  software  maintenance and support,  and
related  hardware,  the Company  also  provides a number of  ancillary  services
including on site implementation and training,  classroom  training,  consulting
and "premium" and after-hours support.  Revenues from such products and services
are  recognized  monthly as such  products are  delivered  and such services are
performed.

PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

     Purchased   software,   furniture   and  equipment  are  carried  at  cost.
Depreciation and amortization are computed using the  straight-line  method over
the estimated  useful lives of the assets.  When assets are retired or otherwise
disposed of, the cost and related accumulated  depreciation are removed from the
accounts and any resulting gain or loss is reflected in income for the period.

SOFTWARE DEVELOPMENT EXPENSES

     Costs  incurred to  establish  the  technological  feasibility  of computer
software  products  are  expensed  as  incurred.  The  Company's  policy  is  to
capitalize  costs  incurred  between  the  point of  establishing  technological
feasibility and general release only when such costs are material.  For the nine
months  ended  September  30, 2002 and the year ended  December  31,  2001,  the
Company had no capitalized computer software and development costs. Software and
development expenses are accounted for as research and development costs.

CASH EQUIVALENTS

     All highly liquid investments  purchased with an original maturity of three
months or less are considered to be cash equivalents.



                                       9
<PAGE>

INTANGIBLE ASSETS AND LONG-LIVED ASSETS

     Statement of Financial  Accounting  Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of"  requires  impairment  losses to be  recorded on  long-lived  assets used in
operations when indicators of impairment are present and the  undiscounted  cash
flows  estimated  to be  generated  by those  assets  are less than the  asset's
carrying amount.  The application of SFAS No. 121 resulted in an impairment loss
of $11.8 million  recorded in the fourth  quarter of 2001.  See Note 5. Prior to
the   impairment   adjustment,   the   intangible   assets   arising   from  the
CareCentric/MCS  merger on March 7, 2000 were amortized using the  straight-line
method  over the  estimated  useful  lives of the  related  assets as more fully
disclosed in Notes 4 and 5. The measurement of the recorded impairment was based
upon comparing the projected  undiscounted  future cash flow from the use of the
assets  against the  unamortized  carrying  value of the assets in the financial
statements.

     Effective  July 1,  2001,  the  Company  adopted  SFAS No.  141,  "Business
Combinations"  and effective  January 1, 2002, the Company adopted SFAS No. 142,
"Goodwill  and  Intangible  Assets"  and  SFAS  No.  144,  "Accounting  for  the
Impairment or Disposal of Long-Lived Assets". These new standards superseded the
Company's  previous  accounting  for  intangible  assets  under  SFAS No. 121 as
discussed below in the section Impact of New Accounting Standards.

     In  adopting  SFAS No. 142,  the Company  ceased  amortizing  goodwill  and
reassessed  the  remaining  life for  developed  technologies  from 6 years to 4
years.  An impairment test is required to be performed upon the adoption of SFAS
No. 142 and at least  annually  thereafter.  On an  ongoing  basis  (absent  any
impairment  indicators requiring interim review), the Company expects to perform
impairment  testing  at the  end of each  fiscal  year.  Impairment  adjustments
recognized from future  impairment  tests, if any,  generally are required to be
recognized as operating expenses.  In connection with adopting SFAS No. 142, the
Company  also  reassesses  the  useful  lives  and  the  classification  of  its
identifiable   intangible   assets  to  determine   that  they  continue  to  be
appropriate.

         SFAS No. 144, which became  effective for fiscal years  beginning after
December  15,  2001,  provides a single  accounting  model for the  disposal  of
long-lived  assets.  New criteria  must be met to classify the asset as an asset
held for sale.  SFAS No. 144 also focuses on reporting the effect of a disposal.
The  adoption  of SFAS No. 144 did not have a material  impact on the  Company's
financial position or results of operations.

         Actual results of operations for the three months and nine months ended
September 30, 2002 and the pro forma results of operations  for the three months
and nine months ended September 30, 2001, had the Company applied the provisions
of SFAS No. 142 in that  period,  are as  follows  (the  impact on  amortization
expense is the result of a cessation of  amortization  of goodwill,  the changed
remaining life of developed technologies and the effect of the impairment charge
recorded in the fourth quarter of the year ended December 31, 2001):



                                       10
<PAGE>
<TABLE>
<CAPTION>
<S>                                               <C>                 <C>                  <C>                 <C>

                                                     THREE MONTHS ENDED SEPTEMBER 30,      NINE MONTHS ENDED SEPTEMBER 30,
                                                  ---------------------------------------  ------------------------------------
                                                        2002                 2001                2002              2001
                                                  ------------------  -------------------  -----------------   ----------------

NET INCOME (LOSS) AVAILABLE TO COMMON
   SHAREHOLDERS                                    $       182,000     $     (4,899,000)    $      (656,000)    $  (10,208,000)

Add back: Goodwill amortization                                  -              427,000                   -          1,282,000
Add back: Technology amortization                          249,000              333,000             747,000            999,000
                                                  ------------------  -------------------  -----------------   ----------------
Adjusted net income                                $       431,000     $     (4,139,000)    $        91,000     $   (7,927,000)
                                                  ==================  ===================  =================   ================

NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED

Reported net income                                $          0.04     $          (1.12)    $         (0.15)    $        (2.41)
Goodwill amortization                                            -                 0.10                  -                0.30
Technology amortization                                       0.06                 0.08                0.17               0.24
                                                  ------------------  -------------------  -----------------   ----------------
Adjusted net income                                $          0.10     $          (0.95)    $          0.02     $        (1.87)
                                                  ==================  ===================  =================   ================
Weighted average common shares-
basic and diluted                                        4,371,000            4,371,000           4,371,000          4,243,000
                                                  ==================  ===================  =================   ================
</TABLE>

INCOME TAXES

     The Company  accounts  for income  taxes using the  asset/liability  method
which  requires  recognition  of  deferred  tax  liabilities  and assets for the
expected future tax consequences of temporary  differences between the financial
statement  carrying  amount  and the tax  bases of  assets  and  liabilities.  A
valuation  allowance  reducing the total net deferred tax asset to zero has been
recorded based on management's assessment that it is "more likely than not" that
this net asset is not realizable.

NET INCOME (LOSS) EARNINGS PER SHARE

     The Company calculates earnings per share under SFAS No. 128, "Earnings Per
Share."  Basic  earnings  per share  exclude  any  dilutive  effects of options,
warrants and convertible  securities.  Diluted  earnings per share for the three
months and nine months ended  September  30, 2002 and September 30, 2001 exclude
the  effects  of  options,  warrants  and  conversion  rights  as they  would be
anti-dilutive,  and as a result, basic and diluted earnings are the same for the
periods.

STOCK BASED COMPENSATION

     Employee  stock  options  are  accounted  for under  SFAS No.  123 (and its
related  interpretations)  which allows the use of Accounting  Principles  Board
Opinion No. 25,  "Accounting  for Stock Issued to Employees".  See Note 8 to the
Consolidated Financial Statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  following  methods  and  assumptions  were  used  by  the  Company  in
estimating its fair value disclosures for financial instruments:

     Cash and cash  equivalents:  The carrying  amounts  reported in the balance
sheet for cash and cash equivalents approximate their fair value.

     Notes  receivable and payable:  The carrying amounts of the Company's notes
receivable and payable approximates their fair value.



                                       11
<PAGE>

SEGMENTS

     The Company has one operating  segment in continuing  operations,  which is
the  Software  Systems  segment.  As further  described  in Note 2, the  Company
discontinued the Consulting segment during the year ended December 31, 2001.

NOTE 2 -- DISCONTINUED OPERATIONS

     The discontinued operations reported in the Company's results of operations
for the three  months and nine months  ending  September  30, 2001 relate to the
Company's Simione Consulting segment,  which was sold on September 28, 2001. The
Consulting  business,  prior to its  sale,  was the  Company's  only  separately
reported segment of business. Accordingly, the Company no longer reports segment
information.   The  Consulting  business  segment  was  discontinued  through  a
transaction   pursuant  to  which   certain  of  the  assets  of  the  Company's
wholly-owned  subsidiary,   Simione  Consulting,  Inc.,  were  sold  to  Simione
Consultants,  L.L.C.  ("Simione"),  which is owned  and  controlled  by  William
Simione, Jr., a director of the Company. The total sales price was approximately
$2.0  million  plus the  assumption  of  certain  liabilities  by  Simione.  The
Company's  net pre-tax loss on the disposal was  approximately  $2.6 million and
resulted  from  a  write-off  of  the  intangible  assets  associated  with  the
Consulting  segment as  identified at the merger date of March 7, 2000 with MCS.
Selected  financial  information  for the  discontinued  Consulting  segment  is
presented in the chart below (dollar amounts in thousands).

<TABLE>
<CAPTION>
      <S>                                   <C>            <C>              <C>            <C>
                                                  THREE MONTHS ENDED             NINE MONTHS ENDED
                                                    SEPTEMBER 30,                  SEPTEMBER 30,
                                             --------------------------     ------------------------
                                                 2002           2001            2002          2001
                                             -------------- -----------     ------------- ----------

       Operating Revenue                      $     -       $       -        $     -        $ 2,277

       Income before Provision for Income
            Taxes                                   -          (2,858)             -         (3,115)

       Income from Discontinued Operations
            Net of Income Tax                 $     -       $  (2,858)       $     -        $(3,115)

</TABLE>

NOTE 3 - NOTES RECEIVABLE

     The Company has certain Notes  Receivable of varying  maturities which have
resulted from the sale of the assets of the Consulting segment, and financing to
a customer for purchase of a new software  system.  The Consulting  segment Note
Receivable is due from William Simione Jr., currently a director of the Company,
the  President  and Chief  Executive  Officer of the acquirer of the  Consulting
business,  Simione  Consulting,  LLC,  and past Chief  Executive  Officer of the
Consulting  segment when it was part of the Company.  The Customer note occurred
in the normal course of business.

     The amounts and term of each note are summarized in the table below:

                                                     NOTES RECEIVABLE
                                         ---------------------------------------
                                          CONSULTING   CUSTOMER NOTE     TOTAL
                                         ---------------------------------------

          Balance as of 12-31-01           $  707,000    $ 137,000    $ 844,000
                                         ============= ============ ============

          Balance as of 9-30-2002          $  467,000    $  71,000    $ 538,000
                                         ============= ============ ============

          Interest Rate                         8.50%        5.65%







                                       12
<PAGE>

NOTE 4 - PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

     Purchased software, furniture and equipment consisted of the following:

<TABLE>
<CAPTION>
<S>                                 <C>                  <C>                  <C>
                                                                                DEPRECIATION
                                          SEPTEMBER 30,       DECEMBER 31,      ESTIMATED
                                              2002               2001           USEFUL LIVES
                                     -------------------  ------------------  ----------------

Furniture and Fixtures                 $  1,447,000       $  1,428,000          10 years
Computer equipment and
purchased software                        6,264,000          6,237,000           5 years
                                    -------------------- ------------------
                                          7,711,000          7,665,000

Accumulated depreciation                 (6,557,000)        (6,132,000)
                                    -------------------- ------------------
                                       $  1,154,000       $  1,533,000
                                  ====================== ==================
</TABLE>



NOTE 5 - INTANGIBLE ASSETS

     As a  result  of the  merger  with  MCS  on  March  7,  2000,  the  Company
capitalized  $26.5 million of  intangible  assets.  Those assets were  amortized
according to various lives ranging from five to nine years.  In accordance  with
SFAS No. 121, the Company was required to  periodically  review the value of its
intangible assets. During the fourth quarter of 2001, the Company's analysis and
review,  utilizing the methodology of SFAS No. 121, resulted in an $11.8 million
impairment loss of the intangible  assets of the Company.  The major reasons for
the impairment were new technologies  being integrated in the Company's  current
and future  products  causing its  existing  product  platforms  to have reduced
future  revenue  generation  capability,   and  an  expectation  that  immediate
opportunities  for new software sales are lower than were forecasted at the time
of the merger with MCS.

     The following table  summarizes the Company's  changes in account  balances
for its intangible assets since the MCS merger on March 7, 2000.

<TABLE>
<CAPTION>
   <S>                    <C>              <C>               <C>                 <C>               <C>
                                                                                                      9/30/2002
                             ORIGINAL            ASSETS          IMPARMENT         ACCUMULATED        NET BOOK     AMORTIZATION
                               COST             DISPOSED         WTITE-DOWN       AMORTIZATION          VALUE         PERIOD
                          ---------------    ---------------  -----------------  ----------------   -------------- -------------

    Developed technology   $  10,650,000      $          -     $  (4,220,000)     $ (3,189,000)      $   3,241,000       4 years

    Customer base              1,700,000          (510,000)                -          (341,000)      $     849,000       9 years

    Goodwill                  14,151,000        (2,906,000)       (7,580,000)       (3,165,000)      $     500,000
                          ---------------    ---------------  -----------------  ----------------   --------------
                           $  26,501,000      $ (3,416,000)    $ (11,800,000)     $ (6,695,000)      $   4,590,000
                          ===============    ===============  =================  ================   ==============
</TABLE>


     Included in Note 1 to the Financial Statements is a table presenting actual
results of operations for the three and nine months ended September 30, 2002 and
pro forma  results of  operations  for the three  months and nine  months  ended
September  30, 2001.  The pro forma  results for  September 30, 2001 present the
effect on  earnings  had the  nonamortization  provisions  of SFAS No.  142 been
applied  and the effect of the  write-off  of the  intangibles  recorded  in the
fourth quarter of 2001.

NOTE 6 - NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

     On July 1, 2002, the Company completed a recapitalization plan initiated on
April 8, 2002. The recapitalization plan was approved by the common shareholders
of the Company at the June 6, 2002 annual  stockholders'  meeting. The effect of
the  recapitalization  plan is  summarized  below  for  each  note  payable  and


                                       13
<PAGE>

presented  comparatively  in the  following  chart  at  September  30,  2002 and
December 30, 2001.

<TABLE>
<CAPTION>
          <S>                                            <C>                       <C>
           NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

                                                           SEPTEMBER 30, 2002       DECEMBER 31, 2001
                                                          --------------------     -------------------
           SHORT TERM:
           Line of Credit                                   $   5,125,000             $    5,572,000
                                                          --------------------     -------------------
                                                            $   5,125,000             $    5,572,000
                                                          ====================     ===================

           LONG TERM:
           Convertible Note Payable - J.E. Reed (1)         $           -             $    3,500,000
           Note Payable - Mestek                                        -                  1,019,000
           Convertible Note Payable - B.C. O'Donnell              600,000                    600,000
           Note Payable - J.E. Reed Capitalized Interest                -                    184,000
           Note Payable - Mestek Capitalized Interest                   -                     40,000
           Convertible Note - Mestek                            4,063,000
           Convertible Note - J.E. Reed                         3,612,000
           Note Payable - J.E. Reed Accrued Interest              105,000
                                                          --------------------     -------------------
                                                            $   8,380,000             $    5,343,000
                                                          ====================     ===================
</TABLE>

           (1) Includes Mestek's participation in the J.E. Reed Facility

     LINE OF CREDIT:

     On July 12, 2000, the Company entered into a $6.0 million Loan and Security
Agreement  facility  with  Wainwright  Bank and Trust  Company  (the  Wainwright
Facility),  a commercial  bank, under which the Company granted a first priority
position on substantially all of its assets as security. The Wainwright Facility
was  used to pay off the  line of  credit  with  Silicon  Valley  Bank,  certain
short-term  loans from Mestek,  Inc. (a related  party,  See Note 9), and a loan
from David O. Ellis. Borrowings under the Wainwright Facility accrue interest at
the bank's prime rate per annum and require  monthly  payments of interest.  The
Wainwright  facility  currently  matures  on  October  1,  2003.  The  Company's
obligations   under  the  Wainwright   Facility  are  guaranteed  by  Mestek  in
consideration  of which  the  Company  issued a warrant  to  Mestek to  purchase
104,712  shares of the Company's  common stock.  As a result of the July 1, 2002
recapitalization, the warrant was cancelled.

     CONVERTIBLE NOTE PAYABLE - BARRETT C. O'DONNELL:

     On November 11, 1999,  Simione borrowed  $500,000 from Barrett C. O'Donnell
and  $250,000  from David O. Ellis,  both on an  unsecured  basis,  and executed
promissory  notes in  connection  therewith.  Dr.  Ellis and Mr.  O'Donnell  are
directors of the Company. When the CareCentric/MCS merger was completed on March
7, 2000, the Company succeeded to both of these obligations. The note payable to
Dr. Ellis,  which accrued interest at 9% per annum, was paid in full on July 12,
2000 in  advance  of its  August  15,  2000  maturity.  The note  payable to Mr.
O'Donnell  included interest at 9% per annum, was scheduled to mature on May 11,
2002, and required  quarterly  payments of accrued interest.  On August 8, 2000,
the $500,000 note payable to Mr.  O'Donnell,  together with $100,000 of deferred
salary, was cancelled in exchange for a $600,000 subordinated note,  convertible
into  CareCentric  common  stock at a strike  price of  $2.51  per  share,  with
interest at 9% per annum and a five-year  maturity.  In January 2002,  this loan
was amended to change the interest  rate to prime plus two percent and to change
the terms of  payment  of  interest  for 2002 to require  that  one-half  of the
accrued  interest  be timely  paid each  quarter  and the  balance to be paid on
December 31, 2003 or to be converted into an additional convertible note.



                                       14
<PAGE>

     CONVERTIBLE NOTE PAYABLE - MESTEK:

     Prior to the July 1, 2002 recapitalization  plan, the Company was obligated
under a) an eighteen month unsecured  promissory note in the principal amount of
$1,019,000  payable to Mestek Inc.,  that earned  interest at prime plus one and
one half percent  (1.5%),  with  interest  payable  semiannually  and matured on
September 30, 2003 and b)  additional  notes payable to Mestek in the amounts of
$40,000,  $535,000 and $350,000.  These additional notes payable earned interest
at prime plus two percent (2.0%) for the $40,000 note and prime plus one percent
(1.0%) for the  $535,000  and  $350,000  notes until all  principal  and accrued
interest  amounts  were paid in full.  These  funds were  advanced  by Mestek to
CareCentric to cover payroll and accounts  payable  obligations  incurred by the
Company,  working  capital  needs  of  the  Company  during  the  period  of its
transition of senior  lenders from Silicon  Valley Bank to  Wainwright  Bank and
Trust Company,  accrued and unpaid interest thereon and the unreimbursed portion
of Mr. Bruce Dewey's salary for the periods from November 9, 1999 to October 31,
2001 when he was Chief Executive Officer of the Company.

     On July 1, 2002,  under the terms of the  recapitalization  plan, all notes
payable to Mestek by the Company were  consolidated  together with a) $1,000,000
of Mestek's previous participation in the J. E. Reed facility, b) accrued unpaid
interest on all notes payable to Mestek aggregating  $42,560,  c) accrued unpaid
interest on Mestek's  participation  in the J. E. Reed  facility of $33,750,  d)
$850,000 of cancelled  Mestek Series C Preferred  stock, and d) $129,748 of cash
paid on July 1, 2002 by Mestek to the  Company  to create a single  consolidated
$4,000,000 convertible note payable. The terms of the single consolidated Mestek
note are that interest  accrues and accumulates at a per annum rate equal to six
and one-quarter  percent  (6.25%) through  September 30, 2004, at which time the
accumulated  interest will be capitalized into the related note. After September
30, 2004, the principal and capitalized interest will accumulate interest at the
per annum  rate  equal to six and  one-quarter  percent  (6.25%)  with  interest
compounded and payable quarterly. Together with any unpaid principal and accrued
interest,  the Mestek  note will  mature and  become  payable on June 30,  2007.
Additionally,  the new $4.0 million  Mestek note and the $3.6 million J. E. Reed
note,  together with the value of accrued  interest may be converted at the rate
of $1.00 per share into CareCentric  common stock  exercisable at any time after
July 1, 2002. The new notes are  subordinate to the Wainwright Bank $6.0 million
line of credit.

     CONVERTIBLE NOTE PAYABLE - J. E. REED:

     Prior to the July 1, 2002 recapitalization  plan, the Company was obligated
under a financing  facility (the J. E. Reed Facility)  provided by John E. Reed,
Chairman of CareCentric and the Chairman and Chief Executive  Officer of Mestek,
Inc. The J. E. Reed Facility  consisted of a $6.0 million  subordinated  line of
credit,  convertible into common stock of the Company at a strike price of $2.51
per share,  with  interest at 9% per annum and a five-year  maturity.  The J. E.
Reed  Facility  was  secured by a second  position on  substantially  all of the
Company's assets.  At September 30, 2002 and December 31, 2001,  borrowings were
equal to  $4,331,000  and  $3,500,000  respectively,  $1,000,000  of  which  was
participated  to Mestek at  September  30, 2002 and at  December  31,  2001.  On
December 31, 2001, the facility was amended to change the interest rate to prime
plus two percent  (2.0%) and to change the payment term for unpaid 2001 interest
to require  payment on December  31,  2003,  or convert the  outstanding  unpaid
interest  to  additional  convertible  notes,  in the amount of  $184,438 at the
option of Mr. Reed, and in the amount of $40,463 at the option of Mestek, and to
change the terms of payment of  interest  for 2002 to require  that  one-half be
timely paid each  quarter  and the  balance be paid on  December  31, 2003 or be
converted  to  additional  convertible  notes.  On March  27,  2002 the  Company
received an additional $871,117 advance on the J.E. Reed Facility.

     On  July 1,  2002,  under  the  terms  of the  recapitalization  plan,  all
principal  amounts  advanced under the J.E. Reed  Facility,  less the $1,000,000
participation by Mestek, together with interest accrued through December 31,2001
were  consolidated  into  a  single  consolidated  $3,555,555  convertible  note
payable.  The terms of the single  consolidated J.E. Reed note are that interest
accrues and accumulates at a per annum rate equal to six and one-quarter percent
(6.25%) through September 30, 2004, at which time the accumulated  interest will
be capitalized  into the related note.  After  September 30, 2004, the principal
and capitalized interest will accumulate interest at the per annum rate equal to
six and  one-quarter  percent  (6.25%)  with  interest  compounded  and  payable
quarterly.  Together with any unpaid principal and accrued  interest,  the J. E.
Reed note will mature and become payable on June 30, 2007. Additionally, the new
$3.6 million J. E. Reed note, together with the value of accrued interest may be
converted  at the  rate  of  $1.00  per  share  into  CareCentric  common  stock
exercisable at any time after July 1, 2002. The new notes are subordinate to the
Wainwright Bank $6.0 million line of credit.



                                       15
<PAGE>

     NOTE PAYABLE - J. E. REED ACCRUED INTEREST:

     Under the terms of the July 1, 2002  recapitalization,  $103,818 of accrued
interest  earned on all advances under the J.E. Reed Facility  during the period
January 1, 2002 and June 30, 2002 was  capitalized  into a separate note payable
that  accrues  and  accumulates  interest  at a per annum  rate equal to six and
one-quarter percent (6.25%) through September 30, 2004, with interest compounded
quarterly.   After  September  30,  2004,  the  accumulated   interest  will  be
capitalized  into the related note and the  principal and  capitalized  interest
will  accumulate  interest  at the per annum rate  equal to six and  one-quarter
percent (6.25%) with interest  compounded and payable  quarterly.  Together with
any unpaid  principal  and accrued  interest,  the  separate J. E. Reed  accrued
interest  note will mature and become  payable on June 30, 2007.  The J. E. Reed
accrued interest note is subordinate to the Wainwright Bank $6.0 million line of
credit.

     CAPITAL LEASE OBLIGATIONS:

     The  Company  is  obligated  under a number of  capital  lease  obligations
originally  entered into by CareCentric  related to computer  equipment formerly
used in CareCentric's business.

     The fair value of the Company's  long-term  debt is estimated  based on the
current  interest  rates  offered  to the  Company  for debt  offered  under the
liquidity conditions and credit profile of the Company.  Management believes the
carrying value of debt and the contractual values of the outstanding  letters of
credit approximate their fair values as of September 30, 2002.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

     COMMITMENTS

     The  Company  leases its office  facilities  and  certain  equipment  under
various  operating  lease  agreements.  These leases  require the Company to pay
taxes,  insurance,  and maintenance  expenses and provide for renewal options at
the then fair market rental value of the property.

     CONTINGENCIES

     The Company is engaged in various legal and regulatory  proceedings arising
in the normal  course of  business  which  management  believes  will not have a
material adverse effect on its financial position or results of operations.

     Simione Central Holding,  Inc., a subsidiary of CareCentric now known as SC
Holding,  Inc.  ("SC  Holding"),  was  one  of  several  defendants  named  in a
"whistleblower"  lawsuit related to alleged Medicare fraud filed under the False
Claims  Act in the  Northern  District  of  Georgia  (U.S.  ex re.  McLendon  v.
Columbia/HCA  Healthcare  Corp., et al., No. 97-VC-0890 (N.D. Ga.)). The lawsuit
involves alleged claims that SC Holding  allegedly  participated in a conspiracy
with Columbia/HCA and other third parties to bill inflated and fraudulent claims
to Medicare.  On July 21, 1999, the Justice Department issued notice that it had
elected  not to join  in the  claims  asserted  against  SC  Holding  by  Donald
McLendon,  who  is a  former  employee  of  an  unrelated  service  provider  to
Columbia/HCA.  Although  the Justice  Department  joined the suit with regard to
other  defendants,  it  specifically  declined  to  intervene  with regard to SC
Holding.  In late 2000,  CareCentric was advised by Mr. McLendon's attorney that
notwithstanding the declination by the Justice Department,  Mr. McLendon intends
to pursue "whistleblower"  claims against SC Holding directly.  Through November
8, 2002,  no such action has been taken and nothing  further has been heard from
McLendon's  attorney in over one year.  Management  believes that this claim has
been abandoned.  In the event a claim is asserted,  however,  CareCentric and SC
Holding intend to vigorously defend against it.

     In addition,  the Company has subleased  several  offices that it no longer
uses; the Company  remains  contingently  liable for the lease payments on these
subleased offices.



                                       16
<PAGE>

NOTE 8 - SHAREHOLDERS' EQUITY

     On July 1, 2002, the Company completed a recapitalization plan initiated on
April 8, 2002. The recapitalization plan was approved by the common shareholders
of the Company at the June 6, 2002 annual stockholders' meeting. Under the terms
of the  recapitalization  plan, the Company's  Preferred  Stock and Common Stock
warrants were partially restructured. The effect of the recapitalization plan is
summarized below for each class of equity.

     The  Company's  shareholders'  equity  (all on a  split-adjusted  basis) is
comprised of the following:

     COMMON SHARES - 20,000,000 SHARES AUTHORIZED

     Common Shares - 20,000,000 shares  authorized,  $.001 par value,  4,371,350
shares  issued and  outstanding  as of September 30, 2002 and December 31, 2001.
1,489,853  of such  shares were issued on March 7, 2000 to the former MCS common
shareholders.  606,904 of such shares were issued on March 7, 2000 to the former
preferred  shareholders  and noteholders of CareCentric  Solutions,  Inc., which
shares were converted from Series A Preferred Stock into  CareCentric  (formerly
known as Simione  Central  Holdings,  Inc.) common shares in connection with the
merger.

     Pursuant  to the  terms of the  July 12,  1999  merger  agreement  by which
Simione  acquired  the stock of  CareCentric  Solutions,  Inc.,  the Company was
required  to issue up to an  additional  606,904  shares of common  stock to the
former preferred  shareholders  and noteholders of CareCentric  Solutions if the
average  closing  price of the  Company's  stock for the period  October 1, 2000
through  December  31,  2000 is not equal to or greater  than  $15.00 per share.
Since the Company's  average  closing stock price for the fourth quarter of 2000
was less than $15.00 per share,  on March 19, 2001,  the Company  issued 593,688
shares of its common stock to the former preferred  shareholders and noteholders
of  CareCentric   Solutions.   As  required  by  generally  accepted  accounting
principles, no value was assigned to these shares as it was deemed not to impact
total consideration paid. The Company asserted that it was not required to issue
13,216 additional shares of its common stock as well as 150,740 shares of common
stock  that  were  being  held in  escrow  under  the  terms of the  CareCentric
Solutions  Merger  Agreement  based upon  various  indemnification  and  expense
overages  claims  the  Company  had  against  the former  CareCentric  Solutions
preferred shareholders and noteholders. On May 16, 2001, the Company finalized a
settlement  of these claims with the  representative  of the former  CareCentric
Solutions  parties pursuant to which 88,586 shares of common stock were released
from  escrow and  distributed  to the  former  CareCentric  Solutions  preferred
shareholders and noteholders, the remaining 62,154 escrow shares were cancelled,
no additional shares of common stock will be issued,  and the parties executed a
comprehensive settlement agreement.

     Pursuant to a comprehensive  settlement agreement on June 28, 2001, between
Sterling  Star,  Inc., Mr. Ted Wade  (President of Sterling Star,  Inc.) and the
Company, certain disputes related to the acquisition of a product named Tropical
Software  were  settled.  Under the terms of the  settlement,  10,000  shares of
common stock originally issued to Sterling Star were returned to the Company and
were cancelled.

     PREFERRED STOCK-10,000,000 SHARES AUTHORIZED

     Series B Preferred  Stock -$.001 par value,  5,600,000  shares issued.  The
shares of Series B Preferred  Stock are held by Mestek,  Inc.  (Mestek) and were
issued in  consideration  of $6,000,000 paid to CareCentric on March 7, 2000, in
the  form of cash and debt  forgiveness.  The  Series  B  Preferred  shares,  as
originally  issued,  carried  2,240,000  common share votes (on a split-adjusted
basis) and were entitled to a 9% annual cumulative dividend, among other rights.
In connection with the Company's  application for listing on the Nasdaq SmallCap
Market,  the Company  reached an agreement  with Mestek on June 12, 2000,  under
which Mestek agreed to allow the aforementioned  number of common share votes to
be reduced to  1,120,000  in  consideration  for the  issuance by the Company to
Mestek of a warrant to acquire up to 490,396 shares of CareCentric common stock,
as more  fully  described  below.  On March 29,  2002,  in  connection  with the
refinancing  commitments  made to the  Company  by  Mestek  and John E. Reed (as
further  described in Note 13), Mestek  transferred the voting rights associated
with the Series B Preferred  Stock to Mr. Reed.  As a result of the July 1, 2002
recapitalization plan, the terms of the Series B Preferred Stock were amended to
provide that each share is convertible into 1.072 shares of common stock.



                                       17
<PAGE>

     Series C Preferred  Stock - $.001 par value,  850,000 shares  issued.  As a
result of the July 1, 2002  recapitalization  plan, the Series C Preferred Stock
was cancelled,  and the $850,000 of cash value originally  contributed by Mestek
was consolidated into a Mestek  convertible Note as more fully described in Note
6 above.  $208,000 of accumulated and unpaid dividends  through June 30, 2002 on
the Series C Preferred  Stock were  cancelled  and  recorded  as a reduction  in
preferred dividend expense and an increase in net income at June 30, 2002.

     Prior to the July 1, 2002  capital  restructuring,  the  shares of Series C
Preferred  Stock were held by Mestek and  resulted  from the  conversion  at the
March 7, 2000 merger of a  pre-existing  $850,000  convertible  note  payable to
Mestek.  The Series C Preferred  shares carried 170,000 common share votes (on a
split adjusted  basis) and were entitled to an 11% annual  cumulative  dividend,
among other rights.

     Series D Preferred  Stock - $.001 par value,  398,406  shares  issued.  The
shares of Series D  Preferred  Stock are held by John E. Reed and were issued on
June 12, 2000 in  consideration of $1.0 million paid to the Company in cash. The
Series D Preferred shares have a 9% annual cumulative dividend,  are convertible
into common stock at an initial  conversion price of $2.51 per share,  limit the
ability to issue dilutive stock options and have voting rights equal to those of
the common stock, among other rights.

     Series E Preferred  Stock - $.001 par value,  210,000 shares issued under a
restricted  stock award. The shares of Series E Preferred Stock are held by John
R. Festa and the rights to those shares were  granted on November 10, 2001.  The
Series E Preferred shares are entitled to certain voting, dividend,  liquidation
and conversion rights.

     As of September 30, 2002, the Company had a cumulative  preferred dividends
liability of $1,594,700  comprised of $1,384,890 for Series B Preferred  shares,
$204,315  for  Series D  Preferred  shares  and $ 5,495 for  Series E  Preferred
shares.  Cumulative  preferred  dividends  payable  are  included in the accrued
liabilities  account  presented  on  the  Consolidated  Balance  Sheets  in  the
accompanying financial statements.

     WARRANTS AND OPTIONS

     Common  Stock  Warrants - In  connection  with the issuance of the Series B
Preferred  Stock  described  above,  Mestek  received a warrant to acquire up to
400,000 shares of the Company's common stock at a per share exercise price equal
to $10.875.  In  connection  with the waiver by Mestek of certain  voting rights
previously  granted to it, Mestek received on June 12, 2000 a warrant to acquire
up to 490,396  shares of the  Company's  common stock for a term of 3 years at a
per share exercise price equal to $3.21. In connection  with Mestek's  guarantee
of the Company's  obligations  under the line of credit from Wainwright Bank and
Trust Company, as more fully explained in Note 6 to these Financial  Statements,
Mestek  received on July 12,  2000 a warrant to acquire up to 104,712  shares of
the Company's  common stock for a term of 3 years at a per share  exercise price
equal to $2.51. The aforementioned  number of shares and per share prices is all
on  a  split-adjusted  basis.  Other  warrants  existing  prior  to  the  merger
transaction to acquire up to 25,000 shares of common stock remain outstanding.

     As a result of the July 1, 2002 capital restructuring,  the warrants issued
to Mestek to purchase  490,396 and 400,000  shares of Company  common stock were
cancelled  and  reissued  with an  exercise  price of  $1.00  per  share  and an
expiration date of June 15, 2004. Additionally, the warrants issued to Mestek to
purchase 104,712 shares of the Company's common stock were cancelled.

     The Company's  outstanding Warrants as of September 30, 2002 are summarized
in tabular form as follows:

          COMMON              EXERCISE               EXPIRATION
          SHARES                PRICE                   DATE
       ---------------  ----------------------  ---------------------
              490,396     $     1.00             June 15, 2004
              400,000     $     1.00             June 15, 2004
                          $     5.00             February 24, 2005
               25,000
       ---------------
              915,396
       ===============



                                       18
<PAGE>

     Stock Options - Options  totaling 1,000 shares were  outstanding and vested
under the now discontinued 1997 SCHI NQ (Directors) Plan at an exercise price of
$60.00.   Non-plan  options  totaling  107,453  shares,   of  which  90,787  are
exercisable,  are  outstanding at exercise  prices ranging from $2.51 to $45.00.
The Simione Central Holding Inc. 1997 Omnibus  Equity-Based Plan (the "Plan") is
the only  continuing  stock  option  plan of the  Company.  The Plan offers both
incentive  stock  options  and  non-qualified  stock  options.  The  Company  is
authorized  to grant  options of up to  900,000  shares of common  stock.  As of
September 30, 2002,  options totaling 486,894 shares were outstanding,  of which
173,566 shares are exercisable, at exercise prices ranging from $1.00 to $73.55.

     In  connection  with the  Simione/MCS  merger on March 7, 2000,  Mestek was
granted a series of options to purchase a total of approximately  378,295 shares
of the Company's  common stock (on a split-adjusted  basis).  These options were
cancelled as a result of the July 1, 2002 capital restructuring.

NOTE 9 - RELATED PARTY TRANSACTIONS

     The Company has subleased  certain space to  Healthfield,  Inc.  which is a
MestaMed(R)  customer and has a significant  shareholder who was a former member
of the board of  directors  of the  Company.  The  original  lease  and  related
sublease expire on December 31, 2002 and require annual sublease  payments equal
to the original lease payments of approximately $730,000.

     During the year ended  December 31, 2001,  R. Bruce Dewey was Vice Chairman
of the Board of  Directors,  and  president  of the Company and Chief  Operating
Officer of Mestek Inc.  Mr. Dewey was replaced by Mr. John R. Festa as President
and Chief Executive Officer of the Company in October 2001 and did not stand for
re-election to the Board of Directors in 2002.

     Winston R. Hindle, Jr., a director of the Company, is a director of Mestek.
Mestek has certain investments in the Company in the form of notes,  convertible
notes,  warrants,  stock options and preferred  stock as described in Notes 6, 8
and 13 to these Financial Statements.

     The Company has a note receivable from Simione Consultants, LLC of $467,000
at September  30, 2002.  On September  28, 2001,  the Company  discontinued  its
Consulting  business segment by closing the sale of certain of the assets of its
wholly-owned  subsidiary,  Simione  Consulting,  Inc.  ("Consulting") to Simione
Consultants,  LLC, which is owned and  controlled by William J. Simione,  Jr., a
director  and  former  officer  of  CareCentric.   The  total  sales  price  was
approximately $2.0 million plus the assumption of certain liabilities.  The sale
was made  pursuant to an asset  purchase  agreement.  William  Simione,  Jr. has
resigned as an officer of, but remains a director  of,  CareCentric.  The assets
sold under the agreement included the Consulting accounts  receivable,  computer
equipment, and miscellaneous prepaid expenses.  Consideration received consisted
of approximately $1.0 million in cash and $1.0 million in notes, $770,000 with a
36-month term and $230,000  with a 5-month term.  The cash proceeds were used to
pay down CareCentric's line of credit.

     As of September 30, 2002, the Company had a promissory note  outstanding to
Barrett C. O'Donnell, a director of the Company, as described in Note 6 to these
Financial Statements.

     John  E.  Reed  is a  director  and a  significant,  but  not  controlling,
shareholder  of the  Wainwright  Bank and Trust  Company  which has provided the
Company with a $6.0 million line of credit, as more fully explained in Note 6 to
the Financial Statements.

     John E. Reed,  Chairman  of the Company and  Chairman  and Chief  Executive
Officer of Mestek, has provided the Company with a $3.6 million convertible note
and a $0.1 million  accrued  interest note as more fully  described in Note 6 to
the Financial Statements.  Mr. Reed also purchased $1.0 million of the Company's
Series D Preferred  Stock on June 12, 2000, as more fully described in Note 8 to
these Financial Statements.  Mestek has provided the Company with a $4.0 million
convertible  note. The John E. Reed and Mestek notes were  originally  part of a
$6.0 million line of credit  (unrelated  to the  Wainwright  Bank and Trust $6.0
million line of credit  described  above) which was cancelled as a result of the
July 1, 2002  recapitalization.  An independent committee of the Company's Board


                                       19
<PAGE>

of Directors,  consisting of Barrett C. O'Donnell and David O. Ellis, negotiated
the terms of Mr. Reed's debt and equity investments in the Company. The issuance
of 398,406  shares of Series D Preferred  Stock to Mr. Reed for his $1.0 million
equity  investment was based on a per share price of $2.51,  which was the 5-day
average  closing price of  CareCentric  common stock as of the date of the final
negotiation of the terms of Mr. Reed's purchase.

     Warrants  were  granted in June 2000 and July 2000 by the Company to Mestek
in connection with its waiver of certain voting rights previously  granted to it
and in connection  with its guarantee of the loan from Wainwright Bank and Trust
Company to the Company.  The terms of the warrants (as  described in more detail
in  Note  8 to  these  Financial  Statements)  were  based  on  negotiations  by
independent committees of the Boards of Directors of the Company and Mestek.

     On August 22, 2002, the Company's common stock was delisted from the Nasdaq
Small Cap  Market and has been  listed on the Over the  Counter  Bulletin  Board
since that date.

NOTE 10 - LICENSE AGREEMENTS

     The Company  licenses  certain  software  products  from third  parties for
incorporation  in, or other use  with,  its  products  and is  obligated  to pay
license fees in connection  with such  products.  The Company  sublicenses  such
products  to  its  customers   and  collects   fees  in  connection   with  such
sublicensees.

NOTE 11 - EXECUTIVE COMPENSATION

     The Company has entered into an employment agreement with its President and
Chief Executive  Officer,  Mr. John Festa.  Among other specific  contents,  Mr.
Festa (i) has been granted 210,000 shares of Series E preferred  stock, one half
of which vest evenly over the course of three years from his hire date dependent
upon his  continued  employment  as President  and CEO and one half of which are
forfeitable  pro rata over a three year period if certain  financial  milestones
are not met,  (ii) payment of an annual bonus of up to 50% of his annual  salary
based on completion of annual performance  objectives,  (iii) the possibility of
receiving a special  bonus which varies in dollar amount in the event there is a
sale of the Company  while Mr.  Festa is  President  and CEO and for nine months
thereafter.  The Series E preferred stock was originally valued at approximately
$210,000 and is being  amortized  as  compensation  expense over the  three-year
vesting period. The amount representing  unearned compensation is recorded as an
increase  in the  stockholders  deficit  account.  For the three and nine months
ended September 30, 2002, approximately $18,000 and $58,000,  respectively,  was
recorded as current expense associated with earnings under this grant.

NOTE 12 - LIQUIDITY

     As disclosed in the financial  statements,  the Company's  operations  used
significant  amounts of cash in 2001. The Company has a working  capital deficit
of $13.3 million at September 30, 2002. During the first six months of 2002, the
Company  occasionally  used its Wainwright  Bank Credit Line and the Reed Credit
Line in order to meet its working capital needs. As a result of the July 1, 2002
recapitalization,  the Reed  Credit  facility  was  cancelled  and as more fully
explained  in  Note 6 to  these  financial  statements,  replaced  by  long-term
interest  deferred  notes that mature on September  30,  2007.  During the three
months ended  September 30, 2002 the company paid back $0.8 million of liability
on the Wainwright Bank Credit Line.

     As of  October  30,  2002,  the  Company  had  unused  credit  capacity  of
approximately $1.3 million from the $6.0 million  Wainwright Bank facility.  The
Company  believes  the  combination  of the  funds  available  from  cash  to be
generated  from future  operations  and the  Wainwright  Bank  facility  will be
sufficient  to meet  the  Company's  operating  requirements  through  at  least
September 30, 2003,  assuming no material adverse change in the operation of the
Company's  business.  Nevertheless,  as revenues increase  sufficiently to cover
fluctuations in forward-looking  costs and operating expenses,  the Company does
not expect to, but may need, the continued  support of its majority  shareholder
to manage  short-term  working  capital  fluctuations.  The  Company's  majority
shareholder  has stated he will  consider  and has the  ability to  continue  to
advance short term working  capital loans to the Company on terms similar to his
existing loans with the Company.





                                       20
<PAGE>



ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     Certain  statements  set forth in  Management's  Discussion and Analysis of
Financial  Condition  and  Results  of  Operations  constitute  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
the Private  Securities  Litigation  Reform Act of 1995,  and are subject to the
safe  harbor  created  by such  sections.  When used in this  report,  the words
"believe",  "anticipate",  "estimate",  "expect",  "plans", "intend",  "likely",
"will"  and  similar  expressions  are  intended  to  identify   forward-looking
statements.   The   Company's   future   financial   performance   could  differ
significantly  from  that  set  forth  herein,  and  from  the  expectations  of
management.   Important  factors  that  could  cause  the  Company's   financial
performance to differ  materially  from past results and from those expressed in
any forward looking statements  include,  without  limitation,  the inability to
obtain additional capital resources, variability in quarterly operating results,
customer concentration,  product acceptance, long sales cycles, long and varying
delivery  cycles,  the  Company's  dependence  on  business  partners,  emerging
technological standards,  changing regulatory standards,  inability to retain or
hire   experienced   and   knowledgeable   employees,   risks   associated  with
acquisitions,   increased  regulation  of  the  health  care  industry,   future
consolidation  of the health care  industry,  potential  liability in connection
with a Department of Labor  investigation  or IRS audit, the need to develop new
and  enhanced  products,  product  delays and  errors,  competition,  difficulty
protecting  intellectual  property rights,  and the risk factors detailed in the
Company's  Registration  Statement on Form S-4 (File No.  333-96529)  and in the
Company's  periodic  reports filed with the Securities and Exchange  Commission.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements, which speak only as of their dates. This Management's Discussion and
Analysis of  Financial  Condition  and Results of  Operations  should be read in
conjunction with the Company's  consolidated  financial statements and the notes
thereto.  The  Company  assumes  no  obligation  to  update  publicly  any  such
forward-looking  statements,  whether  as a result  of new  information,  future
events, or otherwise.

CRITICAL ACCOUNTING POLICIES

     Financial  Reporting  Release No. 60,  which was  recently  released by the
Securities  and  Exchange  Commission,  requires  all  companies  to  include  a
discussion of critical accounting policies or methods used in the preparation of
financial  statements.  Note  1 of  the  Notes  to  the  Consolidated  Financial
Statements includes a summary of the significant accounting policies and methods
used in the preparation of the Company's Consolidated Financial Statements.  The
following is a brief discussion of the more significant  accounting policies and
methods that we follow.

General

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally  accepted  in  the  United  States  of  America,  requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities  and the disclosure of contingent  assets and liabilities
at the dates of the financial  statements  and the reported  amounts of revenues
and expenses during the reporting  periods.  The most significant  estimates and
assumptions  relate to the intangible  assets,  realization  of deferred  income
taxes and the adequacy of allowances for returns and doubtful  accounts.  Actual
amounts could differ significantly from these estimates.

Our critical accounting policies are as follows:

     o    revenue  recognition;
     o    estimate of allowance for uncollectible  accounts;  and
     o    valuation of long-lived and intangible assets and goodwill.

Revenue Recognition

     The Company sells its software pursuant to non-exclusive license agreements
which provide for the payment of a one-time  license fee. In accordance with the
American Institute of Certified Public  Accountants  Statement of Position 97-2,
"Revenue Recognition", these revenues are recognized when products are delivered




                                       21
<PAGE>


and the  collectability  of  fees  is  probable,  provided  that no  significant
obligations  remain  under  the  contract.  Revenues  derived  from  the sale of
software  products not requiring  significant  modification or customization are
recognized when products are delivered and  collectability  of fees is probable,
provided that no significant obligations remain under the contract. The price of
the  Company's  software  varies  depending  on the number of  software  modules
licensed and the number of users  accessing  the system and can range from under
ten thousand dollars to a few million dollars.  The Company  generally  requires
payment of a deposit  upon the  signing  of a customer  order as well as certain
additional payments prior to delivery.  As a result, the Company's balance sheet
reflects significant customer deposits.

     Third-party software and computer hardware revenues are recognized when the
related  products are  delivered.  Software  support  agreements  are  generally
renewable  for one-year  periods,  and revenue  derived from such  agreements is
recognized  ratably  over  the  period  of  the  agreements.   The  Company  has
historically  maintained high renewal rates with respect to its software support
agreements. The Company generally charges for software implementation,  training
and technical  consulting services as well as management  consulting services on
an hourly or daily basis. The Company offers "tiered pricing" for implementation
of new systems  whereby  the  customer  pays a fixed fee for a certain  level of
packaged services and daily fees for services beyond the package.

     Revenues for post-contract customer support are recognized ratably over the
term of the support period,  which is typically one year. Post contract customer
support  fees  typically  cover  incremental  product  enhancements,  regulatory
updates  and  correction  of  software  errors.  Separate  fees are  charged for
significant product  enhancements,  new software modules,  additional users, and
migrations to different operating system platforms.

Estimate of Allowance for Uncollectible Accounts

     The Company  continuously reviews the status of all its accounts receivable
with its customers for current collectability. The Company recognizes that there
are  circumstances  under which  customers  will delay payment  beyond the terms
offered  by the  Company  either  because  of their  own  payment  practices  or
temporary situations which need to be resolved before the customer will continue
payment.  Reserves  for  uncollectability  are  based on  various  ages of those
accounts  receivable  past their original due date for  collection.  The Company
does not write the account off  against  the reserve for  uncollectible  account
until all efforts to collect the accounts receivable have been exhausted.

Valuation of Long-Lived and Intangible Assets and Goodwill

     The Company assesses the impairment of identifiable intangibles, long-lived
assets and related goodwill and enterprise  level goodwill  annually or whenever
events or changes in  circumstances  indicate that the carrying value may not be
recoverable.  Factors the Company  considers  important  which could  trigger an
impairment review include the following:

     o    significant   underperformance  relative  to  expected  historical  or
          projected future operating results;
     o    significant changes in the manner of the Company's use of the acquired
          assets or the strategy for its overall business; and
     o    significant negative industry or economic trends.

     When the  Company  determines  that  the  carrying  value  of  intangibles,
long-lived  assets and related goodwill and enterprise level goodwill may not be
recoverable  based upon the existence of one or more of the above  indicators of
impairment,  the Company measures any impairment based on a projected discounted
cash  flow  method  using  a  discount  rate  determined  by  management  to  be
commensurate  with  the risk  inherent  in the  current  business  model.  After
recording a $11.8 million impairment adjustment,  net intangible assets amounted
to $5.4  million  as of  December  31,  2001.  See  Note 5 of the  Notes  to the
Consolidated Financial Statements.

RESULTS OF OPERATIONS

Effect of Discontinued  Operations and SFAS No. 142 on Management Discussion and
Analysis

     To  present  a more  meaningful  analysis  of  operating  performance,  the
comparison  of the three  months and nine  months  ended  September  30, 2002 to


                                       22
<PAGE>

September  30, 2001  compares  the 2002  reported  Financial  Statements  in the
accompanying  Financial  Statements  to a pro forma 2001  statement of operating
results.  The pro forma  adjustments  for the 2001 financial  statements were to
exclude the results of the discontinued  operations of the Consulting segment of
CareCentric, Inc. in September of 2001 (see Note 2 to the accompanying Financial
Statements) and to reduce  amortization  expense for the effect of adopting SFAS
No. 142 (see Note 1 to the accompanying Financial Statements).

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 30, 2002

     Net Revenues.  Revenues  (exclusive of the  Consulting  segment,  which was
discontinued  in  September  2001) were $5.7  million for the three months ended
September  30, 2002 and $5.1 million for the three months  ended  September  30,
2001, or an increase of 10.8%.  The $0.6 million increase was attributable to an
increase in software  system  sales and related  income of $0.2  million to $2.7
million in 2002 from $2.5 million in 2001 and increase in  maintenance  revenues
of $0.4 million to $3.0 in 2002 from $2.6 million in 2001.

     Cost of Revenues.  Cost of revenues  decreased $0.2 million,  or 11.8%,  to
$1.7 million in 2002 from $1.9 million for the three months ended  September 30,
2001. As a percentage of total net revenues, cost of revenues decreased to 30.8%
in 2002 from 38.7% in 2001. The $0.2 million  decrease  resulted  primarily from
cost cutting and changes in product  mix. The decrease as a percentage  of total
net revenues is due to the combined  impact of many factors  including  improved
efficiencies in installation procedures and reduced support costs resulting from
lower sales discounts and changes in product mix.

     Selling,  General and Administrative.  Selling,  general and administrative
expenses decreased $0.5 million,  or 19.1%, to $2.1 million for the three months
ended  September 30, 2002 from $2.6 million for the three months ended September
30,  2001.  As  a  percentage  of  total  net  revenues,  selling,  general  and
administrative expenses were 36.5% for the three months ended September 30, 2002
and 50.0% for the three  months ended  September  30,  2001.  This  decrease was
attributable to synergies derived from cost savings  initiatives  implemented in
2001  and  early  2002.  Cost  savings  were  primarily   realized  through  the
centralization  of  administrative  functions and  elimination of  non-essential
facilities and excess capacity.

     Research and  Development.  Research  and  development  expenses  decreased
approximately $0.5 million, or 37.0%, to $0.9 million for the three months ended
September  30, 2002 from $1.4 million for the three months ended  September  30,
2001. As a percentage of total net revenues,  research and development  expenses
decreased to 15.8% for the three months ended  September 30, 2002 from 27.7% for
the three  months  ended  September  30,  2001.  The  decrease in  research  and
development  expenditures  was  primarily due to the  Company's  realignment  of
research efforts between existing and future platform products.  The expenditure
on research and  development  in the third quarter was unchanged at $0.9 million
for the second quarter. The Company believes the level of expenditure maintained
in the second and third  quarters of 2002 is the proper  amount to both  enhance
and maintain existing  products and begin development of new product  platforms.
As development of new product  platforms  advance,  the Company expects research
and  development  expenses to rise above the current  15.8% but remain below the
historic 27.7% of revenue level experienced in 2001.

     Amortization and Depreciation.  Amortization and depreciation  decreased by
$0.6 million to $0.4 million for the three months ended  September 30, 2002 from
$1.0 million for the three months ended  September  30, 2001.  This  decrease is
attributable to the net effect of the adoption of SFAS No. 142 and the reduction
in  amortization  from the write off of the intangibles in the fourth quarter of
2001.

     Operating  income  (Loss).   The  Company's  net  income  from  operations,
reflecting  the  same  assumptions  as  above  for  purposes  of  comparability,
increased  from a loss of $1.9 million for the three months ended  September 30,
2001 to a net profit of $0.4 million for the three months  ended  September  30,
2002. This change to profitability from a loss from continuing operations is due
to the combined effect of the increase in revenue,  reductions in all components
of  expenses  including  selling,  general  and  administrative,   research  and
development and amortization expenses.

     Other Income  (Expense).  Interest  expense related to borrowings under the
Company's  line of  credit  agreements,  loans  and  capital  lease  obligations
increased  $135,000  to  $174,000  for three  months  ended  September  30, 2002


                                       23
<PAGE>

compared to $39,000 for the three months ended September 30, 2001.  Interest and
other income consist  principally of interest income related to customer finance
charges  and the  Company's  short term cash  investments.  The  increase in net
interest  expense in 2002 was caused by an increase in interest  bearing debt in
2002.

     Income Taxes.  The Company has not incurred or paid any substantial  income
taxes since March 2000. At December 31, 2001, CareCentric had net operating loss
("NOL")  carryforwards  for  federal  and state  income  tax  purposes  of $36.7
million.  Such losses expire beginning in 2008, if not utilized.  The Tax Reform
Act of 1986, as amended,  contains  provisions that limit the NOL and tax credit
carryforwards  available to be used in any given year when certain events occur,
including  additional sales of equity securities and other changes in ownership.
As a  result,  certain  of the NOL  carryforwards  may be  limited  as to  their
utilization  in any year.  The Company has concluded that it is more likely than
not that these NOL  carryforwards  will not be  realized  based on a weighing of
available  evidence at September 30, 2002, and accordingly,  a 100% deferred tax
valuation allowance has been recorded against these assets.

     Loss from Operations of Discontinued  Segment. The loss of $2.8 million for
the three  months  ended  September  30,  2001 was  attributable  to the loss on
disposal  of $2.6  million  and a $0.2  million  loss from  operations  from the
discontinued  operations  of the  Consulting  segment.  The $2.6 million loss on
disposal was the result of the write off of intangible  assets attributed to the
Consulting business at the March 7, 2000 merger date with MCS, Inc.

     Cumulative  Preferred  Dividends.  Cumulative  preferred  dividends for the
three months ended September 30, 2002 was $184,000  compared to $180,000 for the
three months ended September 30, 2002 and 2001 respectively.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002

     Net  Revenues.  Total net revenues for the nine months ended  September 30,
2002  increased by $0.3  million,  or 1.6%,  to $16.7 million in 2002 from $16.4
million in 2001.  Revenues from software  systems and related  income  increased
$0.1 million to $8.3 million in 2002 from $8.2  million in 2001.  Revenues  from
software  maintenance  increase $0.2  million,  or 2.0%, to $8.4 million in 2002
from $8.2 million in 2001.

     Cost of  Revenues.  Total cost of  revenues  decreased  approximately  $1.3
million,  or 19.9%, to $5.2 million for the nine months ended September 30, 2002
from $6.5 million for the nine months ended  September 30, 2001. As a percentage
of total  revenues,  cost of revenues  decreased  to 31.0% in 2002 from 39.4% in
2001. The $1.3 million decrease resulted primarily from cost cutting and changes
in product mix. The decrease as a percentage of total net revenues is mainly the
result  of  efficiencies  in  installation  and  support  costs,  reduced  sales
discounts and changes in product mix.

     Selling,  General and Administrative  Expenses.  Total selling, general and
administrative  expenses  decreased  $0.7  million to $7.4  million for the nine
months  ended  September  30, 2002 from $8.1  million for the nine months  ended
September 30, 2001. This decrease is principally  attributable to the net effect
of  synergies  derived  from  centralization  of  administrative  functions  and
elimination of non-essential  facilities and excess capacity. As a percentage of
total net revenues,  selling, general and administrative expenses were 43.9% for
the nine months ended September 30, 2002 compared with 49.1% for the nine months
ended September 30, 2001.

     Research  and  Development  Expenses.  Research  and  development  expenses
decreased  $2.0  million,  or 42.0%,  to $2.8  million for the nine months ended
September  30, 2002 from $4.8  million for the nine months ended  September  30,
2001. As a percentage of total net revenues,  these expenses  decreased to 16.6%
for the nine  months  ended  September  30,  2002 from 29.1% for the nine months
ended  September  30,  2001.  As the Company  advances  development  of its next
generation product platforms, research and development expenditures are expected
to increase to a higher level than experienced in the first nine months of 2002.

     Amortization and Depreciation.  Amortization and depreciation  decreased by
$1.6 million to $1.3 million for the nine months ended  September  30, 2002 from
$2.9 million for the nine months ended  September  30,  2001.  This  decrease is
attributable to the net effect of the adoption of SFAS No. 142 and the reduction
in  amortization  from the write  off of the  intangible  assets  in the  fourth
quarter of 2001.




                                       24
<PAGE>

     Other Income  (Expense).  Interest  expense related to borrowings under the
Company's line of credit agreements and capital lease obligations increased $0.2
million for the nine months ended September 30, 2002 compared to the nine months
ended September 30, 2001.  Interest and other income,  which consist principally
of  interest  income  related to  customer  finance  charges  and the  Company's
short-term cash investments,  have decreased by approximately $0.2 million.  The
Company expects a net increase in interest expense in 2002 caused by an increase
in interest bearing debt in 2002.

BACKLOG

     The  Company's  backlog   associated  with  its  software   operations  was
approximately  $2.2  million at September  30, 2002  compared to $3.2 million at
December 31, 2001. Backlog consists of the unrecognized portion of contractually
committed  software  license fees,  hardware,  estimated  installation  fees and
professional services. The length of time required to complete an implementation
depends on many factors outside the control of the Company,  including the state
of the customer's  existing  information  systems and the customer's  ability to
commit  the   personnel   and  other   resources   necessary   to  complete  the
implementation  process.  As a result,  the  Company  may be  unable to  predict
accurately  the amount of revenue it will  recognize in any period and therefore
can make no  assurances  that the amounts in backlog will be  recognized  in the
next three months.

LIQUIDITY AND CAPITAL RESOURCES

     In November  1999,  CareCentric,  prior to the merger with MCS and when its
pre-merger  name was Simione Central  Holdings,  Inc.  (Simione),  received $1.6
million  of  loans  from  Mestek  ($850,000)  and two  stockholders  of  Simione
($750,000),  Barrett C. O'Donnell and David Ellis,  to fund operating  needs and
continue the execution of product  strategies in the fourth quarter of 1999. The
$850,000  loan from Mestek was  converted  into  850,000  shares of newly issued
Series C  Preferred  stock of  Simione at the  closing of the MCS merger  having
170,000  common  shares  votes  and  which  were  entitled  to an  11.0%  annual
cumulative dividend. The loan from Mr. O'Donnell along with $100,000 in deferred
salary were exchanged for a $600,000 subordinated note,  convertible into common
stock at $2.51 per share,  with  interest at 9% per annum and a maturity date of
August 8, 2005.  In January  2002,  this loan was amended to change the interest
rate to prime plus two  percent  and to change the terms of payment of  interest
for 2002 to require  that  one-half of the accrued  interest be timely paid each
quarter and the balance to be paid on December 31, 2003 or to be converted  into
an additional convertible note. The loan from Dr. Ellis was paid in full on July
12, 2000 from the credit facility provided by Wainwright Bank and Trust Company.
See Note 6 to the accompanying Consolidated Financial Statements.

     In February  2000,  Simione  received an  additional  $1.0  million of loan
proceeds from Mestek.  The loan proceeds were used to fund  Simione's  operating
needs until  completion  of the merger with MCS,  and carried the same terms and
security as a $3.0 million loan received from Mestek in September 1999. On March
7, 2000,  the merger with MCS was completed and Mestek's  notes  evidencing  the
$1.0 million and $3.0 million loans, together with an additional $2.0 million in
cash from Mestek,  were converted into Series B Preferred Stock and a warrant to
purchase  CareCentric  common  stock as more  fully  explained  in Note 6 to the
accompanying  Consolidated  Financial  Statements.   The  consolidation  of  the
accounts  receivable  of MCS into  the then  outstanding  balance  of  Simione's
accounts receivable provided an additional $1.5 million of borrowing capacity on
the $5.0 million bank line of credit established by Simione in September 1999.

     Immediately after the Simione/MCS  merger on March 7, 2000, the Company had
cash and cash  equivalents of $3.5 million and short and long term debt from all
sources  of  $2.5  million,   for  a  positive  net   cash/(debt)   position  of
approximately $1.0 million.  In order to supplement its capital  resources,  the
Company,  subsequent to the merger,  undertook a search for  additional  capital
resources. On June 22, 2000, the Company closed a financing with John E. Reed, a
CareCentric  director  and the chief  executive  officer of Mestek,  of up to $7
million.  The  financing  consisted  of $1 million  in equity,  and a $6 million
subordinated revolving line of credit facility, convertible into common stock of
CareCentric,  with a 9% interest rate and five-year maturity.  On July 12, 2000,
the Company closed a financing with Wainwright Bank and Trust Company for access
to a $6.0 million revolving line of credit, which was guaranteed by Mestek, Inc.
These  three  transactions  are  described  in  greater  detail in Note 6 to the
accompanying  Consolidated  Financial Statements and resulted in the creation of
the following credit and debt facilities and preferred equity securities:

                                       25
<PAGE>

<TABLE>
<CAPTION>
<S>                                        <C>                <C>                         <C>
                      CREDIT AND DEBT AND PREFERRED EQUITY SECURITIES IN JULY 2000
-----------------------------------------------------------------------------------------------------------
                 SOURCE                        FUNDING                  FORM               DATE CLOSED
-----------------------------------------  -----------------  -------------------------  ------------------

Barrett C. O'Donnell                           $   600,000    Convertible Note            November 11, 1999

John E. Reed                                   $ 1,000,000    Series D Preferred Stock    June 22, 2000

John E. Reed                                     6,000,000    Line of Credit              June 22, 2000

Wainwright Bank and Trust Company                6,000,000    Line of Credit              July 12, 2000
                                           -----------------
                                               $13,600,000
                                           =================
</TABLE>

     Throughout  2000 and 2001,  advances  were made on the John E. Reed line of
credit such that on December 31, 2001, the  outstanding  amount under the Credit
Facility was $3.5 million, $1.0 million of which was participated to Mestek, and
the  balance of which was  retained  by Mr.  Reed.  On December  31,  2001,  the
facility was amended to change the interest  rate to prime plus two percent,  to
change the payment terms for unpaid 2001 interest to require payment at December
31, 2003 or to convert the outstanding unpaid interest to additional convertible
notes in the amount of $184,438 at the option of Mr. Reed,  and in the amount of
$40,463 at the option of Mestek,  and to change the terms of payment of interest
for 2002 to require that one-half be timely paid each quarter and the balance to
be paid on December 31, 2003 or to be converted to additional convertible notes.

     During  2000 and  2001,  the  Company  became  obligated  under an 18 month
unsecured  promissory  note in the  principal  amount of  $1,019,000  payable to
Mestek which earned interest at prime plus one and one half percent (1.5%), with
interest payable semiannually and which matured on September 30, 2003. This note
covers funds  advanced by Mestek to  CareCentric  to cover  payroll and accounts
payable obligations  incurred by the Company during the period of its transition
of senior lenders from Silicon Valley Bank to Wainwright Bank and Trust Company,
accrued and unpaid interest thereon and the unreimbursed portion of Mr. R. Bruce
Dewey's salary for the periods from November 9, 1999 to October 31, 2001.

     Also during 2000, 2001 and the first quarter of 2002, the Company  incurred
operating  losses  resulting  from  numerous  factors,  including  the uncertain
operating  condition of its customers due to the negative effects of the current
government limits over home medical cost reimbursement,  higher than anticipated
costs of developing,  implementing and supporting The Smart Clipboard(R) product
and slower than  expected  completion  of effective  integration  of the MCS and
Simione Central organizations. In addition, sales revenue in 2000 was lower than
planned in the core  MestaMed(R),  DME VI and STAT2  products while new sales of
The Smart  Clipboard(R) and Tropical products (now discontinued) did not develop
as quickly as projected.

     On April 8, 2002,  the  Company  secured  two  commitments  for  additional
financing,  from existing shareholders John Reed and Mestek. Mr. Reed and Mestek
provided $871,117 and $1,092,000 in short-term debt financing, respectively.

     Also on April 8, 2002, the Company  initialized a  recapitalization  of its
interest bearing debt and preferred  equity  instruments.  The  recapitalization
plan was  approved  by the  Company's  shareholders  at the June 6, 2002  annual
stockholders  meeting and  completed  on July 1, 2002.  See Notes 6 and 8 to the
accompanying Financial Statements for the impact of the recapitalization plan on
each  class  of debt  and  preferred  stock.  Following  the  completion  of the
recapitalization  plan on July 1, 2002, the Company's credit and debt facilities
and related preferred equity securities consist of the following:


                                       26
<PAGE>

<TABLE>
<CAPTION>
<S>                                       <C>                <C>                             <C>

                      CREDIT AND DEBT AND PREFERRED EQUITY SECURITIES AT SEPTEMBER 2002
--------------------------------------------------------------------------------------------------------------
                 SOURCE                        FUNDING                     FORM                 DATE CLOSED
-----------------------------------------  ----------------- ------------------------------- -----------------

Barrett C. O'Donnell                           $   600,000   Convertible Note maturing         November 11, 1999
                                                             August, 2005

John E. Reed                                   $ 1,000,000   398,000 shares of convertible     June 22, 2000
                                                             Series D Preferred Stock

Mestek, Inc.                                   $ 4,000,000   Convertible deferred interest      July 1, 2002
                                                             Note maturing June 30, 2007

John E. Reed                                   $ 3,555,555   Convertible deferred interest      July 1, 2002
                                                             Note maturing June 30, 2007

John E. Reed                                   $   103,818   Capitalized deferred interest      July 1, 2002
                                                             Note maturing June 30, 2007

Wainwright Bank and Trust Company                6,000,000   Line of Credit                    July 12, 2000
                                           -----------------
                                               $15,259,373
                                           =================
</TABLE>

The John E. Reed and Mestek,  Inc.  debt and equity  amounts have all been fully
funded to the Company as of September 30, 2002.  During the third  quarter,  the
Company paid off $0.8 million of the  Wainwright  Bank and Trust Company line of
credit  resulting in an  outstanding  balance of $5.1  million at September  30,
2002.

     During the month of October  2002,  the Company has paid off an  additional
$0.4 million on the Wainwright Bank line of credit, resulting in $1.7 million of
unused  credit  capacity  as of  November  8, 2002.  The  Company  believes  the
combination  of the  funds  available  from  cash to be  generated  from  future
operations  and the  Wainwright  Bank  facility  will be  sufficient to meet the
Company's operating  requirements  through at least September 30, 2003, assuming
no  material  adverse  change  in  the  operation  of  the  Company's  business.
Nevertheless,  until revenues  increase  sufficiently  to cover  fluctuations in
forward-looking costs and operating expenses, the Company may need the continued
support  of its  majority  shareholder  to  manage  short-term  working  capital
fluctuations. The Company's majority shareholder has stated he will consider and
has the ability to continue to advance  short term working  capital loans to the
Company on terms similar to his existing  credit  facility.  See also Note 12 to
Financial Statements.

     The  table  below  summarizes  the  Company's  debt and  other  contractual
obligations at September 30, 2002:
<TABLE>
<CAPTION>
   <S>                          <C>               <C>               <C>          <C>
                                                     PAYMENTS DUE BY PERIOD
                                ---------------------------------------------------------------------
     CONTRACTUAL OBLIGATIONS         TOTAL        LESS THAN 1 YEAR    2-3 YEARS       4 - 5 YEARS
                                ----------------  ---------------------------------------------------

   Long-Term Debt                $    8,380,000    $            -   $     600,000   $      7,780,000
   Capital Lease Obligations              7,500             7,500               -                  -
   Operating Leases                   2,164,000         1,121,000       1,034,000              9,000
   Line of Credit                     5,125,000         5,125,000               -                  -
   Other Long-Term Obligations        1,327,000         1,027,000         300,000                  -
                                ----------------  ---------------- --------------- ------------------
   Total Contractual Cash
     Obligations                 $   17,003,500    $    7,280,500   $   1,934,000   $      7,789,000
                                ================  ================ =============== ==================
</TABLE>



                                       27
<PAGE>

     As of September 30, 2002, the Company had negative working capital of $13.3
million and cash equivalents of $1.1 million.  The Company's current liabilities
as of September 30, 2002 include customer  deposits of $1.5 million and unearned
revenues of $4.9 million.

     Net cash  provided  by  operating  activities  for the three  months  ended
September  30,  2002 was $1.1  million  compared  to a use of cash by  operating
activities  for the three months ended  September 30, 2001 of $1.2 million.  Net
cash used in operating  activities for the nine months ended  September 30, 2002
and September 30, 2001 was $0.8 million and $4.1 million, respectively.

     Cash flows from financing activities during the nine months ended September
30,  2002  include  John E. Reed and  Mestek,  Inc.  borrowings  made before the
recapitalization plan was completed on July 1, 2002.

     Inflation  has not had, and is not  expected to have, a material  impact on
the Company's  operations.  If inflation increases,  the Company will attempt to
increase its prices to offset  increased  expenses.  No assurance  can be given,
however,  that the Company  will be able to  adequately  increase  its prices in
response to inflation.

IMPACT OF NEW ACCOUNTING STANDARDS

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets"
SFAS No. 141  addresses  financial  accounting  and  reporting  for all business
combinations and requires that all business combinations entered into subsequent
to June  2001 be  recorded  under  the  purchase  method.  This  statement  also
addresses  financial  accounting and reporting for goodwill and other intangible
assets acquired in a business combination at acquisition. SFAS No. 142 addresses
financial  accounting and reporting for intangible assets acquired  individually
or with a group of other assets at  acquisition.  This  statement also addresses
financial  accounting  and  reporting for goodwill and other  intangible  assets
subsequent to their acquisition. These statements were adopted by the Company on
January 1, 2002.  Under SFAS No. 142,  goodwill is no longer  amortized.  In the
place of  amortization,  the  Company is  required  to  periodically  review the
valuation  of the  Company's  intangible  assets  using a  discounted  cash flow
estimation   approach.   Following  the  accounting  for  impairment   discussed
immediately  below,  which has been made  under the rules of SFAS No.  121,  the
effect of adopting  SFAS No. 141 and 142 was limited to changes in  amortization
expense for the periods  after  December 31, 2001.  Additionally,  the assembled
workforce intangible asset has been  recharacterized as goodwill,  which will no
longer be amortized under the rules of SFAS No. 142.

     Accounting for impairment.  For the years ended December 31, 2001, 2000 and
1999, the Company  reported its accounting for intangible  assets under SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to Be Disposed Of", and the  accounting  and reporting  provisions of APB
Opinion No. 30. Under the rules of SFAS No. 121, the Company  performs  periodic
analysis to  determine if the  Company's  intangible  assets have been  impaired
using  a  combination  of  discounted  and  undiscounted   estimated  cash  flow
estimations.  In the fourth  quarter of 2001,  the Company  determined  that the
combination of new technologies  being  integrated in the Company's  current and
future products would result in its existing  product  platforms  having smaller
future revenue generation capability.  Additionally, the Company determined that
the continued  support of existing  products  while  migrating to new technology
platforms  would  result  in a lower  estimated  cash  value to the  Company  of
existing  products.  The resulting  impairment to the  intangible  assets of the
Company  was $11.8  million.  As  further  detailed  in Note 5 of the  Financial
Statements,  the intangible assets of the Company,  after the impairment charge,
will be Developed Technologies, Customer Base and Assembled Workforce.

     On  October  3,  2001,  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment  or Disposal  of  Long-Lived  Assets,"  that  replaced  SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To
Be Disposed  Of." The primary  objectives  of this  project  were to develop one
accounting  model  based  on the  framework  established  in  SFAS  No.  121 for
long-lived  assets  to be  disposed  of by  sales  and  to  address  significant
implementation issues. The accounting model for long-lived assets to be disposed
of by sale applies to all long-lived assets,  including discontinued operations,
and replaces the provisions of the Accounting  Principles Board (APB Opinion No.
30,  Reporting  Results of  Operations-Reporting  the  Effects of  Disposal of a
Segment of a Business) for the disposal of segments of a business.  SFAS No. 144
requires  that those  long-lived  assets be  measured  at the lower of  carrying
amount or fair  value  less cost to  determine  whether  such  assets  should be
reported in continuing  operations  or in  discontinued  operations.  Therefore,
discontinued  operations  will no longer be measured at net realizable  value or


                                       28
<PAGE>

include amounts for operating losses that have not yet occurred.  The provisions
of SFAS No.  144 were  adopted by the  Company  effective  January 1, 2002.  The
impact of those  provisions  were not  material to the  Company's  statement  of
financial condition and results of operations.

     In April 2002, the FASB issued SFAS No. 145. This  Statement  rescinds FASB
Statement No. 4, Reporting Gains and Losses from  Extinguishment of Debt, and an
amendment of that Statement, FASB Statement No. 64, Extinguishments of Debt Made
to Satisfy Sinking-Fund Requirements.  SFAS No. 145 also rescinds FASB Statement
No. 44,  Accounting  for  Intangible  Assets of Motor  Carriers  and amends FASB
Statement No. 13, Accounting for Leases,  to eliminate an inconsistency  between
the  required  accounting  for  sale-leaseback  transactions  and  the  required
accounting for certain lease  modifications  that have economic effects that are
similar to sale-leaseback transactions.  SFAS No. 145 also amends other existing
authoritative  pronouncements  to make various  technical  corrections,  clarify
meanings, or describe their applicability under changed conditions.  The Company
does not  believe  SFAS No.  145 will have a  material  effect on its  financial
statements.

     In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal.  SFAS No. 146 eliminates the definition and  requirements
for recognition of exit costs in EITF Issue No. 94-3. SFAS No. 146 requires that
a  liability  for a cost  associated  with  an  exit  or  disposal  activity  be
recognized  and  measured  initially  at fair value only when the  liability  is
incurred.  SFAS No. 146 is effective  for exit or disposal  activities  that are
initiated  after  December 31,  2002.  The Company does not believe SFAS No. 146
will have a material effect on its financial statements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

     As of September 30, 2002, the Company's  obligations  include variable rate
notes payable and a line of credit bank note with aggregate  principal  balances
of approximately $13.5 million,  which mature at various dates through 2007. The
Company  is  exposed  to the  market  risk of  significant  increases  in future
interest rates.  Each incremental  point change in the prime interest rate would
correspondingly   increase  or  decrease  the  Company's   interest  expense  by
approximately $53,250 per year.

     At September 30, 2002, the Company had accounts receivable of approximately
$5.7 million net of an  allowance  for doubtful  accounts of $1.3  million.  The
Company  is  subject  to a  concentration  of credit  risk  because  most of the
accounts receivable are due from companies in the home health industry.

ITEM 4.  CONTROLS AND PROCEDURES.

     In the 90-day period before the filing of this report,  the chief executive
and chief financial  officers of the Company have evaluated the effectiveness of
the Company's disclosure controls and procedures.  These disclosure controls and
procedures are those controls and other procedures management  maintains,  which
are designed to insure that all of the  information  required to be disclosed by
the  Company  in all its  periodic  reports  filed  with  the  SEC is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
SEC's rules and forms.  Disclosure  controls  and  procedures  include,  without
limitation, controls and procedures designed to ensure that information required
to be  disclosed  by the Company in its  reports  filed or  submitted  under the
Securities  Exchange  Act of 1934 is  accumulated  and  communicated  to Company
management,  including the chief  executive and chief  financial  officer of the
Company,  as  appropriate  to  allow  those  persons  to make  timely  decisions
regarding required disclosure.

     Subsequent  to the  October  25,  2002,when  the  disclosure  controls  and
procedures  were evaluated,  there have not been any significant  changes in the
Company's  disclosure  controls or  procedures  or in other  factors  that could
significantly affect such controls or procedures. No significant deficiencies or
material  weaknesses  in  the  controls  or  procedures  were  detected,  so  no
corrective actions needed to be taken.




                                       29
<PAGE>

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

     Neither CareCentric nor any of its subsidiaries is currently a party to any
legal proceedings which would be material to the business or financial condition
of the Company on a consolidated basis.

     Simione Central Holding,  Inc., a subsidiary of CareCentric now known as SC
Holding,  Inc.  ("SC  Holding")  was  one  of  several  defendants  named  in  a
"whistleblower"  lawsuit related to alleged Medicare fraud filed under the False
Claims  Act in the  Northern  District  of  Georgia  (U.S.  ex re.  McLendon  v.
Columbia/HCA  Healthcare  Corp., et al., No. 97-VC-0890 (N.D. Ga.)). The lawsuit
involves alleged claims that SC Holding  allegedly  participated in a conspiracy
with Columbia/HCA and other third parties to bill inflated and fraudulent claims
to Medicare.  On July 21, 1999, the Justice Department issued notice that it had
elected  not to join  in the  claims  asserted  against  SC  Holding  by  Donald
McLendon,  who  is a  former  employee  of  an  unrelated  service  provider  to
Columbia/HCA.  Although  the Justice  Department  joined the suit with regard to
other  defendants,  it  specifically  declined  to  intervene  with regard to SC
Holding.  In late 2000,  CareCentric was advised by Mr. McLendon's attorney that
notwithstanding the declination by the Justice Department,  Mr. McLendon intends
to pursue "whistleblower"  claims against SC Holding directly.  Through November
8, 2002,  no such action has been taken and nothing  further has been heard from
McLendon's  attorney for over one year.  Management believes that this claim has
been abandoned.  In the event a claim is asserted,  however,  CareCentric and SC
Holding intend to vigorously defend against it.

Item 2.  Change in Securities.

     On August 22, 2002, the Company's common stock was delisted from the Nasdaq
SmallCap Market and has been listed on the Over the Counter Bulletin Board since
that date.  The  delisting  from  Nasdaq  was the  result of  certain  financial
indicators, as reported in the Company's December 31, 2001 financial statements,
were below applicable minimum  requirements issued by Nasdaq to maintain listing
on the Nasdaq SmallCap Market.  The Company's  trading price during 2002 and its
write-off of certain non-cash,  impaired  intangible  assets  contributed to the
delisting by Nasdaq.

     On July 1, 2002,  the Company  cancelled and reissued  warrants to purchase
490,396 and 400,000 shares of its common stock to Mestek,  Inc., pursuant to the
terms of the  recapitalization  described in more detail in Notes 6 and 8 to the
Financial  Statements  included herein.  The reissued  warrants have an exercise
price of $1.00 per share and expire in June 2004. In reissuing  warrants without
registration,  the Company  takes the position  that this  transaction  does not
constitute  an  "offer",  "offer  to  sell" or  "sale"  under  Section  5 of the
Securities  Act  of  1933,  and  also  relies  on  the  on  the  exemption  from
registration provided in Section 4(2) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated  thereunder.  Mestek,  the recipient of
the warrants,  is an accredited  investor as defined in Regulation D, is a major
shareholder  of the  Company,  and has complete  access to  financial  and other
information pertaining to the Company.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Submission of Matters to a Vote of Security Holders.

None.

Item 5.  Other Information.

None.


Item 6.  Exhibits and Reports on Form 8-K.

         (a)      Exhibits:



                                       30
<PAGE>

          3.1       Amended and Restated  Certificate  of  Incorporation  of the
                    Company  (Incorporated  by  reference  to Exhibit 3.4 of the
                    Company's  Quarterly  Report  on Form  10-Q for the  quarter
                    ended March 31, 2002 (File No. 000-22162)).

          3.2       Certificate  of  Ownership  and  Merger of  Simione  Central
                    Holdings,  Inc. with and into CareCentric Inc. (Incorporated
                    by reference to Exhibit 3.2 of the Company's  Current Report
                    on  Form  8-K  dated  as  of  January  31,  2001  (file  No.
                    000-22162)).

          3.3*      Bylaws of the Company dated October 25, 2002.

          3.4       Certificate  of  Designations,  Preferences  and  Rights  of
                    Series E  Preferred  Stock of the Company  (Incorporated  by
                    reference to Exhibit 3.4 of the  Company's  Annual Report on
                    Form 10-K for the year  ended  December  31,  2001 (File No.
                    000-22162)).

          3.5**     Certificate  of Amendment of  Certificate  of  Designations,
                    Preferences  and Rights of Series B  Preferred  Stock of the
                    Company.

          3.6**     Certificate  of Amendment of  Certificate  of  Designations,
                    Preferences  and Rights of Series D  Preferred  Stock of the
                    Company.

          10.47**   Promissory  Note  in  the  original   principal   amount  of
                    $4,000,000  dated as of July 1,  2002 from the  Company  and
                    certain of its subsidiaries in favor of Mestek, Inc.

          10.48**   Secured  Convertible  Credit Facility and Security Agreement
                    dated as of July 1,  2002 by and  between  the  Company,  SC
                    Holding, Inc., CareCentric National, LLC and Mestek, Inc.

          10.49**   Promissory  Note  in  the  original   principal   amount  of
                    $3,555,555  dated as of July 1,  2002 from the  Company  and
                    certain of its subsidiaries in favor of John E. Reed.

          10.50**   Amended and Restated Secured Convertible Credit Facility and
                    Security  Agreement  dated as of July 1, 2002 by and between
                    the Company, SC Holding, Inc., CareCentric National, LLC and
                    John E. Reed.

          10.51**   Warrant for 400,000  shares of common stock dated as of July
                    1, 2002 by and between the Company and Mestek, Inc.

          10.52**   Warrant Exchange Agreement with respect to 400,000 shares of
                    common  stock  dated as of July 1, 2002 by and  between  the
                    Company and Mestek, Inc.

          10.53**   Warrant for 490,396  shares of common stock dated as of July
                    1, 2002 by and between the Company and Mestek, Inc.

          10.54**   Warrant Exchange Agreement with respect to 490,396 shares of
                    common  stock  dated as of July 1, 2002 by and  between  the
                    Company and Mestek, Inc.

          10.55**   Registration  Rights  Agreement  dated as of July 1, 2002 by
                    and between the Company and Mestek, Inc.

          10.56**   Promissory Note in the original principal amount of $103,818
                    dated as of July 1, 2002 from the Company and certain of its
                    subsidiaries in favor of John E. Reed.

     ------------------
     *    Filed herewith
     **   Incorporated  by reference to the Company's  Quarterly  Report on Form
          10-Q for the quarter ended June 30, 2002.



                                       31
<PAGE>

     (b)  Reports on Form 8-K:

               On April 30,  2002,  the  Company  filed a Form 8-K  regarding  a
               letter from Nasdaq indicating that certain  financial  indicators
               as reported in the December 31, 2001  financial  statements  were
               below  applicable  minimum   requirements  issued  by  Nasdaq  to
               maintain listing on the Nasdaq SmallCap Market.

               On August 20, 2002,  the Company  filed a Form 8-K  regarding the
               delisting of the Company's  common stock from the Nasdaq SmallCap
               Market. Effective August 22, 2002, the Company's common stock has
               traded on the Over the Counter Bulletin Board.


                                   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.


                                       CARECENTRIC, INC.


Dated:  November 11, 2002              By: /s/ George M. Hare
                                          --------------------------------
                                       GEORGE M. HARE
                                       Senior Vice President and
                                       Chief Financial Officer
                                       (Principal Financial Officer)



                                       32

1560966
<PAGE>

       CareCentric, Inc., Certification for Quarterly Report on Form 10-Q

I, John R. Festa, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of CareCentric, Inc.;

2.   Based on my knowledge,  this  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 this  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.   The  registrants  other  certifying  officers  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as 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 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  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and 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 function):

     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  weaknesses 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.   The  registrant's  other  certifying  officers 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
     weaknesses.

Date: November 12, 2002
                                         /s/ John R. Festa
                                         --------------------------------------
                                         John R. Festa
                                         President and Chief Executive Officer



<PAGE>


       CareCentric, Inc., Certification for Quarterly Report on Form 10-Q

I, George M. Hare, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of CareCentric, Inc.;

2.   Based on my knowledge,  this  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 this  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.   The  registrants  other  certifying  officers  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as 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 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  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and 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 function):

     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  weaknesses 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.   The  registrant's  other  certifying  officers 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
     weaknesses.

Date: November 12, 2002
                                     /s/ George M. Hare
                                     -----------------------------------------
                                     George M. Hare
                                     Chief Financial Officer