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

                                    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 JUNE 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                                          7/31/02
     -----                                          -------
     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 - June 30, 2002  (unaudited) and December
          31, 2001 (audited).

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

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

          Consolidated Statements of Cash Flows - Six Months Ended June 30, 2002
          and 2001 (unaudited).

          Notes  to   Consolidated   Financial   Statements   -  June  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

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>



                                CARECENTRIC, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
<S>                                                               <C>                    <C>
                                                                       JUNE 30,            DECEMBER 31,
                                                                        2002                  2001
                                                                     (unaudited)            (audited)
                                                                     -----------            ---------
                              ASSETS

 Current assets:
     Cash and cash equivalents                                      $    471,000        $    201,000
     Accounts receivable, net of allowance for doubtful
       accounts of $1,343,000 and $1,042,000 respectively              6,112,000           4,185,000
     Prepaid expenses and other current assets                           530,000             608,000
     Notes receivable                                                    310,000             413,000
       Total current assets                                            7,423,000           5,407,000

Purchased software, furniture and equipment, net                       1,283,000           1,533,000
Intangible assets, net                                                 4,873,000           5,437,000
Long term notes receivable                                               312,000             431,000
                                                                   --------------      --------------
       Total assets                                                 $ 13,891,000        $ 12,808,000
                                                                   ==============      ==============

              LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Line of credit                                                 $  5,882,000        $  5,572,000
     Accounts payable                                                  2,294,000           2,185,000
     Accrued compensation expense                                        582,000             593,000
     Accrued liabilities                                               6,460,000           6,574,000
     Customer deposits                                                 1,136,000           2,120,000
     Unearned revenues                                                 5,096,000           3,981,000
                                                                   --------------      --------------
       Total current liabilities                                      21,450,000          21,025,000
                                                                   --------------      --------------

Accrued liabilities, less current portion                                450,000             750,000

Note payable long-term                                                 7,099,000           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 $1.31          6,000               6,000
     Series C Preferred, $.001 par value;
       850,000  issued and outstanding; liquidation value $1.00            1,000               1,000
     Series D Preferred, $.001 par value;
       398,000  issued and outstanding; liquidation value $3.07
     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 June 30, 2002
       and December 31, 2001                                               4,000               4,000
     Unearned compensation                                              (169,000)           (210,000)

     Additional paid-in capital                                       21,280,000          21,280,000
     Stock warrants                                                    1,000,000           1,000,000
     Accumulated deficit                                             (37,230,000)        (36,391,000)
       Total shareholders' deficit                                   (15,108,000)        (14,310,000)
                                                                   --------------      --------------
       Total liabilities and shareholders' deficit                  $ 13,891,000        $ 12,808,000
                                                                   ==============      ==============

</TABLE>

                             See notes to consolidated financial statements




                                       4
<PAGE>




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

                                                     CARECENTRIC, INC.
                                           CONSOLIDATED STATEMENTS OF OPERATIONS


                                                      THREE MONTHS ENDED JUNE 30,          SIX MONTHS ENDED JUNE 30,
                                                    ---------------------------------   ---------------------------------
                                                         2002              2001              2002              2001
                                                    ---------------   ---------------   ---------------   ---------------
                                                     (unaudited)       (unaudited)       (unaudited)       (unaudited)

Net revenues                                         $   5,848,000     $   5,657,000     $  11,101,000     $  11,385,000

Costs and expenses:
    Cost of revenues                                     1,785,000         2,360,000         3,460,000         4,517,000
    Selling, general and administrative                  2,589,000         2,711,000         5,288,000         5,536,000
    Research and development                               942,000         1,609,000         1,889,000         3,376,000
    Amortization and depreciation                          423,000           950,000           848,000         1,901,000
    Restructructuring Charge                                     -           675,000                 -           675,000
                                                    ---------------   ---------------   ---------------   ---------------
    Total costs and expenses                             5,739,000         8,305,000        11,485,000        16,005,000
                                                    ---------------   ---------------   ---------------   ---------------

Income (loss) from operations                              109,000        (2,648,000)         (384,000)       (4,620,000)

Other income (expense):
    Interest expense                                      (153,000)         (148,000)         (322,000)         (272,000)
    Interest and other income                               15,000            68,000            13,000           194,000
                                                    ---------------   ---------------   ---------------   ---------------
Loss before taxes                                          (29,000)       (2,728,000)         (693,000)       (4,698,000)
                                                    ---------------   ---------------   ---------------   ---------------

    Income tax benefit (expense)                                 -                 -                 -                 -

                                                    ---------------   ---------------   ---------------   ---------------
Loss from continuing operations                            (29,000)       (2,728,000)         (693,000)       (4,698,000)
                                                    ---------------   ---------------   ---------------   ---------------


Discontinued operation
    Loss from operations of
         discontinued segment before taxes                        -          (73,000)                 -         (258,000)
                                                    ---------------   ---------------   ---------------   ---------------
Net loss from discontinued operations                             -          (73,000)                 -         (258,000)

Net loss                                                   (29,000)       (2,801,000)         (693,000)       (4,956,000)
                                                    ===============   ===============   ===============   ===============

    Cumulative Preferred Dividends                          34,000          (178,000)         (146,000)         (354,000)
                                                    ---------------   ---------------   ---------------   ---------------
Net Profit (loss) available to common
    shareholders                                     $       5,000     $  (2,979,000)    $    (839,000)    $  (5,310,000)
                                                    ===============   ===============   ===============   ===============

Net loss per share - basic and diluted
    From continuing operations                       $       (0.01)    $       (0.62)    $       (0.16)    $       (1.12)
Net loss per share - basic and diluted
    From discontinued operations                     $           -     $       (0.02)    $           -     $       (0.06)
                                                    ---------------   ---------------   ---------------   ---------------
Net loss per share - basic and diluted
    From operations                                  $       (0.01)    $       (0.63)    $       (0.16)    $       (1.19)
                                                    ===============   ===============   ===============   ===============
Net loss per share - basic and diluted available
    to common shareholders                           $        0.00     $       (0.67)    $       (0.19)    $       (1.27)
                                                    ===============   ===============   ===============   ===============
Weighted average common shares -
    basic and diluted                                    4,371,000         4,418,000         4,371,000         4,178,000
                                                    ===============   ===============   ===============   ===============
</TABLE>


                 See notes to consolidated financial statements






                                       5
<PAGE>

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

                                                            CARECENTRIC, INC.
                                            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT

                                                 FOR THE SIX MONTHS ENDED JUNE 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                                                       41,000                                                     41,000

Net loss                                                                                                   (839,000)       (839,000)
                  ----------- --------- ---------- ---------  ------------ ------------  -----------   ------------    -------------
Balance at
June 30, 2002     4,371,000    $ 4,000   7,058,000  $ 7,000    $(169,000)  $21,280,000     1,000,000    (37,230,000)   $(15,108,000)
                  ========== ========== ========== =========  ============ ============  ===========   =============   =============


                                                  See notes to Consolidated Financial Statements

</TABLE>




                                       6
<PAGE>







                                CARECENTRIC, INC.
                     CONSOLOIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
    <S>                                                <C>               <C>                   <C>             <C>

                                                           THREE MONTHS ENDED JUNE 30,          SIX MONTHS ENDED JUNE 30,
                                                       -------------------------------------------------------------------------
                                                            2002               2001             2002             2001
                                                       ---------------- ----------------------------------- ---------------
                                                         (unaudited)       (unaudited)       (unaudited)     (unaudited)
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net  Income (loss)                                    $    5,000      $  (2,979,000)       $  (839,000)    $ (5,310,000)


    ADJUSTMENTS  TO  RECONCILE  NET  LOSS
    TO NET  CASH  (USED  IN)  PROVIDED  BY
    OPERATING ACTIVITIES:
       Provision for doubtful accounts                        87,000            110,000            244,000          153,000
       Amortization and depreciation                         423,000          1,093,000            848,000        2,178,000
       Stock based compensation charge to earnings            18,000                  -             41,000                -

    CHANGES IN ASSETS AND LIABILITIES, NET OF
    ACQUISITIONS:
       Accounts receivable                                  (764,000)         1,296,000         (2,172,000)         376,000
       Prepaid expenses and other current assets              60,000            159,000             80,000         (242,000)
       Notes receivable                                       15,000           (139,000)            55,000         (139,000)
       Accounts payable                                     (338,000)           334,000            109,000        1,557,000
       Accrued compensation                                   39,000           (196,000)           (11,000)         201,000
       Accrued liabilities                                  (248,000)           100,000           (415,000)         (12,000)
       Customer deposits                                  (1,010,000)          (194,000)          (984,000)        (290,000)
       Unearned revenues                                     989,000           (828,000)         1,115,000       (1,392,000)
                                                       ---------------- ------------------ ---------------- ---------------
            Net cash used in operating activities           (724,000)        (1,244,000)        (1,929,000)      (2,920,000)
                                                       ---------------- ------------------ ---------------- ---------------

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of software, furniture and equipment            (13,000)          (257,000)           (34,000)        (376,000)
                                                       ---------------- ------------------ ---------------- ---------------
            Net cash used in investing activities            (13,000)          (257,000)           (34,000)        (376,000)
                                                       ---------------- ------------------ ---------------- ---------------

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from notes payable                              756,000          1,279,000          1,756,000        2,979,000
    Increase (decrease) in line of credit                    (85,000)                 -            310,000               -
    Payments on capital lease obligation                       9,000             13,000                  -               -
    Proceeds from Consulting note receivable                  71,000                  -            167,000               -
                                                       ---------------- ------------------ ---------------- ---------------
            Net cash provided by  financing                  751,000          1,292,000          2,233,000        2,979,000
            activities                                 ---------------- ------------------ ---------------- ---------------

            Net change in cash and cash equivalents           14,000            (209,000)          270,000         (317,000)

    Cash and cash equivalents, beginning of period           457,000            254,000            201,000          362,000
                                                       ---------------- ------------------ ---------------- ---------------
    Cash and cash equivalents, end of period             $   471,000        $    45,000         $  471,000       $   45,000
                                                       ================ ================== ================ ===============
    Cash paid during period for interest                 $    74,000        $   171,000            155,000          274,000

</TABLE>

See notes to consolidated financial statements




                                       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 six months ended June 30, 2002, the Company recorded
total revenues of $11.1  million.  The Company's core product lines of STAT2 and


                                       10
<PAGE>


MestaMed  accounted for 36.3% and 52.8%,  respectively,  of the $11.1 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.
Those  software  and  development  expenses  are  accounted  for as research and
development costs.

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 six
months ended June 30, 2002 and the year ended December 31, 2001, the Company had
no capitalized computer software 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.



                                       10
<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 six months ended June
30, 2002 and the pro forma  results of  operations  for the three months and six
months ended June 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):

<TABLE>
<CAPTION>
     <S>                                               <C>           <C>                 <C>              <C>
                                                    --------------------------------  -----------------------------------
                                                      THREE MONTHS ENDED JUNE 30,         SIX MONTHS ENDED JUNE 30,
                                                    --------------------------------  -----------------------------------
                                                         2002             2001             2002               2001
                                                    ---------------- ---------------  ----------------   ----------------

     NET INCOME (LOSS) AVAILABLE TO COMMON               $    5,000  $  (2,979,000)      $  (839,000)      $ (5,310,000)
     SHAREHOLDERS

     Add back: Goodwill amortization                              -        422,000                  -           849,000

     Add back: Technology amortization                      249,000        333,000           498,000            666,000
                                                    ---------------- ---------------  ----------------   ----------------
     Adjusted net income                                $   254,000   $ (2,224,000)      $  (341,000)      $ (3,795,000)
                                                    ================ ===============  ================   ================
     NET INCOME(LOSS) PER SHARE - BASIC AND
     DILUTED

     Reported net income                                 $     0.00      $   (0.67)       $    (0.19)         $   (1.27)
     Goodwill amortization                                        -           0.10                 -               0.20
     Technology amortization                                   0.06           0.08              0.11               0.16
                                                    ---------------- ---------------  ----------------   ----------------
     Adjusted net income                                 $     0.06      $   (0.50)       $    (0.08)         $   (0.91)
                                                    ================ ===============  ================   ================
     Weighted average common shares-
     basic and diluted                                    4,371,000       4,418,000         4,371,000          4,178,000
                                                    ================ ===============  ================   ================
</TABLE>


                                       11
<PAGE>

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 (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 six months  ended June 30, 2002 and June 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.

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 six months ending June 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.



                                       12
<PAGE>


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

                                                  THREE MONTHS ENDED JUNE 30,         SIX MONTHS ENDED JUNE 30,
                                                ---------------------------------  ---------------------------------
                                                     2002              2001             2002             2001
                                                ----------------  ---------------  ---------------- ----------------

    Operating Revenue                                  $      -        $   1,113          $      -        $   2,277

    Income before Provision for Income Taxes
                                                              -             (73)                 -            (258)

    Income from Discontinued Operations
         Net of Income Tax                             $      -        $    (73)          $      -       $    (258)


</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:

<TABLE>
<CAPTION>
        <S>                             <C>                  <C>                   <C>
                                                              NOTES RECEIVABLE
                                        -------------------------------------------------------------
                                         CONSULTING             CUSTOMER               NOTE TOTAL
                                        -----------------    ------------------    ------------------

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

         Balance 6-30-2002                     $ 540,000           $    82,000             $ 622,000
                                        =================    ==================    ==================

         Interest Rate                             8.50%                 5.65%
</TABLE>


NOTE 4 - PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

     Purchased software, furniture and equipment consisted of the following:

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

Furniture and Fixtures                                  $  1,448,000              $ 1,428,000         10 years
Computer equipment and purchased software                  6,251,000                6,237,000          5 years
                                               ----------------------   ----------------------
                                                           7,699,000                7,665,000

Accumulated depreciation                                  (6,416,000)              (6,132,000)
                                               ----------------------   ----------------------
                                                         $ 1,283,000              $ 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


                                       13
<PAGE>

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>

                                                                                                    6/30/02
                          ORIGINAL          ASSETS          IMPARMENT           ACCUMULATED        NET BOOK    AMORTIZATION
                            COST           DISPOSED         WTITE-DOWN         AMORTIZATION          VALUE        PERIOD
                       ---------------  --------------- -------------------  ------------------  ---------------------------

Developed technology    $  10,650,000    $           -   $      (4,220,000)   $     (2,939,000)   $   3,491,000    4 years
Customer base               1,700,000         (510,000)                  -            (308,000)   $     882,000    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)   $     (6,412,000)   $   4,873,000
                       ===============  =============== ===================  ==================  ==============
</TABLE>

     Included in Note 1 to the Financial Statements is a table presenting actual
results of  operations  for the three and six months ended June 30, 2002 and pro
forma results of  operations  for the three months and six months ended June 30,
2001. The pro forma results for June 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

     As more fully discussed in Note 13,  Subsequent  Events,  the notes payable
and related capitalized interest obligations to Mestek, Inc. and J. E. Reed were
restructured  on July 1,  2002  pursuant  to a plan  approved  by the  Company's
shareholders at the June 6, 2002 annual  shareholders'  meeting. All amounts and
explanations of the

<TABLE>
<CAPTION>
         <S>                                            <C>                        <C>
                                                                JUNE 30, 2002           DECEMBER 31, 2001
                                                        ----------------------     -----------------------
         SHORT TERM:
         Line of Credit                                       $     5,882,000             $     5,572,000
         Note Payable  - Mestek                                             -                           -
                                                        ----------------------     -----------------------
                                                              $     5,882,000             $     5,572,000
                                                        ======================     =======================
         LONG TERM:
         Convertible Note Payable - J.E.Reed (1)              $     4,331,000             $     3,500,000
         Note Payable  - Mestek                                     1,944,000                   1,019,000
         Convertible Note Payable - B.C.O'Donnell                     600,000                     600,000
         Note Payable  - J.E.Reed Capitalized interest                184,000                     184,000
         Note Payable  - Mestek Capitalized Interest                   40,000                      40,000
                                                        ----------------------     -----------------------
                                                              $     7,099,000             $     5,343,000
                                                        ======================     =======================
</TABLE>

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

Mestek and J. E. Reed notes payable  included in this Note 6 are as they existed
as of June 30, 2002 prior to the closing of the recapitalization.

     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


                                       14
<PAGE>

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 November 30,  2002.  The Company has
submitted a request for, and expects approval by Wainwright, of a renewal of the
line of credit for one year  beginning  October 1, 2002  through  September  30,
2003. The Company's  obligations under the Wainwright Facility are guaranteed by
Mestek in  consideration  of which the Company has issued a warrant to Mestek to
purchase 104,712 shares of the Company's common stock as more fully explained in
Note 8 to these Financial Statements.

         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.

     NOTE PAYABLE - MESTEK:

     The Company is obligated under an eighteen month unsecured  promissory note
in the  principal  amount of  $1,019,000  payable  to Mestek  Inc.  which  bears
interest at prime plus one and one half percent  (1.5%),  with interest  payable
semiannually  and which matures on June 30, 2003. In addition to the  $1,019,000
note, the Company is obligated  under separate notes to Mestek in the amounts of
$40,000,  $535,000 and $350,000. These additional notes payable bear 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  are 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.

     J.E. REED FACILITY:

     On June 22, 2000, the Company entered into 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
consists 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 can be drawn down by
the Company as needed in $500,000 increments and is secured by a second position
on substantially  all of the Company's assets. At June 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 June 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.

     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.



                                       15
<PAGE>

     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 June 30, 2002.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

     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 August 7,
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.

     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.

NOTE 8 - SHAREHOLDERS' EQUITY

     As more  fully  discussed  in Note 13,  Subsequent  Events,  the  Company's
Preferred Stock and Common Stock warrants were partially restructured on July 1,
2002 pursuant to a recapitalization plan approved by the Company's  shareholders
at the June 6, 2002 annual  shareholders'  meeting. All amounts and explanations
of the Company's Preferred Stock and Common Stock warrants included in this Note
8  are  as  they  existed  at  June  30,  2002  prior  to  the  closing  of  the
recapitalization on July 1, 2002.

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

     Common Shares - 20,000,000 shares  authorized,  $.001 par value,  4,371,350
shares  issued  and  outstanding  as of June 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


                                       16
<PAGE>

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 by it in escrow  under the terms of the  CareCentric
Solutions  Merger  Agreement  based upon  various  indemnification  and  expense
overages  claims it believes it 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.

     Series C Preferred  Stock - $.001 par value,  850,000  shares  issued.  The
shares  of Series C  Preferred  Stock are held by  Mestek  and  result  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 carry 170,000 common share
votes (on a split adjusted  basis) and are entitled to an 11% annual  cumulative
dividend,  among other rights.  As more fully  explained in Note 13,  Subsequent
Events,   in  connection  with  the   recapitalization   plan  approved  by  the
shareholders of the Company at the June 6, 2002 annual shareholders' meeting and
completed on July 1, 2002,  the Series C Preferred  Stock was terminated and all
accumulated  Series C Preferred Stock dividends  through  termination  date were
cancelled  without  payment.   Accordingly,   at  June  30,  2002,  $208,000  of
accumulated  Series C Preferred  Stock dividends were cancelled and are included
as an addition to earnings in the three months ended June 30, 2002.

     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.



                                       17
<PAGE>

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

           COMMON                 EXERCISE                  EXPIRATION
           SHARES                   PRICE                      DATE
        --------------------  ----------------------   -------------------------

                  490,396                $   3.21                June 30, 2003
                  400,000                $  10.88                March 7, 2003
                  104,712                $   2.51                July 12, 2003
                   25,000                $   5.00            February 24, 2005
        --------------------
                1,020,108
         ====================

     The  warrants  issued to Mestek to purchase  490,396 and 400,000  shares of
Company common stock that were  originally  scheduled to expire on June 30, 2003
and March 7,  2003,  respectively,  were,  as more fully  explained  in Note 13,
Subsequent  Events,  cancelled and reissued with an exercise  price of $1.00 per
share and an expiration  date of June 15, 2004, as part of the  recapitalization
plan effective July 1, 2002.

     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,  ere  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 June
30, 2002,  options  totaling 498,423 shares were  outstanding,  of which 174,595
shares are exercisable, at exercise prices ranging from $2.51 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 are
exercisable only to the extent that outstanding CareCentric options, warrants or
other  conversion  rights are exercised.  These options were designed to prevent
dilution of Mestek's  ownership  interest  in the Company  after the merger.  As
options,  warrants and other common rights are forfeited or cancelled,  Mestek's
option rights are correspondingly reduced. Due to the contingent nature of these
options,  they  have been  excluded  from the above  tables.  At June 30,  2002,
159,573  shares of such  options  were  available  under the  original  terms of
issuance.

NOTE 9 - RELATED PARTY TRANSACTIONS

     The Company has subleased  certain space to  Healthfield,  Inc.  which is a
Mestamed  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 required 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.



                                       18
<PAGE>

     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 $540,000
at June 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 June 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 $6.0 million line of credit
(unrelated  to the  Wainwright  Bank  and  Trust  $6.0  million  line of  credit
described  above) as more fully described in Note 6 to the Financial  Statements
and has 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.
An  independent  committee of the Company's  Board 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.  The  conversion  price for Mr. Reed's $6.0 million loan,
which converts into CareCentric common stock as described in more detail in Note
6 to these Financial Statements, is also $2.51 per share. On June 30, 2002, $5.3
million was outstanding under this credit facility,  $4.3 million payable to Mr.
Reed, and $1.0 million payable to Mestek pursuant to a participation  agreement.
As more fully  described in Note 13,  Subsequent  Events,  the interest  payment
terms and conversion  rights of Mr. Reed's loan to CareCentric were restructured
on July 1, 2002 in  accordance  with a  recapitalization  plan  approved  by the
shareholders of the Company.

     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. As
more fully  described  in Note 13,  Subsequent  Events,  the  exercise  price of
Mestek's  warrants  were  restructured  on July 1,  2002  in  accordance  with a
recapitalization plan approved by the shareholders of the Company.

 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


                                       19
<PAGE>

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 six months ended
June 30, 2002, approximately $18,000 and $41,000,  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 $14.0  million at June 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  of  July  31,  2002,  the  Company  had  untapped  credit  capacity  of
approximately  $0.6 million from the $6.0 million  Wainwright Bank facility.  As
discussed in Note 13, Subsequent Events,  below, the J. E. Reed facility,  after
including  $445,000 of interest to be capitalized  between July 1, 2002 and June
30,  2004,  was fully  utilized  at July 31,  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 June 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  credit
facility.

NOTE 13 - SUBSEQUENT EVENTS

     On July 1, 2002, the Company closed the 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 following
is a summary of the material terms of the recapitalization plan on the Company's
debt and equity positions:

     o    Consolidation into a single $4.0 million note payable to Mestek of the
          value of i) all notes,  $1.944  million at June 30, 2002,  and accrued
          interest  thereon  payable  to  Mestek,  plus  ii)  the  $1.0  million
          participation  by  Mestek  in the J.E.  Reed  facility  plus  iii) the
          $850,000  Series  C  Preferred  Stock,   after  termination   thereof,
          (effective  July  1,  2002,  this  $850,000  will be  subtracted  from
          Shareholders  Deficit and added to Long Term Notes Payable),  plus iv)
          payment by Mestek to CareCentric of $129,748 cash on July 1, 2002.

     o    Cancellation of the i) accumulated dividends on the Series C Preferred
          Stock (the  accumulated  dividends at June 30, 2002 were  $208,000 and
          recorded as a reduction in preferred  dividend expense and an increase
          in net  earnings  for the three month period ended June 30, 2002 since
          they were no longer a liability  of the  Company as of June 30,  2002)
          ii)  warrants,   held  by  Mestek,   to  purchase  104,712  shares  of
          CareCentric  common  stock,  and  iii)  options,  held by  Mestek,  to
          purchase  159,573 shares of CareCentric  common stock.

     o    Consolidation  of i) all notes,  $4.331  million at June 30, 2002, and
          accrued  interest  thereon  payable to J. E.  Reed,  less ii) the $1.0
          million  participation  by Mestek in the J. E. Reed  facility,  into a
          $3.6 million note and a $0.103 million note.

     o    The new $4.0  million  Mestek  note and the $3.6  million  and  $0.103
          million J. E. Reed notes will accumulate  interest at a per annum rate
          equal to six and one-quarter percent (6.25%) through June 30, 2004, at
          which time the  accumulated  interest on each note will be capitalized
          into  the  related  note.  After  June 30,  2004,  the  principal  and
          capitalized interest of


                                       20
<PAGE>

          the Mestek and J. E. Reed notes 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 and J. E. Reed notes will mature and
          become  payable on June 30, 2007.

     o    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.

     o    Amendment  of the  terms of the  Series  B  Preferred  Stock  (held by
          Mestek) to provide that each share is  convertible  in 1.072 shares of
          Common Stock.

     o    Amendment of the terms of the Series D Preferred  Stock (held by J. E.
          Reed) to provide  that each share is  convertible  into 2.51 shares of
          common stock

     o    Re-issuance  of  Mestek's  warrants  to  purchase  400,000  shares and
          490,396  shares,  respectively,  of common  stock into new warrants to
          purchase  the same  number of shares  of common  stock at an  exercise
          price of $1.00 per share and an expiration date of June 15, 2004.

     On April 19,  2002,  the Company  received a letter from Nasdaq  indicating
that 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 current trading
price  and  its  write-off  of  certain  non-cash,  impaired  intangible  assets
contributed to the Nasdaq letter.  On May 10, 2002, the Company submitted a plan
to Nasdaq  that  might  allow  the  Company  to work  towards  meeting  Nasdaq's
requirements for continued  listing on the Nasdaq SmallCap  Market.  On June 24,
2002,  the Company  submitted a letter to Nasdaq  summarizing  the effect of the
capital  restructuring  approved by  shareholders  of the Company at the June 6,
2002 annual  shareholders'  meeting.  In the event the  Company's  plan does not
receive  acceptance,   the  Company's  stock  will  be  de-listed  from  Nasdaq.
Nevertheless,  the  Company is  considering  the  actions  necessary  to achieve
continued trading on the OTC Bulletin Board.



                                       21
<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,


                                       22
<PAGE>

"Revenue Recognition", these revenues are recognized when products are delivered
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 our  management  to be
commensurate  with  the risk  inherent  in our  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



                                       23
<PAGE>

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 six months  ended June 30, 2002 to June 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 JUNE 30, 2002

     Net Revenues.  Revenues  (exclusive of the  Consulting  segment,  which was
discontinued  in  September  2001) were $5.8  million for the three months ended
June 30, 2002 and $ 5.7 million for the three months ended June 30, 2001,  or an
increase  of 3.4%.  The $0.1  million  increase  was mainly  attributable  to an
increase in software  system  sales and related  income of $0.3  million to $3.2
million in 2002 from $2.9  million in 2001 offset by a decrease  in  maintenance
revenues of $0.2 million to $2.5 in 2002 from $2.7 million in 2001.

     Cost of Revenues.  Cost of revenues  decreased $0.6 million,  or 24.4%,  to
$1.8 million in 2002 from $2.4 million for the three months ended June 30, 2001.
As a percentage  of total net revenues,  cost of revenues  decreased to 30.5% in
2002 from 41.7% in 2001. The $0.7 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 $0.1 million,  or 4.5%, to $2.6 million for the three months
ended June 30, 2002 from $2.7  million for the three months ended June 30, 2001.
As a  percentage  of total net  revenues,  selling,  general and  administrative
expenses  were 44.3% for the three  months ended June 30, 2002 and 47.9% for the
three months ended June 30, 2001.  This decrease was  attributable  to synergies
derived from cost savings initiatives implemented in 2001 and 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 $0.7 million, or 41.5%, to $0.9 million for the three months ended
June 30, 2002 from $1.6 million for the three  months ended June 30, 2001.  As a
percentage of total net revenues, research and development expenses decreased to
16.1% for the three  months  ended June 30, 2002 from 28.4% for the three months
ended June 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.  Although the comparative  total  expenditure on
research and development  expenses has fallen in the second quarter of 2002, the
Company believes the 16.1% of revenue level experienced in the second quarter of
2002 is the proper  amount to both  enhance and maintain  existing  products and
begin development of new product platforms.

     Amortization and Depreciation.  Amortization and depreciation  decreased by
approximately  $0.5  million to $0.4 million for the three months ended June 30,
2002 from $0.9 million for the three months ended June 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 $2.6  million for the three months ended June 30, 2001
to a net profit of $0.1 million for the three  months ended June 30, 2002.  This
decrease in loss from  continuing  operations  is due to the combined  effect of
stabilization and a modest increase in revenue,  reductions in 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  and capital  lease  obligations  remained


                                       24
<PAGE>

consistent for the three months ended June 30, 2002 compared to the three months
ended June 30, 2001.  Interest and other income consist  principally of interest
income  related to customer  finance  charges and the Company's  short term cash
investments and have decreased by approximately  $53,000.  The Company expects a
net  increase  in  interest  expense in 2002  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 2010, 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 June 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 $73,000 for the
three months ended June 30, 2001 was attributable to the discontinued operations
of the Consulting segment.

     Cumulative  Preferred  Dividends.  Cumulative  preferred  dividends for the
three  months  ended  June 30,  2002 were a  contribution  to profit of  $34,000
compared to an increase to loss of $178,000  for the three months ended June 30,
2001. This  contribution to profit was due to recognition of the earnings effect
of the recapitalization  plan approved by the shareholders of the Company at the
June 6, 2002 annual  shareholders'  meeting and completed on July 1, 2002. Under
the provisions of the  recapitalization  plan, the Company's  Series C Preferred
Stock was  terminated and all  accumulated  Series C Preferred  Stock  dividends
through  termination date were cancelled without payment.  Accordingly,  at June
30,  2002,  $208,000 of  accumulated  Series C Preferred  Stock  dividends  were
cancelled  and are included as an addition to earnings in the three months ended
June 30, 2002.


RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2002

     Net  Revenues.  Total net  revenues  for the six months ended June 30, 2002
decreased by $0.3 million,  or 2.5%, to $11.1 million in 2002 from $11.4 million
in 2001. Revenues from software systems and related income remained unchanged at
$5.7 million.  Revenues from software maintenance  decreased by $0.3 million, or
4.6%, to $5.4 million in 2002 from $5.7 million in 2001.

     Cost of  Revenues.  Total cost of  revenues  decreased  approximately  $1.1
million,  or 23.4%,  to $3.4 million for the six months ended June 30, 2002 from
$4.5 million for the six months ended June 30,  2001.  As a percentage  of total
revenues,  cost of revenues  decreased to 31.2% in 2002 from 39.7% in 2001.  The
$1.1  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  $0.2  million to $5.3  million  for the six
months  ended June 30, 2002 from $5.5  million for the six months ended June 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 47.6% for the six
months ended June 30, 2002 compared with 48.6% for the six months ended June 30,
2001.

     Research  and  Development  Expenses.  Research  and  development  expenses
decreased $1.5 million,  or 44.1%, to $1.9 million for the six months ended June
30,  2002 from  $3.4  million  for the six  months  ended  June 30,  2001.  As a
percentage of total net revenues,  these expenses decreased to 17.0% for the six
months ended June 30, 2002 from 29.7% for the six months ended June 30, 2001. As
the  Company  develops  its next  generation  product  platforms,  research  and
development  expenditures  are  expected  to  increase  to a higher  level  than
experienced in the first six months of 2002.



                                       25
<PAGE>

     Amortization and Depreciation.  Amortization and depreciation  decreased by
$1.1  million to $0.8  million for the six months  ended June 30, 2002 from $1.9
million for the six months ended June 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.

     Other Income  (Expense).  Interest  expense related to borrowings under the
Company's  line of credit  agreements  and capital  lease  obligations  remained
unchanged  for the six months  ended June 30,  2002  compared  to the six months
ended June 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  remained
consistent at approximately $3.2 million on June 30, 2002 and December 31, 2001,
respectively.  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 are 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 the $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. 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,  which  resulted  in the  creation of the  following  credit and debt
facilities and preferred equity securities:



                                       26
<PAGE>

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

                 SOURCE                    FUNDING                  FORM               DATE CLOSED
-------------------------------------  -----------------  -------------------------  ----------------

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
                                       -----------------

                                           $13,000,000
                                       =================
</TABLE>

     These three  transactions  are described in greater detail in Note 6 to the
accompanying  Consolidated  Financial Statements.  The Wainwright Bank and Trust
Company  line of  credit  was used to pay off the line of  credit  from  Silicon
Valley  Bank (the  Company's  commercial  bank  prior to the  merger  with MCS),
certain  short-term  loans from Mestek,  and the note payable to David O. Ellis.
The  Wainwright  Line of  Credit  expired  July 11,  2002 and has been  extended
through  November 30, 2002. The Company has submitted a request for, and expects
approval  by  Wainwright,  of a  renewal  of the  line of  credit  for one  year
beginning October 1, 2002 through September 30, 2003.  Payment of the Wainwright
Line of Credit is  guaranteed by Mestek.  As of July 31, 2002,  the Company owes
Wainwright approximately $5,425,000 under the Line of Credit.

     The Company is obligated under an 18 month unsecured promissory note in the
principal  amount of $1,019,000  payable to Mestek which bears interest at prime
plus one and one half percent (1.5%),  with interest  payable  semiannually  and
which  matures on June 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.

     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 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.

     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.
These  additional  loans were  consolidated  and restructured on July 1, 2002 in
accordance a capital restructuring plan approved by the Company's  shareholders.
See Notes 6, 8 and 13 to the Financial Statements.

     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.

     The  second  quarter  of  2002  is the  first  quarter  of  results  with a
completely re-engineered organization following the merger with Simione Central.
Also,  during  the second  quarter of 2002,  the  Company  recorded a  sustained


                                       27
<PAGE>

increase in bookings  of new systems in several of its major  product  lines and
newly  integrated  third party  software  modules.  The  existing  pipeline,  if
realized,  will exceed the Company's 2002 bookings budget and generate cash flow
for the rest of 2002 in excess of its  operating  needs.  The  Company  projects
funding  requirements for product development  initiatives will use all of these
excess operating funds.

     As  of  July  31,  2002,  the  Company  had  untapped  credit  capacity  of
approximately  $0.6 million from the $6.0 million  Wainwright Bank facility.  As
discussed in Note 13, Subsequent Events,  above, the J. E. Reed facility,  after
including  $445,000 of interest to be capitalized  between July 1, 2002 and June
30,  2004,  was fully  utilized  at July 31,  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 June 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 June 30, 2002:

<TABLE>
<CAPTION>
         <S>                              <C>              <C>                      <C>             <C>
                                                                 PAYMENTS DUE BY PERIOD
                                      ------------------------------------------------------------------------------
           CONTRACTUAL OBLIGATIONS         TOTAL           LESS THAN 1 YEAR         1-3 YEARS        4 - 5 YEARS

         Long-Term Debt                $     7,099,000    $                0    $      2,168,000    $     4,931,000
         Capital Lease Obligations              17,000                17,000                   -                  -
         Operating Leases                    4,562,000             2,359,000           2,114,000             89,000
         Line of Credit                      5,882,000             5,882,000                   -                  -
         Other Long-Term Obligations         1,152,000               702,000             450,000                  -
                                      -----------------  --------------------  ------------------  -----------------
         Total Contractual Cash
           Obligations                 $    18,712,000    $        8,960,000    $      4,732,000    $     5,020,000
                                      =================  ====================  ==================  =================
</TABLE>


     As of June 30,  2002,  the Company had  negative  working  capital of $14.0
million and cash equivalents of $0.5 million.  The Company's current liabilities
as of June 30,  2002  include  customer  deposits of $1.1  million and  unearned
revenues of $5.1 million.

     Net cash used in  operating  activities  for the six months  ended June 30,
2002 and June 30, 2001 was $1.9 million and $2.9 million, respectively. Net cash
used in operating  activities  for the three months ended June 30, 2002 and June
30, 2001 was $0.7 million and $1.2 million, respectively.

     Cash flows from financing  activities  during the six months ended June 30,
2002 include the Wainwright and Reed lines of credit borrowings.

     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


                                       28
<PAGE>

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
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.




                                       29
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

     As of June 30, 2002, the Company's  obligations include variable rate notes
payable  and a line of credit  bank note with  aggregate  principal  balances of
approximately  $13.0  million,  which mature at various dates through 2005.  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 $115,000 per year.

     At June 30, 2002, the Company had accounts receivable of approximately $6.1
million net of an allowance for doubtful  accounts of $1.2 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.

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 August 7,
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 April 19,  2002,  the Company  received a letter from Nasdaq  indicating
that 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 current trading
price  and  its  write-off  of  certain  non-cash,  impaired  intangible  assets
contributed to the Nasdaq letter.  On May 10, 2002, the Company submitted a plan
to Nasdaq  that  might  allow  the  Company  to work  towards  meeting  Nasdaq's
requirements for continued  listing on the Nasdaq SmallCap  Market.  On June 24,
2002,  the Company  submitted a letter to Nasdaq  summarizing  the effect of the
capital  restructuring  approved by  shareholders  of the Company at the June 6,
2002 annual  shareholders'  meeting.  In the event the  Company's  plan does not
receive  acceptance,   the  Company's  stock  will  be  de-listed  from  Nasdaq.
Nevertheless,  the  Company is  considering  the  actions  necessary  to achieve
continued trading on the OTC Bulletin Board.

     At the Annual Meeting of Stockholders on June 6, 2002, the  stockholders of
the Company voted to amend the Company's Certificate of Incorporation to provide
that:

     o    the 5,600,000 shares of Series B Preferred Stock held by Mestek,  Inc.
          will be  convertible  into shares of  CareCentric  common  stock at an
          exchange rate of approximately  1.072 shares of common stock per share
          of Series B Preferred Stock, for a total of 6,000,000 shares of common
          stock.

     o    the 398,406 shares of Series D Preferred  Stock held by John Reed will
          be convertible into shares of CareCentric  common stock at an exchange
          rate of 2.51  shares of common  stock per share of Series D  Preferred
          Stock, for a total of 1,000,000 shares of common stock.


                                       30
<PAGE>



The amendments were proposed as part of a refinancing plan for the Company.


Item 3.  Defaults Upon Senior Securities.

None.

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

On June 6, 2002, the Annual Meeting of  Stockholders  of  CareCentric,  Inc. was
held.  Stockholders present in person or by proxy holding 5,034,700 votes, based
upon ownership of CareCentric common stock and preferred stock, were represented
at the meeting.

Eight  Directors  of the Company were duly elected to hold office until the next
Annual Meeting of Stockholders or until  successors have been duly elected.  The
elected Directors and the affirmative votes were as follows:

                                                              VOTES AGAINST OR
NAME                                AFFIRMATIVE VOTES             WITHHELD
----                                -----------------             --------
Dr. David O. Ellis                         5,023,479                 11,148
John R. Festa                              5,024,106                 10,521
Barrett C. O'Donnell                       5,022,891                 11,736
Winston R. Hindle, Jr.                     5,023,466                 11,161
John E. Reed                               5,023,352                 11,275
Stewart B. Reed                            5,023,305                 11,322
William Simione, Jr.                       5,023,091                 11,536
Edward K. Wissing                          5,023,479                 11,148

The  Company's   financing  plan,   including  an  amendment  to  the  Company's
certificate  of  incorporation,  was approved.  The  affirmative  votes for this
matter were as follows:

          AFFIRMATIVE VOTES            VOTES AGAINST       VOTES ABSTAINED
          -----------------            -------------       ---------------
              3,589,407                   10,317               27,404

Grant  Thornton  LLP was  appointed as the  Company's  auditors for December 31,
2002. The affirmative votes for this matter were as follows:

          AFFIRMATIVE VOTES        VOTES AGAINST           VOTES ABSTAINED
          -----------------        -------------           ---------------
              5,026,171                5,796                    2,733


Item 5.  Other Information.

None.

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

          (a)  Exhibits:

                    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)).



                                       31
<PAGE>

                    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  Amended   and   Restated    Bylaws   of   the   Company
                         (Incorporated  by  reference  to  Exhibit  3.3  of  the
                         Company's    Registration   Statement   on   Form   S-1
                         (Registration  Number  333-25551)  as  filed  with  the
                         Securities and Exchange Commission).

                    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.

                  99.1*  Certification of Periodic Financial Reports.

------------------------
* Filed herewith.



                                       32
<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.


                                   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:  August 14, 2002                  By: /s/ George M. Hare
                                            --------------------------------
                                            GEORGE M. HARE
                                            Senior Vice President and
                                            Chief Financial Officer
                                            (Principal Financial Officer)



                                       33
1497065