UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                    UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                   FORM 10-QSB


(Mark One)

     [X]  QUARTERLY  REPORT  UNDER  SECTION  13 OR 15(d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934

         For the quarterly period ended: March 31, 2004

     [ ]  TRANSITION  REPORT  UNDER  SECTION  13 OR 15(d)  OF THE  SECURITIES
          EXCHANGE ACT OF 1934

           For the transition period from __________ to _____________

                        Commission file number: 000-31249
                            CRITICAL HOME CARE, INC.
        (Exact name of small business issuer as specified in its charter)

                NEVADA                                      88-0331369
    (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                      Identification No.)

                                762 SUMMA AVENUE
                               WESTBURY, NY 11590
                    (Address of principal executive offices)

                                  516-997-1200
                           (Issuer's telephone number)

                                 Not Applicable
                     (Former name, former address and former
                   fiscal year, if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable  date: June 8, 2004, Common Stock,  $0.001
par value, 78,183,351 shares outstanding


Transitional Small Business Disclosure Format (Check one): Yes [    ]   No [ X ]



<PAGE>
<TABLE>
<CAPTION>


                     CRITICAL HOME CARE, INC. AND SUBSIDIARIES


                                      INDEX

                                                                     Page
                                                                    Number

PART I. FINANCIAL INFORMATION
<S>     <C>                                                       <C>

   Item 1. Financial Statements
     Unaudited Consolidated Balance Sheet as of
       March 31, 2004............................................   1
     Unaudited Consolidated Statements of Operations
       For The Three Months Ended March 31, 2004
       and March 31, 2003........................................   2
     Unaudited Consolidated Statements of Operations
       For The Six Months Ended March 31, 2004
       and March 31, 2003........................................   3
     Unaudited Consolidated Statements of Cash Flows
       For The Six Months Ended March 31, 2004
       and March 31, 2003........................................   4
     Notes to Unaudited Consolidated Financial Statements........   5-13

   Item 2. Management's Discussion and Analysis or
           Plan of Operation ....................................   13-16
   Item 3. Controls and Procedures...............................   16

PART II. OTHER INFORMATION
   Item 1. Legal Proceedings ....................................   16
   Item 2. Changes in Securities and Use of Proceeds.............   16-17
   Item 3. Defaults Upon Senior Securities.......................   17
   Item 4. Submission of Matters to a Vote of Security
           Holders...............................................   17-18
   Item 5. Other Information ....................................   18
   Item 6. Exhibits and Reports on Form 8-K......................   18

           Signatures............................................   19
           Certifications........................................   20-23
</TABLE>

<PAGE>


<TABLE>
<CAPTION>
ITEM 1
                  CRITICAL HOME CARE, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                                                                  March 31,
                                                                                    2004
                                                                                 ------------
                                                                                 (unaudited)
                                  ASSETS
<S>                                                                         <C>

CURRENT ASSETS
   Cash and cash equivalents.................................................  $       75,000
   Accounts receivable, net of allowance for
       doubtful accounts of $818,000.........................................         855,000
   Inventory.................................................................         262,000
   Prepaid expenses and other current assets.................................         364,000

                                                                                  -----------

       TOTAL CURRENT ASSETS..................................................       1,556,000
                                                                                  -----------

PROPERTY AND EQUIPMENT - NET.................................................         604,000
SECURITY DEPOSITS............................................................          37,000
                                                                                  -----------

       TOTAL ASSETS.......................................................... $     2,197,000
                                                                                  ===========
                   LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable...........................................................$       637,000
   Accrued expenses and other current liabilities.............................        231,000
   Current portion of long term debt..........................................          8,000
   Loan payable - bridge loan.................................................      1,500,000
   Notes payable - asset acquisition..........................................        233,000
   Notes payable - other, net of discount of $2,000..........................         223,000
   Notes payable - officer...................................................         654,000
                                                                                    ---------
       TOTAL CURRENT LIABILITIES..............................................      3,486,000
                                                                                    ---------
LONG-TERM DEBT

   Note payable - officer.....................................................         50,000
   Other, net of current portion..............................................         15,000
                                                                                   ----------
TOTAL LONG TERM DEBT..........................................................         65,000
                                                                                   ----------
TOTAL LIABILITIES.............................................................      3,551,000
                                                                                   ----------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:
   Preferred stock, $0.25 par value, 5,000,000 shares authorized,
        none issued and outstanding
   Common stock, $0.25 par value; 100,000,000 shares authorized;
        24,603,000 shares issued and outstanding..............................      6,151,000
   Additional paid-in capital.................................................      3,525,000
   Accumulated deficit........................................................    (11,030,000)
                                                                                    ----------
       TOTAL STOCKHOLDERS' DEFICIT.............................................    (1,354,000)
                                                                                    ----------
       TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT............................  $   2,197,000
                                                                                   ===========


                       See accompanying notes to consolidated financial statements.

</TABLE>
                                                -1-
<PAGE>
<TABLE>
<CAPTION>

                    CRITICAL HOME CARE, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                                                                           FOR THE
                                                                      THREE MONTHS ENDED
                                                                           March 31,
                                                                     -------------------
                                                                  2004                 2003
                                                                  ----                 ----
<S>                                                         <C>          <C>



NET SALES..............................................     $    696,000        $    1,510,000
COST OF GOODS SOLD.....................................          235,000               434,000
                                                              ----------              ---------
GROSS PROFIT...........................................          461,000             1,076,000

OPERATING EXPENSES:
    Selling, general and administrative................          935,000             1,474,000
    Depreciation and amortization......................           22,000                23,000
    Impairment of goodwill.............................        1,857,000                   -
    Impairment of other intangibles....................           70,000                   -
                                                                --------              ---------

      TOTAL OPERATING EXPENSES.........................        2,884,000             1,497,000
                                                               ---------             ---------

LOSS FROM OPERATIONS...................................       (2,423,000)             (421,000)
                                                              ----------             ----------
OTHER EXPENSE:

   Interest expense....................................         (115,000)              (21,000)
   Amortization of debt discount and
     deferred financing costs..........................              -                (666,000)
   Amortization of deferred debt discount,
     notes payable - other.............................         (233,000)               (6,000)

                                                              ----------             ----------
                                                                (348,000)             (693,000)
                                                              ----------             ----------

LOSS BEFORE PROVISION FOR INCOME TAXES.................       (2,771,000)           (1,114,000)

PROVISION FOR INCOME TAXES.............................             -                     -
                                                              ----------             ----------

NET LOSS...............................................    $  (2,771,000)        $  (1,114,000)
                                                              ==========            ==========


BASIC AND DILUTED LOSS PER SHARE.......................    $     ( 0.11)         $       (0.05)
                                                              ==========            ==========

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING.........................................       24,539,000            24,380,000
                                                              ==========            ==========


                    See accompanying notes to consolidated financial statements.

</TABLE>



                                       -2-
<PAGE>
<TABLE>
<CAPTION>

                   CRITICAL HOME CARE, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                                                                           FOR THE
                                                                        SIX MONTHS ENDED
                                                                           March 31,
                                                                     -------------------
                                                                  2004                 2003
                                                                  ----                 ----
<S>                                                         <C>          <C>



NET SALES..............................................     $  2,011,000        $    3,195,000
COST OF GOODS SOLD.....................................          643,000               982,000
                                                              ----------              ---------
GROSS PROFIT...........................................        1,368,000             2,213,000

OPERATING EXPENSES:
    Selling, general and administrative................        2,091,000             2,680,000
    Depreciation and amortization......................           43,000                48,000
    Impairment of goodwill.............................        1,857,000                  -
    Impairment of other intangibles....................           70,000                  -
                                                                --------              ---------

      TOTAL OPERATING EXPENSES.........................        4,061,000             2,728,000
                                                               ---------             ---------

LOSS FROM OPERATIONS...................................       (2,693,000)             (515,000)
                                                                ---------             ---------
OTHER INCOME (EXPENSE):

   Other income........................................             -                  138,000
   Interest expense....................................         (139,000)              (62,000)
   Amortization of debt discount and
     deferred financing costs     .....................              -                (666,000)
   Amortization of deferred debt discount,
     notes payable - other.............................         (245,000)               (6,000)

                                                               ----------            ----------
                                                                (384,000)             (596,000)
                                                               ----------            ----------

LOSS BEFORE PROVISION FOR INCOME TAXES.................       (3,077,000)           (1,111,000)

PROVISION FOR INCOME TAXES.............................             -                     -
                                                              ----------             ----------

NET LOSS...............................................    $  (3,077,000)        $  (1,111,000)
                                                              ==========            ==========


BASIC AND DILUTED LOSS PER SHARE.......................    $     ( 0.13)         $       (0.05)
                                                              ==========            ==========

BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING.........................................       24,467,000            24,119,000
                                                              ==========            ==========

</TABLE>

                    See accompanying notes to consolidated financial statements.

                                       -3-
<PAGE>
<TABLE>
<CAPTION>

                                               CRITICAL HOME CARE, INC. AND SUBSIDIARIES

                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                              (Unaudited)
                                                                                  FOR THE
                                                                             SIX MONTHS ENDED
                                                                                 MARCH 31,
                                                                              --------------
                                                                      2004                    2003
                                                                      ----                    ----
<S>                                                       <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss...............................................    $  (3,077,000)          $  (1,111,000)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
       Provision for bad debts............................          125,000                 304,000
       Depreciation and amortization......................           96,000                  64,000
       Interest paid with common stock....................           84,000                  50,000
       Stock option compensation..........................              -                   114,000
       Amortization of debt discount and
         deferred financing costs.........................              -                   666,000
       Amortization of deferred debt discount
         notes payable - other/bridge loan................          245,000                   6,000
       Impairment of goodwill.............................        1,857,000                   -
       Impairment of other intangibles                               70,000                   -
   Changes in operating assets and liabilities
       Accounts receivable................................         ( 87,000)               (701,000)
       Inventory..........................................            4,000                 329,000
       Prepaid expenses and other current assets..........           23,000                 (92,000)
       Deposits...........................................         (  7,000)                   -
       Accounts payable...................................         (148,000)                259,000
       Accrued expenses and other current liabilities.....          (85,000)                 (5,000)
                                                               ------------              -----------
Total adjustments.........................................        2,177,000                 994,000
                                                               ------------              -----------
NET CASH USED IN OPERATING ACTIVITIES.....................         (900,000)               (117,000)
                                                               ------------              -----------
CASH FLOWS USED IN INVESTING ACTIVITIES
   Purchases of property and equipment....................          (75,000)               (255,000)
   Deposit for Acquisition................................         (300,000)                   -
                                                               ------------              -----------
NET CASH USED IN INVESTING ACTIVITIES                              (375,000)               (255,000)
                                                               ------------              -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   Cash overdrafts.........................................         (39,000)                   -
   Proceeds from insurance settlement......................          11,000                    -
   Proceeds from convertible promissory notes..............             -                   666,000
   Debt issue costs........................................             -                   (81,000)
   Proceeds from notes payable - other.....................         274,000                 475,000
   Proceeds from bridge loan...............................       1,500,000                     -
   Proceeds from notes payable - officer                            277,000                  50,000
   Payment of long-term debt...............................         (12,000)                 (4,000)
   Payment of notes payable - asset acquisitions...........            -                   (200,000)
   Payment of notes payable - other........................        (663,000)               (241,000)
                                                               ------------              -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES..................       1,348,000                 665,000
                                                               ------------              -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS..................          73,000                 293,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............           2,000                  54,000
                                                               ------------              -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD...................   $      75,000          $      347,000
                                                               ============              ===========
Supplementary information:
Cash paid during the
period for:

   Interest................................................   $     35,000          $         2,000
                                                               ===========             ============

                    See accompanying notes to consolidated financial statements.
</TABLE>

                                             -4-
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

     The  consolidated  balance sheet as of March 31, 2004, and the consolidated
statements of operations and cash flows for the periods ended March 31, 2004 and
2003, have been prepared by the Company in accordance with accounting principles
generally  accepted in the United  States of America and  without  audit.  These
interim financial statements include all adjustments, which management considers
necessary  to make the  financial  statements  not  misleading.  The  results of
operations  for  the  three  and  six-months  ended  March  31,  2004,  are  not
necessarily  indicative  of results that may be expected  for any other  interim
period or for the remainder of the year.

     The consolidated financial statements include the accounts of Critical Home
Care,  Inc. and its wholly owned  subsidiaries  (collectively  "Critical" or the
"Company").  All significant  intercompany  balances and transactions  have been
eliminated in consolidation.

     This report  should be read in  conjunction  with the  Company's  financial
statements  included  in the report on Form  10-KSB  for the  fiscal  year ended
September 30, 2003 filed with the Securities and Exchange Commission on February
18, 2004 as well as the Company's other filings with the Securities and Exchange
Commission  including,  but not limited to, its current Report on Form 8-K filed
on May 24, 2004.

     The  consolidated  financial  information  included in this report has been
prepared on the basis that the Company  will  continue  as a going  concern.  At
March 31, 2004, the Company had a working capital  deficiency of $1,930,000,  an
accumulated deficit of $11,030,000 and had incurred net losses for the three and
six months ended March 31, 2004 of $2,771,000 and $3,077,000,  respectively. The
Company's  recurring  losses from  operations  and its  difficulty in generating
sufficient cash flow to meet its  obligations  and sustain its operations  raise
substantial doubt about its ability to continue as a going concern.

     The Company's  business  plan and growth  strategy are dependent on working
capital.  Management has been aggressively  seeking to raise additional  capital
through  accounts  receivable  financing and private sector loans and obtained a
loan of $250,000  from a private  individual  on February 3, 2004,  and a bridge
loan of $1,500,000  on March 11, 2004 (see Note 6). On May 7, 2004,  the Company
completed  a total of  $8,000,000  of a  Regulation  D  Private  Placement  (the
"Offering").  The Company subsequently sold an additional $245,000 of securities
and terminated the Offering.  The Company sold an aggregate of 32,980,000 shares
at $0.25 per share together with 3,298,000  Class A Warrants  exercisable  for 7
years at $0.50 per share.  The  Placement  Agent  received  warrants to purchase
2,298,000  shares,  exercisable  on a  cashless  basis  for 7 years at $0.50 per
share.  The  Placement  Agent  also  received  a  10%  sales   commission,   and
reimbursement of out-of-pocket  expenses. The Company advanced $5 million of the
net  proceeds  to  complete   the  RKDA  Merger   described  in  Note  2  below;
approximately   $164,000  of  the  proceeds  was  used  for  the   repayment  of
indebtedness and the balance for working capital.



NOTE 2 - DESCRIPTION OF BUSINESS

     On July 12, 2002, the Company  acquired 100% of the common stock of Classic
Healthcare Solutions, Inc. ("Classic");  on August 8, 2002, the Company acquired
substantially  all of the assets and business  operations of Homecare  Alliance,
Inc. ("Alliance"); on September 13, 2002, the Company acquired substantially all
of the assets and business  operations of All Care Medical Products,  Inc. ("All
Care") and on September 26, 2002, the Company  consummated a reverse acquisition
with New York Medical, Inc. ("NYMI") and NYMI changed its name to Critical.  The
results of  operations of acquired  businesses  have been included with those of
the Company since the respective dates of acquisition.

     For  accounting  purposes,  the  transaction  between NYMI and Critical was
considered,   in  substance,  a  capital  transaction  rather  than  a  business
combination  and has been accounted for under the purchase  method of accounting
since the former  shareholders  of Critical owned a majority of the  outstanding
common stock of NYMI.  Accordingly,  the  combination  of Critical with NYMI was
recorded as a recapitalization of Critical,  pursuant to which Critical has been
treated as the continuing entity for accounting purposes.


                                       -5-
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


     Critical is incorporated in Nevada and based on Long Island,  New York. The
Company  markets,  rents and sells  surgical  supplies,  orthotic and prosthetic
products and durable medical  equipment,  such as wheelchairs and hospital beds.
The Company also  provides  oxygen and other  respiratory  therapy  services and
equipment and operates four retail  outlets in the New York  metropolitan  area.
Clients and patients are primarily  individuals  residing at home. The Company's
equipment and supplies are readily  available in the marketplace and the Company
is not dependent on a single supplier.  Reimbursement  and payor sources include
Medicare,  Medicaid,  insurance companies, managed care groups, HMO's, PPO's and
private pay. The Company had one payor  source,  Medicare,  which  accounted for
more than 10% of its  revenue  during the three and six months  ended  March 31,
2004  and  2003.  Such  revenue  represented  approximately  20%  and 21% of the
Company's  revenues  for the  three  months  ended  March  31,  2004  and  2003,
respectively,  and 20% and 16% for the six months  ended March 31, 2004 and 2003
respectively.

     On May 4, 2004,  following an Annual Meeting of  Stockholders,  the Company
amended and restated its Articles of Incorporation to:

(i)  amend the par value and increase the number of authorized  Shares of Common
     Stock to 150,000,000, $.001 par value per share, from 100,000,000, $.25 par
     value per share;

(ii) authorize the issuance of serial  preferred  stock  consisting of 5,000,000
     shares, $.001 par value per share; and

(iii) eliminate preemptive rights. (See Part II. Item 4)


     On May 10, 2004, CHC Sub,  Inc., a wholly-owned  subsidiary of the Company,
merged with and into RKDA,  Inc. (the "RKDA Merger") a recently  formed Michigan
corporation. RKDA's assets consist of all the capital stock of Arcadia Services,
Inc. and the membership  interests of SSAC,  LLC d/b/a Arcadia Rx  (collectively
"Arcadia").  RKDA acquired Arcadia Services,  Inc. on May 7, 2004, pursuant to a
stock purchase  agreement by and among RKDA,  Arcadia,  Addus  Healthcare,  Inc.
and W.Andrew Wright.

     The Company is in the process of  determining  whether the RKDA Merger will
be  accounted  for as a reverse  acquisition  due to the  change in  control  of
Critical whereby Messrs.  John E. Elliott II and Lawrence R. Kuhnert now control
the  Board of  Directors.  If it is  concluded  that the  transaction  should be
accounted for as a reverse merger, the consolidated  operations of RKDA would be
reflected  as the  historical  operations  of the  ongoing  entity.  Some of the
factors relevant to the  determination  are as follows:  Elliott,  Kuhnert and a
nominee  to be named by them will hold  three of the five seats on the board and
by  operation  of a  certain  voting  agreement,  they  control  the  vote  of a
sufficient number of shares, in addition to their own, that would result in them
being able to elect a majority of the Board of Directors.  The voting  agreement
will stay in  effect  until the  earlier  of (a) the date on which the  combined
ownership  of the  Company  held by Elliott  and Kuhnert is reduced to less than
10%, (b) the date on which neither Elliott nor Kuhnert are executive officers of
the Company, or (c) the expiration of the maximum period permitted by law.



NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Revenue recognition - Revenues are recorded in the period the services were
rendered at established  rates reduced by provisions  for doubtful  accounts and
contractual  adjustments.  Such  adjustments  represent the  difference  between
charges  at  established  rates  and  estimated  recoverable  amounts  and  were
recognized in the period the services were  rendered.  Any  differences  between
estimated  contractual  adjustments and actual final settlements were recognized
as contractual  adjustments in the year final  settlements were determined.  The
Company reports  revenues in its financial  statements net of such  adjustments,
however,  appeals  are  sometimes  filed and if such  appeals are decided in the
Company's  favor,  revenues  would be  readjusted.  The  Company  estimates  the
allowance  for  uncollectible  accounts  and  contractual  adjustments  based on
historical experience.

     Concentration of credit risk - The Company  primarily  provides health care
services,   medical  need  related  equipment  and  customized  devices  and  is
reimbursed by the patient's third-party insurers or governmentally funded health
care insurance programs. The Company performs ongoing credit evaluations for its
private pay customer  patients and open  account  customers.  The ability of the
Company's  debtors to meet their  obligations  is dependent  upon the  financial
stability  of the  insurers  of  the  Company's  customer  patients  and  future
legislation and regulatory actions. The Company maintains reserves for potential
losses from these receivables that  historically  have been within  management's
expectations.

                                       -6-
<PAGE>





                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

     Allowance  for  doubtful  accounts  -  The  Company  reviews  all  Accounts
Receivable balances,  and provides for an allowance for uncollectible  accounts,
and  estimates  for its bad debt  expense  based on  historical  analysis of its
records.  The basis of this analysis is from the aging of the receivable  files,
and the patient, payer provider records, and additionally their payment history.
Items that are greater than one year old are  reserved for 100%.  The balance of
any reserve, which is established,  is estimated based on the collection history
from Company records.

     Impairment of Long-lived assets - The Company reviews its long-lived assets
for  impairment  whenever  changes in  circumstances  indicate that the carrying
amount of an asset may not be  recoverable.  To determine if impairment  exists,
the Company  compares  the  estimated  future  undiscounted  cash flows from the
related long-lived assets to the net carrying amount of such assets. Once it has
been  determined that an impairment  exists,  the carrying value of the asset is
adjusted to fair value.  Factors  considered in the  determination of fair value
include  current  operating  results,  trends and the present value of estimated
expected future cash flows.

     Earnings  (loss) per share - The Company  follows  Statement  of  Financial
Accounting  Standards,  ("SFAS")  No.  128,  "Earnings  per Share"  ("EPS")  for
computing and presenting  earnings(loss) per share, which requires,  among other
things,  dual presentation of basic and diluted earnings (loss) per share on the
face of the  statement  of  operations.  Basic EPS is computed  by dividing  net
income (loss) available to common stockholders by the weighted average number of
common  shares  outstanding  for the period.  Diluted EPS reflects the potential
dilution  that could occur if  securities,  or other  contracts  to issue common
stock were exercised or converted into common stock.  Outstanding  stock options
to acquire  1,763,100  and 325,000  common shares as at March 31, 2004 and March
31, 2003, respectively,  have not been considered in the computation of dilutive
earnings per share since their effect would be antidilutive.

     Inventories - The Company for interim  accounting  purposes  calculates and
adjusts  its  inventory  pursuant  to a review of its  historical  gross  profit
percentages.

 STOCK BASED COMPENSATION

     The  Company  accounts  for its  stock  option  plan  under  SFAS No.  148,
"Accounting  for Stock Based  Compensation  -  Transition  and  Disclosure  - an
amendment  of SFAS No.  123".  As  permitted  under SFAS No.  123,  the  Company
continues to apply the Accounting  Principles Board Opinion No. 25,  "Accounting
for Stock Issued to  Employees."  As required  under SFAS No. 148, the following
table presents pro forma net loss and basic and diluted loss per share as if the
fair value-based method had been applied to all awards.

<TABLE>
<CAPTION>

                                                                  For The Three Months Ended
                                                            ----------------------------------------
                                                             March 31, 2004      March 31, 2003
                                                            ----------------------------------------
<S>                                                         <C>                   <C>
 Net loss as reported                                       $  (2,771,000)        $ (1,114,000)
 Stock option compensation included in net loss                     -                   57,000
  Less: Total stock-based employee compensation expense
        determined under the fair value method, net of
        related tax effects                                       ( 5,000)            ( 68,000)
                                                             ---------------      ------------------
                               Pro Forma net loss           $  (2,776,000)        $ (1,125,000)
                                                             ---------------      ------------------

 Net loss per share:
 Basic and diluted loss per share as reported               $       (0.11)        $      (0.05)
 Pro Forma basic and diluted loss per share                 $       (0.11)        $      (0.05)

</TABLE>


                                       -7-

<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                   For The Six Months Ended
                                                            ----------------------------------------
                                                             March 31, 2004      March 31, 2003
                                                            ----------------------------------------
<S>                                                         <C>                   <C>
 Net loss as reported                                       $  (3,077,000)        $ (1,111,000)
 Stock option compensation included in net loss                     -                  114,000
  Less: Total stock-based employee compensation expense
        determined under the fair value method, net of
        related tax effects                                       ( 9,000)            (135,000)
                                                             ---------------      ------------------
                               Pro Forma net loss           $  (3,086,000)        $ (1,132,000)
                                                             ---------------      ------------------

 Net loss per share:
 Basic and diluted loss per share as reported               $       (0.13)        $      (0.05)
 Pro Forma basic and diluted loss per share                 $       (0.13)        $      (0.05)

</TABLE>

NOTE 4 - LEGAL PROCEEDINGS

     In April 2003,  Ruth Davis and Herman Davis (wife and husband)  commenced a
lawsuit in Nassau County Supreme Court against the Company's subsidiary, Classic
Healthcare  Solutions,  Inc.  ("Classic").  Plaintiff  Mrs. Davis claims to have
sustained  injuries on September 15, 2002,  from an alleged  malfunction  of the
chair lift,  which she acquired from Classic,  and claims damages of $2,000,000.
In  addition,  plaintiff  Mr.  Davis  claims  damages  of  $500,000  for loss of
services.

     The lawsuit  was  resolved by the  insurance  carrier on June 2, 2004.  The
Company will have no monetary  exposure for any payments either  presently or in
the future, based upon the settlement.


NOTE 5 - ISSUANCE OF SECURITIES

     During the six months  ended March 31,  2003,  the Company  sold a total of
$666,000 of  convertible  promissory  notes (the "Notes")  pursuant to a private
placement  (the  "Private  Placement")  under  Rule 506 of  Regulation  D of the
Securities Act of 1933, as amended. The Notes were convertible into common stock
at the rate of one share for every  $1.00 of Notes at the  Company's  discretion
and from November 2002 through February 2003, the Company elected to convert all
such Notes into 666,000 shares of common stock. An additional  2,168 shares were
issued as interest.  The private placement terminated on February 28, 2003. As a
result of the conversion price of $1.00 being less than the fair market value on
the dates the notes  were  purchased,  the  Company  recorded  a  non-cash  debt
discount and  beneficial  conversion  feature  charge of $666,000 in the quarter
ended March 31, 2003.

     On January 28,  2004,  the Company  agreed to issue  210,000  shares of its
common stock to the Rubin Family Irrevocable Trust, a lender to the Company,  in
consideration  for numerous  extensions  of the maturity  date of its loan.  The
shares  were  valued at $0.40 per share and  $84,000  was  therefore  charged to
interest  expense  during the three months  ended March 31,  2004.  The debt was
repaid in full on March 24,  2004,  and the shares  were  issued as of March 31,
2004.








                                       -8-


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 6 - NOTES PAYABLE
<TABLE>
<CAPTION>

     In  February  2003,  the Company  borrowed  $475,000  from three  unrelated
parties.  The notes  payable  to two of the  three  unrelated  parties  included
five-year  options to acquire an  aggregate of 187,500  shares of the  Company's
common  stock at $1.00  per  share.  Using the  Black  Scholes  method of option
valuation,  these  options  were valued at $56,000  which amount was recorded as
debt discount and is being amortized over the 14-month life of the notes and the
charge  for the three  and six  months  ended  March 31,  2004 was  $12,000  and
$24,000,  respectively,  and the  balance  of  $2,000  has been  reflected  as a
discount to notes payable, other. Additionally, during February 2004 the Company
received an  additional  $250,000  from one of the above  unrelated  parties who
received  ten-year  options  to acquire an  aggregate  of 500,000  shares of the
Company's  common stock at $0.25 per share.  Using the Black  Scholes  method of
option  valuation,  these  options  were  valued at  $200,000  which  amount was
recorded as debt  discount and was  expensed in this quarter  since the note was
paid in full,  prior to March  31,  2004  (See  Note 8).  The  balance  of Notes
payable, other of $223,000 is described below.

Notes payable at March 31, 2004, are summarized as follows:

<S>                                                                   <C>
Notes payable, bridge loan made to the Company on March 11, 2004,
evidenced by a 12% Subordinated Promissory Note due June 12, 2004,
unless prepaid. If the note is repaid before maturity date the Company
shall pay a 1% termination fee to the lender. The bridge
lender received warrants to purchase 250,000 shares of the Company's
Common Stock exercisable for 7 years at $0.50 per share.  Using the
Black Scholes method of option valuation, these options were valued
at $94,000 which amount is being amortized over the life of the bridge
loan. The amount of amortization expense recorded for the three and
six months ended March 31, 2004 was $21,000, (See Note 1). As at June 9,
2004 the Promissory Note due June 12, 2004 is in the process of being
re-negotiated.                                                          $ 1,500,000

                                                                         ==========



Notes payable, other, issued in February 2003 pursuant to working
capital loans provided by two unrelated parties bearing interest
at 5% per annum payable in April 2004. The note for $75,000 was paid
in full in April 2004 and the other Note is presently being
renegotiated.                                                          $   225,000

Less discount:                                                             ( 2,000)
                                                                          ---------
                                                                        $   223,000
                                                                          =========


Notes payable, officer, issued from May 2003 through December 2003
pursuant to working capital loans from the President of the Company
bearing interest at 8% per annum and due in May 2004 through
December 2004. Of this amount, $150,000 was converted into equity
in May 13, 2004, at $0.25 per share.(See Note 10)                       $   654,000
                                                                           ========

Notes payable, asset acquisition, issued September 13, 2002
pursuant to the All Care Asset Acquisition Agreement as modified
on April 16, 2003, bearing interest at 7% per annum and payable
August 15, 2005. This debt was re-negotiated and paid in full
during May 2004.                                                        $   233,000
                                                                           ========
Long Term:

Note payable, officer, issued in February 2003 pursuant to a working
capital loan from the President of the Company bearing interest at 8%
and payable October 16, 2005.                                           $    50,000
                                                                           ========
</TABLE>

                                       -9-
<PAGE>




                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

<S>                                                                    <C>
Notes payable, other issued during February 2004 for the purchase of
a delivery vehicle is payable in monthly installments of $665 including
interest at 7.3% per annum maturing in March 2007 and secured by the
delivery vehicle.                                                        $   23,000

                                                 Less: Short-term portion    (8,000)
                                                                          ---------
                                                                         $   15,000
                                                                          =========
</TABLE>

NOTE 7 - Income Taxes

     As of March 31,  2004,  the Company has net  operating  loss  carryforwards
("NOLs") of approximately  $2,610,000,  which may be available to reduce taxable
income if any. These NOLs expire  through 2024.  However  Internal  Revenue Code
Section  382 rules limit the  utilization  of NOLs upon a change in control of a
company.  It has been determined  that a subsequent  change in control has taken
place.  Since the change in control has taken place utilization of the Company's
NOLs will be subject to severe  limitations in future periods,  which could have
an effect of eliminating substantially all the future income tax benefits of the
NOL's.

     Tax benefits  from the  utilization  of NOL's will be recorded at such time
and to such extent,  they are more likely than not to be realized.  As such, the
resulting estimated deferred tax assets of approximately  $1,300,000 as of March
31, 2004, have been offset by a corresponding valuation allowance.


NOTE 8 - Stock Option Information

     On  February  3, 2004,  the Company  entered  into an Amended and  Restated
Promissory  Note for a total of $500,000  (the  "Restated  Note")  with  Stephen
Garchik,  Trustee ("Garchik") and simultaneously executed a related stock option
agreement and a registration rights agreement in favor of Garchik.  The Restated
Note is comprised of $250,000  previously loaned to the Company in February 2003
and originally due in April 2004, and an additional  $250,000,  which was loaned
to the Company on February 3, 2004.


     The stock  option  agreement  provides  Garchik  with  ten-year  options to
acquire 500,000 shares of the Company's  common stock at $0.25 per share and all
such options vested upon grant and the registration  rights  agreement  provides
Garchik with certain piggyback registration rights in the event that the Company
files a registration  statement.  The Restated Note bears interest at Prime,  as
published  in the Wall  Street  Journal  plus 1% and  principal  and all accrued
interest was due June 30, 2004. The restated note and all accrued  interest were
paid in full on March 12, 2004 from the proceeds of the  $1,500,000  bridge loan
described  in Note 6 above.  Deferred  debt  discount  in the amount of $200,000
relative to this  transaction was expensed in the three month period ended March
31, 2004, since the loan and repayment took place during the quarter.


NOTE 9 - IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLES

     SFAS  142 -  "Goodwill  and  Other  Intangible  Assets",  requires  that an
impairment  test for  goodwill and other  intangible  assets be performed in two
steps,  (i) determine  impairment  based upon fair valve of a reporting  unit as
compared to its carrying value, and (ii) if there is an impairment,  measure the
impairment  loss by  comparing  the  implied  fair  value of  goodwill  with the
carrying  amount of the goodwill.  Due to continued  losses  realized by the All
Care Medical Products division, closing of a store location, continued cash flow
difficulties and the loss of key sales employees,  during the period  management
determined  that a $1,857,000  impairment  charge,  representing  the  remaining
carrying value of the goodwill,  be recorded  during the quarter ended March 31,
2004.  Additionally,  the Company  recorded a charge for the impairment of other
intangibles in the amount of $70,000  (covenant not to compete)  relative to the
All Care  Medical  Products  asset  acquisition,  since this asset has no future
benefit.  This amount was charged to expense  during the quarter ended March 31,
2004.




                                      -10-
<PAGE>


                    NOTES TO CONSOLIDATED FINNCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 10 - SUBSEQUENT EVENTS

     RKDA  MERGER,  CHANGE IN  CONTROL  OF THE BOARD OF  DIRECTORS  AND  PRIVATE
PLACEMENT


     On May 10, 2004, the Company,  CHC Sub, Inc., a wholly-owned  subsidiary of
the Company,  John E.  Elliott,  II,  Lawrence R.  Kuhnert,  and David S. Bensol
consummated  the Agreement and Plan of Merger under which CHC Sub, Inc.,  merged
with and into  RKDA,  Inc.  The  purchase  price paid was  21,300,000  shares of
Critical common stock and 1,000,000  seven-year class A warrants  exercisable at
$0.50 per share.  Bensol  contributed  1,300,000 shares of common stock owned by
him back to the Company as part of this  transaction.  RKDA's assets  consist of
all of the capital stock of Arcadia Services,  Inc. and the membership interests
of SSAC,  LLC d/b/a  Arcadia Rx.  (collectively  "Arcadia").  RKDA had  acquired
Arcadia Services,  Inc. immediately prior to the closing of the RKDA Merger. The
Company also advanced  $5,000,000 to RKDA which was used to pay a portion of the
cash purchase  price of Arcadia  Services,  Inc. The cash was part of a total of
$8,245,000  raised in a Regulation  D private  placement  of  32,980,000  common
shares at a price of $0.25 per share which was  completed  and  terminated.  The
offering  also included  seven year  warrants to buy 3,298,000  common shares of
stock at an exercise  price of $0.50 per share.  The Placement  Agent received a
10% sales commission,  reimbursement  for out-of-pocket  expenses and seven year
warrants to purchase  2,298,000 shares of the Company's common stock exercisable
on a cashless basis at $0.50 per share.  Proforma financial  information has not
been provided since  financial  information for Arcadia is not available at this
time.

     Arcadia  Services,  Inc., is a national  provider of staffing and home care
services currently  operating in 22 states with annual revenues of approximately
$75,000,000.  Arcadia  operates  through  56  affiliated  and  18  company-owned
offices.   Arcadia's  medical  staffing  includes  registered  nurses,  licensed
practical  nurses,   certified  nursing  assistants,   respiratory   therapists,
technicians  and medical  assistants.  Its non-medical  staffing  includes light
industrial,  clerical and  technical  personnel.  Arcadia's  home care  staffing
includes  personal  care aides,  home care  aides,  homemakers  and  companions.
Arcadia  also  offers  physical  therapists,   occupational  therapists,  speech
pathologists,  and medical social workers. Arcadia Rx is a mail service pharmacy
based in Paducah, Kentucky with annual revenues of approximately $3,000,000.

     Dr. Barbara Levine and Mr. Bradley Smith resigned as directors  leaving Mr.
David S. Bensol and Mitchell Cooper as the remaining  original  directors of the
Company.  Messrs.  Elliott and Kuhnert became Chief Executive  Officer and Chief
Operating  Officer,  respectively,  and were elected to the  Company's  Board of
Directors  and have the right to elect a director of their  choosing  which will
result in three  directors  out of five being  under the  control of Elliott and
Kuhnert and  therefore a change in control of the  Company's  Board of Directors
has occurred.


     John E. Elliott,  II, Lawrence  Kuhnert and David S. Bensol have escrowed 6
million,  4 million and 2 million  shares of Critical  Home Care,  Inc.,  common
stock,  respectively,  pursuant  to  Escrow  Agreements  dated as of May 7, 2004
(collectively,  the "Escrow  Shares").  Fifty (50%) percent of the Escrow Shares
will be released from escrow in each of the next two 12 month periods,  if RKDA,
in the case of Elliott  and  Kuhnert,  and the  Company,  in the case of Bensol,
meets the following  milestones:  for the 12 month period ending March 31, 2006,
an Adjusted  EBITDA (as defined) of $9.7 million and for 12 month period  ending
March 31, 2007, an Adjusted EBITDA of $12.5 million.  Alternatively,  the Escrow
Shares  shall be released in 2007 if RKDA,  in the case of Elliott and  Kuhnert,
and the Company,  in the case of Bensol,  obtains an Adjusted EBITDA for the two
12 month periods ending March 31, 2007 of at least $22.2  million.  In addition,
for  any  of  the  Escrow  Shares  to be  released  pursuant  to  the  foregoing
thresholds,  the Company's,  in the case of Bensol,  and RKDA's,  in the case of
Elliott and Kuhnert,  Debt to Adjusted EBITDA ratio must be 2.0 or less for both
fiscal  periods.  Nevertheless,  twenty (20%)  percent of the Escrow Shares (2.4
million shares) will be released if the Company's  Common Stock remains at least
$1.00 per share for 30 consecutive trading days or the average closing price for
any  consecutive  45 day period is at least $1.00 per share,  even if the EBITDA
thresholds are not met.





                                      -11-
<PAGE>






                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


     COMERICA BANK CREDIT AGREEMENT

     On May 7, 2004, Arcadia Services,  Inc and three wholly  owned-subsidiaries
entered into a loan Agreement  with Comerica  Bank.  The agreement  provides the
borrowers with a revolving  credit  facility of up to $12 million through May 7,
2006.  The initial  advance on May 7, 2004,  was in the amount of $11.5 million.
The  initial  advance was  immediately  distributed  up to RKDA,  Inc. to fund a
portion of the purchase  price of the capital  stock of Arcadia by RKDA from the
seller.  All other advances  under the credit  facility shall be used solely for
working capital  purposes.  RKDA granted Comerica Bank a first priority security
interest  in all of the issued and  outstanding  stock of  Arcadia.  The Arcadia
subsidiaries  and Arcadia  granted the bank  security  interests in all of their
assets  and the  seller  subordinated  $500,000  of  indebtedness  of Arcadia to
Arcadia's indebtedness to Comerica Bank. RKDA and its former principals, Elliott
and  Kuhnert,  each  executed  a personal  guaranty  to  Comerica  Bank over all
indebtedness of Arcadia and its subsidiaries.

     Advances under the credit  facility bear interest at the  prime-based  rate
(as  defined) or the  Eurodollar-based  rate (as  defined),  at the  election of
borrowers.  Arcadia agreed to various  financial  covenant  ratios;  to have any
person who acquires  Arcadia  capital stock pledge such stock to Comerica  Bank,
and along with Elliott and Kuhnert, to customary negative covenants.

     EMPLOYMENT AGREEMENTS

     Elliott,  Kuhnert, and Bensol entered into substantially similar Employment
Agreements  on May 7, 2004,  as Chief  Executive  Officer,  President  and Chief
Operating Officer, and Executive Vice President, respectively. Each agreement is
for three years,  automatically renewable for successive one-year periods unless
terminated on three months'  prior  written  notice.  Each officer is being paid
$150,000 per annum in salary and is eligible to receive a  discretionary  annual
bonus  determined  by the Board of Directors.  If either  Elliott,  Kuhnert,  or
Bensol's Employment  Agreement is terminated by the Company other than for cause
(as  defined)  or by the  executive  for good  reason  (as  defined)  then  such
executive shall receive twice his base salary.  Upon a change in control,  other
than the RKDA Merger,  if the  executive is terminated by the Company other than
for cause or by the executive for good reason, the executive shall receive three
times his total  compensation  for the past year.  Each executive  agreed not to
compete with the Company within North America for the one-year-period  following
termination of his employment.

     Elliott and Kuhnert were each granted  stock  options to purchase 4 million
shares of Common Stock exercisable at $0.25 per share. The options shall vest in
six tranches  provided certain adjusted EBITDA milestones are met through fiscal
2008, subject to acceleration upon certain events occurring.  The options may be
executed by Elliott and Kuhnert as long as they are  employed by the Company and
for one year from termination for any reason.


     SETTLEMENT OF CERTAIN LIABILITIES


     On April 21, 2004, David S. Bensol transferred 250,000 shares of his common
stock of the Company to Global Asset  Management,  LLC ("Global").  Global is an
affiliate of Rockwell Capital Partners, LLC ("Rockwell") and of Vertical Capital
Partners,  Inc.  ("Vertical")  with whom the Company had a financial  consulting
agreement  dated November 15, 2002 and amended on April 10,2003,  payable at the
rate  of  $  10,000  per  month  through   October  2005.  The  shares  were  in
consideration of Rockwell and Vertical  canceling such agreement,  and any prior
agreements.  The shares are not registered but do carry registration rights that
call for a registration statement to be filed within 90 days of April 21, 2004.

     In May 2004,  David S.  Bensol,  Robert  Rubin,  and Kenneth Orr, two other
founding  shareholders,  each  agreed  to  contribute  or  cause  affiliates  to
contribute 200,000 shares of their Critical common stock to Cleveland  Overseas,
Ltd.  ("Cleveland") in full payment of the Company's  $150,000 debt to Cleveland
which  matured  on April 30,  2004,  and in  exchange  for the  release of their
personal  guarantees  and stock pledges to Cleveland.  In addition,  the Company
reduced the exercise  price to Cleveland of a 7 year warrant to acquire  100,000
common shares to $0.50 per share.  Upon  completion of this pending  transaction
the Company's debt to Cleveland,  consisting of $150,000 principal and $8,000 of
accrued interest will be considered paid in full.


                                      -12-

<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


     On May 7,  2004,  David  S.  Bensol  transferred  350,000  shares  to Luigi
Piccione  ("Piccione"),  the seller of the assets of All Care Medical  Products,
Inc.,  pursuant to a  settlement  agreement  which  provided  for the payment to
Piccione  of the  shares  and  $164,000  in cash from the  Company.  In  return,
Piccione  cancelled  the  remaining  36  months  of the  lease on the  Patchogue
facility  and agreed to a month to month  tenancy and agreed to a  reduction  of
$82,500  in the  amount  due on the  original  acquisition  promissory  note and
accrued  interest  which would then be  considered  paid in full.  Piccione also
terminated his existing consulting  agreement for $150,000 annually plus certain
benefits and accepted a new agreement which calls for annual payments of $24,000
through  September  2007 and the payment of certain  health  insurance and other
benefits.

     On May 13,  2004,  David S.  Bensol  converted  $150,000  of his debt  into
600,000  shares of the  Company's  common stock at $0.25 per share,  plus 60,000
Class A warrants  identical to those issued in connection with the Company's May
7, 2004  Offering  (defined  below),  pursuant to a  resolution  of the Board of
Directors on May 4, 2004.


   EMPLOYEE STOCK PURCHASES

     On May 25, 2004, the Company entered into separate  Agreements with certain
managerial  employees of Arcadia  Services,  Inc.,  Cathy Sparling,  Lakshumanan
Sundaram, Barbara Gay and Phyllis Pheeney, that entitled Sparling,  Sundaram and
Gay to each purchase  200,000  shares of Company common stock at $0.25 per share
and  Phenney to purchase  240,000  shares of Company  common  stock at $0.25 per
share.  Pursuant  to the  terms  of the  Subscription  Agreements,  each  of the
subscribers  have a period of fifteen days to rescind the purchase and receive a
refund of the entire purchase price.


     ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR
              PLAN OF OPERATIONS

GENERAL

     The following  discussion and analysis  should be read in conjunction  with
the Consolidated  Financial  Statements and Notes thereto appearing elsewhere in
this Form 10-QSB.

     Statements  contained in this report include  "forward-looking  statements"
within the meaning of such term in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.  Forward-looking  statements
involve known and unknown risks,  uncertainties  and other factors,  which could
cause actual  financial  or  operating  results,  performances  or  achievements
expressed  or implied by such  forward-  looking  statements  not to occur or be
realized.  Such  forward-looking  statements  generally  are  based  on our best
estimates of future  results,  performances  or  achievements,  predicated  upon
current  conditions  and the most recent  results of the companies  involved and
their respective industries. Forward-looking statements may be identified by the
use of  forward-looking  terminology  such as  "may,"  "can,"  "will,"  "could,"
"should," "project," "expect," "plan," "predict," "believe,"  "estimate," "aim,"
"anticipate," "intend," "continue," "potential," "opportunity" or similar terms,
variations of those terms or the negative of those terms or other  variations of
those terms or comparable words or expressions.

     Readers are urged to carefully review and consider the various  disclosures
made by us in this Quarterly  Report on Form 10-QSB,  our current report on Form
8-K filed on May 24,  2004,  our Annual  Report on Form 10-KSB filed on February
18, 2004 and our other  filings with the  Securities  and  Exchange  Commission.
These reports and filings attempt to advise interested  parties of the risks and
factors  that may  affect  our  business,  financial  condition  and  results of
operations  and  prospects.  The  forward-looking  statements  made in this Form
10-QSB  speak  only as of the date  hereof and we  disclaim  any  obligation  to
provide updates,  revisions or amendments to any  forward-looking  statements to
reflect changes in our expectations or future events.



                                      -13-


<PAGE>


Results of Operations

     The Three  Months  Ended March 31, 2004  Compared to the Three Months Ended
March 31,2003.

     For the three months ended March 31, 2004, sales decreased by $814,000,  or
54%, to $696,000 as compared to  $1,510,000  in the three months ended March 31,
2003.  The decrease is primarily  attributable  to a lack of sufficient  working
capital to purchase the products  needed to maintain  historical  volume levels,
and  additionally  the loss of sales  and  professional  staff who have left the
Company.

     Gross  profit  for the three  months  ended  March 31,  2004 was  66.0%,  a
decrease of 5.3% over the 71.3%  recorded in the prior year  comparable  period.
This was a result of the  sales mix in the  quarter  being  different,  which is
attributable  to the durable  medical  equipment  ("DME") rentals being a higher
percentage  of sales and such revenue  generates a somewhat  higher gross profit
than other sales, in the quarter ended March 31, 2003.


     Selling, general and administrative expenses totaled $935,000 for the three
months ended March 31, 2004  compared to  $1,474,000  for the three months ended
March 31, 2003.  The net decrease of  $539,000,  or 37%,  consists of a non-cash
charge for stock option  compensation  of $57,000  during the three months ended
March 31, 2003, as no stock option  compensation was incurred during the quarter
ended  March 31,  2004,  a  reduction  in  professional  fees and other  related
expenses of $68,000;  and a reduction  of $39,000 in rent and related  occupancy
expense.  Additionally,  the three months ended March 31, 2003 included a charge
of $57,000 for commitment  fees and due diligence fees paid to a potential asset
based lender and also included a provision for bad debts of $304,000.  There was
no comparable  expense for either of these items in the three months ended March
31, 2004.  However  during the quarter  ended March 31,  2004,  the Company paid
commissions for raising of capital of $25,000.  A billing and collection service
was  contracted on October 1, 2003.  The net savings for the use of this service
as compared to the payroll and related expenses was $77,000. In addition,  there
was a net increase of approximately $38,000 in all other expenses.


     Interest  expense was $115,000 for the three months ended March 31, 2004 as
compared to $21,000 for the three months ended March 31, 2003.  Interest expense
incurred in the three months ended March 31, 2004  included  $84,000 of interest
paid with the issuance of common stock.  Interest  expense incurred in the three
months  ended  March 31,  2003  included  $25,000 of  amortization  of  deferred
interest.  The amount of net interest paid in cash  increased by $33,000 for the
quarter ended March 31, 2004 due to the payment of interest on outstanding loans
to investors  from  additional  debt which was raised  (bridge  loan) during the
three months ended March 31, 2004. Additionally the increase of interest expense
during the quarter ended March 31, 2004 as compared to March 31, 2003 was due to
the higher average balances of outstanding debt during the current year.

     Amortization of deferred debt discount of $233,000 and $6,000 for the three
months ended March 31, 2004 and March 31,  2003,  respectively,  represents  the
amount of amortization  for the quarters of $294,000 and $56,000,  respectively,
the fair value of stock options and warrants  granted to certain  noteholders as
explained in Note 6 to the consolidated financial statements.  Such amounts were
expensed  during the  quarter  as the loan was  received  and repaid  during the
quarter  ended March 31, 2004 and the bridge  loan is being  amortized  over the
period  March 11, 2004 through  June 12, 2004 the life of the  promissory  note.
Loans received during the quarter ended March 31, 2003 were being amortized over
the 14-month life of the related notes through April 2004.

     The Company reviews it long-lived assets for impairment whenever changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  SFAS 142 requires that an  impairment  test for goodwill and other
intangible assets be performed in two steps, (i) determine impairment based upon
fair valve of a reporting  unit as compared to its carrying  value,  and (ii) if
there is an  impairment,  measure the  impairment  loss by comparing the implied
fair  value of  goodwill  with  the  carrying  amount  of the  goodwill.  Due to
continued losses realized by the All Care Medical Products division,  closing of
a store  location,  continued cash flow  difficulties  and the loss of key sales
employees,  during the period management determined that a $1,857,000 impairment
charge,  representing the remaining carrying value of the goodwill,  be recorded
during the quarter ended March 31, 2004.  Additionally,  the Company  recorded a
charge  for the  impairment  of  other  intangibles  in the  amount  of  $70,000
(covenant  not to  compete)  relative  to the All Care  Medical  Products  asset
acquisition,  since this asset has no future benefit. This amount was charged to
expense during the quarter ended March 31, 2004. (See Note 3)

                                      -14-

<PAGE>




     The Six Months Ended March 31, 2004  Compared to the Six Months Ended March
31,2003.

     For the six months ended March 31, 2004, sales decreased by $1,184,000,  or
37%, to  $2,011,000  as compared to $3,195,000 in the six months ended March 31,
2003.  The decrease is primarily  attributable  to a lack of sufficient  working
capital to purchase the product  needed to maintain  historical  volume  levels,
additionally  the loss of  sales,  from  professional  staff  who have  left the
Company.

     Gross  profit for the six  months  ended  March 31,  2004 was 68%, a slight
decrease of 1% from the 69% recorded in the prior year comparable  period.  This
was a result of the sales mix in both six month  periods  being  relatively  the
same.  Even though during the quarter there was a decline in our durable medical
equipment  ("DME")  rentals and such  revenue  generates  somewhat  higher gross
profit than other sales.

     Selling, general and administrative expenses totaled $2,091,000 for the six
months  ended March 31, 2004  compared to  $2,680,000  for the six months  ended
March 31, 2003.  The net decrease of  $589,000,  or 22%,  consists of a non-cash
charge for stock option compensation of $114,000 as no stock option compensation
was  incurred  during  the six months  ended  March 31,  2004,  a  reduction  in
professional fees and other related expenses of $116,000; a reduction of $54,000
in rent and related occupancy expense.  Additionally during the six months ended
March 31, 2004 there were charges for commitment fees and bad debt provisions of
$26,000 and $57,000 respectively as compared with $125,000 and $304,000,  during
the six months ended March 31, 2003. The commitment  fees and due diligence fees
paid in 2003 were to two  potential  asset  based  lenders,  this  resulted in a
reduction  of $210,000  for the six months  ended March 31,  2004. A billing and
collection service was contracted on October 1, 2003. The net savings during the
six months  ended March 31, 2004 for the use of this  service as compared to the
payroll and related expenses was $51,000. In addition,  there was a net decrease
of approximately $44,000 in all other expenses.

     Interest  expense was  $139,000  for the six months ended March 31, 2004 as
compared to $62,000 for the six months  ended March 31, 2003.  Interest  expense
incurred in the six months  ended March 31,  2004  included  $84,000 of interest
expense recorded with the issuance of common stock. Interest expense incurred in
the six months ended March 31, 2003 included $50,000 of amortization of deferred
interest.  The amount of net interest paid in cash  increased by $33,000 for the
six months  ended March 31,  2004 due to the payment of interest on  outstanding
loans to investors  from  additional  debt which was raised (bridge loan) during
the three months ended March 31, 2004. Additionally during the current six month
period the  interest  expense  increased  due to the higher  average  balance of
outstanding debt, during the current year.

     Amortization  of deferred  debt discount of $245,000 and $6,000 for the six
months ended March 31, 2004 and March 31,  2003,  respectively,  represents  the
amount of amortization for the quarters of the $294,000 and $56,000 respectively
the fair value of stock options and warrants  granted to certain  noteholders as
explained in Note 6 to the consolidated financial statements.  Such amounts were
expensed  during the  quarter  as the loan was  received  and repaid  during the
quarter  ended March 31, 2004 and the bridge  loan is being  amortized  over the
period from March 11,  2004  through  June 12,  2004 the life of the  promissory
note.  Loans  received  during the six months  ended  March 31,  2003 were being
amortized over the 14-month life of the related notes through April 2004.


Liquidity and Capital Resources

     The Company's  primary  needs for  liquidity and capital  resources are the
funding of operating and  administrative  expenses  related to the management of
the Company and its subsidiaries.

     Subsequent to March 31, 2004 the Company  consummated  the  Acquisition  of
RKDA (See Note 2). This  transaction  was  preceded  by the Company  obtaining a
bridge loan in the amount of $1.5 million. Simultaneous with the RKDA Merger the
Company  completed  the minimum  amount of $8 million of a  Regulation D Private
Placement (the "Offering"). The Company subsequently sold an additional $245,000
of securities  and  terminated  the  Offering.  The Company sold an aggregate of
32,980,000  shares at $0.25 per share together with  3,298,000  Class A Warrants
exercisable  for 7 years  at $0.50  per  share.  The  Placement  agent  received
warrants to purchase  2,298,000  shares,  exercisable  on a cashless basis for 7
years at $0.50 per share.  The Placement  Agent also received a 10%  commissions
and reimbursement of out-of-pocket  expenses. The Company advanced $5 million of
the net  proceeds to complete  the RKDA Merger as  described in Note 2, and used
the balance of the proceeds to repay indebtedness and for working capital.



                                      -15-

<PAGE>


     On May 7, 2004, Arcadia Services, Inc. and three wholly-owned  subsidiaries
entered into a Loan Agreement  with Comerica  Bank.  The agreement  provides the
borrowers with a revolving  credit  facility of up to $12 million through May 7,
2006.  The initial  advance on May 7, 2004,  was in the amount of $11.5 million.
The initial  advance was  immediately  distributed  up to RKDA,  Inc., to fund a
portion of the purchase  price of the capital  stock of Arcadia by RKDA from the
seller and to pay expenses  associated with the transaction.  All other advances
under the credit  facility  shall be used solely for working  capital  purposes.
RKDA granted  Comerica  Bank a first  priority  security  interest in all of the
issued and outstanding  capital stock of Arcadia.  The Arcadia  subsidiaries and
Arcadia  granted  the bank a security  interest  in all of their  assets and the
seller subordinated $500,000  indebtedness of Arcadia to Arcadia's  indebtedness
to Comerica  Bank.  RKDA and its former  principals,  Elliott and Kuhnert,  each
executed a personal  guaranty to Comerica over all  indebtedness  of Arcadia and
its subsidiaries.

     Advances  under the credit  facility  bear interest at the  prime-rate  (as
defined)  or  the  Eurodollar-based  rate  (as  defined),  at  the  election  of
borrowers.  Arcadia agreed to various  financial  covenant  ratios;  to have any
person who acquires  Arcadia  capital stock pledge such stock to Comerica  Bank,
and along with Elliott and Kuhnert, to customary negative covenants.

ITEM 3. CONTROLS AND PROCEDURES

     An evaluation was performed,  as of March 31, 2004,  under the  supervision
and with the participation of our current Executive Vice President,  who was the
Chief Executive  Officer on such date, and our Chief Financial  Officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  Based on such  evaluation,  these persons have  concluded  that our
disclosure  controls and procedures  were effective as of March 31, 2004.  There
have been no  significant  changes in our internal  controls or in other factors
that could  significantly  affect our internal controls  subsequent to March 31,
2004, other than the RKDA Merger.

PART II

ITEM 1.  LEGAL PROCEEDINGS

     Please  see  Note 4 to  the  consolidated  financial  statements  which  is
incorporated herein by reference.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     (a) The sole material  modification  to the rights of the holders of Common
Stock was the elimination of preemptive  rights at the Company Annual meeting of
Shareholders  held on May 4, 2004.  Preemptive rights are the rights of existing
stockholders,  subject to various  exemptions,  to  subscribe  for new shares of
capital  stock to be  issued by a  company  increasing  its  issued  shares,  in
preference to persons who are not  stockholders.  The effect of the amendment to
the Company's  Articles of Incorporation was to make it clear that the Company's
stockholders do not have any have preemptive rights arising pursuant to Sections
78.265 and 78.267 of the Nevada revised Statutes. Because the Company was formed
after 1991,  Section 78.267 of the Nevada revised  Statutes should apply and the
Company's  stockholders  should not have had preemptive rights.  Therefore,  the
Company  believes  it was in its best  interest  to adopt  an  amendment  to the
Articles of Incorporation to expressly eliminate preemptive rights.

     (b) On February 3, 2004,  the Company  entered into an Amended and Restated
Promissory  Note for a total of $500,000  (the  "Restated  Note")  with  Stephen
Garchik,  Trustee ("Garchik") and simultaneously executed a related stock option
agreement and a registration rights agreement in favor of Garchik.  The Restated
Note is comprised of $250,000  previously loaned to the Company in February 2003
and originally due in April 2004, and an additional  $250,000,  which was loaned
to the Company on  February 3, 2004.  The loan was repaid on March 12, 2004 from
the bridge financing proceeds which the Company received on March 11, 2004.

     The stock  option  agreement  provides  Garchik  with  ten-year  options to
acquire 500,000 shares of the Company's  common stock at $0.25 per share and all
such options vested upon grant and the registration  rights  agreement  provides
Garchik with certain piggyback registration rights in the event that the Company
files a registration  statement.  The Restated Note bears interest at Prime,  as
published  in the Wall Street  Journal  (4% as of March 1,  2004),  plus one and
principal and all accrued interest was due June 30,  2004,which was paid in full
on March 12, 2004. (See Note 6 to the consolidated financial statements).  There
was no underwriter involved in this transaction and no underwriting discounts or
commissions  were paid. The issuance of the Note and the stock option  agreement
were exempt from registration  pursuant to Section 4(2) of the Securities Act of
1933, as amended, since the transaction did not involve any public offering.

                                      -16-

<PAGE>



     The Company  obtained a bridge loan on March 11,  2004.  The Bridge loan is
for $1.5 million,  is evidenced by a 12%  subordinated  Promissory Note due June
12, 2004,  unless  prepaid.  If the Note is repaid  before  maturity the Company
shall  pay a 1%  termination  fee to the  lender.  The  bridge  lender  received
warrants to purchase 250,000 shares of Common Stock  exercisable for seven-years
at $0.50 per share. There was no underwriter involved in this transaction and no
underwriting  discounts or  commissions  paid.  The issuance of the Note and the
warrants  were  exempt  from  registration  pursuant  to  Section  4 (2)  of the
Securities Act of 1933, as amended,  since the  transaction  did not involve any
public offering.

     On May  7,  2004,  the  Company  completed  the  minimum  $8  million  of a
Regulation D Private Placement (the "Offering").  The Company  subsequently sold
an additional  $245,000 of securities and  terminated the Offering.  The Company
sold an  aggregate  of  32,980,000  shares  at $0.25  per  share  together  with
3,298,000  Class A  Warrants  exercisable  for 7 years at $0.50 per  share.  The
Placement Agent received warrants to purchase 2,298,000 Shares, exercisable on a
cashless basis for 7 years at $0.50 per share. The Placement Agent also received
a 10% sales commission and reimbursement of out-of-pocket  expenses. The Company
advanced  $5  million  of the  net  proceeds  to RKDA  as  described  in Note 2;
approximately  $164,000 for the  repayment of  indebtedness  and the balance for
working capital. The offering was exempt from registration pursuant to Section 4
(2) of the  Securities  Act of 1933,  as amended,  and Rule 506 of  Regulation D
under the  Securities  Act since the  transaction  did not  involve  any  public
offering.

     On May 13,  2004,  David S.  Bensol  converted  $150,000  of his debt  into
600,000  shares of the  Company's  common stock at $0.25 per share,  plus 60,000
Class A warrants  identical to those issued in connection with the Company's May
7, 2004  Offering,  pursuant to a resolution of the Board of Directors on May 4,
2004. There was no underwriter  involved in this transaction and no underwriting
discounts or  commissions  paid.  The issuance of the  securities is exempt from
registration  pursuant to Section 4 (2) of the  Securities  Act of 1933,  as the
transaction did not involve any public offering.

     On May 25, 2004, the Company entered into separate  Agreements with certain
managerial  employees of Arcadia  Services,  Inc.,  Cathy Sparling,  Lakshumanan
Sundaram, Barbara Gay and Phyllis Pheeney, that entitled Sparling,  Sundaram and
Gay to each purchase  200,000  shares of Company common stock at $0.25 per share
and  Phenney to purchase  240,000  shares of Company  common  stock at $0.25 per
share.  Pursuant  to the  terms  of the  Subscription  Agreements,  each  of the
subscribers  have a period of fifteen days to rescind the purchase and receive a
refund of the entire purchase price.  There was no underwriter  involved in this
transaction and no underwriting  discounts or commissions  paid. The issuance of
the  securities  is exempt  from  registration  pursuant to Section 4 (2) of the
Securities Act of 1933, as the transaction did not involve any public offering.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                  None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          (a)  On  May  4,  2004,   the  Company  held  its  Annual  Meeting  of
               Shareholders.

          (b)  David S.  Bensol,  Bradley  Smith,  Mitchell  Cooper and  Barbara
               Levine  were  reelected  to  the  Board  of  Directors.   Delbert
               Spurlock, Jr. did not stand for re-election.


          (c)          Name              For                Withheld Authority
                -----------------     ------------          ------------------
                 David S. Bensol       20,654,497                  2,018

                 Bradley Smith         20,654,497                  2,018

                 Mitchell Cooper       20,654,497                  2,018
                 Barbara Levine        20,654,497                  2,018


          Proposal 2 - the amendment to the Company's  Articles of Incorporation
          to amend the par value and increase the number of  authorized  shares,
          20,546,097  shares voted in favor,  110,418 shares voted against and 0
          shares abstained.

                                      -17-
<PAGE>



          Proposal 3 - the amendment to the Company's  Articles of Incorporation
          to authorize the issuance of serial preferred stock, 15,883,149 shares
          voted in favor, 93,318 shares voted against and 500 shares abstained.


          Proposal 4 - the amendment to the Company's  Articles of Incorporation
          to  eliminate  preemptive  rights,  15,862,649  shares voted in favor,
          11,618 shares voted against and 2,500 shares abstained.


          Proposal 5 - ratifying  the  selection of Marcum & Kliegman LLP as the
          Company's  independent  auditors and  accountants  for the fiscal year
          ending  September 30, 2004,  20,650,997  shares voted in favor,  5,518
          shares voted against and 0 abstained.


          (d) None


ITEM 5.  OTHER INFORMATION

                  None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(A)      EXHIBITS

     31.1 Certification  of  the  Chief  Executive   Officer  required  by  rule
          13a-14(a) or rule 15d-14(a)

     31.2 Certification  of  the  Chief  Financial   Officer  required  by  rule
          13a-14(a) or rule 15d-14(a)

     32.1 Chief Executive Officer  Certification  Pursuant to 18 U.S.C.  Section
          1350, as Adopted Pursuant to Section 206 of the  Sarbanes-Oxley Act of
          2002

     32.2 Chief Financial Officer  Certification  Pursuant to 18 U.S.C.  Section
          1350, as Adopted Pursuant to Section 206 of the  Sarbanes-Oxley Act of
          2002

         (B)      REPORTS ON FORM 8-K

     1.   The  Company  filed a Report on Form 8-K on March  10,  2004 to report
          that the  Company  has  signed a  non-binding  letter of  intent  with
          certain  unaffiliated persons to acquire their company RKDA, which had
          a  binding  agreement  to  purchase  all of  the  capital  stock  of a
          privately held company engaged in the healthcare industry.


     2.   The Company  filed a Report on Form 8-K on May 24, 2004 to report that
          the Company had completed  the minimum $8 million of the  Regulation D
          Private  Placement,  and the RKDA Merger,  and the resultant change of
          control.


                                      -18-
<PAGE>



                                   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.

CRITICAL HOME CARE, INC.
June 10, 2004

              By:     /s/ John E. Elliott, II            /s/ Eric S. Yonenson
                      -------------------               ---------------------
                      John E. Elliott II                Eric S. Yonenson
                      Chief Executive Officer           Chief Financial Officer


































                                      -19-