UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q/A

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x   Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2004

OR

o   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 000-31249

CRITICAL HOME CARE, INC.(Exact name of registrant as specified in its charter)

|NEVADA                                                           |  | 88-0331369                   
|---------------------------------------------------------------- |  | -----------------------------
|(State or other jurisdiction of
  incorporation or organization) |  | (I.R.S. Employer I.D. Number)
|                                                                 |  |                              
|26777 CENTRAL PARK BLVD., SUITE 200
  SOUTHFIELD, MI             |  | 48076                        
|(Address of principal executive
  offices)                       |  | Zip Code                     

Registrants telephone no.: 248-352-7530

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.x Yes     o No

Indicate by
check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange
Act).o Yesx No

As of
August 16, 2004, there were 79,023,351 shares of common stock, $0.001 par
value, of the Registrant  outstanding.

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Part I:  Financial Information

Item
1.          Financial
Statements

The
financial statements of the Registrant included herein have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission.  Although certain
information normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
has been condensed or omitted, the Registrant believes that the disclosures are
adequate to make the information presented not misleading.  Readers are urged to carefully review and
consider the various disclosures made by us in this quarterly report on Form
10-Q, our Current Report on Form 8-K/A filed on July 23, 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 operation and prospects.

The
consolidated financial statements included herein reflect all adjustments,
consisting only of normal recurring items, which, in the opinion of management,
are necessary to present a fair statement of the results for the interim
periods presented.

The
results for interim periods are not necessarily indicative of trends or results
to be expected for a full year.



2

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Critical
Home Care, Inc.
Consolidated
Balance Sheet
(Unaudited)

SuccessorJune 30,2004
        
     PredecessorMarch 31,2004AssetsCurrent AssetsCash
     
     $
     574,482
        
     $
     Accounts receivable, net of allowance of $1,567,000 and
     
     15,193,378
        
     13,478,381$848,000, respectivelyInventory
     
     503,450
        
     Prepaid expenses and other current assets
     
     263,369
        
     133,547Deferred income tax
     
     683,000
        
     Total Current Assets
     
     17,217,679
        
     13,611,928Fixed AssetsEquipment
     
     711,806
        
     Furniture and fixtures
     
     120,533
        
     6,251Leasehold improvements
     
     2,685
        
     7,208Software
     
     
        
     61,619835,024
        
     75,078Accumulated depreciation and amortization
     
     (263,729
        )
     (73,067)Net Fixed Assets
     
     571,295
        
     2,011Other AssetsGoodwill
     
     22,542,857
        
     3,589,191Deferred income tax
     
     90,000
        
     Deferred financing costs, net of accumulated amortization of $7,000
     
     73,688
        
     Total Other Assets
     
     22,706,545
        
     3,589,191$
     40,495,519
        
     $
     17,203,130




3

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SuccessorJune 30,2004
        
     PredecessorMarch 31,2004Liabilities and Stockholders EquityCurrent LiabilitiesChecks issued against future deposits
     
     $
     
        
     $
     1,116,143Accounts payable
     
     932,285
        
     Accrued expensesCompensation and related taxes
     
     2,235,983
        
     1,573,267Commissions
     
     406,483
        
     470,326Other
     
     12,618
        
     239,489Accrued Interest
     
     211,427
        
     Due to related parties
     
     1,185,025
        
     1,143,804Note payable - Officer
     
     554,000
        
     Loans - current portion
     
     2,081,969
        
     Total Current Liabilities
     
     7,619,790
        
     4,543,029Long Term Debt,
     Less Current Portion
     
     11,916,646
        
     Due to Related Parties
     
     398,401
        
     429,829Total Liabilities
     
     19,934,837
        
     4,972,858Commitments and ContingenciesStockholders EquityCommon stock
     $.001 par value, 150,000,000 shares authorized,
     
     79,023
        
     94879,023,351 shares issued and outstanding (Successor)Additional paid-in capital
     
     20,619,953
        
     7,627,047Retained earnings
     
     (138,294)
        
     4,602,277Total Stockholders' Equity
     
     20,560,682
        
     12,230,272$  40,495,519
        
     $
     17,203,130


4

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Critical
Home Care, Inc.
Consolidated  Statements of Income
(Unaudited)

Predecessor
     
     
     SuccessorPeriod From
     April 1, 2004
     To
     May 9, 2004
     
     Three Months
     Ended
     June 30, 2003
     
     
     Period from
     May 10, 2004
     To
     June 30, 2004Net Sales
     
     $
        9,486,601
     
     $
        18,207,662
     
     
     $
        13,621,057Cost of Sales
     
     
        8,120,463
     
     
        15,470,261
     
     
     
        11,499,987Gross Profit
     
     
        1,366,138
     
     
        2,737,401
     
     
     
        2,121,070General and Administrative Expenses
     
     
        886,916
     
     
        1,911,501
     
     
     
        2,017,846Operating Income
     
     
        479,222
     
     
        825,900
     
     
     
        103,224Other ExpensesImpairment of Goodwill
     
     
        16,055
     
     
        -
     
     
     
        -Interest Expense, Net
     
     
        -
     
     
        -
     
     
     
        244,282Amortization of Debt Discount
     
     
        -
     
     
        -
     
     
     
        35,234Total Other Expenses
     
     
        16,055
     
     
        -
     
     
     
        279,516Operating Income (Loss) Before Income Tax Benefit
     
     
        463,167
     
     
        825,900
     
     
     
        (176,292)Income Tax Benefit
     
     
        -
     
     
        -
     
     
     
        60,000Net Income (Loss)
     
     $
        463,167
     
     $
        825,900
     
     
     $
        (116,292)Unaudited pro forma amounts to reflect pro formaIncome Taxes  fromtax status change
  
     
        158,000
     
     
        282,000Pro Forma Income After Income Taxfrom tax status change
  
     
        305,167
     
     
        543,900Income (Loss) Per Share:Basic
     
        0.49
     
     
        0.87
     
     
     
        (0.00)Diluted
  
     
        0.49
     
     
        0.87
     
     
     
        (0.00)Proforma Income Per Share:Basic
     
        0.32
     
     
        0.57Diluted
  
     
        0.32
     
     
        0.57Weighted average number of shares (in thousands):Basic
  
     
        948
     
     
        948
     
     
     
        67,023Diluted
  
     
        948
     
     
        948
     
     
     
        86,632


5

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Table of Contents

Critical
Home Care, Inc.
Consolidated  Statements of Cash Flows
(Unaudited)

Predecessor
    
    SuccessorPeriod from
      April 1, 2004
      To
      May 9, 2004
    
    Predecessor
      Three Months
      Ended
      June 30, 2003
    
    Period From
      May 10, 2004
      To
      June 30, 2004CASH FLOWS
      FROM OPERATING ACTIVITIESNet Income (Loss)
    
    
    $
    463,167
    
    $
    825,900
    
    $
    (116,292
    )Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activitiesProvision
      for bad debts
    
    
    
    42,192
    
    
    103,000
    
    
    67,333Depreciation
      and amortization
    
    
    
    77
    
    
    5,790
    
    
    123,554Amortization
      of debt discount and deferred financing costs
    
    
    
    
    
    
    
    
    
    41,933Investments
      write off
    
    
    
    16,055
    
    
    
    
    
    Changes in operating assets and liabilitiesAccounts
      receivable
    
    
    
    (692,193
    )
    
    156,739
    
    
    35,611Inventory
    
    
    
    
    
    
    
    
    
    (39,101
    )Prepaid
      expenses and other current assets
    
    
    
    27,903
    
    
    5,490
    
    
    (70,296
    )Checks
      issued against future deposits
    
    
    
    (314,025
    )
    
    (112,976
    )
    
    (850,125
    )Accounts
      payable
    
    
    
    42,823
    
    
    (88,376
    )
    
    227,143Accrued
      expenses and other current liabilities
    
    
    
    (301,999
    )
    
    383,696
    
    
    (548,723
    )Due to
      related parties
    
    
    
    170,915
    
    
    (65,216
    )
    
    (161,122
    )NET CASH
      PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    
    (545,085
    )
    
    1,214,047
    
    
    (1,290,085
    )CASH FLOWS FROM
        INVESTING ACTIVITIESPurchases
      of affiliates
    
    
    
    (157,500
    )
    
    (31,000
    )
    
    Purchases of property and equipment
    
    
    
    
    
    
    (2,785
    )
    
    Proceeds
      from sale of equipment to affiliate
    
    
    
    
    
    
    
    
    
    1,779NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    
    (157,500
    )
    
    (33,785
    )
    
    1,779CASH
        FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of common stock
    
    
    
    
    
    
    
    
    
    1,262,500Payment of long-term debt
    
    
    
    
    
    
    
    
    
    (258,147
    )Advances (dividends) from stockholder
    
    
    
    702,585
    
    
    (1,180,262
    )
    
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    
    702,585
    
    
    (1,180,262
    )
    
    1,004,353NET INCREASE (DECREASE)
        IN CASH AND EQUIVALENTS
    
    
    
    
    
    
    
    
    
    (283,953
    )CASH
        AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    
    
    
    
    
    
    
    858,435CASH AND CASH EQUIVALENTS,
        END OF PERIOD
    
    
    
    
    
    
    
    
    
    574,482Supplementary
      information:Cash paid during the period for:Interest
    
    
    
    
    
    
    
    
    
    244,282




6

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

The
accompanying unaudited consolidated financial statements as of June 30, 2004,
and for the periods ended June 30, 2004 and 2003, have been prepared by the
Company in accordance with accounting principles generally accepted in the
United States of America. 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 months ended
June 30, 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 as of June 30, 2004 and for the period from
May 10, 2004 to June 30, 2004, include the accounts of Critical Home Care, Inc.
and its wholly owned subsidiaries (collectively referred to as Critical or
the Company).  The balance sheet as of
March 31, 2004 and the statements of income for the period from April 1, 2004 to
May 9, 2004, and for the three months ended June 30, 2003, include the accounts
of Arcadia Services, Inc. and subsidiaries prior to the effect of the
acquisition and merger described in Note 4. All significant inter company
balances and transactions have been eliminated in consolidation.

MERGER AND RECAPITALIZATION

Effective
May 10, 2004, CHC Sub, Inc., a wholly owned subsidiary of the Company, merged
with and into RKDA, Inc., a recently formed Michigan Corporation, (the RKDA
Merger).  RKDAs assets consist of all
of the capital stock of Arcadia Services, Inc. and the membership interest of
SSAC, LLC d/b/a Arcadia Rx.  RKDA
acquired Arcadia Services, Inc. on May 7, 2004 pursuant to a Stock Purchase
Agreement by and among RKDA, Inc., Arcadia Services, Inc., Addus HealthCare, Inc.,
and the principal stockholder of Addus HealthCare, Inc. (the Arcadia
Acquisition).  For descriptions of the
terms of the RKDA Merger and the Arcadia Acquisition, please refer to the Form
8-K filed with the Securities and Exchange Commission (the Commission) on May
24, 2004, as amended by the accompanying Form 8-K/A filed with the Commission
on July 23, 2004.

For
accounting purposes, the transaction between RKDA and Critical was considered a
reverse merger, and RKDA, Inc. will be considered the acquirer of the Company
for accounting purposes.

This
report should be read in conjunction with Consolidated Financial Statements of
Arcadia Services, Inc. and Subsidiaries for the Years Ended March 31, 2004 and
2003, included in
the Form 8-K/A filed with the Commission on July 23, 2004.

NOTE 2  DESCRIPTION OF BUSINESS

Critical is
incorporated in Nevada and based in Southfield, Michigan. The Company is a
national provider of staffing and homecare services, durable medical equipment
and mail order pharmaceuticals. The Companys medical staffing service includes
registered nurses, travel nurses, licensed practical nurses, certified nursing
assistants, respiratory therapists and medical assistants. The non-medical
staffing service includes light industrial, clerical, and technical personnel.
The homecare services include personal care aides, home care aides, homemakers,
companions, physical therapists, occupational therapists, speech pathologists
and medical social workers.  The Company
markets, rents and sells surgical supplies, orthotic and prosthetic products
and durable medical equipment, such as wheelchairs and hospital beds and also
provides oxygen and other respiratory therapy services and equipment. Clients
and patients are facilities and individuals residing at home. These services
are generally paid for by the clients themselves, insurance companies, medicare
and state medicaid waiver programs.

7

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NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles
of Consolidation  The consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation.

Use
of Estimates  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 as of the date of the financial statements, and revenue and
expenses during the reporting period. Actual results could differ from those
estimates.

Revenue
Recognition  Revenues are
recorded in the period the services were rendered at established rates.

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 fully reserved. The balance of any reserve, which
is established, is estimated based on the collection history from Company
records.  If actual collection
experience changes, revisions to the allowance may be required.  Any unanticipated change in customers
credit worthiness or other matters affecting the collectibility of amounts due
from such customers, could have a material effect on the results of operations
in the period in which such changes or events occur.  After all attempts to collect a receivable have failed, the
receivable is written off against the allowance.

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

8

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Fixed
Assets and Depreciation  The Companys policy is to depreciate or amortize
fixed assets over the estimated useful lives of the assets (3-15 years) by use
of the straight-line method.

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.

Goodwill -
Goodwill represents the excess of purchase price over net assets of businesses
acquired. Goodwill was previously amortized on the straight-line method over
periods ranging from seven to fifteen years. The Company follows Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets.  Accordingly, goodwill is not
amortized but is tested for impairment annually by comparing the fair value of
each reporting unit to its carrying value.

Earnings
(Loss) Per Share - The Company follows 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 income. 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 common shares, and outstanding warrants to acquire common
shares, have not been considered in the computation of dilutive loss per
share since their effect would be antidilutive.

Income
Taxes - Income taxes are accounted for under the asset and liability method.
Accordingly, deferred tax assets and liabilities are recognized currently for
the future tax consequences attributable to the temporary differences between
the financial statement carrying amounts of assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which those temporary differences
are expected to be recovered or settled. A valuation allowance is recorded to
reduce the carrying amounts of deferred tax assets if it is more likely than
not that such assets will not be realized.

9

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The
Company considers
all available evidence, both positive and negative, to determine whether, based
on the weight of that evidence, a valuation allowance is needed for some
portion or all of a net deferred tax asset. Judgment is used in considering the
relative impact of negative and positive evidence. In arriving at these
judgments, the weight given to the potential effect of negative and positive
evidence is commensurate with the extent to which it can be objectively
verified. The Company records a valuation allowance to reduce our deferred tax assets and
review the amount of such allowance annually. When the Company determines certain
deferred tax assets are more likely than not to be utilized, the Company will reduce
the
valuation allowance accordingly.

Prior to
May 10, 2004, Arcadia Services, Inc. elected to be taxed as a Subchapter S-corporation with the
individual shareholders reporting their respective share of income on their
income tax return. Accordingly, the Company has no deferred tax assets or liabilities
arising in prior periods.

The
Company has provided a valuation allowance for the deferred tax assets related to the
approximate $2,610,000 operating carryovers of Critical expiring through 2024.
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 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 net operating loss carryforwards will be
recorded at such time and to such extent, they are more likely than not to be
realized.

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.

|                                                                                                                                                       |                             | SuccessorFor the Period
  Ended
  June 30, 2004 |   | PredecessorFor the Three 
  Months Ended
  June 30, 2003 |         
|------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------- | ----------------------------------------------- | - | -------------------------------------------------------- | --------
|                                                                                                                                                       |                             |                                                 |   |                                                          |         
|Net income (loss) as reported                                                                                                                          |                             |                                                 | $ | (116,292                                                 | )       
|                                                                                                                                                       |                             |                                                 |   |                                                          |         
|Less: Total stock-based employee
  compensation
            expense
  determined under the fair value
            method, net of
  related tax effects |                             |                                                 |   | (3,000                                                   | )       
|                                                                                                                                                       |                             |                                                 |   |                                                          |         
|                                                                                                                                                       | Pro Forma net income (loss) |                                                 |   | $                                                        | (119,292
|                                                                                                                                                       |                             |                                                 |   |                                                          |         
|Net income (loss) per share:                                                                                                                           |                             |                                                 |   |                                                          |         
|Basic and diluted income per share as
  reported                                                                                                       |                             |                                                 | $ | 0.00                                                     |         
|Pro Forma basic and diluted income per
  share                                                                                                         |                             |                                                 | $ | 0.00                                                     |         

NOTE 4  MERGER TRANSACTION

Effective May 10, 2004 CHC Sub, Inc., a wholly owned subsidiary of Critical Homecare, Inc. merged
with and into RKDA, Inc., a recently formed Michigan Corporation,  RKDA's
assets consist of all of the capital stock of Arcadia Services, Inc. and the
membership interest of SSAC, LLC d/b/a Arcadia Rx.  RKDA acquired Arcadia
Services, Inc. on May 7, 2004 pursuant to a Stock Purchase Agreement by and
among RKDA, Inc., Arcadia Services, Inc., Addus Healthcare, Inc. and Addus
Healthcare's principal shareholder. The purchase price of Arcadia Services, Inc.
is $16.8 million and assumption of certain related liabilities.

The following unaudited pro forma statement of income has been prepared to give effect to the reverse
merger. RKDA, Inc. will be considered the acquirer of the Company for accounting purposes. This pro forma statement of income has
been prepared as if the merger had been completed as of April 1, 2004.

The unaudited pro forma statement of income is presented for illustrative purposes only and is not
necessarily indicative of the results of operation that would have actually been reported had the merger occurred on April 1, 2004,
nor is it necessarily indicative of the future results of operation. The pro forma statement of income has been prepared based upon
the Company's financial information.

10

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Three Months
     Ended
     June 30, 2004Pro forma revenue
     
     
     $
     23,580,408Pro forma net income
     
     
     $
     66,940Pro forma earnings per
     shareBasic
     $0.00Diluted
     $0.00Pro forma weighted averagecommon shares (in thousands)Basic
     67,023Diluted
     86,632


NOTE 5  NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt at June 30, 2004, are summarized as
follows:

|Notes
  payable, officer, issued from May 2003 through December 2003 pursuant to
  working capital loans from an officer of the Company bearing interest at 8%
  per annum and due in May 2004 through December 2004.                                                                                                                                                                                                                                                                                                                                       |  | $ | 554,000    | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ---------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|Long Term                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   |            | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|Notes
  payable, bridge loan made to the Company on June 12, 2004, evidenced by a 12%
  Subordinated Convertible Promissory Note. The Note shall be due and payable
  in four installments, December 31, 2004, March 31, 2005, July 15, 2005 and
  October 15, 2005. If the note is repaid before the maturity date the Company
  shall pay a 2.5% prepayment fee to the lender. The bridge lender received
  conversion rights to convert all of the outstanding principal under this note
  into shares of common stock at a rate of one share per $0.50. |  | $ | 1,500,000  | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|Revolving
  Line of Credit US Bank dated February 17, 2004 with a Credit limit of
  $250,000, bearing interest at prime +1%, and maturing on February 17, 2005.                                                                                                                                                                                                                                                                                                                                                                                             |  | $ | 70,000     | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|Note payable

  due by December 31, 2004 and July 1, 2005 with
  interest rates of 8% and 12% for the purpose of working capital                                                                                                                                                                                                                                                                                                                                                                                                                            |  | $ | 400,000    | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|Note payable
  party dated May 7, 2004 for the Arcadia acquisition with
  interest at 12% payable in one year, accrued interest will be waived if note
  is paid by the maturity date                                                                                                                                                                                                                                                                                                                                                                       |  | $ | 500,000    | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|Revolving
  Line of Credit with Comerica dated May 7, 2004 for the Arcadia acquisition
  for a two year term and a credit limit of $12,000,000. The formula base is
  85% of the eligible accounts receivable and an overformula advance of $1,000,000. The term on the overformula is one
  year. On the 7th day of each month the overformula amount shall be
  reduced by $83,333. On July 29, 2004, the credit limit was increased to
  $14,400,000.                                                                                                    |  | $ | 11,443,817 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | $ | 84,798     | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | $ | 13,998,615 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|Less - Current portion of long term                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | $ | 2,081,969  | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | $ | 11,916,646 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 

11

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COMERICA BANK CREDIT AGREEMENT

On May 7,
2004, Arcadia Services, Inc. and three of its wholly owned-subsidiaries entered into a
Credit Agreement with Comerica Bank. The agreement provides the borrowers with
a revolving credit facility of up to $12 million through May 7, 2006 (on July
29, 2004, the credit limit was increased to $14,400,000). The
initial advance on May 7, 2004, was in the amount of $11 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, Messrs. 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
Messrs. Elliott and Kuhnert, to customary negative covenants.

12

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NOTE 6  Stockholders Equity

On May 10,
2004, CHC Sub, Inc., a wholly-owned subsidiary of Critical, consummated an
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.
An officer of the Company 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. on May 7, 2004. 
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 by the Company 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 on May 27, 2004. 
The offering also included 3,298,000 Class A Warrants to purchase
3,298,000 common shares of stock over seven years 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.

Three
officers of the Company escrowed 6 million, 4 million and 2 million shares
of the Companys 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 Messrs. Elliott and Kuhnert, and
the Company, in the case of Mr. 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 the 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 Messrs. Elliott and Kuhnert, and the Company, in the case
of Mr. 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 Mr. Bensol, and RKDAs, in the case of Messrs. 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 at $1.00 per share, even if the EBITDA
thresholds are not met.

On
May 25, 2004, the Company entered into separate agreements with certain
managerial employees of Arcadia Services, Inc., that entitled the employees to
each purchase 200,000 and 240,000 shares, of the Company's common
stock at $0.25 per share.

13

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NOTE 7  COMMITMENTS

EMPLOYMENT AGREEMENTS

Three
officers of the Company 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 Messrs. Elliott, Kuhnert,
or  Bensols employment 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s employment 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.

Arcadia Services, Inc. entered
into an employment agreement with Cathy Sparling effective April 1, 2000 for a initial three year term and extended for another
three year term. The employment agreement expires on April 1, 2006. The term of the agreement is base salary and an annual bonus
not to exceed 50% of base salary.  The agreement may be terminated by any party for any reasons upon thirty days prior written
notice of termination.

Messrs.
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 exercised by Messrs. Elliott and Kuhnert as long as they are employed by
the Company and for one year from termination for any reason provided they have
achieved the EBITDA milestones.

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Table of Contents

SETTLEMENT OF CERTAIN LIABILITIES

In May
2004, David S. Bensol, Robert Rubin, and Kenneth Orr 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 from $1.00 per share to $0.50 per
share. The Companys debt  of $150,000 to Cleveland is considered paid in full.

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
(See Note 6), pursuant to a resolution of the Board of Directors dated May
4, 2004.

15

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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 hereunto
duly authorized.

|Critical Home Care, Inc.      |  |                                                                             
|----------------------------- |  | ----------------------------------------------------------------------------
|                              |  |                                                                             
|By:  /s/ John E. Elliott II   |  | By:  /s/ Lawrence R. Kuhnert                                                
|                              |  |                                                                             
|John E.
  Elliott II          |  | Lawrence
  R. Kuhnert                                                       
|                              |  |                                                                             
|Its:
  Chairman of the Board  |  | Its: Vice
  Chairman of Finance                                             
|and
  Chief Executive Officer |  | (Principal
  Financial and                                                  
|                              |  | Accounting
  Officer),
        President and Chief
        Operating Officer
|                              |  |                                                                             
|Dated: September 1, 2004      |  |                                                                             

24