Table of Contents

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

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FORM 10-Q

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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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Table of Contents

|            |                                                                                         | Page No.
|----------- | --------------------------------------------------------------------------------------- | --------
|            |                                                                                         |         
|            | Part I: 
  Financial Information                                                        |         
|            |                                                                                         |         
|Item 1.     | Financial Statements.                                                                   | 3       
|            |                                                                                         |         
|Item 2.     | Management's Discussion and  Analysis of Financial Condition and Results of Operations. | 16      
|            |                                                                                         |         
|Item 3.     | Controls and Procedures.                                                                |         
|            |                                                                                         | 19      
|            | Part II: 
  Other Information                                                           |         
|            |                                                                                         |         
|Item 1.     | Legal Proceedings.                                                                      | 20      
|            |                                                                                         |         
|Item 2.     | Changes in Securities and Use of Proceeds.                                              | 20      
|            |                                                                                         |         
|Item 3.     | Defaults Upon Senior Securities.                                                        | 21      
|            |                                                                                         |         
|Item 4.     | Submission of Matters to a Vote of Security Holders.                                    | 22      
|            |                                                                                         |         
|Item 5.     | Other Information.                                                                      | 22      
|            |                                                                                         |         
|Item 6.     | Exhibits and Reports on Form 8-K (§249.308 of this chapter).                            | 23      
|            |                                                                                         |         
|Signatures. | 24                                                                                     



2

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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.



3

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

June 30,
     
     2004
        
     2003AssetsCurrent AssetsCash
     
     $
     574,482
        
     $
     -Accounts receivable, net of allowance of $1,567,000 and
     
     15,193,378
        
     11,821,748$848,000 in 2004 and 2003, respectivelyInventory
     
     503,450
        
     0Prepaid expenses and other current assets
     
     263,369
        
     241,762Deferred income tax
     
     683,000
        
     0Total Current Assets
     
     17,217,679
        
     12,063,510Fixed AssetsEquipment
     
     711,806
        
     0Furniture and fixtures
     
     120,533
        
     6,251Leasehold improvements
     
     2,685
        
     7,208Software
     
     0
        
     61,619835,024
        
     75,078Accumulated depreciation and amortization
     
     (263,729
        )
     (59,212)Net Fixed Assets
     
     571,295
        
     15,866Other AssetsGoodwill
     
     22,542,857
        
     2,686,607Deferred income tax
     
     90,000
        
     0Deferred financing costs, net of accumulated amortization of $7,000
     
     73,688
        
     0Total Other Assets
     
     22,706,545
        
     2,686,607$
     40,495,519
        
     $
     14,765,983




4

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June 30,
     
     2004
        
     2003Liabilities and Stockholder's EquityCurrent LiabilitiesChecks issued against future deposits
     
     $
     0
        
     $
     42,395Accounts payable
     
     932,285
        
     0Accrued expensesCompensation and related taxes
     
     2,235,983
        
     1,347,772Commissions
     
     406,483
        
     244,025Other
     
     12,618
        
     429,946Accrued Interest
     
     211,427
        
     0Due to related parties
     
     1,185,025
        
     1,187,774Note payable - Officer
     
     554,000
        
     0Loans - current portion
     
     2,081,969
        
     0Total Current Liabilities
     
     7,619,790
        
     3,251,912Long Term Debt
     Less Current Portion
     
     11,916,646
        
     0Due to Related Parties
     
     398,401
        
     66,890Total Liabilities
     
     19,934,837
        
     3,318,802Commitments and ContingenciesStockholder's EquityCommon stock
     $.001 par value, 150,000,000 shares authorized,
     
     79,023
        
     94879,023,351 shares issued and outstandingAdditional paid-in capital
     
     2,619,953
        
     7,627,047Retained earnings
     
     (138,294)
        
     3,819,186Total Stockholder's Equity
     
     20,560,682
        
     11,447,181$  40,495,519
        
     $
     14,765,983




5

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



Predecessor
     
     
     SuccessorPeriod From
     April 1, 2004
     To
     May 9, 2004
     
     Thee 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 Expenses (Income)Impairment of Goodwill
     
     
        16,055
     
     
        -
     
     
     
        -Other Income
     
     
        -
     
     
        -
     
     
     
        -Interest Expense (Income), Net
     
     
        -
     
     
        -
     
     
     
        244,282Amortization of Debt Discount
     
     
        -
     
     
        -
     
     
     
        35,234Total Other Expenses (Income)
     
     
        16,055
     
     
        -
     
     
     
        279,516Operating Income Before Income Tax Expense
     
     
        463,167
     
     
        825,900
     
     
     
        (176,292)Income Tax Expense (Benefit)
     
     
        -
     
     
        
     
     
     
        (60,000)Net Income
     
     $
        463,167
     
     $
        825,900
     
     
     $
        (116,292)Unaudited pro forma amounts to reflect pro formaIncome Taxes and adjustment of tax
     benefit fromtax status change (Note 3)
  
     
        158,000
     
     
        282,000Pro Forma Income After Income Taxfrom tax status change
  
     
        305,167
     
     
        543,900Income (Loss) Per Share:Basic
     
        0.01
     
     
        
     
     
     
        (0.00)Diluted
  
     
        0.01
     
     
        
     
     
     
        (0.00)Weighted average number of shares (in thousands):Basic
  
     
        67,023
     
     
        
     
     
     
        67,023Diluted
  
     
        86,632
     
     
        
     
     
     
        86,632




6

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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 to net cash usedProvision for bad debts
     42,192
        
     103,000
        
     67,333Depreciation and amortization
     
     
     
     77
        
     
     5,790
        
     
     123,554Amortization of debt discount and deferred financing costs
     
        
     
        
     41,933Forgiveness of debt
     
     
     
     
        
     
     
        
     
     Recording goodwill
     
        
     
        
     (27,573,252
        )Investments in affiliate write off
     
     
     
     16,055
        
     
     
        
     
     Changes in operating assets and liabilities
     Accounts 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
     (3,514,751
        )
     383,696
        
     (200,770
        )Increase in short term financing
     
     
     
     
        
     
     
        
     
     1,336,868Intercompany accounts
     
        
     
        
     6,207,399Due to related parties
     
     
     
     170,915
        
     
     (65,216
        )
     
     (101,838
        )Total adjustments
     
     
     
     (4,279,328
        )
     
     279,357
        
     
     6,544,891NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
     
     
     
     (3,757,838
        )
     
     1,214,047
        
     
     (20,911,833
        )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
     
     
     
     
        
     
     
        
     
     1,779Increase due from stockholder
     3,915,337
        
     (1,180,262
        )
     9,928,598NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
     3,757,837
        
     (1,214,047
        )
     9,930,377CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of common stock
  
  
  
  
  
  
  
  
  1,412,500Proceeds from deferred financing costsProceeds from convertible promissory notes
  
  
  
  
  
  
  
  
  (834,000
  )Debt issue costs
     
  
  
  
  
  
  
  
  
  10,527,150Proceeds from line of credit
  
  
  
  
  
  
  
  
  -Proceeds from bridge loan
     
  
  
  
  
  
  
  
  
  -Proceeds from notes payable - officer
  
  
  
  
  
  
  
  
  -Payment of long-term debt
     
  
  
  
  
  
  
  
  
  (258,147
  )Payment of notes payable - asset
     acquisition
  
  
  
  
  
  
  
  
  (150.000
  )Payment of notes payable - other
     
  
  
  
  
  
  
  
  
  -NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
     
        
     
        
     10,697,503NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
     (0
        )
     0
        
     (283,953
        )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     
     
     
     
        
     
     
        
     
     858,435CASH AND CASH EQUIVALENTS, END OF PERIOD
     (0
        )
     0
        
     574,482Supplementary information:Cash paid during the period for:Interest




7

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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
June 30, 2003 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.

8

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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.

9

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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.

10

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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 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 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.

|                                                                                                                                                       |                             | For the Period
  Ended
  June 30, 2004 |   | For 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 purpose 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.

11

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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. At closing the formula advance was $10,031,650
  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 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |   |            | 

12

---

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.

13

---

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.

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.  Three
officers of the Company have 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.

14

---

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.

15

---

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.

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

16

---

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-Q, our current report on Form 8-K 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 operations and
prospects. The forward-looking statements made in this Form 10-Q 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.

Critical Accounting Policies

The Company has identified the
following accounting policies that require significant judgment. The Company
believes its judgments relating to allowance for doubtful accounts and goodwill
are appropriate.

Allowance for doubtful accounts – The Company reviews all accounts receivable balances, and provides for an
allowance for uncollectable 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.

Goodwill – As the merger of
the Company with and into RKDA, Inc. is treated as a reverse merger of an operating company for accounting purpose, the goodwill of
the company is the market value of outstanding shares of the company on the date of the merger plus the net liabilities of the
Company. The Company had 24,393,351 shares outstanding immediately preceding the merger. At a closing price of $0.53 per share on
May 10, 2004 the effective date of the merger, the total value of the company’s 24,393,351 outstanding shares immediately
preceding the merger is $12,928,476, which together with liabilities of $1,632,322 equals the total goodwill resulting from the
merger.

Results of Operations

The Three
Months Ended June 30, 2004 Compared to the Three Months Ended June 30,2003.

Sales for
the three months ended June 30, 2004 are split between the Predecessor and
Successor companies. The sales from May 10, 2004 to June 30, 2004 were
$13,621,057 and from April 1, 2004 to May 9, 2004 were $9,486,601. The combined
sales for the three months ended June 30, 2004 increased by $4,899,996, or

27%, to $23,107,658 as compared to $18,207,662 for the three months ended
June 30, 2003. The increase is primarily attributable to total sales of
$711,256 attributable to the operations of the entities which merged into the
Company effective May 10, 2004 as discussed in Note 1 to the financial
statements and due to the acquisition of

companies.

Gross
profit for the period from May 10, 2004 to June 30, 2004 is 15.6% and for the
period from April 1, 2004 to May 9, 2004 is 14.4%.  The combined gross
profit for the three months ended June 30, 2004 was 15.1%, an increase of 0.1%
over the 15.0% recorded in the prior year comparable period. The increase was a
result of the sales mix in the quarter being different, which is attributable
to the DME rentals and mail order pharmacy being a higher percentage of sales
and such revenue generates a somewhat higher gross profit than other sales.

17

---

General and
administrative expenses for the period from May 10, 2004 to June 30, 2004 were
$1,867,846 and for the period from April 1, 2004 to May 9, 2004 were $886,916.
Combined general and administrative expenses totaled $2,604,762 for the three
months ended June 30, 2004 compared to $1,911,501 for the three months ended June
30, 2003. The net increase of $693,261, or 36%, consists of primarily the
general and administrative expenses of the merged entities totaling $562,481.
In addition, the administrative salaries and benefits increased by $63,360 and
advertising expenses increased by $15,765. Bank charges increased by $20,433 as
a result of a switch in banking facilities in connection with the merger. In
addition, there was a net increase of approximately $24,752 in all other
expenses.

Interest
expense was $244,282 for the three months ended June 30, 2004. There was no
interest expense for the three months ended June 30, 2003. Interest expense
incurred in the three months ended June 30, 2004 included $68,183 interest to the
bank for the line of credit, $45,000 interest for the bridge loan, $90,000
interest for the conversion rights for the note, and $41,099 interest to the various note payables. The increase in interest expense is a result of
borrowings resulting from the acquisition of the Arcadia subsidiary and
incorporation of the borrowings of the merged entities.

Amortization
of deferred debt discount was $35,234 for the three months ended June 30, 2004
which represents the amount of the balance for the bridge loan. The deferred
debt discount is the fair value of stock options and warrants granted to
certain noteholders as explained in Note 5 to the consolidated financial
statements. The bridge loan was being amortized over the period from March 11,
2004 through June 12, 2004, the life of the promissory note.

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.

Prior to
June 30, 2004, the Company consummated the merger with and into 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% commission 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.

18

---

On May 7,
2004, Arcadia Services, Inc. and three of its 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 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, Messrs. 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
Messrs. Elliott and Kuhnert, to customary negative covenants.

Contractual Commitments

As of June 30, 2004 the Company had contractual obligations in the form of
non-Cancelable operating leases and employment agreements as follows:

Payments due by March 31,Total
     2005
     2006
     2007
     2008
     2009Operating Leases
     
     
     $
     1,938,336
        
     $
     464,149
        
     $
     533,234
        
     $
     496,299
        
     $
     375,604
        
     $
     69,050Employment Agreements
     900,000
        
     487,500
        
     412,500Total
     $2,838,336
        
     $951,649
        
     $945,734
        
     $496,299
        
     $375,604
        
     $69,050


Item
3.          Controls and
Procedures.

An
evaluation was performed, as of June 30, 2004, under the supervision of the
Vice President of Finance (Principal Financial and Accounting Officer) and the
Chief Executive 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 June 30, 2004. There
have been no significant changes in our internal controls or in other factors
that could significantly affect our internal controls subsequent to June 30,
2004.

19

---

Part II:  Other Information

Item
1.          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.

Item
2.          Changes in
Securities and Use of Proceeds.

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 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.

On
June 12, 2004, the Company entered into an amended and restated 12%
Subordinated Convertible Promissory Note (the Note) that amended and restated
a note that evidenced a $1.5 million bridge loan made on March 11, 2004 by Jana
Master Fund, Ltd. (Jana).  The Note is
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 is obligated to pay a 2.5% prepayment fee to
Jana.  Jana received conversion rights
to convert all of the outstanding principal under the Note into shares of the
Companys common stock at a rate of one share per $0.50 of all amounts
outstanding under the Note. 
Additionally, Jana, at the time of the making of the original
note, 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 the transaction of June 12,
2004 and no underwriting discounts or commissions paid.  The issuance of the Note was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended, because the transaction did not involve any public offering.

20

---

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 on May 27, 2004.  The Company sold an aggregate of 32,980,000
shares at $0.25 per share together with 3,298,000 Class A Warrants to purchase
3,298,000 shares of common stock, 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, because 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 dated 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 Ms. Sparling, Mr. Sundaram and
Ms. Gay to each purchase 200,000 shares of Company common stock at $0.25 per
share and Ms. Pheeney 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 had 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.

21

---

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         | 
| |     |                   |     |                    | 
| |     | Bradley
  Smith   |     | 20,654,497         | 
| |     |                   |     |                    | 
| |     | Mitchell
  Cooper |     | 20,654,497         | 
| |     | Barbara
  Levine  |     | 20,654,497         | 

| |     | 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.                 
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                         
| |     | 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.

22

---

Item
6.          Exhibits and
Reports on Form 8-K (§249.308 of this chapter).

| | (a) | Exhibits                                                                                                                           
| | --- | -----------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                    
| |     | The Exhibits
  included as part of this report are listed in the attached Exhibit Index,
  which is incorporated by this reference.
| |     |                                                                                                                                    
| | (b) | Reports on
  Form 8-K                                                                                                              
| |     |                                                                                                                                    
| |     |                                                                                                                                    
| |     |                                                                                                                                    
| |     |                                                                                                                                    
| |     |                                                                                                                                    
| |     |                                                                                                                                    
| |     |                                                                                                                                    
| |     |                                                                                                                                    

23

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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:  August 20, 2004       |  |                                                                             

24

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EXHIBIT INDEX

|Exhibit No. |  | Exhibit Description                                                                                                                                                                                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                   
|2.1         |  | Agreement
  and Plan of Merger dated May 7, 2004 by and among RKDA, Inc., CHC Sub, Inc.,
  Critical Home Care, Inc., John E. Elliott, II, Lawrence Kuhnert and David
  Bensol (filed as an exhibit to the Companys Current Report on Form 8-K filed
  on May 24, 2004 and incorporated herein by this reference).
|            |  |                                                                                                                                                                                                                                                                                                                   
|2.2         |  | Membership
  Interest Contribution  Agreement dated
  May 7, 2004, by and among RKDA, Inc. John E. Elliott, II, and Lawrence
  Kuhnert (filed as an exhibit to the Companys Current Report on Form 8-K
  filed on May 24, 2004 and incorporated herein by this reference).                                       
|            |  |                                                                                                                                                                                                                                                                                                                   
|2.3         |  | Stock
  Purchase  Agreement dated as of May 7,
  2004 by and among RKDA,  Inc., Arcadia
  Services, Inc., Addus Healthcare, Inc. and W. Andrew Wright (filed as an
  exhibit to the Companys Current Report on Form 8-K filed on May 24, 2004 and
  incorporated herein by this reference).                      
|            |  |                                                                                                                                                                                                                                                                                                                   
|3.1         |  | Amended and
  Restated Articles of Incorporation of Critical Home Care, Inc. (filed as an
  exhibit to the Companys Current Report on Form 8-K filed on May 24, 2004 and
  incorporated herein by this reference).                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                   
|3.2         |  | Articles of
  Incorporation of RKDA, Inc. (filed as an exhibit to the Companys Current
  Report on Form 8-K filed on May 24, 2004 and incorporated herein by this
  reference).                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                   
|3.3         |  | By-laws of
  RKDA, Inc. (filed as an exhibit to the Companys Current Report on Form 8-K
  filed on May 24, 2004 and incorporated herein by this reference).                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                   
|4.1         |  | Form of
  Regulation D Class A Common Stock Purchase Warrant (filed as an exhibit to
  the Companys Current Report on Form 8-K filed on May 24, 2004 and
  incorporated herein by this reference).                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                   
|4.2         |  | Class A
  Warrant issued to John E. Elliott, II (filed as an exhibit to the Companys
  Current Report on Form 8-K filed on May 24, 2004 and incorporated herein by
  this reference).                                                                                                                            

25

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|4.3  |  | Class A
  Warrant issued to Lawrence Kuhnert (filed as an exhibit to the Companys
  Current Report on Form 8-K filed on May 24, 2004 and incorporated herein by
  this reference).                                                                                                                                                                                                                               
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|7.1  |  | Financial
  Statement of Business Acquisition, Consolidated Financial Statements of
  Arcadia Services, Inc. and Subsidiaries for the Years Ended March 31, 2004
  and 2003, including signed Report of Independent Registered Public Accounting
  Firm BDO Seidman, LLP (filed as an exhibit to the Companys Current Report on
  Form 8-K/A filed on July 23, 2004 and incorporated herein by this
  reference).
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|7.2  |  | Pro Forma
  Financial Information, Unaudited Pro Forma Condensed Combined Financial
  Statements for the Period Ended March 31, 2004 (filed as an exhibit to the
  Companys Current Report on Form 8-K/A filed on July 23, 2004 and
  incorporated herein by this reference).                                                                                                                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|9.1  |  | Form of
  Voting Agreement (filed as an exhibit to the Companys Current Report on Form
  8-K filed on May 24, 2004 and incorporated herein by this reference).                                                                                                                                                                                                                                                   
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.1 |  | Employment
  Agreement dated May 7, 2004, by and between Critical Home Care, Inc. and
  Lawrence Kuhnert (filed as an exhibit to the Companys Current Report on Form
  8-K filed on May 24, 2004 and incorporated herein by this reference).                                                                                                                                                                     
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.2 |  | Employment
  Agreement dated May 7, 2004, by and between Critical Home Care, Inc. and John
  E. Elliott, II (filed as an exhibit to the Companys Current Report on Form
  8-K filed on May 24, 2004 and incorporated herein by this reference).                                                                                                                                                                  
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.3 |  | Employment
  Agreement dated May 7, 2004, by and between Critical Home Care, Inc. and
  David Bensol (filed as an exhibit to the Companys Current Report on Form 8-K
  filed on May 24, 2004 and incorporated herein by this reference).                                                                                                                                                                         
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.4 |  | Termination
  of Employment Agreement and Release dated May 7, 2004, by and between
  Critical Home Care, Inc. and David Bensol (filed as an exhibit to the
  Companys Current Report on Form 8-K filed on May 24, 2004 and incorporated
  herein by this reference).                                                                                                                                            
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.5 |  | Escrow
  Agreement made as of May 7, 2004, by and among Critical Home Care, Inc., John
  E. Elliott, II, Lawrence Kuhnert and Nathan Neuman & Nathan P.C. (filed
  as an exhibit to the Companys Current Report on Form 8-K filed on May 24,
  2004 and incorporated herein by this reference).                                                                                                                  

26

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|10.6  |  | Escrow
  Agreement made as of May 7, 2004, by and among Critical Home Care, Inc.,
  David Bensol and Nathan Neuman & Nathan P.C. (filed as an exhibit to the
  Companys Current Report on Form 8-K filed on May 24, 2004 and incorporated
  herein by this reference).                                                            
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                                                                                    
|10.7  |  | Stock Option
  Agreement dated May 7, 2004,  between
  Critical Home Care, Inc. and John E. Elliott, II. (filed as an exhibit to the
  Companys Current Report on Form 8-K filed on May 24, 2004 and incorporated
  herein by this reference).                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                    
|10.8  |  | Stock Option
  Agreement dated May 7, 2004,  between
  Critical Home Care, Inc. and Lawrence Kuhnert (filed as an exhibit to the
  Companys Current Report on Form 8-K filed on May 24, 2004 and incorporated
  herein by this reference).                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                    
|10.9  |  | Agreement of
  Modification (without exhibits) dated May 6, 2004, among Critical Home Care,
  Inc. and David Bensol and All Care Medical Products Corp., Luigi Piccione and
  S&L Realty, LLC. (filed as an exhibit to the Companys Current Report on
  Form 8-K filed on May 24, 2004 and incorporated herein by this reference).
|      |  |                                                                                                                                                                                                                                                                                                                                    
|10.10 |  | Credit
  Agreement dated as of May 7, 2004, by and among Arcadia Services, Inc.,
  Arcadia Health Services, Inc. Grayrose, Inc. and Arcadia Health Services of
  Michigan, Inc. (filed as an exhibit to the Companys Current Report on Form
  8-K filed on May 24, 2004 and incorporated herein by this reference).               
|      |  |                                                                                                                                                                                                                                                                                                                                    
|31.1  |  | Certification
  of the Chief Executive Officer required by rule 13a-14(a) or rule 15d-14(a).                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                    
|31.2  |  | Certification
  of the Principal Accounting and 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. §1350, as Adopted
  Pursuant to §206 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                    
|32.2  |  | Principal
  Accounting and Financial Officer Certification Pursuant to 18 U.S.C. §1350,
  as Adopted Pursuant to §206 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                           

27