SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
              Annual Report pursuant to Section 13 or 15 (d) of the
                         Securities Exchange Act of 1934
                   For the Fiscal Year Ended December 31, 2001
                         Commission File Number 0-26168

                               CAREADVANTAGE, INC.
                               (Name of Business)

           Delaware                                       52-1849794
 (State or other jurisdiction of                       (I.R.S. Employer
  incorporation or organization)                      Identification No.)

485-C Route 1 South, Iselin, New Jersey                      08830
(Address of principal executive office)                   (Zip Code)

       Registrant's telephone number, including area code: (732) 602-7000
             Securities registered pursuant to Section 12(b) of the
                           Exchange Act of 1934: NONE


           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock $.001 par value
                                (Title of Class)

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  twelve  months  (or for  such  shorter  period  that the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days: Yes X No __

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

The Registrant's revenues for its most recent fiscal year were $20,264,000

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  as  of  March  14,  2002  (assuming  solely  for  purposes  of  this
calculation  that all  directors and executive  officers of the  Registrant  are
affiliates) was $490,469.


The number of shares of common stock outstanding as of March 14, 2002 was
99,787,000.

              Transitional Small Business Disclosure Format Yes      No X
                                                                ----   ---
     PORTIONS OF THE FOLLOWING DOCUMENTS HAVE BEEN INCORPORATED BY REFERENCE
                  INTO THIS ANNUAL REPORT ON FORM 10-KSB: NONE

<PAGE>

                                     PART I

Item 1.    Description of Business
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Introduction and Background

     CareAdvantage,  Inc.  ("CAI" or the  "Company") and its direct and indirect
subsidiaries,  CareAdvantage  Health  Systems,  Inc.  ("CAHS") and  Contemporary
health  care  Management,  Inc.  ("CHCM"),  are in  the  business  of  providing
management and health care cost containment  services  designed to enable health
care  insurers and other  health  service  organizations  to reduce the costs of
medical services provided to their subscribers.  The management services include
care management program enhancement services,  executive and clinical management
services,  and  training  programs;  the health care cost  containment  services
include utilization review in medical/surgical cases where  pre-authorization is
required  for   hospitalization   and  for  certain  in-patient  and  outpatient
procedures, case management and disease management, and independent reviews. The
Company's  management  services  have been  provided to  integrated  health care
delivery systems;  the Company's health care cost containment services have been
principally  provided to several of the statewide Blue Cross/Blue  Shield health
service organizations in the Northeastern United States.

     CAI was  incorporated  in  August  1994 as a  wholly  owned  subsidiary  of
Primedex Health Systems,  Inc. ("PMDX"), a publicly traded New York corporation.
In October  1994,  the Company  acquired CAHS (under its prior  corporate  name,
Advantage Health Systems,  Inc.,  ("AHS"),  from PMDX. On June 12, 1995, a stock
dividend  of all of the issued  and  outstanding  shares of common  stock of the
Company was  declared  effective  by PMDX.  As a result,  the Company  commenced
trading as a publicly traded company on that date.

     Initially,  CAI relied on PMDX to provide the bulk of its working  capital.
In addition to  transferring  all of its AHS stock to the  Company,  PMDX made a
total of  $9,700,059 in working  capital  advances to CAI (the last such advance
being made in July 1995). Pursuant to a revised separation agreement between CAI
and PMDX dated April 20, 1995,  PMDX agreed to  capitalize  all such advances in
connection with CAI's separation from PMDX.

     On February 22, 1996, the Company  completed a series of transactions  with
CW Ventures II, L.P. ("CW Ventures") and with Horizon Blue Cross and Blue Shield
of New Jersey,  formerly  known as Blue Cross Blue  Shield of New  Jersey,  Inc.
("Horizon  BCBSNJ").  The  transactions  included  the  sale to CW  Ventures  of
3,903,201  shares of the  Company's  common  stock,  par  value  $.001 per share
("Common Stock") at a purchase price of $0.2562 per share (after  adjustment for
the "one (1) for six  (6)"  reverse  stock  split of the  Company's  outstanding
Common Stock as discussed below) for an aggregate of $1,000,000 and the issuance
of an 8%  Exchangeable  Note in the  original  principal  amount of  $2,000,000,
maturing  on June 30,  1998 (the "CW  Note").  By its  terms,  CW  Ventures  was
required  to exchange  the CW Note on June 30, 1998 for shares of the  Company's
Common  Stock  absent any events of default,  as defined in the CW Note.  The CW
Note, which was collateralized by substantially all of the assets of the Company
and its subsidiaries,  was originally exchangeable into that number of shares of
the  Company's  Common  Stock  as  would  equal  approximately  23  1/3%  of the
outstanding  shares of the Company's common stock on a fully diluted basis as of
February 22, 1996.  Accordingly,  the  3,903,201  shares  issued to CW Ventures,
together  with the  shares  issuable  upon the  exchange  of the CW Note,  would
comprise 35% of the outstanding  shares of the Company's Common Stock on a fully
diluted basis as of February 22, 1996 (such percentage was subsequently adjusted
as discussed below). In addition, in connection with a $150,000 bridge financing
by CW Ventures to the  Company,  the Company  issued to CW Ventures  for nominal
consideration  five-year warrants (the "CW Warrants") to purchase 166,667 shares
of the  Company's  Common  Stock at an  exercise  price equal to $0.96 per share
(after an  adjustment  for the "one (1) for six (6)" reverse  stock split of the
Company's outstanding Common Stock).


<PAGE>

     Concurrently  with the February 22, 1996 closing of the transaction with CW
Ventures,  CAHS  purchased all of the  outstanding  capital stock of CHCM from a
wholly  owned  Horizon  BCBSNJ  subsidiary,  Enterprise  Holding  Company,  Inc.
("EHC"). Although this acquisition was consummated on February 22, 1996, results
of operations of CHCM have been reflected in the Company's financial  statements
since  April 30,  1995  pursuant to an Interim  Services  Agreement  between the
Company  and  Horizon  BCBSNJ  (as  amended  from  time to time,  the  "Services
Agreement")  whereby the Company had effective control and responsibility of the
day-to-day  operations  of CHCM pending a sale of CHCM to the Company.  The CHCM
stock was  acquired  in exchange  for an 8%  Exchangeable  Note in the  original
principal  amount of  $3,600,000,  maturing on June 30, 1998 by CAHS in favor of
EHC,  which was  subsequently  assigned to Horizon  BCBSNJ (the "Horizon  BCBSNJ
Note").  The Horizon BCBSNJ Note was  collateralized by substantially all of the
assets  of the  Company  and its  subsidiaries.  The  Horizon  BCBSNJ  Note  was
originally exchangeable into that number of shares of the Company's Common Stock
as would equal  approximately  40% of the outstanding  shares on a fully diluted
basis as of February 22, 1996. The  transaction  was accounted for as a purchase
of CHCM for an amount  originally  approximating  $3,427,000 (the face amount of
the  Horizon  BCBSNJ  Note less an  original  issue  discount  of  approximately
$173,000), plus assumed liabilities of approximately $360,000 and purchase costs
of $64,000 and was subsequently  adjusted. The excess of the purchase price over
the fair value of CHCM's  tangible  assets  consisting of cash of  approximately
$848,000  and fixed  assets,  with a fair value of  approximately  $27,000,  was
allocated to the Services Agreement.

     Since  the  Company  did not have a  sufficient  number of  authorized  and
unissued shares of Common Stock to permit the issuance of the required number of
shares  upon  exchange  of  the  CW  Note  and  the  Horizon  BCBSNJ  Note,  the
stockholders of the Company  approved an amendment to the Company's  Certificate
of Incorporation in August 1996, which decreased the number of authorized shares
of Common  Stock to  90,000,000  shares,  creating a new class of "blank  check"
preferred stock, $.10 par value,  consisting of 10,000,000 shares and effected a
"one (1) for six (6)" reverse  stock split of the Company's  outstanding  Common
Stock.  As a result,  and pursuant to the terms of the Horizon  BCBSNJ Note, the
Horizon  BCBSNJ Note was  automatically  exchanged  on  September  30, 1996 into
13,375,083 shares of Common Stock of the Company.

     Pursuant to the terms of the CW Note and the Horizon  BCBSNJ Note,  because
the Company failed to realize at least  $15,000,000 in net revenues or specified
earnings  before taxes for its fiscal year ended  October 31, 1996,  the Company
issued an aggregate of 50,156,559  additional  shares of Common Stock to Horizon
BCBSNJ and CW Ventures on February 27, 1997.

     On August 16, 2001,  pursuant to a  Satisfaction  of Debt  Agreement  dated
November 1, 2000, among the Company,  Horizon BCBSNJ and one of Horizon BCBSNJ's
subsidiaries,  Horizon  health care of New  Jersey,  Inc.,  the  Company  issued
15,777,400  shares of its  common  stock in  exchange  for the  cancellation  of
approximately $1.6 million owed by it.

     The  Company,  Horizon  BCBSNJ and CW Ventures  are parties to an agreement
dated  February 22, 1996 (the  "Stockholders  Agreement")  pursuant to which the
parties agreed that the Board shall consist of seven members. From May 22, 1997,
to February 8, 2001,  the agreement was modified to provide for merely six Board
members; on February 8, 2001, the Board was restored to seven members.

     The  Company's  executive  offices  are  located  at  485-C  Route 1 South,
Metropolitan  Corporate Plaza, Iselin, New Jersey 08830 and its telephone number
is (732) 602-7000.

Industry Overview: Consumerism, Health Care Expenditures and Managed Care

     The  American  health care market  continues  to evolve with an emphasis on
consumer  choice,  patient  rights and  confidentiality  protections,  against a
backdrop of accelerating costs and an aging population.  Employer groups balance
concern about the costs of providing  health  insurance to their  employees with
the need to  maintain a  competitive  human  resource  position in a tight labor
market.  Employers,  the traditional  customers of commercial  health  insurance
companies, continue to seek strategies to reduce costs while assuring access and
satisfaction.  Among the strategies is a fundamental  shift:  some employers are
abandoning  the middleman  role and enabling  their  employees to make their own
benefit  decisions.  Although  this  will  not  occur  immediately,  some of the
barriers,  such as  restricted  access  to  comparative  information,  are being
eliminated.  Additionally,  some employers may seek to distance  themselves from
the potential legal liabilities emerging in the health benefits industry.

                                       2
<PAGE>

     Over the next decade, the health insurance market will increasingly  become
one of a defined  contribution,  not defined  benefit,  and employees will enjoy
selection  among multiple  health  insurance  products.  Among health  insurers,
premium  price  differences  will become less  significant;  quality of provider
networks will be assumed and  relatively  non-differentiating;  and service will
separate winners from losers.

     Concurrently,   the  health  care  providers,   especially  physicians  and
integrated delivery systems, are increasingly  cautious about entering into risk
arrangements,  while expressing renewed vigor in taking charge of their destiny.
The larger  entities  among them have made,  and  continue to make,  substantial
investments in information technology with increasingly sophisticated managerial
accounting  systems to support  the  management  of their  services,  arrayed by
product  line.  By virtue of their market  position,  provider  systems lack the
capital, claims systems, marketing strength and geographic scope to compete with
health insurers.

     Increasingly,  the market  will force  providers  and  insurers  to develop
operational  and  administrative  efficiencies  in their many shared  functions.
Among  these  shared  functions  is care  management,  the  core  capability  of
CareAdvantage.

Services and Products

     The Company offers management and health care cost containment  services to
the health  insurance  industry  and health  service  organizations  in order to
assure that members  receive  appropriate  health and medical care. The services
include focused  utilization  management  services,  physician  review services,
specialty  case  management   services,   care  management  program  enhancement
services, executive and clinical management services and training programs.

     The Company  possesses  substantial  resources in core areas of information
management,  member and  provider  profiling  and outreach  services,  including
provider  network  management  and  specialty  case  management  and makes  them
available to its clients in specific packages.

     Focused Utilization Management and Independent Review

     The Company transforms the client's utilization  management program from an
administrative  exercise to a program  that uses  focused  profiling to identify
inappropriate  variations  in  medical  practices,  as well as  clinical  review
criteria and highly credible  physician  advisors to actively  engage  attending
physicians  in  treatment  decisions.  These  proactive  utilization  management
methods  enable  the  Company's  clients  to  achieve  utilization   performance
approaching or exceeding that of well-managed health maintenance organizations.

     Physician Review Services

     Rapidly changing state legislation and evolving URAC and NCQA standards are
driving the need for health plans to seek external,  objective  clinical  review
services to support their internal medical review process.  The Company offers a
panel of board certified  physicians  representing 48 specialties in traditional
and alternative  health care. The Company provides  physician review services to
HMOs, PPOs and indemnity plans.

     Specialty Case Management

     Specialty case  management  services apply  fundamental  principles of case
management  to identify  those  members in need of  coordination  of care,  with
potential  for  improving  the  clinical  outcomes and with the  opportunity  to
optimize their health insurance  benefit while avoiding  unnecessary  costs. The
Company's  proprietary  method,  RightPath(TM),  enables  its case  managers  to
systematically  select those members most in need to apply  standard,  validated
approaches to members with common clinical conditions and to measure outcomes.

     Care coordination, both outpatient and inpatient, allows patients to access
a variety of health care services, such as home health care,  rehabilitation and
infusion therapy services.  The Company's outpatient care coordination  services
provide an effective  mechanism  for cost  containment  while  safeguarding  the
delivery of quality  health care services.  Additionally,  only members who give
consent are  enrolled in the program.  Currently  the Company  achieves  consent
rates in excess of 80%.

                                       3
<PAGE>

     Case management  also seeks to support the attending  physician in managing
the  care  of  patients  with  chronic  diseases  on  an  on-going  basis.  Case
conferences  with matched  medical  specialists  are used to optimize  attending
physician collaboration.

     Care Management Program Enhancement Services

     The  Company  offers  an  experienced,   multi-disciplinary  team  of  care
management  professionals  that  assess  care  management  operations,  systems,
resources,  integration  and outcomes.  The team  identifies  opportunities  and
provides  specific and  prioritized  recommendations  to improve the efficiency,
effectiveness  and results of the  program.  In addition,  the team  provides an
experienced,   on-site   implementation   team  to  facilitate  the  recommended
enhancements.

     Executive and Clinical Management Services

     The  Company  offers  experienced  health  care  executives  for  strategic
planning,   guiding   organization   transitions,   and  designing  and  leading
re-engineering   initiatives.   In  addition,  the  Company  offers  experienced
physician executives for care management program leadership,  internal physician
review services, and mentoring of inexperienced health plan medical directors.

     Training Programs

     The Company offers an extensive care management training curriculum focused
on  increasing  productivity,  improving  program  outcomes,  enhancing  quality
customer service and promoting quality patient outcomes.


Operations

     The Company utilizes a multi-disciplinary team approach to ensure effective
management and health care cost containment services.  The Company,  through its
employees and subcontracting physician advisors, reviews, evaluates and monitors
the medical necessity and appropriateness of the medical services prescribed for
members in its  clients'  health  plans.  Generally,  the  pre-admission  review
process for elective and non-elective  admission is initiated  telephonically by
the member or provider.  During this phase,  clinical review staffs evaluate the
need for, and/or initiate when appropriate,  pre-certification,  second surgical
opinion, insurance verification, pre-admission testing, pre-operative education,
pre-operative anesthesia evaluation, and continuing care planning. Additionally,
pre-admission  review determines if the service requested is medically necessary
by utilizing review criteria,  appropriate  alternatives for providing  service,
length of stay and the need for case management intervention.

     The  Company  currently  maintains  a  contracted  network of more than 112
independent,  multi-specialty  physician  advisors,  most of whom are  active in
managed  care  practices  and some of whom are  affiliated  with major  teaching
hospitals.  Several of these physicians are currently  spending  one-to-two days
per week  on-site  with  and on  behalf  of the  Company's  clients,  discussing
questionable  cases with local  specialists and leading  meetings with groups of
local  specialists to disseminate  and implement the care  management  "critical
pathways"  necessary for effective  case  management.  The Company also uses its
nurse  reviewers for  telephonic  review as well as in hospitals to conduct more
extensive  on-site  reviews of patients,  whenever  possible.  On-site review is
performed for concurrent  review and case management  activities.  These on-site
reviews also include  collaboration  with the Company's local and national board
certified physician employees and advisors.  By reviewing on-site,  these nurses
are in a better  position to determine the need for continued  stay, and to make
necessary arrangements for outpatient care.

     For its services,  the Company is compensated either (i) on a fixed-fee per
subscriber  basis;  (ii) on a  performance-based  method  whereby the  Company's
compensation  is based on achieving  certain  defined  benchmarks;  (iii) on the
basis of a combination of both fixed fee per  subscriber  and  performance-based
fees; and (iv) on a fee-for-service basis. Accordingly,  the Company has adopted
the following  accounting  policies for revenue  recognition under each contract
category:

     (a)  Revenue  under  the  fixed-fee  and  fee-for-service  arrangements  is
          recognized  as the  services  are  provided  and the related  costs of
          services are incurred on a pro-rata basis.

                                       4
<PAGE>

     (b)  Revenue under the partial fixed-fee/incentive  agreements is initially
          recognized  for the monthly  fixed-fee  component only as services are
          provided and related costs of services are incurred.  Incentives based
          upon  performance  are recorded  when such amounts can  reasonably  be
          determined.

Customers and Marketing

     The Company currently  provides its services to five Blue Cross Blue Shield
("BCBS")  organizations in the Northeastern  United States and to two integrated
health  care  delivery   systems  pursuant  to  one  or  a  combination  of  the
compensation  arrangements  described  above.  Also, the Company is dependent on
Horizon BCBSNJ,  a more than 50%  stockholder of the Company,  for a substantial
portion of its revenues,  gross margins and cash flows. The loss of Horizon BCBS
as a customer  would have a material  adverse impact on the Company's cash flows
and results of  operations.  The Company had a written  service  agreement  with
Horizon BCBSNJ that expired on June 30, 2000. The Company has been continuing to
provide services to Horizon pursuant to an oral agreement,  pending  negotiation
of a  definitive  written  contract  renewal.  Although  the precise  terms of a
contract renewal have not yet been agreed upon, the Company has been informed by
Horizon  BCBSNJ that  Horizon  BCBSNJ  intends to continue to contract  with the
Company for care management  services for the indemnity  portion of the business
at  least  until  January  1,  2003.  In  2001,  Horizon  BCBSNJ  accounted  for
approximately 70% of the Company's revenue.

     The Company markets its services to health  insurance  companies and health
service  organizations  throughout  the United  States and, on a  subcontracting
basis, to other care management companies.

     Typically,  the Company will enter into an agreement with a client pursuant
to which the Company provides its services.  The Company's  services for a group
health insurance  company generally cover all insureds under an indemnity or PPO
insurance  plan  and/or  members  of  a  health  maintenance  organization  plan
affiliated with the insurer.  When the Company contracts to provide its services
to an insurer,  the insurer's  account  executives  ordinarily plan to offer the
Company's  services to its group  policyholders  and those groups  covered under
administrative-services-only arrangements.

Competition

     The Company  faces intense  competition  in a highly  fragmented  market of
managed care  services  firms.  Several  managed care  service  firms  currently
provide and aggressively market services,  which are in some respects similar to
the  Company's  services.  Management  is  aware  of  a  significant  number  of
independent  utilization  review firms currently  marketing  utilization  review
services directly to employers,  small insurers and third party  administrators.
In addition to other utilization  review and medical management  companies,  the
Company competes with insurance  companies,  that have developed in-house staffs
to provide such services.  There are a variety of competitors offering component
services  such as physician  reviewers  and demand  management/patient  advisory
products.  There  are also a number of  organizations  developing  a variety  of
approaches to case and disease  management.  Some of the  Company's  competitors
have substantially  greater financial resources and employ substantially greater
numbers of personnel.

     The  Company  intends to compete on the basis of the  quality of  services,
including  its  ability to develop  tailored  programs  for large  clients,  its
willingness  to accept risk in methods of  compensation  based on  results,  its
computer-based  clinical decision making and information systems and its current
experience in developing outsourcing  arrangements acceptable to Blue Cross Blue
Shield plans.

Government Regulation

     Health Care Regulation

     Government  regulation of health care cost  containment  services,  such as
those  provided  by the  Company,  is a changing  area of law that  varies  from
jurisdiction to  jurisdiction  and generally  gives  responsible  administrative
agencies  broad  discretion.  The Company is subject to extensive and frequently
changing  federal,  state  and local  laws and  regulations  concerning  company
licensure,  conduct of operations,  acquisitions of businesses  operating within
its industry,  the employment of physicians and other licensed  professionals by
business corporations and the reimbursement for services.  Regulatory compliance
could have an adverse effect on the Company's present business and future growth
by restricting or limiting the manner in which it can acquire businesses, market
its  services,  and contract for  services  with other health care  providers by
limiting or denying  licensure  or by limiting  its  reimbursement  for services
provided.

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<PAGE>

     It should be noted that in providing utilization review and case management
services,  the  Company  makes  recommendations  regarding  what  is  considered
appropriate  medical  care based upon  professional  judgments  and  established
protocols. However, the ultimate responsibility for all health care decisions is
with the health care  provider.  Furthermore,  the Company is not an insurer and
the  ultimate  responsibility  for the  payment  of  medical  claims is with the
insurer.

     Although the Company is not a health care provider, it could have potential
liability  for  adverse  medical  consequences.  The  Company  could also become
subject to claims based upon the denial of health care  services and claims such
as malpractice arising from the acts or omissions of health care professionals.

     The  Company's  operations in a particular  state are typically  subject to
certification by the appropriate  state agency.  The Company has received or has
filed the  necessary  application  for such  certification  where  required.  In
addition,  various  state and federal laws  regulate the  relationships  between
providers of health care services and physicians and other clinicians, including
employment  or service  contracts,  investment  relationships  and referrals for
certain  designated  health  services.  These laws  include  the fraud and abuse
provisions   of  the  Medicare  or  Medicaid   statutes,   which   prohibit  the
solicitation,   payment,   receipt  or   offering  of  any  direct  or  indirect
remuneration  for the  referral  of  Medicare  or  Medicaid  patients or for the
ordering  or  providing  of  Medicare or  Medicaid  covered  services,  items or
equipment.  Violations  of these  provisions  may  result  in civil or  criminal
penalties for individuals or entities including  exclusion from participation in
the Medicare and Medicaid  programs.  Several  states have adopted  similar laws
that cover patients in private programs as well as government programs.  Because
the anti-fraud and abuse laws have been broadly interpreted,  they may limit the
manner in which the Company can acquire  businesses  and market its services to,
and contract for services with, other health care providers.

     The  Company's  management  believes  that its  present  operations  are in
compliance  with all  applicable  laws  and  regulations  and that it  maintains
sufficient  comprehensive general liability and professional liability insurance
coverage to  mitigate  claims to which the Company may be subject in the future.
The Company is unable to predict what, if any, government  regulations affecting
its business may be enacted in the future or how existing or future  regulations
may be interpreted.  To maintain future compliance,  it may be necessary for the
Company to modify its services,  products,  structure or marketing methods. This
could  increase  the  cost of  compliance  or  otherwise  adversely  affect  the
Company's operations, products, profitability or business prospects.

     Proposed Health Care Reform

     If proposed  federal and state health care reform  initiatives are enacted,
the payments for and the  availability  of health care services may be affected.
Aspects of certain  proposals,  such as  reductions  in  Medicare  and  Medicaid
payments,  could adversely affect the Company.  The Company is unable to predict
what impact,  if any, future enacted health care reform  legislation may have on
its current and future  business,  and no  assurance  can be given that any such
reforms will not have an adverse impact on its business  operations or potential
profitability.

Employees

     At  December  31,  2001,  the  Company  employed  a total of 182  full-time
employees.  Of this total,  130  employees are engaged in servicing its clients.
The 52 remaining employees include executives,  administrative support, finance,
marketing,  training  and  education,  information  systems and human  resources
personnel.  None  of  the  Company's  employees  are  party  to  any  collective
bargaining agreements.

Item 2.    Description of Property
-------    -----------------------

     The Company's  executive offices and operations,  comprising  approximately
28,000 square feet of office space,  are located in the  Metropolitan  Corporate
Plaza in Iselin,  New Jersey. The Company has executed a six-year lease for this
facility  commencing  June 15,  1995,  which was  extended  during  2000 for ten
additional  years.  The  extended  lease  provides  for an  annual  base rent of
approximately $668,000 with annual escalations based on increases in real estate
taxes and  operating  expenses.  The Company  believes that its  facilities  are
adequate  for its  current  needs and that  suitable  additional  space  will be
available as required.

     The Company also maintains  rent-free  operations  offices in approximately
600 square feet of space in  Providence,  Rhode  Island,  under an informal oral
arrangement  with  Blue  Cross  and  Blue  Shield  of Rhode  Island  ("BCBSRI").

                                       6

<PAGE>

Additionally,  the  Company  maintains  rent-free  operation  offices in Vermont
pursuant to an informal  arrangement  with its customer  there,  Blue Cross Blue
Shield of Vermont.

Item 3.    Legal Proceedings
-------    -----------------

     On August 12,  1998,  Caruso v.  Petillo,  et al.,  was filed  against  the
Company, three of its former officers, John J. Petillo, Vincent M. Achillare and
Lawrence  A.  Whipple,  and certain  others in  Superior  Court of New Jersey by
Robert T. Caruso,  a former  consultant  to the  Company.  The  complaint  seeks
damages  in the  approximate  amount of $1.8 to $2.0  million  on account of the
termination of Mr. Caruso's consulting arrangement with the Company on a variety
of legal theories including breach of contract,  fraud,  conspiracy,  promissory
estoppel and negligent  misrepresentation.  The Company received a written claim
for indemnification  from defendants Petillo and Achillare and, subject to their
having acted in good faith,  the Company  agreed to indemnify them and defendant
Whipple and to pay their  reasonable  defense  costs.  On February 16, 2001, the
court dismissed this action with prejudice with respect to defendant  Achillare.
In May 2001, the matter was scheduled for trial against the remaining defendants
-- the Company and Messrs.  Petillo and Whipple. Mr. Caruso was unable to attend
the trial due to his  incarceration in a Federal  Detention Center. As a result,
Mr.  Caruso and the  aforesaid  remaining  defendants  signed a  Stipulation  of
Dismissal, terminating the action, without prejudice, and the action was ordered
dismissed. Mr. Caruso has since appealed the grant of summary judgement in favor
of other  defendants (but not the summary  judgment in favor of Mr.  Achillare),
indicating in the Civil Case Information Statement filed in connection with that
appeal that "It is [Mr. Caruso's] intent to reinstate the matter once Mr. Caruso
is released  from the Federal  Detention  Center." In the event that Mr.  Caruso
seeks to  reinstate  the  matter  or  otherwise  commence  an action on the same
claims,  the Company  plans to vigorously  contest such claims.  The Company has
recorded  a  provision  for  Mr.  Caruso's  contingent  claim.  There  can be no
assurance  that this  provision  will be sufficient  to satisfy this claim.  The
Company  received  notice from its  directors and officers  liability  insurance
carrier, Princeton Insurance Company, that it denied coverage in this matter; in
September 2001, the Company commenced  litigation  against  Princeton  Insurance
Company  contesting its decision to deny coverage and seeking damages  therefor.
Princeton has denied liability in that lawsuit and has  counter-claimed  against
the  Company for its  attorneys'  fees in  defending  the  lawsuit.  The Company
believes the counterclaim is without merit.

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

     None.

                                     PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters
-------    ---------------------------------------------------------------------

(a)  Market Information: Since the Company's effective registration date of June
     12, 1995,  the  Company's  Common Stock has traded in the  over-the-counter
     market and is currently  quoted on the Electronic  Bulletin Board under the
     symbol CADV. The following  table shows the range of closing bid prices for
     each quarter of the Company's two most recent  calendar  years.  The prices
     reflect   inter-dealer   prices,   without  retail  mark-up,   markdown  or
     commission, and may not represent actual transactions.

                                         2001                     2000
                                         ----                     ----
            Quarter Ended           High       Low          High        Low
            -------------           ----       ---          ----        ---
            March 31,               $.17       $.10         $.48       $.16
            June 30,                $.11       $.10         $.38       $.16
            September 30,           $.15       $.05         $.21       $.11
            December 31,            $.12       $.08         $.20       $.07


(b)  Holders:  As of March 14, 2002 there were  approximately  4,063  holders of
     record of the Company's Common Stock. No shares of the Company's  preferred
     stock have been issued.

(c)  Dividends:  During the two most recent  fiscal  years,  the Company paid no
     cash dividends on its Common Stock.  The payment of future dividends on its
     Common Stock is subject to the  discretion of the Board of Directors and is
     dependent on several factors,  including the Company's earnings and capital
     needs.


                                       7

<PAGE>

Item 6.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations
-------    ---------------------------------------------------------------------

Cautionary Statements

     Statements in this Form 10-KSB may constitute "forward-looking  statements"
within  the  meaning of the  Private  Securities  Litigation  Reform Act of 1995
("PSLRA"),  including statements concerning  management's plans,  intentions and
expectations  with respect to future  financial  performance  and future events,
particularly   relating  to  revenues   from   performance-based   services  and
re-negotiations  of existing and new  contracts  with  customers.  Many of these
statements  involve known and unknown risks,  uncertainties  and  contingencies,
many of which are beyond our  control,  which  could  cause  actual  results and
outcomes to differ  materially from those expressed in this 10-KSB.  Although we
believe  that  our  plans,   intentions  and  expectations  reflected  in  these
forward-looking  statements  are  reasonable,  we can give no assurance that our
plans, intentions or expectations will be achieved.

     The  following  discussion  contains  cautionary  statements  regarding our
business that investors and others should consider.  This discussion is intended
to take advantage of the "safe harbor"  provisions of the PSLRA. In making these
cautionary  statements,  we are not  committed to  addressing  or updating  each
factor in  future  filings  or  communications  regarding  the our  business  or
results,  or  addressing  how any of these  factors may have  caused  results to
differ  from  discussions  or  information  contained  in  previous  filings  or
communications.  In  addition,  any of the  matters  discussed  below  may  have
affected or may affect our past, as well as current,  forward-looking statements
about future results.

Company Risk

     We have had a history of losses.  Although our Company was  profitable  for
2000 and 2001, we have experienced a history of significant  operating losses on
a  consolidated  basis.  At  December  31,  2001,  we  had  working  capital  of
approximately $4,525,000,  stockholders equity of approximately $5,903,000,  and
an accumulated deficit of approximately $17,997,000.

     We face aggressive  competition because new competitors can enter our field
easily and because customers could decide to perform internally the functions or
services that we provide.  New competitors  can enter our field easily.  Many of
our customers may decide to perform  internally functions or services,  that we
previously  provided.  Also, some of our providers may decide to compete against
us by marketing products and services to our customers.

     Due to increased  merger and  acquisition  activity,  we may face  stronger
competition in the future.  Our industry,  as well as our customers'  industries
(i.e.,  health  insurers  and HMOs)  have  experienced  significant  merger  and
acquisition  activity.  Merger and  acquisition  activity  may  create  stronger
competitors  or  result  in  decreased  opportunities.   Strong  competition  or
competition  that intensifies in any market will adversely affect our ability to
retain or increase  customers,  or maintain or increase revenue growth,  pricing
flexibility, or control over medical cost trends and marketing expenses.

     We could incur significant additional costs as a result of litigation based
on the adverse  medical  consequences  of our  recommendations.  We provide cost
containment services for health care organizations. Our services include:

        o       utilization  review,  which is the review of the appropriateness
                of a particular medical event, such as a hospital  admission,  a
                particular  medical  procedure or an additional day of inpatient
                care;

        o       case management  services,  which provide  alternative plans for
                patient  treatment  and examine how the  attending  physician is
                managing  the  care of  patients  with  chronic  diseases  on an
                ongoing basis;

        o       outpatient  care  coordination,  which allows patients to access
                services such as home health care,  rehabilitation  and infusion
                therapy services; and

                                       8

<PAGE>

        o       disease management services,  which provide patients with expert
                consensus on the most  appropriate  treatment  alternatives  for
                patients at different disease stages.

     We base our  recommendations for patient benefit plan coverage on judgments
and  established  protocols as to the  appropriateness  of the proposed  medical
treatment.  Our judgments and  established  protocols are based on data gathered
through  case  studies on the  treatment  and care of patients  over a number of
years.  As a result,  we may be liable for adverse  medical  consequences of our
recommendations.  We could  become  subject to claims for the costs of  services
denied and malpractice  claims arising from the acts or omissions of health care
professionals.  Although  we do not  believe  that we engage in the  practice of
medicine or that we deliver medical services directly,  we may become subject to
litigation or liability.  Although we maintain  comprehensive  general liability
and professional liability insurance coverage,  including coverage for liability
in connection with the performance of medical  utilization  review services,  we
cannot be certain that coverage will be adequate in the event we become  subject
to a claim.

     We depend on effective information systems to deliver products and services
to  customers.  We depend on effective  information  systems and have linked our
computer  systems with our customers'  computer  systems in order to conduct and
deliver our products and services.  Our  information  systems require an ongoing
commitment of resources to maintain and enhance existing systems and develop new
systems in order to keep pace with continuing changes in information  processing
technology,  evolving industry standards and changing customer preferences.  Our
failure to maintain effective and efficient information systems could cause loss
of  existing  customers,   difficulty  in  attracting  new  customers,  customer
disputes, regulatory problems and increases in administrative expenses.

     Because  our  products  depend  on  the  integrity  of  our  data,  if  the
information contained in our databases were found or perceived to be inaccurate,
or if the  information is generally  perceived to be  unreliable,  we may not be
able to maintain commercial  acceptance.  We rely on data collected through case
studies and other confidential criteria to make cost containment decisions. Many
of the products that are part of our knowledge and information-related  business
rely on the  integrity of the data on which they are based.  If the  information
contained in our databases were found or perceived to be  inaccurate,  or if the
information  is  generally  perceived  to be  unreliable  we may  not be able to
maintain commercial acceptance of our database-related products.

     To succeed,  we must maintain the  confidential  nature of criteria that we
have  acquired or developed  for the delivery of health care services in medical
specialty areas. The success of our knowledge and  information-related  business
depends on our ability to maintain the ownership rights to our products. We rely
on agreements with customers,  confidentiality  agreements with employees, trade
secrets,  trademarks  and patents to protect our ownership  rights.  These legal
protections and precautions may not prevent misappropriation of our intellectual
property. In addition,  substantial  litigation regarding  intellectual property
rights exists in the software  industry,  and we expect software  products to be
increasingly  subject  to  third-party  infringement  claims  as the  number  of
products and competitors in our industry segment grows.

Industry Risk

     Because  the  managed  care  industry  has  received  significant  negative
publicity there has been increased  activity,  regulation and review of industry
practices.  The managed care industry frequently receives  significant  negative
publicity.  The negative  publicity  has  contributed  to increased  legislative
activity,  regulation and review of industry  practices.  Legislative  activity,
regulation  and review may  adversely  affect our ability to market  products or
services,  may require us to change products and services,  and may increase the
regulatory burdens under which we operate.

     Our failure to comply  with,  or the costs of  complying  with,  government
regulation could affect our ability to grow by denying  licensing or restricting
payment for services.  Our  operations  are subject to extensive and  frequently
changing  federal,  state and local laws and  regulation  concerning  licensing,
conduct of operations,  acquisitions of business operating in our industry,  the
employment  of  physicians  and other  licensed  professionals  and  payment for
services.  These various types of regulatory  activity could restrict our growth
through  acquisition  or  otherwise,  by  limiting  or denying  licensing  or by
limiting the payment for services provided.

     Existing laws and  regulations  may be revised and new laws and regulations
could be adopted or become applicable to us. We may not be able to recover these
increased  costs  of  compliance  from  our  customers  and  future  changes  in
applicable  laws  and  regulations  could  affect  adversely  our  business  and
financial conditions.

                                       9
<PAGE>

Investment Risk

     The  market  price of our shares has been  extremely  volatile.  The market
prices of our  securities has shown  volatility  and  sensitivity in response to
many factors,  including general market trends, public communications  regarding
managed  care,  legislative  or  regulatory  actions,  health care cost  trends,
pricing  trends,  competition,  earnings  or  membership  reports of  particular
industry participants, and acquisition activity.

     Two  stockholders  own over 90% of the  outstanding  shares  of our  common
stock.   Our  two  largest   stockholders,   Horizon  BCBSNJ  and  CW  Ventures,
beneficially own more than 90% of the outstanding shares of our common stock. An
agreement  between our largest  stockholders and the Company states that Horizon
BCBSNJ and CW  Ventures  have agreed to vote their  shares in the  Company  with
respect to the election of our Board of Directors for:

     o    two designees of CW Ventures;

     o    two designees of Horizon BCBSNJ;

     o    two designees of our management  acceptable to CW Ventures and Horizon
          BCBSNJ; and

     o    one  non-employee  outside  director  acceptable  to CW  Ventures  and
          Horizon BCBSNJ.

     The Stockholders Agreement prevents us from taking certain material actions
without the consent of Horizon BCBSNJ and/or CW Ventures.  If Horizon BCBSNJ and
CW Ventures  were to vote in the same  manner on the  election of members of the
board of directors or on any other  matter  requiring  approval of a majority of
the  outstanding  shares  of common  stock,  the  matter  would be  approved  or
defeated,  as the  case may be,  depending  on the  vote of  these  two  largest
stockholders.

     Because our common stock is traded in the over-the-counter  market in "pink
sheets" or the "OTC Bulletin Board," our stock is illiquid.  Our common stock is
traded  in the  over-the-counter  market  in  so-called  "pink  sheets"  or,  if
available,  the "OTC  Bulletin  Board."  The OTC  Bulletin  Board is a regulated
quotation service that displays  real-time  quotes,  last-sale prices and volume
information in over-the-counter equity securities.  As a result, an investor may
find it more difficult to dispose of or to obtain accurate  quotations as to the
value of our  common  stock.  Because  our  common  stock is  subject to federal
securities  rules affecting  "penny stock",  the market liquidity for our common
stock is adversely affected. There is a limited public float in our common stock
as the  result  of the  ownership  of more than 90% of the  common  stock by two
stockholders.

     Our  common  stock  could  become  subject  to  additional  sales  practice
requirements for low priced securities. Our common stock could become subject to
Rule 15g-9 under the Securities  Exchange Act of 1934, which imposes  additional
sales practice  requirements  on  broker-dealers  that sell our shares of common
stock to persons other than established customers and "accredited  investors" or
individuals  with net worth in excess of $1,000,000 or annual incomes  exceeding
$200,000 or $300,000 together with their spouses.

     The rule:

        o       requires  a   broker-dealer   to  make  a  special   suitability
                determination   for  the   purchaser   and  have   received  the
                purchaser's  written consent to the  transaction  prior to sale.
                Consequently,  the rule may affect the ability of broker-dealers
                to  sell  our  securities  and may  affect  the  ability  of our
                shareholders  to sell  any of our  securities  in the  secondary
                market;

        o       generally  define a "penny  stock" to be any  non-NASDAQ  equity
                security that has a market price less than $5.00 per share or an
                exercise price of less than $5.00 per share,  subject to certain
                exceptions;

        o       requires broker dealers to deliver,  prior to a transaction in a
                "penny stock", a risk disclosure document relating to the "penny
                stock" market.

     Disclosure is also required to be made about  compensation  payable to both
the broker-dealer and the registered  representative  and current quotations for
the  securities.  In addition,  the rule requires that broker dealers deliver to

                                       10

<PAGE>

customers  monthly  statements  that disclose  recent price  information for the
"penny stock" held in the account and information on the limited market in penny
stocks.

Overview

     Management believes it must continue to refine its current service lines in
order to continue to add value to existing and potential customers. In addition,
the  Company   intends  to  broaden  the   services   offered  with  unique  and
complementary  cost-containment strategies.  Management intends to evaluate each
service in light of anticipated changes in the health care industry, the cost to
enter each such  service  line as well as the  availability  and  timeliness  of
competent  resources.  To  further  expand  its line of  services,  the  Company
contemplates   pursuing   alternatives  to  its  internal  product  and  service
development  efforts by entering into strategic  alliances and joint ventures as
well as through acquisitions.


Results of  Operations--12  Months Ended December 31, 2001 Compared to 12 Months
Ended December 31, 2000

Revenues

     Total  revenues  for the  years  ended  December  31,  2001 and  2000  were
approximately  $20,309,000  and  $18,237,000,   respectively.  The  increase  in
revenues of  approximately  $2,072,000 was primarily  attributable  to increased
revenue of approximately $480,000 due to increased membership on a major account
and increased revenue of approximately  $1,889,000 due to new contracts,  offset
by decreased performance revenue of approximately $297,000.


     Contracts that provide for  performance-based  revenues require claims data
that is supplied by the  Company's  customers to calculate  the  achievement  of
goals for each period.  Because  compilation  of claims data  typically lags the
Company's  actual  performance  by several  months,  it is  difficult  to ensure
complete  accuracy when  recording  performance-based  revenues.  Management has
worked  closely with its  customers  to secure more timely and accurate  data in
order to improve the  accuracy of reporting  its  revenues,  including,  in some
cases, the re-negotiation of a fixed fee based contract. Management believes its
estimated  performance-based  revenues  contained  in reported  revenues for the
twelve months ended December 31, 2001 are accurate based upon the data available
to management.  However,  information  received by the Company subsequent to the
filing of this Form 10-KSB could  result in an  adjustment  of its  estimates of
performance-based  revenues (which would be reflected in subsequent quarters, if
necessary).

Cost of services:

     Cost of  services  for the  years  ended  December  31,  2001 and 2000 were
approximately $10,953,000 and $9,164,000, respectively. The increase in the cost
of services of approximately $1,789,000 is largely due to increases in personnel
costs of  approximately  $895,000  due to  increased  staffing,  travel costs of
approximately  $223,000 and  professional  and consulting costs of approximately
$717,000,  primarily offset by a decrease in other costs of approximately $4,000
and a decrease in depreciation and amortization costs of approximately $42,000.

Operating Expenses

Selling, general and administrative:

     Selling,  general and administrative costs for the years ended December 31,
2001 and 2000 were $7,349,000 compared to $7,994,000, respectively. The decrease
in  selling,  general  and  administrative  costs of  approximately  $645,000 is
largely  due  to  decreases  in  personnel  costs  of  approximately   $418,000,
professional  and consulting costs of  approximately  $246,000,  information and
communication  costs of  approximately  $207,000,  travel costs of approximately
$50,000,  offset by an increase of approximately  $210,000 in facility costs and
an increase of approximately $66,000 in other general and administrative costs.

Depreciation and amortization:

     Depreciation  and  amortization  for  the  year  ended  December  31,  2001
aggregated $640,000, of which $131,000 is included in cost of services, compared
to $893,000 for the year ended  December 31, 2000, of which $173,000 is included
in cost of services.  The decrease in  depreciation  and  amortization  costs of
approximately  $253,000  is  largerly  due to assets  being  fully  depreciated.
Depreciation  and  amortization  for the year ended  December 31, 2001  includes
amortization  of intangible  assets  attributed to the Services  Agreement  with
Horizon  BCBSNJ in  connection  with the  acquisition  of CHCM of  approximately
$122,000 (See "Note A to Financial  Statements - Introduction and  Background"),
amortization of approximately $182,000 relating


                                       11
<PAGE>

to other  intangible  assets and  depreciation  of  property  and  equipment  of
approximately $336,000.

Interest income/expense:

     Interest  income for the years ended December 31, 2001 and 2000 was $92,000
and  $96,000,  respectively.  The decrease in interest  income of  approximately
$4,000 is due to the decline of interest rates in 2001.  Interest expense during
the fiscal  year ended  December  31, 2001 was $49,000  compared  with  interest
expense of  $43,000  for the year ended  December  31,  2000.  The  increase  in
interest  expense of approximately  $6,000 is largely due to increased  interest
costs relating to Horizon BCBSNJ indebtedness.

Financial Condition

Liquidity and capital resources:

     At  December  31,  2001,  the Company  had cash of  $4,297,000  and working
capital of  approximately  $4,525,000.  At December 31, 2000, the Company's cash
balance was $1,479,000 and working  capital was  approximately  $1,382,000.  The
increase  in  working  capital of  approximately  $3,143,000  is largely  due to
increased operating activities for the twelve months ended December 31, 2001.

     Net cash  provided  from  operating  activities  amounted to  approximately
$3,298,000  and  $123,000  for the  years  ended  December  31,  2001 and  2000,
respectively.  This increase in cash provided by operating activities is largely
due to an increase in accounts payable of approximately $222,000, an increase in
accrued expenses and other liabilities of approximately  $212,000, a decrease in
other customer receivable of approximately  $703,000, an increase in stockholder
receivable of approximately  $75,000,  an increase of  approximately  $41,000 in
other assets,  an increase in non-cash charges of approximately  $654,000 and an
increase of $1,541,000 in net profit.

     Net cash used by investing  activities  amounted to approximately  $651,000
and $53,000 for the years ended December 31, 2001 and 2000,  respectively.  This
increase  in cash used of  approximately  $598,000 is due to  increased  capital
expenditures during the current calendar year.

     Net cash  provided/(used) by financing activities amounted to approximately
$171,000 and  ($206,000)  for the years ended December 31, 2001 and December 31,
2000,  respectively.  This  increase in cash is primarily  due to proceeds  from
issuance of common stock of  approximately  $15,000 and  transfers of restricted
cash of approximately $156,000.

     While there can be no assurances, management believes that its cash on hand
and  projected  future cash flows from  operations  will  support the  Company's
anticipated cash needs for calendar year ending December 31, 2002.

     On November 1, 2000, the Company and Horizon BCBSNJ signed a  "Satisfaction
of Debt Agreement" which was subsequently  amended to extend the closing date to
September 30, 2001.  Under the terms of the agreement,  the Company has paid and
satisfied amounts outstanding to Horizon BCBSNJ of $1,577,740 by issuance of its
common stock.  The amount of $1,577,740  consists of the  promissory  note dated
April 1, 1997, with a balance at June 30, 2001 of $692,571,  the amount due to a
Horizon  BCBSNJ  subsidiary of $839,000,  and accrued  interest of $46,169.  The
transaction closed on August 16, 2001.

     The  Company  had a  credit  facility  with  a  bank  that  provided  for a
$1,500,000  working  capital  revolver  to be used for general  working  capital
needs, which was effective through June 30, 2000. The Company did not renew such
credit facility.


Item 7.  Financial Statements and Supplementary Data
-------  -------------------------------------------

     The  Financial  Statements  and  supplementary  data  required by this item
appear under the caption "Index to  Consolidated  Financial  Statements" and are
included elsewhere herein.

                                       12

<PAGE>

Item 8.  Changes in and Disagreements with Accountants On Accounting and
         Financial Disclosure
-------  -----------------------------------------------------------------------

     On July 31, 2001,  the Company  informed  Richard A. Eisner & Company,  LLP
("Eisner")  that it would no longer be  retained  as the  Company's  independent
auditor.  Eisner audited the Company's consolidated financial statements for the
years  ended  December  31,  2000 and 1999.  Eisner's  reports on the  Company's
consolidated financial statements for the years ended December 31, 2000 and 1999
did not contain an adverse  opinion nor a disclaimer  of opinion,  nor were such
reports  qualified or modified as to  uncertainty,  audit scope,  or  accounting
principles.

     During the years ended December 31, 2000 and 1999 and during the portion of
2001 prior to the decision to make a change, there were no disagreements between
the Company and Eisner on any matters of  accounting  principles  or  practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements,  if not resolved to the satisfaction of Eisner, would have caused
it to make  reference to the subject  matter of the  disagreement  in connection
with its reports.

     Effective July 31, 2001, the Company retained Arthur Andersen LLP ("AA") to
serve as its independent  auditor for fiscal year 2001. During the Company's two
most  recent  fiscal  years and during the portion of 2001 prior to the board of
directors'  decision,  the  Company  did  not  consult  with  AA  regarding  the
application of accounting  principles to a specified transaction nor the type of
audit  opinion that might be rendered on the  Company's  consolidated  financial
statements.


                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons
-------  -----------------------------------------------------------------------

The Company's  directors,  executive officers and control persons as of December
31, 2001 are as follows:
<TABLE>
<CAPTION>

   Name                           Age       Positions with the Company
   ----                           ---       --------------------------
<S>                  <C>          <C>       <C>
   William J. Marino (1)          58        Chairman of the Board of Directors
   Robert J. Pures (2)            56        Director
   Barry Weinberg (1)             63        Director
   Walter Channing, Jr. (2)       61        Director
   David J. McDonnell (1) (2)     59        Director
   David G. Noone (3)             48        Director
   Dennis J. Mouras (3)           45        Chief Executive Officer, President and Director
   Daniel J. Potterton            48        Executive Vice President, Operations
   R. Christopher Minor           47        Senior Vice President & Chief Financial Officer
   Michael Eleff, M.D.            47        Senior Vice President & Chief Medical Officer
---------------------------------------------------------------------
</TABLE>

(1)  Member of Compensation Committee
(2)  Member of Audit Committee
(3)  As of February 15, 2001, Mr. Noone resigned as Chief Executive  Officer and
     Mr. Mouras was appointed to that office.  Also, as of that date,  the Board
     of Directors  was expanded to seven members and Mr. Mouras was appointed as
     director.

                                     13
<PAGE>
     There is no family  relationship  between any director or executive officer
of the Company. At a meeting of the Company's Board of Directors held on January
14, 1997, a Compensation Committee and Audit Committee were formed.

     All directors of the Company are elected by the stockholders of the Company
or, in the case of a vacancy,  are  elected by the  directors  then in office to
hold office  until the next annual  meeting of  stockholders  of the Company and
until  their   successors  are  elected  and  qualify  or  until  their  earlier
resignation or removal.

     The Company, Horizon BCBSNJ and CW Ventures are parties to the Stockholders
Agreement,  pursuant to which  Horizon  BCBSNJ and CW Ventures  have agreed that
each of them shall be  entitled  to  designate  two  members  of the Board;  two
members  acceptable  to CW Ventures  and Horizon  BCBSNJ will be  designated  by
management of the Company,  and one member not associated with the operations of
the  Company  who  is  acceptable  to  CW  Ventures  and  Horizon   BCBSNJ  (See
"Description of Business - Introduction and Background"  above). CW Ventures has
designated  Barry  Weinberg  and Walter  Channing,  Jr. as members of the Board.
Horizon BCBSNJ has  designated  William J. Marino and Robert J. Pures as members
of the Board.

     The following sets forth certain  information with respect to each director
and executive officer of the Company:

     William J. Marino has been a director of the Company since  February  1996.
He has been President,  Chief Executive Officer and a director of Horizon BCBSNJ
since January  1994,  and Senior Vice  President of Horizon  BCBSNJ from January
1992 through  December 1993.  Mr. Marino also currently  serves as a director of
Computer Horizons, Inc.

     Robert J. Pures has been a director of the Company since  February 1996. He
has been Senior Vice President -  Administration,  Chief  Financial  Officer and
Treasurer of Horizon BCBSNJ since 1995, and Vice President Finance and Treasurer
of Horizon BCBSNJ from October 1985 through July 1995.

     Barry  Weinberg has been a director of the Company  since May 1997.  He has
been  President  of the CW Group,  Inc.,  a company  engaged in investing in the
health care field since 1981.  Mr.  Weinberg  currently  serves on the boards of
directors of several privately owned companies (including Tanical,  Inc.) and is
a general partner of CW Partners.

     Walter Channing,  Jr. has been a director of the Company since May 1997. He
has been Vice President of the CW Group, Inc., a company engaged in investing in
the health care field since 1981. Mr. Channing currently serves on the boards of
directors of several  privately owned  companies  (including  Alignis,  Inc. and
Clareos, Inc.) and is a general partner of CW Partners.

     David J.  McDonnell  has been a director of the Company since January 1997.
He served from  December  1993 to February  1997 as a director of Value  Health,
Inc., a company engaged in the health care service  business.  Prior to that, he
was employed by Preferred  Health Care Ltd., a behavioral  managed care company,
where he served as that company's Chief Executive Officer from 1988 to 1993, and
its  President  from 1988 to 1992.  Mr.  McDonnell  also  served as  Chairman of
Preferred Health Care Ltd.'s board of directors from 1991 to 1993. Mr. McDonnell
currently serves as a member of the compensation committee of the Brown Schools.

     David G. Noone has been a director of the Company since  January 1999,  CEO
from January 1999 until February 15, 2001 and an employee engaged in identifying
and pursuing strategic business combinations from February 15, 2001 to September
2001.  Prior to his service  with the Company,  Mr. Noone served from  September
1995 to February  1997 as the  President  and Chief  Executive  Officer of Value
Health  International,  a  subsidiary  of  Value  Health,  Inc.,  where  he  was
responsible  for the  migration of Managed  Health Care  strategies  to emerging
opportunity  markets in Europe,  Latin  America and Asia.  From December 1993 to
February  1995,  Mr. Noone served as President  and Chief  Executive  Officer of
Value Health Insurance Services Group,  another Value Health,  Inc.  subsidiary,
where he was  responsible  for the  development of a diversified  managed health
care company  serving the  property  casualty,  group health and auto  liability
sectors.  Prior to that time, Mr. Noone served as President and Chief  Operating
Officer  of  Preferred  Health  Care Ltd.  from 1992 to 1993 and in a variety of
capacities with that company from 1987 to 1992. Effective February 15, 2001, Mr.
Noone resigned his position as Chief Executive Officer of the Company.

                                       14
<PAGE>

     Dennis J. Mouras has served as the Chief  Executive  Officer and a director
of the Company  since  February 15, 2001.  He has served as President  and Chief
Operating  Officer of the Company since  October 30, 2000,  and as the Executive
Vice  President of Marketing and Sales of the Company from April 1999 to October
30, 2000. Prior to that, Mr. Mouras served as President of Intracorp,  Inc. from
January  1997 to January  1999 and as  President  and  General  Manager of CIGNA
health care of Colorado from October 1994 to January 1997.

     Daniel J. Potterton has served as Executive Vice President,  Operations, of
the Company since February 20, 2001. Prior to that, in 1999 Mr. Potterton was an
independent   consultant  to  health  plans  and  venture   capital   investment
institutions,  and  from  1995  to  1999,  he  served  as the  President  of MCC
Behavioral Care, Inc. a subsidiary of CIGNA health care.

     R.  Christopher  Minor  has  served  as  Senior  Vice  President  and Chief
Financial  Officer of the Company  since April 2000.  Prior to that,  Mr.  Minor
served as Senior Vice President & Treasurer of Hermitage  Insurance Company from
December 1997 to March 2000, and as Vice President and Chief  Financial  Officer
of One Call Medical,  Inc. from August 1996 to December 1997. Prior to that, Mr.
Minor served as Vice President and Chief Financial  Officer of Value  Behavioral
Health from January 1994 to March 1996.

     Michael Eleff,  M.D., has served as Senior Vice President and Chief Medical
Officer of the Company since October 1999;  and as the Company's  Vice President
for Medical  Management from June 23, 1997, to September 1999.  Prior to joining
the Company,  Dr. Eleff served as Chief  Medical  Officer and Vice  President of
Aetna Health Plans of Ohio since September 1995.


Compliance with Section 16(a) of the Securities Exchange Act of 1934:

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the  Company's  officers and  directors,  and persons who own more than 10% of a
registered  class  of the  Company's  equity  securities,  to  file  reports  of
ownership and changes in ownership with the  Securities and Exchange  Commission
and NASDAQ,  copies of which are required by  regulation  to be furnished to the
Company.  Based solely on review of the copies of such reports  furnished to the
Company,  the Company  believes  that during  fiscal 2001 its officers,
directors and ten percent (10%) beneficial  owners complied with all the Section
16(a) filing  requirements,  with the  exception  that Mr.  Noone  inadvertently
failed  to  report in a timely  manner  his  exercise  of  options  and grant of
options;  these  transactions  were reported late on a Form 4. In addition,  Mr.
Mouras  inadvertently  failed to  include  his  ownership  of 100  shares of the
Company's common stock on his initial Form 3 filing and on subsequent  reports;
these filings have all been amended.

                                       15

<PAGE>


Item 10.   Executive Compensation
--------   ----------------------

                             EXECUTIVE COMPENSATION

     The following table sets forth information concerning the compensation paid
or accrued by the Company for each of the three  calendar  years ended  December
31, 2001, to the individual  performing the function of Chief Executive  Officer
and each of the next  four  most  highly  compensated  executive  officers  with
compensation in excess of $100,000, during such periods.

<TABLE>
                                                         Summary Compensation Table


<CAPTION>

                                                          Annual Compensation                     Long Term
                                                                                                 Compensation
------------------------------------------------------------------------------------------------------------------------------------

                                 Year Ended                                                        Securities
     Name and Principal          December 31,    Salary         Bonus       Other Annual           Underlying          All Other
          Position                                                          Compensation(2)     Options/SARSs(#)     Compensation

------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>              <C>           <C>                 <C>                <C>
David G. Noone (3)                  2001        $101,538         $-0-          $13,208             400,000            $1,385 (1)
Chief Executive Officer             2000        $300,000         $-0-           $-0-                  -0-             $5,100 (1)
                                    1999        $295,385         $-0-           $-0-              3,600,000           $4,800 (1)
------------------------------------------------------------------------------------------------------------------------------------
Dennis J. Mouras (3)                2001        $285,000         $-0-          $31,774               -0-              $5,100 (1)
Chief Executive Officer &           2000        $229,615         $-0-          $64,728            2,500,000           $5,100 (1)
President                           1999        $155,769         $-0-          $41,538             500,000               $-0-
------------------------------------------------------------------------------------------------------------------------------------
Daniel J. Potterton(4)              2001        $165,000         $-0-          $65,675             500,000            $4,500 (1)
Senior Vice President               2000          $-0-           $-0-           $-0-                 -0-                 $-0-
& Chief Operating Officer           1999          $-0-           $-0-           $-0-                 -0-                 $-0-
------------------------------------------------------------------------------------------------------------------------------------
Christopher Minor                   2001        $210,000         $-0-           $-0-                 -0-              $5,100 (1)
Senior Vice President               2000        $145,385         $-0-           $-0-               700,000               $-0-
& Chief Financial Offer             1999          $-0-           $-0-           $-0-                 -0-                 $-0-
------------------------------------------------------------------------------------------------------------------------------------
Michael Eleff, MD(5)                2001        $232,000         $-0-           $-0-                 -0-              $5,097 (1)
Senior Vice President               2000        $232,000         $-0-           $-0-                 -0-              $5,100 (1)
& National Medical Director         1999        $213,385         $-0-           $-0-               813,000            $2,715 (1)
------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------

<FN>

(1)  Represents Company matching contributions to a 401(k) profit sharing/savings plan.

(2)  Other Annual Compensation includes taxable fringe benefits, unused accrued vacation days, relocation allowances, and, in
     the case of Mr. Mouras, for 2000 and 1999, commissions.

(3)  As of February 15, 2001, Mr. Noone resigned as Chief  Executive  Officer and Mr. Mouras was appointed to that office.
     Also, as of that date, the Board of Directors was expanded to seven members and Mr. Mouras was appointed as director.

(4)  Mr. Potterton joined the Company on February 20, 2001.

(5)  Dr. Eleff was designated as an executive officer by the Company's Board of Directors on April 30, 2001.

</FN>
</TABLE>

Compensation Plans

Stock Option Plan:

     The Board of Directors  initially adopted the Stock Option Plan ("Plan") on
June 6,  1996,  and the  stockholders  approved  the plan on  August  23,  1996.
Effective January 8, 1999 and January 26, 1999, the Board of Directors  approved
amendments  to the Plan to update the Plan and to increase  the number of shares
and certain other benefits  available under the Plan. The stockholders  approved
the amendments to the Plan on July 7, 1999. Additionally, effective November 30,
2000,  the Board of  Directors  and a  majority  of the  stockholders  acting by
written  consent,  approved  amendments  to the Plan to  increase  the number of
shares available under the Plan.

     The  Plan  is  administered  by a  Committee  of  the  Board  of  Directors
consisting  of at least two members who are  "outside  directors"  as defined in

                                       16
<PAGE>

Section 162(m) of the Internal Revenue Code who are also "disinterested persons"
as  defined  in  regulations  under the  Securities  and  Exchange  Act of 1934.
Employees, officers, and other persons selected by the Committee are eligible to
receive options under the Plan.

     Under the Plan,  as  amended,  the Company has  reserved  an  aggregate  of
22,648,000 shares of Common Stock for issuance pursuant to options granted under
the Plan.  Beginning on January 1, 2002, and on each  subsequent  January 1, the
number of shares  reserved  for  issuance  under the Plan shall be  increased by
three percent (3%),  provided,  however,  that no shares authorized  pursuant to
such annual  increase  shall be issued with respect to incentive  stock options.
Pursuant to the terms of the Plan,  the Committee  will select the persons to be
granted options and will determine:  (i) whether to grant a non-qualified  stock
option  and/or  an  incentive  stock  option;  (ii) the  number of shares of the
Company's  Common Stock that may be purchased  upon the exercise of such option;
(iii) the time or times when the option becomes  exercisable;  (iv) the exercise
price,  which  cannot be less than 100% of the fair  market  value of the Common
Stock on the date of grant for incentive stock options (110% of such fair market
value for incentive options granted to a person who owns or who is considered to
own stock  possessing  more than 10% of the total  combined  voting power of all
classes of stock of the Company);  (v) the duration of the option,  which cannot
exceed ten (10) years;  and (vi) the terms and provisions of option  agreements,
which may differ among  recipients,  and which,  unless the Committee  otherwise
determines,  shall be  substantially  in the forms  attached  as exhibits to the
Plan.  Incentive  stock  options  may only be  granted to  employees  (including
officers) of the Company  and/or any of its  subsidiaries.  Non-qualified  stock
options  may be  granted to any  employees  (including  employees  who have been
granted incentive stock options) and other persons who the Committee may select.
The Committee may issue  non-qualified stock options with an exercise price less
than 100% of fair market value of the Common Stock.

     All  options  granted  under the Plan are  exercisable  during  the  option
grantee's   lifetime   only  by  the   option   holder  (or  his  or  her  legal
representative) and generally only while such option grantee is in the Company's
employ.  Unless  the  Committee  otherwise  provides,  in the  event  an  option
grantee's  employment  is  terminated  other than by death or  disability,  such
person shall have three  months from the date of  termination  to exercise  such
option to the extent the option was  exercisable  at such date,  but in no event
subsequent  to the option's  expiration  date.  Unless the  Committee  otherwise
provides,  in the event of  termination of employment due to death or disability
of the option grantee, such person (or such person's legal representative) shall
have 12 months from such date to  exercise  such option to the extent the option
was  exercisable at the date of termination,  but in no event  subsequent to the
option's  expiration  date.  A grantee may  exercise an option by payment of the
exercise price via any lawful method authorized by the Committee.

     The Plan contains anti-dilution provisions which provide that, in the event
of any change in the  Company's  outstanding  capital stock by reason of a stock
dividend,  recapitalization,  stock  split,  combination,  exchange of shares or
merger or consolidation, the Committee or the Board shall proportionately adjust
the number of shares  covered by each option  granted and the exercise price per
share.  The  Committee's  or Board's  determinations  in these  matters shall be
conclusive.

     The Board of Directors  has the  authority to terminate the Plan as well as
to make changes in and additions to such Plan.  The Plan will  terminate on June
6, 2006, unless previously terminated by the Board of Directors. However, unless
approved by the  stockholders  of the Company,  the Board of  Directors  may not
change the aggregate number of shares subject to the Plan, materially modify the
requirements  of  eligibility  to such Plan or materially  increase the benefits
accruing to participants under such Plan.


                        Option Grants in Last Fiscal Year
--------------------------------------------------------------------------------

                       Number of      % of Total
                       Securities      Options
                       Underlying     Granted to    Exercise
           Name         Options      Employees in   Price
                      Granted (#)    Fiscal Year   per Share  Expiration Date
--------------------------------------------------------------------------------
David G. Noone          400,000          25%         $0.14     March 15, 2004
--------------------------------------------------------------------------------
Daniel J. Potterton     500,000          31%         $0.12     May 2, 2004
--------------------------------------------------------------------------------

                                       17
<PAGE>

                 Aggregated Option Exercises in Last Fiscal Year
                        and Fiscal Year-End Option Values


                             Number of                     Value of
                         Shares Underlying          Unexercised In-the-Money
                       Unexercised Options at              Options at
                          December 31, 2001            December 31, 2001
     Name              Exercisable/Unexercisable   Exercisable/Unexercisable (1)
     ----              -------------------------   -----------------------------

David G. Noone              511,111/288,889                $38,000/$0
Dennis J. Mouras          1,388,889/1,611,111                   $0/$0
Daniel J. Potterton               0/500,000                     $0/$0
R. Christopher Minor        397,222/302,778                     $0/$0
Michael Eleff, M.D.         790,417/22,583                 $75,090/$2,145

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

(1)  Calculated on the basis of the closing bid price on the OTC Bulletin  Board
     of the Company's Common Stock of $0.095 on December 31, 2001.


Employment Agreements and Board Appointments

Noone Employment Agreement

     Effective  as of January 8, 1999 the  Company  entered  into an  Employment
Agreement and Confidentiality,  Invention and Non-Compete Agreement of even date
therewith with David Noone,  its former Chief Executive  Officer  (collectively,
the "Noone  Agreements").  Under the Noone Agreements,  Mr. Noone received stock
options  as of the  commencement  date  providing  Mr.  Noone  with an option to
purchase  Common  Stock  in an  amount  equal  to  four  (4%)  of the  Company's
capitalization on such date, upon the terms and conditions set forth therein. As
of February  15,  2001,  Mr. Noone  resigned as Chief  Executive  Officer of the
Company,  and commenced serving as a part-time  employee of the Company pursuant
to an  employment  agreement  dated as of that date  which,  except as  provided
therein, superceded the Noone Agreements, as amended, and provided for an annual
salary of $90,000,  the grant of  incentive  stock  options to purchase  400,000
shares of the  Company's  Common  Stock and  certain  employee  benefits.  As of
September 30, 2001, Mr. Noone's  employment with the Company ceased.  On October
1, 2001,  the Board of  Directors  amended this last option grant to convert the
grant from  incentive  stock  options to  non-qualified  options  and to include
service as a director as service  with the  Company  for  purposes of the option
agreement's  change the  termination  of  employment  provisions to prevent this
option grant from lapsing upon Mr. Noone's termination of employment.  Mr. Noone
is subject to a  non-compete  restriction  during  the two years  following  the
termination of his employment

Mouras Employment Agreement

     As of October 25, 2000,  the Company  entered into an Employment  Agreement
with Dennis  Mouras  (the  "Mouras  Employment  Agreement"),  the current  Chief
Executive  Officer and President.  The Mouras Employment  Agreement  replaces an
earlier  agreement  between Mr. Mouras and the Company  during the time that Mr.
Mouras served as the Company's  Executive Vice President of Marketing and Sales.
The Mouras  Employment  Agreement  continues for a one-year term, after which it
renews  automatically for successive  one-year terms unless terminated by either
party on at least  sixty days notice  prior to an  anniversary  date.  Under the
Mouras Employment  Agreement,  Mr. Mouras is entitled to (a) an annual salary of
$285,000, (b) a grant of incentive stock options pursuant to the Company's Stock
Option Plan for  2,500,000  shares,  and (c) other  benefits set forth  therein.
Under  the  Mouras  Employment   Agreement,   Mr.  Mouras  waived  unpaid  sales
commissions to which he was otherwise  entitled under his prior  agreement.  The
Mouras Employment Agreement also contains a non-solicitation restriction for one
year after Mr. Mouras' employment.

Potterton Employment Agreement

     By letter  dated  January 31, 2001,  the Company  entered into an agreement

                                       18
<PAGE>

with  Daniel  J.  Potterton,  its  Executive  Vice  President,  Operations  (the
"Potterton  Agreement").  The term of the Potterton Agreement commenced February
20, 2001, pursuant to which Mr. Potterton is entitled to (a) an annual salary of
$195,000,  (b) a cash bonus opportunity of up to $30,000, (c) the grant of stock
options,  subject to Board approval, to purchase 500,000 shares of the Company's
Common Stock, and (d) other benefits set forth therein.

Minor  Employment Agreement

     Effective as of April 17,  2000,  the Company  entered  into an  Employment
Agreement with R. Christopher Minor, its current Senior Vice President and Chief
Financial  Officer  (the  "Minor  Agreement").  The term of the Minor  Agreement
commenced  April 17, 2000,  and  continues for a one-year  term,  after which it
renews  automatically for successive one-year terms unless otherwise  terminated
in accordance with its terms.  Under the Minor Agreement,  Mr. Minor is entitled
to (a) an annual  salary of  $210,000,  (b) a stock  option to purchase  500,000
shares of the Company's  Common Stock, and (c) other benefits set forth therein.
Mr.  Minor  is  subject  to a  non-compete  restriction  during  the term of his
employment and for a period of one year thereafter.

Eleff Employment Agreement

     Effective  as of June 23,  1997,  the Company  entered  into an  Employment
Agreement with Michael Eleff,  M.D., its current Senior Vice President and Chief
Medical Officer (the "Eleff Agreement"). The initial term of the Eleff Agreement
was for two  years;  since  June 23,  1999,  the  agreement  has  been  renewing
automatically  for successive  one-year terms in accordance  with its provisions
and is subject to  termination  by either  party in  accordance  with its terms.
Pursuant to the Eleff Agreement, Dr. Eleff (a) is presently being paid an annual
salary of $232,000,  (b) has received the grant of an incentive  stock option to
purchase  813,000 shares of the Company's  Common Stock, and (c) and is entitled
to other  benefits  set forth  therein.  Mr.  Eleff is subject to a  non-compete
restriction  during  the term of his  employment  and for a  period  of one year
thereafter.

Compensation of Directors

Generally

     No member of the  Board of  Directors  of the  Company  presently  receives
annual remuneration for acting in that capacity,  except disinterested directors
who  are  neither  officers  nor  associated  with  stockholders.  Disinterested
directors  had been paid $1,000 for each meeting of the Board of Directors  they
attended,  which amount was increased to $1,200 for each such meeting  effective
as of October 15, 2001. Disinterested Directors are also eligible for the grants
of options under the Directors Stock Option Plan.  Directors are also reimbursed
their reasonable  out-of-pocket  expenses for each attended meeting of the Board
or any committee  thereof.  As of December 31, 2001,  Mr.  McDonnell is the only
director  that has been  granted any options  pursuant  to the  Directors  Stock
Option Plan.  Mr.  McDonnell  was awarded as of January 26,  1999,  an option to
purchase  300,000  shares of the  Company's  Common  Stock.  The  option  may be
exercised at $.08 per share, and becomes exercisable as follows:  (a) 100,000 of
such  shares were  immediately  exercisable;  (b) 66,666 of such  shares  became
exercisable  on January 26, 2000;  and (c) the remaining  133,334 of such shares
become  exercisable in 24 equal monthly amounts  commencing on February 26, 2000
and on the 26th day of the  following 23 months.  The market price of the Common
Stock on January 26, 1999, the date the option was granted, was $.08 per share.

Directors Stock Option Plan

     The Company adopted the Director Stock Option Plan (the "Director Plan") on
June 6, 1996, and amended it on July 24, 1996.  Effective  January 26, 1999, the
Board of Directors  approved  amendments to the Director Plan to update the plan
and to increase the number of shares and certain other benefits  available under
the Director Plan. The stockholders approved the amendments to the Director Plan
on July 7, 1999.

     Pursuant to the terms of the  Director  Plan,  the Board of  Directors  may
grant  non-qualified  stock  options  to  non-employee   directors  (other  than
directors  appointed by CW Ventures or Horizon BCBSNJ) and will  determine:  (i)
the number of shares of the  Company's  Common Stock that may be purchased  upon
the  exercise  of such  option;  (ii) the time or times when the option  becomes
exercisable;  (iii) the  exercise  price,  and (iv) the  duration of the option,
which cannot exceed ten (10) years.  Under the Director Plan, an aggregate of 2%
of the Company's authorized number of shares of Common Stock (equal to 2,072,000
shares of Common Stock) is reserved for issuance.

                                       19

<PAGE>

     All options  granted  under the Director  Plan are  exercisable  during the
option  grantee's  lifetime  only by the  option  grantee  (or his or her  legal
representative).   In  the  event  of   termination   of  an  option   grantee's
directorship,  such  person  shall have three  months from such date to exercise
such  option  to the  extent  the  option  was  exercisable  as at the  date  of
termination,  but in no event subsequent to the option's expiration date. In the
event of  termination of an option  grantee's  directorship  due to death,  such
person's  legal  representative  shall have 12 months from such date to exercise
such option to the extent the option was  exercisable at the date of death,  but
in no event subsequent to the option's expiration date.

     The Directors  Stock Option Plan contains  anti-dilution  provisions  which
provide  that in the event of any change in the  Company's  outstanding  capital
stock by reason of stock dividend,  recapitalization,  stock split, combination,
exchange of shares or merger or consolidation,  the Board shall equitably adjust
the  aggregate  number  and  kind  of  shares  reserved  for  issuance,  and for
outstanding  options,  the  number  of shares  covered  by each  option  and the
exercise prices per share.

     The Board of Directors  has the  authority to terminate  the Director  Plan
with  respect to any shares of Common Stock not at the time subject to an option
as well as to make  changes  in and  additions  to such  plans.  The  plan  will
terminate on June 6, 2006, unless previously  terminated by the Board.  However,
the Board may not,  unless approved by the  stockholders of the Company,  change
the aggregate number of shares subject to the Director Plan,  materially  change
the requirements of eligibility to such plan or materially increase the benefits
accruing to participants under such plan.


Item 11.  Security Ownership of Certain Beneficial Owners and Management
--------  --------------------------------------------------------------

     The  following  table  sets forth as of March 14, 2002 certain  information
regarding  the  beneficial  ownership of the  Company's  Common Stock by (i) all
persons  known to the  Company  who own more than 5% of the  outstanding  Common
Stock,  (ii) each  director,  (iii) each of the executive  officers named in the
Summary  Compensation  Table, and (iv) all executive officers and directors as a
group.  Unless  otherwise  indicated,  the persons named in the table below have
sole  voting and  investment  power with  respect to all shares of Common  Stock
shown as beneficially owned by them.

                     Beneficial Ownership of Common Stock by
                       Certain Stockholders and Management

                                  Number of Shares
    Name of Beneficial Owner    Beneficially Owned (1)  Percent of Ownership (2)
    ------------------------    ----------------------  ------------------------

Principal Holders:
    Horizon Blue Cross and Blue Shield of
       New Jersey (3)(4)(5)             53,394,820                53.51%
    CW Ventures II, L.P.(5)(6)          37,617,420                37.70%

Management:
    William J. Marino (3)                      334                   *
    Robert J. Pures (3)                          -                   *
    Walter Channing, Jr. (5)(6)(7)      37,617,420                37.70%
    Charles Hartman (5)(6)(7)           37,617,420                37.70%
    Barry Weinberg (5)(6)(7)            37,617,420                37.70%
    David J. McDonnell (8)(9)(10)          300,000                   *
    David G. Noone (9)(10)               2,055,556                 2.03%
    Dennis J. Mouras (9)(10)             1,736,211                 1.71%
    Daniel J. Potterton (9)(10)            180,556                   *
    R. Christopher Minor (9)(10)           464,333                   *
    Michael Eleff, M.D. (9)(10)            813,000                   *

    All Directors and executive officers as
    a Group (8 persons) (7)(10)         43,167,076                48.87%
--------------------------
    * Less than 1%

                                       20

<PAGE>

(1)  Beneficial  ownership is  determined  in  accordance  with the rules of the
Securities  and  Exchange  Commission,   which  generally  attribute  beneficial
ownership  of  securities  to  persons  who  possess  sole or  shared  voting or
investment power with respect to those securities. Beneficial ownership includes
outstanding shares and shares subject to options exercisable within 60 days.

(2) The  percent  beneficially  owned by any  person or group  who held  options
exercisable  within 60 days has been  calculated  assuming all such options have
been  exercised in full and adding the number of shares  subject to such options
to the total number of shares issued and outstanding.

(3) The  business  address of Horizon  Blue Cross and Blue Shield of New Jersey,
Mr.  Marino,  Chairman of the Board of Directors of the Company,  and Mr. Pures,
directors of the Company, is 3 Penn Plaza East, Newark, New Jersey 07105.

(4) In the event that the  Services  Agreement  between  the Company and Horizon
BCBSNJ is  terminated  by Horizon  BCBSNJ,  CW  Ventures  will have the right to
purchase   Horizon   BCBSNJ's  shares  in  accordance  with  the  terms  of  the
Stockholders Agreement between Horizon BCBSNJ and CW Ventures.

(5) Horizon  BCBSNJ may be deemed a member of a "group," as such term is used in
Section 13(d) of the Exchange Act, with CW Ventures,  CW Partners III, L.P., the
general partner of CW Ventures ("CW  Partners"),  and Walter  Channing,  Charles
Hartman and Barry Weinberg, the general partners of CW Partners.  Horizon BCBSNJ
on the one hand, and CW Ventures, CW Partners and Messrs. Channing,  Hartman and
Weinberg,  on the  other,  disclaim  membership  in a group for the  purpose  of
Section 13(d) of the Exchange Act or for any other purpose.

(6) The  business  address of Messrs.  Channing and  Weinberg,  directors of the
Company, and Mr. Hartman is 1041 Third Avenue, New York, New York 10021.

(7) Includes 37,617,420 shares directly owned by CW Ventures.  Messrs. Channing,
Hartman and Weinberg are the general partners of CW Partners, and as such may be
deemed to beneficially own such shares and to have shared voting and disposition
power  over  such  shares.  Messrs.  Channing,  Hartman  and  Weinberg  disclaim
beneficial  ownership  of such shares  except to the extent of their  respective
direct and indirect partnership interests in CW Ventures.

(8) The business  address of Mr.  McDonnell,  a director of the Company,  is 301
Aqua Court, Naples, Florida 34102.

(9) The business address of Messrs.  Noone, Mouras,  Potterton and Minor and Dr.
Eleff is 485-C Route 1 South, Iselin, New Jersey 08830.

(10) 300,000 of Mr. McDonnell's  shares of Common Stock,  555,556 of Mr. Noone's
shares of Common Stock, 1,736,111 of Mr. Mouras' shares of Common Stock, 180,556
of Mr.  Potterton's  shares of Common Stock,  464,333 of Mr.  Minor's  shares of
Common Stock, 813,000 of Dr. Eleff's shares of Common Stock and 4,049,656 of the
shares of Common Stock of all directors  and  executive  officers as a group are
issuable upon the exercise of stock  options to purchase  shares of Common Stock
that were exercisable on March 14, 2002 or that will become  exercisable  within
60 days of such date.

Item 12.  Certain Relationships and Related Transactions
--------  ----------------------------------------------

     The Company has entered into a series of transactions  with Horizon BCBSNJ.
In February  1996,  the Company  issued the Horizon BCBSNJ Note, in the original
principal  amount of $3,600,000,  which provided for conversion  into 13,375,083
shares of Common Stock and the issuance of an  additional  24,242,337  shares of
Common  Stock for  failure of the  Company to meet  certain  revenue  and income
thresholds.  Accordingly, in conjunction with this obligation the Company issued
to Horizon  BCBSNJ  24,242,337  shares of Common Stock on February 27, 1997. For
further  description of the Horizon BCBSNJ Note, see  "Description of Business -
Introduction and Background." On August 16, 2001,  pursuant to a Satisfaction of
Debt Agreement dated November 1, 2000, among the Company, Horizon BCBSNJ and one
of Horizon BCBSNJ's  subsidiaries,  Horizon health care of New Jersey, Inc., the
Company  issued  15,777,400  shares  of its  common  stock in  exchange  for the
cancellation of approximately  $1.6 million owed by it. As of December 31, 2001,
Horizon  BCBSNJ is the  beneficial  owner of 53,394,820  shares of Common Stock,
constituting 53.51% of the Company's  outstanding Common Stock.  Currently,  the
Company is receiving from Horizon BCBSNJ approximately $1,300,000 per month as a
result of an oral agreement to provide it care management services. In addition,
two (2) of Horizon BCBSNJ officers are directors of the Company: Robert Pures, a
director of the Company,  is Senior Vice President,  Chief Financial Officer and
Treasurer of Horizon BCBSNJ;  and William  Marino,  a director of the Company is
also a director, President and Chief Executive Officer of Horizon BCBSNJ.

                                       21
<PAGE>

     The  Company  has  also  entered  into a  series  of  transactions  with CW
Ventures.  In February  1996,  the Company  issued the CW Note,  in the original
principal  amount of  $2,000,000,  which  provided for exchange  into  7,799,997
shares of Common Stock and the issuance of an  additional  25,914,222  shares of
Common  Stock  if  the  Company  failed  to  meet  certain  revenue  and  income
thresholds.  Accordingly, the Company issued to CW Ventures 25,914,222 shares of
Common  Stock on  February  27, 1997 for  failure to meet such  thresholds.  For
further  description of the CW Note, see "Description of Business - Introduction
and  Background." In February 1996 the Company also issued to CW Ventures the CW
Warrants.  For further  description  of the CW  Warrants,  see  "Description  of
Business - Introduction  and  Background."  Effective June 30, 1998, the CW Note
was  automatically  converted  into  7,799,997  shares  of Common  Stock.  As of
December 31, 2001, CW Ventures is the beneficial  owner of 37,617,420  shares of
Common Stock,  constituting 37.70% of the outstanding Common Stock. Also, two of
CW Venture  officers are directors of the Company:  Barry Weinberg is a director
of the Company and is also a General  Partner of CW Partners;  Walter  Channing,
Jr. is a director of the Company and is also a General Partner of CW Partners.

Item 13.  Exhibits and Reports on Form 8-K
--------  --------------------------------

(a)      Exhibits

Exhibit  Description of Exhibit
No.      ----------------------
-------

2.1      Deposit  Agreement dated October 31, 1994 among  Midlantic Bank,  N.A.,
         PMDX and the Registrant  incorporated by reference to Exhibit 2.1 filed
         with  the  Company's  Registration  Statement  on Form  S-1  (File  No.
         33-89176).

2.2      Certificate of Merger of Care Advantage Health Systems (f/k/a Advantage
         Health Systems,  Inc.), a Georgia corporation into CareAdvantage Health
         Systems,  Inc.,  a Delaware  corporation  incorporated  by reference to
         Exhibit 2.2 filed with the Company's Registration Statement on Form S-1
         (File No. 33-89176).

3.1      Registrant's Certificate of Incorporation  incorporated by reference to
         Exhibit 3.1 filed with the Company's Registration Statement on Form S-1
         (File No. 33-89176).

3.11     Amended and  Restated  Certificate  of  Incorporation  incorporated  by
         reference to the Company's Information Statement dated September 1996.

3.2      Registrant's  By-Laws  incorporated  by  reference to Exhibit 3.2 filed
         with  the  Company's  Registration  Statement  on Form  S-1  (File  No.
         33-89176).

10.1     Letter of intent dated  September 30, 1994 between the  Registrant  and
         New Jersey BCBS,  amendments thereto of December 29, 1994, February 27,
         1995 and April 4, 1995 and Interim  Services  Agreement  as of April 1,
         1995  between  the  Registrant  and New  Jersey  BCBS  incorporated  by
         reference  to  Exhibit  10.12  filed  with the  Company's  Registration
         Statement on Form S-1 (File No. 33-89176).

10.1(a)  December  22, 1995 Letter  Agreement  between  the  Registrant  and New
         Jersey  BCBS  extending  the  Letter of  Intent  and  Interim  Services
         Agreement  to March 31,  1996  incorporated  by  reference  to  Exhibit
         10.12(a) filed with the Company's  Annual Report on Form 10-KSB for the
         year ended October 31, 1996.

10.2     Lease  Agreement  dated  April 14,  1995  between  the  Registrant  and
         Metropolitan  Life  Insurance  Company  incorporated  by  reference  to
         Exhibit 10.13 filed with the Company's  Registration  Statement on Form
         S-1 (File No. 33-89176).

10.3     Letter of Intent  dated  January 2, 1996  between CW Ventures II, L.P.,
         the Registrant and its CareAdvantage  Health Systems,  Inc.  subsidiary
         incorporated  by  reference to Exhibit  10.14 filed with the  Company's
         Annual Report on Form 10-KSB for the year ended October 31, 1996.

10.4     Securities   Purchase  Agreement  dated  February  22,  1996  among  CW
         Ventures,  CAHS and the Registrant incorporated by reference to Exhibit
         10.15  filed with the  Company's  Annual  Report on Form 10-KSB for the
         year ended October 31, 1996.

                                       22
<PAGE>

10.5     CW Exchangeable  Note  incorporated by reference to Exhibit 10.16 filed
         with the  Company's  Annual  Report on Form  10-KSB  for the year ended
         October 31, 1996.

10.6     Stock  Acquisition  Agreement  dated February 22, 1996 among EHC, CHCM,
         CAHS and the  Registrant  incorporated  by reference  to Exhibit  10.17
         filed  with the  Company's  Annual  Report on Form  10-KSB for the year
         ended October 31, 1996.

10.7     EHC Exchangeable  Note incorporated by reference to Exhibit 10.18 filed
         with the  Company's  Annual  Report on Form  10-KSB  for the year ended
         October 31, 1996.

10.8     Services Agreement dated February 22, 1996 among Horizon BCBSNJ,  CHCM,
         CAHS and the  Registrant  incorporated  by reference  to Exhibit  10.19
         filed  with the  Company's  Annual  Report on Form  10-KSB for the year
         ended October 31, 1996.

10.9     Stockholders'  Agreement dated February 22, 1996 among EHC, CW Ventures
         and the  Registrant  incorporated  by reference to Exhibit  10.20 filed
         with the  Company's  Annual  Report on Form  10-KSB  for the year ended
         October 31, 1996.

10.10    Joint  Services  Agreement,  dated May 29, 1997,  among  Allied  Health
         Group,  Inc.,  CAHS, Inc. and the Company  incorporated by reference to
         Exhibit  10(c)  filed with the  Company's  Form  10-QSB for the quarter
         ended April 30, 1997.

10.11    Agreement,  dated as of  January  1, 1997  between  Blue Cross and Blue
         Shield of Rhode  Island  ("BCBSRI")  and  CAHS,  Inc.  incorporated  by
         reference to Exhibit 10(a) filed with the Company's Form 10-QSB for the
         quarter ended July 31, 1997.

10.12    Consultant  Agreement dated March 17, 1997, between  Coordinated Health
         Partners,  Inc.  d/b/a  Blue  Chip,  and  CAHS,  Inc.  incorporated  by
         reference to Exhibit 10(d) filed with the Company's Form 10-QSB for the
         quarter ended April 30, 1997.

10.13    Letter Agreement,  dated as of March 1, 1997,  between Medigroup of New
         Jersey,  Inc. d/b/a HMO Blue, the Company and Allied Health Group, Inc.
         incorporated  by  reference to Exhibit  10(e) filed with the  Company's
         Form 10-QSB for the quarter ended April 30, 1997.

10.14    First Amendment and Restatement of Services Agreement, dated as of June
         13,  1997,  among CAHS,  Inc.,  CHCM,  the  Company and Horizon  BCBSNJ
         incorporated  by  reference to Exhibit  10(b) filed with the  Company's
         Form 10-QSB for the quarter ended April 30, 1997.

10.15    Credit  Agreement  among Summit Bank,  the Company and Horizon  BCBSNJ,
         dated June 13, 1997  incorporated  by reference to Exhibit  10(f) filed
         with the Company's Form 10-QSB for the quarter ended April 30, 1997.

10.16    Revolving  Credit Note,  dated June 13, 1997 by the Company in favor of
         Summit Bank in the original principal amount of $1,500,000 incorporated
         by reference to Exhibit  10(f)(1)  filed with the Company's Form 10-QSB
         for the quarter ended April 30, 1997.

10.17    Term Note,  dated June 13, 1997, by the Company in favor of Summit Bank
         in  the  original  principal  amount  of  $1,500,000   incorporated  by
         reference to Exhibit  10(f)(2) filed with the Company's Form 10-QSB for
         the quarter ended April 30, 1997.

10.18    Promissory Note and Security Agreement, dated April 1, 1997, by CHCM in
         favor of Horizon BCBSNJ, in the original principal amount of $1,862,823
         incorporated by reference to Exhibit  10(f)(3) filed with the Company's
         Form 10-QSB for the quarter ended April 30, 1997.

                                       23
<PAGE>

10.19    Employment  Agreement between the Company and Thomas Riley,  dated June
         10,  1997,  as  supplemented  by a side  agreement  with CW and Horizon
         BCBSNJ,  of even date  therewith  incorporated  by reference to Exhibit
         10(a) filed with the Company's  Form 10-QSB for the quarter ended April
         30, 1997.

10.20    Services  Agreement as of January 5, 1998, by and between New York Care
         Plus Insurance Company, Inc. and the Company, incorporated by reference
         to Exhibit 10.20 filed with the Company's Form 10KSB for the year ended
         October 31, 1997.

10.21    Consultation Agreement dated October 1, 1997 by and between the Company
         and  David   McDonnell,   an  independent   director  of  the  Company,
         incorporated  by  reference to Exhibit  10.21 filed with the  Company's
         Form 10KSB for the year ended October 31, 1997.

10.22    Mutual  Release  Agreement  dated as of  January  6, 1998  between  the
         Company and  MEDecision,  Inc.,  incorporated  by  reference to Exhibit
         10.22 filed with the  Company's  Form 10-KSB for the year ended October
         31, 1997.

10.23    Separation  Agreement  dated  April  20,  1995  between  PMDX  and  the
         Registrant  incorporated  by  reference  to Exhibit 10.1 filed with the
         Company's Registration Statement on Form S-1 (File No. 33-89176).

10.24    Agreement  dated as of  January 1,  1995,  between  Maine BCBS and CAHS
         incorporated  by  reference  to Exhibit  10.2 filed with the  Company's
         Registration Statement on Form S-1 (File No. 33-89176).

10.25    Products  and  Services   Agreement  dated  November  7,  1994  between
         MEDecision,  Inc.  and CAHS  incorporated  by reference to Exhibit 10.3
         filed with the Company's  Registration  Statement on Form S-1 (File No.
         33-89176).

10.26    Registrant's  1995  Comprehensive  Stock Incentive Plan incorporated by
         reference  to  Exhibit  4.2  filed  with  the  Company's   Registration
         Statement on Form S-1 (File No. 33-89176).

10.27    Registrant's  1996 Stock Option Plan  incorporated  by reference to the
         Company's Information Statement dated September 1996.

10.28    Registrant's  1996 Director Stock Option Plan incorporated by reference
         to the Company's Information Statement dated September 1996.

10.29    Option Agreement between CW Ventures and Horizon BCBSNJ incorporated by
         reference to Exhibit 5 of Schedule 13(d) of Horizon  BCBSNJ  respecting
         beneficial ownership of Common Stock of the Company dated June 1997.

10.30    Settlement  and Release  Agreement  dated  January 13, 1998 between the
         Company and John Petillo  incorporated  by  reference to Exhibit  10.30
         filed with the  Company's  Form  10-KSB for the year ended  October 31,
         1997.

10.31    Settlement  and Release  Agreement  dated December 19, 1997 between the
         Company and Vince Achilarre  incorporated by reference to Exhibit 10.31
         filed with the  Company's  Form  10-KSB for the year ended  October 31,
         1997.

10.32    Employment Agreement between the Company and David Noone, dated January
         8, 1999,  incorporated  by  reference  to Exhibit  10.32 filed with the
         Company's Form 10-KSB for the year ended September 30, 1998.

10.33    Confidentiality,  Invention,  and  Non-Compete  Agreement  between  the
         Company and David Noone,  dated as of January 8, 1999,  incorporated by
         reference to Exhibit 10.33 filed with the Company's Form 10-KSB for the
         year ended September 30, 1998.

10.34    Settlement and Release Agreement entered into among Horizon BCBSNJ, the
         Company,  CAHS, and CHCM,  Enterprise Holding Company, Inc. ("EHC") and
         CW Ventures,  incorporated by reference to Exhibit 10(a) filed with the
         Company's Form 10-QSB for the quarter ended July 31, 1998.

                                       24

<PAGE>

10.35    Services  Agreement  dated  as of  January  1,  1999,  by  and  between
         HealthNow  New York,  Inc.  ("HNNY") and the Company,  incorporated  by
         reference to Exhibit 10.35 filed with the Company's Form 10-KSB for the
         year ended September 30, 1998.

10.36    Amended and Restated  Employment  Agreement,  dated as of September 29,
         1998, with Richard W. Freeman, M.D., CAHS and the Company (the "Freeman
         Employment  Agreement"),  incorporated  by reference  to Exhibit  10.36
         filed with the Company's  Form 10-KSB for the year ended  September 30,
         1998.

10.37    Employment  Agreement,  dated as of March 25, 1997,  by and between the
         Company  and Elaine del Rossi,  incorporated  by  reference  to Exhibit
         10.37 filed with the Company's Form 10-KSB for the year ended September
         30, 1998.

10.38    Confidentiality,  Invention and Non-Compete Agreement dated as of March
         25, 1998  between the  Company  and Elaine del Rossi,  incorporated  by
         reference to Exhibit 10.38 filed with the Company's Form 10-KSB for the
         year ended September 30, 1998.

10.39    Employment  Agreement,  effective  as of April 28,  1998,  by and among
         Stephan  D.  Deutsch,  M.D.,  the  Company  and CAHS,  incorporated  by
         reference to Exhibit 10.39 filed with the Company's Form 10-KSB for the
         year ended September 30, 1998.

10.40   Employment Agreement,  effective as of April 19, 1999, between Dennis M.
        Mouras,  and the Company,  incorporated  by  reference to Exhibit  10.40
        filed with the  Company's  Form 10-KSB for the year ended  December  31,
        1999.

10.41   Settlement Agreement Settlement Agreement dated August 9, 2000 among the
        Company,  Horizon health care of New Jersey,  Inc. and Allied  Specialty
        Care Services, Inc.

10.42   Employment   Agreement,   effective  as  of  April  17,  2000,   between
        Christopher Minor and the Company,  incorporated by reference to Exhibit
        10.2  filed  with  the  Company's  Form  10-QSB  for the  quarter  ended
        September 30, 2000.

10.43   Satisfaction  of Debt Agreement  among Horizon Blue Cross Blue Shield of
        New Jersey,  Horizon  health care of New  Jersey,  Inc.,  CareAdvantage,
        Inc.,  CareAdvantage  Health Systems,  Inc. and Contemporary health care
        Management, Inc,, incorporated by reference to Exhibit 10.1 filed on the
        Company's  Form 8-K dated  December  5, 2000 and filed on  December  13,
        2000.

10.44   Amendment  dated March 26, 2001 to  Satisfaction of Debt Agreement dated
        as of November 1, 2000 among Horizon BCBSNJ,  Horizon health care of New
        Jersey, Inc.,  CareAdvantage,  Inc.,  CareAdvantage Health Systems, Inc.
        and Contemporary health care Management,  Inc, incorporated by reference
        to Exhibit  10.1 filed with the  Company's  Form  10-QSB for the quarter
        ended March 31, 2001.

10.45    Service  Agreement  dated as of January 1, 2000 between Blue Cross Blue
         Shield  of  Rhode  Island,   Coordinated  Health  Partners,   Inc.  and
         CareAdvantage  Health  Systems,  Inc. ,  incorporated  by  reference to
         Exhibit 10.2 filed with the Company's Form 10-QSB for the quarter ended
         March 31, 2001.

16.1     Letter  regarding  change in accountants,  incorporated by reference to
         Exhibit 16.1 filed on the Company's Form 8-K dated June 6, 1996.

16.2     Letter  regarding  change in accountants,  incorporated by reference to
         Exhibit 16 filed on the Company's Form 8-K dated July 31, 2001.

23.1     Consent of Independent Auditors*

23.2     Consent of Independent Auditors*

99.1     Letter to Commisson Pursuant to Temporary Note 3T.*
--------------------------------------------
*filed herewith

(b)      Reports on Form 8-K

         None.

                                       25

<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                      CareAdvantage, Inc.
                                      -------------------
                                      (Registrant)

Date: March 27, 2002      By:/s/ Dennis J. Mouras
                             ---------------------------------------------------
                             Dennis J. Mouras, Chief Executive Officer, Director

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated:

Date: March 27, 2002      By:/s/ Dennis J. Mouras
                             ---------------------------------------------------
                             Dennis J. Mouras, Chief Executive Officer, Director
                             (Principal Executive Officer)

Date: March 27, 2002      By:/s/ Christopher Minor
                             ---------------------------------------------------
                             R. Christopher Minor, Senior VP & Chief Financial
                             Officer
                             (Principal Financial and Accounting Officer)

Date: March 27, 2002      By:/s/ William J. Marino
                             ---------------------------------------------------
                             William J. Marino, Director

Date: March 27, 2002      By:/s/ Robert J. Pures
                             ---------------------------------------------------
                             Robert J. Pures, Director

Date: March 27, 2002      By:/s/ Barry Weinberg
                             ---------------------------------------------------
                             Barry Weinberg, Director

Date: _____________       By:
                             ---------------------------------------------------
                             Walter Channing, Jr., Director

Date: March 27, 2002      By:/s/ David McDonnell
                             ---------------------------------------------------
                             David McDonnell, Director

 Date: ____________       By:
                             ---------------------------------------------------
                             David Noone, Director

                                       26
<PAGE>



                               CAREADVANTAGE, INC.
                                AND SUBSIDIARIES

                             CONSOLIDATED FINANCIAL
                                   STATEMENTS

                           DECEMBER 31, 2001 AND 2000


<PAGE>


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements                                                       Page
                                                                           ----

  Independent Auditors' Report                                               F-2

  Independent Auditors' Report                                               F-3

  Consolidated Balance sheets as of December 31, 2001 and 2000               F-4

  Consolidated Statements of operations for the years ended December 31,
  2001 and 2000                                                              F-5

  Consolidated Statements of stockholders' equity for the years ended
  December 31, 2001 and 2000                                                 F-6

  Consolidated Statements of cash flows for the years ended December 31,
  2001 and 2000                                                              F-7

  Notes to financial statements                                              F-8

                                      F-1
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors
CareAdvantage, Inc.

We have  audited the  consolidated  balance  sheet of  CareAdvantage,  Inc.  and
subsidiari


es as of December 31, 2001 and the related consolidated  statements of
operations,  changes in  stockholders'  equity  and cash flows for the year then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audit. The consolidated financial
statements of CareAdvantage,  Inc. and subsidiaries as of December 31, 2000 were
audited by other  auditors whose report,  dated February 22, 2001,  expressed an
unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of CareAdvantage,  Inc.
and subsidiaries as of December 31, 2001 and the results of their operations and
their  consolidated  cash  flows  for the year  then  ended in  conformity  with
accounting principles generally accepted in the United States.


Arthur Andersen LLP


New York, New York
March 18, 2002
                                      F-2
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors
CareAdvantage, Inc.
New York, New York

We have audited the accompanying  consolidated  balance sheet of  CareAdvantage,
Inc.  and  subsidiaries  as of December  31,  2000 and the related  consolidated
statements of operations,  stockholders' equity and cash flows for the year then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to express  and opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements enumerated above present fairly, in all
material respects,  the consolidated  financial position of CareAdvantage,  Inc.
and subsidiaries as of December 31, 2000, and the consolidated  results of their
operations  and their  cash  flows for the year then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ Richard A. Eisner & Company, LLP

New York, New York
February 22, 2001

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                      CAREADVANTAGE, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                                                                                                        December 31,
                                                                                              --------------------------------
                                                                                                   2001             2000
                                                                                              ---------------  ---------------
                                           ASSETS
Current assets:
<S>                                                                                           <C>              <C>
   Cash                                                                                       $     4,297,000  $     1,479,000
   Restricted cash                                                                                    100,000          256,000
   Accounts receivable:
      Stockholder                                                                                   1,303,000        1,228,000
      Other                                                                                           375,000        1,078,000
   Other current assets                                                                               139,000          145,000
                                                                                              ---------------  ---------------

        Total current assets                                                                        6,214,000        4,186,000

Property and equipment, at cost less accumulated depreciation                                         464,000          438,000
Intangible assets, net of accumulated amortization                                                    836,000          850,000
Other assets                                                                                           78,000          113,000
                                                                                              ---------------  ---------------

        Total Assets                                                                         $      7,592,000  $     5,587,000
                                                                                              ===============  ===============

                            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                                           $       412,000  $       190,000
   Due to stockholder                                                                                       0        1,532,000
   Accrued compensation and related benefits                                                          757,000          747,000
   Accrued expenses and other current liabilities                                                     520,000          335,000
                                                                                              ---------------  ---------------

        Total current liabilities                                                                   1,689,000        2,804,000


Commitments and contingencies

Stockholders' equity:
   Preferred stock - par value $.10 per share; authorized 10,000,000
      shares; none issued
   Common stock - par value $.001 per share, authorized 200,000,000
      shares; issued and outstanding 99,781,663 and 83,533,752 shares                                 100,000           83,000
   Additional paid in capital                                                                      23,800,000       22,238,000
   Accumulated deficit                                                                            (17,997,000)     (19,538,000)
                                                                                              ---------------  ---------------

                                                                                                    5,903,000        2,783,000
                                                                                              ---------------  ---------------
        Total Liabilities and Stockholders' Equity                                            $     7,592,000  $     5,587,000
                                                                                              ===============  ===============

</TABLE>

See notes to consolidated financial statements


                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                      CAREADVANTAGE, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations

                                                                                                      Year Ended
                                                                                                     December 31,
                                                                                        -----------------------------------
                                                                                               2001                2000
                                                                                        ---------------     ---------------
<S>                                                                                     <C>                 <C>
Net service revenue                                                                     $    20,309,000     $    18,237,000
Cost of services                                                                             10,953,000           9,164,000
                                                                                        ---------------     ---------------

Gross profit                                                                                  9,356,000           9,073,000
                                                                                        ---------------     ---------------

Operating expenses:
   Selling, general and administrative                                                        7,349,000           7,994,000
   Depreciation and amortization                                                                509,000             720,000
                                                                                        ---------------     ---------------

      Total operating expenses                                                                7,858,000           8,714,000
                                                                                        ---------------     ---------------

Operating income                                                                              1,498,000             359,000
Interest income                                                                                  92,000              96,000
Interest expense                                                                                (49,000)            (43,000)
                                                                                        ---------------     ---------------

                             Net income                                                 $     1,541,000      $      412,000
                                                                                        ===============     ===============

Net income per share of common stock -

              Basic                                                                           $ .02               $ .00
                                                                                              =====               =====

              Diluted                                                                         $ .02               $ .00
                                                                                              =====               =====

Weighted average number of common shares outstanding -

              Basic                                                                          89,420,000          83,090,000
                                                                                             ==========          ==========

              Diluted                                                                        91,465,000          89,612,000
                                                                                             ==========          ==========

</TABLE>



See notes to consolidated financial statements

                                      F-5

<PAGE>

<TABLE>
<CAPTION>
                                           CAREADVANTAGE, INC. AND SUBSIDIARIES

                                                Consolidated Statements of Stockholders' Equity

                                                            Common Stock
                                                        ----------------------
                                                         Number         Par
                                                           of          Value      Additional     Accumulated    Stockholders'
                                                         Shares        Amount      Capital         Deficit          Equity
                                                         ------       --------   ------------  -------------        ------

<S>                                                     <C>           <C>        <C>           <C>              <C>
Balance as of January 1, 2000                           82,189,883      82,000     22,062,000    (19,950,000)      2,194,000
Stock option  modification compensation expense                                       127,000                        127,000
Exercise of stock options                                1,343,869       1,000         49,000                         50,000

Net income for the year ended  December 31, 2000                                                     412,000         412,000
                                                          -----------   ---------   ------------  -------------    ------------

Balance as of December 31, 2000                         83,533,752      83,000     22,238,000    (19,538,000)      2,783,000
Stock  option   modification   compensation expense                                    14,000                         14,000
Exercise of stock options                                  470,000       1,000         14,000                         15,000
Issuance of shares for satisfaction of debt             15,777,400      16,000      1,534,000                      1,550,000
Net income for the year ended  December 31, 2001                                                   1,541,000       1,541,000

Balance as of December 31, 2001                         99,781,152    $100,000   $ 23,800,000   $(17,997,000)   $  5,903,000
                                                        ==========    ========   ============   ============    ============

</TABLE>

See notes to consolidated financial statements


                                      F-6
<PAGE>

                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                         Year Ended
                                                                                                        December 31
                                                                                             ----------------------------------
                                                                                                    2001             2000
                                                                                             ----------------  ----------------

Cash flows from operating activities:
<S>                                                                                          <C>              <C>
   Net income                                                                                $     1,541,000  $        412,000
   Adjustments to reconcile net income to net cash
   provided by operating activities:
        Depreciation and amortization                                                                640,000           893,000
        Compensation due to option issuance                                                           14,000           127,000
        Deferred revenue                                                                                   -          (160,000)
        Changes in:
           Accounts receivable stockholder                                                           (75,000)          (93,000)
           Accounts receivable other                                                                 703,000          (905,000)
           Other assets                                                                               41,000            64,000
           Accounts payable                                                                          222,000          (124,000)
           Accrued expenses and other current liabilities                                            212,000           (91,000)
                                                                                             ---------------  ----------------

              Net cash provided by operating activities                                            3,298,000           123,000
                                                                                             ---------------  ----------------

Cash flows from investing activities:
   Capital expenditures                                                                             (651,000)          (53,000)
                                                                                             ---------------  ----------------

              Net cash used by investing activities                                                 (651,000)          (53,000)
                                                                                             ---------------  ----------------

Cash flows from financing activities:
   Proceeds from issuance of common stock                                                             15,000            50,000
   Transfer from/to restricted cash                                                                  156,000          (256,000)
                                                                                             ---------------  ----------------

              Net cash provided by/used in financing activities                                      171,000          (206,000)
                                                                                             ---------------  ----------------

                              Net increase/(decrease) in cash                                      2,818,000          (136,000)
Cash - beginning of year                                                                           1,479,000         1,615,000
                                                                                             ---------------  ----------------

                                    Cash - end of year                                       $     4,297,000  $      1,479,000
                                                                                             ===============  ================

Supplemental disclosures of cash flow information:
   Interest paid                                                                             $       44,000
   Income taxes paid                                                                         $       51,000   $         42,000

Supplemental schedule of non-cash operating and financing activities:
   Due to stockholder                                                                        $   (1,532,000)
   Proceeds from issuance of common stock                                                    $    1,550,000

</TABLE>

                                      F-7

<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

NOTE A - INTRODUCTION AND BACKGROUND

     CareAdvantage,  Inc. ("CAI" or the  "Company"),  is a holding company that,
through its  subsidiaries,  CareAdvantage  Health  Systems,  Inc.  ("CAHS")  and
Contemporary  HealthCare Management,  Inc.  ("CHCM"),  operates  in one business
segment, providing health care cost containment services to health care insurers
and other health service  organizations  to reduce the costs of medical services
provided to their subscribers.

On February 22, 1996,  the Company  completed a series of  transactions  with CW
Ventures II, L.P. ("CW Ventures") and with Horizon Blue Cross and Blue Shield of
New Jersey ("Horizon BCBSNJ"). The transactions included the sale to CW Ventures
of (i)  3,903,201  shares of the Company's  common stock at a purchase  price of
$0.2562  per  share  for an  aggregate  of  $1,000,000;  and  (ii) a  $2,000,000
principal  amount 8%  Exchangeable  Note which matured on June 30, 1998 (the "CW
Note") and was then  converted  into  7,799,997  shares of the Company's  common
stock.

Concurrently  with the  February  22, 1996  closing of the  transaction  with CW
Ventures,  CAHS  purchased all of the  outstanding  capital stock of CHCM from a
wholly owned Horizon BCBSNJ subsidiary.  The CHCM stock was acquired in exchange
for CAHS's $3,600,000  principal amount 8% Exchangeable Note which, in turn, was
exchanged on September 30, 1996 for  13,375,000  shares of the Company's  common
stock.

Pursuant to the terms of the CW Note and the Horizon  BCBSNJ  Note,  because the
Company  failed to realize at least $15  million in net  revenues  or  specified
earnings  before taxes for its fiscal year ended  October 31, 1996,  on February
27,  1997,  the Company  issued  50,156,559  additional  shares of common  stock
resulting in an increase of both Horizon BCBSNJ and CW Ventures equity to 45% on
a fully diluted basis.

The Company has a service agreement with Horizon BCBSNJ that expired on June 30,
2000 and accounted for approximately  70% of net revenue for 2001.  Although the
precise terms of a contract  renewal have not yet been agreed upon,  the Company
has been  informed  by Horizon  BCBSNJ  that  Horizon  BCBSNJ  will  continue to
contract with the Company for care management services for the indemnity portion
of the business at least until January 1, 2003.

The  Company,  Horizon  BCBSNJ and CW Ventures  are  parties to a  stockholders'
agreement dated February 22, 1996 (the  "Stockholders'  Agreement") whereby each
of  Horizon  BCBSNJ and CW  Ventures  have  agreed to vote  their  shares in the
Company with respect to the election of the  Company's  Board of Directors  for:
(i) two designees of CW Ventures;  (ii) two designees of Horizon  BCBSNJ;  (iii)
two members of the  Company's  management  acceptable to CW Ventures and Horizon
BCBSNJ; and (iv) one nonemployee  outside director acceptable to CW Ventures and
Horizon BCBSNJ.  The  Stockholders'  Agreement  prevents the Company from taking
certain  material  actions without Horizon BCBSNJ's and/or CW Ventures' or their
designated directors' consent.

On November 1, 2000,  the Company and Horizon BCBSNJ signed a  "Satisfaction  of
Debt  Agreement"  which was  subsequently  amended to extend the closing date to
September 30, 2001.  Under the terms of the agreement,  the Company has paid and
satisfied amounts outstanding to Horizon BCBSNJ of $1,577,740 by issuance of its
common stock. The amount of $1,577,740 consists of a promissory note dated April
1,  1997,  with a balance  at June 30,  2001 of  $692,571,  the  amount due to a
Horizon  BCBSNJ  subsidiary of $839,000,  and accrued  interest of $46,169.  The
transaction closed on August 16, 2001. As a result of this transaction,  Horizon
BCBSNJ's current  percentage  ownership is 53.51% and CW Venture's  ownership is
37.70%.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1]  Principles of consolidation:

     The consolidated  financial statements include the accounts of CAI, and its
     wholly owned subsidiary, CAHS and CAHS's wholly owned subsidiary, CHCM. All
     intercompany   accounts   and   transactions   have  been   eliminated   in
     consolidation.

[2]  Revenue recognition:

     For its services,  the Company is compensated either (i) on a fixed-fee per
     subscriber basis; (ii) on a performance-based  method whereby the Company's
     compensation is based on achieving certain defined benchmarks; (iii) on the


                                      F-8
<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

     basis of a combination  of both fixed fee and  performance-based  fees; and
     (iv) on a fee-for-service basis.  Accordingly,  the Company has adopted the
     following  accounting  policies for revenue recognition under each contract
     category:

     (a)  Revenue  under  the  fixed-fee   arrangements   and  fee  for  service
          arrangements  is  recognized  as the  services  are  provided  and the
          related costs of services are incurred.

     (b)  Revenue  under the  partial  fixed  fee/incentive-type  agreements  is
          initially  recognized  for the  monthly  fixed fee  component  only as
          services  are provided  and related  costs of services  are  incurred.
          Incentives  based upon  performance  are estimated and recorded in the
          period earned.

[3]  Depreciation and amortization:

     Depreciation  is computed by the  straight-line  method and is based on the
     estimated  useful lives of the various  assets.  Estimated  useful lives of
     depreciable assets range from three to seven years.  Leasehold improvements
     are amortized using the straight-line method over the remaining term of the
     related lease.  Depreciation  expense amounted to $336,000 and $530,000 for
     the years ended December 31, 2001 and 2000, respectively.

     Intangible assets are amortized over their expected useful lives of five to
     seven years on the straight-line method (see Note C).

     Depreciation and amortization expense of $131,000 and $173,000 are included
     in cost of services for December 31, 2001 and 2000, respectively.

[4]  Per share data:

     Basic net income per share has been computed based on the weighted  average
     number of shares  outstanding  during the  periods.  Dilutive  earnings per
     share reflects the potential  dilution that could occur if dilutive options
     and warrants outstanding were exercised and converted into common stock.
<TABLE>
<CAPTION>

                                                                       December 31,
                                                                --------------------------
                                                                   2001            2000
                                                                ----------    ------------

<S>                                                             <C>             <C>
        Weighted average common shares outstanding - basic      89,420,000      83,090,000
        Effect of dilutive options                               2,045,000       6,522,000
                                                                ----------    ------------

        Weighted average common shares outstanding - diluted    91,465,000      89,612,000
                                                                ==========    ============
</TABLE>

     Options and warrants  outstanding at December 31, 2001 and 2000 to purchase
     approximately 5,648,000 and 2,871,000 shares of common stock, respectively,
     were not  included in the diluted  per share  computation.  During the year
     ended December 31, 2001, some of the options'  exercise prices were greater
     than the average  market  price of the common  stock during the period and,
     therefore, the effect would be antidilutive.

[5]  Concentration of credit risk:

     Financial  instruments that potentially  subject the Company to credit risk
     consist of cash and accounts  receivable.  The Company  maintains  its cash
     balances in high quality  financial  institutions.  The Company markets its
     services  primarily to Blue Cross and Blue Shield companies.  Collateral is
     not required to support these financial instruments.


                                      F-9
<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

[6]  Estimates:

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

[7]  Fair value of financial instruments:

     The fair value of financial instruments approximates their carrying amount.

[8]  Major customers:

     Two of the Company's  customers  accounted for  approximately  70% (Horizon
     BCBSNJ) and 9% (Blue Cross Blue Shield of Rhode Island) of net revenues for
     the year ended December 31, 2001 and approximately 75% (Horizon BCBSNJ) and
     12% (Blue Cross Blue Shield of Rhode  Island) of net  revenues for the year
     ended  December 31, 2000.  The loss of Horizon BCBSNJ would have a material
     adverse impact on the Company's business.

[9]  Stock-based compensation:

     The Financial Accounting Standard Board's Statement of Financial Accounting
     Standards ("SFAS") No. 123,  "Accounting for Stock-Based  Compensation"
     encourages, but does not require, companies to record compensation cost for
     stock-based  employee  compensation  plans at fair  value.  The Company has
     elected to continue to account for its stock-based compensation plans using
     the  intrinsic  value method  prescribed  by  Accounting  Principles  Board
     Opinion No. 25 ("APB No. 25"),  "Accounting  for Stock Issued to Employees"
     and to disclose  the pro forma  effects on net income  (loss) and  earnings
     (loss)  per share had the fair value of options  been  expensed.  Under the
     provisions of APB No. 25,  compensation  cost for stock options is measured
     as the excess,  if any, of the quoted market price of the Company's  common
     stock at the date of the  grant  over the  amount an  employee  must pay to
     acquire the stock (see Note G).

[10] Recently issued accounting standards:

     In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
     No.   141,   "Business   Combinations."   SFAS  No.  141   eliminates   the
     pooling-of-interest   method  of  accounting  for  business   combinations,
     requiring all business  combinations to be accounted for under the purchase
     method.  Accordingly,  net assets  acquired are recorded at fair value with
     any excess of cost over net assets assigned to goodwill.  SFAS No. 141 also
     requires that certain intangible assets acquired in a business  combination
     be recognized apart from goodwill.  The provisions of SFAS No. 141 apply to
     all  business  combinations  initiated  after  June  30,  2001.  Use of the
     pooling-of-interest   method  of  accounting  for  those   transactions  is
     prohibited. Adoption of SFAS No. 141 will not have a material impact on the
     Company's financial condition or results of operations.

     In June 2001, the FASB issued SFAS No. 142,  "Goodwill and Other Intangible
     Assets."  Under  SFAS No.  142,  amortization  of  goodwill  is  precluded;
     however,  its fair value is periodically  (at least annually)  reviewed and
     tested for  impairment.  Goodwill must be tested for impairment in the year
     of adoption,  including an initial test performed within six months. If the
     initial  test  indicates  a  potential  impairment,  then a  more  detailed
     analysis to determine  the extent of  impairment  must be completed  within
     twelve  months.  SFAS No. 142 requires  that useful  lives for  intangibles
     other than goodwill be reassessed  and  remaining  amortization  periods be
     adjusted accordingly. The reassessment must be completed prior to the first
     quarter of 2002. The provisions of SFAS No. 142 are effective for financial
     statements  issued for fiscal years  beginning after December 15, 2001. The
     provisions  of SFAS No. 142 will be applied  beginning  January 1, 2002, to
     goodwill and other intangible assets.  Amortization of intangibles  totaled
     $182,000  after  tax in  2001,  and  the  Company  expects  it  would  have
     approximated   $100,000  after  tax  in  2002  before  application  of  the
     non-amortization provisions of this statement.

     In August  2001,  the FASB issued  statement  No. 144  "Accounting  for the
     Impairment or Disposal of Long Lived  Assets,"  which updates and clarifies
     the accounting and reporting for impairment of assets held in use and to be
     disposed  of. SFAS No. 144,  among other things will require the Company to
     classify the  operations  and cash flow of  properties to be disposed of as
     discontinued operations. The provisions of SFAS No. 144 are effective

                                      F-10

<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

     for financial  statements issued for fisacal years beginning after December
     15,  2001,  and interim  periods  within  those  fiscal  years,  with early
     application encouraged.  The provisions of SFAS No. 144 generally are to be
     applied  prospectively.  The Company expects to adopt the provisions of the
     Statement  on January  1,  2002,  and does not expect it to have a material
     impact on the Company's financial position or results from operations.

NOTE C - INTANGIBLE ASSETS

Intangible assets, net of accumulated amortization consist of the following:

                                                    December 31,
                                            -----------------------------
                                                 2001           2000
                                            -------------   -------------
        Service agreement                   $   1,100,000   $   1,100,000
        License fees                            1,103,000       1,100,000
        Software development cost                 549,000         536,000
        Building Renovations                      274,000               -
                                            -------------   -------------

                                                3,026,000       2,736,000

        Less accumulated amortization           2,190,000       1,886,000
                                            -------------   -------------

                                            $     836,000   $     850,000
                                            =============   =============

Amortization expense for the years ended December 31, 2001 and 2000 was $304,000
and $363,000, respectively.

[1]  Service agreement:

     This amount represents the Company's service agreement with Horizon BCBSNJ,
     which was recorded  upon the  acquisition  of CHCM.  The remaining net book
     value amounts to $469,000 at December 31, 2001.

[2]  License agreement:

     The Company signed a five-year  agreement  commencing  November 1, 1994 for
     products and services (the "License Agreement") with a software development
     company which required an advance  payment of  $1,000,000.  Pursuant to the
     License Agreement,  the Company was granted a license for 100 users under a
     non-exclusive  five year license for the use of certain existing  software.
     In December 1998,  the Company  upgraded the software and extended the term
     through  the later of  October  31,  2001 or the  termination  of a license
     agreement  that a  subsidiary  of  Horizon  BCBSNJ  has with such  software
     development company which runs through November 2003.

[3]  Software development costs:

     Software   development   costs  are  capitalized   beginning  when  project
     technological feasibility is established and concluding when the product is
     ready for  release.  Research  and  development  costs  related to software
     development are expensed as incurred.  Amortization of software development
     costs  amounted to $173,000 and  $195,000 for the years ended  December 31,
     2001 and 2000, respectively.


                                      F-11

<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

NOTE D - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

                                                             December 31,
                                                             ------------
                                                         2001            2000
                                                         ----            ----

    Computer equipment                             $   2,597,000  $   2,276,000
    Furniture and fixtures                               498,000        485,000
    Office machines and telephone equipment              496,000        467,000
    Leasehold improvements                               537,000        537,000
                                                    ------------  -------------

                                                       4,128,000      3,765,000
    Less accumulated depreciation and amortization    (3,664,000)    (3,327,000)
                                                    ------------  -------------

                                                    $    464,000  $     438,000
                                                    ============  =============

NOTE E - DUE TO CUSTOMER

The amount due to  customer of $902,000  at  December  31, 1999  represented  an
estimate due based upon cash advanced  under a contract  between the Company,  a
customer, and a subsidiary of Horizon BCBSNJ. In November 1998, the contract was
terminated  and as a result of the ensuing  litigation,  a joint  settlement was
reached  between  the  three  parties  in  August  2000.  Under the terms of the
settlement, the Company agreed to pay Horizon BCBSNJ $839,000.  Interest, on the
second installment of $419,500,  payable in 2 equal installments on those dates,
accrued at the five-year U.S. Treasury yield, adjusted quarterly.  On August 16,
2001, this amount was satisfied (See Note F).

NOTE F - DUE TO STOCKHOLDER

The amount of  $1,532,000  due to  stockholder  at December 31, 2000  represents
$693,000 owed to Horizon BCBSNJ  pursuant to a $1,862,823  promissory note dated
April 1, 1997 and $839,000 pursuant to the settlement of litigation discussed in
Note E. On August 16,  2001,  this  amount  was  satisfied,  including  interest
payable of $46,169.


NOTE G - STOCKHOLDERS' EQUITY

[1]  Authorized shares:

     On  November  30, 2000 the Board of  Directors  approved an increase to the
     authorized number of shares of common stock from 103,600,000 to 200,000,000
     shares.

[2]  Preferred stock:

     The preferred stock is issuable in such series and with such  designations,
     preferences,  conversion  rights,  cumulative,  participating,  optional or
     other rights,  including  voting  rights,  qualifications,  limitations  or
     restrictions  thereof  as  determined  by the  Board  of  Directors  of the
     Company.  As such,  the Board of  Directors  of the  Company is entitled to
     authorize the creation and issuance of 10,000,000 shares of preferred stock
     in one or more  series with such  limitations  and  restrictions  as may be
     determined in the Board's sole discretion, with no further authorization by
     stockholders required for the creation and issuance thereof.

[3]  Stock option plans:

     The Board of Directors initially adopted the Stock Option Plan (the "Plan")
     on June 6, 1996, and the stockholders approved the Plan on August 23, 1996.
     Effective  January 8, 1999 and January  26,  1999,  the Board of  Directors
     approved  amendments  to the Plan to update  the Plan and to  increase  the
     number of shares and certain other benefits  available  under the Plan. The
     stockholders approved the amendments to the Plan on July 7, 1999.


                                      F-12
<PAGE>



                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES


NOTE G - STOCKHOLDERS' EQUITY  (CONTINUED)

[3]  Stock option plans:  (continued)

The Plan is administered by a Committee of the Board of Directors  consisting of
at least two members who are "outside directors" as defined in Section 162(m) of
the  Internal  Revenue Code who are also  "disinterested  persons" as defined in
regulations under the Securities and Exchange Act of 1934. Employees,  officers,
and other  persons  selected by the  Committee  are eligible to receive  options
under the Plan.

Under the Plan, as amended,  the Company has reserved an aggregate of 22,648,000
shares of Common Stock for issuance  pursuant to options granted under the Plan.
Beginning on January 1, 2002,  and on each  subsequent  January 1, the number of
shares  reserved for issuance under the Plan shall be increased by three percent
(3%),  provided,  however,  that no shares  authorized  pursuant  to such annual
increase shall be issued with respect to incentive  stock options.  Prior to the
Plan  Amendment,  the Plan  reserved an aggregate of 18,648,000 of the Company's
authorized common stock for issuance under the Plan.

Pursuant to the terms of the Plan,  the Committee  will select the persons to be
granted options and will determine:  (i) whether to grant a non-qualified  stock
option  and/or  an  incentive  stock  option;  (ii) the  number of shares of the
Company's  Common Stock that may be purchased  upon the exercise of such option;
(iii) the time or times when the option becomes  exercisable;  (iv) the exercise
price,  which  cannot be less than 100% of the fair  market  value of the Common
Stock on the date of grant for incentive stock options (110% of such fair market
value for incentive options granted to a person who owns or who is considered to
own stock  possessing  more than 10% of the total  combined  voting power of all
classes of stock of the Company);  (v) the duration of the option,  which cannot
exceed ten (10) years;  and (vi) the terms and provisions of option  agreements,
which may differ among  recipients,  and which,  unless the Committee  otherwise
determines,  shall be  substantially  in the forms  attached  as exhibits to the
Plan.  Incentive  stock  options  may only be  granted to  employees  (including
officers) of the Company  and/or any of its  subsidiaries.  Non-qualified  stock
options  may be  granted to any  employees  (including  employees  who have been
granted incentive stock options) and other persons who the Committee may select.
The Committee may issue  non-qualified stock options with an exercise price less
than 100% of fair market value of the Common Stock.

All options granted under the Plan are exercisable  during the option  grantee's
lifetime  only by the  option  holder (or his or her legal  representative)  and
generally only while such option grantee is in the Company's employ.  Unless the
Committee  otherwise  provides,  in the event an option grantee's  employment is
terminated  other  than by death or  disability,  such  person  shall have three
months from the date of  termination  to exercise  such option to the extent the
option was exercisable at such date, but in no event  subsequent to the option's
expiration  date.  Unless  the  Committee  otherwise  provides,  in the event of
termination of employment due to death or disability of the option grantee, such
person (or such person's  legal  representative)  shall have 12 months from such
date to  exercise  such option to the extent the option was  exercisable  at the
date of termination, but in no event subsequent to the option's expiration date.
An  optionee  may  exercise an option by payment of the  exercise  price via any
lawful method authorized by the Committee.

The Plan contains  anti-dilution  provisions which provide that, in the event of
any  change  in the  Company's  outstanding  capital  stock by reason of a stock
dividend,  recapitalization,  stock  split,  combination,  exchange of shares or
merger or consolidation, the Committee or the Board shall proportionately adjust
the number of shares  covered by each option  granted and the exercise price per
share.  The  Committee  or  Board's  determinations  in these  matters  shall be
conclusive.

The Board of Directors  has the  authority  to terminate  the Plan as well as to
make changes in and  additions to the Plan.  The Plan will  terminate on June 6,
2006, unless previously terminated by the Board. However, unless approved by the
stockholders  of the Company,  the Board may not change the aggregate  number of
shares subject to the Plan, materially modify the requirements of eligibility to
such Plan or materially  increase the benefits  accruing to  participants  under
such Plan.

                                      F-13
<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

NOTE G - STOCKHOLDERS' EQUITY  (CONTINUED)

[3]  Stock option plans:  (continued)

     The Company adopted the Director Stock Option Plan (the "Director Plan") on
     June 6, 1996, and amended it on July 24, 1996.  Effective January 26, 1999,
     the Board of Directors  approved  amendments to the Director Plan to update
     the plan and to increase  the number of shares and certain  other  benefits
     available under the Director Plan. The Stockholders approved the amendments
     to the Director Plan on July 7, 1999.

     Pursuant to the terms of the  Director  Plan,  the Board of  Directors  may
     grant  non-qualified  stock options to non-employee  directors  (other than
     directors  appointed by CW Ventures or Horizon  BCBSNJ and will  determine:
     (i) the  number  of  shares  of the  Company's  common  stock  that  may be
     purchased upon the exercise of such option; (ii) the time or times when the
     option becomes exercisable; (iii) the exercise price, and (iv) the duration
     of the option, which cannot exceed ten (10) years. Under the Director Plan,
     an aggregate of 2% of the Company's  authorized  number of shares of common
     stock (equal to 2,072,000 shares of common stock) is reserved for issuance.

     All options  granted  under the Director  Plan are  exercisable  during the
     option  grantee's  lifetime only by the option grantee (or his or her legal
     representative).  In  the  event  of  termination  of an  option  grantee's
     directorship,  such  person  shall  have  three  months  from  such date to
     exercise  such  option to the extent the option was  exercisable  as at the
     date of termination,  but in no event subsequent to the option's expiration
     date. In the event of termination of an option  grantee's  directorship due
     to death, such person's legal representative shall have 12 months from such
     date to exercise  such option to the extent the option was  exercisable  at
     the date of death,  but in no event  subsequent to the option's  expiration
     date.

     The Director Plan contains  anti-dilution  provisions which provide that in
     the  event of any  change in the  Company's  outstanding  capital  stock by
     reason  of stock  dividend,  recapitalization,  stock  split,  combination,
     exchange of shares or merger or  consolidation,  the Board shall  equitably
     adjust the aggregate  number and kind of shares reserved for issuance,  and
     for  outstanding  options,  the number of shares covered by each option and
     the exercise prices per share.

     The Board of Directors  has the  authority to terminate  the Director  Plan
     with  respect to any shares of common  stock not at the time  subject to an
     option  as well as to make  changes  in and  additions  to such  plan.  The
     Director Plan will terminate on June 6, 2006, unless previously  terminated
     by  the  Board.  However,  the  Board  may  not,  unless  approved  by  the
     stockholders of the Company,  change the aggregate number of shares subject
     to the Director Plan,  materially change the requirements of eligibility to
     such plan or  materially  increase  the benefits  accruing to  participants
     under such plan.

     The following is a summary of stock option  activity during the years ended
     December 31, 2001 and 2000:

<TABLE>
<CAPTION>

                                                                     2001                         2000
                                                       -----------------------------   ----------------------------
                                                                           Weighted                       Weighted
                                                                            Average                       Average
                                                                           Exercise                       Exercise
                                                            Shares           Price          Shares         Price
                                                       --------------    -----------   --------------   ------------
          <S>                                             <C>                <C>          <C>               <C>
          Outstanding at beginning of year                 15,297,000         $.23         14,449,000        $.21
          Granted                                           1,588,600          .12          4,705,000         .18
          Exercised                                          (470,000)         .03         (1,344,000)        .04
          Cancelled                                        (4,745,360)         .23         (2,513,000)        .10
                                                        -------------                   -------------

          Outstanding at end of year                       11,670,240          .22         15,297,000         .23
                                                        =============                   =============

          Exercisable at end of year                        7,813,056          .30          7,373,000         .32
                                                        =============                   =============
</TABLE>
                                                              F-14

<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

NOTE G - STOCKHOLDERS' EQUITY  (CONTINUED)

[3]  Stock option plans:  (continued)

     The following table summarizes  information about stock options at December
     31, 2001:
<TABLE>
<CAPTION>

                                                    Options Outstanding                       Options Exercisable
                                      ------------------------------------------------   -----------------------------
                                                           Weighted
                                                            Average
                                                           Remaining        Weighted                        Weighted
                                                          Contractual        Average                        Average
                    Range of             Number              Life           Exercise        Number          Exercise
                 Exercise Price        Outstanding         In Years           Price       Exercisable        Price
                 --------------       -------------      -------------     ----------    ------------       ---------
                <S>                     <C>                 <C>              <C>           <C>              <C>
                 $0.03 to $0.15          8,908,044           7.55             $0.09         5,683,360        $  0.08
                 $0.16 to $0.30          1,590,944           7.75              0.23         1,187,750           0.51
                 $0.31 to $0.45            635,000           8.25              0.40           405,694           0.40
                 $0.78                     125,000           5.60              0.78           125,000           0.78
                 $1.32                      82,084           4.70              1.32            82,084           1.32
                 $2.82                     329,168           4.70              2.82           329,168           2.82
                                     -------------                                      -------------
                 $0.03 to $2.82         11,670,240                            $0.22         7,813,056           0.30
                                     =============                                      =============


     The  weighted  average  fair value of options  granted in 2001 and 2000 was approximately $.13 and $.18,  respectively,
     using the Black-Scholes Option Pricing model utilizing the following assumptions:
</TABLE>

                                                   December 31,
                                        -------------------------------------
                                             2001                 2000
                                        --------------       ----------------

        Dividend yield                      0                     0
        Volatility                        158.9%                217.8%
        Risk free interest rate             4.56-6.16%            5.74-6.49%
        Expected life in years              5                     5

     Had the Company  elected to recognize  compensation  cost based on the fair
     value of the options at the date of grant as  prescribed  by SFAS 123,  pro
     forma net income/(loss)  for the years  ended  December  31,  2001 and 2000
     would have been approximately $997,000 and $(26,000) or $.01 and $(.00) per
     share, respectively.

[4]  Warrants:

     The Company  issued  166,667  warrants in 1996 to CW Ventures in connection
     with a bridge financing. The warrants expired unexercised in February 2001.

                                      F-15

<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

NOTE H - INCOME TAX

Under the asset and liability method used by the Company as outlined in SFAS No.
109,  "Accounting  for Income Taxes",  deferred tax assets and  liabilities  are
recognized for the future tax consequences attributable to temporary differences
between the  consolidated  financial  statements'  carrying  amounts of existing
liabilities and their respective tax bases.

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets are as follows:
<TABLE>
<CAPTION>

                                                                                             December 31,
                                                                                  ---------------------------------
                                                                                        2001              2000
                                                                                  ----------------   --------------
     <S>                                                                          <C>              <C>

      Current portion of deferred tax assets:
         Accrued liabilities                                                       $       172,000  $       254,000
                                                                                   ---------------  ---------------

                                                                                           172,000          254,000
                                                                                   ---------------  ---------------

      Noncurrent portion of deferred tax assets:
         Net operating loss carryforwards                                                4,217,000        5,262,000
         Excess of tax basis over book basis of fixed assets                               373,000          216,000
         Intangibles                                                                     1,128,000        1,276,000
         Alternative minimum tax credit                                                     55,000           55,000
                                                                                   ---------------  ---------------

                                                                                         5,773,000        6,809,000

      Deferred tax assets                                                                5,945,000        7,063,000
      Valuation allowance                                                               (5,945,000)      (7,063,000)
                                                                                   ---------------  ---------------

                                                                                   $             0  $             0
                                                                                   ===============  ===============
</TABLE>

The  Company's  deferred  tax  asset  has been  fully  reserved,  as its  future
realization   cannot  be   determined.   The  Company  has  net  operating  loss
carryforwards  of  approximately  $12,403,000  at December  31,  2001,  expiring
through  2019.  Pursuant  to  Section  382 of the  Internal  Revenue  Code,  the
carryforwards  are subject to  limitations on annual  utilization  based upon an
ownership  change  that  took  place  during  1996.  As of  December  31,  2001,
$8,186,000  of  the  net  operating  loss  carryforwards  are  subject  to  such
limitation.  It is reasonably  possible that the amount of the  carryforward and
its annual  utilization may be reduced upon  examination by the Internal Revenue
Service.   The  valuation   allowance  on  the  Company's   deferred  tax  asset
(decreased)/increased  approximately  ($1,118,000)  and  $521,000  for the years
ended  December  31, 2001 and 2000,  respectively.  The Company  incurred  state
income tax of  approximately  $165,000 and $25,000 for the years ended  December
31, 2001 and 2000, respectively.

The difference  between the federal  statutory rate and the Company's  effective
tax rate is as follows:

                                                            Year Ended
                                                           December 31,
                                                   ---------------------------
                                                       2001            2000
                                                   ------------   ------------

        Income taxes at federal statutory rate     $    362,000   $    150,000
        Permanent differences                            10,000         10,000
        Change in valuation reserve                    (372,000)      (160,000)
                                                   ------------   ------------

                                                   $          0   $          0
                                                   ============   ============


                                      F-16
<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

NOTE I - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

[1]  Potential uninsured exposure to litigation:

     On August 12,  1998,  Caruso v.  Petillo,  et al.,  was filed  against  the
     Company,  three  of its  former  officers,  John  J.  Petillo,  Vincent  M.
     Achillare and Lawrence A. Whipple,  and certain others in Superior Court of
     New Jersey by Robert T. Caruso,  a former  consultant  to the Company.  The
     complaint seeks damages in the  approximate  amount of $1.8 to $2.0 million
     on account of their termination of Mr. Caruso's consulting arrangement with
     the Company on a variety of legal  theories  including  breach of contract,
     fraud, conspiracy, promissory estoppel and negligent misrepresentation. The
     Company  received  a written  claim  for  indemnification  from  defendants
     Petillo and Achillare and, subject to their having acted in good faith, the
     Company  agreed  to  indemnify  them and  defendant  Whipple  to pay  their
     reasonable  defense costs.  On February 16, 2001, the court  dismissed this
     action with prejudice with respect to defendant Achillare. In May 2001, the
     matter was  scheduled  for trial  against the  remaining  defendants -- the
     Company and Messrs.  Petillo and Whipple.  Mr.  Caruso was unable to attend
     the trial due to his  incarceration  in a Federal  Detention  Center. As a
     result,  Mr.  Caruso  and  the  aforesaid  remaining  defendants  signed  a
     Stipulation of Dismissal,  terminating the action,  without prejudice,  and
     the action was ordered  dismissed.  Mr. Caruso has since appealed the grant
     of summary  judgment in favor of other defendants (but not summary judgment
     in  favor of Mr.  Achillare),  indicating  in the  Civil  Case  Information
     Statement filed in connection  with that appeal that "It is [Mr.  Caruso's]
     intent to reinstate the matter once Mr. Caruso is released from the Federal
     Detention  Center." In the event that Mr.  Caruso  seeks to  reinstate  the
     matter or  otherwise  commence  an action on the same  claims,  the Company
     plans to  vigorously  contest  such  claims.  The  Company  has  recorded a
     provision for Mr. Caruso's contingent claim. There can be no assurance that
     this  provision  will be  sufficient  to satisfy  this  claim.  The Company
     received  notice  from  its  directors  and  officers  liability  insurance
     carrier,  Princeton  Insurance  Company,  that it denied  coverage  in this
     matter;  in  September  2001,  the  Company  commenced  litigation  against
     Princeton  Insurance  Company  contesting its decision to deny coverage and
     seeking damages  therefor.  Princeton has denied  liability in that lawsuit
     and has  counter-claimed  against the Company  for its  attorneys'  fees in
     defending the lawsuit.  The Company  believes the  counterclaim  is without
     merit.

[2]  Professional liability:

     In providing  utilization review and case management services,  the Company
     makes recommendations  regarding benefit plan coverage based upon judgments
     and established protocols as to the appropriateness of the proposed medical
     treatment.  Consequently,  the Company could have  potential  liability for
     adverse medical  results.  The Company could become subject to claims based
     upon the denial of health  care  benefits  and claims  such as  malpractice
     arising from the acts or omissions of health care  professionals.  Although
     the Company does not believe that it engages in the practice of medicine or
     that it delivers medical services directly,  no assurance can be given that
     the  Company  will not be  subject to  litigation  or  liability  which may
     adversely  affect its  financial  condition  and  operations  in a material
     manner.  Although the Company maintains comprehensive general liability and
     professional liability insurance coverage, including coverage for liability
     in connection with the performance of medical  utilization  review services
     and typically obtains indemnification from its customers, no assurances can
     be given  that such  coverage  will be  adequate  in the event the  Company
     becomes subject to any of the above described claims.

[3]  Operating leases:

     Minimum  annual lease  payments  office space and equipment for each of the
     next five years ending December 31 and thereafter are as follows:

                    Year
                   Ending                         Payments
              ---------------                 ---------------

              2002                            $     726,000
              2003                                  719,000
              2004                                  710,000
              2005                                  710,000
              2006                                  730,000
              Thereafter                          3,132,000
                                              -------------

                                              $   6,727,000
                                              =============

     Rent  expense for the years ended  December  31, 2001 and 2000 was $728,000
     and $725,000, respectively.

                                      F-17
<PAGE>
                     CAREADVANTAGE, INC. AND SUBSIDIAIRIES

NOTE I - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS  (CONTINUED)

[4]  Employee benefit plans:

     The Company administers a  profit-sharing/savings  plan pursuant to Section
     401(k) of the  Internal  Revenue  Code.  The plan  provides  for a matching
     contribution by the Company up to a maximum level, which in no case exceeds
     3% of the employees'  compensation.  Company contributions are fully vested
     immediately.

     The Company's matching contribution was $232,000 and $216,000 for the years
     ended December 31, 2001 and 2000, respectively.


NOTE J - CREDIT FACILITY

The Company had a credit  facility  with a bank that  provided for a $1,500,000,
working capital revolver to be used for general working capital needs, which was
effective through June 30, 2000. The Company did not renew such credit facility.


NOTE K - STAND BY LETTER OF CREDIT

In September 1998, the bank issued an irrevocable letter of credit in the amount
of $250,000, for the account of the Company in favor of a vendor as security for
the Company's obligation under a non-cancelable  operating lease. This letter of
credit was issued under the Company's credit  facility.  As of December 31, 2000
the $250,000 irrevocable letter of credit is secured by a certificate of deposit
in the amount of  $250,000.  On February  15,  2001,  the vendor  cancelled  the
irrevocable  letter of credit.  During 2001, the Company obtained an irrevocable
letter of credit in the  amount of  $100,000  in favor of the  landlord  for the
Company's obligation under its real estate lease.

NOTE L - SHAREHOLDER OPTION AGREEMENT

In June 1997, CW Ventures  granted to Horizon  BCBSNJ an option to purchase from
it  10,031,238  shares of common stock at $0.38 per share (the " Horizon  BCBSNJ
Option"). The Horizon BCBSNJ Option would have been exercisable in the event the
Company had achieved  certain goals for defined periods  through  February 2000,
which goals were not achieved.  The option was granted by CW Ventures to Horizon
BCBSNJ in consideration  of Horizon BCBSNJ revising its Services  Agreement with
the Company,  entering into a joint services  agreement  between Horizon BCBSNJ,
the Company and an unrelated party, and an agreement to guaranty the Summit Bank
Credit Agreement.


                                      F-18


<PAGE>

                                  EXHIBIT INDEX

Exhibit  Description of Exhibit
-------  ----------------------
No.
---

2.1     Deposit  Agreement dated October 31, 1994 among  Midlantic  Bank,  N.A.,
        PMDX and the Registrant  incorporated  by reference to Exhibit 2.1 filed
        with  the  Company's  Registration  Statement  on  Form  S-1  (File  No.
        33-89176).

2.2     Certificate of Merger of Care Advantage  Health Systems (f/k/a Advantage
        Health Systems,  Inc.), a Georgia corporation into CareAdvantage  Health
        Systems,  Inc.,  a Delaware  corporation  incorporated  by  reference to
        Exhibit 2.2 filed with the Company's  Registration Statement on Form S-1
        (File No. 33-89176).

3.1     Registrant's  Certificate of Incorporation  incorporated by reference to
        Exhibit 3.1 filed with the Company's  Registration Statement on Form S-1
        (File No. 33-89176).

3.11    Amended  and  Restated  Certificate  of  Incorporation  incorporated  by
        reference to the Company's Information Statement dated September 1996.

3.2     Registrant's By-Laws incorporated by reference to Exhibit 3.2 filed with
        the Company's Registration Statement on Form S-1 (File No. 33-89176).

10.1    Letter of intent dated September 30, 1994 between the Registrant and New
        Jersey BCBS,  amendments thereto of December 29, 1994, February 27, 1995
        and April 4, 1995 and  Interim  Services  Agreement  as of April 1, 1995
        between the Registrant and New Jersey BCBS  incorporated by reference to
        Exhibit  10.12 filed with the Company's  Registration  Statement on Form
        S-1 (File No. 33-89176).

10.1(a) December 22, 1995 Letter Agreement between the Registrant and New Jersey
        BCBS  extending the Letter of Intent and Interim  Services  Agreement to
        March 31, 1996  incorporated by reference to Exhibit 10.12(a) filed with
        the  Company's  Annual  Report on Form 10-KSB for the year ended October
        31, 1996.

10.2    Lease  Agreement  dated  April  14,  1995  between  the  Registrant  and
        Metropolitan Life Insurance Company incorporated by reference to Exhibit
        10.13 filed with the Company's  Registration Statement on Form S-1 (File
        No. 33-89176).

10.3    Letter of Intent dated January 2, 1996 between CW Ventures II, L.P., the
        Registrant  and  its  CareAdvantage  Health  Systems,   Inc.  subsidiary
        incorporated  by  reference  to Exhibit  10.14 filed with the  Company's
        Annual Report on Form 10-KSB for the year ended October 31, 1996.

10.4    Securities Purchase Agreement dated February 22, 1996 among CW Ventures,
        CAHS and the Registrant incorporated by reference to Exhibit 10.15 filed
        with the  Company's  Annual  Report on Form  10-KSB  for the year  ended
        October 31, 1996.

10.5    CW  Exchangeable  Note  incorporated by reference to Exhibit 10.16 filed
        with the  Company's  Annual  Report on Form  10-KSB  for the year  ended
        October 31, 1996.

10.6    Stock  Acquisition  Agreement  dated  February 22, 1996 among EHC, CHCM,
        CAHS and the Registrant incorporated by reference to Exhibit 10.17 filed
        with the  Company's  Annual  Report on Form  10-KSB  for the year  ended
        October 31, 1996.

10.7    EHC Exchangeable  Note  incorporated by reference to Exhibit 10.18 filed
        with the  Company's  Annual  Report on Form  10-KSB  for the year  ended
        October 31, 1996.

10.8    Services  Agreement dated February 22, 1996 among Horizon BCBSNJ,  CHCM,
        CAHS and the Registrant incorporated by reference to Exhibit 10.19 filed
        with the  Company's  Annual  Report on Form  10-KSB  for the year  ended
        October 31, 1996.

<PAGE>

10.9    Stockholders'  Agreement  dated February 22, 1996 among EHC, CW Ventures
        and the Registrant incorporated by reference to Exhibit 10.20 filed with
        the  Company's  Annual  Report on Form 10-KSB for the year ended October
        31, 1996.

10.10   Joint Services Agreement, dated May 29, 1997, among Allied Health Group,
        Inc.,  CAHS,  Inc. and the Company  incorporated by reference to Exhibit
        10(c) filed with the  Company's  Form 10-QSB for the quarter ended April
        30, 1997.

10.11   Agreement,  dated as of  January  1, 1997  between  Blue  Cross and Blue
        Shield  of Rhode  Island  ("BCBSRI")  and  CAHS,  Inc.  incorporated  by
        reference to Exhibit 10(a) filed with the Company's  Form 10-QSB for the
        quarter ended July 31, 1997.

10.12   Consultant  Agreement dated March 17, 1997,  between  Coordinated Health
        Partners, Inc. d/b/a Blue Chip, and CAHS, Inc. incorporated by reference
        to Exhibit  10(d) filed with the  Company's  Form 10-QSB for the quarter
        ended April 30, 1997.

10.13   Letter  Agreement,  dated as of March 1, 1997,  between Medigroup of New
        Jersey,  Inc. d/b/a HMO Blue, the Company and Allied Health Group,  Inc.
        incorporated by reference to Exhibit 10(e) filed with the Company's Form
        10-QSB for the quarter ended April 30, 1997.

10.14   First Amendment and Restatement of Services Agreement,  dated as of June
        13,  1997,  among CAHS,  Inc.,  CHCM,  the  Company  and Horizon  BCBSNJ
        incorporated by reference to Exhibit 10(b) filed with the Company's Form
        10-QSB for the quarter ended April 30, 1997.

10.15   Credit  Agreement  among  Summit Bank,  the Company and Horizon  BCBSNJ,
        dated June 13, 1997  incorporated  by reference  to Exhibit  10(f) filed
        with the Company's Form 10-QSB for the quarter ended April 30, 1997.

10.16   Revolving  Credit  Note,  dated June 13, 1997 by the Company in favor of
        Summit Bank in the original principal amount of $1,500,000  incorporated
        by reference to Exhibit  10(f)(1)  filed with the Company's  Form 10-QSB
        for the quarter ended April 30, 1997.

10.17   Term Note,  dated June 13, 1997,  by the Company in favor of Summit Bank
        in the original principal amount of $1,500,000 incorporated by reference
        to Exhibit 10(f)(2) filed with the Company's Form 10-QSB for the quarter
        ended April 30, 1997.

10.18   Promissory Note and Security Agreement,  dated April 1, 1997, by CHCM in
        favor of Horizon BCBSNJ, in the original  principal amount of $1,862,823
        incorporated  by reference to Exhibit  10(f)(3) filed with the Company's
        Form 10-QSB for the quarter ended April 30, 1997.

10.19   Employment  Agreement  between the Company and Thomas Riley,  dated June
        10,  1997,  as  supplemented  by a side  agreement  with CW and  Horizon
        BCBSNJ,  of even date  therewith  incorporated  by  reference to Exhibit
        10(a) filed with the  Company's  Form 10-QSB for the quarter ended April
        30, 1997.

10.20   Services  Agreement as of January 5, 1998,  by and between New York Care
        Plus Insurance Company, Inc. and the Company,  incorporated by reference
        to Exhibit 10.20 filed with the Company's Form 10-KSB for the year ended
        October 31, 1997.

10.21   Consultation  Agreement dated October 1, 1997 by and between the Company
        and  David   McDonnell,   an   independent   director  of  the  Company,
        incorporated by reference to Exhibit 10.21 filed with the Company's Form
        10-KSB for the year ended October 31, 1997.

10.22   Mutual Release Agreement dated as of January 6, 1998 between the Company
        and MEDecision,  Inc.,  incorporated by reference to Exhibit 10.22 filed
        with the Company's Form 10KSB for the year ended October 31, 1997.

                                       2
<PAGE>

10.23   Separation   Agreement  dated  April  20,  1995  between  PMDX  and  the
        Registrant  incorporated  by  reference  to Exhibit  10.1 filed with the
        Company's Registration Statement on Form S-1 (File No. 33-89176).

10.24   Agreement  dated as of  January  1,  1995,  between  Maine BCBS and CAHS
        incorporated  by  reference  to Exhibit  10.2  filed with the  Company's
        Registration Statement on Form S-1 (File No. 33-89176).

10.25   Products  and  Services   Agreement   dated  November  7,  1994  between
        MEDecision,  Inc.  and CAHS  incorporated  by  reference to Exhibit 10.3
        filed with the  Company's  Registration  Statement on Form S-1 (File No.
        33-89176).

10.26   Registrant's  1995  Comprehensive  Stock Incentive Plan  incorporated by
        reference to Exhibit 4.2 filed with the Company's Registration Statement
        on Form S-1 (File No. 33-89176).

10.27   Registrant's  1996 Stock  Option Plan  incorporated  by reference to the
        Company's Information Statement dated September 1996.

10.28   Registrant's  1996 Director Stock Option Plan  incorporated by reference
        to the Company's Information Statement dated September 1996.

10.29   Option Agreement between CW Ventures and Horizon BCBSNJ  incorporated by
        reference to Exhibit 5 of Schedule  13(d) of Horizon  BCBSNJ  respecting
        beneficial ownership of Common Stock of the Company dated June 1997.

10.30   Settlement  and Release  Agreement  dated  January 13, 1998  between the
        Company and John Petillo  incorporated  by  reference  to Exhibit  10.30
        filed with the  Company's  Form  10-KSB for the year ended  October  31,
        1997.

10.31   Settlement  and Release  Agreement  dated  December 19, 1997 between the
        Company and Vince  Achilarre  incorporated by reference to Exhibit 10.31
        filed with the  Company's  Form  10-KSB for the year ended  October  31,
        1997.

10.32   Employment  Agreement between the Company and David Noone, dated January
        8, 1999,  incorporated  by  reference  to Exhibit  10.32  filed with the
        Company's Form 10-KSB for the year ended September 30, 1998..

10.33   Confidentiality,   Invention,  and  Non-Compete  Agreement  between  the
        Company and David Noone,  dated as of January 8, 1999,  incorporated  by
        reference to Exhibit 10.33 filed with the Company's  Form 10-KSB for the
        year ended September 30, 1998.

10.36   Settlement and Release Agreement entered into among Horizon BCBSNJ,  the
        Company, CAHS, and CHCM, Enterprise Holding Company, Inc. ("EHC") and CW
        Ventures,  incorporated  by  reference  to Exhibit  10(a) filed with the
        Company's Form 10-QSB for the quarter ended July 31, 1998.

10.37   Services Agreement dated as of January 1, 1999, by and between HealthNow
        New York,  Inc.  ("HNNY") and the Company,  incorporated by reference to
        Exhibit  10.35 filed with the  Company's  Form 10-KSB for the year ended
        September 30, 1998.

10.36   Amended and Restated  Employment  Agreement,  dated as of September  29,
        1998, with Richard W. Freeman,  M.D., CAHS and the Company (the "Freeman
        Employment Agreement"), incorporated by reference to Exhibit 10.36 filed
        with the Company's Form 10-KSB for the year ended September 30, 1998.

10.37   Employment  Agreement,  dated as of March 25,  1997,  by and between the
        Company and Elaine del Rossi, incorporated by reference to Exhibit 10.37
        filed with the  Company's  Form 10-KSB for the year ended  September 30,
        1998.

10.38   Confidentiality,  Invention and Non-Compete  Agreement dated as of March
        25,  1998  between the  Company  and Elaine del Rossi,  incorporated  by
        reference to Exhibit 10.38 filed with the Company's  Form 10-KSB for the
        year ended September 30, 1998.

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<PAGE>

10.39   Employment  Agreement,  effective  as of April  28,  1998,  by and among
        Stephan  D.  Deutsch,  M.D.,  the  Company  and  CAHS,  incorporated  by
        reference to Exhibit 10.39 filed with the Company's  Form 10-KSB for the
        year ended September 30, 1998.

10.40   Employment Agreement,  effective as of April 19, 1999, between Dennis M.
        Mouras,  and the Company,  incorporated  by  reference to Exhibit  10.40
        filed with the  Company's  Form 10-KSB for the year ended  December  31,
        1999.

10.41   Settlement Agreement Settlement Agreement dated August 9, 2000 among the
        Company,  Horizon health care of New Jersey,  Inc. and Allied  Specialty
        Care Services, Inc.

10.42   Employment   Agreement,   effective  as  of  April  17,  2000,   between
        Christopher Minor and the Company,  incorporated by reference to Exhibit
        10.2  filed  with  the  Company's  Form  10-QSB  for the  quarter  ended
        September 30, 2000.

10.43   Satisfaction  of Debt Agreement  among Horizon Blue Cross Blue Shield of
        New Jersey,  Horizon  health care of New  Jersey,  Inc.,  CareAdvantage,
        Inc.,  CareAdvantage  Health Systems,  Inc. and Contemporary health care
        Management,  Inc, incorporated by reference to Exhibit 10.1 filed on the
        Company's  Form 8-K dated  December  5, 2000 and filed on  December  13,
        2000.

10.44   Amendment  dated March 26, 2001 to  Satisfaction of Debt Agreement dated
        as of November 1, 2000 among Horizon BCBSNJ,  Horizon health care of New
        Jersey, Inc.,  CareAdvantage,  Inc.,  CareAdvantage Health Systems, Inc.
        and Contemporary health care Management,  Inc, incorporated by reference
        to Exhibit  10.1 filed with the  Company's  Form  10-QSB for the quarter
        ended March 31, 2001.

10.45   Service  Agreement  dated as of January 1, 2000  between Blue Cross Blue
        Shield  of  Rhode  Island,   Coordinated   Health  Partners,   Inc.  and
        CareAdvantage  Health  Systems,  Inc. ,  incorporated  by  reference  to
        Exhibit 10.2 filed with the Company's  Form 10-QSB for the quarter ended
        March 31, 2001.

16.1    Letter  regarding  change in  accountants,  incorporated by reference to
        Exhibit 16.1 filed on the Company's Form 8-K dated June 6, 1996.

16.2    Letter  regarding  change in  accountants,  incorporated by reference to
        Exhibit 16.1 filed on the Company's Form 8-K dated July 31, 2001.

23.1    Consent of Independent Auditors*

23.2    Consent of Independent Auditors*

99.1    Letter to Commission Pursuant to Temporary Note 3T.*

--------------------------------------------
*filed herewith

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