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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE
ACT OF 1934



For the quarterly period ended September 30,
2004



COMMISSION FILE NUMBER 0-26168



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CAREADVANTAGE, INC.

(Exact name of small business issuer as specified in its
charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|DELAWARE                                                       |  | 52-1849794                             
|(State or other jurisdiction of Incorporation or organization) |  | (I.R.S. Employer Identification Number)



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



Issuers
telephone number, including area code: (732) 362-5000



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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 ̈



46,399,332

Number of shares of Common Stock outstanding as of October 20, 2004



Transitional Small Business Disclosure Format     Yes ̈No  x



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##### Table of Contents

CareAdvantage, Inc. and Subsidiaries

Form 10-QSB

For the nine months ended September 30, 2004



I N D E X



|                                                                                                                                            |  |                                                                                       |  |   
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | --
|Part I 
Financial Information                                                                                                              |  |                                                                                      
|                                                                                                                                            |  |                                                                                      
|Item 1.                                                                                                                                     |  | Financial Statements                                                                  |  |   
|                                                                                                                                            | 
|      
Condensed Consolidated Balance Sheets  September 30, 2004 (Unaudited) and December 31, 2003.                                       |  | 2                                                                                    
|                                                                                                                                            | 
|      
Condensed Consolidated Statements of Operations  Three and Nine months ended September 30, 2004 and September 30, 2003 (Unaudited) |  | 3                                                                                    
|                                                                                                                                            | 
|      
Condensed Consolidated Statements of Cash Flows  Nine months ended September 30, 2004 and September 30, 2003 (Unaudited)           |  | 4                                                                                    
|                                                                                                                                            | 
|      Notes to Unaudited Condensed Consolidated Financial Statements                                                                       |  | 5                                                                                    
|                                                                                                                                            |  |                                                                                      
|Item 2.                                                                                                                                     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 7 
|                                                                                                                                            |  |                                                                                      
|Item 3.                                                                                                                                     |  | Controls and Procedures                                                               |  | 12
|                                                                                                                                            | 
|Part II 
Other Information                                                                                                                 |  |                                                                                      
|                                                                                                                                            |  |                                                                                      
|Item 1.                                                                                                                                     |  | Legal Proceedings                                                                     |  | 13
|                                                                                                                                            |  |                                                                                      
|Item 2.                                                                                                                                     |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 13
|                                                                                                                                            |  |                                                                                      
|Item 3.                                                                                                                                     |  | Defaults Upon Senior Securities                                                       |  | 13
|                                                                                                                                            |  |                                                                                      
|Item 4.                                                                                                                                     |  | Submission of Matters to a Vote of Security Holders                                   |  | 13
|                                                                                                                                            |  |                                                                                      
|Item 5.                                                                                                                                     |  | Other Information                                                                     |  | 13
|                                                                                                                                            |  |                                                                                      
|Item 6.                                                                                                                                     |  | Exhibits                                                                              |  | 13
|                                                                                                                                            | 
|Signature                                                                                                                                   |  | 14                                                                                   



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##### Table of Contents

PART I  FINANCIAL INFORMATION

ITEM 1. Financial Statements



CAREADVANTAGE, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                         |  |                            |             |   |                          |   |             |  
|-------------------------------------------------------------------------------------------------------- |  | -------------------------- | ----------- | - | ------------------------ | - | ----------- | -
|                                                                                                         |  | September 30,2004Unaudited |             |   | December 31,2003 Audited |  
|ASSETS                                                                                                   |  |                            |             |   |                          |   |             |  
|Current assets:                                                                                          |  |                            |             |   |                          |   |             |  
|Cash and cash equivalents                                                                                |  | $                          | 1,639,000   |   |                          | $ | 4,238,000   |  
|Restricted cash                                                                                          |  |                            | 100,000     |   |                          |   | 100,000     |  
|Accounts receivable for services:                                                                        |  |                            |             |   |                          |   |             |  
|Stockholder, net of allowance of $779,000                                                                |  |                            | 762,000     |   |                          |   | 762,000     |  
|Other                                                                                                    |  |                            | 217,000     |   |                          |   | 175,000     |  
|Other current assets                                                                                     |  |                            | 193,000     |   |                          |   | 231,000     |  
|                                                                                                         |  |                            |             |   |                          |   |             |  
|Total current assets                                                                                     |  |                            | 2,911,000   |   |                          |   | 5,506,000   |  
|                                                                                                         |  |                           
|Property and equipment, at cost less accumulated depreciation                                            |  |                            | 792,000     |   |                          |   | 938,000     |  
|Intangible assets                                                                                        |  |                            | 85,000      |   |                          |   | 158,000     |  
|Other assets                                                                                             |  |                            | 74,000      |   |                          |   | 75,000      |  
|                                                                                                         |  |                            |             |   |                          |   |             |  
|Total Assets                                                                                             |  | $                          | 3,862,000   |   |                          | $ | 6,677,000   |  
|                                                                                                         |  |                            |             |   |                          |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                     |  |                            |             |   |                          |   |             |  
|                                                                                                         |  |                           
|Current liabilities:                                                                                     |  |                            |             |   |                          |   |             |  
|                                                                                                         |  |                           
|Accounts payable                                                                                         |  | $                          | 82,000      |   |                          | $ | 219,000     |  
|Deferred revenue                                                                                         |  |                            | 0           |   |                          |   | 75,000      |  
|Accrued compensation and related benefits                                                                |  |                            | 112,000     |   |                          |   | 268,000     |  
|Accrued expenses and other current liabilities                                                           |  |                            | 1,695,000   |   |                          |   | 2,070,000   |  
|                                                                                                         |  |                            |             |   |                          |   |             |  
|Total current liabilities                                                                                |  |                            | 1,889,000   |   |                          |   | 2,632,000   |  
|                                                                                                         |  |                            |             |   |                          |   |             |  
|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 99,794,152 |  |                            | 100,000     |   |                          |   | 100,000     |  
|Additional capital                                                                                       |  |                            | 23,801,000  |   |                          |   | 23,801,000  |  
|Accumulated deficit                                                                                      |  |                            | (21,928,000 | ) |                          |   | (19,856,000 | )
|                                                                                                         |  |                            |             |   |                          |   |             |  
|Total Stockholders Equity                                                                               |  |                            | 1,973,000   |   |                          |   | 4,045,000   |  
|                                                                                                         |  |                            |             |   |                          |   |             |  
|Total Liabilities and Stockholders Equity                                                               |  | $                          | 3,862,000   |   |                          | $ | 6,677,000   |  
|                                                                                                         |  |                            |             |   |                          |   |             |  



The accompanying notes
are an integral part of these financial statements.



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CAREADVANTAGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                       |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------ |  | -------------------------------- | ---------- | - | ------------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                       |  | Three Months Ended September 30, |            |   | Nine Months Ended September 30, |  
|                                                       |  | 2004                             |            |   | 2003                            |   |            | 2004 |  |   | 2003       |  
|Net revenues                                           |  | $                                | 381,000    |   |                                 | $ | 761,000    |      |  | $ | 1,902,000  |   |  | $ | 2,909,000  |  
|Costs of services                                      |  |                                  | 405,000    |   |                                 |   | 543,000    |      |  |   | 1,389,000  |   |  |   | 1,838,000  |  
|                                                       |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Gross (loss)/margin                                    |  |                                  | (24,000    | ) |                                 |   | 218,000    |      |  |   | 513,000    |   |  |   | 1,071,000  |  
|Operating Expenses:                                    |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Selling, general and administration                    |  |                                  | 846,000    |   |                                 |   | 843,000    |      |  |   | 2,513,000  |   |  |   | 5,557,000  |  
|                                                       |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Operating loss                                         |  |                                  | (870,000   | ) |                                 |   | (625,000   | )    |  |   | (2,000,000 | ) |  |   | (4,486,000 | )
|Interest (expense)/income  net                        |  |                                  | (28,000    | ) |                                 |   | 8,000      |      |  |   | (69,000    | ) |  |   | 32,000     |  
|Provision for income taxes                             |  |                                  | 2,000      |   |                                 |   | 2,000      |      |  |   | 3,000      |   |  |   | 12,000     |  
|                                                       |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Net loss                                               |  |                                  | (900,000   | ) |                                 |   | (619,000   | )    |  |   | (2,072,000 | ) |  |   | (4,466,000 | )
|                                                       |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Net loss per share of common stock-basic and diluted   |  | $                                | (.01       | ) |                                 | $ | (.01       | )    |  | $ | (.02       | ) |  | $ | (.04       | )
|                                                       |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Weighted average number of common shares outstanding  |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Basic                                                  |  |                                  | 99,795,000 |   |                                 |   | 99,795,000 |      |  |   | 99,795,000 |   |  |   | 99,795,000 |  
|                                                       |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  
|Diluted                                                |  |                                  | 99,795,000 |   |                                 |   | 99,795,000 |      |  |   | 99,795,000 |   |  |   | 99,795,000 |  
|                                                       |  |                                  |            |   |                                 |   |            |      |  |   |            |   |  |   |            |  



The accompanying notes
are an integral part of these financial statements.



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CAREADVANTAGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                              |  |                                |            |   |      |   |            |  
|----------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | ---- | - | ---------- | -
|                                                                              |  | Nine Months EndedSeptember 30, |           
|                                                                              |  | 2004                           |            |   | 2003 |  
|Cash flows from operating activities:                                         |  |                                |            |   |      |   |            |  
|                                                                              |  |                               
|Net (loss)                                                                    |  | $                              | (2,072,000 | ) |      | $ | (4,466,000 | )
|                                                                              |  |                               
|Adjustments to reconcile net (loss) to net cash used in operating activities: |  |                                |            |   |      |   |            |  
|                                                                              |  |                               
|Depreciation and amortization                                                 |  |                                | 340,000    |   |      |   | 349,000    |  
|Deferred revenue                                                              |  |                                | (75,000    | ) |      |   |           |  
|                                                                              |  |                               
|Change in assets and liabilities:                                             |  |                                |            |   |      |   |            |  
|                                                                              |  |                               
|Accounts receivable stockholder                                               |  |                                |           |   |      |   | 769,000    |  
|Accounts receivable other                                                     |  |                                | (42,000    | ) |      |   | (186,000   | )
|Other assets                                                                  |  |                                | 39,000     |   |      |   | 57,000     |  
|Accounts payable                                                              |  |                                | (137,000   | ) |      |   | (23,000    | )
|Accrued expenses and other liabilities                                        |  |                                | (531,000   | ) |      |   | 457,000    |  
|                                                                              |  |                                |            |   |      |   |            |  
|Net cash used in operating activities                                         |  |                                | (2,478,000 | ) |      |   | (3,043,000 | )
|                                                                              |  |                                |            |   |      |   |            |  
|Cash flows from investing activity:                                           |  |                                |            |   |      |   |            |  
|                                                                              |  |                               
|Capital expenditures                                                          |  |                                | (121,000   | ) |      |   | (38,000    | )
|                                                                              |  |                                |            |   |      |   |            |  
|Net decrease in cash                                                          |  |                                | (2,599,000 | ) |      |   | (3,081,000 | )
|                                                                              |  |                               
|Cash - beginning of period                                                    |  |                                | 4,238,000  |   |      |   | 7,793,000  |  
|                                                                              |  |                                |            |   |      |   |            |  
|Cash - end of period                                                          |  |                                | $1,639,000 |   |      | $ | 4,712,000  |  
|                                                                              |  |                                |            |   |      |   |            |  



The accompanying notes
are an integral part of these financial statements.



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CAREADVANTAGE, INC.



Note ABasis of presentation:



The condensed consolidated financial statements as of September 30, 2004 and for the three and nine-month periods ended September 30, 2004 and 2003 have been prepared by
CareAdvantage, Inc. (the Company). The accompanying financial statements include all adjustments (which include only normal recurring adjustments), which in the opinion of management are necessary to present fairly the financial
position, results of operations and cash flows. All amounts contained in the financial statements, except per share data, have been rounded to the nearest thousand.



Certain information and footnote disclosures required to be included in consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States have been omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included with the
Companys December 31, 2003 Annual Report on Form 10-KSB. The results of operations for the period ended September 30, 2004 are not necessarily indicative of operating results to be expected for the full year. The accompanying condensed
consolidated financial statements have been prepared on a going concern basis.



In light of the termination of the services agreement with Horizon Blue Cross and Blue Shield of New Jersey (Horizon BCBSNJ), the Company has reduced its operations significantly and concentrated on building up its remaining
sources of revenues to continue to operate. Management believes that its cash on hand, the $500,000 received as part of the Horizon BCBSNJ settlement (see Note H) and projected future cash flows from operations will support the Companys
anticipated cash needs for the next twelve months. However, if the Company is unsuccessful in its efforts to generate and collect revenue and/or renegotiate the Companys lease with the landlord to reduce operational expenses, it will not have
sufficient funds to support its cash needs for the next twelve months. Accordingly, the Company will need to contemplate other alternatives to enable it to fund continuing operations, including, but not limited to, exploring strategic alternatives,
which may include a merger, asset sale, joint venture or another comparable transaction, loans, salary deferrals, further staff reductions or other cost cutting mechanisms, or raising additional capital by private placements of equity or debt
securities or through the establishment of other funding facilities. None of these potential alternatives may be available to us, or may only be available on unfavorable terms. We do not currently have in place a credit facility with a bank or other
financial institution. If the Company is unsuccessful in building up its consulting and management services business, obtaining additional financing or curtailing operational costs to the point that net revenues are sufficient to offset expenses,
the Company will continue to operate at a loss and will be required to wind up its operations, sell its assets, restructure the business, or liquidate. Each of these alternatives may require the Company to file for bankruptcy protection, which would
impact the Companys ability to continue as a going concern. No adjustments have been made to the condensed consolidated financial statements with respect to such uncertainty. However, the Company is cautiously optimistic about opportunities in
the consulting and management services business and currently plans to pursue those opportunities.



Note BTermination of Horizon BCBSNJ Contract:



Prior to January 1, 2003, the Company provided, principally to Horizon BCBSNJ and another Blue Cross Blue Shield organization, certain health care containment services, including utilization review, case management
and disease management and independent reviews. During 2002, the Company ceased providing these services to the other Blue Cross Blue Shield organization, which accounted for 4% of net revenues for the year ended December 2002. As of December 31,
2002, Horizon BCBSNJ ceased purchasing the Companys services. As a result, beginning January 1, 2003, the Company ceased offering these services, since it no longer maintained the employees and infrastructure necessary to support their
delivery. Horizon BCBSNJ accounted for 82% of net revenues for the year ended December 31, 2002.



Note CPer share data:



Basic net
income/(loss) 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. The effect of these potential dilutive securities has not been computed since the effect would be antidilutive.



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CAREADVANTAGE, INC.



Note D Stock-Based Compensation:



Statement of Financial Accounting Standards (SFASB) No. 123, Accounting for Stock-Based Compensation encourages the use of the fair value based
method of accounting for stock-based employee compensation. Alternatively, SFAS No. 123 allows entities to continue to apply the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion 25, Accounting for
Stock Issued to Employees, and related interpretations and provide pro forma disclosures of net income (loss) and earnings (loss) per share, as if the fair value based method of accounting had been applied to employee awards. The Company has
elected to continue to apply the provisions of APB Opinion 25 and provide the disclosures required by SFAS No. 123 and SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure, which was released in December
2002 as an amendment of SFAS No. 123. The following table illustrates the effect on net loss per share if the fair value based method had been applied to all awards.



|                                                                                           |  |                                 |   |  |                                |   |  |            |   |  |            |  
|------------------------------------------------------------------------------------------ |  | ------------------------------- | - |  | ------------------------------ | - |  | ---------- | - |  | ---------- | -
|                                                                                           |  | Three Months EndedSeptember 30, |   |  | Nine Months EndedSeptember 30, |  
|                                                                                           |  | 2004                            |   |  | 2003                           |   |  | 2004       |   |  | 2003       |  
|Reported net (loss)                                                                        |  | (900,000                        | ) |  | (619,000                       | ) |  | (2,072,000 | ) |  | (4,466,000 | )
|Stock-based employee compensation determined under the fair value based method, net of tax |  | 16,000                          |   |  | 42,000                         |   |  | 53,000     |   |  | 124,000    |  
|                                                                                           |  |                                 |   |  |                                |   |  |            |   |  |            |  
|Pro forma net (loss)                                                                       |  | (916,000                        | ) |  | (661,000                       | ) |  | (2,125,000 | ) |  | (4,590,000 | )
|                                                                                           |  |                                 |   | 
|Basic and diluted (loss) per share:                                                        |  |                                 |   |  |                                |   |  |            |   |  |            |  
|As reported                                                                                |  | (.01                            | ) |  | (.01                           | ) |  | (.02       | ) |  | (.04       | )
|Pro forma                                                                                  |  | (.01                            | ) |  | (.01                           | ) |  | (.02       | ) |  | (.05       | )



Note EContingencies:



Fontes v. CareAdvantage, Inc.pending in Superior
Court of New Jersey involves a claim by Alan Fontes, a former employee of the Company, for compensation under various legal theories. The Company believes that the complaint is without merit and is contesting the matter vigorously.



Note FLoss Due to Termination of Horizon BCBSNJ Contract:



In June 2002, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal Activities, and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when
the liability is incurred. Under EITF Issue No. 94-3, a liability for exit costs was recognized at the date of an entitys commitment to an exit plan. SFAS No. 146 is effective for exit or disposal activities that are initiated after December
31, 2002.



The Company adopted SFAS No. 146, and accordingly has recognized
certain costs in exiting the following activities. As of December 31, 2002, Horizon BCBSNJ ceased purchasing from the Company certain health care containment services, including utilization review, case management, and disease management and
independent reviews. As a result, the Company ceased offering these services as of January 1, 2003.



As of December 31, 2002, the Company incurred certain costs in exiting this business, which included employee termination costs of approximately $1,128,000 and the write down of intangible assets related to the
Horizon BCBSNJ service agreement of approximately $468,000.



In the first
quarter of 2003, the Company incurred costs associated with the termination of certain operating leases under SFAS No. 146, including the lease for its office space in Iselin, NJ in connection with exiting its prior service business with Horizon
BCBSNJ and another BCBS customer. The Company recorded a charge



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CAREADVANTAGE, INC.



in the amount of approximately $2,639,000 relating to the operating leases during 2003. The charge is included in selling, general and
administrative expenses on the accompanying statement of operations. Rent in the amount of approximately $428,000 was charged to such liability, offset by accretion expense of approximately $83,000 for the nine months ended September 30, 2004. As of
September 30, 2004, the remaining liability is $1,605,000.



Note
GConcentration of Credit Risk



As of September 30, 2004, and
December 31, 2003, four customers accounted for approximately 39%, 36%, 18% and 7% of accounts receivable and two customers accounted for approximately 11% each of accounts receivable respectively.



During the three and nine month periods ended September 30, 2004 three customers accounted
for approximately 53%, 31%, and 12% of net revenues and four customers accounted 28%, 23%, 20% and 18% of net revenues respectively.



During the three and nine month periods ended September 30, 2003 three customers accounted for approximately 41%, 25%, and 21% of net revenues and four customers
accounted 28%, 22%, 19% and 18% of net revenues respectively.



Note
H-Subsequent Events



On September 29, 2004, the Company entered into a
Settlement Agreement with Horizon BCBSNJ. The terms of the agreement include the Company to receive $500,000, the return of 53,394,820 common shares, representing 100% of Horizon BCBSNJ holdings and the resignation of both Horizon BCBSNJ designated
board members. The $500,000 and common shares were received by the Company on October 1, 2004, the date the Company recorded the transaction. Based upon managements analysis, the Company has ascribed a value of at least $262,000 to the shares
received from Horizon BCBSNJ. The accounting treatment for this settlement transaction will result in an increase in cash of $500,000, the recording of treasury stock of $262,000 and the reduction of accounts receivable of $762,000. Based upon the
above, the settlement transaction will result in no charge to the statement of operations. The settlement transaction will be recorded in the fourth quarter 2004.



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



Cautionary Statements:



Statements in this Form 10-QSB 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-QSB. For a more
complete discussion of these risk factors, please see Cautionary Statements in Item 6 of the Companys Form 10-KSB for the fiscal year ended December 31, 2003. 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.



GENERAL OVERVIEW:



CareAdvantage, Inc. (CAI or the Company) and its direct and indirect subsidiaries, CareAdvantage Health Systems, Inc. (CAHS) and Contemporary HealthCare Management, Inc.
(CHCM), are in the business of providing management and consulting services designed to enable integrated health care delivery systems and other care management organizations to reduce the costs, while improving the quality, of medical
services provided to their subscribers. The management and consulting services include care management program enhancement services, executive and clinical management services, and training programs. The Companys management and consulting
services have been and continue to be provided to integrated health care delivery systems and other care management organizations. The Company operates in one business segment.



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CAREADVANTAGE, INC.



In June 2002, the Company received notification from Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ) that the
existing services arrangement between Horizon BCBSNJ and the Company was terminated, effective January 1, 2003. This contract with Horizon BCBSNJ accounted for approximately 82% of net revenues for the year ended December 31, 2002.



Significant shareholders of the Company as of September 30, 2004, included Horizon BCBSNJ (a
53.5% stockholder) and CW Ventures (a 37.7% stockholder). However, as of October 1, 2004, Horizon BCBSNJ surrendered all of its stock in the Company to the Company in connection with the Settlement Agreement between Horizon BCBSNJ and the Company
(see discussion Part II, Section 1); and as of October 6, 2004, CW Ventures distributed its stock in the Company to its partners.



Prior to January 1, 2003, the Company provided, principally to Horizon BCBSNJ, certain health care cost containment services, including utilization review, case
management and disease management and independent reviews. As of December 31, 2002, Horizon BCBSNJ ceased purchasing the Companys services. As a result, beginning January 1, 2003, the Company ceased offering these services, since it no longer
maintained the employees and infrastructure necessary to support their delivery. Horizon BCBSNJ accounted for 82% of net revenues for the year ended December 31, 2002.



The Company is now focusing on offering its management and consulting services. As part of this effort, the Company has developed
RPNavigator, a proprietary tool to help managed care plans and employers better understand and forecast resource consumption, risk, and costs associated with their respective populations. In providing its consulting services, the Company licenses
RPNavigator to its customers. The Company recognizes revenue as services are performed or ratably under contract terms. For a further discussion of considerations relating to this business, see Liquidity, Financial Condition and Capital
Resources  General Overview.



RESULTS OF OPERATIONS:



The following discussion compares the Companys results of
operations for the three and nine months ended September 30, 2004, with those for the three and nine months ended September 30, 2003. The Companys consolidated financial statements and notes thereto included elsewhere in this report contain
detailed information that should be referred to in conjunction with the following discussion.



Three Months Ended September 30, 2004, Compared to Three Months Ended September 30, 2003



Revenues:



The Companys total operating revenues for the three-month periods ended September 30, 2004 and September 30, 2003 were approximately $381,000 and $761,000, respectively. The revenue was generated primarily from
consulting fees earned during this period. The current revenue amounts represent a decrease of approximately $380,000 for the three-month period ended September 30, 2004 from the corresponding period of the prior year. The decrease for the three
months ended September 30, 2004 resulted from a decrease of approximately $338,000 due to the termination of consulting arrangements, a decrease of approximately $13,000 from current consulting business and a decrease of approximately $29,000 due to
one time implementation fees of approximately $184,000 in 2003. The Company is currently focusing its efforts to produce revenue by providing services in connection with its RPNavigator product (see Liquidity, Financial Condition and Capital
Resources).



Cost of services:



The Companys total direct cost of services for the three-month periods ended September
30, 2004 and September 30, 2003 was approximately $405,000 and $543,000, respectively. This represents a decrease of approximately $138,000 for the three-month period ended September 30, 2004 over the corresponding period of the prior year. The
decrease in the cost of services for the three-month period ended September 30, 2004 was primarily due to decreased personnel costs of approximately $117,000, travel costs of approximately $13,000 and professional costs of approximately $8,000.



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Selling, general and administrative expenses:



The Companys total selling, general, and administrative costs for the three-month periods ended September 30, 2004 and September 30,
2003 were approximately $846,000 and $843,000, respectively. This represents an increase of approximately $3,000 for the three-month period ended September 30, 2004 over the corresponding period of the prior year. This increase for the three-month
period ended September 30, 2004 is primarily due to increases in facility costs of approximately $65,000 resulting from applying partial rent payments to expense in 2004 and professional costs of approximately $52,000 due to increased legal fees
(due primarily to the Companys litigation with Horizon BCBSNJ), offset by decreases in personnel costs of approximately $47,000, information and communications costs of approximately $56,000, other general and administrative costs of
approximately $4,000 and depreciation and amortization costs of approximately $7,000.



Interest income:



The Companys total net interest
(expense)/income for the three-month periods ended September 30, 2004 and September 30, 2003 was approximately $(28,000) and $8,000, respectively. This represents a decrease of approximately $36,000 in net interest income for the three-month period
ended September 30, 2004 from the corresponding period of the prior year. The decrease in net interest income is largely due to a charge of approximately $33,000 for accretion expense (included in interest expense) associated with the building lease
liability and a decrease of approximately $3,000 due to the decline of interest rates in 2004 and a decrease in the operating cash balance.



Nine Months Ended September 30, 2004, Compared to Nine Months Ended September 30, 2003



Revenues:



The Companys total operating revenues for the nine-month periods ended September 30, 2004 and September 30, 2003 were approximately $1,902,000 and $2,909,000,
respectively. This represents a decrease of approximately $1,007,000 for the nine-month period ended September 30, 2004 from the corresponding period of the prior year. The decrease for the nine months ended September 30, 2004 resulted from a
decrease of approximately $1,633,000 due to the termination of consulting arrangements in 2003 and 2004 and a decrease of approximately $106,000 from current consulting business, offset by an increase of approximately $732,000 in new business
relating to RPNavigator.



Cost of services:



The Companys total direct cost of services for the nine-month periods ended September
30, 2004 and September 30, 2003 was approximately $1,389,000 and $1,838,000, respectively. This represents a decrease of approximately $449,000 for the nine-month period ended September 30, 2004 over the corresponding period of the prior year. The
decrease in the cost of services for the nine-month period ended September 30, 2004 was primarily due to decreased personnel costs of approximately $312,000, professional costs of approximately $90,000 and travel costs of approximately $47,000.



Selling, general and administrative expenses:



The Companys total selling, general, and administrative costs for the nine-month
periods ended September 30, 2004 and September 30, 2003 were approximately $2,513,000 and $5,557,000, respectively. This represents a decrease of approximately $3,044,000 for the nine-month period ended September 30, 2004 over the corresponding
period of the prior year. This decrease for the nine-month period ended September 30, 2004 is primarily due to a reserve for loss on sublease of office space of approximately $2,639,000 in 2003, decreased personnel costs of approximately $206,000,
decreases in information and communications costs of approximately $161,000, professional costs of approximately $127,000, depreciation and amortization costs of approximately $7,000 and other general and administrative costs of approximately
$24,000, offset by increased facility costs of approximately $91,000 and travel costs of approximately $29,000.



Interest income:



The Companys total net interest (expense)/income for the nine-month periods ended September 30, 2004 and September 30, 2003 was approximately $(69,000) and $32,000, respectively. This represents a decrease of
approximately $101,000 in net interest income for the nine-month period ended September 30, 2004 from



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the corresponding period of the prior year. The decrease in net interest income of approximately $101,000 is largely due a charge of
approximately $83,000 for accretion expense (included in interest expense) associated with the building lease liability and a decrease of approximately $18,000 in interest income due to the decline of interest rates in 2004 and a decrease in the
operating cash balance.



LIQUIDITY, FINANCIAL CONDITION AND CAPITAL
RESOURCES:



General overview:



At September 30, 2004, the Company had working capital of approximately
$1,022,000, stockholders equity of approximately $1,973,000 and an accumulated deficit since its inception of approximately $21,928,000. The Companys operations have been significantly impacted by the events described below.



As stated above, Horizon BCBSNJ terminated the Services Agreement with the
Company, effective January 1, 2003. The Company recognized approximately $19 million in revenues in 2002 and $14 million in 2001 from Horizon BCBSNJ due to the services arrangement. The termination of this services arrangement had a significant
impact on the Companys business. The Companys total revenues in 2003 were $3,550,000.



As a result of the termination of the Services Agreement with Horizon BCBSNJ, the Company has significantly reduced the scope of its operations.



As of January 1, 2003, the Company had 29 employees, down from
191 employees six months earlier. As of September 30, 2004, the Company had 24 full time employees. In addition, the Company no longer needs 20,500 square feet of the 28,000 square feet of office space it currently has under lease in Iselin, New
Jersey. During the first three quarters of 2003, the Company attempted to sublease this space and negotiated with the landlord to retake possession. Because of the market conditions for space of this type, the likely cost of subleasing or the
landlords retaking was deemed by the Company to be excessive and would likely be required to be paid upon subleasing or the landlords retaking. Therefore, during the fourth quarter of 2003 the Company determined to continue to occupy
such space and has ceased its efforts to sublease the space and its negotiations with the landlord to retake the space. During the third quarter of 2004, the Company has resumed its negotiations with the landlord regarding retaking such space.
Moreover, the Company has terminated, renegotiated or is in the process of terminating or renegotiating a variety of information systems and communications agreements.



Because the Company no longer maintains the infrastructure necessary to support the provision of certain health care
containment services (including utilization review, case management and disease management, and independent reviews), it has ceased offering these services for sale. The Company is instead focusing on offering its management and consulting services
(the Management Services). The Company had not heavily marketed the Management Services in the past, because the Companys primary focus was on the health care containment services provided under the Horizon BCBSNJ services
agreement. At the present time, the Companys primary focus now is to build up revenues from the Management Services, which will require the Company to devote significant resources, both in the time and efforts of its employees as well as
funding, to promote and support these activities. As part of this effort, the Company has developed RPNavigator, a proprietary tool to help managed care plans and employers better understand and forecast resource consumption, risk, and costs
associated with their respective populations. The tool uses 3Ms Clinical Risk Group (CRGs), a classification methodology that groups members according to risk related to the individuals clinical history and demographic information. Using
RPNavigator, CAI will enable its customers to:



| |  | track population and member-related disease progression changes over time;
| | - | --------------------------------------------------------------------------



| |  | compare health plan sub-populations on a valid and reliable basis;
| | - | ------------------------------------------------------------------



| |  | profile providers using case mix and severity-adjusted techniques;
| | - | ------------------------------------------------------------------



| |  | select and prioritize members to optimize the allocation and assess the impact of care management resources, direct interventions and initiatives; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | reduce client dependence on internal information technology resources.
| | - | ----------------------------------------------------------------------



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Despite the significant loss of revenues from the Horizon services agreement, the Company believes that the Management
Services business has the potential to become profitable for the Company. The Company has reached informal agreements with two customers for significant contract expansions for Management Services. Moreover, Management Services provided to one of
the foregoing customers, a health maintenance organization, for the benefit of one of that customers clients, has resulted in a potential opportunity for the Company to provide Management Services to that portion of the clients
activities not serviced by the health maintenance organization. Management believes that these opportunities will enhance business prospects, facilitate a more significant market penetration and improve revenues and profitability for the Company.



If the Company is unable to develop the Management Services
business as planned, and/or if the Company is unsuccessful in renegotiating its lease with the landlord in order to significantly reduce operating expenses, the Company may be required to seek additional capital financing. If the Company is not
successful in obtaining additional capital, it may need to either restructure its business, sell its assets, or cease operations entirely. In each such case, the Company may be required to file for bankruptcy protection. The Company is cautiously
optimistic, however, about opportunities in the Management Services business and currently plans to pursue those opportunities.



On September 29, 2004, the Company entered into a Settlement Agreement with Horizon BCBSNJ resolving the lawsuit captioned CareAdvantage, Inc. v. Horizon Blue Cross
Blue Shield of New Jersey, which had been pending in the Superior Court of New Jersey. Under the Settlement Agreement, on October 1, 2004, Horizon BCBSNJ paid the Company $500,000 and assigned and transferred to the Company all the right, title
and interest in and to all 53,394,820 shares of common stock, par value $.001 per share, of the Company held by Horizon BCBSNJ. For more information regarding the Settlement Agreement, see Part II, Item 1.



Financial condition:



At September 30, 2004, the Company had cash of approximately $1,639,000 and working capital of approximately $1,022,000. At December 31,
2003, the Company had cash of approximately $4,238,000 and working capital of approximately $2,874,000.



Net cash used in operating activities amounted to approximately $2,478,000 for the nine-month period ended September 30, 2004. The use of cash in operations related principally to the Companys nine-month loss of
$2,072,000, a decrease in accrued expenses of approximately $668,000, an increase in other assets of approximately $39,000 offset by a decrease in accounts receivable of approximately $42,000, non-cash charges of approximately $340,000 and a
decrease in deferred revenue of approximately $75,000.



Net cash used in
investing activities amounted to approximately $121,000 for the nine-month period ended September 30, 2004 and is due to capital expenditures during the nine-month period.



There were no financing activities for the nine-month period ended September 30, 2004.



The accompanying condensed consolidated financial statements have been prepared on a going
concern basis. In light of the termination of the services agreement with Horizon BCBSNJ, the Company has reduced its operations significantly and concentrated on building up its remaining sources of revenues to continue to operate. Management
believes that its cash on hand, the $500,000 received as part of the Horizon BCBSNJ settlement (see Note H) and projected future cash flows from operations will support the Companys anticipated cash needs for the next twelve months. However,
if the Company is unsuccessful in its efforts to generate and collect revenue and/or renegotiate the Companys lease with the landlord to reduce operational expenses, it will not have sufficient funds to support its cash needs for the next
twelve months. Accordingly, the Company will need to contemplate other alternatives to enable it to fund continuing operations, including, but not limited to, exploring strategic alternatives, which may include a merger, asset sale, joint venture or
another comparable transaction, loans, salary deferrals, further staff reductions or other cost cutting mechanisms, or raising additional capital by private placements of equity or debt securities or through the establishment of other funding
facilities. None of these potential alternatives may be available to us, or may only be available on unfavorable terms. We do not currently have in place a credit facility with a bank or other financial institution. If the Company is unsuccessful in
building up its Management Services business, obtaining additional financing or curtailing operational costs to the point that net revenues are sufficient to



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offset expenses, the Company will continue to operate at a loss and will be required to wind up its operations, sell its assets, restructure
the business, or liquidate. Each of these alternatives may require the Company to file for bankruptcy protection, which would impact the Companys ability to continue as a going concern. No adjustments have been made to the condensed
consolidated financial statements with respect to such uncertainty. However, the Company is cautiously optimistic about opportunities in the Management Services business and currently plans to pursue those opportunities.



Recent Developments



On September 29, 2004, the Company entered into a Settlement Agreement with Horizon BCBSNJ resolving the lawsuit captioned CareAdvantage,
Inc. v. Horizon Blue Cross Blue Shield of New Jersey, which had been pending in the Superior Court of New Jersey. Under the Settlement Agreement, on October 1, 2004, Horizon BCBSNJ paid the Company $500,000 and assigned and transferred to the
Company all the right, title and interest in and to all 53,394,820 shares of common stock, par value $.001 per share, of the Company held by Horizon BCBSNJ. For more information regarding the Settlement Agreement, see Part II, Item 1.



Application of Critical Accounting Policies:



The Companys consolidated condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America. Certain accounting policies have a significant impact on amounts reported in the financial statements. A summary of those significant accounting policies can
be found in Note B to the Companys financial statements included in the Companys 2003 Annual Report on Form 10-KSB. The Company has not adopted any significant new accounting policies during the quarter ended September 30, 2004.



Among the significant judgments made by management in the preparation of the
Companys financial statements are the determination of the allowance for doubtful accounts and adjustments. The financial statements for the quarter ended September 30, 2004 also include a significant estimate relating to the liability
recorded for the loss on the office space lease (see Note F).



ITEM 3. Controls and Procedures



a) Evaluation
of disclosure controls and procedures. The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys reports filed under the Securities Exchange Act of 1934,
such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to the
Companys management, including the Chief Executive Officer, who is also currently the acting Chief Financial Officer (CEO), as appropriate, to allow for timely decisions regarding required disclosure. A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate.



An evaluation of
the effectiveness of these disclosure controls, as of the end of the period covered by this Quarterly Report on Form 10-QSB, was carried out under the supervision and with the participation of the Companys management, including the CEO. Based
on that evaluation, the Companys management, including the CEO, has concluded that the Companys disclosure controls and procedures are effective.



(b) Changes in internal control over financial reporting. There were no significant changes in our internal control over financial reporting or in other factors
during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART IIOTHER INFORMATION



Item 1. Legal Proceedings



On September 29, 2004,
the Company entered into a Settlement Agreement with Horizon BCBSNJ resolving CareAdvantage, Inc. v. Horizon Blue Cross Blue Shield of New Jersey, which had been pending in the Superior Court of New Jersey. Under the terms of the Settlement
Agreement, Horizon BCBSNJ agreed to (i) pay the Company $500,000 within 5 days of the execution of the Settlement Agreement, and (ii) to assign and transfer to the Company all the right, title and interest in and to all 53,394,820 shares of common
stock, par value $.001 per share, of the Company held by Horizon BCBSNJ within 5 days of the execution of the Settlement Agreement. Horizon BCBSNJ also agreed to procure the resignations of Patrick J. Geraghty and Christine L. Nelson, the two
Horizon BCBSNJ-nominated members of the Companys Board of Directors. On October 1, 2004, the Company received $500,000 and 53,394,820 shares of its common stock, par value $.001 per share, and the resignations of directors Patrick J. Geraghty
and Christine L. Nelson.



CareAdvantage, Inc. v. Blue Cross & Blue
Shield of Rhode Island and Coordinated Health Partners, pending in the Superior Court of the State of Rhode Island, arises out of the defendants termination of an Agreement effective as of January 1, 2000, among the parties pursuant to
which the Company had been providing services. The Company is seeking declaratory relief including judgment (i) that the Companys failure to attain Performance Goals under the Agreement was as a result of the defendants conduct, (ii)
that defendants lack cause to terminate the Agreement based on the Companys failure to meet the Performance Goals, and (iii) that the Company is entitled to compensation under the Agreement, including compensation for having been deemed to
have met the Performance Goals. In addition, the suit seeks equitable relief and damages with respect to defendants hiring a physician formerly employed by the Company.



For a description of additional legal proceedings, see Note E to the Financial Statements. With the exception of the legal proceedings
described above and in Note E to the Financial Statements, there are no material pending legal proceedings other than ordinary routine litigation incidental to the business of the Company.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



None.



Item 3. Defaults Upon Senior Securities



None.



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



No matters were submitted to a vote of the Companys security holders during the last quarter of calendar year ended September 30, 2004.



Item 5. Other Information



None.



Item 6. Exhibits



(a) Exhibits



See Exhibit Index.



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SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                  |  |                                                               
|----------------- |  | --------------------------------------------------------------
|                  |  | CareAdvantage, Inc                                            
|                  | 
|November 15, 2004 |  | /s/ Dennis J. Mouras                                          
|                  |  | Dennis J. Mouras                                              
|                  |  | Chief Executive Officer and acting Principal Financial Officer



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                      
|           
|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).                                                                                                                                                                                                                         
|            | 
|3.1(a)      |  | 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.                                                                                                                                                                                                                                 



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



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



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##### Table of Contents

CAREADVANTAGE, INC.



|      |  |                                                                                                                                                                                                                                                                                                                                                                                           
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 Healthcare 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 Healthcare of New Jersey, Inc., CareAdvantage, Inc., CareAdvantage Health Systems, Inc. and
Contemporary HealthCare 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 Healthcare of New Jersey, Inc., CareAdvantage, Inc., CareAdvantage
Health Systems, Inc. and Contemporary HealthCare 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.                                                                                              
|      | 
|10.46 |  | Amendment dated as of August 9, 2001 to Satisfaction of Debt Agreement dated as of November 1, 2000 among Horizon BCBSNJ, Horizon Healthcare of New Jersey, Inc., CareAdvantage, Inc.,
CareAdvantage Health Systems, Inc. and Contemporary HealthCare Management, Inc, incorporated by reference to Exhibit 10.1 filed with the Companys Form 10-QSB for the quarter ended June 30, 2001.
|      | 
|10.47 |  | Settlement Agreement dated September 29, 2004 between CareAdvantage, Inc. and Horizon Blue Cross Blue Shield of New Jersey, incorporated by reference to Exhibit 10.1 filed with the
Companys Form 8-K dated September 29, 2004 and filed on October 1, 2004.                                                                                                                            
|      | 
|31    |  | Certifications pursuant to Rule 13a-14(a), promulgated under the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith)                                                                                                                                                                                                          



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CAREADVANTAGE, INC.



|   |  |                                                                                                                                             
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|32 |  | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)



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