SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended April 30, 1999



                         COMMISSION FILE NUMBER 0-26168


                               CAREADVANTAGE, INC.
             (Exact name of registrant as specified in its charter)


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

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


       Registrant's telephone number, including area code: (732) 602-7000

      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__


                                   82,189,883
        Number of shares of Common Stock outstanding as of June 14, 1999

                  Transitional Small Business Disclosure Format
                                   Yes X No__








<PAGE>




                      CareAdvantage, Inc. and Subsidiaries
                                   Form 10-QSB
                     For the six-months ended April 30, 1999


                                    I N D E X


Part I - Financial Information

    Item 1.   Financial Statements

o    Condensed Consolidated Balance Sheets -
     April 30, 1999 (Unaudited) and October 31, 1998 ........................ 2

o    Condensed Consolidated Statements of Operations -
     Three and Six-months ended April 30, 1999 and April 30, 1998 ........... 3
     (Unaudited)

o    Condensed Consolidated Statements of Cash Flows -
     Six-months ended April 30, 1999 and April 30, 1998.....................  4
     (Unaudited)

o    Notes to Condensed Consolidated Financial Statements...................  5
     (Unaudited)


    Item 2.   Management's Discussion and Analysis of
              Financial Condition and Results of Operations.................  7

    Item 3.   Quantitative and Qualitative Disclosures about Market Risk...  13


Part II - Other Information

    Item 1.   Legal Proceedings...........................................   14

    Item 2.   Changes in Securities.......................................   14

    Item 3.   Defaults Upon Senior Securities.............................   14

    Item 4.   Submission of Matters to a Vote of Security Holders.........   14

    Item 5.   Other Information ..........................................   14

    Item 6.   Exhibits and Reports on Form 8-K............................   14

    Signature.............................................................   15




<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  Financial Statements

                               CAREADVANTAGE, INC
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                 April 30,             October 31,
                     ASSETS                                        1999                   1998
                                                                 Unaudited                Audited
                                                                 ---------                -------
<S>     <C>    <C>    <C>    <C>                                    <C>                        <C>
Current assets:
     Cash and cash  equivalents                                  $2,907,000            $3,745,000
     Accounts  receivable  for services:
         Stockholder                                              1,045,000             1,080,000
         Other                                                      249,000               667,000
     Other current assets                                           312,000                75,000
                                                                    -------                ------

                  Total current assets                            4,513,000             5,567,000

Property and equipment, at cost less accumulated depreciation     1,045,000             1,374,000
Intangible assets                                                 1,689,000             1,768,000
Other assets                                                        101,000                91,000
                                                                    -------                ------

Total Assets                                                    $ 7.348,000           $ 8,800,000
                                                                ===========           ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of capital lease obligation                   $109,000              $422,000
     Accounts payable                                               302,000               163,000
     Due to stockholder                                           1,209,000             1,153,000
     Due to customer                                                902,000               902,000
     Accrued salaries and employee benefits                         848,000             1,211,000
     Accrued expenses and other current liabilities (Note E)        606,000               455,000
     Deferred revenue, current                                      184,000               184,000
                                                                    -------               -------

                  Total current liabilities                       4,160,000             4,490,000

Due to stockholder, less current portion                            199,000               710,000
Deferred revenue and other liabilities, less current portion         29,000               116,000
                                                                    -------               -------

Total Liabilities                                                 4,388,000             5,316,000
                                                                  ---------             ---------

Stockholders' equity  (capital  deficiency):
   Preferred  stock-par  value $.10 per share;
       authorized 10,000,000 shares; none issued
   Common stock-par value $.001 per share;
       authorized 90,000,000 shares; issued
       and outstanding 82,189,883 and 82,189,883                     82,000                82,000
   Additional capital                                            22,035,000            22,009,000
   Accumulated deficit                                          (19,157,000)          (18,607,000)
                                                                -----------          ------------
Total Stockholders' Equity                                        2,960,000             3,484,000
                                                                  ---------             ---------

Total Liabilities and Stockholders' Equity                      $ 7,348,000           $ 8,800,000
                                                                ===========           ===========

</TABLE>

        The accompanying notes are an integral part of these statements.


                                        2



<PAGE>







                                            CAREADVANTAGE, INC.
                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                                (UNAUDITED)

<TABLE>
<CAPTION>
                                                   Three-months Ended                          Six-months Ended
                                                        April 30,                                    April 30,


                                                  1999                 1998                  1999            1998
                                                  ----                 ----                  ----            ----


<S>                                           <C>               <C>                     <C>               <C>
Net revenues                                  $3,955,000        $ 4,195,000             8,011,000          8,197,000

Costs of services                              2,203,000          1,996,000             4,214,000          4,022,000
                                              ----------         ----------             ---------          ---------


Gross margin                                   1,752,000          2,199,000             3,797,000          4,175,000
                                               ---------          ---------             ---------          ---------

Operating expenses:

Selling, general and administration            2,334,000          1,517,000             3,959,000          3,053,000
Depreciation and amortization                    216,000            152,000               404,000            280,000
                                                 -------          ---------               -------            -------

Total operating expenses                       2,550,000          1,669,000             4,363,000          3,333,000
                                               ---------          ---------             ---------          ---------

Operating income (loss)                         (798,000)           530,000             (566,000)            842,000

Net interest (income)/expense                     (7,000)            64,000              (17,000)            137,000
                                                 -------             ------              --------            -------

Net income (loss)                               (791,000)           466,000             (549,000)            705,000
                                               =========            =======             =========            =======

Net income (loss)
per share of common stock-basic and diluted        ($.01)              $.01                ($.01)               $.01
                                                   =====              =====                 =====               ====

Weighted average number
of common shares outstanding                  82,190,000         74,390,000           82,190,000          74,390,000
                                              ==========         ==========           ==========          ==========

</TABLE>

        The accompanying notes are an integral part of these statements.


                                        3


<PAGE>




                                    CAREADVANTAGE, INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (UNAUDITED)
<TABLE>
<CAPTION>

                                                                          Six-months Ended
                                                                              April 30,

                                                                   1999                     1998
                                                                   ----                     -----
<S>                                                                 <C>                     <C>
Cash flows from operating activities:

Net profit (loss)                                               $ (549,000)             $ 705,000

Adjustments  to reconcile  net profit (loss)
to net cash provided from (used by)
operating activities:

Depreciation and amortization                                       651,000               549,000
Compensation due to option issuance                                  25,000                     0

Change in assets and liabilities:

Due to/from customers/stockholders                                  493,000              (201,000)
Other assets                                                       (247,000)              (84,000)
Accounts payable                                                    139,000                51,000
Accrued expenses and other liabilities                             (213,000)             (235,000)
Deferred revenue                                                    (87,000)              805,000
                                                                   --------               -------

Net cash provided from (used by)
operating activities                                                212,000             1,590,000
                                                                    -------             ---------

Cash flows from investing activities:

Capital expenditures                                               (242,000)             (562,000)
                                                                  ---------              --------

Net cash provided from (used by) investing
activities                                                         (242,000)             (562,000)
                                                                   ---------             ---------

Cash flows from financing activities:

Principal payments to stockholder                                  (495,000)                   (0)
Principal payments under long-term debt                            (313,000)             (279,000)
                                                                  ---------             ---------

Net cash provided from (used by) financing
Activities                                                         (808,000)             (279,000)


Net increase (decrease) in cash                                    (838,000)              749,000

Cash - beginning of fiscal year                                   3,745,000             1,038,000
                                                                  ---------             ---------

Cash - end of period                                             $2,907,000            $1,787,000
                                                                 ==========            ==========


                      The  accompanying  notes  are an  integral  part of  these statements.
</TABLE>

                                                    4


<PAGE>


                               CAREADVANTAGE, INC.
                        NOTES TO THE FINANCIAL STATEMENTS



Note A--Basis of preparation:

The consolidated financial statements have been prepared by CareAdvantage,  Inc.
("CAI" or the "Company") and have not been audited by the Company's  independent
auditors.  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 at April 30, 1999 and for all periods presented.

Certain  information  and  note  disclosures  required  to be  included  in  the
financial  statements  prepared in accordance with generally accepted accounting
principles have been omitted.  These consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included with the Company's  October 31, 1998 Annual Report on Form 10-KSB filed
with the Securities and Exchange  Commission on January 29, 1999. The results of
operations for the period ended April 30, 1999 are not necessarily indicative of
operating results to be expected for the full year.

Note B--Per share data:

Basic net  income  per share has been  computed  based on the  weighted  average
number of shares  outstanding  during the  periods.  In fiscal  year  1999,  the
dilutive  effect of stock  options is  included  in the  calculation  of diluted
earnings per share using the treasury  stock  method.  Common stock  equivalents
have not been included since they are not dilutive.

The Company  adopted  SFAS No. 128  "Earnings  Per Share" and has  retroactively
applied  the  effects  thereof  for  all  periods  presented.  Accordingly,  the
presentation of per share information includes calculations of basic and diluted
net income per share.  The impact on the per share amounts  previously  reported
was not significant.

Note C--Contingencies:

Potential uninsured exposure to litigation:

a)   The  Company  has been  named as a party in an  action  entitled  ROBERT T.
     CARUSO V. CARE  ADVANTAGE,  INC.,  JOHN J.  PETILLO,  VINCENT M. ACHILLARE,
     LAWRENCE A. WHIPPLE, AND HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, INC.
     ET AL., which was filed in Superior Court of New Jersey on August 12, 1998.
     Messrs. Petillo, Achillare and Whipple were officers of the Company and may
     have claims for  indemnification for expenses and for any judgments against
     them  in this  case.  Mr.  Caruso  was a  consultant  to the  Company.  The
     complaint  alleges  breach  of  contract,  fraud,  conspiracy,   promissory
     estoppel and negligent  misrepresentation  in connection  with, among other
     things,  the termination of Mr. Caruso's  consulting  arrangement  with the
     Company.   The  complaint  seeks  compensation   allegedly  due  under  the
     consulting  arrangement and other damages. The Company received notice from
     two of its  insurance  carriers  denying  coverage on this matter,  but the
     Company plans to vigorously contest these coverage  decisions.  The Company
     received  a written  claim for  indemnification  from  defendants  Petillo,
     Achillare and, subject to their having acted in good faith, the Company has
     agreed to indemnify them and to pay their  reasonable  defense  costs.  The
     parties to this  litigation are currently  taking  discovery,  and no trial
     date has been set.  Until  discovery  has been  completed,  the Company has
     insufficient information regarding its potential exposure in this matter.

b)   On or about  January 16,  1998, an action  entitled MARY  DESTEFANO V. CARE
     ADVANTAGE,  INC.,  CAROL  MANZELLA,  AND THOMAS P.  RILEY  (the  "DeStefano
     Action")  was filed in the  Superior  Court of New  Jersey.  The  complaint
     alleges that (i) the  plaintiff was terminated from her employment with the
     Company in retaliation for her complaints  regarding alleged  violations of
     state and federal labor laws and (ii) the  Company  violated the New Jersey
     Wire Tapping and Electronic Surveillance Control Act. The complaint did not
     demand an amount of specific monetary  damages.  The defendants have denied
     liability in all respects.  On July 7, 1998, the Company was advised by its
     insurance carrier that it will provide a defense to all defendants named in
     the complaint.  However,  the Company's  insurance carrier has also advised
     that it will not pay any judgment adverse to the insured which  establishes
     the act of  deliberate  dishonesty  committed  by the  insured  with actual
     dishonest  purpose  and intent and  material  to the cause of the action so
     adjudicated.  Under the terms of the policy, "insured" includes the Company
     and its officers and directors.  The Company has retained  separate counsel
     to represent it in the litigation for purposes of this exclusion. Plaintiff
     has advised  that her damages are  believed to exceed  $250,000 and she has
     also asserted a claim for punitive damages. The Company is

                                        5


<PAGE>


                               CAREADVANTAGE, INC.
                        NOTES TO THE FINANCIAL STATEMENTS


     contesting  this lawsuit  vigorously.  The parties to this  litigation  are
     currently taking discovery, and no trial date has been set. Until discovery
     has been completed,  the Company has insufficient information regarding its
     potential exposure in this matter.


Note D - Supplemental Cash Flow Information:

Below is supplemental cash flow information related to the six- months ended
April 30, 1999 and 1998:
<TABLE>
<CAPTION>
                                                                              April 30,
<S>                                                                    <C>                    <C>

                                                                       1999                  1998
                                                                       ----                  ----


Income taxes paid                                                   104,000                     0
Interest paid, IBM capital lease obligations                         17,000                50,000
Interest paid, Horizon BCBS-NJ Note                                  35,000                     0
</TABLE>

Note E - Stock Option Grant and 1996 Stock Option Plan Amendment

On January 8, 1999,  the Board of  Directors  of the Company  ("Board")  granted
stock  options  for  3,600,000  shares of Common  Stock of the  Company to David
Noone, its Chief Executive  Officer,  in connection with Mr. Noone's  employment
agreement. The options have an exercise price of $.03 per share and a term of 10
years. Options for 1,800,000 shares shall become exercisable as follows: (a) 1/3
on December 31, 1999;  and (b) the  remaining  2/3 shall become  exercisable  in
equal  monthly  amounts over the period  January 1, 2000,  to December 31, 2001.
Options for the remaining 1,800,000 shares originally were to become exercisable
over a period  of 3 years  commencing  January  8, 2000 if  certain  performance
criteria  were met. On February  24,  1999,  the Board  approved an amendment to
these  options.  Under the terms of this amendment the options for the remaining
1,800,000 shares shall become exercisable in three equal annual  installments on
the  forth,  fifth  and  sixth  anniversary  of the  date of  grant  subject  to
acceleration upon achievement of certain performance  targets.  The Company will
realize  compensation costs related to this amendment of approximately  $252,000
and will amortize this cost over six years. In connection  with this grant,  and
subject to  stockholder  approval,  the Board amended the  Company's  1996 Stock
Option  Plan (now known as the "Stock  Option  Plan") to provide the Board (or a
Committee  thereof) with  increased  discretion  in the terms and  conditions of
stock options it may award.

On January 26, 1999,  the Board granted stock  options,  subject to  stockholder
approval,  constituting an aggregate of 10,556,000 shares of Common Stock of the
Company, to various employees,  a director and a former employee of the Company.
The  options  have an  exercise  price of $.08 per  share and a term of 10 years
subject to earlier  termination  upon certain  events.  A portion of the options
vests immediately and the remainder vests over 3 years. In connection with these
grants, and subject to stockholder approval,  the Board amended the Stock Option
Plan to increase the number of shares authorized for issuance from 10% to 18% of
the  Company's  authorized  Common  Stock,  and it amended  the  Company's  1996
Directors Stock Option Plan (now known as the "Directors  Stock Option Plan") to
provide the Board with increased discretion in the terms and conditions of stock
options it may award.

In addition on January 26,  1999,  subject to  stockholder  approval,  the Board
amended the Company's  Certificate  of  Incorporation  to increase the number of
shares of the  Company's  Common Stock for issuance  from  90,000,000  shares to
103,600,000 shares.

                                        6


<PAGE>


                               CAREADVANTAGE, INC.
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


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

FORWARD LOOKING STATEMENTS:

Certain   statements  in  this  Form  10-QSB  may  constitute   "forward-looking
statements"  contemplated under the Private Securities  Litigation Reform Act of
1995, including those concerning management's plans, intentions and expectations
with respect to future  financial  performance and future events and the outcome
of pending litigation,  particularly relating to revenues from performance-based
services and re-negotiations of existing and new contracts with customers.  Such
statements  involve known and unknown risks,  uncertainties  and  contingencies,
many of which are  beyond the  control of the  Company,  and which  could  cause
actual results and outcomes to differ  materially from those  expressed  herein.
Although  the  Company  believes  that its plans,  intentions  and  expectations
reflected in such forward  looking  statements  are  reasonable,  it can give no
assurance that such plans, intentions or expectations will be achieved.  Certain
risk factors exist, such as the ability to generate new business,  the Company's
inability  to prevent its  customers  from  terminating  existing  contracts  by
invoking standard  termination  clauses,  as well as other inherent  contractual
risks,  which are  beyond  the  control  of the  Company,  could have a material
adverse  impact on the Company or prevent the Company from  achieving the growth
or obtaining the results discussed.  For a more complete discussion of these and
other risk factors, please see "Cautionary Statements in Item 6 of the Company's
Form 10-KSB for the fiscal year ended October 31, 1998 filed with the Securities
and Exchange Commission on January 29, 1999.

GENERAL OVERVIEW:

The  Company  is a holding  company  which,  through  its  direct  and  indirect
subsidiaries,  CareAdvantage  Health  Systems,  Inc.  ("CAHS") and  Contemporary
HealthCare  Management,  Inc.  ("CHCM"),  is in the business of providing health
care cost containment services designed to enable health care insurers and other
health service organizations to reduce the costs of medical services provided to
their  subscribers.   The  services  provided  include   utilization  review  in
medical/surgical  cases where  pre-authorization is required for hospitalization
and for certain  in-patient  and  outpatient  procedures,  case  management  and
disease  management.  The Company's  services have been principally  provided to
several of the statewide Blue Cross/Blue Shield health services organizations in
the Northeastern United States.

RESULTS OF OPERATIONS:

The following  discussion  compares the Company's  results of operations for the
six and three  months  ended  April 30,  1999,  with those for the six and three
months ended April 30, 1998.

Three Months Ended April 30, 1999, Compared to Three Months Ended April 30, 1998
<TABLE>
<CAPTION>

      Net revenues:                                              Three Months Ended
                                                                 ------------------
                                                    April 30, 1999                April 30, 1998
                                                    --------------                --------------
                                              Amount         Percent           Amount           Percent
                                              ------         -------           ------           -------
<S>                                            <C>           <C>                <C>              <C>

Revenues from fixed fee
arrangements                                $3,987,000       101%            $3,993,000          95%
Revenues from performance-
based arrangements                             (33,000)       (1)%              200,000           5%
Other revenues                                   1,000         0%                 2,000           0%
                                               --------    -------            ----------        ------
Total revenues                               $3,955,000       100%            $4,195,000         100%
                                             ==========      =====           ===========        =====
</TABLE>


                                        7


<PAGE>


                               CAREADVANTAGE, INC.
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Revenues:

The Company's  total operating  revenues for the three-month  period ended April
30,  1999 and  April 30,  1998 were  approximately  $3,955,000  and  $4,195,000,
respectively.  This  represents  a decrease of  approximately  $240,000  for the
three-month  period  ended April 30, 1999 over the  corresponding  period of the
prior fiscal year.  The decrease for the three-month period ended April 30, 1999
is largely due to decreased  revenue of  approximately  $518,000 due to contract
terminations,  of which  $346,000  is related to the  termination  of the Allied
Health  Group,  Inc.  agreement,  offset by increased  revenue of  approximately
$101,000 from the Company's  major  customers due to increased  membership,  and
approximately  $177,000  due to new  contracts  entered  into during the current
fiscal year.

The Company's  ability to increase  revenues and gross margins is dependent upon
its ability to enter into additional  contracts with new customers and/or expand
the services  provided to existing  customers.  While the Company is pursuing an
aggressive  marketing and sales campaign to increase its revenues,  there can be
no assurance that the Company will be successful in increasing its revenues.

Cost  of  services:

The  Company's  total direct cost of services for the  three-month  period ended
April 30, 1999 and April 30, 1998 were approximately  $2,203,000 and $1,996,000,
respectively.  This  represents  an increase of  approximately  $207,000 for the
three- month period  ended April 30, 1999 over the  corresponding  period of the
prior fiscal  year.  This  increase in the cost of services for the  three-month
period ended April 30, 1999 was primarily due to increases in personnel  related
to  increased  staffing  for the  Company's  product  and  business  development
processes.

Operating  expenses:

Selling,  general  and  administrative:

The  Company's  total  selling,   general,  and  administrative  costs  for  the
three-month  period  ended April 30, 1999 and April 30, 1998 were  approximately
$2,334,000  and  $1,517,000,   respectively.  This  represents  an  increase  of
approximately  $817,000 for the three-month period ended April 30, 1999 over the
corresponding period of the prior fiscal year. This increase for the three-month
period  ended  April  30,  1999  is due  to  increases  in  personnel  costs  of
approximately $484,000, which includes approximately $300,000 of severance costs
for two executive officers,  travel costs of approximately $52,000,  information
and communication  costs of approximately  $64,000,  professional and consulting
costs of approximately  $79,000,  and other general and administrative  costs of
approximately  $138,000.  The increase in other general and administrative costs
is largely due to  increases  of  approximately  $75,000 in  increased  investor
relations and marketing materials costs,  approximately $14,000 related to stock
compensation  expense and approximately  $30,000 related to clinical  guidelines
licenses. The Company experienced increased marketing and sales costs during the
three-month  period ended April 30, 1999.  This increase is  attributable to the
Company's  increased  marketing and sales efforts, as well as increased emphasis
on new product development.

Management has taken and intends to take additional  steps to reduce general and
administrative  costs. There is no assurance,  however, that the Company will be
successful  in reducing  general  and  administrative  costs by any  significant
amount.

Depreciation  and  amortization:

The Company's  total  depreciation  and  amortization  costs for the three-month
period ended April 30, 1999 and April 30, 1998 were  approximately  $358,000 and
$286,000,  respectively.  This increase is largely due to increased amortization
related  to  internally  developed  software  costs  of  approximately  $73,000.
Approximately  $142,000 and $134,000 were included in costs of services for such
periods.

Interest expense:

The Company's total net interest  expense/(income)  for the  three-month  period
ended April 30, 1999 and April 30, 1998 was approximately  ($7,000) and $64,000,
respectively.  This  represents  a decrease  of  approximately  $71,000  for the
three-month  period  ended April 30, 1999 over the  corresponding  period of the
prior  fiscal  year.  The  decrease  in net  interest  expense is largely due to
decreased  interest  costs of  approximately  $18,000  under  the  Master  Lease
Agreement  with IBM Credit  Corporation  ("IBM"),  decreased  interest  costs of
approximately  $40,000  related  to the 8%  Exchangeable  Note  in the  original
principal amount of $2,000,000, maturing on June 30, 1998

                                       8
<PAGE>
                               CAREADVANTAGE, INC.
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


issued  by the  Company  to CW  Ventures  II,  L.P.  (the "CW  Note")  which was
converted to common stock on June 30, 1998,  and decreased  interest costs under
the Horizon  BCBSNJ  Note of  approximately  $4,000.  In  addition,  the Company
realized  increased  interest income of approximately  $9,000 from the Company's
short-term investments.

Six Months Ended April 30, 1999, Compared to Six Months Ended April 30, 1998
<TABLE>
<CAPTION>

       Net revenues:                                              Six Months Ended
                                                                  ----------------
                                                    April 30, 1999                April 30, 1998
                                                    --------------                --------------
                                              Amount         Percent           Amount           Percent
                                              ------         -------           ------           -------
<S>                                            <C>           <C>                <C>            <C>

Revenues from fixed fee
arrangements                                $7,979,000       100%            $7,795,000            95%
Revenues from performance-
based arrangements                              29,000         0%               396,000             5%
Other revenues                                   3,000         0%                 6,000             0%
                                              --------     ------             ---------         ------
Total revenues                              $8,011,000       100%            $8,197,000           100%
                                            ==========      =====           ===========          =====
</TABLE>

Revenues:

The Company's total operating  revenues for the six-month period ended April 30,
1999  and  April  30,  1998  were   approximately   $8,011,000  and  $8,197,000,
respectively.  This  represents  a decrease of  approximately  $186,000  for the
six-month period ended April 30, 1999 over the corresponding period of the prior
fiscal year. The decrease for the six-month  ended April 30, 1999 is largely due
to decreased revenue of approximately $735,000 due to contract terminations,  of
which $591,000 is related to the  termination  of the Allied Health Group,  Inc.
agreement  offset  by  increased  revenue  of  approximately  $294,000  from the
Company's  major  customers  due  to  increased  membership,  and  approximately
$255,000 due to new contracts entered into during the current fiscal year.

Cost of services:

The Company's total direct cost of services for the six-month period ended April
30, 1999 and April 30,  1998,  were  approximately  $4,214,000  and  $4,022,000,
respectively.  This  represents  an increase of  approximately  $192,000 for the
six-month period ended April 30, 1999 over the corresponding period of the prior
fiscal  year.  This  increase in the cost of services for the  six-month  period
ended  April  30,  1999 was  primarily  due to  increases  in  personnel  costs.

Operating expenses:

Selling,  general and  administrative:

The Company's total selling, general, and administrative costs for the six-month
period ended April 30, 1999 and April 30, 1998 were approximately $3,959,000 and
$3,053,000,  respectively. This represents an increase of approximately $906,000
for the six-month period ended April 30, 1999 over the  corresponding  period of
the prior fiscal year.  This increase for the  six-month  period ended April 30,
1999 is due to increases in personnel  costs of  approximately  $515,000,  which
includes  approximately  $300,000 of severance costs for two executive officers,
travel costs of approximately  $85,000,  information and communication  costs of
approximately  $75,000,  professional  and  consulting  costs  of  approximately
$40,000, and other general and administrative  costs of approximately  $191,000.
The increase in general and administrative  costs is largely due to increases of
approximately  $75,000 in investor  relations  and  marketing  materials  costs,
approximately  $25,000  related  to stock  compensation  expense,  approximately
$30,000  related  to  clinical   guidelines   licenses  and  other  general  and
administrative costs of approximately $20,000. The Company experienced increased
marketing and sales costs during the six-month period ended April 30, 1999. This
increase is attributable to the Company's increased marketing and sales efforts,
as well as increased emphasis on new product development.

                                       9


<PAGE>


                               CAREADVANTAGE, INC.
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


Management has taken and intends to take additional  steps to reduce general and
administrative  costs. There is no assurance,  however, that the Company will be
successful  in reducing  general  and  administrative  costs by any  significant
amount.

Depreciation  and  amortization:

The Company's total depreciation and amortization costs for the six-month period
ended  April 30,  1999 and  April  30,  1998  were  approximately  $651,000  and
$549,000,  respectively.  This increase of approximately $102,000 is largely due
to amortization  related to internally developed software costs of approximately
$118,000. Approximately $277,000 and $269,000 were included in costs of services
for such periods.

Interest expense:

The Company's net interest expense/(income) for the six-month period ended April
30,  1999  and  April  30,  1998  was  approximately   ($17,000)  and  $137,000,
respectively.  This  represents  a decrease of  approximately  $154,000  for the
six-month period ended April 30, 1999 over the corresponding period of the prior
fiscal year.  The  decrease in net interest  expense is largely due to decreased
interest  costs  under the  Master  Lease  Agreement  with IBM of  approximately
$34,000,  decreased  interest costs of  approximately  $80,000 related to the CW
Note,  which was  converted  to common  stock on June 30,  1998,  and  decreased
interest  costs  under the  Horizon  BCBSNJ  Note of  approximately  $8,000.  In
addition,  the  Company  realized  increased  interest  income of  approximately
$32,000 from the Company's short-term investments.

RESULTS FOR THE QUARTER:

The Company has incurred a net loss of approximately  $791,000 during the second
quarter ended April 30, 1999 and such loss is primarily  due to charges  related
to the following:

Severance   charges  of   approximately   $300,000  related  to  the  employment
termination of two executive  officers,  $70,000 of software  development  costs
that were written off due to the abandonment of the project, $250,000 related to
additional  legal  support  and  investor  relations  costs for  on-going  legal
disputes  and the holding of the  Company's  annual  shareholders  meeting,  and
$50,000 of travel  and  lodging  expenses  related  to the  Company's  increased
marketing and sales efforts.

Other expense increases have been identified and the Company  implemented a cost
reduction  strategy to control  these  increased  costs.  However,  there are no
assurances  that  management  will be  successful  in  controlling  general  and
administrative expenses in the future.



LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES:

General overview:

At April 30, 1999, the Company had a working  capital  surplus of  approximately
$353,000,  a capital  surplus of  approximately  $2,960,000  and an  accumulated
deficit  since its  inception of  approximately  $19,157,000.  By  continuing to
provide  high quality care cost  containment  services to its existing  customer
base of five BCBS  plans,  management  believes  it can  continue  to market its
products to other BCBS plans.  This strategy is particularly  significant  given
the current health care environment where large  third-party  payers are merging
in an effort to protect  their  respective  franchises  and expand  their market
reach.  The various BCBS plans  throughout  the country are no exception to this
phenomenon  and the Company  believes it can leverage its core  competencies  to
participate in this consolidating environment.

                                       10


<PAGE>


                               CAREADVANTAGE, INC.
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



Management is of the opinion that it must continue to refine its current service
lines in order to  continue to add value to existing  and  potential  customers.
Additionally,  the Company  intends to broaden its services  offered with unique
and  complementary  cost-containment  strategies.  Management will evaluate each
service with regard to anticipated changes in the health care industry, the cost
to enter any such  line of  service  as well as the  availability  of  competent
resources. To further expand its line of services, the Company intends to pursue
alternatives  to its  internal  products  and  service  development  efforts  by
entering  into  strategic  alliances  and  joint  ventures  as well  as  through
acquisitions.

Financial  condition:

At April 30,  1999,  the  Company  had cash of  approximately  $2,907,000  and a
working  capital  surplus of  approximately  $353,000.  At October 31, 1998, the
Company had cash of  approximately  $3,745,000 and a working  capital surplus of
approximately  $1,077,000.

Net cash provided from operating  activities amounted to approximately  $212,000
and  $1,590,000  for the  six-month  period  ended  April  30,  1999  and  1998,
respectively. The cash provided from 1999 operating activities is largely due to
an  increase  in  accounts  payable of  approximately  $139,000,  a decrease  in
customer  receivables  of  approximately   $493,000,  and  non-cash  charges  of
approximately  $676,000 offset by decreases of approximately $87,000 in deferred
revenue, accrued expenses and other liabilities of approximately $213,000, other
assets of  approximately  $247,000  and a  $549,000  net loss.

Net cash used in investing  activities  amounted to  approximately  $242,000 and
$562,000 for the six-month  period ended April 30, 1999 and 1998,  respectively.
The decrease in cash used of approximately  $320,000 is due to decreased capital
outlays for computer  related  equipment  incurred  during the six-month  period
ended  April  30,  1999.

Net cash used in financing  activities  amounted to  approximately  $808,000 and
$279,000 for the six-month  period ended April 30, 1999 and 1998,  respectively.
The increase in cash used of approximately  $529,000 is largely due to increased
principal  payments to a  stockholder/customer  of  approximately  $495,000  and
increased  principal  payments related to the Master Lease Agreement with IBM of
approximately  $34,000.

While there can be no  assurances,  management  believes  that its cash on hand,
projected future cash flows from operations and the Company's borrowing capacity
under its credit facility with Summit Bank (see  discussion  below under Capital
Resources)  will provide  adequate  capital  resources to support the  Company's
anticipated cash needs for the next twelve months.

Capital resources:

Amounts  payable  pursuant to long-term  financing  arrangements as of April 30,
1999 were  approximately  $109,000,  consisting  of  capital  lease  obligations
pursuant to a Master Lease Agreement for the financing of computer and telephone
equipment,  installation,  software and related system integration expenses. The
term of the Master Lease Agreement is four years; it expires in June 30 1999, at
which time,  pursuant to its terms the Company will  purchase all such items for
one dollar, and bears interest at 11.39% per annum.  Horizon Blue Cross and Blue
Shield  of New  Jersey,  formerly  known as Blue  Cross  and Blue  Shield of New
Jersey, Inc. ("Horizon BCBSNJ")  guarantees the Company's  obligations under the
Master Lease  Agreement.

Pursuant to the Horizon  BCBSNJ  Note,  the Company owes  $1,368,000  to Horizon
BCBSNJ as of April 30, 1999.  The Horizon BCBSNJ Note provides for equal monthly
payments of principal  and  interest  commenced on October 1, 1998 and ending on
June 30,  2000,  at which time the  principal  of the note is payable and due in
full. The Horizon BCBSNJ Note bears interest at a five-year U.S. treasury yield,
adjusted  quarterly.  While there can be no  assurances  that  future  operating
results will be  sufficient to fund this  obligation of the Company,  management
expects such amounts to be funded through operations.


The Company has a credit  facility  with Summit Bank (the "Bank") that  provides
for a $1,500,000 working capital revolver to be used for general working capital
needs,  which has been extended through September 3, 1999. In September of 1998,
the Bank issued an  irrevocable  letter of credit in the amount of $250,000  for
the account of the Company in favor of a vendor as  security  for the  Company's
obligation  under a  non-cancelable  operating  lease.


                                       11


<PAGE>


                               CAREADVANTAGE, INC.
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


This letter of credit is issued  under the  Company's  credit  facility  and the
availability  is thus  reduced by the face  amount of the letter of credit.  The
remainder of the credit facility is available to the Company.

In connection with  management's  intention to more  effectively  streamline its
operations, as well as increased emphasis on developing in-house data management
capabilities  and training and  educational  programs for its clinical staff and
customers,  the  Company  expects  to incur  additional  leasehold  improvement,
software and  computer  hardware  costs  during the third and fourth  quarter of
fiscal 1999 of  approximately  $300,000.  Such costs are expected to be financed
with the Company's current cash reserves and future operating cash flows.

YEAR 2000:

POTENTIAL IMPACT OF YEAR 2000 COMPUTER ISSUES OVERVIEW:

The year 2000 computer  problem is the inability of computer systems which store
dates by using  the last two  digits  of the  year  (i.e.  "98" for  "1998")  to
reliably  recognize  that dates after  December 31, 1999 are later than, and not
before,  1999.  For  instance,  the date  January  1,  2000,  may be  mistakenly
interpreted as January 1, 1900, in calculations  involving dates on systems that
are non-year 2000 compliant. The Company relies on information technology ("IT")
systems and other systems and  facilities  such as telephones,  building  access
control systems and heating and ventilation  equipment  ("Embedded  Systems") to
conduct its  business.  These  systems are  potentially  vulnerable to year 2000
problems  due to their use of date  information.  The Company  also has business
relationships  with  customers  and health  care  providers  and other  critical
vendors who are themselves  reliant on IT and Embedded  Systems to conduct their
businesses.

STATE OF READINESS:

The Company's IT systems are largely centralized, with substantially all systems
maintained in the Company's  corporate  headquarters in Iselin,  New Jersey, the
Company has developed its own standards for systems which include both purchased
and  internally-developed  software. The Company's IT hardware infrastructure is
built  mainly  around  mid-range  computers  and IBM  PC-compatible  servers and
desktop systems.  The Company's  principal means of ensuring year 2000 readiness
for  purchased  software  has  been  the  replacement,   upgrade  or  repair  of
non-compliant  systems.  This replacement process would have been undertaken for
business reasons irrespective of the year 2000 problem;  however, it would, more
than likely,  have been  implemented over a longer period of time. The Company's
internally-developed  software  was either  designed  to be year 2000 ready from
inception  or is in the  process  of  being  modified  to be  year  2000  ready.
Substantially all of the Company's  mid-range IT hardware has been remediated to
a state of year 2000 readiness, with the remainder scheduled to be remediated by
the end of the third quarter of fiscal 1999. Most of the Company's non-compliant
IBM  PC-compatible  servers and desktops have been upgraded,  with the remainder
expected to be replaced by the end of fiscal  1999.  The  Company's  plan for IT
systems consists of several phases, primarily: (i) Inventory--identifying all IT
systems and the magnitude of year 2000  readiness  risk of each according to its
potential business impact; (ii) Date assessment--identifying IT systems that use
date   functions  and  assessing  them  for  year  2000   functionality;   (iii)
Remediation--reprogramming,  replacing or upgrading where necessary, inventoried
items  to   ensure   they  are  year   2000   ready;   and  (iv)   Testing   and
certification--testing  the code  modifications  and new  inventory  with  other
associated  systems,  including  extensive date testing and  performing  quality
assurance testing to ensure successful  operation in the post-1999  environment.
The Company has substantially  completed the inventory and assessment phases for
substantially  all of its IT systems.  The Company's IT systems are currently in
the  remediation  and testing and  certification  phases.  The Company  plans to
complete the remediation,  testing and certification of all of its IT systems by
the end of the third quarter of fiscal year 1999. The Company leases most of the
office  space in which its  reliance  on Embedded  Systems  presents a potential
problem and is  currently  working with the  respective  lessors to identify and
correct any potential year 2000 problems related to these Embedded Systems.  The
Company believes that its year 2000 projects generally are on schedule.

                                       12


<PAGE>

                               CAREADVANTAGE, INC.
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



EXTERNAL RELATIONSHIPS:

The Company  also faces the risk that one or more of its  critical  suppliers or
customers  ("External  Relationships")  will  not be able to  interact  with the
Company due to the third party's  inability to resolve its own year 2000 issues,
including those associated with its own External  Relationships.  The Company is
attempting  to  determine  the  overall  year  2000  readiness  of its  External
Relationships.  In the  case  of  significant  customers  and  mission  critical
suppliers such as banks, telecommunications providers and other utilities and IT
vendors,  the Company is engaged in  discussions  with the third  parties and is
attempting to obtain  detailed  information as to those parties' year 2000 plans
and  state  of  readiness.  The  Company,  however,  does  not  have  sufficient
information  at the current time to predict  whether its External  Relationships
will be year 2000 ready.


YEAR 2000 COSTS:

Total costs incurred  solely for remediation of potential year 2000 problems are
currently  estimated  to be  approximately  $100,000  in  fiscal  1999.  A large
majority of these costs are expected to be  incremental  expenses  that will not
recur in the year  2000 or  thereafter.  The  Company  expenses  these  costs as
incurred and funds these costs through operating cash flows. Year 2000 readiness
is critical to the Company.  The Company has  re-deployed  some  resources  from
non-critical  system  enhancements  to  address  year  2000  issues.  Due to the
importance  of IT systems to the  Company's  business,  management  has deferred
non-critical  systems  enhancements to become year 2000 ready.  The Company does
not expect these  redeployments  and deferrals to have a material  impact on the
Company's financial condition or results of operations.


RISKS AND CONTINGENCY/RECOVERY PLANNING:

If the Company's year 2000 issues were  unresolved,  the most reasonably  likely
worst case scenario would include,  among other possibilities,  the inability to
accurately  and  timely  authorize  and  process  benefits  and  medical  stays,
accurately  bill  customers,   assess  claims  exposure,   determine   liquidity
requirements,  report  accurate  data to  management,  stockholders,  customers,
regulators and others,  business  interruptions or shut downs, financial losses,
reputational  harm,  loss  of  significant  customers,   increased  scrutiny  by
regulators and litigation related to year 2000 issues. The Company is attempting
to limit the potential impact of the year 2000 by monitoring the progress of its
own year 2000 project and those of its critical  External  Relationships  and by
developing contingency/recovery plans. The Company cannot guarantee that it will
be able to resolve all of its year 2000  issues.  Any critical  unresolved  year
2000 issues at the Company or its External Relationships,  however, could have a
material  adverse effect on the Company's  results of  operations,  liquidity or
financial   condition.   The   Company   has   developed,   or  is   developing,
contingency/recovery plans aimed at ensuring the continuity of critical business
functions  before and after  December 31,  1999.  As part of that  process,  the
Company has substantially  completed the development of manual work alternatives
to automated  processes which will both ensure business continuity and provide a
ready  source  of  input to  affected  systems  when  they  are  returned  to an
operational  status.  These manual  alternatives  presume,  however,  that basic
infrastructure  such as  electrical  power  and  telephone  service,  as well as
purchased  systems  which  are  advertised  to  be  year  2000  ready  by  their
manufacturers  (primarily  personal  computers and  productivity  software) will
remain unaffected by the year 2000 problem.

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

As of April 30, 1999, the Company's  investments  are not adversely  impacted by
changes in market interest  rates.  The Company does not believe that changes in
interest  rates will have a  material  impact on future  earnings  or cash flows
during the next twelve months.

                                       13


<PAGE>


                               CAREADVANTAGE, INC.
            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



PART II--OTHER INFORMATION

Item 1.  Legal Proceedings

Not applicable

Item 2.  Changes in Securities

None.

Item 3.  Defaults Upon Senior Securities

None.

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

None.

Item 5.  Other Information

None.

Item 6. Exhibits and reports on Form 8-K

     (a) Exhibits

          (27) Financial Data Schedule

     (b) Reports on Form 8-K - None


                                       14


<PAGE>





                                   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

June 14, 1999             /s/ David G. Noone
                          ------------------
                          David G. Noone
                          Chief Executive Officer

June 14, 1999             /s/ David G. DeBoskey
                          ---------------------
                          David G. DeBoskey
                          Principal Financial and Accounting Officer







                                       15
<PAGE>