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 June 30, 2001



                         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
                                  -----        -----



                                   83,534,263
        Number of shares of Common Stock outstanding as of August 6, 2001

                  Transitional Small Business Disclosure Format
                                  Yes___ No_X_



<PAGE>




                      CareAdvantage, Inc. and Subsidiaries
                                   Form 10-QSB
                     For the six months ended June 30, 2001


                                    I N D E X


Part I - Financial Information

    Item 1.    Financial Statements

         o   Condensed Consolidated Balance Sheets -
             June 30, 2001 (Unaudited) and December 31, 2000 (Audited).........2

         o   Condensed Consolidated Statements of Operations -
             Three and Six-months ended June 30, 2001 (Unaudited) and
             June 30, 2000 (Unaudited).........................................3

         o   Condensed Consolidated Statements of Cash Flows -
             Six months ended June 30, 2001 (Unaudited) and
             June 30, 2000 (Unaudited).........................................4

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

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


Part II - Other Information

    Item 1.  Legal Proceedings................................................11

    Item 2.  Changes in Securities............................................11

    Item 3.  Defaults Upon Senior Securities..................................11

    Item 4.  Submission of Matters to a Vote of Security Holders..............11

    Item 5.  Other Information ...............................................11

    Item 6.  Exhibits and Reports on Form 8-K.................................11

    Signature.................................................................12




<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1.  Financial Statements
<TABLE>
<CAPTION>

                                       CAREADVANTAGE, INC AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                  June 30,                               December 31,
                     ASSETS                                        2001                                     2000
                                                                 Unaudited                                 Audited
                                                                 ---------                                 -------
<S>                                                              <C>                                   <C>
Current assets:
     Cash and cash equivalents                                   $2,959,000                             $  1,479,000
     Restricted cash                                                106,000                                  256,000
     Accounts receivable for services:
         Stockholder                                              1,228,000                                1,228,000
         Other                                                      832,000                                1,078,000
     Other current assets                                           197,000                                  145,000
                                                                    -------                                  -------

                  Total current assets                            5,322,000                                4,186,000

Property and equipment, at cost less accumulated depreciation       355,000                                  438,000
Intangible assets                                                   757,000                                  850,000
Other assets                                                        137,000                                  113,000
                                                                    -------                                  -------

Total Assets                                                    $ 6,571,000                             $  5,587,000
                                                                ===========                                =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:


     Accounts payable                                           $    11,000                             $    190,000
     Due to stockholder                                           1,532,000                                1,532,000
     Accrued salaries and employee benefits                         797,000                                  747,000
     Accrued expenses and other current liabilities                 468,000                                  335,000
                                                                    -------                                  -------



                  Total current liabilities                       2,808,000                                2,804,000


Total Liabilities                                                 2,808,000                                2,804,000
                                                                  ---------                                ---------

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 83,534,238 and 83,533,752                   83,000                                   83,000
     Additional capital                                          22,238,000                               22,238,000
     Accumulated deficit                                        (18,558,000)                             (19,538,000)
                                                                ------------                             -----------


Total Stockholders' Equity                                        3,763,000                                2,783,000
                                                                  ---------                                ---------
Total Liabilities and Stockholders' Equity                      $ 6,571,000                            $   5,587,000
                                                                ===========                            =============


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

                                       2

<PAGE>

<TABLE>

                                          CAREADVANTAGE, INC. AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                       (UNAUDITED)


                                                   Three Months Ended                          Six Months Ended
                                                       June 30,                                    June 30
                                                   2001            2000                     2001            2000
                                                   ----            ----                     ----            ----
<CAPTION>
<S>                                             <C>              <C>                    <C>              <C>

Net revenues                                    $5,281,000       $4,338,000              $10,423,000     $8,887,000

Costs of services                                2,857,000        2,216,000                5,612,000      4,455,000
                                                 ---------        ---------                ---------    -----------


Gross margin                                     2,424,000        2,122,000                4,811,000      4,432,000
                                                 ---------        ---------                ---------      ---------

Operating expenses:

Selling, general and administration              1,761,000        1,899,000                3,436,000      3,808,000
Depreciation and amortization                      164,000          182,000                  339,000        359,000
                                                   -------          -------                  -------        -------

Total operating expenses                         1,925,000        2,081,000                3,775,000      4,167,000
                                                 ---------        ---------                ---------      ---------

Operating income                                   499,000           41,000                1,036,000        265,000

Interest income - net                               11,000            9,000                   19,000         23,000

Provision for income taxes                          45,000                -                   75,000              -
                                                   --------      ----------                   ------       --------

Net income/(loss)                                   465,000          50,000                  980,000        288,000
                                                    =======          ======                 ========        =======

Net  income/(loss)
per share of common stock-basic and diluted            $.01            $.00                     $.01           $.00
                                                       ====            ====                     ====           ====

Weighted average number
of common shares outstanding -

      Basic                                      83,534,000      83,042,000               83,534,000     82,898,000
                                                 ==========      ==========               ==========     ==========

      Diluted                                    85,575,000      91,490,000               86,032,000     92,659,000
                                                ===========      ==========               ==========     ==========


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


                                       3


<PAGE>
<TABLE>
<CAPTION>


                              CAREADVANTAGE, INC. AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (UNAUDITED)

                                                                          Six Months Ended
                                                                 June 30,                 June 30,
                                                                   2001                     2000
                                                                   ----                     ----
<S>                                                               <C>                   <C>

Cash flows from operating activities:

Net profit/(loss)                                                 $ 980,000             $ 288,000

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

Depreciation and amortization                                       409,000               446,000
Compensation due to option issuance                                  10,000                25,000
Deferred revenue                                                          -               (98,000)

Change in assets and liabilities:

Due to/from customers/stockholders                                  246,000              (303,000)
Other assets                                                        (86,000)              (85,000)
Accounts payable                                                   (178,000)              144,000
Accrued expenses and other liabilities                              182,000              (341,000)
                                                                    -------              ---------
Net cash  provided from
operating activities                                              1,563,000                76,000
                                                                  ---------                ------
Cash flows from investing activities:

Capital expenditures                                               (233,000)             (229,000)
                                                                   ---------             ---------
Net cash  (used by) investing
activities                                                         (233,000)             (229,000)
                                                                   ---------             ---------
Cash flows from financing activities:

Transfer from Restricted Cash                                       150,000                     -
Proceeds from issuance of Common Stock                                    -                30,000
                                                                 ----------                ------
Net cash provided from financing activities                         150,000                30,000
                                                                 ----------                ------
Net  increase/(decrease) in cash                                  1,480,000              (123,000)

Cash - beginning of fiscal year                                   1,479,000             1,615,000
                                                                  ---------             ---------

Cash - end of period                                             $2,959,000            $1,492,000
                                                                 ==========            ==========



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

</TABLE>
                                        4
<PAGE>


                               CAREADVANTAGE, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
Note A--Basis of preparation:

The condensed  consolidated financial statements as of June 30, 2001 and for the
six months  ended June 30,  2001 and 2000 have been  prepared by 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 as
of and for the periods ended June 30, 2001 and 2000.

Certain  information and note  disclosures  required to be included in condensed
financial  statements  prepared in accordance with generally accepted accounting
principles 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, 2000 Annual Report on
Form 10-KSB.  The results of  operations  for the period ended June 30, 2001 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.  Dilutive  earnings per share
reflects  the  potential  dilution  that could  occur if  dilutive  options  and
warrants outstanding were exercised and converted into common stock.

Note C--Contingencies:

Potential uninsured exposure to litigation:

In 1998  Robert T.  Caruso,  a former  consultant  to the  Company,  commenced a
lawsuit against the Company, John J. Petillo, Vincent M. Achillare,  Lawrence A.
Whipple,  three former officers of the Company, and others, in Superior Court of
New  Jersey.  The  complaint  alleged  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 plaintiff sought treble and other damages for an unspecified amount
and claims actual damages in the approximate amount of $1.8 - $2.0 million.  The
Company received a written claim for  indemnification  from defendants,  Petillo
and  Achillare  and,  subject to their having  acted in good faith,  the Company
agreed to  indemnify  them and  defendant  Whipple  and to pay their  reasonable
defense costs. The Company  believes that plaintiff's  claims are without merit.
The court has granted summary  judgment in favor of the other  defendants and in
favor of Mr. Achillare.  In May 2001, the matter was scheduled for trial against
the  remaining  defendants--the  Company and Messrs.  Petillo and  Whipple.  Mr.
Caruso  was  unable to attend  the trial due to his  incarceration  in a Federal
Detention Center. As a result, Mr. Caruso and the aforesaid remaining defendants
signed a Stipulation of Dismissal, terminating the action, without prejudice and
the action was ordered  dismissed.  Mr.  Caruso has since  appealed the grant of
summary judgement in favor of the other defendants (but not the summary judgment
in favor of Mr. Achillare),  indicating in the Civil Case Information  Statement
filed in  connection  with  that  appeal  that "It is [Mr.  Caruso's]  intent to
reinstate  the matter  once Mr.  Caruso is released  from the Federal  Detention
Center." In the event that Mr. Caruso seeks to reinstate the matter or otherwise
commence an action on the same claims,  the Company plans to vigorously  contest
such  claims.  The Company  received  notice  from its  directors  and  officers
liability  insurance  carrier that it has denied  coverage in this  matter;  the
Company is  contesting  this  coverage  decision.  The  Company  has  recorded a
provision for Mr. Caruso's contingent claim. There can be no assurance that this
provision will be sufficient to satisfy this claim.

Note D - Supplemental Cash Flow Information:

Below is supplemental cash flow information related to the six months ended June
30, 2001 and June 30, 2000:

                                         June 30,             June 30,
                                         --------             --------

                                            2001                  2000
                                            ----                  ----

Income taxes paid                         31,000                41,000


                                       5
<PAGE>


                               CAREADVANTAGE, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note E - Exercise of Stock Options

During the six months ended June 30, 2001, no options were exercised.




                                      6
<PAGE>


                               CAREADVANTAGE, INC.

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, 2000.
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 health care cost containment  services  designed to enable health
care  insurers and other  health  service  organizations  to reduce the costs of
medical services provided to their subscribers.  The management services include
care management program enhancement services,  executive and clinical management
services,  and training  programs;  the  healthcare  cost  containment  services
include utilization review in medical/surgical cases where  pre-authorization is
required  for   hospitalization   and  for  certain  in-patient  and  outpatient
procedures, case management and disease management, and independent reviews. The
Company's  management  services  have been  provided to  integrated  health care
delivery systems;  the Company's health care cost containment services have been
principally provided to several of the statewide Blue Cross/Blue Shield ("BCBS")
health service organizations in the Northeastern United States.

The Company has a service  agreement  with Horizon Blue Cross Blue Shield of New
Jersey  ("Horizon  BCBSNJ")  which  expired on June 30, 2000 and  accounted  for
approximately  75% of net revenue  for 2000.  Although  the  precise  terms of a
contract renewal have not yet been agreed upon, the Company has been informed by
Horizon  BCBSNJ that  Horizon  BCBSNJ  intends to continue to contract  with the
Company for care management  services for the indemnity  portion of the business
at least until January 1, 2002. The indemnity portion of the business  accounted
for approximately 90% of the total Horizon BCBSNJ contract revenues on an annual
basis.



RESULTS OF OPERATIONS:

The following  discussion  compares the Company's  results of operations for the
six and three  months  ended  June 30,  2001,  with  those for the six and three
months ended June 30,  2000.  The  Company's  condensed  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 June 30, 2001, Compared to Three Months Ended June 30, 2000

Revenues:

The Company's  total operating  revenues for the three-month  periods ended June
30,  2001  and June 30,  2000  were  approximately  $5,281,000  and  $4,338,000,
respectively.  This  represents  an increase of  approximately  $943,000 for the
three-month  period  ended June 30,  2001 from the  corresponding  period of the
prior year. The increase for the three months ended June 30, 2001 is largely due
to increased revenue of approximately $995,000 due to new contracts, offset by a
decrease of  approximately  $52,000 in revenue due to decreased  membership from
the Company's major customers.

                                       7
<PAGE>
                               CAREADVANTAGE, INC.


Cost of services:

The Company's  total direct cost of services for the  three-month  periods ended
June 30, 2001 and June 30, 2000 was  approximately  $2,857,000  and  $2,216,000,
respectively.  This  represents  an increase of  approximately  $641,000 for the
three-month  period  ended June 30,  2001 over the  corresponding  period of the
prior year.  The  increase in the cost of services  for the  three-month  period
ended  June  30,  2001 was  primarily  due to  increased  costs  related  to new
contracts  (i.e.,  increased  personnel  costs of  approximately  $260,000,  and
medical  consulting  services of  $327,000)  and travel  costs of  approximately
$124,000,  offset by a decrease in professional  costs of approximately  $56,000
and a  decrease  in  depreciation  and  amortization  expense  of  approximately
$14,000.

Operating expenses:

Selling, general, and administrative:

The  Company's  total  selling,   general,  and  administrative  costs  for  the
three-month  periods  ended June 30, 2001 and June 30,  2000 were  approximately
$1,761,000  and  $1,899,000,   respectively.   This  represents  a  decrease  of
approximately  $138,000 for the three-month  period ended June 30, 2001 over the
corresponding period of the prior year. This decrease for the three-month period
ended  June  30,  2001  is  largely  due to  decreases  in  personnel  costs  of
approximately   $199,000,   information   systems  and  communication  costs  of
approximately  $30,000  and travel  costs of  approximately  $12,000,  offset by
increases in other general and administrative costs of approximately $24,000 and
facility costs of approximately $79,000.

Depreciation and amortization:

The Company's  total  depreciation  and  amortization  costs for the three-month
periods  ended June 30, 2001 and June 30, 2000 were  approximately  $195,000 and
$225,000,  respectively.  Approximately $31,000 and $45,000 of such amounts were
included in cost of services for such periods.

Interest expense:

The Company's total net interest  income for the three-month  periods ended June
30, 2001 and June 30, 2000 was approximately  $11,000 and $9,000,  respectively.
This represents an increase of  approximately  $2,000 in net interest income for
the three-month period ended June 30, 2001 from the corresponding  period of the
prior year.  The  increase in net  interest  income is largely due to  decreased
interest costs of approximately  $3,000 pursuant to a Horizon BCBSNJ  promissory
note with a principal  balance of  $693,000  as of June 30,  2001 and  increased
interest  income  of   approximately   $5,000  from  the  Company's   short-term
investments, offset by increased interest costs of approximately $6,000 pursuant
to an obligation to a Horizon subsidiary.



Six Months Ended June 30, 2001, Compared to Six Months Ended June 30, 2000

Revenues:

The Company's total operating  revenues for the six-month periods ended June 30,
2001  and  June  30,  2000  were   approximately   $10,423,000  and  $8,887,000,
respectively.  This represents an increase of  approximately  $1,536,000 for the
six-month period ended June 30, 2001 from the corresponding  period of the prior
year.  The  increase  for the six months  ended June 30,  2001 is largely due to
increased  revenue of approximately  $2,111,000 due to new contracts offset by a
decrease of approximately  $575,000 in revenue due to decreased  membership from
the Company's major customers.

Cost of services:

The Company's total direct cost of services for the six-month periods ended June
30,  2001  and  June  30,  2000 was  approximately  $5,612,000  and  $4,455,000,
respectively.  This represents an increase of  approximately  $1,157,000 for the
six-month period ended June 30, 2001 over the corresponding  period of the prior
year.  The increase in the cost of services for the six-month  period ended June
30, 2001 was  primarily due to increased  costs related to new contracts  (i.e.,
increased personnel costs of approximately $405,000, travel

                                       8
<PAGE>
                               CAREADVANTAGE, INC.


costs of approximately $259,000, which is reimbursed by the Company's customers,
and medical  consulting  services of  $496,000),  travel costs of  approximately
$12,000 and professional costs of approximately  $3,000, offset by a decrease in
depreciation and amortization expense of approximately $19,000.



Operating expenses:

Selling, general, and administrative:

The Company's total selling, general, and administrative costs for the six-month
periods ended June 30, 2001 and June 30, 2000 were approximately  $3,436,000 and
$3,808,000,  respectively.  This represents a decrease of approximately $372,000
for the six-month  period ended June 30, 2001 over the  corresponding  period of
the prior year.  The  decrease for the  six-month  period ended June 30, 2001 is
largely  due  to  decreases  in  personnel  costs  of  approximately   $360,000,
information and communication costs of approximately $91,000 and travel costs of
approximately   $49,000   and  other   general  and   administrative   costs  of
approximately  $34,000,  offset by increases in facility costs of  approximately
$94,000 and professional costs of approximately $68,000.

Depreciation and amortization:

The  Company's  total  depreciation  and  amortization  costs for the  six-month
periods  ended June 30, 2001 and June 30, 2000 were  approximately  $409,000 and
$446,000, respectively.  Approximately $70,000 and $89,000 were included in cost
of services for such periods.

Interest expense:

The Company's total net interest income for the six-month periods ended June 30,
2001 and June 30, 2000 was approximately $19,000 and $23,000, respectively. This
represents a decrease of  approximately  $4,000 in net  interest  income for the
six-month period ended June 30, 2001 from the corresponding  period of the prior
year. The decrease in net interest  income is largely due to increased  interest
costs  of  approximately   $20,000  pursuant  to  an  obligation  to  a  Horizon
subsidiary,  offset by decreased interest costs of approximately $1,000 pursuant
to a Horizon BCBSNJ  promissory note with a principal  balance of $693,000 as of
June 30, 2001 and increased  interest income of  approximately  $15,000 from the
Company's short-term investments.



LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES:

General overview:

At June 30, 2001, the Company had working capital of  approximately  $2,514,000,
stockholders  equity of approximately  $3,763,000 and an accumulated  deficit of
approximately $18,558,000. 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 June 30, 2001, the Company had cash of  approximately  $3,065,000 and working
capital of approximately  $2,514,000. At December 31, 2000, the Company had cash
of approximately $1,735,000 and working capital of approximately $1,382,000.


Net cash provided by operating  activities amounted to approximately  $1,563,000
and $76,000 for the  six-month  periods  ended June 30, 2001 and June 30,  2000,
respectively.  The increase in cash provided of  approximately  $1,487,000  from
2001 operating  activities is largely due to an increase in customer receivables


                                       9

<PAGE>
                               CAREADVANTAGE, INC.


of approximately $246,000, an increase in accrued expenses and other liabilities
of approximately  $182,000,  non-cash  charges of  approximately  $419,000 and a
$980,000  in  net  profit,   offset  by  a  decrease  in  accounts   payable  of
approximately $178,000 and a decrease in other assets of approximately $86,000.

Net cash used in investing  activities  amounted to  approximately  $233,000 and
$229,000  for the  six-month  periods  ended  June 30,  2001 and June 30,  2000,
respectively.

Net cash provided by financing activities amounted to approximately $150,000 and
$30,000  for the  six-month  periods  ended  June 30,  2001  and June 30,  2000,
respectively.  The  increase  in cash of  approximately  $120,000  is due to the
transfer of  restricted  cash of $150,000,  offset by proceeds  from issuance of
common stock in 2000 of approximately $30,000.

While there can be no assurances,  management believes that its cash on hand and
projected   future  cash  flows  from  operations  will  support  the  Company's
anticipated cash needs for the calendar year ending December 31, 2001.


Capital resources:

Pursuant  to a  promissory  note dated April 1, 1997 in the  original  principal
amount of $1,862,823,  assigned to Horizon BCBSNJ,  the Company owes $693,000 to
Horizon BCBSNJ as of June 30, 2001.  The  promissory  note bears interest at the
five-year U.S., Treasury yield, adjusted quarterly. The Company has an agreement
with  Horizon  BCBSNJ to suspend  payments  and  convert  principal  and accrued
interest as of November 1, 2000 to common stock, as discussed below.

On November 1, 2000,  the Company and Horizon BCBSNJ signed a  "Satisfaction  of
Debt  Agreement"  which was  subsequently  amended to extend the closing date to
September 30, 2001.  Under the terms of the agreement,  the Company will pay and
satisfy  amounts  outstanding to Horizon BCBSNJ of  approximately  $1,600,000 by
issuance  of  its  common  stock.  The  amount  of  $1,600,000  consists  of the
promissory  note  dated  April 1,  1997,  with a  balance  at June  30,  2001 of
$693,000, the amount due to a Horizon BCBSNJ subsidiary of $839,000, and accrued
interest of $20,975. The transaction is scheduled to close on August 16, 2001.

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

                                       10

<PAGE>

                               CAREADVANTAGE, INC.


PART II--OTHER INFORMATION

Item 1.  Legal Proceedings

For a description of legal proceedings,  see Note C to the Financial Statements.
With the exception of the legal proceedings described in Note C 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.  Changes in Securities

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
quarter ended June 30, 2001.

Item 5.  Other Information

None.

Item 6. Exhibits and reports on Form 8-K

(a) Exhibits

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

           10.1           Amendment to Satisfaction of Debt Agreement among
                          Horizon BCBSNJ,  Horizon Healthcare of New Jersey,
                          Inc., CareAdvantage, Inc., CareAdvantage Health
                          Systems, Inc. and Contemporary HealthCare Management,
                          Inc.

(b) Reports on Form 8-K.

      None
                                       11

<PAGE>

                               CAREADVANTAGE, INC.

                                   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.



August 14, 2001           /s/ Dennis J. Mouras
                          ------------------------------------
                              Dennis J. Mouras
                              Chief Executive Officer



August 14, 2001          /s/  R. Christopher Minor
                         -------------------------------------
                              R. Christopher Minor
                              Chief Financial Officer



                                       12




<PAGE>





                                  EXHIBIT INDEX

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

    10.1       Amendment to Satisfaction of Debt Agreement among Horizon BCBSNJ,
               Horizon Healthcare of New Jersey, Inc., CareAdvantage, Inc.,
               CareAdvantage Health Systems, Inc. and Contemporary HealthCare
               Management, Inc.