<PAGE>

                      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 March 31, 2004

                         COMMISSION FILE NUMBER 0-26168

                               CAREADVANTAGE, INC.
        (Exact name of small business issuer 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)

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

      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 ___
                                        -


                                   99,794,152
         Number of shares of Common Stock outstanding as of May 4, 2004

                  Transitional Small Business Disclosure Format
                                  Yes___ No_X_

<PAGE>


                      CareAdvantage, Inc. and Subsidiaries
                                   Form 10-QSB
                    For the three months ended March 31, 2004

                                    I N D E X

<TABLE>
<S>                                                                          <C>
Part I - Financial Information

  Item 1.    Financial Statements

       .   Condensed Consolidated Balance Sheets -
           March 31, 2004 (Unaudited) and December 31, 2003. ...............   2

       .   Condensed Consolidated Statements of Operations -
           Three months ended March 31, 2004 and March 31, 2003
           (Unaudited) .....................................................   3

       .   Condensed Consolidated Statements of Cash Flows -
           Three months ended March 31, 2004 and March 31, 2003
           (Unaudited) .....................................................   4

       .   Notes to Unaudited Condensed Consolidated Financial Statements ..   5

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

  Item 3.    Controls and Procedures .......................................  10

Part II - Other Information

  Item 1.    Legal Proceedings .............................................  12

  Item 2.    Changes in Securities and Small Business Issuer Purchases of
             Equity Securities .............................................  12

  Item 3.    Defaults Upon Senior Securities ...............................  12

  Item 4.    Submission of Matters to a Vote of Security Holders ...........  12

  Item 5.    Other Information .............................................  12

  Item 6.    Exhibits and Reports on Form 8-K ..............................  12

  Signature ................................................................  13
</TABLE>

<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1.  Financial Statements

                       CAREADVANTAGE, INC AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                 March 31,      December 31,
                     ASSETS                                        2004            2003
                                                                 Unaudited        Audited
                                                                -----------     ------------
<S>                                                             <C>             <C>
Current assets:
     Cash and cash equivalents                                   $3,147,000     $  4,238,000
     Restricted cash                                                100,000          100,000
     Accounts receivable for services:
         Stockholder, net of allowance of $779,000                  762,000          762,000
         Other                                                      326,000          175,000
     Other current assets                                           112,000          231,000
                                                                -----------     ------------
                  Total current assets                            4,447,000        5,506,000

Property and equipment, at cost less accumulated depreciation       935,000          938,000
Intangible assets                                                   133,000          158,000
Other assets                                                         74,000           75,000
                                                                -----------     ------------

Total Assets                                                    $ 5,589,000     $  6,677,000
                                                                ===========     ============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                           $    50,000     $    219,000
     Deferred revenue                                                     0           75,000
     Accrued compensation and related benefits                      225,000          268,000
     Accrued expenses and other current liabilities               1,881,000        2,070,000
                                                                -----------     ------------
     Total current liabilities                                    2,156,000        2,632,000
                                                                -----------     ------------
Stockholders' equity:
     Preferred stock-par value $.10 per share;
          authorized 10,000,000 shares; none issued
     Common stock-par value $.001 per share;
         authorized 200,000,000 shares; issued
         and outstanding 99,794,152                                 100,000          100,000
     Additional capital                                          23,801,000       23,801,000
     Accumulated deficit                                        (20,468,000)     (19,856,000)
                                                                -----------     ------------
Total Stockholders' Equity                                        3,433,000        4,045,000
                                                                -----------     ------------
Total Liabilities and Stockholders' Equity                      $ 5,589,000     $  6,677,000
                                                                ===========     ============
</TABLE>

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

                                       2

<PAGE>

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

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                           March 31,
                                                                   2004            2003
                                                                   ----            ----
<S>                                                             <C>             <C>
Net service revenues                                            $   790,000     $ 1,073,000

Costs of services                                                   570,000         674,000
                                                                -----------     -----------

Gross margin                                                        220,000         399,000

Operating Expenses:

Selling, general and administration                                 836,000       3,267,000
                                                                -----------     -----------

Operating (loss)                                                   (616,000)     (2,868,000)

Interest income - net                                                 5,000          13,000

Provision for income taxes                                            1,000           6,000
                                                                -----------     -----------

Net (loss)                                                         (612,000)     (2,861,000)
                                                                ===========     ===========

Net (loss)

per share of common stock-basic and diluted                           ($.01)          ($.03)
                                                                ===========     ===========

Weighted average number
of common shares outstanding -

     Basic                                                       99,795,000      99,795,000
                                                                 ==========      ==========

     Diluted                                                     99,795,000      99,795,000
                                                                 ==========      ==========
</TABLE>

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

                                       3

<PAGE>

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


                                                  Three Months Ended March 31,

                                                   2004                 2003
                                                   ----                 ----

Cash flows from operating activities:

Net (loss)                                   $   (612,000)      $ (2,861,000)

Adjustments to reconcile net (loss)
to net cash used in operating activities:

     Depreciation and amortization                122,000            128,000
     Deferred revenue                             (75,000)                 -

Change in assets and liabilities:

Accounts receivable stockholder                         -            769,000
Accounts receivable other                        (151,000)          (201,000)
Other assets                                      119,000            111,000
Accounts payable                                 (169,000)           (69,000)
Accrued expenses and other liabilities           (232,000)           500,000
                                             ------------       ------------

Net cash used in operating activities            (998,000)        (1,623,000)
                                             ------------       ------------

Cash flows from investing activity:

Capital expenditures                              (93,000)           (19,000)
                                             ------------       ------------


Net decrease in cash                           (1,091,000)        (1,642,000)

Cash - beginning of period                      4,238,000          7,793,000
                                             ------------       ------------

Cash - end of period                         $  3,147,000       $  6,151,000
                                             ============       ============


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

                                       4

<PAGE>

                              CAREADVANTAGE, INC.


Note A--Basis of presentation:

The condensed consolidated financial statements as of March 31, 2004 and for the
three-month periods ended March 31, 2004 and 2003 have been prepared by
CareAdvantage, Inc. (the "Company"). The accompanying financial statements
include all adjustments (which include only normal recurring adjustments), which
in the opinion of management are necessary to present fairly the financial
position, results of operations and cash flows. All amounts contained in the
financial statements, except per share data, have been rounded to the nearest
thousand.

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

Note B--Termination of Horizon BCBSNJ Contract:

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

Note C--Per share data:

Basic net income/(loss) per share has been computed based on the weighted
average number of shares outstanding during the periods. Dilutive earnings per
share reflects the potential dilution that could occur if dilutive options and
warrants outstanding were exercised and converted into common stock. The effect
of these potential dilutive securities has not been computed since the effect
would be antidilutive.

Note D--Stock-Based Compensation:

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

                                       5

<PAGE>

                              CAREADVANTAGE, INC.


                                                    Three Months Ended March 31,
                                                    ----------------------------

                                                       2004              2003
                                                       ----              ----

Reported net income (loss)                          (612,000)      (2,861,000)
Stock-based employee compensation determined
  under the fair value based method, net of tax        9,000           44,000
Pro forma net income (loss)                         (621,000)      (2,905,000)
Basic income (loss) per share:
  As reported                                           (.01)            (.03)
  Pro forma                                             (.01)            (.03)
Diluted income (loss) per share:
  As reported                                           (.01)            (.03)
  Pro forma                                             (.01)            (.03)


Note E--Contingencies:

  CareAdvantage, Inc. v. Horizon Blue Cross Blue Shield of New Jersey, pending
in Superior Court of New Jersey, arises under a service agreement that Horizon
BCBSNJ terminated as of December 31, 2002. The Company is seeking service fees
of approximately $1.5 million, for which it has not been paid by Horizon BCBSNJ,
as well as damages for Horizon BCBSNJ's solicitation and hiring of certain of
the Company's employees in violation of the service agreement. Horizon BCBSNJ is
counterclaiming against CareAdvantage, Inc. seeking damages for breach of
contract, breach of implied duty of good faith and fair dealing, tortuous
interference with prospective economic advantage, trade libel and unfair
competition. Each party believes that the other party's claims are without merit
and is vigorously contesting them.

  Morriale v. CareAdvantage, Inc. is a complaint filed by a former employee,
Adriana Morriale, with the New Jersey Division of Human Rights, in which she
claims that the Company retaliated against her for claiming leave under the New
Jersey Family Leave Act. The Company believes that the complaint is without
merit and is contesting the matter vigorously.


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

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

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

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

In the first quarter of 2003, the Company incurred costs associated with the
termination of certain operating leases, including the lease for its office
space in Iselin, NJ in connection with exiting its prior service business with
Horizon BCBSNJ and another BCBS customer under SFAS No. 146. The Company
recorded a charge in the amount of approximately $2,639,000 relating to the
operating leases during 2003. The charge

                                       6

<PAGE>

                              CAREADVANTAGE, INC.


is included in selling, general and administrative expenses on the accompanying
statement of operations. Rent in the amount of approximately $174,000 was
charged to such liability for the three months ended March 31, 2004. As of March
31, 2004, the remaining liability is $1,776,000.

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

Cautionary Statements:

Statements in this Form 10-QSB may constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
("PSLRA"), including statements concerning management's plans, intentions and
expectations with respect to future financial performance and future events,
particularly relating to revenues from performance-based services and
re-negotiations of existing and new contracts with customers. Many of these
statements involve known and unknown risks, uncertainties and contingencies,
many of which are beyond our control, which could cause actual results and
outcomes to differ materially from those expressed in this 10-QSB. For a more
complete discussion of these risk factors, please see "Cautionary Statements" in
Item 6 of the Company's Form 10-KSB for the fiscal year ended December 31, 2003.
Although we believe that our plans, intentions and expectations reflected in
these forward-looking statements are reasonable, we can give no assurance that
our plans, intentions or expectations will be achieved.

GENERAL OVERVIEW:

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

In April 2002, the Company received notification from Blue Cross Blue Shield of
Rhode Island ("BCBSRI") that the existing services arrangement between BCBSRI
and the Company was terminated, effective May 31, 2002. The Company had
previously given notice in January 2002 that it was terminating the contract
effective July 31, 2002. This contract with BCBSRI accounted for approximately
4% of net revenues for the year ended December 31, 2002.

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

Significant shareholders of the Company include Horizon BCBSNJ (a 53.5%
stockholder) and CW Ventures (a 37.7% stockholder).

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

The Company is now focusing on offering its management and consulting services.
As part of this effort, the Company has developed RPNavigator, a proprietary
tool to help managed care plans and employers

                                       7

<PAGE>

                              CAREADVANTAGE, INC.

better understand and forecast resource consumption, risk, and costs associated
with their respective populations. In providing its consulting services, the
Company licenses RPNavigator to its customers.

RESULTS OF OPERATIONS:

The following discussion compares the Company's results of operations for the
three months ended March 31, 2004, with those for the three months ended March
31, 2003. The Company's consolidated financial statements and notes thereto
included elsewhere in this report contain detailed information that should be
referred to in conjunction with the following discussion.

Three Months Ended March 31, 2004, Compared to Three Months Ended March 31, 2003

Revenues:

The Company's total operating revenues for the three-month periods ended March
31, 2004 and March 31, 2003 were approximately $790,000 and $1,073,000,
respectively. The revenue is generated primarily from consulting fees earned
during this period. The current revenues amount represents a decrease of
approximately $283,000 for the three-month period ended March 31, 2004 from the
corresponding period of the prior year. The decrease for the three months ended
March 31, 2004 resulted from a decrease of approximately $539,000 due to the
termination of one consulting arrangement in 2003, offset by an increase of
approximately $256,000 from the consulting business.

Cost of services:

The Company's total direct cost of services for the three-month periods ended
March 31, 2004 and March 31, 2003 was approximately $570,000 and $674,000,
respectively. This represents a decrease of approximately $104,000 for the
three-month period ended March 31, 2004 over the corresponding period of the
prior year. The decrease in the cost of services for the three-month period
ended March 31, 2004 was primarily due to decreased personnel costs of
approximately $37,000, resulting from cutbacks implemented upon the loss of the
Horizon BCBSNJ business, professional costs of approximately $62,000 as a result
of license fee termination costs in 2003, and travel costs of approximately
$5,000.

Selling, general and administrative expenses:

The Company's total selling, general, and administrative costs for the
three-month periods ended March 31, 2004 and March 31, 2003 were approximately
$836,000 and $3,267,000, respectively. This represents a decrease of
approximately $2,431,000 for the three-month period ended March 31, 2004 over
the corresponding period of the prior year. This decrease for the three-month
period ended March 31, 2004 is primarily due to decreases in personnel costs of
approximately $90,000 resulting from cutbacks implemented upon the loss of the
Horizon BCBSNJ business, reduced facility costs of approximately $153,000
resulting from rent payments being applied to the facility lease liability in
2004, lower information and communications costs of approximately $71,000,
decreased professional costs of approximately $175,000, a reduction in other
general and administrative costs of approximately $1,935,000, resulting from a
charge in 2003 relating to the facility lease, and depreciation and amortization
costs of approximately $7,000.

Interest income:

The Company's total net interest income for the three-month periods ended March
31, 2004 and March 31, 2003 was approximately $5,000 and $13,000, respectively.
This represents a decrease of approximately $8,000 in net interest income for
the three-month period ended March 31, 2004 from the corresponding period of the
prior year. The decrease in net interest income of approximately $8,000 is
largely due to the decline of interest rates in 2004 and a decrease in the
operating cash balance.

                                       8

<PAGE>

                              CAREADVANTAGE, INC.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES:

General overview:

     At March 31, 2004, the Company had working capital of approximately
$2,291,000, stockholders equity of approximately $3,433,000 and an accumulated
deficit since its inception of approximately $20,468,000. The Company's
operations have been significantly impacted by the events described below.

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

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

     As of January 1, 2003, the Company had 29 employees, down from 191
employees six months earlier. As of March 31, 2004, the Company had 25 full time
employees. In addition, the Company no longer needs 20,500 square feet of the
28,000 square feet of office space it currently has under lease in Iselin, New
Jersey. During the first three quarters of 2003, the Company attempted to
sublease this space and negotiated with the landlord to retake possession.
Because of the market conditions for space of this type, the likely cost of
subleasing or the landlord's retaking was deemed by the Company to be excessive
and would likely be required to be paid upon subleasing or the landlord's
retaking. Therefore, during the fourth quarter of 2003 the Company determined to
continue to occupy such space and has ceased its efforts to sublease the space
and its negotiations with the landlord to retake the space. Nevertheless, the
Company would entertain offers to sublease such space were such offers to be
made. In the event that market conditions for such space improve, the Company
may again attempt to sublease all or a portion of the unneeded space and or
resume its negotiations with the landlord regarding retaking such space.
Moreover, the Company has terminated, renegotiated or is in the process of
terminating or renegotiating a variety of information systems and communications
agreements.

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

     . track population and member-related disease progression changes over
       time;
     . compare health plan sub-populations on a valid and reliable basis;
     . profile providers using case mix and severity-adjusted techniques;
     . select and prioritize members to optimize the allocation and assess the
       impact of care management resources, direct interventions and
       initiatives; and
     . reduce client dependence on internal information technology resources.

     If the Company is unable to build up these services to a level that would
support its business, it may have to seek additional capital financing or may be
required to further reduce planned operational expenses. If, the Company is not
successful with these measures, it will not be able to continue its operations.

                                       9

<PAGE>

                              CAREADVANTAGE, INC.

Financial condition:

At March 31, 2004, the Company had cash of approximately $3,147,000 and working
capital of approximately $2,291,000. At December 31, 2003, the Company had cash
of approximately $4,238,000 and working capital of approximately $2,874,000.

The use of cash in operations related principally to the Company's three-month
loss of $612,000, offset by an increase in accrued expenses as a result of a
$1,776,000 liability for the potential loss on the sublease of its office space.

Net cash used in investing activities amounted to approximately $93,000 for the
three-month period ended March 31, 2004 and is due to capital expenditures
during the three-month period.

There were no financing activities for the three month period ended March 31,
2004.

In light of the termination of the services agreement with Horizon BCBSNJ, the
Company has reduced its operations significantly and concentrated on building up
its remaining sources of revenues to continue to operate. Management believes
that its cash on hand and projected future cash flows from operations will
support the Company's anticipated cash needs for calendar year ending December
31, 2004. However, if the Company is unsuccessful in its efforts to generate and
collect revenue, it will not have sufficient funds to support its cash needs for
the next year. Accordingly, the Company will need to contemplate other
alternatives to enable it to fund continuing operations, including, but not
limited to, exploring strategic alternatives, which may include a merger, asset
sale, joint venture or another comparable transaction, loans, salary deferrals
or other cost cutting mechanisms, or raising additional capital by private
placements of equity or debt securities or through the establishment of other
funding facilities. None of these potential alternatives may be available to us,
or may only be available on unfavorable terms. We do not currently have in place
a credit facility with a bank or other financial institution.

Application of Critical Accounting Policies:

The Company's consolidated condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. Certain accounting policies have a significant impact on amounts
reported in the financial statements. A summary of those significant accounting
policies can be found in Note B to the Company's financial statements included
in the Company's 2003 Annual Report on Form 10-KSB. The Company has not adopted
any significant new accounting policies during the quarter ended March 31, 2004.

Among the significant judgments made by management in the preparation of the
Company's financial statements are the determination of the allowance for
doubtful accounts and adjustments. The financial statements for the quarter
ended March 31, 2004 also include a significant estimate relating to the
liability recorded for the loss on the office space lease (see Note F).

ITEM 3.  Controls and Procedures

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

                                       10

<PAGE>

                              CAREADVANTAGE, INC.

there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions; over time, control may become
inadequate because of changes in conditions, or the degree of compliance with
the policies or procedures may deteriorate.

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

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

                                       11

<PAGE>

                              CAREADVANTAGE, INC.

PART II--OTHER INFORMATION

Item 1. Legal Proceedings

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

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

Item 2. Changes in Securities and Small Business Issuer Purchases of Equity
        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
last quarter of calendar year ended March 31, 2004.

Item 5. Other Information

None.

Item 6. Exhibits and reports on Form 8-K

    (a) Exhibits

         See Exhibit Index.

    (b) Reports on Form 8-K.

         None.

                                       12

<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

May 14, 2004             /s/ Dennis J. Mouras
                         ---------------------------------
                         Dennis J. Mouras
                         Chief Executive Officer and acting
                         Principal Financial Officer

                                       13

<PAGE>

                               CAREADVANTAGE, INC.

                                  EXHIBIT INDEX

Exhibit
No.       Description of Exhibit

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       14

<PAGE>

                               CAREADVANTAGE, INC.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       15

<PAGE>

                              CAREADVANTAGE, INC.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10.36    Amended and Restated Employment Agreement, dated as of September 29,
         1998, with Richard W. Freeman, M.D., CAHS and the Company (the "Freeman
         Employment Agreement"), incorporated by

                                       16

<PAGE>

                              CAREADVANTAGE, INC.

         reference to Exhibit 10.36 filed with the Company's Form 10-KSB for the
         year ended September 30, 1998.

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

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

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

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

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

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

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

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

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

10.46    Amendment dated as of August 9, 2001 to Satisfaction of Debt Agreement
         dated as of November 1, 2000 among Horizon BCBSNJ, Horizon Healthcare
         of New Jersey, Inc., CareAdvantage, Inc., CareAdvantage Health Systems,
         Inc. and Contemporary HealthCare Management, Inc, incorporated by
         reference to Exhibit 10.1 filed with the Company's Form 10-QSB for the
         quarter ended June 30, 2001.

   31    Certifications pursuant to Rule 13a-14(a), promulgated under the
         Securities Exchange Act of 1934, as amended, and Section 302 of the
         Sarbanes-Oxley Act of 2002 (filed herewith)

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

                                       17