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 September 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
                                    -         -----



                                   99,481,664

       Number of shares of Common Stock outstanding as of October 30, 2001

                  Transitional Small Business Disclosure Format
                                  Yes___ No_X_









<PAGE>




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


                                    I N D E X
                                    ---------


Part I - Financial Information

    Item 1.    Financial Statements

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

           o   Condensed Consolidated Statements of Operations -
               Three and Nine-Months Ended September 30, 2001 (Unaudited) and
                September 30, 2000 (Unaudited).................................3

           o   Condensed Consolidated Statements of Cash Flows -
               Nine-Months Ended September 30, 2001 (Unaudited) and
               September 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>

                                       CAREADVANTAGE, INC AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATED BALANCE SHEETS


<CAPTION>
                                                               September 30,                     December 31,
                     ASSETS                                        2001                             2000
                                                                 Unaudited                         Audited
                                                                 ---------                         -------
<S>                                                              <C>                             <C>
Current assets:
     Cash and cash equivalents                                   $3,631,000                     $  1,479,000
     Restricted cash                                                106,000                          256,000
     Accounts receivable for services:
         Stockholder                                              1,452,000                        1,228,000
         Other                                                      719,000                        1,078,000
     Other current assets                                           259,000                          145,000
                                                                    -------                          -------

                  Total current assets                            6,167,000                        4,186,000

Property and equipment, at cost less accumulated depreciation       312,000                          438,000
Intangible assets                                                   683,000                          850,000
Other assets                                                        103,000                          113,000
                                                                    -------                          -------

Total Assets                                                    $ 7,265,000                    $   5,587,000
                                                                ===========                        =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable                                           $    65,000                    $     190,000
     Due to stockholder                                                 -                          1,532,000
     Accrued salaries and employee benefits                       1,058,000                          747,000
     Accrued expenses and other current liabilities                 440,000                          335,000
                                                                    -------                          -------


                  Total current liabilities                       1,563,000                        2,804,000


Total Liabilities                                                 1,563,000                        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 99,481,664 and 83,533,752                   99,000                           83,000
     Additional capital                                          23,813,000                       22,238,000
     Accumulated deficit                                        (18,210,000)                     (19,538,000)
                                                                ------------                      -----------

Total stockholders' equity                                        5,702,000                        2,783,000
                                                                  ---------                        ---------
Total liabilities and stockholders' equity                      $ 7,265,000                    $   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)

<CAPTION>

                                                   Three Months Ended                         Nine Months Ended
                                                     September 30,                              September 30,
                                                   2001          2000                         2001         2000
                                                   ----          ----                         ----         ----

<S>                                             <C>              <C>                    <C>             <C>
Net revenues                                    $5,016,000       $4,479,000             $15,439,000     $13,367,000

Costs of services                                2,772,000        2,187,000               8,384,000       6,642,000
                                                 ---------        ---------               ---------     -----------


Gross margin                                     2,244,000        2,292,000               7,055,000       6,725,000
                                                 ---------        ---------               ---------       ---------

Operating expenses:

Selling, general and administration              1,713,000        1,945,000               5,149,000       5,754,000
Depreciation and amortization                      152,000          194,000                 491,000         553,000
                                                   -------          -------                 -------         -------

Total operating expenses                         1,865,000        2,139,000               5,640,000       6,307,000
                                                 ---------        ---------                ---------      ---------

Operating income                                   379,000          153,000               1,415,000         418,000

Interest income - net                               17,000           15,000                  36,000          38,000

Provision for income taxes                          48,000                -                 123,000               -
                                                   --------      ----------               ---------       ---------

Net income                                         348,000          168,000               1,328,000         456,000
                                                   =======          =======               =========       =========

Net income -

Basic                                                 $.00             $.00                    $.02            $.01
                                                      ====             ====                    ====            ====

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

Weighted average number
of common shares outstanding -

       Basic                                    91,529,000       83,255,000               86,170,000     83,011,000
                                                ==========       ==========               ==========     ==========

       Diluted                                  93,293,000       88,205,000               87,933,000     91,210,000
                                                ==========       ==========               ==========     ==========

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

</TABLE>



                                                                      3
<PAGE>


<TABLE>

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

                                                                          Nine Months Ended
                                                               September 30,            September 30,
                                                                   2001                     2000
                                                                   ----                     ----
<S>                                                             <C>                     <C>
Cash flows from operating activities:

Net income                                                      $ 1,328,000             $ 456,000

Adjustments to reconcile net income to net cash provided from
operating activities:

Depreciation and amortization                                       592,000               679,000
Compensation due to option issuance                                  11,000                38,000
Deferred revenue                                                          -               (98,000)

Change in assets and liabilities:

Accounts Receivable                                                 135,000              (423,000)
Other assets                                                       (114,000)              (32,000)
Accounts payable                                                   (125,000)               27,000
Accrued expenses and other liabilities                              465,000              (103,000)
Due to stockholder                                                        -               (63,000)
                                                                  ---------              --------

Net cash provided from
operating activities                                              2,292,000               481,000
                                                                  ---------               -------

Cash flows from investing activities:

Capital expenditures                                               (298,000)              (94,000)
                                                                   ---------              --------

Net cash  (used by) investing
activities                                                         (298,000)              (94,000)
                                                                  ---------               --------

Cash flows from financing activities:

Transfer from restricted cash                                       150,000                     -
Proceeds from issuance of common stock                                8,000                36,000
                                                                  ---------                ------

Net cash provided from financing activities                         158,000                36,000
                                                                   --------               -------

Net  increase in cash                                             2,152,000               423,000

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

Cash - end of period                                             $3,631,000            $2,038,000
                                                                 ==========            ==========



             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 September 30, 2001 and for
the nine  months  ended  September  30,  2001 and 2000  have  been  prepared  by
CareAdvantage,  Inc. (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  September
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  September 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 nine months ended
September 30, 2001 and September 30, 2000:

                                       September 30,         September 30,

                                          2001                   2000
                                          ----                   ----

Income taxes paid                        51,000                41,000
Interest paid                            44,000                     0



                                       5
<PAGE>

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



Note E - Exercise of Stock Options

During the nine months ended  September 30, 2001,  certain  employees  exercised
options that resulted in the issuance of 170,000 shares of common stock.


Note F - New Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 141,  "Business  Combinations".  SFAS No.
141  eliminates  the  pooling-of-interests  method of  accounting  for  business
combinations and requires that all business  combinations be accounted for under
the purchase method. The purchase method of accounting  requires that net assets
acquired  that  constitute  a business  be recorded at their fair value with any
excess  cost over the  amounts  assigned  to net assets  acquired be recorded as
goodwill.  SFAS No. 141 also requires that certain intangible assets acquired in
a business combination be recognized apart from goodwill.

The  provisions  of SFAS No. 141 apply to all  business  combinations  initiated
after June 30, 2001.  Use of the  pooling-of-interests  method of accounting for
those  transactions  is  prohibited.  Adoption  of SFAS No.  141 will not have a
material impact on the Company's financial condition or results of operations.

In July 2001,  the FASB  issued  SFAS No. 142,  "Goodwill  and Other  Intangible
Assets." Under previous accounting guidance,  goodwill resulting from a business
combination is amortized  against income over its estimated  useful life.  Under
SFAS No.  142,  goodwill  is no longer  amortized  as an expense  but instead is
reviewed and tested for impairment under a fair value approach. Goodwill will be
tested for  impairment at least annually or more  frequently,  as a result of an
event or change in  circumstances  that would  indicate an  impairment  may have
occurred.

Goodwill  must be tested for  impairment in the year of adoption with an initial
test  indicating  potential  impairment  to be  performed  within  six months of
adoption.  If the  initial  test  indicates  potential  impairment,  then a more
detailed analysis to determine the extent of the impairment  related to goodwill
must be completed within twelve months of adoption.

SFAS No.  142 also  requires  that the  useful  lives of  previously  recognized
intangible   assets  other  than  goodwill  be  reassessed   and  the  remaining
amortization  periods adjusted  accordingly.  The reassessment must be completed
prior to the end of the first quarter of 2002.

All of the provisions of SFAS No. 142 will be applied  beginning January 1, 2002
to all goodwill and other  intangible  assets,  regardless  of when those assets
were  initially  recognized.  Adoption  of  SFAS  No.  142  will  result  in the
elimination of goodwill amortization.





                                       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  healthcare  cost  containment   services   designed  to  enable
healthcare  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
healthcare delivery systems;  the Company's healthcare 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.



RESULTS OF OPERATIONS:

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

Revenues:

The  Company's  total  operating  revenues  for the  three-month  periods  ended
September  30, 2001 and  September 30, 2000 were  approximately  $5,016,000  and
$4,479,000,  respectively. This represents an increase of approximately $537,000
for the  three-month  period  ended  September  30, 2001 from the  corresponding
period of the prior year. The increase for the three months ended  September 30,
2001 is largely due to  increased  revenue of  approximately  $247,000  from new
contracts  and an  increase  of  approximately  $290,000  in  revenue  from  the
Company's existing customers.


                                       7
<PAGE>
                              CAREADVANTAGE, INC.

Cost of services:

The Company's  total direct cost of services for the  three-month  periods ended
September  30, 2001 and  September  30, 2000 was  approximately  $2,772,000  and
$2,187,000,  respectively. This represents an increase of approximately $585,000
for the  three-month  period  ended  September  30, 2001 over the  corresponding
period  of the  prior  year.  The  increase  in the  cost  of  services  for the
three-month period ended September 30, 2001 was primarily due to increased costs
related to new  contracts  (i.e.,  increased  personnel  costs of  approximately
$269,000,  and  medical  consulting  services  of  $208,000),  travel  costs  of
approximately $63,000, and professional costs of approximately  $54,000,  offset
by a decrease in depreciation and amortization expense of approximately $9,000.

Operating expenses:

Selling, general, and administrative:

The  Company's  total  selling,   general,  and  administrative  costs  for  the
three-month  periods  ended  September  30,  2001 and  September  30,  2000 were
approximately  $1,713,000  and  $1,945,000,   respectively.  This  represents  a
decrease of  approximately  $232,000 for the three-month  period ended September
30, 2001 over the corresponding  period of the prior year. This decrease for the
three-month  period  ended  September  30, 2001 is largely due to  decreases  in
information  systems  and  communication  costs  of  approximately  $51,000  and
professional  costs of approximately  $275,000,  offset by increases in facility
costs of approximately $76,000,  travel costs of approximately $16,000 and other
general and administrative costs of approximately $2,000.

Depreciation and amortization:

The Company's  total  depreciation  and  amortization  costs for the three-month
periods  ended  September  30, 2001 and  September  30, 2000 were  approximately
$183,000 and $233,000,  respectively.  Approximately $31,000 and $39,000 of such
amounts were included in cost of services for such periods.

Interest income:

The  Company's  total net  interest  income for the  three-month  periods  ended
September 30, 2001 and September 30, 2000 was approximately $17,000 and $15,000,
respectively.  This  represents  an  increase  of  approximately  $2,000  in net
interest  income for the  three-month  period ended  September 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  $7,000 pursuant to a
Horizon  BCBSNJ  promissory  note,  offset  by  decreased   interest  income  of
approximately  $2,000 from the Company's  short-term  investments  and increased
interest costs of  approximately  $3,000  pursuant to an obligation to a Horizon
subsidiary.



Nine Months Ended  September 30, 2001,  Compared to Nine Months Ended  September
30, 2000

Revenues:

The  Company's  total  operating  revenues  for  the  nine-month  periods  ended
September  30, 2001 and September 30, 2000 were  approximately  $15,439,000  and
$13,367,000,   respectively.   This  represents  an  increase  of  approximately
$2,072,000  for  the  nine-month  period  ended  September  30,  2001  from  the
corresponding  period of the prior year.  The increase for the nine months ended
September  30,  2001  is  largely  due to  increased  revenue  of  approximately
$2,332,000 from new contracts offset by a decrease of approximately  $260,000 in
revenue from the Company's existing customers.

Cost of services:

The  Company's  total direct cost of services for the  nine-month  periods ended
September  30, 2001 and  September  30, 2000 was  approximately  $8,384,000  and
$6,642,000,   respectively.   This  represents  an  increase  of   approximately
$1,742,000  for  the  nine-month  period  ended  September  30,  2001  over  the
corresponding period of the prior year. The increase in the cost of services for
the  nine-month  period ended  September 30, 2001 was primarily due to increased
costs related to new contracts (i.e., increased personnel costs of approximately
$674,000, travel costs of approximately $309,000 and medical consulting services
of


                                       8
<PAGE>

                              CAREADVANTAGE, INC.

$704,000), other travel costs of approximately $24,000 and professional costs of
approximately  $57,000,  offset by a decrease in depreciation  and  amortization
expense of approximately $26,000.



Operating expenses:

Selling, general, and administrative:

The  Company's  total  selling,   general,  and  administrative  costs  for  the
nine-month  periods  ended  September  30,  2001 and  September  30,  2000  were
approximately  $5,149,000  and  $5,754,000,   respectively.  This  represents  a
decrease of approximately $605,000 for the nine-month period ended September 30,
2001 over the  corresponding  period of the prior  year.  The  decrease  for the
nine-month  period  ended  September  30,  2001 is largely due to  decreases  in
personnel costs of approximately  $360,000,  information and communication costs
of approximately $142,000,  travel costs of approximately $33,000,  professional
costs of approximately  $207,000 and other general and  administrative  costs of
approximately  $34,000,  offset by increases in facility costs of  approximately
$170,000.

Depreciation and amortization:

The Company's  total  depreciation  and  amortization  costs for the  nine-month
periods  ended  September  30, 2001 and  September  30, 2000 were  approximately
$592,000 and $679,000,  respectively.  Approximately  $101,000 and $126,000 were
included in cost of services for such periods.

Interest income:

The  Company's  total net  interest  income  for the  nine-month  periods  ended
September 30, 2001 and September 30, 2000 was approximately $36,000 and $38,000,
respectively. This represents a decrease of approximately $2,000 in net interest
income for the nine-month period ended September 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 $23,000 pursuant to an obligation to a
Horizon subsidiary,  offset by decreased interest costs of approximately  $8,000
pursuant to a Horizon BCBSNJ  promissory  note and increased  interest income of
approximately $13,000 from the Company's short-term investments.



LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES:

General overview:

At  September  30,  2001,  the  Company  had  working  capital of  approximately
$4,604,000,  stockholders equity of approximately  $5,702,000 and an accumulated
deficit of approximately $18,210,000.  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 healthcare  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 September  30, 2001,  the Company had cash of  approximately  $3,737,000  and
working capital of approximately  $4,604,000.  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  $2,292,000
and $481,000 for the nine-month  periods ended  September 30, 2001 and September
30,  2000,  respectively.   The  increase  in  cash  provided  of  approximately
$1,811,000  from 2001  operating  activities  is largely  due to an  increase in
accrued expenses and other liabilities of approximately $568,000, an increase in
accounts receivable of approximately $621,000 and an increase of $872,000 in net
profit, offset by a decrease in accounts payable of approximately


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<PAGE>
                              CAREADVANTAGE, INC.

$152,000, a decrease in non-cash charges of approximately $16,000 and a decrease
in other assets of approximately $82,000.

Net cash used in investing  activities  amounted to  approximately  $298,000 and
$94,000 for the  nine-month  periods ended  September 30, 2001 and September 30,
2000, respectively.

Net cash provided by financing activities amounted to approximately $158,000 and
$36,000 for the  nine-month  periods ended  September 30, 2001 and September 30,
2000, respectively. The increase in cash of approximately $122,000 is due to the
transfer of restricted cash of $150,000 and an increase of approximately $8,000
due to proceeds from  issuance of common stock in 2000.

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:

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

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



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<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 September 30, 2001.

Item 5.  Other Information

None.

Item 6. Exhibits and reports on Form 8-K

     (a) Exhibits

           None.

     (b) Reports on Form 8-K.

               On August 3, 2001,  the Company filed a Report on Form 8-K, dated
               July 31, 2001,  under Items 4 and 7 of Form 8-K,  announcing that
               the  Company  would no longer  retain  Richard  A.  Eisner as its
               independent auditor.

               On August 20, 2001, the Company filed a Report on Form 8-K, dated
               August 16, 2001, under Items 5 and 7 of Form 8-K, announcing that
               the Company  executed a Debt  Satisfaction  Agreement  to convert
               $1.58 million in indebtedness owed to Horizon Blue Cross and Blue
               Shield of New Jersey and Horizon  Healthcare of New Jersey,  Inc.
               into 15,777,400 shares of the Company's common stock.






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<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



November 12, 2001         /s/Dennis J. Mouras
                          --------------------
                          Dennis J. Mouras
                          Chief Executive Officer



November 12, 2001         /s/R. Christopher Minor
                          ----------------------
                          R. Christopher Minor
                          Chief Financial Officer





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