SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                   FORM 10-QSB

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

                  For the quarterly period ended June 30, 2003



                         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) 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
                                      -        ---



                                   99,795,000
        Number of shares of Common Stock outstanding as of July 28, 2003

                 Transitional Small Business Disclosure Format
                                  Yes___ No_X_








<PAGE>



                      CareAdvantage, Inc. and Subsidiaries
                                   Form 10-QSB
                     For the six months ended June 30, 2003


                                    I N D E X


Part I - Financial Information

    Item 1.    Financial Statements

     o    Condensed  Consolidated Balance Sheets -
          June 30, 2003 (Unaudited) and December 31, 2002....................  2

     o    Unaudited Condensed Consolidated  Statements of Operations -
          Three and Six months ended June 30, 2003 and June 30, 2002.........  3

     o    Unaudited Condensed Consolidated Statements of Cash Flows -
          Six months ended June 30, 2003 and June 30, 2002...................  4

     o    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............................................. 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

                       CAREADVANTAGE, INC AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                   June 30,                       December 31,
                     ASSETS                                         2003                             2002
                                                                  Unaudited                         Audited
                                                                  ---------                         -------
Current assets:
     <S>                                                         <C>                             <C>
     Cash and cash equivalents                                   $ 5,595,000                     $ 7,793,000
     Restricted cash                                                 100,000                         100,000
     Accounts receivable for services:
         Stockholder, net of allowance of $779,000                   762,000                       1,531,000
         Other                                                       500,000                         441,000
     Other current assets                                            133,000                         221,000
                                                                 -----------                     -----------

                  Total current assets                             7,090,000                      10,086,000

Property and equipment, at cost less accumulated depreciation        918,000                       1,056,000
Intangible assets                                                    211,000                         277,000
Other assets                                                          74,000                          84,000
                                                                 -----------                     -----------

Total Assets                                                     $ 8,293,000                     $11,503,000
                                                                 ===========                     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable                                            $   198,000                     $   114,000
     Accrued compensation and related benefits                       195,000                       1,801,000
     Accrued expenses and other current liabilities                2,544,000                         385,000
                                                                 -----------                     -----------

     Total current liabilities                                     2,937,000                       2,300,000
                                                                 -----------                     -----------


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                                         (18,545,000)                    (14,698,000)
                                                                 -----------                     -----------

Total Stockholders' Equity                                         5,356,000                       9,203,000
                                                                 -----------                     -----------
Total Liabilities and Stockholders' Equity                       $ 8,293,000                     $11,503,000
                                                                  =========                      ===========


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


                                                         -2-
</TABLE>
<PAGE>


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



<TABLE>
<CAPTION>
                                                     Three Months Ended                    Six Months Ended
                                                          June 30,                              June 30,
                                                     2003             2002                2003              2002
                                                     ----             ----                ----              ----


<S>                                              <C>             <C>                    <C>            <C>
Net revenues                                     $ 1,075,000     $ 6,300,000            2,148,000      $ 11,809,000

Costs of services                                    621,000       2,852,000            1,295,000         5,639,000
                                                 -----------     -----------           ----------      ------------

Gross margin                                         454,000       3,448,000              853,000         6,170,000

Operating Expenses:

Selling, general and administration                1,447,000       2,252,000            4,714,000         4,291,000
                                                 -----------     -----------           ----------      ------------


Operating income/(loss)                             (993,000)      1,196,000           (3,861,000)        1,879,000

Interest income - net                                 11,000          15,000               24,000            29,000

Provision for income taxes                             4,000         104,000               10,000           152,000
                                                 -----------     -----------          -----------      ------------

Net income/(loss)                                   (986,000)      1,107,000           (3,847,000)        1,756,000
                                                 ===========     ===========          ===========      ============

Net income/(loss)
per share of common stock-basic and diluted            ($.01)           $.01                ($.04)             $.02
                                                       ======           ====                ======             ====

Weighted average number
of common shares outstanding -

     Basic                                        99,795,000      99,795,000           99,795,000        99,790,000
                                                 ===========     ===========          ===========      ============

     Diluted                                      99,795,000     103,419,000           99,795,000       103,415,000
                                                 ===========     ===========          ===========      ============




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




                                                      -3-

</TABLE>
<PAGE>


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

<TABLE>
<CAPTION>
                                                                     Six Months Ended June 30,


                                                                   2003                      2002
                                                                   ----                      ----

Cash flows from operating activities:

<S>                                                           <C>                         <C>
Net income/(loss)                                             $ (3,847,000)               $ 1,756,000

Adjustments to reconcile net income/(loss)
to net cash (used in)/provided from
operating activities:

     Depreciation and amortization                                 239,000                    381,000

Change in assets and liabilities:

Accounts receivable stockholder                                    769,000                   (234,000)
Accounts receivable other                                          (59,000)                  (128,000)
Other assets                                                        98,000                   (219,000)
Accounts payable                                                    84,000                   (181,000)
Accrued expenses and other liabilities                             553,000                    610,000
                                                              -------------               ------------

Net cash (used in)/provided by
operating activities                                            (2,163,000)                 1,985,000
                                                              -------------               ------------

Cash flows from investing activity:

Capital expenditures                                               (35,000)                  (833,000)
                                                              -------------               ------------

Cash flows from financing activities:


Proceeds from issuance of Common Stock                                    -                     2,000
                                                              -------------               ------------


Net (decrease)/increase in cash                                 (2,198,000)                 1,154,000

Cash - beginning of period                                       7,793,000                  4,297,000
                                                              -------------               ------------

Cash - end of period                                          $  5,595,000                $ 5,451,000
                                                                 ==========               ============



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



                                                      -4-

</TABLE>
<PAGE>


                               CAREADVANTAGE, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note A--Basis of preparation:

The condensed  consolidated financial statements as of June 30, 2003 and for the
three and  six-month  periods ended June 30, 2003 and 2002 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 presented. All amounts contained
herein 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,  2002  Annual  Report on Form  10-KSB.  The  results of
operations for the period ended June 30, 2003 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.

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  income  and  earnings  per share if the fair  value  based  method had been
applied to all awards.


                                      -5-
<PAGE>


                                CAREADVANTAGE, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                              Six Months Ended June 30,
                                                              -------------------------

                                                                2003              2002
                                                                ----              ----

    <S>                                                      <C>                <C>
    Reported net income (loss)                               (3,847,000)        1,756,000
    Stock-based employee compensation determined
           under the fair value based method, net of tax         82,000           132,000
    Pro forma net income (loss)                              (3,929,000)        1,624,000
    Basic income (loss) per share:
         As reported                                            (.04)              .02
         Pro forma                                              (.04)              .02
    Diluted income (loss) per share:
         As reported                                            (.04)              .02
         Pro forma                                              (.04)              .02

</TABLE>

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
in the amount of  $1,547,000,  which we have not been paid by Horizon  BCBSNJ in
connection  with certain  disputes under the  agreement,  as well as damages for
Horizon  BCBSNJ's  hiring of the Company's  employees.  The Company has reserved
$779,000  relating  to the  amounts due for such  service  fees.  In April 2003,
Horizon BCBSNJ filed a counterclaim 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. The Company believes that the counterclaim is without merit.

The Company is also the plaintiff in two other unrelated cases.


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 2003, the Company  incurred costs  associated with the termination of certain
operating  leases,  including the lease for its office space in Iselin,  NJ. The
Company recorded a charge in the amount of approximately  $2,639,000 relating to
the operating  leases on January 1, 2003,  the date the Company ceased using the
majority  of the  facility.  The charge is  included  in  selling,  general  and
administrative expenses on the


                                      -6-

<PAGE>


                               CAREADVANTAGE, INC.


accompanying  statement  of  operations.  Rent in the  amount  of  approximately
$341,000 was charged to such  liability  for the six months ended June 30, 2003.
As of June 30, 2003, the remaining liability is $2,298,000.



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, 2002.
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 provided to
integrated health care delivery systems and other care management organizations.

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.

Prior to January 1, 2003,  the Company  provided,  principally to Horizon BCBSNJ
and BCBSRI, certain health care cost containment services, including utilization
review,  case management and disease  management and independent  reviews.  As a
result of the loss of the  aforesaid  customers  and the  Company's  concomitant
reduction  in  employees  and  infrastructure,  beginning  January 1, 2003,  the
Company ceased offering these services.


RESULTS OF OPERATIONS:

The following  discussion  compares the Company's  results of operations for the
three and six  months  ended  June 30,  2003,  with  those for the three and six
months ended June 30, 2002. 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.


                                      -7-
<PAGE>


Three Months Ended June 30, 2003, Compared to Three Months Ended June 30, 2002

Revenues:

The Company's  total operating  revenues for the three-month  periods ended June
30,  2003  and June 30,  2002  were  approximately  $1,075,000  and  $6,300,000,
respectively.  This  represents a decrease of  approximately  $5,225,000 for the
three-month  period  ended June 30,  2003 from the  corresponding  period of the
prior year.  The decrease for the three months ended June 30, 2003 resulted from
a decrease of approximately  $5,438,000 as a result of terminated contracts with
Horizon BCBSNJ and BCBSRI, offset by an increase of approximately  $213,000 from
consulting business.

Cost of services:

The Company's  total direct cost of services for the  three-month  periods ended
June 30,  2003 and June 30,  2002 was  approximately  $621,000  and  $2,852,000,
respectively.  This  represents a decrease of  approximately  $2,231,000 for the
three-month  period  ended June 30,  2003 over the  corresponding  period of the
prior year.  The  decrease in the cost of services  for the  three-month  period
ended  June  30,  2003  was  primarily  due  to  decreased  personnel  costs  of
approximately  $1,981,000,  professional costs of approximately $180,000, travel
costs  of  approximately  $7,000  and  depreciation  and  amortization  costs of
approximately $63,000.

Selling, general and administrative expenses:

The  Company's  total  selling,   general,  and  administrative  costs  for  the
three-month  periods  ended June 30, 2003 and June 30,  2002 were  approximately
$1,447,000  and  $2,252,000,   respectively.   This  represents  a  decrease  of
approximately  $805,000 for the three-month  period ended June 30, 2003 over the
corresponding period of the prior year. This decrease for the three-month period
ended  June  30,  2003 is  primarily  due to  decreases  in  personnel  costs of
approximately $958,000, facility costs of approximately $319,000, which includes
approximately $341,000 of rent payments applied to the facility lease liability,
travel costs of approximately  $63,000,  information and communications costs of
approximately $122,000, and depreciation and amortization costs of approximately
$33,000,  offset by  increases  in other  general  and  administrative  costs of
approximately $658,000, which includes approximately $688,000 adjustment to loss
on sublease, and professional costs of approximately $32,000.

Interest income:

The Company's total net interest  income for the three-month  periods ended June
30, 2003 and June 30, 2002 was approximately $11,000 and $15,000,  respectively.
This  represents a decrease of  approximately  $4,000 in net interest income for
the three-month period ended June 30, 2003 from the corresponding  period of the
prior year. The decrease in net interest income of  approximately  $4,000 is due
to the decline of interest rates in 2003.

Six Months Ended June 30, 2003, Compared to Six Months Ended June 30, 2002

Revenues:

The Company's total operating  revenues for the six-month periods ended June 30,
2003  and  June  30,  2002  were   approximately   $2,148,000  and  $11,809,000,
respectively.  This  represents a decrease of  approximately  $9,661,000 for the
six-month period ended June 30, 2003 from the corresponding  period of the prior
year.  The  decrease  for the six months  ended June 30,  2003  resulted  from a
decrease of approximately  $10,261,000 as a result of terminated  contracts with
Horizon BCBSNJ and BCBSRI, offset by an increase of approximately  $600,000 from
consulting business.

Cost of services:

The Company's total direct cost of services for the six-month periods ended June
30,  2003  and  June  30,  2002 was  approximately  $1,295,000  and  $5,639,000,
respectively.  This  represents a decrease of  approximately  $4,344,000 for the
six-month period ended June 30, 2003 over the corresponding  period of the prior
year.  The decrease in the cost of services for the six-month  period ended June
30,  2003 was  primarily  due to  decreased  personnel  costs  of  approximately
$4,003,000,  professional  costs of approximately  $260,000 and depreciation and

                                      -8-

<PAGE>

                              CAREADVANTAGE, INC.

amortization  costs of  approximately  $94,000,  offset by an increase in travel
costs of approximately $13,000.

Selling, general and administrative expenses:

The Company's total selling, general, and administrative costs for the six-month
periods ended June 30, 2003 and June 30, 2002 were approximately  $4,714,000 and
$4,291,000,  respectively. This represents an increase of approximately $423,000
for the six-month  period ended June 30, 2003 over the  corresponding  period of
the prior year.  This increase for the  six-month  period ended June 30, 2003 is
primarily due to increases in professional costs of approximately $135,000 and a
reserve for loss on sublease of office space of approximately $2,639,000, offset
by decreases in facility costs of  approximately  $334,000,  personnel  costs of
approximately $1,566,000,  information and communications costs of approximately
$192,000,   travel  costs  of   approximately   $100,000,   other   general  and
administrative costs of approximately $109,000 and depreciation and amortization
costs of approximately $50,000.

Interest income:

The Company's total net interest income for the six-month periods ended June 30,
2003 and June 30, 2002 was approximately $24,000 and $29,000, respectively. This
represents a decrease of  approximately  $5,000 in net  interest  income for the
six-month period ended June 30, 2003 from the corresponding  period of the prior
year. The decrease in net interest income of approximately  $5,000 is due to the
decline of interest rates in 2003.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES:

General overview:

At June 30, 2003, the Company had working capital of  approximately  $4,153,000,
stockholders equity of approximately $5,356,000 and an accumulated deficit since
its inception of approximately  $18,545,000.  However,  the Company's operations
have been significantly impacted by the events described below.

Significant development:

As stated above,  Horizon  BCBSNJ  terminated  its services  agreement  with the
Company,  effective  January 1, 2003. The Company  recognized  approximately $19
million in revenues in 2002 from Horizon BCBSNJ due to the services arrangement.

As a result of the termination of the services  agreement with Horizon BCBSNJ as
of December 31,  2002,  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 June 30, 2003, the Company has 26 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 and is currently
attempting to sublease all or a portion of 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.  There can be no
guaranty that the Company, through these various measures, will be successful in
mitigating the effect of the loss of the services  agreement with Horizon BCBSNJ
and to continue to remain in business.

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.  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.  However,  if the Company is not
successful with these measures, it may not be able to continue its operations.


                                       -9-

<PAGE>

                              CAREADVANTAGE, INC.

Financial condition:

At June 30, 2003, the Company had cash of  approximately  $5,595,000 and working
capital of approximately  $4,153,000. At December 31, 2002, the Company had cash
of approximately $7,793,000 and working capital of approximately $7,786,000.

The use of cash in  operations  related  principally  to the Company's six month
loss of $3,847,000 and the payment of accrued  severance,  offset by an increase
in accrued expenses as a result of a $2,298,000 liability for the potential loss
on the  sublease of its office space and the  reduction  of accounts  receivable
from stockholders of $769,000.

Net cash used in investing activities amounted to approximately  $35,000 for the
six-month period ended June 30, 2003 and is due to capital  expenditures  during
the six-month period.

There were no financing activities for the six-month period ended June 30, 2003.

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.  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 at
least the next 12 months.

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 2002 Annual Report on Form 10-KSB.  The Company has not adopted
any significant new accounting policies during the quarter ended June 30,2003.

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  June 30,  2003  also  include  a  significant  estimate  relating  to the
liability recorded for the loss on the office space lease (see Note F).

ITEM 3.  Controls and Procedures

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

     An evaluation of the effectiveness of these disclosure controls,  as of the
end of the period covered by this Quarterly  Report on Form 10-QSB,  was carried

                                      -10-

<PAGE>

                              CAREADVANTAGE, INC.

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.


PART II--OTHER INFORMATION

Item 1.  Legal Proceedings

In CareAdvantage,  Inc. v. Princeton  Insurance Company,  the Company is seeking
damages  against the Princeton  Insurance  Company arising out of that company's
denial of coverage  under an officers and directors  insurance  policy issued to
the Company;  Princeton Insurance Company has counterclaimed against the Company
for its attorneys  fees in defending the instant  action.  In January 2003,  the
trial judge  granted  summary  judgement  to  Princeton  Insurance  Company with
respect to the Company's claim and denied Princeton's  counterclaim  against the
Company for attorneys  fees.  The Company's  appeal to the Superior Court of New
Jersey, Appellate Division, is presently pending.

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

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 June 30, 2003.

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.

                                      -11-

<PAGE>

                              CAREADVANTAGE, INC.



                                   SIGNATURES



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



                                CareAdvantage, Inc



August 14, 2003                  /s/ Dennis J. Mouras
                                -----------------------------------
                                Dennis J. Mouras

                                Chief Executive Officer and acting Principal
                                 Financial Officer




                                      -12-

<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.

                                      -13-

<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.

                                      -14-

<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

                                      -15-

<PAGE>

                              CAREADVANTAGE, INC.

          "Freeman Employment Agreement"),  incorporated by reference to Exhibit
          10.36  filed  with  the  Company's  Form  10-KSB  for the  year  ended
          September 30, 1998.

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  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).

                                      -16-