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, 2000



                         COMMISSION FILE NUMBER 0-26168


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


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

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


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

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  twelve  months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No
                                              ---   ---
                                   83,112,207
        Number of shares of Common Stock outstanding as of June 30, 2000

                  Transitional Small Business Disclosure Format
                                  Yes___  No  X
                                             ---









<PAGE>


                      CareAdvantage, Inc. and Subsidiaries
                                   Form 10-QSB
                     For the six months ended June 30, 2000


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


Part I - Financial Information

    Item 1.  Financial Statements

             Condensed Consolidated Balance Sheets -
             June 30, 2000 (Unaudited) and December 31, 1999 (Audited).....   2

             Condensed Consolidated Statements of Operations -
             Three and Six-months ended June 30, 2000 and June 30, 1999
             (Unaudited)...................................................   3

             Condensed Consolidated Statements of Cash Flows - Six months
             ended June 30, 2000 and June 30, 1999 (Unaudited).............   4

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

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

    Item 3.  Quantitative and Qualitative Disclosures about Market Risk....  11


Part II - Other Information

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

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

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

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

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

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

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



<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  Financial Statements

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


                                                                 June 30,                        December 31,
                     ASSETS                                        2000                             1999
                                                                 Unaudited                         Audited
                                                                 ----------                     ------------
Current assets:
<S>                                                              <C>                            <C>
     Cash and cash equivalents                                  $ 1,492,000                      $ 1,615,000
     Accounts receivable for services:
         Stockholder                                              1,361,000                        1,135,000
         Other                                                      250,000                          173,000
     Other current assets                                           321,000                          220,000
                                                                    -------                          -------
                  Total current assets                            3,424,000                        3,143,000

Property and equipment, at cost less accumulated depreciation       703,000                          845,000
Intangible assets                                                 1,207,000                        1,283,000
Other assets                                                         86,000                          102,000
                                                                     ------                          -------

Total Assets                                                    $ 5,420,000                     $  5,373,000
                                                                ===========                        =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable                                           $  456,000                      $   313,000
     Due to stockholder                                            693,000                          393,000
     Due to customer                                               839,000                          902,000
     Accrued salaries and employee benefits                        615,000                          841,000
     Accrued expenses and other current liabilities                280,000                          332,000
     Deferred revenue, current                                           0                           98,000
                                                                ----------                      -----------

                  Total current liabilities                      2,883,000                        2,879,000

Due to stockholder, less current portion                                 0                          300,000


Total Liabilities                                                 2,883,000                       3,179,000
                                                                -----------                       ---------

Stockholders' equity:
     Preferred stock-par value $.10 per share;
          authorized 10,000,000 shares; none issued
     Common stock-par value $.001 per share;
         authorized 103,600,000 shares; issued
         and outstanding 83,112,207 and 82,189,883                   83,000                         82,000
     Additional capital                                          22,117,000                     22,062,000
     Accumulated deficit                                        (19,663,000)                   (19,950,000)
                                                               ------------                    -----------

Total Stockholders' Equity                                        2,537,000                      2,194,000
                                                                  ---------                     ----------
Total Liabilities and Stockholders' Equity                      $ 5,420,000                    $ 5,373,000
                                                                ===========                    ===========

</TABLE>

        The accompanying notes are an integral part of these statements.

                                                         2


<PAGE>


<TABLE>
<CAPTION>



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


                                                  Three Months Ended                          Six Months Ended
                                                        June 30,                                   June 30
                                                   2000            1999                     2000            1999
                                                   ----            ----                     ----            ----


<S>                                             <C>             <C>                     <C>               <C>
Net revenues                                    $4,338,000      $3,795,000              $8,887,000        $7,829,000

Costs of services                                2,216,000       2,214,000               4,455,000         4,246,000
                                                ----------      ----------              ----------        ----------


Gross margin                                     2,122,000       1,581,000               4,432,000         3,583,000
                                                 ---------       ---------              ----------        ----------

Operating expenses:

Selling, general and administration             1,899,000        1,863,000              3,808,000         3,791,000
Depreciation and amortization                     182,000          211,000                359,000           415,000
                                                ---------        ---------              ---------         ---------

Total operating expenses                        2,081,000        2,074,000              4,167,000         4,206,000
                                                ---------        ---------              ---------         ---------

Operating income/(loss)                            41,000         (493,000)               265,000          (623,000)

Net interest income/(expense)                       9,000           10,000                 23,000            17,000
                                                ---------        ---------              ---------         ---------


Net income/(loss)                                  50,000         (483,000)               288,000          (606,000)
                                                =========        =========              =========         =========

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

Weighted average number
of common shares outstanding -

     Basic                                    83,042,000        82,190,000             82,898,000        82,190,000
                                              ==========        ==========             ==========        ==========

     Diluted                                  91,490,000        82,190,000             92,659,000        82,190,000
                                              ==========        ==========             ==========        ==========

</TABLE>


                                                         3


<PAGE>





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

                                                       Six Months Ended
                                                   June 30,         June 30,
                                                      2000           1999
                                                  -----------    -----------

Cash flows from operating activities:

Net profit/(loss) ............................   $   288,000    $  (606,000)

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

Depreciation and amortization ................       446,000        668,000
Compensation due to option issuance ..........        25,000         32,000
Deferred revenue .............................       (98,000)       (87,000)

Change in assets and liabilities:

Due to/from customers/stockholders ...........      (303,000)        40,000
Other assets .................................       (85,000)        19,000
Accounts payable .............................       144,000        (41,000)
Accrued expenses and other liabilities .......      (341,000)      (380,000)
                                                 -----------    -----------


Net cash  provided from/(used by)
operating activities .........................        76,000       (355,000)
                                                 -----------    -----------

Cash flows from investing activities:

Capital expenditures .........................      (229,000)      (282,000)
                                                 -----------    -----------

Net cash  (used by) investing
activities ...................................      (229,000)      (282,000)
                                                 -----------    -----------

Cash flows from financing activities:

Proceeds from Exercise of Stock Options ......        30,000              0
Principal payments to stockholder ............             0       (405,000)
Principal payments under long-term debt ......             0       (319,000)
                                                 -----------    -----------

Net cash provided from/(used by) financing
Activities ...................................        30,000       (724,000)
                                                 -----------    -----------

Net  (decrease)/increase in cash .............      (123,000)    (1,361,000)

Cash - beginning of fiscal year ..............     1,615,000      3,355,000
                                                 -----------    -----------

Cash - end of period .........................   $ 1,492,000    $ 1,994,000
                                                 ===========    ===========



        The accompanying notes are an integral part of these statements.


                                        4


<PAGE>



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

Note A--Basis of preparation:
Fiscal Year Change:
-------------------

On June 8, 1999, CareAdvantage, Inc. ("CAI" or the "Company") changed its fiscal
year from one ending October 31 to a calendar year ending December 31.

The consolidated financial statements have been prepared by the Company and have
not  been  audited  by the  Company's  independent  auditors.  The  accompanying
financial   statements  include  all  adjustments  (which  include  only  normal
recurring  adjustments)  which in the opinion of  management  are  necessary  to
present fairly the financial  position,  results of operations and cash flows at
June 2000 and for all periods presented.

Certain  information  and  note  disclosures  required  to be  included  in  the
financial  statements  prepared in accordance with generally accepted accounting
principles have been omitted.  These consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included with the Company's  December 31, 1999 Annual Report on Form 10-KSB. The
results of  operations  for the period  ended June 30, 2000 are not  necessarily
indicative  of operating  results to be expected for the full year.

Note B--Per share data:

Net income per share has been computed  based on the weighted  average number of
shares  outstanding  during the periods.  Common stock equivalents have not been
included in 1999 as they are not dilutive.

Note C--Contingencies:

Potential uninsured exposure to litigation:

a)   ROBERT T.  CARUSO V. JOHN J.  PETILLO,  VINCENT M.  ACHILLARE,  LAWRENCE A.
     WHIPPLE,  AND HORIZON  BLUE CROSS BLUE  SHIELD OF NEW JERSEY,  INC. ET AL.,
     which was filed in Superior Court of New Jersey on August 12, 1998. Messrs.
     Petillo,  Achillare  and Whipple were  officers of the Company and may have
     claims for  indemnification for expenses and for any judgments against them
     in this case.  Mr.  Caruso was a consultant  to the Company.  The complaint
     alleges  breach of contract,  fraud,  conspiracy,  promissory  estoppel and
     negligent  misrepresentation  in connection with,  among other things,  the
     termination of Mr. Caruso's  consulting  arrangement with the Company.  The
     Plaintiff  seeks treble  damages for  unspecified  amount and claims actual
     damages in the approximate amount of $1.8-2.0 million. The Company received
     notice from two of its insurance  carriers denying coverage on this matter,
     but the Company plans to vigorously contest these coverage  decisions.  The
     Company  received  a written  claim  for  indemnification  from  defendants
     Petillo and Achillare and, subject to their having acted in good faith, the
     Company has agreed to indemnify them and defendant Whipple and to pay their
     reasonable  defense  costs.  The parties to this  litigation  are currently
     taking  discovery.  Until  discovery  has been  completed,  the Company has
     insufficient information regarding its potential exposure in this matter.


b)   In December 1999 the Company was impleaded as a third-party  defendant in a
     lawsuit  entitled  HORIZON  HEALTHCARE  OF  NEW  JERSEY,  INC.  VS.  ALLIED
     SPECIALTY CARE SERVICES,  INC., pending in the United States District Court
     for the District of New Jersey.  This lawsuit seeks damages  arising out of
     an agreement between Horizon Healthcare of New Jersey, Inc. ("Horizon") and
     Allied Specialty Care Services, Inc. ("Allied").  One of the claims made by
     Horizon is that it is entitled to damages on account of Allied's  agreement
     to repay certain  monies  ("Risk  Amounts") to Horizon in the event certain
     charges for medical claims exceeded certain  capitation  amounts.  Allied's
     third-party  complaint  against the Company  seeks to enforce an  agreement
     among  Horizon,  Allied and the  Company  wherein  it is  claimed  that the
     Company  agreed to pay Allied  one-half  of any Risk  Amounts  that  Allied
     "owed" to Horizon,  but no more than certain funds  received by the Company
     on account  of such  agreement.  (A copy of the  agreement  among  Horizon,
     Allied and the Company has been filed as Exhibit 10(e) to Form 10-QSB dated
     April 30,  1997.) The Company has  previously  established  a reserve  that
     management  believes is sufficient to satisfy any liability the Company may
     have on account of Allied's claim.  The parties have  informally  agreed to
     settle their respective claims at a cost to the Company consistent with the
     reserve.  However, until such agreement has been executed,  there can be no
     assurance that such claims have been settled.

                                       5

<PAGE>
                              CAREADVANTAGE, INC.
                  NOTES TOTHE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note D - Supplemental Cash Flow Information:

Below is supplemental cash flow information related to the six months ended June
30, 2000 and June 30, 1999:

                                                    June 30,

                                            2000                  1999
                                            ----                  ----

Income taxes paid                         41,000               104,000
Interest paid                                  0                42,000

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

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

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

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

On July 7, 1999, the Company's stockholders approved the foregoing amendments to
the Company's Stock Option Plan, the amendments to the Company's Directors Stock
Option Plan and the amendment to the Company's Certificate of Incorporation.

Note F - Exercise of Stock Option

During the six months ended June 30, 2000,  certain employees  exercised options
that resulted in the issuance of 922,324 shares of common stock.


                                        6


<PAGE>


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



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.  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.  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,  1999.

GENERAL OVERVIEW:

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

The Company had a service agreement with Horizon BCBSNJ that expired on June 30,
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 will
continue to  contract  with the Company  for care  management  services  for the
indemnity  portion of the business at least until January 1, 2001. The indemnity
portion of the business  accounts  for  approximately  90% of the total  Horizon
BCBSNJ contract revenues on an annual basis.

RESULTS OF OPERATIONS:

The following  discussion  compares the Company's  results of operations for the
six and three  months  ended  June 30,  2000,  with  those for the six and three
months ended June 30, 1999. The Company's  consolidated financial statements and
notes thereto  included  elsewhere in this report contain  detailed  information
that should be referred to in conjunction with the following discussion.

Three Months Ended June 30, 2000, Compared to Three Months Ended June 30, 1999

Revenues:

The Company's  total operating  revenues for the three-month  periods ended June
30,  2000  and June 30,  1999  were  approximately  $4,338,000  and  $3,795,000,
respectively.  This  represents  an increase of  approximately  $543,000 for the
three-month  period  ended June 30,  2000 from the  corresponding  period of the
prior year. The increase for the three months ended June 30, 2000 is largely due
to increased revenue of approximately  $540,000 due to increased membership on a
major account.

Cost of services:

The Company's  total direct cost of services for the  three-month  periods ended
June 30, 2000 and June 30, 1999 was  approximately  $2,216,000  and  $2,214,000,
respectively.  This  represents  an  increase  of  approximately  $2,000 for the
three-month  period  ended June 30,  2000 over the  corresponding  period of the
prior year.  This  increase in the cost of services for the  three-month  period
ended  June 30,  2000 was  primarily  due to  increases  in  personnel  costs of
approximately  $147,000  offset by a decrease in travel  costs of  approximately
$21,000, a decrease in professional  costs of approximately  $22,000, a decrease

                                       7

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

of approximately  $2,000 in  communication  costs and a decrease in depreciation
and amortization expense of approximately $100,000.

Operating expenses:

Selling, general, and administrative:

The  Company's  total  selling,   general,  and  administrative  costs  for  the
three-month  periods  ended June 30, 2000 and June 30,  1999 were  approximately
$1,899,000  and  $1,863,000,   respectively.  This  represents  an  increase  of
approximately  $36,000 for the  three-month  period ended June 30, 2000 over the
corresponding period of the prior year. This increase for the three-month period
ended  June  30,  2000  is  largely  due to  increases  in  personnel  costs  of
approximately $54,000, including severance costs of approximately $90,000, , and
other  general and  administrative  costs of  approximately  $71,000,  offset by
decreases in professional costs of approximately  $78,000.  Management has taken
and intends to take additional steps to reduce general and administrative costs.
There is no assurance,  however, that the Company will be successful in reducing
general and  administrative  costs by any significant  amount.

Depreciation and amortization:

The Company's  total  depreciation  and  amortization  costs for the three-month
periods  ended June 30, 2000 and June 30, 1999 were  approximately  $225,000 and
$355,000, respectively. Approximately $45,000 and $144,000 were included in cost
of services for such periods.

Interest expense:

The Company's total net interest  income for the three-month  periods ended June
30, 2000 and June 30, 1999 was approximately  $9,000 and $10,000,  respectively.
This  represents a decrease of  approximately  $1,000 in net interest income for
the three-month period ended June 30, 2000 from the corresponding  period of the
prior year.  The  decrease in net  interest  income is largely due to  decreased
interest costs of approximately $3,000 under the Master Lease Agreement with IBM
Credit Corporation ("IBM"). In addition, the Company realized decreased interest
income of approximately $4,000 from the Company's short-term investments.

Six Months Ended June 30, 2000, Compared to Six Months Ended June 30, 1999

Revenues:

The Company's total operating  revenues for the six-month periods ended June 30,
2000  and  June  30,  1999  were   approximately   $8,887,000  and   $7,829,000,
respectively.  This represents an increase of  approximately  $1,058,000 for the
six-month period ended June 30, 2000 from the corresponding  period of the prior
year.  The  increase  for the six months  ended June 30,  2000 is largely due to
increased revenue of approximately  $189,000 from the realization of performance
revenues  and  increased  revenue of  approximately  $885,000  due to  increased
membership on a major account.

Cost of services:

The Company's total direct cost of services for the six-month periods ended June
30,  2000  and  June  30,  1999 was  approximately  $4,455,000  and  $4,246,000,
respectively.  This  represents  an increase of  approximately  $209,000 for the
six-month period ended June 30, 2000 over the corresponding  period of the prior
year. This increase in the cost of services for the six-month  period ended June
30, 2000 was  primarily  due to increases in  personnel  costs of  approximately
$436,000 , offset by a decrease in travel costs of approximately  $42,000, and a
decrease in depreciation  and amortization  expense of  approximately  $195,000.

Operating expenses:

Selling, general, and administrative:

The Company's total selling, general, and administrative costs for the six-month
periods ended June 30, 2000 and June 30, 1999 were approximately  $3,808,000 and
$3,791,000,  respectively.  This represents an increase of approximately $17,000
for the six-month  period ended June 30, 2000 over the  corresponding  period of
the prior year.  This increase for the  six-month  period ended June 30, 2000 is

                                       8

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

largely due to increases in personnel costs of approximately $134,000, including
severance costs of approximately  $150,000,  information and communication costs
of  approximately  $86,000,   offset  by  decreases  in  professional  costs  of
approximately  $178,000, and a decrease in other costs of approximately $25,000.
Management has taken and intends to take additional  steps to reduce general and
administrative  costs. There is no assurance,  however, that the Company will be
successful  in reducing  general  and  administrative  costs by any  significant
amount.

Depreciation  and  amortization:

The  Company's  total  depreciation  and  amortization  costs for the  six-month
periods  ended June 30, 2000 and June 30, 1999 were  approximately  $446,000 and
$668,000, respectively. Approximately $89,000 and $282,000 were included in cost
of services for such periods.

Interest expense:

The Company's total net interest income for the six-month periods ended June 30,
2000 and June 30, 1999 was approximately $23,000 and $17,000, respectively. This
represents an increase of  approximately  $6,000 in net interest  income for the
six-month period ended June 30, 2000 from the corresponding  period of the prior
year. The increase in net interest  income is largely due to decreased  interest
costs of  approximately  $11,000 under the Master Lease  Agreement  with IBM and
decreased  interest costs of approximately  $8,000 related to the Horizon BCBSNJ
Note.  In  addition,   the  Company  realized   decreased   interest  income  of
approximately $13,000 from the Company's short-term investments.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES:

General overview:

At June 30, 2000,  the Company had working  capital of  approximately  $541,000,
stockholders equity of approximately $2,537,000 and an accumulated deficit since
its  inception  of  approximately  $19,663,000.  By  continuing  to provide high
quality care cost  containment  services to its existing  customer  base of five
BCBS plans,  management believes it can continue to market its products to other
BCBS plans.  This strategy is particularly  significant given the current health
care  environment  where  large  third-party  payers are merging in an effort to
protect their  respective  franchises and expand their market reach. The various
BCBS plans  throughout  the country are no exception to this  phenomenon and the
Company  believes it can leverage its core  competencies  to participate in this
consolidating environment.

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

Financial condition:

At June 30, 2000, the Company had cash of approximately $1,492,000 and a working
capital surplus of approximately $541,000. At December 31, 1999, the Company had
cash of approximately  $1,615,000 and a working capital surplus of approximately
$264,000.

Net cash provided from/(used by) operating  activities amounted to approximately
$76,000 and  $(355,000)  for the six-month  periods ended June 30, 2000 and June
30, 1999,  respectively.  The cash  provided from 2000  operating  activities is
largely  due to an  increase  in  accounts  payable of  approximately  $144,000,
non-cash charges of approximately  $471,000 and a $288,000 in net profit, offset
by a decrease in customer  receivables of approximately  $303,000, a decrease in
accrued expenses and other liabilities of approximately  $279,000, a decrease in
deferred  revenue of  approximately  $161,000  and a decrease in other assets of
approximately  $84,000.

                                       9

<PAGE>


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

Net cash used in investing  activities  amounted to  approximately  $229,000 and
$282,000  for the  six-month  periods  ended  June 30,  2000 and June 30,  1999,
respectively.  The  decrease  in cash used of  approximately  $53,000  is due to
decreased  capital outlays for  computer-related  equipment  incurred during the
six-month period ended June 30, 2000.

Net cash  provided/(used)  in  financing  activities  amounted to  approximately
$30,000 and  ($724,000)  for the six-month  periods ended June 30, 2000 and June
30, 1999,  respectively.  The decrease in cash used of approximately $754,000 is
largely  due  to  suspended   loan   payments  to  a   stockholder/customer   of
approximately  $405,000 and decreased  principal  payments related to the Master
Lease  Agreement  with IBM of  approximately  $319,000,  offset by proceeds from
issuance of common stock of approximately $30,000.

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

Capital resources:

Pursuant to the Horizon BCBSNJ Note, the Company owes $693,000 to Horizon BCBSNJ
as of June 30, 2000.  The Company has an oral  agreement  with Horizon BCBSNJ to
suspend  payments on the note due to Horizon  BCBSNJ  through  August 2000.  The
Company is to resume  making  payments  on  September  1, 2000 in equal  monthly
installments  to  repay  the debt by  March  31,  2001.  While  there  can be no
assurances  that  future  operating  results  will be  sufficient  to fund  this
obligation of the Company,  management expects such amounts to be funded through
operations.

The Company 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.
In September  of 1998,  the bank issued an  irrevocable  letter of credit in the
amount of  $250,000,  for the  account  of the  Company  in favor of a vendor as
security for the Company's  obligation under a  non-cancelable  operating lease.
This letter of credit was issued under the Company's credit facility. As of June
30, 2000 the $250,000  irrevocable letter of credit is still outstanding and the
Company is exploring alternative ways to secure such letter of credit.



                                       10


<PAGE>


                               CAREADVANTAGE, INC.

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk
As of June 30, 2000, the Company's investments are not significantly impacted by
change in market  interest  rates.  The Company does not believe that changes in
interest  rates will have a  material  impact on future  earnings  or cash flows
during the next twelve months.

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
last  quarter of calendar  year ended June 30, 2000.

Item 5. Other Information

None.

Item 6. Exhibits and reports on Form 8-K

    (a)  Exhibits

         (27)  Financial Data Schedule

                                       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 9, 2000             /s/ David G. Noone
                           ---------------------------------------
                                David G. Noone
                                Chief Executive Officer

August 9, 2000             /s/ R. Christopher Minor
                           ---------------------------------------
                                R. Christopher Minor
                                Chief Financial Officer





                                       12


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