SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(MARK ONE)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(D)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM ___________ TO _______________

                         COMMISSION FILE NUMBER 0-22162

                                CARECENTRIC, INC.
             (Exact name of Registrant as specified in its charter)

             DELAWARE                                    22-3209241
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
  incorporation or organization)

           2625 CUMBERLAND PARKWAY, SUITE 310, ATLANTA, GEORGIA 30339
               (Address of principal executive offices) (Zip Code)
       Registrant's telephone number, including area code: (678) 264-4400

           Securities registered pursuant to Section 12(b) of the Act:

                                                  NAME OF EACH EXCHANGE
         TITLE OF EACH CLASS                      ON WHICH REGISTERED
         -------------------                      -------------------

               NONE                                        NONE

           Securities registered pursuant to Section 12(g) of the Act:
                          COMMON STOCK, $.001 PAR VALUE
                                (Title of class)

     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  12 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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

     Aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant on February 28, 2003 was $2,173,957.

     There were 4,371,350 shares of Common Stock outstanding at March 10, 2003.

     Documents  incorporated  by  reference  in this Form 10-K:  Portions of the
definitive  proxy statement  relating to the 2002 Annual Meeting of Stockholders
in Part III, Items 10 (as related to Directors), 11, 12 and 13.





<PAGE>


     Note: The discussions in this Form 10-K contain forward-looking  statements
that involve  risks and  uncertainties.  Statements  contained in this Form 10-K
that are not historical facts are forward-looking statements that are subject to
the safe harbor created by the Private Securities Litigation Reform Act of 1995.
A number of important  factors could cause future results of CareCentric and its
subsidiaries  to differ  materially and  significantly  from those  expressed or
implied in past  results and in any forward  looking  statements  made by, or on
behalf  of,  the  Company.  Factors  that  could  cause  or  contribute  to such
differences  include,  but are not limited to, those discussed in "Business" and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  as well as those  discussed  elsewhere  in this Form  10-K.  These
factors  include,  without  limitation,  those  listed in "Risk  Factors" in the
Company's Registration Statement on Form S-4 (File No. 333-96529).


PART I

ITEM 1.  BUSINESS

OVERVIEW

     CareCentric,  Inc.  (formerly  known as  Simione  Central  Holdings,  Inc.)
("CareCentric" or the "Company") is a leading provider of enterprise information
technology  systems  and  related  services  designed  to help home  health care
providers  effectively  operate  their  businesses in today's  environment.  The
Company's focus is to provide  software  products for home health care providers
to streamline their operations,  meet regulatory  requirements,  receive payment
and  better  serve  their  patients.  For more  than 20 years,  CareCentric  has
provided  comprehensive  enterprise solutions to its markets in home healthcare.
Currently, the Company is leveraging its long history and success to migrate its
product solutions to new technology  platforms that are being licensed or built.
These new technology  platforms are being designed to: create long-term scalable
technology  platforms using state of the art technologies;  streamline real-time
customer  service,   shorten  decision  cycles  for  our  customers;   speed  up
reimbursement;  add new  product  solutions;  and enhance  customer  options for
reporting  to  meet  the  business   requirements  of  the  enterprises  served.
CareCentric currently offers several comprehensive  software solutions.  Each of
these solutions  provides a basic set of software  applications  and specialized
modules that can be added based on customer needs.  These software solutions are
designed   to  enable   customers   to   provide   clinical   case   management,
administrative,   operating  and  financial  solutions  and  payment  processing
efficiencies. Currently the STAT product serves hundreds of home health agencies
as it has  done  for  many  years  with a full  enterprise  suite  of  products.
Similarly,  MestaMed(R) and Dezine DME VI services thousands of home health care
equipment providers at an enterprise level, streamlining the delivery, recording
and payment of services.  More recently, the introduction of three point-of-care
products,  Smart ClipBoard(R),  Visit Assistant(TM) and Delivery  Assistant(TM),
are adding value to the capture of administrative  and clinical data at the time
services are offered to the patient.  This complete line of products offers,  in
management's  opinion,  the  most  complete  suite of home  healthcare  software
solutions available from a single provider.

     CareCentric has over 1,500 customers nationwide, including:

     o    hospital-based facilities;
     o    free-standing home health care providers;
     o    alternate-site care organizations;
     o    respiratory therapy service providers;
     o    home medical, IV, infusion and rehabilitation equipment providers;
     o    integrated delivery networks (IDN); and
     o    government-managed organizations.

Unless  the  context  otherwise  requires,  references  to  CareCentric  include
CareCentric,  Inc. and its  subsidiaries.  Our executive  offices are located at
2625 Cumberland  Parkway,  Suite 310,  Atlanta,  Georgia 30339 and the telephone
number is 678-264-4400.

<PAGE>

RECENT DEVELOPMENTS

     On January  29,  2003,  CareCentric  received an offer to merge with Borden
Associates,   Inc.  In  the  proposed  transaction,   Borden  would  merge  into
CareCentric  and  purchase  the shares of  shareholders  holding less than 4,000
shares for $0.55 per share.  Each share of  CareCentric  common  stock  owned of
record by a holder of 4,000  shares or more of  CareCentric  common  stock  will
continue  to  represent  one  share  of  common  stock  after  the  merger.  The
outstanding shares of Borden Associates capital stock will, in the aggregate, be
converted into the right to receive that number of shares of CareCentric  common
stock equal to the quotient of the total cash  consideration paid to the holders
of fewer than 4,000 shares of CareCentric  common stock divided by the $0.55 per
share price. CareCentric would remain the surviving entity. This transaction, if
consummated,  may  result in the  Company  becoming  private so that it would no
longer be a reporting company under SEC regulations or be publicly traded on the
OTC Bulletin  Board.  The Board of Directors is evaluating  the proposal and has
formed a special  committee of independent  directors,  consisting of Winston R.
Hindle, Jr. and William J. Simione,  Jr., to evaluate,  respond or negotiate the
proposal  with the  principals  of Borden  Associates.  Borden  Associates is an
investment  company formed for the purpose of this transaction and owned by John
Reed,  Stewart  Reed and James  Burk.  John Reed and Stewart  Reed are  material
shareholders of CareCentric  and members of its Board of Directors.  As of March
10, 2003,  the special  committee of the Board has selected legal counsel and an
investment banking firm to assist in the special committee's review of the offer
by Borden Associates.

     In January 2003,  CareCentric reached agreement with Columbia HCA regarding
certain litigation between the companies involving services contract obligations
related to health agency activities which the Company had been involved in prior
to 1999 when it was known as Simione Central  Holdings,  Inc. The settlement was
completed in February 2003 with no future  obligation due from the Company and a
payment of $290,000 made to the Company.

     On January 31, 2003,  CareCentric  licensed,  as a reseller,  a home health
care  agency  processing  software  set to service  the small  agency and middle
market service providers pursuant to a reseller  agreement with Riversoft,  Inc.
of  Melbourne,  Florida.  The  Company  will  enhance,  re-brand  and resell the
software on a royalty basis. This product will provide a cost-effective solution
to  service  the  largest  part of the market  without  material  investment  in
research and development by CareCentric.

INDUSTRY OVERVIEW

     The home health  industry is comprised of agencies  that are  freestanding,
community based,  provider based,  hospital based,  not for profit,  for profit,
large  corporate  chains and small  agencies.  Services  provided  include  home
health, hospice,  private duty, infusion therapy,  durable medical equipment and
rehabilitation services. The largest payer for home health services is Medicare.

     Home health care consists of various lines of services, including:

     o    skilled nursing;
     o    private duty;
     o    physical, occupational and speech therapies;
     o    respiratory therapy;
     o    durable medical and rehabilitation equipment and supplies;
     o    intravenous and infusion therapy; and
     o    Hospice.

     The  importance  of home health care  throughout  the 1980's and 1990's was
principally a result of payer choices and significant  economic pressures within
the  health  care  industry.  In those  years,  U.S.  health  care  expenditures
increased rapidly. In response to these escalating expenditures, payers, such as
Medicare and managed care  organizations,  have applied  increasing  pressure on
physicians, hospitals and other providers to contain costs. During the 1980s and
early 1990s, this pressure led to the growth of lower cost alternate-site  care,
such as home health  care,  and to reduced  hospital  admissions  and lengths of


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<PAGE>

stay.  In  addition,  home health  care grew  rapidly as a result of advances in
medical  technology,  which  facilitated  the  delivery of services in alternate
sites,  demographic trends,  such as an aging population,  and preferences among
patients to receive health care in their homes. Historically,  this industry has
been highly  fragmented and characterized by small,  local providers  offering a
limited  range of  services.  With the  advent of  managed  care and  integrated
delivery  networks  (IDNS) and  changes in state  regulations,  home health care
providers  sought to expand  their  geographic  scope and range of  product  and
service  offerings.  As a  result  of these  developments  and  legislation  and
regulatory pressures,  the home health care industry went into a period of rapid
growth and consolidation.

     This  trend  of  growth  and  consolidation   began  to  reverse  with  the
implementation  of the Interim  Payment  System (IPS) by the Health Care Finance
Administration (HCFA, now known as the Center for Medicare and Medicaid Services
- "CMS"). CMS is the federal agency that administers Medicare  reimbursement for
the home  health care  industry,  pursuant  to the  Balanced  Budget Act of 1997
enacted on August 5, 1997. Medicare traditionally  reimbursed a majority of home
health care services at reasonable  and customary  amounts that could not exceed
the costs of services provided,  resulting in a direct relationship  between the
number of home health  care  visits and  reimbursement.  However,  the  Balanced
Budget Act of 1997 contained provisions that significantly changed the manner in
which home health  agencies and home care services were  reimbursed by Medicare.
The  legislation  created IPS which lowered the cost per visit  limitations  and
created   restrictions  on  the  amount  of  cost   reimbursement  per  Medicare
beneficiary. In late January 1998, HCFA published a notice revising the schedule
of limits on home health agency costs for cost reporting periods beginning on or
after October 1, 1997, which reduced the cost per visit limitations. At the same
time,  HCFA  issued  a  rule  setting  forth  surety  bond  and   capitalization
requirements for home health agencies. IPS has had a significant negative impact
on the home  health  industry,  resulting  in  numerous  closings of home health
agencies,  consolidation of agencies and decisions by home health  executives to
no longer  participate in the Medicare program or serve Medicare  beneficiaries.
Consolidation of the industry continued in 2001, but at a slower pace, as first,
uncertainties  about the effect of IPS,  and second,  the  significantly  poorer
operating results  (especially for home health agencies that were part of an IDN
or hospital-based  system or had modified  operations to adapt to a managed-care
environment), slowed the pace of home health merger and acquisition activity.

     Also,  as mandated by the  Balanced  Budget Act,  the  prospective  payment
system (PPS) was  implemented  on October 1, 2000.  This payment  system  limits
reimbursement  to a fixed amount for all  services  rendered per episode of care
based upon home  health  care  resource  groups  (HHRG)  indicated  by  clinical
assessments.  In addition to the impact of IPS and PPS, the growth in the number
of Medicare members  enrolling in managed care plans,  which have taken measures
to  contain  costs,  has  and  will  have a  significant  impact  on  providers'
operations as they strive to maintain profitability. The uncertainty in the home
health care industry concerning these changing regulations,  and CMS' continuing
updates of the regulations,  adversely impacted  CareCentric's business in 1998,
1999  and  2000 as many  providers  dissolved,  conserved  cash,  cut back on IT
spending or delayed purchasing decisions.

     These negative  factors  increased during the fourth quarter of 2000 as PPS
took effect and home health providers faced greater uncertainty and were further
distracted.  These  trends  continued  throughout  2001 as  providers  worked to
understand the short- and long-term effects of PPS. By mid-2001,  most providers
understood  what they  were  facing  financially  and  operationally,  with many
concluding  that with good  management,  training  and  information  technology,
better financial  results would be possible.  While HME and IV/infusion  service
providers  were not  significantly  affected by IPS or PPS,  other  cost-cutting
initiatives  of HCFA had a deleterious  effect on these  providers'  interest in
upgrading or acquiring information technology products and services.

     In 2002, the home health industry  waited  patiently for the elimination of
the 15%  reduction  in payment  rates  which had been part of the  original  PPS
legislation.  The 15%  reduction  scheduled to take place on October 1, 2002 was
effectively  enacted  because the U.S.  Senate failed to take timely action on a
Medicare  relief bill passed by the House.  Home health agencies were once again
dealing with significant  cash flow and credit line issues.  Other issues on the
home health front during 2002 included medical supply  bundling,  Outcomes Based
Quality Indicators (OBQI),  reduction in the Outcome and Assessment  Information
Set (OASIS) requirements, and the publishing of the Health Insurance Portability
and Accountability Act of 1996 (HIPAA) privacy regulations.  Management believes


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<PAGE>

that  these  issues  will  continue  into  2003  and  will  continue  to  impact
information systems including CareCentric  products.  In addition,  the industry
wanted a permanent  extension of the 10% rural add-on.  This rural add-on, a 10%
increased  reimbursement  to agencies  that have  additional  costs and expenses
associated  with doing  business  in rural  areas,  is due to expire on April 1,
2003.  The  expiration  of  the  add-on  could  begin  to  affect  reimbursement
associated  with "episodes of care," defined  periods of caregiving for specific
sickness used for purposes of cost  reimbursement,  beginning  February 1, 2003.
The MedPAC  report,  scheduled  for release in March 2003, is expected to remain
silent  on the 15% cut and to  propose  a 5%  rural  add-on.  Home  health  care
executives  are said to be facing  these cuts head on and are  implementing  the
necessary steps to live with these  reductions and, in doing so, are stabilizing
the industry.  CareCentric  cannot predict how new  regulations  will impact its
business in the future,  although the costs of  addressing  hundreds of pages of
regulations   with  fixed   implementation   dates,   last  minute  changes  and
post-effective amendments and updates in comprehensive and integrated legacy and
client/server  systems are extensive.  These developments also are disruptive to
product development, deployment and support operations.

     With the advent of the ongoing cost pressures and the  complexities of PPS,
home  health  care  providers  will  continue  to  require  enhanced  management
expertise,   specialized   industry   knowledge  and   standardized   financial,
operational and clinical data,  information,  reports and transactional forms in
order to  compete.  CareCentric  believes  that many  existing  home health care
information  systems are inadequate to address the changing needs of home health
care  providers.  Generally,  these  systems were  designed to generate  patient
billing  information  and cost  reports  for  Medicare  reimbursement  and, as a
result,  may  be  unable  to  provide  the  detailed  information  required  for
meaningful  business  analyses and financial and clinical data collection  under
the new system.  The Company  believes  providers  need  reports,  real-time and
point-of-care  generated data on operational and financial matters and complete,
organized  and timely  clinical  records to  effectively  treat  patients and to
co-manage  the cost and  quality  of the  clinical  care  necessary  to  achieve
favorable patient outcomes.

     Thus PPS, in transferring  the cost risk to home health  providers  already
committed to quality clinical outcomes,  creates the opportunity for the Company
and its competitors to work with the providers to develop information technology
software  applications that will be useful tools in facilitating best practices,
process improvement,  decision support,  activity-based  costing, and electronic
records and form  transmission.  The  increased  pressure  that PPS  presents to
providers  to  manage  costs,  generate  profits  and  manage  outcomes  greatly
increases the need for new generation software.  CareCentric's opportunity is to
provide  software  that helps the agency  provide  program  continuity  for each
patient,  detailed clinical support at the point-of-care,  better administrative
payment and regulatory record keeping, reporting and processing. Together, these
capabilities will enable an agency to better manage costs, stay current, improve
productivity  and patient  outcomes and ultimately  operate  profitably  through
enhanced revenues and lower cost.

     An additional major factor affecting the health care industry is a shortage
of qualified nursing  personnel.  This shortage has had a significant  impact on
all service  areas  including  home health,  hospice,  private duty and infusion
therapy.  A priority for agency  executives in 2003 will be to actively  address
the issues of recruitment and retention.  Once hired,  employee job satisfaction
will become the number one issue on the table.  One  consequence of the shortage
is that employees are  influencing  agency  operations by demanding  tools which
reduce paperwork, are user friendly, and improve and measure patient outcomes.

     Another issue of significant  importance is HIPAA, or more specifically the
impact  of the  HIPAA  privacy  regulations  on home  health  operations.  These
regulations  mandate  the  protection  of health  information  and  require  the
development  and  implementation  of many  policies  and  procedures.  The added
financial burden of these requirements is great.  Agencies that do not put these
requirements  into practice will face the  possibility  of financial ruin due to
the fines associated with non-compliance.

     Moving into 2003 with less Medicare money,  less Medicaid money,  and fewer
staff, home health  organizations are going to rely on systems and technology to
operate cost  efficiently,  improve  operating  performance  and enhance quality
patient care. To be successful, CareCentric believes that home health executives
will focus  their  efforts on  managing  their  costs and  knowing  where  their
agencies stand  financially  and  operationally.  To do this they will depend on


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real time reports to make  decisions  and will  continue to look at ways to take
advantage of available  technology  like the  Internet.  Using new and available
Internet  applications to conduct  business  transactions  will enhance business
practices by decreasing time, improving staff productivity, improving compliance
with regulations and facilitating best practices.

MARKET POSITION

     CareCentric's  objective  is to enhance  and grow its  position  as a major
developer and provider of comprehensive  and integrated  information  technology
solutions,  focused on the home health care industry.  The principal elements of
CareCentric's  business and product strategies are described below.  During 2002
continued  progress  in the  execution  of  many  of the  strategies  was  made.
Specifically,  the  absorption of The Smart  Clipboard(R)  and Outcomes  Planner
products  acquired in 1999 combined with the  acquisition of the MestaMed(R) and
HMExpress(TM)  products  through  the  merger  with MCS,  signed in May 1999 and
completed  in March 2000,  has  provided an  increased  breadth of products  and
services  capable of  enhancing  CareCentric's  market  position.  In 2002,  the
Company accelerated its strategy by adding to its list of available products and
solutions.  The Company  released new products  including  Visit  Assistant(TM),
Inventory  Assistant and Santrax telephony services for distribution.  These new
products and alliances have dramatically increased the variety and affordability
of  information  solutions  for  existing  customers  and new  prospects  alike.
Accordingly,  the products and services  that have become part of  CareCentric's
offerings  to the  industry  have been  included  in the current  Core  Software
Solutions,  Specialized Software Product Solutions, Clinical Content Options and
Service Solutions sections described below.

BUSINESS STRATEGIES

     Under the  guidance of John R. Festa,  the  Company's  President  and Chief
Executive Officer, CareCentric has embarked upon an aggressive strategy in 2003,
focusing on the future of the Company. CareCentric will continue to leverage its
deep domain knowledge,  systems knowledge,  and proven product offerings,  while
adding new services and capabilities.  Current examples include the introduction
of innovative PDA-based solutions, HIPAA-related system enhancements,  alliances
to provide HIPAA and asset  management  consulting  services and the  industry's
first  electronic  Certificate of Medical  Necessity  product  (eCMN).  The eCMN
solution combines customers'  existing  investment in CareCentric  software with
the latest technology available on the Internet.

     Recently,  the  Company  made a  major  step  forward  on its  strategy  by
launching  several  new  products  to maintain a  leadership  position  with its
current line of products.  Visit  Assistant(TM)  provides small and medium-sized
home health agencies with a solution to point-of-care data capture at attractive
pricing levels.  Delivery  Assistant(TM)  provides a similar opportunity for the
home  equipment  market.  At  the  higher  end of the  product  spectrum,  Smart
ClipBoard(R)  4.0 is  expected  to continue  providing  upgraded,  comprehensive
clinical,   administrative   and   reimbursement   capabilities   to  streamline
productivity, speed up reimbursement,  provide clinical data continuity and meet
current and future regulatory requirements.  In the home health care market, the
Company is launching  AC-CURA(TM),  a newly  licensed  enterprise-wide  software
package  servicing the small agency and middle market  service  providers  where
management believes that there are the greatest number of agencies and the least
number  of  software  provider  solutions.  Licensed  from  Riversoft,  Inc.  of
Melbourne,   Florida,   AC-CURA(TM)  will  be  enhanced  and  sold  directly  by
CareCentric's  field  sales force using more  direct  mail,  telemarketing,  and
innovative  marketing  techniques  for the home health  industry.  Additionally,
CareCentric  will be using more flexible  pricing options to aid the customer in
faster   buying   decisions.   PharmMed(R)   adds   another  key   clinical  and
administrative  product  offering to service  the home  pharmacy  market.  These
products, combined with the new eCMN offering and a more comprehensive telephony
offering,  continue CareCentric's central mission as a complete and wide-ranging
home health software solution provider.

     Organizational  changes  made by  CareCentric  in  2002  have  created  and
intensified   an   existing   commitment   to  improve   customer   service  and
responsiveness.  Activities continued throughout the year to review and create a
"best practices"  environment reaching all functional areas of the Company. More
importantly,  management  believes that these changes  position  CareCentric for


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more rapid  development  and  deployment of new  generation  product  platforms.
Leveraging  off of its  existing  comprehensive  product  offerings,  management
believes   that  the   reorganization   will  allow  faster   decision   making,
decentralized  parallel  execution of plans and shorter time to market solutions
for  CareCentric's new product  offerings.  The changes had a dramatic effect in
2002 by providing reduced costs,  increased focus on sales,  better  operational
systems, fewer customer complaints and better customer service.

     CareCentric management believes that CareCentric's products are regarded by
many home health care  providers  as the most  feature  rich in the industry but
management  recognizes that the products'  technology platforms need improvement
for wider acceptance. In 2003 and beyond, CareCentric will continue to invest in
new delivery and  technology  platforms  for servicing its customers in creative
ways, combining increased flexibility,  proven technology, and scalable and open
ubiquitous  platforms.  Additionally,  CareCentric will look for more partnering
opportunities to add new product offerings and services on a reasonable  license
basis to  leverage  the  Company's  infrastructure  and to manage  research  and
development expense.

     The rapid evolution of computer  technology provides for "faster to market"
products and open platforms,  which use more industry accepted  technology tools
that can remain ever flexible to meet future  needs.  During the next two years,
CareCentric  expects to devote substantial  resources to take advantage of these
new technologies. CareCentric fully expects to provide seamless migration to its
new  technology  platforms  while  maintaining  the features and  functions  its
customers  so highly value today.  In  addition,  platform  options will provide
customer  specified  configurations  allowing  scale,  function,  and  financial
characteristics to be designed and determined on an individual basis.

     CareCentric will continue to sell its current and future products through a
direct  sales  force and  through  industry  partners  in  related  fields.  The
Company's  strategy is to make these new product offerings  available to a wider
customer base than it currently services today as a result of increased delivery
efficiencies  and a more flexible cost structure.  CareCentric will seek to keep
all products current and innovative by maintaining a constant communication with
the marketplace, a focus on regulatory changes and technological improvements.

THE CARECENTRIC SOLUTIONS

     CareCentric  offers a comprehensive set of product and service solutions to
address the  changing  needs of home health  providers  and  caregivers  through
information  technology  software systems,  training,  deployment  resources and
customer support. CareCentric's systems and services are designed to enable home
health care, supply and equipment providers to produce and utilize comprehensive
information  reports to optimize the  performance of their  organization.  These
reports  include  financial,  operational and clinical  information  designed to
address organizational issues in order to make informed business decisions, more
cost effectively operate their businesses, generate more revenues and compete in
a cost-contained  regulatory environment.  Management believes these information
technology solutions should help home health care providers:

     o    improve revenue opportunities
     o    reduce costs, improve cash flow and build financial strength
     o    accelerate payment reimbursement
     o    handle rapidly changing reimbursement rules and privacy regulations.
     o    manage inventories
     o    co-manage  cost and  quality  and  empower  clinicians  to make better
          decisions at the point-of-care
     o    maximize return on technology investment through comprehensive product
          services to optimally use the application in conjunction  with process
          re-engineering and optimization
     o    increase  understanding  of key  industry  issues and optimal  product
          usage with specialized training
     o    receive  real time  response to system  usage  issues  through  expert
          customer support and call tracking
     o    leverage  best  practice  solutions  against a large  national base of
          current users
     o    meet regulatory requirements



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     CareCentric's  key  solutions  provide a  comprehensive  set of home health
enterprise software:

     o    STAT services the home health agency market and tracks patient visits,
          reports on action, follows regulatory  requirements,  and accounts and
          provides for reimbursement of services for the home health agency.
     o    MestaMed(R),  MSS, and DME VI service the home medical  equipment  and
          supply  markets  with a  complete  suite  of  accounting,  regulatory,
          tracking, reporting,  invoicing,  inventory management and utilization
          management systems for agencies of varying sizes.
     o    PharmMed(R)  services  the home health  Infusion and IV market with a
          comprehensive application of prescription, patient tracking, inventory
          control and regulatory functions.
     o    Smart ClipBoard(R) services the high-end  point-of-care market for the
          acquisition of clinical, accounting, administrative, reimbursement and
          regulatory data.
     o    Visit  Assistant(TM)  also  services the  point-of-care  market with a
          less expensive, less comprehensive data acquisition product to service
          the moderate size to smaller home health agency.
     o    Delivery Assistant(TM) services the home equipment market in capturing
          delivery data for accounting, tracking and reimbursement purposes.
     o    AC-CURA(TM)  services  the home health  agency  market by  providing a
          Windows-based comprehensive information management system for managing
          operations, finance and clinical functions of a small agency.
     o    Santrax is the  nations  largest  supplier  of home  health  telephony
          services. It provides patient based confirmed time, expense,  activity
          and attendance reporting.
     o    Remaining  product  offerings  include eCMN  Processing  and Inventory
          Assistant which provide  critical  ancillary  products to complete the
          suite of critical home health enterprise applications.

     Opportunity  exists  for the  Company to extend its  current  offerings  to
current and future customers. CareCentric will continue to leverage its software
applications  and  related  services by  leveraging  existing  platforms  into a
growing suite of tools that will facilitate new revenues,  faster payment,  best
practices,  process  improvement,  decision  support,  secure  transactions  and
efficient,   electronic   transmission  of  medical  records  and  claim  forms.
Investment  in  information  technology  is more  critical  in home  health care
because the information needs both to be shared and secured while users are both
distributed   and   disconnected.   CareCentric  is  directing  its  information
technology  solutions  at these  opportunities.  CareCentric  plans  to  package
information  technology  solutions and services to serve the individual needs of
customers.

INFORMATION SYSTEMS

     CareCentric offers comprehensive and flexible software solutions to address
the information  processing needs defined by a number of unique home care market
segments   including  home  medical  equipment   suppliers,   infusion  pharmacy
providers,  home health  agencies,  hospice  service  providers  and  integrated
delivery  networks.  Each of CareCentric's  software  products offers a suite of
core application  modules that address the financial,  administrative,  payment,
regulatory and  operational,  and in some cases,  clinical  requirements of home
health care providers. These applications are designed to:

     o    Generate revenue
     o    Promote  improvement  in the  efficiency  of  customer  processes  and
          operations
     o    Operate in a number of popular technology environments
     o    Speed reimbursement for services
     o    Improve patient care
     o    Provide scalability and growth options
     o    Facilitate open data access and ubiquitous connectivity to third-party
          solutions
     o    Produce management reporting and decision support tools
     o    Facilitate regulatory compliance


                                       7
<PAGE>

     o    Manage inventories
     o    Ease the burden of HIPAA compliance


CORE SOFTWARE SOLUTIONS

     CareCentric's current core software solutions are as follows:

STAT2

     STAT2 is designed as a feature  rich,  stand-alone  complete,  flexible and
fully  integrated home health agency  management  system.  The STAT2 core set of
software applications includes:
<TABLE>
       <S>                                               <C>

        o    Client Intake                                o   Billing/Accounts Receivable
        o    Treatment Plans                              o   General Ledger
        o    Employee Tracking                            o   Accounts Payable
        o    Scheduling                                   o   Payroll
        o    Electronic Transmission and Remittance       o   Hospice
        o    HIPAA compliance                             o   Interface with Point of Care
</TABLE>

     This core set of applications and their  underlying  features and functions
can  be  enhanced  with  specialized  features  including,   telephony  and  SQL
reporting. The STAT2 system allows a customer to exchange clinical and financial
information  with external systems such as demographics and patient master files
from  affiliates or referring  institutions  in either a real-time or batch mode
through HL-7  interface  engine  technology or customized  interfaces.  STAT2 is
designed  to increase  staff  productivity  by fully  integrating  the  system's
clinical,   financial  and  operational  applications  and  thereby  eliminating
redundant data entry. STAT2 has the ability to customize system features as well
as the  ability to expand  with the  customers'  business.  The STAT2  system is
further enhanced by the use of the Smart Clipboard(R)  point-of-care  system and
Visit  Assistant(TM).  Smart Clipboard(R) and Visit  Assistant(TM) are discussed
further below.

MestaMed(R)

     MestaMed(R)  is a stand-alone  fully  integrated  billing,  accounting  and
inventory control system for providers of multiple  line-of-business home health
services including:

<TABLE>
<CAPTION>
       <S>                                                <C>
        o   Home Medical Equipment & Supplies              o    Rehabilitation Equipment
        o   Home Health Care                               o    Hospice Services
        o   Infusion and IV Therapy                        o    Retail Sales
</TABLE>

     MestaMed(R) customers are home health care providers who use MestaMed(R) to
track the delivery of home medical  equipment and related  supplies and infusion
pharmacy,  skilled  nursing  and hospice  services  to patients  and to meet the
complex requirements  necessary to obtain reimbursement from Medicare,  Medicaid
and other  third-party  payers.  CareCentric  believes  MestaMed(R)  is the only
system that fully integrates information on operational and financial management
for multiple lines of service homecare providers.

     MestaMed(R) is in use nationwide by hundreds of organizations  and multiple
thousands of users from  independent  providers to large,  regional and national
companies.  It is  proven  to be  well  suited  to meet  the  needs  of  larger,
multi-location home care providers. MestaMed(R) is designed to be cost-effective
and  scalable  and to  readily  expand  to meet  future  information  processing
requirements and provide  management  flexibility.  Multi-service  providers can
de-centralize  certain  operations,  such  as  intake,  by  location  or line of
business;  and  centralize  other  functions,  such as billing and  collections,
across locations and business lines.



                                       8
<PAGE>

     A number of  additional  add-on  features and  supplemental  modules can be
optionally  purchased to satisfy the  information  technology  requirements of a
particular  home  care  provider.   Recent  product  releases  include  Delivery
Assistant(TM),  a point of delivery  PDA  solution and  Inventory  Assistant,  a
physical  inventory  barcode-scanning  PDA solution.  MestaMed(R)  was the first
system  nationwide  to deliver an electronic  CMN solution  through and alliance
with Trac Medical.  MestaMed(R) is designed to easily and cost  effectively meet
the needs of large providers who have high transaction volumes, large numbers of
users,  multiple  branches and remote  processing  requirements.  MestaMed(R) is
available  on  a  variety  of  hardware  platforms  and  operating  environments
including Open VMS, UNIX, Windows NT, Windows 2000, AIX and various Intel, Alpha
and RS 6000 computer systems.

DME VI

     DME  VI is a  PC-based  software  application  for  mid-size  home  medical
equipment  and  medical  supply  businesses.  The  DME VI core  set of  software
applications includes:

        o   Order Entry                        o    Billing
        o   Inventory Management               o    Accounts Receivable
        o   General Ledger                     o    Purchase Orders

     DME VI features add-on modules such as retail sales and bar coding. The DME
VI  software  provides  easy  to use  data  import/export  capabilities.  DME VI
customers are also afforded  real-time  customer  support coverage and services.
Delivery  Assistant(TM),  Inventory  Assistant and eCMN features are planned for
DME VI in 2003.

HMExpress(TM)

     HMExpress(TM)  is a  Windows-based,  cost-effective  and  proven  suite  of
applications  designed for small to mid-sized home medical equipment  providers.
HMExpress(TM)  automates order  processing,  CMN management,  billing,  accounts
receivable,  inventory and rental management;  the core operational areas of any
HME business.  HMExpress(TM)  packages years of research and development into an
affordable out-of-the-box HME solution.

     HMExpress(TM)  features HME patient intake and order processing,  equipment
pickups and exchanges,  rental equipment  management,  recurring rental billing,
capped rental  processing,  CMN printing and  tracking,  Medicare Form 1500 bill
printing,  private-pay statements,  HIPAA compliant 837 and 835 standard billing
formats,  billing  system,  accounts  receivable  system,  perpetual  inventory,
management reporting and multi-branch processing.  HMExpress(TM) can grow with a
business or customers can upgrade to other compatible CareCentric products.

AC-CURA(TM)

     AC-CURA(TM)  is a Windows  2000/XP open  architecture  complete home health
agency information  system  application.  It is fully scaleable,  and capable of
supporting  centralized  or  decentralized  organizations.   AC-CURA(TM)  offers
complete  scheduling,  billing,  operations,  financial,  and QA  functionality.
AC-CURA(TM)  offers a simple and reliable  interface  solution to virtually  any
point-of-care device, telephony, and care plan management.

     AC-CURA(TM)  has hundreds of users  operating in 23 states.  AC-CURA(TM) is
designed to handle all types of payers including Medicare, Medicaid, Private Pay
and  Staffing.   AC-CURA(TM)   can  be  configured  in  a  client  server  or  a
decentralized  data base  environments.  AC-CURA(TM)  is sold  under a  business
alliance based on a reseller agreement with Riversoft, Inc.


SPECIALIZED SOFTWARE PRODUCT SOLUTIONS

     CareCentric offers the following specialized software solutions:



                                       9
<PAGE>

The Smart Clipboard(R)

     The Smart Clipboard(R) is a point-of-care  clinical information system that
provides  a  clinical  solution  designed  to  assist  home  care  providers  in
co-managing  the cost and  quality  of the care they  deliver  by  helping  them
understand their clinical and administrative  processes.  The Smart Clipboard(R)
is a Windows-based client/server application that uses replication technology to
maintain synchronized subsets of the master database in each tablet computer for
data  collection  and  validation  at  the   point-of-care.   This   facilitates
disconnected,  distributed  operations  that  characterize  the  information and
operational  needs of home health operations spread over large areas or across a
region. The Smart Clipboard(R) provides home care nurses,  therapists, and other
clinicians with a means to capture  complete  patient  information and assist in
making  timely,  informed  clinical  decisions at the  point-of-care.  Through a
relationship  with Outcome Concept  Systems,  the system provides OASIS and ORYX
data entry,  validation,  submittal and  benchmark-reporting  capabilities.  The
Company designed The Smart  Clipboard(R)  system to work in conjunction with the
STAT2 and  MestaMed(R)  HHA  back-office  systems to give home  health  agencies
seamless data exchange from clinical to operational  to financial  functions and
back as indicated or required.

Visit Assistant(TM)

     CareCentric  Visit  Assistant(TM) is an intuitive,  easy to use,  hand-held
point-of-care  device.  It performs key  admission  and patient  care  functions
necessary  for  improved  cash flow  while  eliminating  manual  data  entry and
increasing  visit  data  accuracy.   Using  personal  digital   assistant  (PDA)
technology,  Visit  Assistant(TM) is the latest in CareCentric's  line of mobile
computing solutions.  Visit Assistant(TM) is based on a Palm Operating System(R)
device and provides a cost-effective solution for any size agency.

     Visit Assistant(TM) enables improved clinical processes through the ability
to collect OASIS,  485,  Assessment and Clinical Notes in the field.  With Visit
Assistant(TM),  agencies can perform regulatory functions to generate 485 forms,
calculate  HHRG and submit  OASIS data sets  validated at the  point-of-care  to
ensure consistency and compliance.  Visit Assistant(TM) is designed for use with
the STAT 2 and  MestaMed(R)  HHA clinical and  financial  system for billing and
operational efficiency.

     Visit  Assistant(TM)  is  sold  under a  business  alliance  with a  vendor
company,  Golden  Rule  Software,  Inc.  based  on a  license  and  distribution
agreement.

Delivery Assistant(TM)

     CareCentric  Delivery  Assistant(TM)  is  an  automated  inventory  control
solution  for  home  medical  equipment   providers.   Asset  control  including
serialized  inventory  tracking  can now be  performed at the point of delivery.
Fully   integrated  to  the   MestaMed(R)   management   system,   the  Delivery
Assistant(TM)  enables delivery  technicians to scan bar-coded orders,  supplies
and equipment  information to confirm delivery  transactions.  In addition,  the
Delivery  Assistant(TM)  captures  insurance  verification  information and cash
receipts.  Daily activity can be  automatically  transferred to the  MestaMed(R)
system for inventory control and operational efficiency.  Delivery Assistant(TM)
is a key addition to the MestaMed(R) Home Medical Equipment line of products. It
provides valuable inventory, delivery and payment needs that speed the delivery,
reduces backlog,  increase productivity and speeds  reimbursement.  In 2003, the
company plans integrate the Delivery Assistant(TM) into the DME VI HME system.

OASIS/ORYX Reporting and Benchmarking

     CareCentric  continues to enjoy value-added Retailer agreement with Outcome
Concept Systems,  Inc. (OCS).  This agreement  enables  CareCentric to offer the
complete  suite of OCS  products to all  CareCentric  customers  who use outcome
measures to define patient care goals.  The OCS products  allow home  healthcare
companies to manage, report and analyze clinical data.



                                       10
<PAGE>

PharmMed(R)

     PharmMed(R) is CareCentric's enhanced, comprehensive,  Windows-based, home
care pharmacy  software.  PharmMed(R) works in conjunction with the MestaMed(R)
Management  System to fully automate  processes  unique to home infusion therapy
providers, including the billing of HME products and tracking of related assets.
A Windows-based application that adapts to both centralized and/or decentralized
operations,  PharmMed(R)  supports  multiple  locations and offers  streamlined
prescription processing, enhanced clinical documentation, improved operations to
facilitate  more efficient  workflow,  and improved  reporting to aid regulatory
compliance.  Compounded,  Non-compounded  and  TPN  prescription  processing  is
supported.   A  number  of  productivity   enhancing  interfaces  including  TPN
compounder interfaces to Baxter and BAXA products are available.

Santrax

     In 2002,  CareCentric  entered into a value added  reseller  agreement with
SanData  Systems,  Inc.  to  provide  a  best-of-breed   telephony  solution  to
CareCentric's home health customers.  Santrax is a browser-based ASP application
that enables home care field employees to record timecard and visit  information
using  standard  touch-tone  telephones.  It was designed as a simple,  low-cost
means for capturing key information at the point-of-care. Santrax confirms staff
visits through on-site caller  identification.  Once  collected,  information is
automatically  exported  into an  agency's  payroll  and  billing  applications.
Santrax  is well  suited  for use by  paraprofessionals  or home  health  aides.
Santrax interfaces directly into the STAT enterprise software to provide a fully
integrated solution to the home health care provider for data capture, reporting
and  billing.  Interfaces  to the  MestaMed(R)  HHA  system are  expected  to be
available in 2003.


CLINICAL CONTENT OPTIONS

SmartPlans

     The SmartPlans suite of patient care plans and assessments  integrated into
CareCentric's  Smart  Clipboard(R) that allows home health agencies to implement
electronic clinical data collection  processes by defining treatment plans for a
variety of medical diagnosis-based conditions common to skilled nursing, hospice
services  and  therapies.  Over 30  plans  of  care  and  supported  assessments
facilitate immediate implementation of a structured clinical process.

Outcomes Planner System

     The Outcomes  Planner  System (OPS) is an alternative  option  available to
CareCentric   Smart   Clipboard(R)   customers   designed  to  give  agencies  a
teaching-oriented set of clinical care pathway options.  CareCentric's  Outcomes
Planner  System  is  a  disease-specific,  clinical  care  path  and  care  plan
documentation   package  that  includes   discipline-specific   OASIS  and  ORYX
assessments for skilled nursing.  Modules for physical,  occupational and speech
therapy as well as hospice are also available.

HIPAA Enhancements

     The   Company   expects   that  the  Health   Insurance   Portability   and
Accountability Act of 1996 (HIPAA) will necessitate  on-going security,  privacy
and electronic  transmission-related  enhancements to current software products.
As  specific   implementation   regulations,   guidelines   and  timetables  are
promulgated and finalized,  CareCentric will respond by allocating the resources
and delivering regulation compliant,  productivity enhancing modules it believes
will be needed to gain  compliance  for its own  employees,  product and service
offerings and its operations.




                                       11
<PAGE>

SERVICE SOLUTIONS

Software Services

     CareCentric  believes that  providing  comprehensive  software  services to
customers  is  critical  to  its  success  in the  home  health  care  industry.
CareCentric employs in excess of 100 professionals  dedicated to this effort who
provide the following services:

     o    Implementation:  Implementation  services provide a proven approach to
          implementing and supporting a CareCentric  software  system.  Services
          include a formal  implementation plan, periodic review of the schedule
          and on-going  progress with customer  management,  and coordination of
          CareCentric  installation,  training and system integration resources.
          Quality assurance measurements are required after each on-site visit.

     o    Training:  Training and education services are offered on a continuing
          basis  to  existing  customers  either  at  the  customer's  site,  at
          CareCentric classroom training facilities in Pittsburgh, Pennsylvania;
          Pompano Beach,  Florida; and Atlanta,  Georgia or at a remote facility
          in conjunction with major industry trade shows.

     o    Data Conversion  Services:  Data conversion  services are offered on a
          fee for  service  basis to those  customers  that  require  electronic
          creation  of  certain  databases  required  for use  with  CareCentric
          software  solutions.  This critical aspect of sales and implementation
          provides the customer with the technical  and  operational  support to
          effect  a  smooth,  accurate  and  comprehensive  data  transition  to
          CareCentric's platforms.

     o    Software Support:  CareCentric offers telephone support Monday through
          Friday and emergency  telephone support on evenings and weekends.  The
          support is available  at standard  8:30 a.m. to 8:30 p.m. EST hours or
          can  be  specially  tailored  to the  different  types  of  healthcare
          operations serviced by the product. Weekend support is available on an
          on-call basis by support staff of the Company.  Customers can purchase
          added  platinum/premium  level  support.  In these cases,  key support
          personnel are on call to handle critical issues during extended hours.
          Support coverage includes selected training questions,  non-compliance
          issues,  system  breakdowns and  diagnostics of critical  functions to
          keep the  customer  operational.  The Company also  provides  software
          maintenance  releases  on a periodic  basis to address  non-conforming
          software,  certain regulatory updates and certain product features and
          improvements.  Maintenance  releases of software are made available to
          customers  periodically.  These software  maintenance releases include
          improvements  and  regulatory  updates.  These  updates do not include
          major functional or computer platform changes that would be offered to
          customers as new product sale opportunities.

     o    Technical Consulting:  CareCentric provides software customization and
          integration,  technical audits of the customer's  information systems,
          integration   and  network   planning  and   strategic   and  tactical
          information systems planning.

     o    Custom Programming: CareCentric provides customer-specific changes for
          its products on a fixed fee or per hour basis.

     o    Data Migration Services:  CareCentric provides customer data migration
          routines to support transitioning from a competitive software product.

     o    CareCentric is assembling a standardized business optimization package
          of services.  This package of services will provide  on-site review of
          customers' existing procedures and recommend  "best-practice" policies
          and procedures designed to maximize the customer's  utilization of the
          CareCentric's software product features.

     Software support services  represents a major source of recurring  revenue,
as these services are provided through  monthly,  quarterly and annual renewable
maintenance  contracts  which  provide  access  to  customer  support,  software
releases  to respond to changes in  regulatory  policies,  and  certain  product
improvements.   The  software  at  customer   installations  that  do  not  have
maintenance  agreements  rapidly becomes obsolete.  Other services are generally
charged on a time and materials usage basis. Travel costs are billed separately.
CareCentric's  technical  personnel also provide  on-site and on-call support as
requested.



                                       12
<PAGE>

Business Consulting Services:

     This segment was discontinued at the end of the third quarter of 2001.


CUSTOMERS

     CareCentric has over 1,500 customers nationwide, including:

     o    hospital-based companies;
     o    home health care service providers;
     o    alternate-site care organizations;
     o    home medical equipment providers;
     o    integrated delivery systems;
     o    government-managed organizations;
     o    respiratory service providers; and
     o    home infusion therapy providers.

SALES AND MARKETING

     CareCentric, led by a Senior Vice President of Sales and Marketing, markets
its information  technology systems and services through a direct national sales
force led by two Vice  Presidents,  one focused on home health  agencies and the
other focused on home medical equipment and IV pharmacy providers. There were 12
account  executives at February 28, 2003. An inside sales force of six employees
handles additional  licenses,  add-on modules,  accessories,  forms and supplies
sales.  CareCentric  also employs a marketing  and sales support staff to assist
its sales force.

     Recognizing the importance of maintaining good  communication and obtaining
valuable input from its customers, CareCentric sponsors customer advisory groups
and national user group meetings.  Regional user group meetings are also held to
discuss customer  comments,  suggestions,  industry  trends,  and related system
issues.  CareCentric also maintains an active web site promoting important news,
customer   training   events,   web   based   educational    opportunities   and
demonstrations.  In  addition,  CareCentric  maintains  a  national  advertising
campaign, direct mail campaigns and an active national, regional and state trade
show presence.

BACKLOG

     CareCentric  had backlog of $3.8 million at December 31, 2002, $3.2 million
on December 31, 2001, and $4.1 million on December 31, 2000. Backlog consists of
the  unrecognized  portion of  contractually  committed  software  license fees,
hardware,  estimated  installation fees and professional services. The length of
time required to complete an implementation  depends on many factors outside the
control  of  CareCentric,   including  the  state  of  the  customer's  existing
information systems and the customer's ability to commit the personnel and other
resources  necessary  to  complete  the  implementation  process.  As a  result,
CareCentric  may be unable to predict  accurately  the amount of revenue it will
recognize in any period and, therefore,  can make no assurances that the amounts
in backlog will be recognized in the next twelve months.

TECHNOLOGY

SMART  CLIPBOARD(R)  CareCentric's  Smart  Clipboard(R)  point-of-care  clinical
product is built upon a Client/Server  Remote  Distributed  Relational  Database
technology platform. Smart Clipboard(R) utilizes iAnywhere's (Sybase) relational


                                       13
<PAGE>

database  engine,  Adaptive  Server  Anywhere,  for  its  rich  feature  set and
replication  support.  The Smart  Clipboard(R)  product is currently deployed on
Microsoft's  Windows  operating  systems  platforms.  User  interaction with the
system  is  through a  Windows-based  Graphical  User  Interface  (GUI),  with a
pen-based user interface provided at the point-of-care.

STAT2 The  STAT2  system is an  MSM-based  solution  and  operates  on  multiple
operating  systems,  including  Windows,  SCO-UNIX  and AIX.  MSM is a reliable,
hierarchical  database  that is very fast and requires low  maintenance.  MSM is
also a programming  language that was designed to  efficiently  manage the large
amounts of text that the medical  industry uses.  STAT2 is a back-office  system
that allows a customer to  exchange  clinical  and  financial  information  with
external systems in either an immediate  connection  (using the HL7 standard) or
by accumulating data to transmit later in batch mode.  Several components of the
Cache database and development environment will be incorporated in 2003 to allow
support under a larger family of operating systems and to eliminate the need for
third-party ODBC tools.

DME VI The DME VI system is a complete billing and operations  management system
that  addresses the business needs of the Home Medical  Equipment  (HME) market.
The solution is a PC based, Windows compliant software system that operates on a
variety of platforms, including Windows 95/98, Windows NT, and Windows 2000. The
software is scaleable,  and can run as a separate  stand-alone system or as part
of a local area network  (LAN) or wide area network  (WAN).  The DME VI software
uses the highly  regarded  Pervasive  SQL 2000  database  software to ensure the
accuracy and integrity of the data.

MESTAMED(R) The MestaMed(R) software system is a completely  integrated billing,
operations and financial management system for the Home Medical Equipment (HME),
Home Infusion  Therapy (IV) and/or Home Nursing (HHA)  market.  The  MestaMed(R)
solution can be deployed in an integrated health care delivery  environment,  or
implemented  as a stand-alone  solution in any of the  operational  disciplines.
MestaMed(R)  can operate on multiple  operating  systems  including  Windows NT,
Windows 2000,  Unix,  AIX or Open VMS. The system fully  supports local and wide
area networks  through  TCP/IP  network  protocol.  The  MestaMed(R)  product is
powered by the Synergy Development Tool set; a comprehensive  cross-platform set
of  advanced  tools  that  enable  programmers  to  rapidly  create  and  deploy
system-independent, extensible Enterprise solutions. Within this Tool set is the
xfServer Plus component, a robust, scalable server that enables access to remote
data and logic.

VISIT  ASSISTANT(TM) The Visit Assistant(TM) (VA) operates on the Palm operating
system.  The handheld units  synchronize to any PC on the same network where the
Visit Assistant(TM) server resides. The VA server uses an SQL database and users
can  work  with  the  synchronized  handheld  data  from  a  workstation.  Visit
Assistant(TM) data are exchanged with the back-office STAT2 product, eliminating
dual data entry. Visit Assistant(TM) is sold based on a license and distribution
agreement  with a  vendor  company,  Golden  Rule  Software,  Inc.  Golden  Rule
originally  designed a generic  version of the base  point-of-care  product  and
offered  it as a  non-integrated,  stand  alone  point-of-care  capture  device.
CareCentric has integrated the product to its STAT and  MestaMed(R)  back office
systems.

PHARMMED(R) The PharmMed(R)  software is a front-end  windows-based GUI pharmacy
and prescription processing system designed to manage the specialized mixing and
delivery needs of infusion therapy. The PharmMed(R) system is a fully integrated
product that  leverages the  MestaMed(R)  patient  intake,  backoffice  billing,
accounts  receivable and management system features.  PharmMed(R) can operate on
Windows NT and Windows  2000.  The system  fully  supports  local and  wide-area
networks  through  TCP/IP  network  protocol.  The  PharmMed(R)  product is also
powered by use of the Synergy development toolset and language.

DELIVERY  ASSISTANT(TM)  The  MestaMed(R)  Delivery  Assistant(TM) is a handheld
point of delivery system.  The solution is deployed on a Personal Data Assistant
(PDA) using the Palm  operating  system.  The  Delivery  Assistant(TM)  is fully
integrated  with the  MestaMed(R)  System  to  automatically  confirm  delivered
orders.  Information is shared between the PDA and  MestaMed(R)  Host system via
HTTP requests from a JAVA Virtual Machine running on any Windows 95/98,  Windows
NT or Windows 2000 client in the network.

INVENTORY  ASSISTANT The MestaMed(R)  Inventory Assistant is a handheld physical
inventory  system.  The solution is deployed on a Personal Data Assistant  (PDA)
using the Palm operating  system.  The Inventory  Assistant is fully  integrated
with the  MestaMed(R)  System to  automatically  scan  bar-coded  inventories to
expedite physical  inventory  counts.  Information is shared between the PDA and
MestaMed(R) Host system via HTTP requests from a JAVA Virtual Machine running on
any Windows 95/98, Windows NT or Windows 2000 client in the network.

THIRD PARTY SOFTWARE  CareCentric's  systems are dependent upon many third-party
software and hardware  products and related  services and  alliances  with other
product and  development  partners.  There can be no assurance that financial or


                                       14
<PAGE>

other  difficulties  experienced  by such  third-party  vendors will not have an
adverse  effect on  CareCentric's  abilities  to  provide  its  systems  or that
CareCentric  will be able to replace such  third-party  products and services if
they become unavailable.

     The  third-party  software  is composed  of varying  types and  contractual
arrangements.  The software  licensed  from third parties falls into one of four
categories consisting of operating systems,  medical content,  report writer and
data base manager. All of CareCentric's  products use these third-party software
products  to  some  varying   degree.   The  software  is  either   embedded  in
CareCentric's software prior to sale or accessed by CareCentric's software as an
external data file. Fees charged by the third-party  software vendors are passed
on to  CareCentric's  customers in the license fees,  annual fees or maintenance
fees charged by CareCentric.


RESEARCH AND DEVELOPMENT

     CareCentric  maintains  a staff of  approximately  38 product  and  project
managers, programmers, data base engineers and analysts, systems and application
analysts,  quality assurance analysts and documentation  specialists who monitor
developments  in the  computer  software  and  health  care  industries  and who
continuously work to enhance and develop  CareCentric's  systems, to investigate
and partner  with  third-party  vendors  whose  products  provide  complimentary
solutions to existing  CareCentric products and to enhance and develop its suite
of product and re-engineering services.

     CareCentric continuously engages in enhancing selected features of existing
products to help its customers meet constantly changing regulatory  requirements
as well as to improve operational and clinical  processes.  The Company believes
that  such  activities  will  help  customers  manage  and  reduce  costs  while
increasing the opportunities to improve revenue generation and collection.

     CareCentric  has  also  engaged  in  the  design  of an  "n-tier  platform"
multiple-line-of-business  solution  designed to operate in the  Microsoft  .NET
environment as both an in-house and ASP deployable  solution.  Plans to move the
project  to its  development  phases  through a  combination  of  available  and
integratable  third-party  components in  conjunction  with a number of in-house
developed components in 2003 are underway.

     A large development team remains in place to add new features and value-add
products to the Company's  existing products while a new product team builds off
the  Company's  existing  base to develop the  technology  platforms  for future
products.

COMPETITION

     Competition  in the market for home  health  care  information  systems and
services  is intense and has  resulted in the ongoing  entry and exit of vendors
each year.  CareCentric believes that the primary factors affecting  competition
are:

     o    features and functions
     o    technology platforms
     o    system performance and reliability
     o    ability to operate in a changing regulatory environment
     o    customer support
     o    service
     o    system flexibility and ease of use
     o    potential for providing feature enhancements
     o    delivery mechanisms
     o    reputation
     o    financial stability




                                       15
<PAGE>
     o    pricing

     CareCentric  believes it is a strong  competitor in features and functions,
system performance and reliability,  ability to provide regulatory enhancements,
customer  support and potential for  enhancements,  thus  providing the customer
with a return on investment.  CareCentric  provides  customer  support through a
real-time,  telephone-based  system  that has  proven  effective  in  satisfying
customer needs in a timely fashion.  CareCentric has a competitive  advantage in
the service area due in large part to a tenured  staff and a deeply  experienced
installation  and  training  team  leading to stronger  customer  relationships.
Pricing  in this  industry  is very  competitive,  with no  particular  company,
including  CareCentric,  having a clear advantage.  CareCentric's  reputation is
tied  mainly  to the  performance  of each of its  products,  its deep  industry
knowledge and the feature and function of its products.

     Management  believes that CareCentric's name recognition has been expanding
since its debut in January 2001.  Advertising  of the name,  logo and tag line -
Achieve Your Potential - continued  throughout  2002 and has been  successful in
beginning to establish a single branded identity  representing multiple flagship
products and services. Management believes that the market continues to identify
with  CareCentric's  products - MestaMed(R),  STAT 2(R), Smart  Clipboard(R) and
PharmMed(R) - indicating a strong product allegiance by the customer.

     CareCentric's  competitors  include  other  providers  of home  health care
information  systems  and  services.   Furthermore,   other  major  health  care
information  companies  not  presently  offering  home health  care  information
systems,  or major information system companies not currently in the health care
industry,   could  develop  the  technology  and  enter  CareCentric's  markets.
CareCentric believes its most significant competitors are:

     o    McKesson Information Systems;
     o    Patient Care Technologies, Inc. (partially owned by Meditech);
     o    Home Care Information Systems, Inc. (owned by Misys PLC);
     o    3M;
     o    Beyond Now Technologies;
     o    FastTrack Healthcare System;
     o    Computer Applications Unlimited; and
     o    Computers Unlimited.

     Increased  competition  could result in new products and technology,  price
reductions,  reduced gross margins and loss of market share,  any of which could
materially  adversely affect  CareCentric's  business,  financial  condition and
results of  operations.  In  addition,  many of  CareCentric's  competitors  and
potential competitors have significantly greater financial,  technical,  product
development,   marketing  and  other  resources  and  market   recognition  than
CareCentric.  Many of  CareCentric's  competitors  also  currently  have, or may
develop or acquire, substantial installed customer bases in the home health care
industry.  There can be no assurance  that  CareCentric  will be able to compete
successfully   against  current  and  future  competitors  or  that  competitive
pressures  faced  by  CareCentric  will  not  materially  adversely  affect  its
business, financial condition and results of operations.

PROPRIETARY RIGHTS AND PRODUCT PROTECTION

     CareCentric owns the copyrights on its STAT2 system and the DME VI solution
acquired from Dezine, the Smart Clipboard(R)  system acquired in its 1999 merger
with  CareCentric  Solutions,  Inc.  (CSI),  the  MestaMed(R),  PharmMed(R)  and
HMExpress(TM)  products acquired in its 2000 merger with MCS, Inc. (MCS) and has
applied  for   AC-CURA(TM)   as  the  product   copyright  name  for  its  newly
reseller-licensed  HHA product.  CareCentric depends upon a combination of trade
secret,  copyright and trademark laws,  license  agreements,  nondisclosure  and
other  contractual  provisions,  confidentiality  policies and various  security
measures to protect its proprietary  rights.  There can be no assurance that the
legal   protections   afforded  to  CareCentric  or  the  precautions  taken  by
CareCentric  will be  adequate  to  prevent  misappropriation  of  CareCentric's
technology.   In  addition,   these  protections  do  not  prevent   independent
third-party  development of  functionally  equivalent or superior  technologies,
systems or services,  or the obtaining of a patent with respect to CareCentric's
technology  by  third  parties.   Any   infringement  or   misappropriation   of
CareCentric's core proprietary  software could have a material adverse effect on
CareCentric. Although there has been no significant litigation with respect to


                                       16
<PAGE>

these  claims,  as the number of home health care software  information  systems
increases  and the  functions  of these  systems  further  overlap,  health care
information systems may increasingly become subject to infringement claims.

     CareCentric  believes that its current systems and products do not infringe
on the patent or trademark rights of any third parties. There has, however, been
substantial  litigation and uncertainty  regarding  copyright,  patent and other
intellectual property rights involving computer software companies and there can
be no assurance that CareCentric will prevail in any infringement  litigation in
which it becomes  involved.  Any claims or  litigation,  with or without  merit,
could be costly and could result in a diversion of management's  attention which
could  have a  material  adverse  effect on  CareCentric's  business,  financial
condition and results of operations.  Adverse  determinations  in such claims or
litigation may require CareCentric to cease selling certain systems or products,
obtain a license  and/or pay  damages,  any of which  could also have a material
adverse effect on  CareCentric's  business,  financial  condition and results of
operations.

GOVERNMENT REGULATION AND HEALTH CARE REFORM

     The health care  industry is subject to changing  political,  economic  and
regulatory  influences that may affect the procurement  practices and operations
of home health care  organizations.  During the past several  years,  the United
States  health care  industry  has been  subject to an increase in  governmental
regulation of, among other things,  reimbursement rates and certain proposals to
reform various aspects of the United States health care system have periodically
been considered by Congress. Future proposals may result in increased government
involvement in home health care and otherwise  change the operating  environment
for CareCentric's  customers.  Home health care organizations may react to these
proposals  and the  uncertainty  surrounding  such  proposals by  curtailing  or
deferring investments in CareCentric's systems and services.  CareCentric cannot
predict what impact, if any, such factors might have on its business,  financial
condition and results of operations.

     Regulations  enacted by the United States  government  are created  through
several  agencies and specific  regulations.  The Department of Health and Human
Services  (HHS) is the  agency  responsible  for  protecting  the  health of all
Americans.  The Centers for Medicare and Medicaid  Services  (CMS), a department
within HHS, is responsible for  administering the Medicare and Medicaid programs
and for enforcing the  transaction  and code set standards  that are part of the
Health Insurance  Portability and Accountability Act of 1996 (HIPAA). The Office
of Civil Rights (OCR) is responsible for enforcing the HIPAA privacy  standards.
The  Office  of  Inspector  General  (OIG) is  responsible  for  protecting  the
integrity of HHS. The OIG conducts audits, investigations, inspections and other
related  activities to ensure program integrity and to identify fraud and abuse.
These  government   agencies  and  the  regulations  they  oversee  all  have  a
significant impact on how home health companies conduct business each day.

     Each year the OIG publishes a Work Plan that  identifies  specific areas of
investigation  for the coming  year.  In 2003 home  health,  hospice and durable
medical  equipment  businesses  are once again  included in the Work Plan.  Home
health will be the focus of two studies,  hospice one study and durable  medical
equipment four studies.  For home health the OIG will investigate the effect the
prospective payment system is having on quality of home health care. The goal is
to determine  whether any changes have  occurred in the level or mix of service,
the number of hospital re-admissions or emergency room admissions and the number
of deficiencies  identified on survey and  certification.  The second study will
look at payment  controls and whether  services were properly  coded and whether
any services were inappropriately unbundled and paid separately by Medicare. The
OIG's focus for hospice  will be a  re-examination  of a past area of  scrutiny;
hospice and nursing home  relationships.  Specifically  this study will focus on
the private  paying hospice  patient who resides in a nursing  facility and will
determine whether services were provided  according to the plan of care. Durable
medical  equipment  companies will see the OIG  scrutinizing the area of medical
necessity of wheelchairs,  payments for enteral therapy,  parenteral  nutrition,
oxygen and  therapeutic  shoes.  The  activities of the OIG support the need for
agencies to develop and improve their corporate  compliance plans.  Implementing
system  controls and safe guards are a must in this  environment  of  regulatory
control and scrutiny.



                                       17
<PAGE>

     All of these areas could potentially  impact  CareCentric  through the need
for additional  system controls and safeguards.  Any required changes  resulting
from the Inspector  General's  review of the home health industry could increase
the costs and time  necessary  for  CareCentric  to provide  its  administrative
services to its customers  and could affect  CareCentric  in other  respects not
currently foreseeable.

     The enactment of the Health Insurance Portability and Accountability Act by
Congress in 1996 began a new era in the field of information  management.  Among
other  requirements,  HIPAA called for the adoption of standards  governing  the
electronic  transmission,  privacy  and  security of health  information.  HIPAA
required the Secretary of the Department of Health and Human Services  (DHHS) to
adopt standards governing the electronic transmission of data in connection with
a number of transactions  involving health information,  including submission of
health  claims.  These  standards  are intended to cover  security  measures and
safeguards with respect to health  information,  as well as  standardization  of
data, assignment of identifiers and authentication of electronic signatures.

     The  Standards  for  Electronic  Transactions  and Code Sets Final Rule was
published in the August 17, 2000 Federal Register and became  effective  October
16, 2000,  setting an effective  compliance  date of October 16, 2002.  Congress
enacted a one-year extension to this standard for covered providers who submit a
compliance  plan prior to October 16, 2002.  The goal of this  regulation  is to
simplify  electronic  transfer of data by requiring a single set of standards be
used  throughout  the  health  care  industry.  This  single  set of  electronic
standards will be required for all health plans and providers, as well as claims
clearinghouses,  whether in the government or private  sector.  This  regulation
includes eight  electronic  transactions  and four code sets to be used in those
transactions. These are:

     o    Health claims and equivalent encounter information
     o    Enrollment and dis-enrollment in a health plan
     o    Eligibility for a health plan
     o    Coordinating of benefits
     o    Health care payment and remittance advice
     o    Health plan premium payments
     o    Health claim status
     o    Referral certification and authorization


     The Standards for Privacy of Individually  Identifiable  Health Information
Final Rule was issued on December 20, 2000. This regulation protects all patient
records, including paper, electronic, and oral communications. The Department of
Health and Human Services delayed the effective date of the privacy rules by two
months, setting a new effective date as of April 14, 2001, with a new compliance
date  of  April  14,  2003.  This  rule  will  require  significant  changes  in
CareCentric's  systems and its operations regarding access to records,  masking,
and confidentiality.

     The proposed  Security Rule  published in 1998 was expected to become final
in the first  quarter  of 2003 with a  compliance  date of  February  2005.  The
Security Rule consists of several  standards  that require  covered  entities to
maintain  reasonable and  appropriate  administrative,  technical,  and physical
safeguards to ensure the integrity and confidentiality of health information and
prevent the  unauthorized use or disclosure of health  information.  Home health
agencies  are just  beginning  to prepare  for the  impact of the HIPAA  privacy
standards.

     In January  1999,  HCFA  published  an interim  final rule and a final rule
requiring home health agencies to report  electronically  data obtained from the
Outcome and Assessment Information Set ("OASIS") as a condition of participation
by such agencies in the Medicare program.  OASIS requires information  regarding
patients to be submitted  electronically to HCFA, and the January 1999 rules set
forth   requirements  for  maintaining  the  privacy  of  patient   identifiable
information  generated by OASIS.  Further,  these rules  require the home health
agency or its agent to maintain the confidentiality of all patient  identifiable
information  contained  in the  clinical  record and neither  can  release  such
patient identifiable OASIS information to the public. Any agent acting on behalf
of an agency in connection with the  transmission of OASIS data must be doing so
pursuant  to a  written  agreement  with  the  home  health  agency.  Additional
legislation  governing the dissemination of medical record  information has been
proposed  at both the state and  federal  level.  This  legislation  may require
holders of such information to implement  additional security measures which may
be difficult to implement and costly to  CareCentric.  There can be no assurance
that  changes  to state or  federal  laws and  regulations  will not  materially
restrict the ability of home health care  providers to submit  information  from
patient  records  to  CareCentric's  systems  or impose  requirements  which are
incompatible  with  CareCentric's  current systems.  During 2000, HCFA announced


                                       18
<PAGE>

that  OASIS  assessments  must be  completed  on all  adult  patients,  with the
exception of  maternity or personal  care/housekeeping  services.  However,  the
encoding and transmission requirement currently applies to Medicare and Medicaid
patients only. OASIS  requirements have been delayed for patients receiving only
personal care (non-skilled) services.

     In 2002, CMS's committee on Regulatory Reform recommended streamlining home
health  paperwork.  This resulted in the development of a shorter version of the
OASIS tool. The new version  decreased the number of required fields and added a
new field  required  to comply with  ICD-9-CM  coding  requirements  mandated by
HIPAA. The committee's goal was to require only those assessment items needed to
promote quality patient care and to ensure proper payment.  This  recommendation
was approved by the OMB in January 2003.  Home Health  agencies could  implement
the shorter OASIS immediately.  The compliance date for the changes to the OASIS
data set is October 1, 2003.

     On July 3, 2000,  HCFA  released the  Prospective  Payment  System for Home
Health  Agencies Final Rule for  reimbursement  of home health  providers  under
Medicare  which was  effective  on October 1,  2000.  Under this rule,  Medicare
reimburses  home health  providers  fixed  amounts  for 60-day  episodes of care
determined by home health resource group case-mix  classifications  on the basis
of an initial OASIS assessment adjusted for regional labor cost differences. The
Rule specifies that  reimbursement will be 60% at the start of the first episode
and 40% after the final claim with all adjustments  have been  transmitted.  For
subsequent episodes, the agency will be paid 50% at the start of the episode and
50% upon  receipt  of the  final  claim.  Agencies  must  submit a  Request  for
Anticipated Payment (RAP) after the first billable visit, which will trigger the
initial  payment.  Adjustments  will be  allowed  for low  utilization,  partial
episodes,  significant  changes in condition,  delivery of therapy  services and
other  excessive  cost  situations.   Additional   submittals  required  include
identification  of the appropriate  case mix group,  source of admission,  and a
one-line universal bill submission.

     The  Standards  for  Electronic  Transactions  and  Code  Sets  Final  Rule
published in the August 17, 2000 Federal Register became  effective  October 16,
2000.  Congress  enacted a  one-year  extension  to this  standard  for  covered
providers  who submit a compliance  plan prior to October 16, 2002.  The goal of
this regulation is to simplify electronic transfer of data by requiring a single
set of standards be used throughout the health care industry.

     These  changes to the  Medicare  payment  system  have  required  extensive
changes to the manner in which home health care  providers  do business  because
they are required to reduce or manage the costs of care per episode so the costs
will not exceed the  allowed  reimbursement,  while  maintaining  the quality of
medical  outcomes  required  by the  patient,  the  payer or other  governmental
regulatory  and  self-regulating  organizations.   Such  changes  have  required
extensive  changes to CareCentric's  software  products,  especially  STAT2, The
Smart Clipboard(R) and the MestaMed(R) HHA module.

     In the Omnibus Consolidated and Emergency Supplemental Appropriation Act of
1999,  the portions of the Balanced  Budget Act of 1997 that were  applicable to
the reimbursement of home health care providers under Medicare were amended to:

     o    defer the 15% additional funding cut until October 2000;
     o    provide  for  three  year   extended   payments   of  prior   Medicare
          over-reimbursements with the first year interest-free;
     o    eliminate  the bundling of home medical  equipment  billings with home
          health agency billings; and
     o    provide other minor relief.

     These  changes were intended to increase the cash flow of our customers and
potential  customers  but do not  provide  the  permanent  relief  sought by the
industry.  The  non-bundling  change  eliminates  an  opportunity  to  sell  the
MestaMed(R)  product,  which has a software  program that would  facilitate such
bundling of billing.  This legislation will not require  significant  changes to
our software programs.



                                       19
<PAGE>

     The Medicare,  Medicaid,  and SCHIP Benefits Improvement and Protection Act
(BIPA) of 2000  established  positive  payment changes for home health agencies.
These changes were:

     o    Additional delay in application of 15% reduction on payment limits for
          home health services until October 1, 2002;
     o    Restoration of full market basket update for home health  services for
          fiscal year (FY) 2001;
     o    Temporary two-month periodic interim payment extension;
     o    Clarification  in the use of  telehealth  in  delivery  of home health
          services;
     o    General Accounting Office (GAO) study on costs to home health agencies
          of purchasing non-routine medical supplies;
     o    Clarification  of  criteria  for  branch  offices  and a GAO  study on
          supervision of home health care provided in rural areas;
     o    Clarification of the "Homebound" definition;
     o    Temporary  10%  increase for home health  services  furnished in rural
          areas;
     o    Revisions to Medicare appeals process; and
     o    A full market basket update for home medical equipment for fiscal year
          2001.

     In 2002, the 15% reduction on payment limits for home health  services took
effect with  episodes  beginning on October 1, 2002.  From 1998 to 2002 the home
health  industry was targeted for 16 billion  dollars in reductions  this number
however  climbed to 70 billion with the 15%  reduction  on October 1, 2002.  The
impact of these  reductions  certainly could affect the ability of CareCentric's
customers to purchase new products and on new customers purchasing any product.

     The Standards for Privacy of Individually  Identifiable  Health Information
Final Rule issued on December 20, 2000 and modified on August 14, 2002  protects
all patient records, including paper, electronic,  and oral communications.  The
compliance date for the privacy standards is April 14, 2003.

     The United States Food and Drug  Administration is responsible for assuring
the safety and effectiveness of medical devices under the Federal Food, Drug and
Cosmetic Act administered by the Food and Drug  Administration  (FDA).  Computer
products are subject to regulation when they are used or are intended to be used
in the  diagnosis of disease or other  conditions,  or in the cure,  mitigation,
treatment or prevention  of disease,  or are intended to affect the structure or
function of the body.  Although  CareCentric  believes  that its systems are not
subject to FDA regulation, the FDA could determine in the future that predictive
applications of  CareCentric's  systems could make them clinical  decision tools
subject to FDA regulation.  Compliance with FDA regulations could be burdensome,
time  consuming and expensive.  CareCentric  also could become subject to future
legislation and regulations  concerning the manufacture and marketing of medical
devices and health care information systems.  These could increase the costs and
time  necessary  to market new systems  and could  affect  CareCentric  in other
respects not presently  foreseeable.  CareCentric  cannot  predict the effect of
possible future legislation and regulation.

EMPLOYEES

     As of December 31, 2002, CareCentric employed 158 individuals.  CareCentric
believes  that its  future  success  depends  in  large  part  upon  recruiting,
motivating and retaining  highly skilled and qualified  employees in all aspects
of CareCentric's business, especially product development. None of CareCentric's
employees  is  represented  by a labor  union.  CareCentric  believes  that  its
employee relations are good.

ITEM 2.  PROPERTIES

     CareCentric's  principal  executive  offices are located at 2625 Cumberland
Parkway,  Suite 310,  Atlanta,  Georgia 30339. The principal  executive  offices
consist of approximately  15,431 square feet. The lease on this space expires on
April 30, 2008.



                                       20
<PAGE>

     CareCentric  also leases  office space for its  operations in the following
locations:

<TABLE>
         <S>                                       <C>                      <C>

         LOCATION                                  SQUARE FOOTAGE            LEASE EXPIRATION
         --------                                  --------------            ----------------

         Norcross, Georgia                                19,704                May 31, 2003*
         Pompano Beach, Florida                            6,535                December 31, 2004
         East Brunswick, New Jersey                        1,082                August 31, 2005
         Pittsburgh (Monroeville), Pennsylvania           24,308                September 30, 2005
</TABLE>

     *CareCentric  believes that its present facilities,  excluding the Norcross
facility,  which will be vacated in May 31, 2003 in accordance  with early lease
termination  rights  with the  landlord,  are  adequate  to meet its current and
foreseeable needs.

ITEM 3.  LEGAL PROCEEDINGS

     Neither CareCentric nor any of its subsidiaries is currently a party to any
legal proceedings which would be material to the business or financial condition
of CareCentric on a consolidated basis.

     Simione Central Holding,  Inc., a subsidiary of CareCentric now known as SC
Holding,  Inc.  ("SC  Holding")  was  one  of  several  defendants  named  in  a
"whistleblower"  lawsuit related to alleged Medicare fraud filed under the False
Claims  Act in the  Northern  District  of  Georgia  (U.S.  ex re.  McLendon  v.
Columbia/HCA  Healthcare  Corp., et al., No. 97-VC-0890 (N.D. Ga.)). The lawsuit
involves alleged claims that SC Holding  allegedly  participated in a conspiracy
with Columbia/HCA and other third parties to bill inflated and fraudulent claims
to Medicare.  On July 21, 1999, the Justice Department issued notice that it had
elected  not to join  in the  claims  asserted  against  SC  Holding  by  Donald
McLendon,  who  is a  former  employee  of  an  unrelated  service  provider  to
Columbia/HCA.  Although  the Justice  Department  joined the suit with regard to
other  defendants,  it  specifically  declined  to  intervene  with regard to SC
Holding.  In late 2000,  CareCentric was advised by Mr. McLendon's attorney that
notwithstanding the declination by the Justice Department,  Mr. McLendon intends
to pursue "whistleblower"  claims against SC Holding directly.  Through February
28, 2003, no such action has been taken and nothing  further has been heard from
McLendon's  attorney for over one year.  Management believes that this claim has
been abandoned.  In the event a claim is asserted,  however,  CareCentric and SC
Holding intend to vigorously defend against it.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        Not applicable.


PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     As more  fully  explained  in Notes 1 and 2 to the  Consolidated  Financial
Statements,  MCS, Inc. is considered to have acquired Simione Central  Holdings,
Inc. on March 7, 2000, and the historical  financial statements of the "Company"
as  discussed  herein  for  periods  prior to March 7,  2000 are  therefore  the
historical  financial  statements of MCS, Inc. only,  except where  specifically
noted.

     The common  stock of  CareCentric  has been  traded on the Over the Counter
Bulletin Board (OTCBB) since August 22, 2002 under the symbol  CURA.OB.  Between
December 26, 2000 and August 21, 2002, the Company's  common stock was traded on
The Nasdaq Stock Market's  SmallCap  Market under the symbol CURA.  From June 6,


                                       21
<PAGE>

2000 until  December  26, 2000,  the common stock traded on the Nasdaq  SmallCap
Market  under the symbol SCHI.  During  March 2000,  the common stock was traded
temporarily  under the symbol  SCHID on Nasdaq to reflect  the  1-for-5  reverse
stock split.

     As of March 10, 2003,  CareCentric  common stock was held by  approximately
3,108 holders of record. For this purpose, stockholders whose shares are held by
brokers on behalf of stockholders are not included.

     The table below shows the reported  quarterly  high and low sales price for
CareCentric  common stock on the Nasdaq National Market,  Nasdaq SmallCap Market
and OTCBB for the periods after January 1, 2001. The information set forth below
does not include retail mark-ups, markdowns or commissions.

                            2002                   2001
                     --------------------  ---------------------
                       HIGH       LOW         HIGH       LOW
                     --------------------  ---------------------

First Quarter          1.010     0.550       4.530      1.500
Second Quarter         0.800     0.400       3.000      1.630
Third Quarter          0.600     0.300       2.950      1.340
Fourth Quarter         0.700     0.230       1.700      0.460

     CareCentric has never declared or paid cash dividends on CareCentric common
stock.  CareCentric  currently  intends to retain future  earnings,  if any, for
future  growth  and  does  not  anticipate  paying  any  cash  dividends  in the
foreseeable  future.  CareCentric's line of credit includes  restrictions on the
payment of dividends.

     On January  29,  2003,  CareCentric  received an offer to merge with Borden
Associates,   Inc.  In  the  proposed  transaction,   Borden  would  merge  into
CareCentric  and  purchase  the shares of  shareholders  holding less than 4,000
shares for $0.55 per share.  Each share of  CareCentric  common  stock  owned of
record by a holder of 4,000  shares or more of  CareCentric  common  stock  will
continue  to  represent  one  share  of  common  stock  after  the  merger.  The
outstanding shares of Borden Associates capital stock will, in the aggregate, be
converted into the right to receive that number of shares of CareCentric  common
stock equal to the quotient of the total cash  consideration paid to the holders
of fewer than 4,000 shares of CareCentric  common stock divided by the $0.55 per
share price. CareCentric would remain the surviving entity. This transaction, if
consummated,  may  result in the  Company  becoming  private so that it would no
longer be a reporting company under SEC regulations or be publicly traded on the
OTC Bulletin  Board.  The Board of Directors is evaluating  the proposal and has
formed a special  committee of independent  directors,  consisting of Winston R.
Hindle, Jr. and William J. Simione,  Jr., to evaluate,  respond or negotiate the
proposal  with the  principals  of Borden  Associates.  Borden  Associates is an
investment  company formed for the purpose of this transaction and owned by John
Reed,  Stewart  Reed and James  Burk.  John Reed and Stewart  Reed are  material
shareholders of CareCentric  and members of its Board of Directors.  As of March
10, 2003,  the special  committee of the Board has selected legal counsel and an
investment banking firm to assist in the special committee's review of the offer
by Borden Associates.


EQUITY COMPENSATION PLAN INFORMATION

     The following chart gives aggregate  information regarding grants under all
equity compensation plans of CareCentric through December 31, 2002.



                                       22
<PAGE>

<TABLE>
<CAPTION>
<S>                                            <C>                        <C>                        <C>

                                                                                                       Number of securities
                                                                                                       remaining available
                                                Number of securities        Weighted-average         for future issuance and
                                                  to be issued upon         exercise price of          equity compensation
                                                     exercise of               outstanding               plans (excluding
                                                outstanding options,            options,               securities reflected
              Plan category                      warrants and rights       warrants and rights            in 1st column)
------------------------------------------      ----------------------     --------------------      -------------------------

Equity  compensation  plans  approved  by
securityholders (1)                                    469,836             $          5.03                   383,586

Equity  compensation  plans not  approved
by securityholders (2)                                 108,453                       20.75                      -0-
                                                ----------------------     --------------------      -------------------------

Total                                                  578,289             $          7.55                    383,586
                                                ======================     ====================      =========================
</TABLE>


(1)  Represents  options  granted under the following  plans,  each of which was
     approved by shareholders:  1997 Non-Qualified  Directors Stock Option Plan,
     and the Simione Central Holdings,  Inc. 1997 Omnibus Equity-based Incentive
     Stock Option Plan, as amended.

(2)  Represents non-plan options granted prior to December 31, 2002.


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

     The following table sets forth selected consolidated  financial data of the
Company. The selected consolidated financial data in the table as of and for the
years ended December 31, 2002,  2001,  2000,  1999 and 1998 are derived from the
audited  consolidated  financial  statements  of  the  Company.  As  more  fully
explained  in Note 1 to the  Consolidated  Financial  Statements,  MCS,  Inc. is
considered to have acquired Simione Central Holdings, Inc. on March 7, 2000, and
the  historical  financial  statements for periods prior to March 7, 2000 of the
"Company" as discussed herein are therefore the historical  financial statements
of MCS, Inc. only, except where  specifically  otherwise noted. On September 28,
2001 the Company  discontinued its Consulting business segment and as more fully
described in Note 2 of the Financial Statements, the results of the discontinued
Consulting business have been separately presented in the Financial  Statements.
See Note 1 to Notes to Consolidated  Financial  Statements for information about
the  Company's  history.  The data should be read in  conjunction  with "Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations" and the Consolidated  Financial  Statements and Notes thereto of the
Company included herein.



                                       23
<PAGE>

                              SUMMARY OF OPERATIONS


<TABLE>
<CAPTION>
<S>                                       <C>            <C>            <C>          <C>          <C>
                                                                 YEAR ENDED DECEMBER 31,
                                           --------------------------------------------------------------------
                                              2002           2001          2000         1999          1998
                                           ------------  --------------  ----------  ------------ -------------
                                                          (in thousands, except per share data)

Net revenues:                               $   22,015    $    20,446     $ 19,574    $   16,648   $    14,901

 Costs and expenses:
     Cost of revenues                            6,408          8,217        8,478        10,563         9,225
     Selling, general and administrative         9,770         10,715       10,756         4,077         3,780
     Research and development                    3,431          6,158        6,174         1,051           231
     Amortization and depreciation               1,696          3,865        3,481           230             -
     Write down of intangibles                       -         11,799            -             -             -
     Restructuring Charge                            -            675            -             -             -
                                           ------------  -------------   ----------  ------------ -------------
     Total costs and expenses                   21,305         41,429       28,889        15,921        13,236
                                           ------------  -------------   ----------  ------------ -------------

 Income (loss) from operations                     710        (20,983)      (9,315)          727         1,665

 Other income (expense) :
     Other (expense) income                        250              -           (6)            -             -
     Interest expense                             (712)          (592)        (141)            -             -
     Interest and other income                      45             37           74            45            47
                                           ------------  -------------   ----------  ------------ -------------
 Income (loss) before taxes                        293        (21,538)      (9,388)          772         1,712
                                           ------------  -------------   ----------  ------------ -------------

     Income tax benefit (expense)                    -            (15)         154          (306)         (686)
                                           ------------  --------------  ----------  -----------   ------------
 Income (loss) from continuing
     operations                                    293        (21,553)      (9,234)          466         1,026
                                           ------------  --------------  ----------  -----------   ------------

Discontinued operation
     Loss on disposal of discontinued
        operations                                   -         (2,632)           -             -             -

     Income (loss) from operations of
        discontinued segment before taxes            -           (483)        (442)          251           671

     Applicable tax expense                                                                  100           268
                                           ------------   -------------   ---------   -----------  ------------
   Income (loss) from operations and
      disposal of discontinued segment               -         (3,115)        (442)          151           403
                                           ------------   -------------   ---------   -----------  ------------
   Net income (loss)                        $      293    $   (24,668)    $ (9,676)   $      617   $     1,429
                                           ============   =============   =========   ===========  ============

     Cumulative preferred dividends               (467)          (722)        (569)            -             -

 Net income (loss) available to common
   shareholders                             $     (174)   $   (25,390)    $(10,245)   $      617   $     1,429
                                           ============  ==============  ==========  ============ =============

Net income (loss) per share - basic and
   diluted
     From continuing operations             $     0.07    $     (5.06)    $  (2.70)   $     0.31   $      0.69
     Weighted average common shares
        --basic and diluted                      4,371          4,272        3,418         1,490         1,490
                                           ============  ==========================  ============ =============

     From discontinued operations                    -    $     (0.73)    $  (0.13)   $     0.10   $      0.27
     Weighted average common shares -
        basic and diluted                        4,371          4,272        3,418         1,490         1,490
                                           ============  ==============  ==========  ============ =============
Net income (loss) per share - basic and
   diluted
     From operations                        $     0.07    $     (5.77)    $  (2.83)   $     0.41   $      0.96
     Weighted average common shares -
        basic and diluted                        4,371          4,272        3,418         1,490         1,490
                                           ============  ==============  ==========  ============ =============
 Net income (loss) per share - basic &      $    (0.04)   $     (5.94)    $  (3.00)   $     0.41   $      0.96
    diluted for common shareholders
 Weighted average common shares - basic
    and diluted                                  4,371          4,272        3,418         1,490         1,490
                                           ============  ==============  ==========  ============ =============

</TABLE>



                                       24
<PAGE>

                          SUMMARY OF FINANCIAL POSITION

<TABLE>
<CAPTION>
<S>                                  <C>          <C>         <C>          <C>        <C>
                                                            AS OF DECEMBER 31,
                                     ----------------------------------------------------------------
                                        2002         2001        2000         1999         1998
                                     ------------ ----------- ------------ ----------- --------------
                                                  (in thousands, except per share data)

Cash and cash equivalents             $      826   $     201   $      362   $      47   $         60
Working capital (deficit)                (12,127)    (15,618)     (13,765)     (1,542)        (1,745)
Total Assets                              11,907      12,808       35,120       6,696          5,279
Long-term obligations                      8,670       6,093          728           -              -
Shareholders' equity (deficit)        $  (15,259)  $ (14,310)  $   11,080   $     505   $       (981)

</TABLE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     Certain  statements  set forth in  Management's  Discussion and Analysis of
Financial  Condition  and  Results  of  Operations  constitute  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
the Private  Securities  Litigation  Reform Act of 1995,  and are subject to the
safe  harbor  created  by such  sections.  When used in this  report,  the words
"believe,"  "anticipate,"  "estimate,"  "expect," "plans,"  "intend,"  "likely,"
"will"  and  similar  expressions  are  intended  to  identify   forward-looking
statements. All statements,  other than statements of historical facts, included
or incorporated by reference in this Form 10-K which address activities, events,
or developments  which the Company  expects or anticipates  will or may occur in
the future,  including statements regarding the Company's  competitive position,
the successful  development of its software products,  the impact on the Company
of actual or proposed regulatory changes, the Company's  expectations  regarding
the  adequacy  of  current  financing  arrangements,  product  demand and market
growth, and other statements regarding future plans and strategies,  anticipated
events  or  trends  and  similar  expressions  concerning  matters  that are not
historical facts are forward-looking  statements.  These statements are based on
certain  assumptions and analyses made by the Company in light of its experience
and its perception of historical trends, current conditions, and expected future
developments  as well as  other  factors  it  believes  are  appropriate  in the
circumstances.   The  Company's  future  financial   performance   could  differ
significantly  from  that  set  forth  herein,  and  from  the  expectations  of
management.   Important  factors  that  could  cause  the  Company's   financial
performance to differ  materially  from past results and from those expressed in
any forward looking statements  include,  without  limitation,  the inability to
obtain additional capital resources, variability in quarterly operating results,
customer concentration,  product acceptance, long sales cycles, long and varying
delivery  cycles,  the  Company's  dependence  on  business  partners,  emerging
technological standards,  changing regulatory standards,  inability to retain or
hire   experienced   and   knowledgeable   employees,   risks   associated  with
acquisitions,   increased  regulation  of  the  health  care  industry,   future
consolidation  of the health care  industry,  potential  liability in connection
with the Department of Labor investigation or IRS audit, the need to develop new
and  enhanced  products,  product  delays and  errors,  competition,  difficulty
protecting  intellectual  property rights,  and the risk factors detailed in the
Company's  Registration  Statement on Form S-4 (File No.  333-96529)  and in the
Company's  periodic  reports filed with the Securities and Exchange  Commission.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements, which speak only as of their dates. This Management's Discussion and
Analysis of  Financial  Condition  and Results of  Operations  should be read in
conjunction with the Company's  consolidated  financial statements and the notes
thereto.  The  Company  assumes  no  obligation  to  update  publicly  any  such
forward-looking  statements,  whether  as a result  of new  information,  future
events, or otherwise.

     The following is a discussion of the consolidated  financial  condition and
results of operation of the Company for the three years ended  December 31, 2002
and certain factors that will affect the Company's financial condition. In these
discussions,  most  percentages  and  dollar  amounts  have been  rounded to aid
presentation;  as a result, all such figures are  approximations.  References to
such approximations have generally been omitted.



                                       25
<PAGE>

     As more  fully  explained  in Notes 1 and 2 to the  Consolidated  Financial
Statements,  MCS, Inc. is considered to have acquired Simione Central  Holdings,
Inc. on March 7, 2000, and the historical  financial statements of the "Company"
as  discussed  herein  for  periods  prior to march 7,  2002 are  therefore  the
historical  financial  statements of MCS, Inc. only,  except where  specifically
noted.  Also as discussed  in Note 2, the Company  discontinued  its  Consulting
business  segment  in  September  of  2001  and  the  operating  results  of the
Consulting  segment have been separately  presented in the financial  statements
for the years 2001 and 2000 as a discontinued operation.

OVERVIEW

     CareCentric,  Inc.  (formerly  known as  Simione  Central  Holdings,  Inc.)
("CareCentric" or the "Company") is a leading provider of enterprise information
technology systems and related services and consulting services designed to help
home health care providers more effectively  operate their businesses in today's
environment.  The  Company's  focus  is  to  help  home  health  care  providers
streamline  their  operations and better serve their  patients.  Currently,  the
Company is moving  forward to leverage  its long  history and success to migrate
its product solutions to new technology  platforms that are currently in design.
These new technology  platforms are being designed to: create long term scalable
technology  platforms using state of the art technologies;  streamline real-time
customer  service,  shorten  decision cycles for our customers;  add new product
solutions;  and  revolutionize  customer  options,  while  meeting the  business
requirements of the enterprises  served.  CareCentric  currently  offers several
comprehensive  software solutions.  Each of these solutions provides a basic set
of software  applications  and  specialized  modules which can be added based on
customer  demand.  These software  solutions are designed to enable customers to
provide  clinical  care  management,  administrative,  operating  and  financial
solutions  and payment  processing  efficiencies.  In  addition to its  software
solutions and related software support services,  CareCentric's home health care
consulting services assist providers in addressing the challenges of:

     o    reducing costs;
     o    regulatory compliance;
     o    maintaining quality;
     o    streamlining operations;
     o    re-engineering organizational structures; and
     o    leveraging best practice solutions
     o    accelerate payment reimbursement


CareCentric has over 1,500 customers nationwide in the following categories:


     o    hospital-based companies;
     o    home health care providers;
     o    alternate-site care organizations;
     o    home medical equipment providers;
     o    integrated delivery systems (IDN);
     o    home infusion therapy providers; and
     o    government-managed organizations
     o    respiratory service providers


     The Company defines  recurring  revenues as revenues derived under software
support   agreements,   whether   annual  or  otherwise.   These  revenues  were
approximately $12.1 million, or 55.0% of total net revenues,  for the year ended
December 31, 2002, $11.3 million,  or 55.1% of total net revenues,  for the year
ended December 31, 2001 and $12.5 million,  or 57.1% of total net revenues,  for
the year ended December 31, 2000.

     The Company  believes that  continued  development  and  enhancement of its
software  systems are critical to its future success,  and anticipates  that the
total  amount of research and  development  expense  will  increase,  but should
decrease as a  percentage  of total net  revenues as the Company  increases  its
revenues. Costs incurred to establish the technological  feasibility of computer
software  products  are  expensed  as  incurred.  The  Company's  policy  is  to
capitalize  costs  incurred  between  the  point of  establishing  technological
feasibility and general release only when such costs are material. For the years
ended December 31, 2002, 2001 and 2000, the Company had no capitalized  computer
software and development costs.

CRITICAL ACCOUNTING POLICIES

     Financial  Reporting  Release No. 60, which was released by the  Securities
and Exchange  Commission in December  2001,  requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of


                                       26
<PAGE>

financial  statements.  Note  1 of  the  Notes  to  the  Consolidated  Financial
Statements includes a summary of the significant accounting policies and methods
used in the preparation of our Consolidated Financial Statements.  The following
is a brief  discussion of the more significant  accounting  policies and methods
used by us.

General

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure of contingent  assets and  liabilities  at the dates of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting periods. The most significant  estimates and assumptions relate to the
intangible  assets,  realization  of deferred  income  taxes and the adequacy of
allowances  for returns and  doubtful  accounts.  Actual  amounts  could  differ
significantly from these estimates.

Our critical accounting policies are as follows:

     o    revenue recognition;
     o    estimate of allowance for uncollectible accounts; and
     o    valuation of long-lived and intangible assets and goodwill.

Revenue Recognition

     The Company sells its software pursuant to non-exclusive license agreements
which provide for the payment of a one-time  license fee. In accordance with the
American Institute of Certified Public  Accountants  Statement of Position 97-2,
"Revenue Recognition," these revenues are recognized when products are delivered
and the  collectability  of  fees  is  probable,  provided  that no  significant
obligations  remain  under  the  contract.  Revenues  derived  from  the sale of
software  products not requiring  significant  modification or customization are
recognized when products are delivered and  collectability  of fees is probable,
provided that no significant obligations remain under the contract. The price of
the  Company's  software  varies  depending  on the number of  software  modules
licensed and the number of users  accessing  the system and can range from under
ten thousand dollars to a few million dollars.  The Company  generally  requires
payment of a deposit  upon the  signing  of a customer  order as well as certain
additional payments prior to delivery.  As a result, the Company's balance sheet
reflects significant customer deposits.

     Third-party software and computer hardware revenues are recognized when the
related  products  are  shipped.   Software  support  agreements  are  generally
renewable  for one-year  periods,  and revenue  derived from such  agreements is
recognized  ratably  over  the  period  of  the  agreements.   The  Company  has
historically  maintained high renewal rates with respect to its software support
agreements. The Company generally charges for software implementation,  training
and technical  consulting services as well as management  consulting services on
an hourly or daily  basis.  The Company is now  offering  "tiered  pricing"  for
implementation  of new  systems  whereby  the  customer  pays a fixed  fee for a
certain  level of  packaged  services  and daily  fees for  services  beyond the
package.  Revenue is  recognized  for  instances  where  tiered  pricing is used
according  to  separately  defined  portions  of service  and  software as those
portions are completely delivered to the customer.

     Revenues for post-contract customer support are recognized ratably over the
term of the support period,  which is typically one year. Post contract customer
support  fees  typically  cover  incremental  product  enhancements,  regulatory
updates  and  correction  of  software  errors.  Separate  fees are  charged for
significant product  enhancements,  new software modules,  additional users, and
migrations to different operating system platforms.

Estimate of Allowance for Uncollectible Accounts

     The Company  continuously reviews the status of all its accounts receivable
with its customers for current collectability. The Company recognizes that there
are  circumstances  under which  customers  will delay payment  beyond the terms
offered  by the  Company  either  because  of their  own  payment  practices  or
temporary situations which need to be resolved before the customer will continue
payment.  Reserves  for  uncollectability  are  based on  various  ages of those
accounts  receivable  past their original due date for  collection.  The Company
does not write the account off  against  the reserve for  uncollectible  account
until all efforts to collect the accounts receivable have been exhausted.



                                       27
<PAGE>

Valuation of Long-Lived and Intangible Assets and Goodwill.

     The Company assesses the impairment of identifiable intangibles, long-lived
assets and related  goodwill and enterprise  level goodwill  whenever  events or
changes  in   circumstances   indicate  that  the  carrying  value  may  not  be
recoverable.  Factors the Company  considers  important  which could  trigger an
impairment review include the following:

o    significant  under-performance relative to expected historical or projected
     future operating results;
o    significant  changes in the  manner of the  Company's  use of the  acquired
     assets or the strategy for its overall business;
o    significant negative industry or economic trends.

     When the  Company  determines  that  the  carrying  value  of  intangibles,
long-lived  assets and related goodwill and enterprise level goodwill may not be
recoverable  based upon the existence of one or more of the above  indicators of
impairment,  the Company measures any impairment based on a projected discounted
cash flow method using a discount rate (20%)  determined by our management to be
commensurate  with  the risk  inherent  in our  current  business  model.  As of
December  31,  2002 no event or business  situation  had been  identified  which
indicated  the  carrying  value of the  intangibles  and  long-lived  assets and
related  goodwill and  enterprise  level of goodwill  should be adjusted.  As of
December 31, 2001, a $11.8 million impairment  adjustment was recorded resulting
in net intangible  assets amounting to $5.4 million as of December 31, 2001. See
Note 7 of the Notes to the Consolidated Financial Statements.

RESULTS OF OPERATIONS

EFFECT OF REVERSE MERGER AND  DISCONTINUED  OPERATIONS ON MANAGEMENT  DISCUSSION
AND ANALYSIS

     On March 7, 2000,  CareCentric,  Inc.  (formerly  known as Simione  Central
Holdings  Inc.)  ("CareCentric")  and MCS, Inc.  ("MCS") merged in a transaction
("the CareCentric/MCS merger," also set forth above as "the MCS/Simione merger")
accounted for as a reverse acquisition for financial reporting purposes. As more
fully discussed in Note 1 of the accompanying Financial Statements, the 2002 and
2001  Statements  of Operations  present a full year of the combined  results of
operations of the former Simione Central Holdings, Inc./MCS businesses. The 2000
Statement  of  Operations  presents  a full year of MCS  results  of  operations
combined with the results of operations for the former Simione Central Holdings,
Inc.  since  March 7, 2000.  Because of these  differences  in the  accompanying
Financial Statements,  comparison of the results of operations of the Company as
reported would be misleading, if not meaningless.

     To  present  a more  meaningful  analysis  of  operating  performance,  the
comparison  of the years  ended  December  31, 2001 and 2000  compares  the 2001
reported  Financial  Statements in the  accompanying  Financial  Statements to a
proforma 2000  statement of operating  results which combines the former Simione
Central Holdings Inc. business with MCS as if the merger had occurred on January
1, 2000.

     In  addition  to  the  proforma  information  discussed  in  the  paragraph
immediately  above,  the following  comparison  of the years ended  December 31,
2002,  2001 and 2000 have been  prepared  after  reduction in the years 2001 and
2000 for the  discontinued  operations  of the  Consulting  segment  of  Simione
Central  Holdings,  Inc. in  September of 2001.  See Note 2 to the  accompanying
Financial Statements.


                                       28
<PAGE>


COMPARISON OF YEARS ENDED DECEMBER 31, 2002 AND 2001

     Net  Revenues.  Revenues  (exclusive  of the  Consulting  segment which was
discontinued  in September  2001) were $22.0 million for the twelve months ended
December 31, 2002 and $20.4  million for the twelve  months  ended  December 31,
2001.  The $1.6  million  increase  was mostly  attributable  to an  increase in
maintenance revenues of $0.7 million to $12.1 million in 2002 from $11.4 million
in 2001,  and an increase in revenues from  software  systems of $0.7 million to
$6.8 million for the twelve months ended December 31, 2002 from $6.1 million for
the twelve months ended December 31, 2001.

     The Company believes these increases in revenues are attributable generally
to the  combined  effect of  continued  customer  account  retention,  growth of
existing customer's businesses and price increases.  The Company also recognizes
the  importance  of  successfully  introducing  new products  using more current
technologies and plans to continue to develop and invest in new products in 2003
and beyond.

     Cost of Revenues.  Cost of revenues  decreased $1.8 million,  or 22.0%,  to
$6.4  million in 2002 from $8.2 million in 2001.  As a  percentage  of total net
revenues,  cost of revenues  decreased to 29.1% in 2002 from 40.2% in 2001.  The
$1.8 million decrease resulted primarily from cost cutting combined with changes
in product mix. The decrease as a percentage of total net revenues is due to the
combined  impact of many factors  including  efficiencies  in  installation  and
support costs  resulting from the merger with MCS,  reduced sales  discounts and
changes in product mix.

     Selling,  General and Administrative.  Selling,  general and administrative
expenses  decreased  $0.9  million,  or 8.8%, to $9.8 million in 2002 from $10.7
million in 2001.  As a percentage of total net  revenues,  selling,  general and
administrative  expenses  were  44.4% in 2002 and  52.4%  in 2001.  This  dollar
decrease was attributable to synergies derived from the merger with MCS in March
2000 and cost savings initiatives completed in 2002. Cost savings were primarily
realized through the centralization of administrative  functions and elimination
of non-essential facilities.

     Research and  Development.  Research  and  development  expenses  decreased
approximately $2.7 million,  or 44.3%, to $3.4 million in 2002 from $6.2 million
in 2001.  As a  percentage  of total  net  revenues,  research  and  development
expenses  decreased  to 15.6% in 2002  from  30.1% in  2001.  The  reduction  in
research and development expenses in 2002 was primarily due to efforts to reduce
overall expenses while revamping the Company's overall product  strategies.  The
Company expects  research and  development  costs to increase in 2003 to a level
between the 2002 and 2001 reported  expenditures  and  percentages  of total net
revenues.

     Amortization and Depreciation.  Amortization and depreciation  decreased by
approximately  $2.2  million to $1.7  million in 2002 from $3.9 million in 2001.
This decrease is  attributable  to the write down of the Intangibles at December
31, 2001 in accordance with SFAS No. 121 of $11.8 million.

     Operating Loss. The Company's  operating income from continuing  operations
improved from a loss of $21.0  million for the twelve months ended  December 31,
2001 to a profit of $0.7 million for the twelve months ended  December 31, 2002.
This increase resulted from the combined effect of increases in sales,  improved
gross  profit  margins  and  reductions  in  all  reported   operating   expense
categories.

     Other Income  (Expense).  Interest  expense related to borrowings under the
Company's line of credit agreements and capital lease  obligations  decreased by
approximately  $0.6 million to $0.7 million for the twelve months ended December
31, 2002 from $1.3 million for the twelve  months ended  December 31, 2001.  The
Company  expects  interest  expense  in 2003 to be  comparable  to that of 2002.
Interest and other income  consist  principally  of interest  income  related to
customer  finance  charges.  The  Company's  short-term  cash  investments  were
materially  unchanged  at $45,000 and $37,000 for the years ended  December  31,
2002 and December 31, 2001 respectively.

     Income Taxes.  The Company has not incurred or paid any substantial  income
taxes since March 2000. At December 31, 2002, CareCentric had net operating loss
("NOL")  carryforwards  for  federal  and state  income  tax  purposes  of $38.5


                                       29
<PAGE>

million.  Such losses expire beginning in 2008, if not utilized.  The Tax Reform
Act of 1986, as amended,  contains  provisions that limit the NOL and tax credit
carryforwards  available to be used in any given year when certain events occur,
including  additional sales of equity securities and other changes in ownership.
As a  result,  certain  of the NOL  carryforwards  may be  limited  as to  their
utilization  in any year.  The Company has concluded that it is more likely than
not that these NOL  carryforwards  will not be  realized  based on a weighing of
available  evidence at December 31, 2002, and  accordingly,  a 100% deferred tax
valuation  allowance has been recorded against these assets.  See Note 10 to the
accompanying Financial Statements.

COMPARISON OF YEARS ENDED DECEMBER 31, 2001 AND 2000

     Net  Revenues.  Revenues,  exclusive of the  Consulting  segment  which was
discontinued  in September  2001, were $20.4 million for the twelve months ended
December 31, 2001 and $21.9  million for the twelve  months  ended  December 31,
2000.  The $1.5  million  decrease  was mainly  attributable  to a reduction  in
maintenance revenues of $1.1 million to $11.4 million in 2001 from $12.5 million
in 2000.  Revenues from  software  systems was unchanged at $9.5 million in both
2001 and 2000.

     The Company believes the reduction in revenues was  attributable  generally
to adverse economic  conditions  prevailing in the home healthcare  marketplace.
Additionally, the Company believes certain customers were reluctant to invest in
existing  software  systems  while new products  with  technologically  advanced
platforms were under initial development..

     Cost of Revenues.  Cost of revenues  decreased $1.0 million,  or 11.1%,  to
$8.2  million in 2001 from $9.2 million in 2000.  As a  percentage  of total net
revenues,  cost of revenues  decreased to 40.2% in 2001 from 42.3% in 2000.  The
$1.0 million decrease  resulted  primarily from cost cutting,  product mix and a
slight decrease in revenues for software  systems.  The decrease as a percentage
of total net  revenues is due to the combined  impact of many factors  including
efficiencies  in  installation  and support costs resulting from the merger with
MCS, reduced sales discounts and changes in product mix.

     Selling,  General and Administrative.  Selling,  general and administrative
expenses  decreased $1.5 million,  or 12.3%, to $10.7 million in 2001 from $12.2
million in 2000.  As a percentage of total net  revenues,  selling,  general and
administrative  expenses  were  52.4% in 2001 and  55.8%  in 2000.  This  dollar
decrease was attributable to synergies  derived from the merger and cost savings
initiatives  implemented  in 2000 and  continued  in  2001.  Cost  savings  were
primarily  realized through the  centralization of administrative  functions and
elimination of non-essential facilities and excess capacity.

     Research and  Development.  Research  and  development  expenses  decreased
approximately $0.8 million,  or 11.4%, to $6.2 million in 2001 from $6.9 million
in 2000.  As a  percentage  of total  net  revenues,  research  and  development
expenses  decreased  to 30.1% in 2001 from  31.8% in 2000.  The  continued  high
expenditure of research and  development  funds was  attributable to development
effort on all  continuing  products,  but  especially  for  Smart  Clipboard(R),
PharmMed(R) and HM Express(TM).

     Amortization and Depreciation.  Amortization and depreciation  decreased by
approximately  $0.3  million to $3.9  million in 2001 from $4.2 million in 2000.
This  decrease is  attributable  to the net effect in preparing  these  Proforma
comparisons   eliminating   the   discontinued   consulting   business  and  the
amortization and  depreciation  expense of MCS from January 1 2000 through March
7,  2000,  the  MCS  merger  date.  See  Note 6 and  Note 7 to the  accompanying
Financial Statements.

     Impairment Loss - Intangible  Assets.  As more fully discussed in Note 7 to
the Financial  Statements,  and in accordance with Financial Accounting Standard
121, the Company is required to periodically  review the value of its intangible
assets. The Company's intangible assets were capitalized in conjunction with the
MCS merger on March 7,  2000.  At the end of the  fourth  quarter of 2001,  that
review  resulted in an $11.8  million  write down,  or  impairment  loss, of the
intangible assets of the Company.  The major reasons for the impairment were new
technologies  being  integrated  in the  Company's  current and future  products
causing its existing product platforms to have smaller future revenue generation


                                       30
<PAGE>

capability,  and an expectation  that immediate  opportunities  for new software
sales were lower than forecasted at the time of the merger with MCS.

     Restructuring  Charge.  The restructuring  charge of $675,000 resulted from
the Company  approving a plan in April 2001 to close one remote  support  office
and to downsize the  workforce at its remaining  facilities.  As of December 31,
2001, that plan was fully completed and the restructuring  charge was completely
expended.

     Operating Loss. The Company's  operating loss from  continuing  operations,
reflecting  the  same  assumptions  as  above  for  purposes  of  comparability,
increased  from $10.8 million for the twelve  months ended  December 31, 2000 to
$21.5 for the twelve months ended  December 31, 2001.  Without the impact of the
Impairment  Loss  -  Intangible  Assets,  the  operating  loss  from  continuing
operations decreased from $10.8 million for the twelve months ended December 31,
2000 to $9.7  million  for the twelve  months  ended  December  31,  2001.  This
decrease in operating loss from continuing  operations,  before impairment loss,
is  primarily  due to the  reductions  in  selling  general  and  administrative
expenses.  Additionally,  continued  high  levels of  research  and  development
expenditures  over the last two  years  are a  material  cause of the  recurring
operating loss from continuing operations.

     Other Income  (Expense).  Interest  expense related to borrowings under the
Company's line of credit agreements and capital lease  obligations  increased by
approximately  $0.5 million to $1.3 million for the twelve months ended December
31, 2001 from $0.8  million  for the twelve  months  ended  December  31,  2000.
Interest and other income  consist  principally  of interest  income  related to
customer  finance charges and the Company's short term cash investments and have
decreased by  approximately  $31,000.  The Company expects further  increases in
interest expense in 2002 due to increased borrowing.

     Income Taxes.  The Company has not incurred or paid any substantial  income
taxes since March 2000. At December 31, 2001, CareCentric had net operating loss
("NOL")  carryforwards  for  federal  and state  income  tax  purposes  of $36.7
million.  Such losses expire beginning in 2010, if not utilized.  The Tax Reform
Act of 1986, as amended,  contains  provisions that limit the NOL and tax credit
carryforwards  available to be used in any given year when certain events occur,
including  additional sales of equity securities and other changes in ownership.
As a  result,  certain  of the NOL  carryforwards  may be  limited  as to  their
utilization  in any year.  The Company has concluded that it is more likely than
not that these NOL  carryforwards  will not be  realized  based on a weighing of
available  evidence at December 31, 2001, and  accordingly,  a 100% deferred tax
valuation  allowance has been recorded against these assets.  See Note 10 to the
accompanying Financial Statements.

     The income tax benefit of $154,000 reflected in the accompanying  Financial
Statements for 2000 relates  primarily to losses incurred by MCS between January
1, 2000 and March 7, 2000 while it was a  subsidiary  of Mestek.  The income tax
benefit  arises from the  inclusion of MCS's results for this period in Mestek's
consolidated federal and state income tax filings for 2000.

     Loss on Discontinued  Operations.  As more fully described in Note 7 of the
accompanying  Financial  Statements,  the Company  completed the sale of certain
assets of the  Consulting  business  segment  and  discontinued  its  Consulting
business on September 28, 2001. The loss from the discontinuance of the business
was $3.1 million,  which  resulted  mainly from the write off of $2.6 million of
intangible  assets  recorded as associated  with the Consulting  business at the
time of the merger with MCS.

     Loss from  Operations of Discontinued  Segment.  The loss of ($483,000) for
the twelve months ended  December 31, 2001 from  operations of the  discontinued
Consulting segment compares to a (loss) for the twelve months ended December 31,
2000 of ($442,000).

QUARTERLY FINANCIAL RESULTS

     The  Company's  quarterly  operating  results  have  been and  will  likely
continue to be subject to significant fluctuations.  Revenues can be expected to
vary  significantly  as  a  result  of  the  acceleration  or  delay  of  system
implementations  due to  customer  requirements  or  other  factors  beyond  the
Company's control,  fluctuations in demand for existing systems and services and
the Company's ability to manage successfully any future growth. The sales cycles


                                       31
<PAGE>

related to its systems offerings can be long and difficult to predict, resulting
in variability of revenues.  In addition,  the implementation  period related to
new  installations  of the  Company's  information  systems can range from a few
months to one year while add-ons can occur more quickly. The unpredictability of
revenues  could in any  quarter  result in a  shortfall  relative  to  quarterly
expectations. Many other factors may contribute to fluctuations in the Company's
operating  results.  Accordingly,  the Company  believes  that  period-to-period
comparisons of results of operations are not  necessarily  meaningful and should
not be relied upon as any indication of future performance.

LIQUIDITY AND CAPITAL RESOURCES

     In November  1999,  CareCentric,  prior to the merger with MCS and when its
pre-merger  name was Simione Central  Holdings,  Inc.  (Simione),  received $1.6
million  of  loans  from  Mestek  ($850,000)  and two  stockholders  of  Simione
($750,000),  Barrett C. O'Donnell and David Ellis,  to fund operating  needs and
continue the execution of product  strategies in the fourth quarter of 1999. The
$850,000  loan from Mestek was  converted  into  850,000  shares of newly issued
Series C  Preferred  stock of  Simione at the  closing of the MCS merger  having
170,000  common  shares  votes  and  which  were  entitled  to an  11.0%  annual
cumulative dividend. The loan from Mr. O'Donnell along with $100,000 in deferred
salary were exchanged for a $600,000 subordinated note,  convertible into common
stock at $2.51 per share,  with  interest at 9% per annum and a maturity date of
August 8, 2005.  In January  2002,  this loan was amended to change the interest
rate to prime plus two  percent  and to change the terms of payment of  interest
for 2002 to require  that  one-half of the accrued  interest be timely paid each
quarter and the balance to be paid on December 31, 2003 or to be converted  into
an additional convertible note. The loan from Dr. Ellis was paid in full on July
12, 2000 from the credit facility provided by Wainwright Bank and Trust Company.
See Note 6 to the accompanying Consolidated Financial Statements.

     In February  2000,  Simione  received an  additional  $1.0  million of loan
proceeds from Mestek.  The loan proceeds were used to fund  Simione's  operating
needs until  completion  of the merger with MCS,  and carried the same terms and
security as a $3.0 million loan received from Mestek in September 1999. On March
7, 2000,  the merger with MCS was completed and Mestek's  notes  evidencing  the
$1.0 million and $3.0 million loans, together with an additional $2.0 million in
cash from Mestek,  were converted into Series B Preferred Stock and a warrant to
purchase  CareCentric  common  stock as more  fully  explained  in Note 6 to the
accompanying  Consolidated  Financial  Statements.   The  consolidation  of  the
accounts  receivable  of MCS into  the then  outstanding  balance  of  Simione's
accounts receivable provided an additional $1.5 million of borrowing capacity on
the $5.0 million bank line of credit established by Simione in September 1999.

     Immediately after the Simione/MCS  merger on March 7, 2000, the Company had
cash and cash  equivalents of $3.5 million and short and long term debt from all
sources  of  $2.5  million,   for  a  positive  net   cash/(debt)   position  of
approximately $1.0 million.  In order to supplement its capital  resources,  the
Company,  subsequent to the merger,  undertook a search for  additional  capital
resources. On June 22, 2000, the Company closed a financing with John E. Reed, a
CareCentric  director  and the chief  executive  officer of Mestek,  of up to $7
million.  The  financing  consisted  of $1 million  in equity,  and a $6 million
subordinated revolving line of credit facility, convertible into common stock of
CareCentric,  with a 9% interest rate and five-year maturity.  On July 12, 2000,
the Company closed a financing with Wainwright Bank and Trust Company for access
to a $6.0 million revolving line of credit, which was guaranteed by Mestek, Inc.
These  three  transactions  are  described  in  greater  detail in Note 6 to the
accompanying  Consolidated  Financial Statements and resulted in the creation of
the following credit and debt facilities and preferred equity securities:



                                       32
<PAGE>
<TABLE>
<CAPTION>
<S>                                        <C>              <C>                             <C>
                           CREDIT AND DEBT AND PREFERRED EQUITY SECURITIES IN JULY 2000
-------------------------------------------------------------------------------------------------------------------
                 SOURCE                       FUNDING                   FORM                     DATE CLOSED
-----------------------------------------  ---------------  ------------------------------  -----------------------

Barrett C. O'Donnell                        $    600,000    Convertible Note                  November 11, 1999

Mestek, Inc.                                $  6,000,000    Convertible Preferred Stock         March 7, 2000
                                                            Series B; 9% cumulative
                                                            dividend

Mestek, Inc.                                $    850,000    Preferred Stock Series C;           March 7, 2000
                                                            11% cumulative dividend

John E. Reed                                $  1,000,000    Convertible Preferred Stock         June 22, 2000
                                                             Series D; 9% cumulative
                                                            dividend

John E. Reed                                $  6,000,000    Line of Credit                      June 22, 2000

Wainwright Bank and Trust Company           $  6,000,000    Line of Credit                      July 12, 2000
                                           ---------------
                                            $ 20,450,000
                                           ===============
</TABLE>

     Throughout  2000 and 2001,  advances  were made on the John E. Reed line of
credit such that on December 31, 2001, the  outstanding  amount under the Credit
Facility was $3.5 million, $1.0 million of which was participated to Mestek, and
the  balance of which was  retained  by Mr.  Reed.  On December  31,  2001,  the
facility was amended to change the interest  rate to prime plus two percent,  to
change the payment terms for unpaid 2001 interest to require payment at December
31, 2003 or to convert the outstanding unpaid interest to additional convertible
notes in the amount of $184,438 at the option of Mr. Reed,  and in the amount of
$40,463 at the option of Mestek,  and to change the terms of payment of interest
for 2002 to require that one-half be timely paid each quarter and the balance to
be paid on December 31, 2003 or to be converted to additional convertible notes.

     During  2000 and  2001,  the  Company  became  obligated  under an 18 month
unsecured  promissory  note in the  principal  amount of  $1,019,000  payable to
Mestek which earned interest at prime plus one and one half percent (1.5%), with
interest payable semiannually and which matured on September 30, 2003. This note
covers funds  advanced by Mestek to  CareCentric  to cover  payroll and accounts
payable obligations  incurred by the Company during the period of its transition
of senior lenders from Silicon Valley Bank to Wainwright Bank and Trust Company,
accrued and unpaid interest thereon and the unreimbursed portion of Mr. R. Bruce
Dewey's salary for the periods from November 9, 1999 to October 31, 2001.

     Also during 2000, 2001 and the first quarter of 2002, the Company  incurred
operating  losses  resulting  from  numerous  factors,  including  the uncertain
operating  condition of its customers due to the negative effects of the current
government limits over home medical cost reimbursement,  higher than anticipated
costs of developing,  implementing and supporting The Smart Clipboard(R) product
and slower than  expected  completion  of effective  integration  of the MCS and
Simione Central organizations. In addition, sales revenue in 2000 was lower than
planned in the core  MestaMed(R),  DME VI and STAT2  products while new sales of
The Smart  Clipboard(R) and Tropical products (now discontinued) did not develop
as quickly as projected.

     On April 8, 2002,  the  Company  secured  two  commitments  for  additional
financing,  from existing  shareholders John Reed and Mestek,  Inc. Mr. Reed and
Mestek   provided   $871,117  and  $1,092,000  in  short-term   debt  financing,
respectively.

     Also on April 8, 2002, the Company  initialized a  recapitalization  of its
interest bearing debt and preferred  equity  instruments.  The  recapitalization
plan was  approved  by the  Company's  shareholders  at the June 6, 2002  annual
stockholders  meeting and  completed  on July 1, 2002.  See Notes 6 and 8 to the
accompanying Financial Statements for the impact of the recapitalization plan on


                                       33
<PAGE>

each class of debt and preferred  stock.  As of December 31, 2002, and including
the effect of the completed recapitalization plan, the Company's credit and debt
facilities and related preferred equity securities consisted of the following:
<TABLE>
<CAPTION>
<S>                                        <C>               <C>                            <C>
                       CREDIT AND DEBT AND PREFERRED EQUITY SECURITIES AT DECEMBER 31, 2002
-------------------------------------------------------------------------------------------------------------------
                 SOURCE                        FUNDING                   FORM                     DATE CLOSED
-----------------------------------------  ----------------- ------------------------------ -----------------------

Barrett C. O'Donnell                        $      600,000   Convertible Note maturing         November 11, 1999
                                                             June 30, 2007

Mestek, Inc.                                $    6,000,000   Convertible Preferred Stock         March 7, 2000
                                                             Series B; 9% cumulative
                                                             dividend

John E. Reed                                $    1,000,000   Convertible Preferred Stock         June 22, 2000
                                                             Series D; 9% cumulative
                                                             dividend

Mestek, Inc.                                $    4,000,000   Convertible deferred interest        July 1, 2002
                                                             Note maturing June 30, 2007

John E. Reed                                $    3,555,555   Convertible deferred interest        July 1, 2002
                                                             Note maturing June 30, 2007

John E. Reed                                $      103,818   Capitalized deferred interest        July 1, 2002
                                                             Note maturing June 30, 2007

Wainwright Bank and Trust Company           $    6,000,000   Line of Credit                      July 12, 2000
                                           -----------------
                                            $   21,259,373
                                           =================
</TABLE>

     The John E. Reed and Mestek,  Inc.  debt and equity  amounts  have all been
fully funded to the Company as of December  31,  2002.  Between July 1, 2002 and
December 31, 2002, the Company paid off $1.4 million of the Wainwright  Bank and
Trust Company line of credit resulting in an outstanding balance of $4.5 million
at December 31, 2002.

     During the months of January and February of 2003, the Company has paid off
an additional $0.3 million on the Wainwright  Bank line of credit,  resulting in
$1.8 million of unused  credit  capacity as of February  28,  2003.  The Company
believes the  combination of the funds  available from cash to be generated from
future  operations and the  Wainwright  Bank facility will be sufficient to meet
the  Company's  operating  requirements  through  at least  December  31,  2003,
assuming no material adverse change in the operation of the Company's  business.
See also Note 17 to the Financial Statements.

     The  table  below  summarizes  the  Company's  debt and  other  contractual
obligations at December 31, 2002:
<TABLE>
<CAPTION>
   <S>                          <C>               <C>                <C>              <C>
                                                     PAYMENTS DUE BY PERIOD
                                ---------------------------------------------------------------------
     CONTRACTUAL OBLIGATIONS         TOTAL        LESS THAN 1 YEAR    2-3 YEARS       4 - 6 YEARS
                                ----------------  ---------------------------------------------------

   Long-Term Debt                $    8,520,000    $            -   $           -   $      8,520,000
   Capital Lease Obligations                  -                 -               -                  -
   Operating Leases                   2,647,000           744,000       1,300,000            603,000
   Line of Credit                     4,525,000         4,525,000               -                  -
   Other Long-Term Obligations        1,252,000         1,102,000         150,000                  -
                                ----------------  ---------------- --------------- ------------------
   Total Contractual Cash
   Obligations                   $   16,944,000    $    6,371,000   $   1,450,000   $      9,123,000
                                ================  ================ =============== ==================
</TABLE>


                                       34
<PAGE>



     As of December 31, 2002, the Company had negative  working capital of $12.1
million and cash equivalents of $0.8 million.  The Company's current liabilities
as of December 31, 2002 include  customer  deposits of $1.5 million and unearned
revenues of $4.2 million.

     Net cash  provided by (used in)  operating  activities  for the years ended
December 31, 2002, 2001 and 2000 was ($0.8)  million,  ($3.9) million and ($7.2)
million,  respectively.  Cash used in 2002  principally  funded operating losses
which  occurred in the first  quarter of 2002.  The  significant  reductions  in
negative  cash flow from  operations  during the three years ended  December 31,
2000 to  December  31,  2002 have  greatly  improved  the  Company's  ability to
maintain the liquidity it needs to manage its business.  The improvement in cash
flow is the result of  reductions  in all reported  areas of  operating  expense
including cost of revenues,  selling,  general and  administrative  expenses and
research and development. These reduced expenses, as more specifically discussed
in Management's  Discussion and Analysis of Operations,  have resulted from cost
efficiencies  derived from the merger of MCS, Inc. and Simione Central Holdings,
Inc.,  more efficient use of research and  development  resources  combined with
active  efforts  by the  Company  to  license  the  rights  to sell  non-Company
developed  software,  and stringent cost control  procedures by the  reorganized
management  team  during  2002.  Management  of the Company  expects  these same
actions to be continued  such that the improved cash liquidity of the Company is
repeated with the intent to direct this liquidity at future product initiatives.

     Cash flows  from  financing  activities  during  the  twelve  months  ended
December 31, 2002 include John E. Reed and Mestek,  Inc.  borrowings made before
the  recapitalization  plan was  completed  on July 1,  2002.  During the twelve
months  ended  December 31, 2002,  the Company  achieved a net  reduction in the
Wainwright Line of Credit outstanding of $1.1 million.

     Inflation  has not had, and is not  expected to have, a material  impact on
the Company's  operations.  If inflation increases,  the Company will attempt to
increase its prices to offset  increased  expenses.  No assurance  can be given,
however,  that the Company  will be able to  adequately  increase  its prices in
response to inflation.


IMPACT OF NEW ACCOUNTING STANDARDS

     On December 3, 1999, the SEC released Staff  Accounting  Bulletin 101, (SAB
101) "Revenue  Recognition in Financial  Statements." This bulletin  established
more clearly  defined  revenue  recognition  criteria than  previously  existing
accounting  pronouncements.  On June 26, 2000, the SEC released SAB 101B,  which
delayed the  required  implementation  of SAB 101 until no later than the fourth
quarter of fiscal years ending  December 31, 2000.  The effects of this bulletin
were not material to the Company's financial position,  results of operations or
cash flow.

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
Business  Combinations and SFAS No. 142,  Goodwill and Other Intangible  Assets.
SFAS No. 141  addresses  financial  accounting  and  reporting  for all business
combinations and requires that all business combinations entered into subsequent
to June  2001 be  recorded  under  the  purchase  method.  This  statement  also
addresses  financial  accounting and reporting for goodwill and other intangible
assets acquired in a business combination at acquisition. SFAS No. 142 addresses
financial  accounting and reporting for intangible assets acquired  individually
or with a group of other assets at  acquisition.  This  statement also addresses
financial  accounting  and  reporting for goodwill and other  intangible  assets
subsequent to their acquisition. These statements were adopted by the Company on
January 1, 2002. Under SFAS 142, goodwill is no longer  amortized.  In the place
of amortization, the Company is required to periodically review the valuation of
the  Company's  intangible  assets  using  a  discounted  cash  flow  estimation
approach.  Following the accounting for impairment discussed  immediately below,
which was made under the rules of SFAS 121, the Company believes that the effect
of  adopting  SFAS No. 141 and 142 will be  limited  to changes in  amortization
expense for the periods after  December 31, 2001.  Prior to adoption of SFAS No.
142, the Company had an  intangible  asset  classified  as  Assembled  workforce
valued at $500,000 after accounting for impairment discussed  immediately below.
The assembled workforce  intangible asset has been  recharacterized as goodwill,
under the rules of SFAS No. 142, which will not be amortized.  There has been no
event or indicator  identified  by the Company  through  February 28, 2003 which


                                       35
<PAGE>

indicates  there  has been any  impairment  in the  $500,000  value of  Goodwill
included in the  Company's  Statement of Financial  Condition for the year ended
December 31, 2002.

     Accounting for impairment.  For the years ended December 31, 2001 and 2000,
the Company  reported its accounting  for intangible  assets under SFAS No. 121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
Be Disposed Of, and the accounting  and reporting  provisions of APB Opinion No.
30.  Under the rules of SFAS 121,  the Company  performed  periodic  analysis to
determine  if  the  Company's  intangible  assets  had  been  impaired  using  a
combination of discounted and undiscounted  estimated cash flow estimations.  In
the fourth quarter of 2001, the Company  determined  that the combination of new
technologies being integrated in the Company's current and future products would
result  in  its  existing  product   platforms  having  smaller  future  revenue
generation capability.  Additionally,  the Company determined that the continued
support of existing  products while migrating to new technology  platforms would
result in a lower estimated cash value to the Company of existing products.  The
resulting  impairment to the intangible assets of the Company was $11.8 million.
See Note 7 of the Financial Statements.

     On  October  3,  2001,  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment  or Disposal  of  Long-Lived  Assets,"  that  replaced  SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To
Be Disposed  Of." The primary  objectives  of this  project  were to develop one
accounting  model  based  on the  framework  established  in  SFAS  No.  121 for
long-lived  assets  to be  disposed  of by  sales  and  to  address  significant
implementation issues. The accounting model for long-lived assets to be disposed
of by sale applies to all long-lived assets,  including discontinued operations,
and replaces the  provisions  of Account  Principles  Board (APB Opinion No. 30,
Reporting Results of  Operations-Reporting  the Effects of Disposal of a Segment
of a Business, for the disposal of segments of a business. SFAS No. 144 requires
that those long-lived assets be measured at the lower of carrying amount or fair
value  less  cost  to  see  whether  reported  in  continuing  operations  or in
discontinued  operations.  Therefore,  discontinued operations will no longer be
measured at net realizable  value or include  amounts for operating  losses that
have not yet occurred.  The effect of adoption of SFAS No. 144 effective January
1,  2002  had no  material  to the  Company's  financial  position,  results  of
operations or cash flow.

     On December 31, 2002, FASB issued FASB No. 148, "Accounting for Stock-Based
Compensation--Transition  and Disclosure."  This Statement amends FASB Statement
No. 123, Accounting for Stock-Based Compensation, to provide alternative methods
of transition  for companies  that  voluntarily  change to the  fair-value-based
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  amends  the  disclosure  requirements  of  FASB  No.  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results.  The Company does not believe FAS 148 will have
a material effect on its financial statements.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As of December 31, 2002, the Company's obligations include fixed rate notes
payable and a variable  rate line of credit bank note with  aggregate  principal
balances of  approximately  $13.0  million which mature at various dates through
2005.  The Company is exposed to the market  risk of  significant  increases  in
future interest rates.  Each incremental  point in the prime interest rate would
increase the Company's interest expense by approximately $45,000 per year.

     At December 31, 2002, the Company had accounts  receivable of approximately
$4.6 million (net of an allowance for doubtful accounts of $1.3 million).  These
amounts compare to accounts  receivable of approximately $4.2 million (net of an
allowance  for doubtful  accounts of $1.0  million) at December  31,  2001.  The
Company  is  subject  to a  concentration  of credit  risk  because  most of the
accounts receivable are due from companies in the home health care industry.




                                       36
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     Financial  Statements  and  Supplementary  Data appear on pages 47 to 77 of
this Annual Report on Form 10-K.


ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
     FINANCIAL DISCLOSURE

     Not applicable.


PART III


ITEM 10.  DIRECTORS AMD EXECUTIVE OFFICERS OF THE COMPANY

EXECUTIVE MANAGEMENT OF THE REGISTRANT
<TABLE>
<CAPTION>
         <S>                                   <C>    <C>
         John R. Festa....................      51     Chief Executive Officer, President and
                                                              Director
         Mark A. Kulik....................      45     Senior Vice President of Sales and
                                                            Marketing
         Michael Quinn....................      49     Senior Vice President of Operations
         Ana M. McGary....................      41     Senior Vice President of Human Resources
                                                            and Administration
         George M. Hare...................      48     Senior Vice President and Chief
                                                            Financial Officer
</TABLE>

     John R. Festa became  President and Chief Executive  Officer of the Company
on November 1, 2001. Prior to joining the Company,  Mr. Festa served as Managing
Director  and  General  Partner  of  the  EGL  III  venture  capital  funds,  an
Atlanta-based  family of venture investment firms. Prior to founding the EGL III
Funds in 1999 with his  partners,  Mr. Festa was  President  and CEO of Iterated
Systems,  a software  manufacturer of high-end image and image asset  management
products,  from 1994 to 1998 and  President  and CEO of BuyPass  Corporation,  a
national leader in software and processing  systems for all forms of transaction
payments and medical  claims  processing  from 1984 to 1994.  Prior to 1984, Mr.
Festa held various senior positions in American Express Company and Citicorp.

     Mark A. Kulik  became  Senior  Vice  President  of Sales and  Marketing  of
CareCentric  in October  2000.  Mr.  Kulik has spent the majority of his 21-year
career in the healthcare industry including hospital supply  distribution,  home
health care, home medical equipment,  home infusion,  and healthcare information
management.  Prior to joining  CareCentric,  Mr. Kulik served as Executive  Vice
President for several health care management and information  service companies,
the most recent being Healthcare  Credentials  Management Services from December
1998 to February 2000 and Equifax Healthcare Information Services from July 1994
to December 1998.  Earlier in his career, he served as Area  Vice-President  for
Abbey/Foster Medical, Inc. from July 1986 to February 1991.

     Michael  Quinn served as Senior Vice  President of  Operations of MCS, Inc.
since 1985 and became an officer of  CareCentric  upon the merger with MCS, Inc.
when he became Senior Vice  President of Operations,  responsible  for corporate
resources and customer  support.  He was a director of MCS, Inc. from 1992 until


                                       37
<PAGE>

the  merger  with  Simione.  From 1977 to 1985,  Mr.  Quinn  worked  in  various
programming  and  sales   capacities  for  MCS,  Inc.  and  its  parent  company
supervising sales, product development and product support.

     Ana M. McGary has served as Senior Vice  President of Human  Resources  and
Administration  of CareCentric  since April 1999. Ms. McGary is responsible  for
all aspects of human resource employee and management development.  In August of
2000 Ms. McGary was elected Secretary of the Company.  From 1992 until 1999, Ms.
McGary  managed  human  resources  for  several  business  units of  First  Data
Corporation.  She has led and managed many  recruiting  and  training  teams for
various  companies  through the U.S. Her  experience  includes  company  culture
transformations,  strategic planning and senior management development. In 1999,
she received her Professional Human Resource  Certification  (PHR) from Kennesaw
State University in Marietta,  Georgia. She is a member of the Society for Human
Resources Management and the American Society of Corporate Secretaries.

     George M. Hare has  served as Senior  Vice  President  and Chief  Financial
Officer of  CareCentric,  Inc. since April 2002. Mr. Hare  previously  served as
Chief Financial  Officer of the Company from March 1999 until April 2000.  Prior
to joining  CareCentric  in April 2002,  Mr.  Hare was a Partner  with Tatum CFO
Partners,  LLP. Prior to Tatum, he was a Vice President of ADT Security Systems,
Inc.  where  he was  heavily  involved  in  business  development  and  business
turnaround  activities.  He  previously  held  positions in strategic  planning,
logistics   management  and  financial   planning  for  Campbell  Soup  Company.
Additionally,   Mr.   Hare's   business   experience   has  included   operating
responsibilities for businesses in Europe,  Australia,  and the United States in
various  industries  including  manufacturing,   distribution,  labor  intensive
services and start-ups.  Mr. Hare has an MBA from Lehigh University and is a CPA
in the state of Pennsylvania.

DIRECTORS OF THE REGISTRANT

     Dr. David O. Ellis, age 61, has been a director of CareCentric  since March
7, 2000.  Dr.  Ellis is  President  and a director  of EGL  Holdings,  Inc.,  an
Atlanta-based  merchant banking group providing  investment services and capital
to  United  States  middle  market  companies.  He has  been  with  EGL  and its
predecessor  company,  Corporate  Finance  Associates,  since 1982. Dr. Ellis is
currently a director of several privately held companies.

     John R. Festa,  age 51, became a director of  CareCentric by appointment of
the Board of Directors of the Company on November  28,  2001.  He was  appointed
President  and Chief  Executive  Officer on November  1, 2001.  Prior to joining
CareCentric,  Mr. Festa served as Managing  Director and General  Partner at EGL
III, LLC, as President and Chief  Executive  Officer of two software  companies,
Buypass  Corporation and Iterated  Systems,  and as a senior  executive with the
Information  Processing  Group of  American  Express.  He remains a director  of
Iterated Systems.

     Winston R. Hindle,  Jr., age 72, became a director of  CareCentric on March
7, 2000 upon the closing of the MCS/Simione  merger pursuant to the terms of the
Merger  Agreement.  Mr.  Hindle has been a director of Mestek  since  1994.  Mr.
Hindle was Senior Vice  President  of Digital  Equipment  Corporation,  Maynard,
Massachusetts,  prior to his  retirement  in July  1994.  In his 32  years  with
Digital, he managed both corporate functions and business units and was a member
of Digital's  Executive  Committee.  Mr. Hindle was a director of MCS, Inc. from
1994  until  the date of the MCS  merger  in March  2000.  Mr.  Hindle is also a
director of Keane, Inc., of Boston, Massachusetts.

     Barrett C.  O'Donnell,  age 49,  became a  director  of  CareCentric  (then
Simione  Central  Holdings,  Inc.) in October 1996. He served as Chairman of the
Board of  Directors  of the Company  from June 15,  1998 to August 8, 2000,  and
served as Chief Executive  Officer and President from June 15, 1998 to September
9, 1999. From October 1992 until October 1996, Mr.  O'Donnell served as Chairman
of the Board of InfoMed Holdings,  Inc., a Delaware corporation that merged with
Simione Central Holding, Inc., a Georgia corporation,  to form Simione effective
October 8, 1996. Mr. O'Donnell also served as Chief Executive Officer of InfoMed
from November 1994 to October 1996. From 1978 to present, Mr. O'Donnell has been
Chairman of the Board, President and Chief Executive Officer of O'Donnell Davis,
Inc., which is in the consulting and investment advisory services business.

     John E. Reed,  age 87,  became a director of  CareCentric  on March 7, 2000
upon the closing of the  MCS/Simione  merger pursuant to the terms of the Merger
Agreement. He became Chairman of the Board of Directors of the Company on August


                                       38
<PAGE>

8, 2000.  Mr.  Reed had been the  Chairman  of the Board of MCS from 1986 to the
date of the  MCS/Simione  merger.  Mr. Reed has been a director of Mestek  since
1986  and  Chairman  of the  Board  since  1989.  From  1986  until  2001 he was
President,  and he has been Chief Executive Officer from 1986 to the present, of
Mestek,  Inc. Prior to the 1986 merger of Mestek,  Inc. and Reed National Corp.,
Mr. Reed was President  and Chief  Executive  Officer of Reed National  since he
founded it in 1946. Mr. Reed is also a director of Wainwright  Bank & Trust Co.,
Boston, Massachusetts.

     Stewart B. Reed,  age 54, became a director of CareCentric on June 6, 2002.
Mr. Reed is a director of Mestek since 1986 and serves as a consultant to Mestek
as well as a private investor in various enterprises. Mr. Reed previously served
as a director of the Company from March 2000 until August 2000.  Mr. Reed served
as  Executive  Vice  President  of Mestek  from 1986 to 1996.  Prior to the 1986
merger of Mestek, Inc. and Reed National Corp., Mr. Reed had been Executive Vice
President of Reed National  Corp. in charge of corporate  development.  Mr. Reed
had been employed by Reed National Corp. since 1970. Mr. Reed is the son of John
E. Reed, Chairman of the Board,  President and Chief Executive Officer of Mestek
and the  Chairman  of the Board of the  Company.  Mr.  Reed holds a  substantial
ownership  interest  in  Wainwright  Bank & Trust Co.,  the  provider  of a $6.0
million line of credit to the Company.

     William J.  Simione,  Jr., age 61, became a director of  CareCentric  (then
Simione) in October  1996.  He left the Board of Directors in June 2000 when its
membership was reduced to seven,  and was re-appointed to the Board of Directors
in November 2000 upon the  occurrence of a vacancy.  He served as Executive Vice
President of CareCentric  and President of its subsidiary,  Simione  Consulting,
Inc.  until  October  31,  2001,  when  he left  the  Company  to  form  Simione
Consultants,  LLC. He is a certified public  accountant who previously served as
Vice  Chairman of the Board and  Executive  Vice  President  of the Company from
October 1996 to March 2000.  From January 1996 until October 1996,  Mr.  Simione
served as the President of Simione  Central,  Inc., a wholly owned subsidiary of
CareCentric.  From January 1975 until  December  1995,  Mr. Simione was Managing
Partner of the Home Health Care Consulting Division of Simione & Simione,  CPAs.
Since September 1995, Mr. Simione has also served as a director and an audit and
governance  committee  member of  Personnel  Group of America,  Inc.,  a leading
provider of information  technology  services and commercial staffing solutions.
Mr. Simione has 35 years of experience in the home health care industry.

     Edward K.  Wissing,  age 64, became a director of  CareCentric  on March 7,
2000 upon the  closing of the  MCS/Simione  merger  pursuant to the terms of the
Merger  Agreement.  Mr.  Wissing  retired in 1998 from American  HomePatient  of
Nashville,  Tennessee,  a regional  provider of home health  care  products  and
services,  a company  which he founded.  He maintains an active role in the home
health care  industry  and has twice  chaired the Health  Industry  Distributors
Association   (HIDA).  Mr.  Wissing  has  also  served  as  chairman  of  HIDA's
Educational  Foundation  and  serves on the board of  American  HomePatient  and
Psychiatric Solutions, Inc., a Nashville-based mental health services provider.




                                       39
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
<S>                                         <C>        <C>         <C>        <C>        <C>        <C>          <C>
                                                                           SUMMARY COMPENSATION TABLE

                                                                                                          LONG-TERM
                                                           ANNUAL COMPENSATION                          COMPENSATION
                                          ---------------------------------------------------------  --------------------------
                                                                                                      Number of
                                                                                                      Securities
                                                                                        Retired       Underlying
                                                                                         Stock        Options      All Other
                                                        Salary      Bonus      Other     Awards        Grants     Compensation
Name and Principal Position                  Year         ($)        ($)       ($)(2)     ($)           (#)          ($)(1)
---------------------------------------   ---------  -----------  ----------  --------- -----------  ------------ -------------

John R. Festa (3)                            2002       206,861          --          --         --           --        1,571
President and Chief Executive Officer        2001        31,795          --          --         --      210,000        1,227
                                             2000            --          --          --         --           --           --

George M. Hare (4)                           2002       107,606          --          --     11,200       17,500          214
Senior Vice President and Chief              2001            --          --          --         --           --           --
Financial Officer                            2000        51,890      22,500          --         --           --           --

Ana M. McGary  (5)                           2002        99,230          --          --         --           --         1,508
Senior Vice President-Human Resources &      2001        99,231      20,000          --         --           --         1,843
Administration                               2000        95,000       8,000          --         --        2,000           719

Mark A. Kulik (6)                            2002       183,577          --          --         --           --         2,527
Senior Vice President-Sales and              2001       136,250      33,750          --         --      125,000         2,426
Marketing                                    2000        33,333       7,500          --         --        7,500            28

Michael  L. Quinn (7)                        2002       163,800          --          --         --           --         2,512
Senior Vice President of Operations          2001       163,800          --          --         --           --         2,532
                                             2000       139,737      51,824          --         --        5,000         2,965
</TABLE>

(1)  Represents 401(k) match, excess group life insurance and other compensation
     specified in notes below.

(2)  In accordance with the rules on executive officer  compensation  adopted by
     the   Securities   and  Exchange   Commission,   amounts  of  Other  Annual
     Compensation  for 2000,  2001 and 2002 which would include the  incremental
     costs to the Company of  perquisites  and personal  benefits,  are excluded
     because  they are less than  $50,000  or less than 10% of the total  annual
     salary and bonus  compensation  for each of such individuals in the Summary
     Compensation Table.

(3)  Mr. Festa became Chief Executive  Officer  November 1, 2001. The salary and
     all  other  compensation,  including  reimbursement  of the  premiums  of a
     disability  insurance  policy,  set  forth  herein  for 2002  are  based on
     payments  made by  CareCentric  for the  period  from  January  1,  2002 to
     December 31, 2002.

(4)  Mr. Hare has served as Senior Vice President and Chief financial officer of
     CareCentric,  Inc.  since  April of 2002.  Mr.  Hare  also  served as Chief
     Financial  Officer  during the final four months of 2000. In 2002, Mr. Hare
     received  options to purchase  17,500 shares of the Company's  common stock
     pursuant to the  CareCentric,  Inc.  Omnibus  Equity-based  Incentive Plan,
     which  shall  vest  33-1/3%  on  each  of  the  first,   second  and  third
     anniversaries  of the date of the  resolution.  The  exercise  price of the
     above shares vesting on the first  anniversary  shall be equal to $1.00 per
     share.  Mr. Hare also received grant of 17,500 shares of restricted  common
     stock.  The value  shown  above for the  restricted  stock is based  upon a
     closing price of $0.64 per share on April 22, 2002.

(5)  Ms.  McGary  became an executive  officer of the Company in July 2001.  Ms.
     McGary  has  served  as  Senior  Vice  President  of  Human  Resources  and
     Administration  since April of 1999.  In February of 2000,  Ms.  McGary was
     elected as Assistant  Secretary.  In August of 2000 Ms.  McGary was elected
     Secretary of the Company.

(6)  Mr.  Kulik  became an  executive  officer of the Company in July 2001.  Mr.
     Kulik has served as Senior  Vice  President  of Sales and  Marketing  since
     October 2000. Prior to joining CareCentric,  he served in senior management


                                       40
<PAGE>

     positions  at  Healthcare  Credentials  Management  Services and at Equifax
     Healthcare Information Services.

(7)  Mr. Quinn served as Senior Vice  President of Operations of MCS, Inc. since
     1985 and became an officer of  CareCentric  upon the merger with MCS,  Inc.
     when he  became  Senior  Vice  President  of  Operations,  responsible  for
     customer support and operations.

GRANTS OF STOCK OPTIONS

     The  following  table  sets  forth  certain  information  with  respect  to
individual  grants  of stock  options  by the  Company  to the  named  Executive
Officers during the year ended December 31, 2002.

<TABLE>
<CAPTION>
<S>                        <C>             <C>              <C>               <C>             <C>
                        OPTION GRANTS IN LAST FISCAL YEAR
                                                                                              Potential Realizable
                            Number of                                                            Value at Assumed
                            Securities       % of Total                                          Annual Rates of
                            Underlying      Options/SARs                                        Appreciation for
                           Options/SARs      Granted to                                          Option Term (2)
                             Granted        Employees in     Exercise Price    Expiration      ___________________
Name                          (#)(1)         Fiscal Year         ($/Sh)           Date         5%($)       10%($)
------------------------- --------------- ------------------ ---------------- -------------- ------------------------

George M. Hare                17,500           30%                 $1.00        04-22-12      11,006       27,890
</TABLE>


OPTION EXERCISES AND HOLDINGS

     The  following  table  sets  forth  information  concerning  the  value  of
unexercised  stock options held at the end of the fiscal year ended December 31,
2002 by each named Executive Officer. There were no options exercised during the
fiscal year ended December 31, 2002.

<TABLE>
<CAPTION>
         <S>                                 <C>                <C>              <C>           <C>
                               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

                                              Number of Securities Underlying       Value of in-the-Money
                                                   Unexercised Options at                Options at
                                                    December 31,2002 (#)          December 31, 2002 ($) (1)
                                                -----------------------------    ---------------------------
         Name                                   Exercisable     Unexercisable    Exercisable   Unexercisable
         ----                                   -----------     -------------    -----------   -------------

         John R. Festa                               0                0               0              0
         George M. Hare                              0             17,500             0              0
         Ana M. McGary                             4,333             667              0              0
         Mark A. Kulik                            46,667           85,833             0              0
         Michael L. Quinn                          3,333            1,667             0              0

------------------
</TABLE>

(1)  Dollar values were  calculated by determining  the  difference  between the
     fair market  value of the  underlying  securities  at year-end at $0.60 per
     share, as adjusted for the one-for-five  reverse split effected on March 7,
     2000, and the exercise price of the options.



                                       41
<PAGE>


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following  table sets forth  information  as to the number of shares of
CareCentric common stock that will be beneficially owned as of March 10, 2003 as
follows:

     o    each director of CareCentric;
     o    the Chief Executive Officer and the four other most highly compensated
          executive officers of CareCentric;
     o    all CareCentric directors and executive officers, as a group; and
     o    each  person,   entity,  or  group  of  affiliated  persons  known  by
          CareCentric   to  be  the   beneficial   owner  of  more  than  5%  of
          CareCentric's  common  stock,  based  on  that  person's  or  entity's
          ownership of  CareCentric  common stock and the number of  outstanding
          shares of CareCentric common stock as of April 18, 2002.

     For purposes of this table,  beneficial  ownership of securities is defined
according  to the rules of the  Securities  and  Exchange  Commission  and means
generally the power to vote or exercise  investment  discretion  with respect to
securities,  regardless of any economic interests  therein.  Except as otherwise
indicated,  CareCentric  believes  that  the  beneficial  owners  of  shares  of
CareCentric common stock listed below will have sole investment and voting power
with  respect  to  such  shares,   subject  to  community  property  laws  where
applicable. In addition, for purposes of this table, a person or group is deemed
to have  beneficial  ownership  of any shares which such person has the right to
acquire within 60 days after the date as of which these data are presented.  For
purposes of calculating the percentage of outstanding shares held by each person



                                       42
<PAGE>

named  above,  any shares  which this person has the right to acquire  within 60
days  after  the date as of which  these  data are  presented  are  deemed to be
outstanding,  but not for the purpose of calculating the percentage ownership of
any other person.

     The percentages  were calculated based on the ratio of the number of shares
of CareCentric  common stock  beneficially  owned by such beneficial owner as of
March 10, 2003 to the sum of:

     o    4,371,350, the total number of outstanding shares of common stock;
     o    the number of shares of common stock issuable upon exercise of options
          or warrants held by the applicable beneficial owner exercisable within
          60 days of March 10, 2003; and
     o    the number of shares of common stock  issuable upon the  conversion of
          the Company's Series D Preferred Stock and Series E Preferred Stock by
          the applicable beneficial owner.

     The table  reflects  the  one-for-five  reverse  stock split (the  "Reverse
Split") that became effective on March 7, 2000. The number of shares shown below
reflects  ownership of  5,600,000  shares of Series B Preferred  Stock,  398,406
shares of Series D  Preferred  Stock and  210,000  shares of Series E  Preferred
Stock.

                                                      SHARES OF COMMON STOCK
                                                        BENEFICIALLY OWNED
                                                   -----------------------------
    NAME OF BENEFICIAL OWNER                               NUMBER     PERCENT
    ------------------------                       --------------     ----------
    Mestek, Inc.(1)(2)                                10,890,396         71.4%
    John E. Reed(1)(2)(3)                              5,616,257         62.9
    Stewart B. Reed(2)(4)                                552,649         12.6
    Barrett C. O'Donnell(5)(8)                           233,728          5.2
    Dr. David O. Ellis(6)(8)                             221,374          5.0
    William J. Simione, Jr.                               11,254            *
    Winston R. Hindle, Jr.(2)(7)                           6,866            *
    Edward K. Wissing(2)(7)                                3,333            *
    John R. Festa(8)                                     210,000          4.6
    George M. Hare(9)                                     17,500            *
    Mark A. Kulik(10)                                     46,667          1.1
    Ana M. McGary(11)                                      4,333            *
    Michael L. Quinn(7)                                    3,333            *
    All directors and executive officers
       as a group (10 persons)(12)                     6,374,645         68.5%

---------------------

* Less than 1%.

(1)  Includes (a) warrant to purchase  400,000  shares of the  Company's  common
     stock at a per share price of $1.00 received on July 1, 2002 in exchange of
     a prior warrant,  pursuant to the closing of a Secured  Convertible  Credit
     Facility (the "Mestek Credit Facility") between Mestek, Inc. ("Mestek") and
     CareCentric  dated as of July 1, 2002,  which  warrant  expires on June 15,
     2004,  (b) a warrant to purchase  490,396  shares of the  Company's  common
     stock at a per share price of $1.00 on July 1, 2002 received in exchange of
     a prior  warrant,  pursuant  to the closing of the Mestek  Credit  Facility
     dated as of July 1,  2002,  which  warrant  expires on June 15,  2004,  (c)
     4,000,000  shares of the Company's common stock issuable upon conversion of
     outstanding   indebtedness  under  the  Mestek  Credit  Facility,  and  (d)
     6,000,000  shares of the Company's common stock issuable upon conversion of
     5,600,000  shares of the Company's Series B Preferred Stock. As of the date
     of this  Report,  Mestek does not have any issued  shares of the  Company's
     common stock.

(2)  The address is 260 North Elm Street, Westfield, Massachusetts 01085.

(3)  Includes:  (a) 8,163 shares of  CareCentric's  common stock,  (b) 1,000,000
     shares of common stock  issuable upon  conversion of the Series D Preferred
     Stock;  (c) 3,555,555  shares of common stock  issuable upon  conversion of
     outstanding  indebtedness  under that certain Amended and Restated  Secured
     Convertible  Credit  Facility and Security  Agreement,  dated as of July 1,
     2002 among CareCentric,  SC Holding, Inc.,  CareCentric National,  LLC, and


                                       43
<PAGE>

     John E. Reed; and (d) options held by John E. Reed to purchase 1,666 shares
     of common stock.  Also  includes:  (a) 490,533 shares of common stock which
     are held by John E. Reed as trustee  for  various  family  trusts,  but for
     which he is not the beneficiary; (b) 89,458 shares of common stock owned by
     Sterling Realty Trust, a Massachusetts business trust of which John E. Reed
     is the  trustee and of which he and a family  trust are the  beneficiaries;
     (c) 470,882  shares of common  stock held by trusts for the benefit of John
     E. Reed. Excludes:  (a) 2,267 shares of common stock which are held by John
     E. Reed's wife, (b) 3,267 shares of common stock which are held by a family
     trust for which he is not  trustee,  to which he disclaims  ownership;  (c)
     400,000  shares of common stock  issuable upon exercise of a Warrant issued
     to Mestek in  exchange  for a prior  Warrant on July 1, 2002,  (d)  490,396
     shares of common stock issuable upon exercise of a Warrant issued to Mestek
     in  exchange  for a Warrant on July 1, 2002,  and (e)  4,000,000  shares of
     common stock  issuable upon  conversion of outstanding  indebtedness  under
     that certain Secured  Convertible  Credit  Facility and Security  Agreement
     dated July 1, 2002 between  CareCentric and Mestek.  John E. Reed expressly
     disclaims beneficial ownership of all shares of common stock underlying the
     Mestek Warrants and the Mestek convertible  indebtedness.  (f) the right to
     vote,  pursuant to an  agreement  dated March 29, 2002 between John E. Reed
     and Mestek,  5,600,000 shares of Series B Preferred Stock issued to Mestek,
     each of which  entitles the holder to 1/5th of a vote in all matters  voted
     upon by Issuer's  stockholders,  or an aggregate  of  1,120,000  votes (the
     right to vote shares of common  stock  received  upon  conversion  Series B
     Preferred Stock revert to Mestek under the voting agreement).

(4)  Includes  225,921  shares of common stock which are owned by the Stewart B.
     Reed Trust, of which Stewart B. Reed is the beneficiary and John E. Reed is
     the trustee.

(5)  Includes  87,529 shares  issuable upon exercise of options  (53,333  shares
     individually and the balance through O'Donnell Davis,  Inc.). Mr. O'Donnell
     is  a  stockholder,   director  and  officer  of  O'Donnell   Davis,   Inc.
     Accordingly, pursuant to Rule 13d-3 under the Exchange Act, he is deemed to
     be an indirect  beneficial owner of CareCentric's  securities  beneficially
     owned by O'Donnell Davis, Inc.

(6)  Includes 170,786 shares held by, and 6,189 shares issuable upon exercise of
     options by, Rowan Nominees Limited  ("Rowan").  EGL Holdings,  Inc. manages
     accounts on behalf of Mercury Asset Management or its successors though its
     nominee, Rowan. Mr. Ellis is president and a director of EGL Holdings, Inc.
     Includes  1,837 shares held by Mr.  Ellis'  wife.  Includes  11,353  shares
     issuable upon exercise of options.

(7)  Includes 3,333 shares issuable upon exercise of options.

(8)  All shares are Series E Preferred Stock  convertible  into shares of common
     stock.  105,000 of the shares vest over a three (3) year period and 105,000
     of the shares are  forfeitable pro rata over a three (3) year period if the
     Company's  financial,  cash flow and  performance  milestone  goals are not
     achieved.

(9)  Includes 17,500 shares of restricted stock.

(10) Includes 46,667 shares issuable upon exercise of options.

(11) Includes 4,333 shares issuable upon exercise of options.

(12) Includes  166,069  shares  issuable  upon  exercise  of options and 890,396
     shares  issuable  upon  exercise of  warrants.  Includes  1,000,000  shares
     issuable  upon  conversion  of Series D  Preferred  Stock,  210,000  shares
     issuable upon conversion of Series E Preferred  Stock, and 3,555,555 shares
     issuable upon conversion of notes.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  Company  subleased  certain  space  to  Healthfield,  Inc.  which is a
MestaMed(R)  customer and has a significant  shareholder who was a former member
of the board of  directors  of the  Company.  The  original  lease  and  related
sublease  expired on December 31, 2002 and  required  annual  sublease  payments
equal to the original lease payments of approximately $730,000.



                                       44
<PAGE>

     Winston R. Hindle, Jr., a director of the Company, is a director of Mestek,
Inc.  Mestek  has  certain  investments  in the  Company  in the form of  notes,
convertible notes,  warrants,  stock options and preferred stock as described in
Note 8 and Note 12 to the Financial Statements included in this Report.

     The Company has a note receivable from Simione Consultants, LLC of $409,000
at December  31, 2002.  On September  28,  2001,  the Company  discontinued  its
Consulting  business segment by closing the sale of certain of the assets of its
wholly-owned  subsidiary,  Simione  Consulting,  Inc.  ("Consulting") to Simione
Consultants,  LLC, which is owned and  controlled by William J. Simione,  Jr., a
director  and  former  officer  of  CareCentric.   The  total  sales  price  was
approximately $2.0 million plus the assumption of certain liabilities.  The sale
was made  pursuant to an asset  purchase  agreement.  William  Simione,  Jr. has
resigned as an officer of CareCentric,  however,  William Simione, Jr. remains a
director  of  CareCentric.  The assets  sold under the  agreement  included  the
Consulting accounts receivable,  computer equipment,  and miscellaneous  prepaid
expenses. Consideration received consisted of approximately $1.0 million in cash
and $1.0 million in notes,  $770,000  with a 36-month  term and $230,000  with a
5-month  term.  The cash proceeds  were used to pay down  CareCentric's  line of
credit.

     On  December  13,  2002,  the  Company  entered  into a racing  sponsorship
agreement  for a  one-year  sponsorship  of a  racing  team at a  total  cost of
approximately $125,000. The son of John Festa, the Company's President and Chief
Executive Officer, is one of several members of the racing team being sponsored.
The Company  believes that the terms of the agreement are  arms-length  and that
third  parties are paying  comparable  amounts of at least  $120,000 for similar
arrangements.  The Company will use the sponsorship in its advertising  program,
tradeshows  and launch of the  AC-CURA(TM)  product.  Mr.  Festa will receive no
financial benefit from the sponsorship.

     As of December 31, 2002, the Company had a promissory  note  outstanding to
Barrett C. O'Donnell,  a director of the Company,  as described in Note 8 to the
Financial  Statements  included in this Report.  Barrett C.  O'Donnell also owns
25,000  warrants for the purchase of common shares of the Company at an exercise
price of $5.00 per share.

     John  E.  Reed  is a  director  and a  significant,  but  not  controlling,
shareholder  of the  Wainwright  Bank and Trust  Company  which has provided the
Company with a $6.0 million line of credit, as more fully explained in Note 8 to
the Financial Statements included in this Report.

     John E. Reed,  Chairman  of the Company and  Chairman  and Chief  Executive
Officer of Mestek,  Inc.,  has at December  31, 2002  provided  the Company $3.7
million, including accrued interest, (unrelated to the Wainwright Bank and Trust
$6.0  million  line of  credit  described  above)  of  financing  in the form of
convertible  notes  payable as more fully  described in Note 8 to the  Financial
Statements and also owns $1.0 million of the Company's  Series D Preferred Stock
as more fully described in Note 12 to the Financial  Statements included in this
Report. An independent committee of the Company's Board of Directors, consisting
of Barrett C.  O'Donnell and David O. Ellis,  negotiated the terms of Mr. Reed's
debt and equity  investments  in the Company.  The issuance of 398,406 shares of
Series D Preferred Stock to Mr. Reed for his $1.0 million equity  investment was
based on a per share price of $2.51,  which was the 5-day average  closing price
of CareCentric common stock as of the date of the final negotiation of the terms
of Mr. Reed's purchase. On July 1, 2002, the Company recapitalized certain loans
and preferred stock in accordance  with a shareholder  approved plan under which
the  conversion  price for Mr. Reeds notes payable and Series D Preferred  Stock
was changed to $1.00. See Note 8 to the Financial Statements.

     Mestek,  Inc. has, at December 31, 2002,  provided the Company $4.1 million
of financing in the form of convertible notes payable as more fully described in
Note 8 to the Financial Statements and also is the Guarantor of the $6.0 million
Wainwright Bank and Trust line of credit.  Additionally,  Mestek, Inc. owns $6.0
million of the Company's Series B Preferred Stock. Warrants were granted in June
2000 by the  Company to Mestek,  Inc. in  connection  with its waiver of certain
voting rights  previously  granted to it in connection  with its purchase of the
Series  B  Preferred  Stock  of the  Company.  On  July  1,  2002,  the  Company
recapitalized certain loans and preferred stock in accordance with a shareholder
approved plan under which the conversion  price for Mestek's  Series B Preferred
Stock and notes  payable was  changed to $1.00.  The terms of the  warrants  (as


                                       45
<PAGE>

described in more detail in Note 12 to the Financial  Statements)  were based on
negotiations by independent committees of the Boards of Directors of the Company
and Mestek.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Under the federal  securities  laws, the Company's  directors and executive
officers, and any persons holding more than 10% of the Common Stock outstanding,
are  required  to  report  their  initial  ownership  of  Common  Stock  and any
subsequent changes in that ownership to the Securities and Exchange  Commission.
Specific due dates have been established and the Company is required to disclose
in this Proxy  Statement any failure to file by these dates during the Company's
most  recent  fiscal  year.  To the  Company's  knowledge,  all of these  filing
requirements  were satisfied,  except that (1) Mr. Hare filed one late Form 5 to
report one exempt restricted stock grant, (2) Stewart Reed filed one late Form 4
to report five purchases,  and (3) Mr. O'Donnell filed one late Form 5 to report
one  exempt  option  grant  and one  disposition  of  shares.  In  making  these
disclosures,  the  Company  has  relied  solely  on its  review of copies of the
reports that have been  submitted to the Company with respect to its most recent
fiscal  year,  and  representations  provided  by the  directors  and  executive
officers.

ITEM 14  CONTROLS AND PROCEDURES.

     In the 90-day period before the filing of this report,  the chief executive
and chief financial  officers of the Company have evaluated the effectiveness of
the Company's disclosure controls and procedures.  These disclosure controls and
procedures are those controls and other procedures management  maintains,  which
are designed to insure that all of the  information  required to be disclosed by
the  Company  in all its  periodic  reports  filed  with  the  SEC is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
SEC's rules and forms.  Disclosure  controls  and  procedures  include,  without
limitation, controls and procedures designed to ensure that information required
to be  disclosed  by the Company in its  reports  filed or  submitted  under the
Securities  Exchange  Act of 1934 is  accumulated  and  communicated  to Company
management,  including the chief  executive and chief  financial  officer of the
Company,  as  appropriate  to  allow  those  persons  to make  timely  decisions
regarding required disclosure.

     Subsequent  to  February  21,  2003,  when  the  disclosure   controls  and
procedures  were evaluated,  there have not been any significant  changes in the
Company's  disclosure  controls or  procedures  or in other  factors  that could
significantly affect such controls or procedures. No significant deficiencies or
material  weaknesses  in  the  controls  or  procedures  were  detected,  so  no
corrective actions needed to be taken.

PART IV

ITEM 15.  EXHIBITS,  FINANCIAL  STATEMENTS,  FINANCIAL  STATEMENT  SCHEDULES AND
          REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this Report:

          1.   Financial Statements.

          2.   Financial Statement Schedule.

               Schedule II--Valuation and Qualifying Accounts

               Certain financial  statement  schedules have been omitted because
               they are not applicable.

          3.   Exhibits Incorporated by Reference or Filed with this Report.

     The following exhibits are filed as part of this Report.  Where such filing
is made by incorporation by reference to a previously filed statement or report,
such statement or report is identified in parentheses.



                                       46
<PAGE>

EXHIBIT
NUMBER                                                 DESCRIPTION
------                                                 -----------

2.1(1,3)      --    Agreement and Plan of Merger dated as of July 12, 1999 among
                    the Company, Simione Acquisition Corporation and CareCentric
                    Solutions, Inc.

2.2(1,2)      --    Second Amended and Restated Agreement and Plan of Merger and
                    Investment  Agreement  dated as of October  25,  1999 by and
                    among MCS, Inc.,  Mestek,  Inc., the Company,  John E. Reed,
                    Stewart B. Reed and E. Herbert Burk.

2.3(1)        --    Purchase and Sale Agreement  dated September 28, 2001 by and
                    between the Company,  Simione  Consulting,  Inc. and Simione
                    Consultants,  L.L.C.  (incorporated  by reference to Exhibit
                    2.1 of the  Company's  Current  Report  on  Form  8-K  dated
                    October 12, 2001 as filed with the  Securities  and Exchange
                    Commission).

3.1           --    Amended and Restated  Certificate  of  Incorporation  of the
                    Company  (Incorporated  by  reference  to Exhibit 3.4 of the
                    Company's  Quarterly  Report  on form  10-Q for the  quarter
                    ended March 31, 2002 (File No. 000-22162))

3.2           --    Certificate  of  Ownership  and  Merger of  Simione  Central
                    Holdings, Inc. with and into CareCentric, Inc. (Incorporated
                    by reference to the Company's  Annual Report 8-K dated as of
                    January 31, 2001 (File No. 000-22162)).

3.3           --    Bylaws of the Company dated  October 25, 2002  (Incorporated
                    by reference to Exhibit 3.3 of the Quarterly  Report on Form
                    10-Q for the  quarter  ended  September  30,  2002 (File No.
                    000-22162)  as  filed  with  the   Securities  and  Exchange
                    Commission).

3.4(6)        --    Certificate  of  Designations,  Preferences  and  Rights  of
                    Series E Preferred Stock of the Company.

4.1(5)        --    Specimen Stock  Certificate of the Company  (Incorporated by
                    reference to Exhibit 4.1 of the  Company's  Annual Report on
                    Form 10-K for the fiscal  year ended  December  31,  2000 as
                    filed with the Securities and Exchange Commission).

4.2           --    See  Exhibits  3.1,  3.2  and  3.3  for  provisions  of  the
                    Company's  Certificate of Incorporation and Bylaws governing
                    the rights of holders of securities of the Company.

4.3           --    Registration  Rights  Agreement dated October 7, 1996 by and
                    among InfoMed Holdings,  Inc., those stockholders of Simione
                    Central  Holding,  Inc.  appearing  as  signatories  to  the
                    Registration  Rights  Agreement,  and those  stockholders of
                    InfoMed  Holdings,  Inc.  appearing  as  signatories  to the
                    Registration Rights Agreement  (Incorporated by reference to
                    Exhibit  10.1 of the  Company's  Current  Report on Form 8-K
                    dated  October  8,  1996 as filed  with the  Securities  and
                    Exchange Commission).

9.1           --    Form of Simione Central Holding,  Inc.  Shareholders  Voting
                    Agreement and  Irrevocable  Proxy dated March 5, 1996 by and
                    among  Howard  B.  Krone,  William  J.  Simione,  Jr.,  Gary
                    Rasmussen,  G. Blake  Bremer,  Katherine  L.  Wetherbee,  A.
                    Curtis Eade, James A. Tramonte,  John Isett,  Cindy Lumpkin,
                    Douglas  E.  Caddell,  Robert J.  Simione,  Kenneth L. Wall,
                    Allen K.  Seibert,  III,  Jerry Sevy,  Larry Clark,  Lori N.
                    Siegel, Gary M. Bremer, Richard A. Parlontieri, and James R.
                    Henderson (Incorporated by reference to the Company's Annual
                    Report on Form 10-K for the fiscal year ended  December  31,
                    1996 as filed with the Securities and Exchange Commission).

9.2           --    Agreement  dated as of October 7, 1996 by and among  InfoMed
                    Holdings, Inc., EGL Holdings, Inc., Mercury Asset Management
                    plc,  O'Donnell Davis,  Inc.,  Barrett O'Donnell and certain
                    other holders of the Class A Convertible  Preferred Stock of
                    InfoMed Holdings, Inc. (Incorporated by reference to Exhibit


                                       47
<PAGE>

                    10.2 of the  Company's  Current  Report  on Form  8-K  dated
                    October 8, 1996 as filed with the  Securities  and  Exchange
                    Commission).

10.1          --    Amended and Restated  Agreement  and Plan of Merger dated as
                    of September 5, 1996 by and among  InfoMed  Holdings,  Inc.,
                    Simione   Central   Holding,    Inc.   and   InfoSub,   Inc.
                    (Incorporated  by reference to Exhibit 2.1 of the  Company's
                    Current Report on Form 8-K dated  September 5, 1996 as filed
                    with the Securities and Exchange Commission).

10.2          --    InfoMed  Holdings,  Inc.  Amended and Restated Share Warrant
                    for the Purchase of Common Stock of InfoMed  Holdings,  Inc.
                    dated  October 5, 1996 between  InfoMed  Holdings,  Inc. and
                    each of O'Donnell Davis, Inc., Rowan Nominees Ltd., David O.
                    Ellis,  Richard  V.  Lawry,  Salvatore  A.  Massaro,  Murali
                    Anantharaman,  Kathleen  E.J.  Ellis,  Jeremy  Ellis,  Karen
                    Ellis,  Gemma  Ellis,  Thomas M.  Rogers,  Jr.,  and  Arnold
                    Schumacher  (Incorporated by reference to Exhibit 4.1 of the
                    Company's  Current  Report on Form 8-K dated October 8, 1996
                    as filed with the Securities and Exchange Commission).

10.3          --    Warrant to Purchase  100,000  shares of Class A Common Stock
                    of Simione  Central  Holding,  Inc.,  dated  April 12,  1996
                    between Simione Central Holding, Inc. and Home Health First,
                    a  Texas   not-for-profit   corporation   (Incorporated   by
                    reference to the  Company's  Annual  Report on Form 10-K for
                    the fiscal  year ended  December  31, 1996 as filed with the
                    Securities and Exchange Commission).

10.4          --    Common Stock Warrant of InfoMed Holdings, Inc. dated October
                    8, 1996  between  Jefferies  &  Company,  Inc.  and  InfoMed
                    Holdings,  Inc.  (Incorporated by reference to the Company's
                    Annual  Report  on Form  10-K  for  the  fiscal  year  ended
                    December 31, 1996 as filed with the  Securities and Exchange
                    Commission).

10.5+         --    Form of Simione Central  Holding,  Inc. 1996 Incentive Stock
                    Option  Agreement  dated  September  4, 1996 by and  between
                    Simione  Central   Holding,   Inc.  and  each  of  James  R.
                    Henderson,   William  J.  Simione,   Jr.,   Robert  Simione,
                    Katherine Wetherbee,  Sheldon Berman, Betty Gordon,  William
                    J. Simione, III, J. Blake Bremer, Craig Luigart,  Kenneth L.
                    Wald, Marty Cavaiani, Lori Ferrero, Douglas E. Caddell, Andy
                    Anello and A. Curtis Eade  (Incorporated by reference to the
                    Company's  Annual  Report on Form 10-K for the  fiscal  year
                    ended  December  31, 1996 as filed with the  Securities  and
                    Exchange Commission).

10.6+         --    1994 Incentive Stock Option and  Non-Qualified  Stock Option
                    Plan  (Incorporated  by  reference to the  Company's  Annual
                    Report on Form 10-K for the fiscal  year ended June 30, 1994
                    as filed with the Securities and Exchange Commission).

10.7+         --    CareCentric,  Inc.  Profit  Sharing  Plan dated  October 31,
                    1996, as amended (Incorporated by reference to the Company's
                    Annual  Report  on Form  10-K  for  the  fiscal  year  ended
                    December 31, 1996 as filed with the  Securities and Exchange
                    Commission).

10.8+         --    CareCentric, Inc. Section 125 Plan effective date January 1,
                    1997 sponsored by the Company  (Incorporated by reference to
                    the Company's Annual Report on Form 10-K for the fiscal year
                    ended  December  31, 1996 as filed with the  Securities  and
                    Exchange Commission).

10.9          --    Headquarters  at Gateway Lake Lease  Agreement dated January
                    1, 1996 by and between  Gateway  LLC and  InfoMed  Holdings,
                    Inc.  (Incorporated  by  reference to the  Company's  Annual
                    Report on Form 10-K for the fiscal  year ended June 30, 1996
                    as filed with the Securities and Exchange Commission).

10.10         --    Sublease  dated  November  22,  1996  between  Environmental
                    Design   International,   Ltd.  and  Simione  Central,  Inc.
                    (Incorporated by reference to the Company's Annual Report on
                    Form 10-K for the fiscal  year ended  December  31,  1996 as


                                       48
<PAGE>

                    filed with the Securities and Exchange Commission.

10.11         --    Lease  Amendment  dated August 7, 1992 by and between  Sugar
                    Land Plaza Building Corporation and Medical Solutions,  Inc.
                    (Incorporated by reference to the Company's Annual Report on
                    Form 10-K for the fiscal  year ended  December  31,  1997 as
                    filed with the Securities and Exchange Commission).

10.12         --    Lease dated  August 13,  1992  between  Unum Life  Insurance
                    Company of America and Dezine Associates, Inc. (Incorporated
                    by reference to the Company's Annual Report on Form 10-K for
                    the fiscal  year ended  December  31, 1997 as filed with the
                    Securities and Exchange Commission).

10.13         --    Indenture of Lease dated  January 1, 1998 by and between S&S
                    Realty and Simione Central Consulting, Inc. (Incorporated by
                    reference to the  Company's  Annual  Report on Form 10-K for
                    the fiscal  year ended  December  31, 1997 as filed with the
                    Securities and Exchange Commission).

10.14         --    Lease dated December 18, 1996 by and between Resurgens Plaza
                    South   Associates,   L.P.   and   Simione   Central,   Inc.
                    (Incorporated by reference to the Company's Annual Report on
                    Form 10-K for the fiscal  year ended  December  31,  1997 as
                    filed with the Securities and Exchange Commission).

10.15+        --    Severance Agreement dated July 22, 1998 between CareCentric,
                    Inc. and Gary M. Bremer.  (Incorporated  by reference to the
                    Company's  Annual  Report on Form 10-K for the  fiscal  year
                    ended  December  31, 1997 as filed with the  Securities  and
                    Exchange Commission).

10.16+        --    Executive Employment Agreement dated January 1, 1996 between
                    Simione   Central,   Inc.  and  William  J.   Simione,   Jr.
                    (Incorporated by reference to the Company's Annual Report on
                    Form 10-K for the fiscal  year ended  December  31,  1996 as
                    filed with the Securities and Exchange Commission).

10.16.1(5)+   --    Addendum to Executive  Employment  Agreement  dated December
                    20, 2000 between Simione Central Holdings,  Inc. and William
                    J. Simione, Jr.

10.17         --    Agreement  dated  October  4,  1996 by and  between  InfoMed
                    Holdings,  Inc.  and EGL  Holdings,  Inc.  (Incorporated  by
                    reference to the  Company's  Annual  Report on Form 10-K for
                    the fiscal  year ended  December  31, 1996 as filed with the
                    Securities and Exchange Commission).

10.18         --    Information  Systems  Management  Agreement dated January 4,
                    1996 between  Integrated  Systems Solutions  Corporation and
                    Central Health Management  Services,  Inc.  (Incorporated by
                    reference to the  Company's  Annual  Report on Form 10-K for
                    the fiscal  year ended  December  31, 1996 as filed with the
                    Securities and Exchange Commission).

10.19         --    Master  Software  License  Agreement  Number  96-2283  dated
                    October 31,  1996 by and between  Software  2000,  Inc.  and
                    Simione Central Holding, Inc.  (Incorporated by reference to
                    the Company's Annual Report on Form 10-K for the fiscal year
                    ended  December  31, 1996 as filed with the  Securities  and
                    Exchange Commission).

10.20         --    Guaranty   Agreement  dated  October  31,  1996  by  Simione
                    Central,  Inc.  in  favor  of  HCA,  Inc.  (Incorporated  by
                    reference to the  Company's  Annual  Report on Form 10-K for
                    the fiscal  year ended  December  31, 1996 as filed with the
                    Securities and Exchange Commission).

10.21         --    Lease  Agreement  dated  March  18,  1996  between  National
                    Leasing,  Inc. and Simione  Central,  Inc.  (Incorporated by
                    reference to the  Company's  Annual  Report on Form 10-K for
                    the fiscal  year ended  December  31, 1996 as filed with the
                    Securities and Exchange Commission).



                                       49
<PAGE>

10.22         --    Amendment 2 to Agreement for Information Technology Services
                    between SC Holding,  Inc. and Integrated  Systems  Solutions
                    Corporation  dated July 31, 1997  (Incorporated by reference
                    to Exhibit 10.1 of the  Company's  Quarterly  Report on Form
                    10-Q dated August 13, 1997 as filed with the  Securities and
                    Exchange Commission).

10.23         --    Loan and Security  Agreement by and between National Bank of
                    Canada  and  CareCentric,  Inc.,  dated  as of June 6,  1997
                    (Incorporated by reference to Exhibit 10.34 of the Company's
                    Current Report on Form 8-K dated June 21, 1997 as filed with
                    the Securities and Exchange Commission).

10.25         --    Remarketing  Agreement  dated April 17, 1998 between Simione
                    Central    National,    Inc.   and   Eclipsys    Corporation
                    (Incorporated by reference to the Company's Annual Report on
                    Form 10-K for the fiscal  eyar ended  December  31,  1998 as
                    filed with the Securities and Exchange Commission).

10.26         --    Stock  Purchase  Agreement  dated  April  17,  1998  between
                    CareCentric,   Inc.,   Eclipsys   Corporation   and  certain
                    stockholders  of the Company  (Incorporated  by reference to
                    the Company's Annual Report on Form 10-K for the fiscal year
                    ended  December  31, 1998 as filed with the  Securities  and
                    Exchange Commission).

10.27(3)      --    Form  of  Shareholder  Voting  Agreement  by and  among  the
                    Company,  Daniel J.  Mitchell as agent for  shareholders  of
                    CareCentric Solutions, Inc. and each of Barrett C. O'Donnell
                    and O'Donnell Davis, Inc.

10.28(3)      --    Shareholder  Voting  Agreement  by and  among  the  Company,
                    CareCentric Agent, and Mestek, Inc.

10.29         --    Warrant to Purchase  Common Stock dated March 7, 2000 by and
                    between  the  Company  and  Mestek,  Inc.  (Incorporated  by
                    reference to Exhibit 10.3 to the Registrant's Report on Form
                    10-Q  for the  quarter  ended  March  31,  2000,  (File  No.
                    000-22162)).

10.30(4)      --    Merger  Option  Agreement  by and  between  the  Company and
                    Mestek, Inc. dated March 7, 2000.

10.31(4)      --    Series D  Convertible  Preferred  Stock  Purchase  Agreement
                    dated June 12, 2000 between the Company and John E. Reed.

10.32.1(6)    --    First Amendment to Secured  Convertible  Credit Facility and
                    Security  Agreement  dated as of  December  31,  2001 by and
                    between  the  Company,   CareCentric   National,   LLC,  and
                    CareCentric Consulting, Inc.

10.32.2(6)    --    Promissory  Note dated  December  31, 2001 of the Company in
                    favor of John E. Reed.

10.32.3(6)    --    Promissory  Note dated  December  31, 2001 of the Company in
                    favor of Mestek, Inc.

10.32(4)      --    Secured  Convertible  Credit Facility and Security Agreement
                    dated June 12, 2000  between the  Company,  Simione  Central
                    National, LLC and Simione Central Consulting,  Inc. and John
                    E. Reed.

10.33(4)       --   Warrant  dated June 12,  2000 by and between the Company and
                    Mestek, Inc.

10.34         --    Warrant  dated July 12,  2000 by and between the Company and
                    Mestek,  Inc.  (Incorporated by reference to Exhibit 10.1 to
                    the  Registrant's  Quarterly  Report  on Form  10-Q  for the
                    quarter ended September 30, 2000).

10.35         --    Loan and  Security  Agreement  by and between  the  Company,
                    Simione Central National,  LLC, Simione Central  Consulting,
                    Inc. and Wainwright  Bank and Trust Company,  dated July 10,
                    2000  (Incorporated  by  reference  to  Exhibit  10.1 to the
                    Registrant's  Quarterly  Report on Form 10-Q for the quarter
                    ended September 30, 2000 (File No. 000-22162)).

10.36(5)      --    Lease  Agreement  dated  January 16, 2001  between  Prentiss
                    Properties  Acquisition  Partners,  L.P. and Simione Central
                    Holdings, Inc.



                                       50
<PAGE>

10.37(5)      --    Sublease dated June 17, 1999 between  Healthfield,  Inc. and
                    Simione  Central   Holdings,   Inc.,  and  consented  to  by
                    Environmental Design International, Ltd.

10.38(5)      --    Sublease  dated  December  20,  2000  between  International
                    Paper, Inc. and Simione Central Holdings, Inc.

10.39(5)      --    Sublease Agreement dated January 15, 2000 between The Profit
                    Recovery Group  International  USA, Inc. and Simione Central
                    Holdings, Inc.

10.39.1(6)    --    Lease  Agreement  dated  December  31, 2001  between  Coneca
                    Properties, L.C. and the Company.

10.40         --    First  Amendment  to  Voting  Agreement   Regarding  Simione
                    Directors  dated  as of  July  12,  2000  by and  among  the
                    Company,  Mestek,  Inc.,  John E. Reed,  Stewart B. Reed, E.
                    Herbert   Burk,   Daniel  J.  Mitchell  and  Jesse  I.  Treu
                    (Incorporated  by reference to Exhibit 10.1 of the Company's
                    Quarterly  Report on Form 10-Q for the  quarter  ended March
                    31, 2001).

10.41         --    Settlement  Agreement and Mutual Release dated as of May 16,
                    2001  by  and   between  the   Registrant   and  the  former
                    shareholders and noteholders of CareCentric Solutions,  Inc.
                    by and through  Daniel J.  Mitchell as their  representative
                    and agent  (Incorporated by reference to Exhibit 10.1 of the
                    Company's  Quarterly  Report  on Form  10-Q for the  quarter
                    ended June 30, 2001).

10.42         --    Purchase and Sale Agreement  dated September 28, 2001 by and
                    between the  Registrant,  Simione Central  Consulting,  Inc.
                    n/k/a CareCentric Consulting, Inc., and Simione Consultants,
                    L.L.C. (Incorporated by reference to Exhibit 2.1, filed with
                    Registrant's  Current  Report on Form 8-K (Filed October 12,
                    2001)).

10.43(6)+     --    Employment  Offer  letter  between  John  R.  Festa  and the
                    Company dated October 22, 2001.

10.44(6)+     --    Stock Grant Agreement  between John R. Festa and the Company
                    dated January 23, 2002.

10.45(6)      --    Indemnification  Agreement  between  John R.  Festa  and the
                    Company dated January 23, 2002.

10.47(7)      --    Promissory  Note  in  the  original   principal   amount  of
                    $4,000,000  dated as of July 1,  2002 from the  Company  and
                    certain of its subsidiaries in favor of Mestek, Inc.

10.48(7)      --    Secured  Convertible  Credit Facility and Security Agreement
                    dated as of July 1,  2002 by and  between  the  Company,  SC
                    Holding, Inc., CareCentric National, LLC and Mestek, Inc.

10.49(7)      --    Promissory  Note  in  the  original   principal   amount  of
                    $3,555,555  dated as of July 1,  2002 from the  Company  and
                    certain of its subsidiaries in favor of John E. Reed.

10.50(7)      --    Amended and Restated Secured Convertible Credit Facility and
                    Security  Agreement  dated as of July 1, 2002 by and between
                    the Company, SC Holding, Inc., CareCentric National, LLC and
                    John E. Reed.

10.51(7)      --    Warrant for 400,000  shares of common stock dated as of July
                    1, 2002 by and between the Company and Mestek, Inc.

10.52(7)      --    Warrant Exchange Agreement with respect to 400,000 shares of
                    common  stock  dated as of July 1, 2002 by and  between  the
                    Company and Mestek, Inc.



                                      51
<PAGE>

10.53(7)      --    Warrant for 490,396  shares of common stock dated as of July
                    1, 2002 by and between the Company and Mestek, Inc.

10.54(7)      --    Warrant Exchange Agreement with respect to 490,396 shares of
                    common  stock  dated as of July 1, 2002 by and  between  the
                    Company and Mestek, Inc.

10.55(7)      --    Registration  Rights  Agreement  dated as of July 1, 2002 by
                    and between the Company and Mestek, Inc.

10.56(7)      --    Promissory Note in the original principal amount of $103,818
                    dated as of July 1, 2002 from the Company and certain of its
                    subsidiaries in favor of John E. Reed.

10.57*        --    Convertible   Promissory   Note  dated   December   1,  2002
                    (effective  as of July 1, 2002) from the Company in favor of
                    Barrett C. O'Donnell.

10.58*        --    Amended  and  Restated   Convertible  Note  Agreement  dated
                    December 1, 2002  (effective as of July 1, 2002) between the
                    Company and Barrett C. O'Donnell.

10.59*+       --    Stock  Grant  Agreement  dated  April 22,  2002  between the
                    Company and George M. Hare.

16.1          --    Letter re change in Certifying  Accountant  (Incorporated by
                    reference to Exhibit 4.1 of the Company's  Current Report on
                    Form 8-K dated February 8, 1999 as filed with the Securities
                    and Exchange Commission).

16.2          --    Letter re change in Certifying  Accountant  (Incorporated by
                    reference to Exhibit 4.1 of the Company's  Current Report on
                    Form 8-K dated June 14,  2000 as filed  with the  Securities
                    and Exchange Commission).

21.1*         --    Subsidiaries of the Company.

23*           --    Consent of Grant Thornton LLP

-----------------------
*  Filed herewith
+ Identifies each exhibit that is a "management contract of compensatory plan or
arrangement"  required to be filed as an exhibit to this  Annual  Report on Form
10-K pursuant to Item 14 of Form 10-K
(1)  In accordance  with Item  601(b)(2) of Regulation  S-K, the schedules  have
     been  omitted.  There  is a list of  schedules  at the end of the  Exhibit,
     briefly describing them. The Company will  supplementally  copy any omitted
     schedule to the Commission upon request.
(2)  Incorporated herein by reference to Exhibit 2.1 to the Form 10 of MCS, Inc.
     (File No. 000-27829) filed on October 26, 1999.
(3)  Incorporated by reference to the Company's Current Report on Form 8-K dated
     as of August 12, 1999 (File No. 000-22162).
(4)  Incorporated  by reference to the Company's Form 10-Q for the quarter ended
     June 30, 2000 (File No. 000-22162).
(5)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the fiscal year ended December 31, 2000 (File No. 000-22162).
(6)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the fiscal year ended December 31, 2001 (File No. 000-22162).
(7)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the quarter ended June 30, 2002 (File No. 000-22162).




                                       52
<PAGE>


(b)  Reports on Form 8-K.

     On  February  6,  2002,  the  Company  filed a  Current  Report on Form 8-K
     reporting its plan to realign its business.

     On March 29, 2002 the Company filed a Current  Report on Form 8-K reporting
     the $11.8 million impairment adjustment on its intangible assets.

     On April 30, 2002, the Company filed a Current Report on Form 8-K reporting
     that the Company  received a notice of possible  delisting  from the NASDAQ
     Stock Market.

     On  August  20,  2002,  the  Company  filed a  Current  Report  on Form 8-K
     reporting  that the  Company's  common  stock was being  delisted  from the
     NASDAQ  Stock  Market and would be traded on the Over the Counter  Bulletin
     Board (OTCB).

     On  February  4,  2003,  the  Company  filed a  Current  Report on Form 8-K
     reporting an offer had been received proposing a merger transaction between
     the Company and Borden Associates, Inc.



                                       53
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                              CARECENTRIC, INC.

Date:  March 11, 2003         /s/ JOHN R. FESTA
                              -----------------
                              By: John R. Festa
                                  President and Chief Executive Officer


                              CARECENTRIC, INC.

Date: March 11, 2003          /s/ GEORGE M. HARE
                              ------------------
                              By: George M. Hare
                                  Sr. Vice President and Chief Financial Officer


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S>                                      <C>                                    <C>

SIGNATURE                                TITLE                                  DATE
---------                                -----                                  ----

/s/ JOHN R. FESTA
--------------------------------         President, Chief Executive Officer     March 11, 2003
John R. Festa                            and Director (principal executive
                                         officer)

/s/ GEORGE M. HARE
--------------------------------         Sr. Vice President and Chief           March 11, 2003
George M. Hare                           Financial Officer (principal
                                         financial and accounting officer)

/s/ WILLIAM J. SIMIONE, JR.              Director                               March 11, 2003
--------------------------------
William J. Simione, Jr.

/s/ DAVID O. ELLIS                       Director                               March 11, 2003
--------------------------------
David O. Ellis

/s/ WINSTON R. HINDLE, JR.               Director                               March 11, 2003
--------------------------------
Winston R. Hindle, Jr.

/s/ Barrett C. O'Donnell                 Director                               March 11, 2003
---------------------------------------
Barrett C. O'Donnell

/s/ JOHN E. REED                         Chairman and Director                  March 11, 2003
--------------------------------
John E. Reed

/s/ EDWARD K. WISSING                    Director                               March 11, 2003
--------------------------------
Edward K. Wissing

/s/ STEWART B. REED                      Director                               March 11, 2003
--------------------------------
Stewart B. Reed

</TABLE>



                                       54
<PAGE>



         CareCentric, Inc., Certification for Annual Report on Form 10-K


I, John R. Festa, certify that:

     1.  I have reviewed this annual report on Form 10-K of CareCentric, Inc.;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The registrants  other  certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report  whether or not there were  significant  changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date:    March 11, 2003


/s/ John R. Festa                    .
--------------------------------------
John R. Festa
President and Chief Executive Officer


                                       55
<PAGE>


CareCentric, Inc., Certification for Annual Report on Form 10-K


I, George M. Hare, certify that:

     1.   I have reviewed this annual report on Form 10-K of CareCentric, Inc.;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;

     4.   The registrants  other  certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;
          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and
          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a)   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and
          b)   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report  whether or not there were  significant  changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date:    March 11, 2003


/s/  George M. Hare               .
-----------------------------------
George M. Hare
Sr. Vice President and Chief Financial Officer




                                       56
<PAGE>



                                CARECENTRIC, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            PAGE

Report of Independent Certified Public Accountants - Grant Thornton LLP.......59

Consolidated Balance Sheets...................................................60

Consolidated Statements of Operations.........................................61

Consolidated  Statements of Shareholders'  Equity (Deficit)
     for the years ended  December 31,  2002, 2001, and 2000..................62

Consolidated Statements of Cash Flow for the years ended
     December 31, 2002, 2001, and 2000........................................63

Notes to Consolidated Financial Statements....................................64




                                       58
<PAGE>



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and the Board of Directors of CareCentric, Inc.:

We have audited the  accompanying  consolidated  balance sheets of  CARECENTRIC,
INC. (a Delaware  corporation) and subsidiaries as of December 31, 2002 and 2001
and the related  consolidated  statements of  operations,  shareholders'  equity
(deficit),  and cash flows for each of the years in the three year period  ended
December 31, 2002. These financial statements and the schedule referred to below
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion  on these  financial  statements  and  schedule  based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  CareCentric,   Inc.  and
subsidiaries  as of  December  31,  2002  and  2001  and the  results  of  their
operations  and their cash flows for each of the years in the three year  period
ended  December 31, 2002 in  conformity  with  accounting  principles  generally
accepted in the United States of America.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole.  Schedule II included herein is presented
for purposes of complying with the Securities  and Exchange  Commission's  rules
and is not  part of the  basic  financial  statements.  This  schedule  has been
subjected  to the  auditing  procedures  applied  in  the  audits  of the  basic
financial  statements  and,  in our  opinion,  fairly  states,  in all  material
respects, the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.


/s/ GRANT THORNTON LLP

Atlanta, Georgia
February 20, 2003



                                       59
<PAGE>




<TABLE>
<CAPTION>
<S>                                                               <C>                   <C>

                                            CARECENTRIC, INC.
                                       CONSOLIDATED BALANCE SHEETS

                                                                                DECEMBER 31,
                                                                   ---------------------------------------
                                                                        2002                   2001
                                                                   ----------------       ----------------
                                      ASSETS
Current assets:
   Cash and cash equivalents                                        $      826,000         $      201,000
   Accounts receivable, net of allowance for doubtful
     accounts of $1,307,000 and $1,042,000 respectively                  4,632,000              4,185,000
   Prepaid expenses and other current assets                               696,000                608,000
   Notes receivable                                                        215,000                413,000
                                                                   ----------------       ----------------
     Total current assets                                                6,369,000              5,407,000

Purchased software, furniture and equipment, net                         1,036,000              1,533,000
Intangible assets, net                                                   4,308,000              5,437,000
Other assets                                                               194,000                431,000
                                                                   ----------------       ----------------
     Total assets                                                   $   11,907,000         $   12,808,000
                                                                   ================       ================

        LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)
Current liabilities:
   Line of credit                                                   $    4,525,000         $    5,572,000
   Accounts payable                                                      1,584,000              2,185,000
   Accrued compensation expense                                            556,000                593,000
   Accrued liabilities                                                   6,113,000              6,574,000
   Customer deposits                                                     1,495,000              2,120,000
   Unearned revenues                                                     4,223,000              3,981,000
                                                                   ----------------       ----------------
     Total current liabilities                                          18,496,000             21,025,000

Accrued liabilities, less current portion                                  150,000                750,000

Notes payable long-term                                                  8,520,000              5,343,000

Commitments and contingencies

Shareholders' equity (Deficit):
   Preferred Stock; 10,000,000 shares authorized
   Series B Preferred, $.001 par value;
     5,600,000 issued and outstanding; liquidation value $1.25               6,000                  6,000
   Series C Preferred, $.001 par value; liquidation value $1.00
     850,000 shares in 2001, cancelled in 2002 (no shares
     outstanding)                                                                -                  1,000
   Series D Preferred, $.001 par value; liquidation value $1.23
     398,000 issued and outstanding                                              -                      -
   Series E Preferred, $.001 par value; liquidation value $1.04
     210,000 issued and outstanding                                              -                      -
   Common stock, $.001 par value; 20,000,000 shares authorized;
     4,371,350 shares issued and outstanding at December 31, 2002
     and December 31, 2001                                                   4,000                  4,000
   Unearned compensation                                                  (134,000)              (210,000)
   Additional paid-in capital                                           20,430,000             21,280,000
   Stock warrants                                                        1,000,000              1,000,000
   Accumulated deficit                                                 (36,565,000)           (36,391,000)
                                                                   ----------------       ----------------
     Total shareholders' equity (Deficit)                              (15,259,000)           (14,310,000)
                                                                   ----------------       ----------------
     Total liabilities and shareholders' equity (Deficit)           $   11,907,000         $   12,808,000
                                                                   ================       ================

</TABLE>

See notes to consolidated financial statements



                                       60
<PAGE>


<TABLE>
<CAPTION>
<S>                                                      <C>                  <C>                  <C>

                                CARECENTRIC, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                              YEARS ENDED DECEMBER 31,
                                                         ---------------------------------------------------------
                                                             2002                  2001                 2000
                                                         --------------       ---------------       --------------
Net revenues                                              $ 22,015,000         $  20,446,000         $ 19,574,000

Costs and expenses:
    Cost of revenues                                         6,408,000             8,217,000            8,478,000
    Selling, general and administrative                      9,770,000            10,715,000           10,756,000
    Research and development                                 3,431,000             6,158,000            6,174,000
    Amortization and depreciation                            1,696,000             3,865,000            3,481,000
    Write down of intangibles                                        -            11,799,000                    -
    Restructuring charge                                             -               675,000                    -
                                                         --------------       ---------------       --------------
    Total costs and expenses                                21,305,000            41,429,000           28,889,000
                                                         --------------       ---------------       --------------

Income (loss) from operations                                  710,000           (20,983,000)          (9,315,000)

Other income (expense):
    Other income (expense)                                     250,000                     -               (6,000)
    Interest expense                                          (712,000)             (592,000)            (141,000)
    Interest and other income                                   45,000                37,000               74,000
                                                         --------------       ---------------       --------------
Income (loss) before taxes                                $    293,000         $ (21,538,000)        $ (9,388,000)
    Income tax benefit (expense)                                     -               (15,000)             154,000
                                                         --------------       ---------------       --------------

Income (loss) from continuing operations                       293,000         $ (21,553,000)        $ (9,234,000)

Discontinued operations
    Loss on disposal of discontinued operations                      -            (2,632,000)                   -

    Income (loss) from operations of
        discontinued segment before taxes                            -              (483,000)            (442,000)

    Applicable tax expense                                           -                     -                    -
                                                         --------------       ---------------       --------------
Net (loss) from discontinued operations                              -            (3,115,000)            (442,000)
                                                         --------------       ---------------       --------------

Net income (loss)                                         $    293,000         $ (24,668,000)        $ (9,676,000)
                                                         ==============       ===============       ==============

Cumulative preferred dividends                                (467,000)             (722,000)            (569,000)
                                                         --------------       ---------------       --------------
Net (loss) available to common shareholders               $   (174,000)        $ (25,390,000)        $(10,245,000)
                                                         ==============       ===============       ==============

Net (loss) per share - basic and diluted from
   continuing operations                                  $       0.07         $      (5.06)         $      (2.70)
Weighted average common shares -
    basic and diluted                                        4,371,000             4,272,000            3,418,000
                                                         ==============       ===============       ==============

Net (loss)  per share - basic and diluted                 $          -         $       (0.73)        $      (0.13)
Weighted average common shares -
    basic and diluted                                        4,371,000             4,272,000            3,418,000
                                                         ==============       ===============       ==============

Net income (loss)  per share - basic and diluted          $       0.07         $       (5.77)        $      (2.83)
Weighted average common shares -
    basic and diluted                                        4,371,000             4,272,000            3,418,000
                                                         ==============       ===============       ==============

Net (loss) per share - basic and diluted
    available to common shareholders                      $      (0.04)        $       (5.94)        $      (3.00)
                                                        ==============       ===============       ==============
Weighted average common shares - basic and
   diluted                                                   4,371,000             4,272,000            3,418,000
                                                         ==============       ===============       ==============

See notes to consolidated financial statements
</TABLE>



                                       61

<PAGE>
                             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                             For the years ended December 31, 2002, 2001, 2000
                                                 (unaudited)

<TABLE>
<CAPTION>
<S>                    <C>        <C>        <C>        <C>          <C>       <C>          <C>         <C>           <C>

                                                                     Unearned   Additional                                Total
                             Common              Preferred            Compen-    Paid-in                 Accumulated   Shareholders'
                         Shares     Stock     Shares     Stock        sation     Capital      Warrants      Deficit       Deficit
Balance at             ----------  --------  ---------   --------    ---------- -----------  ----------  ------------- -------------
  December 31, 1999         1,000  $ 1,000           -   $      -     $      -  $ 1,260,000  $        -   $  (756,000)  $   505,000
                       ----------  --------  ---------   --------    ---------- -----------  ----------  ------------- -------------
MCS, Inc. shares
  eliminated in merger     (1,000)  (1,000)                                                                                  (1,000)

CareCentric, Inc.
  Shares post merger,
  $.001 par value       3,850,000    4,000                                       19,810,000   1,000,000                  20,814,000

Issuance of $.001
  par value preferred
  stock in connection
  with merger                   -        -   6,848,000      7,000                                                             7,000
   Series B,
     5,600,000 shares
   Series C,
     850,000 shares
   Series D,
     398,000 shares

Net loss                                                                                                  (10,245,000)  (10,245,000)

Balance at             ----------  --------  ---------   --------    ---------- -----------  ----------  ------------- -------------
  December 31, 2000     3,850,000  $ 4,000   6,848,000   $  7,000     $      -  $21,070,000  $1,000,000  $(11,001,000)  $11,080,000
                       ==========  ========  =========   ========    ========== ===========  ==========  ============= =============
Issuance of
  $.001 par
  value common stock      593,000

Cancellation of
  $.001 par value
  common stock            (72,000)

Issuance of
  $.001 par value
  Series E
  preferred stock,
  210,000 shares                               210,000                (210,000)     210,000

Net loss                                                                                                  (25,390,000)  (25,390,000)


Balance at
  December 31, 2001     4,371,000  $ 4,000   7,058,000   $  7,000    $(210,000) $21,280,000  $1,000,000  $(36,391,000) $(14,310,000)
                       ==========  ========  =========   ========    ========== ===========  ==========  ============= =============

Amortization of
  unearned compensation                                                 76,000                                               76,000

Cancellation of
  Series C
  Preferred Stock                             (850,000)    (1,000)                 (850,000)                               (851,000)

Net loss                                                                                                     (174,000)     (174,000)
                       ----------  --------  ---------   --------    ---------- -----------  ----------  ------------- -------------
Balance at
  December 31, 2002     4,371,000  $ 4,000   6,208,000   $  6,000    $(134,000) $20,430,000  $1,000,000  $(36,565,000) $(15,259,000)
                       ==========  ========  =========   ========    ========== ===========  ==========  ============= =============

</TABLE>

      See notes to Consolidated Financial Statements



                                       62
<PAGE>


<TABLE>
<CAPTION>
<S>                                                  <C>                    <C>                 <C>
                                              CARECENTRIC, INC.
                                     CONSOLIDATED STATEMENTS OF CASH FLOW

                                                                      YEARS ENDED DECEMBER 31,
                                                      ---------------------------------------------------------
                                                            2002               2001                 2000
                                                      -----------------   ----------------    -----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                      $      (174,000)    $  (25,390,000)     $   (10,245,000)

ADJUSTMENTS  TO  RECONCILE  NET (LOSS)
INCOME TO NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES:
    Provision for doubtful accounts                            351,000            500,000              538,000
    Amortization and depreciation                            1,696,000          4,252,000            3,960,000
    Stock based Compensation charged to earnings                76,000                  -                    -
    Loss on discontinued operations                                  -                  -                    -
    Write down of intangibles                                        -          2,632,000                    -
                                                                     -         11,799,000                    -

CHANGES IN ASSETS AND LIABILITIES, NET OF
  ACQUISITIONS:
    Accounts receivable                                       (797,000)         2,101,000             (929,000)
    Prepaid expenses and other current assets                  (88,000)            90,000              159,000
    Other assets                                               137,000            138,000            1,122,000
    Accounts payable                                          (600,000)         1,447,000           (2,684,000)
    Accrued compensation                                       (37,000)           (23,000)             (88,000)
    Accrued liabilities                                     (1,026,000)           (26,000)            (730,000)
    Customer deposits                                         (626,000)          (376,000)             949,000
    Unearned revenues                                          242,000         (1,020,000)             726,000
                                                      -----------------   ----------------    -----------------
         Net cash used in operating activities                (846,000)        (3,876,000)          (7,222,000)
                                                      -----------------   ----------------    -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Assets and liabilities disposed of                                   -            (16,000)                   -
Purchase of software, furniture and equipment                  (70,000)          (327,000)            (658,000)
                                                      -----------------   ----------------    -----------------
         Net cash used in investing activities                 (70,000)          (343,000)            (658,000)
                                                      -----------------   ----------------    -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received in connection with MCS merger                          -                  -            3,547,000
Payment on notes payable                                             -                  -             (150,000)
Proceeds from notes payable                                  3,176,000                  -              600,000
Increase (decrease) in line of credit                       (1,047,000)         4,058,000            4,198,000
Payment on capital lease obligation                            (36,000)                 -                    -
Proceeds from Consulting note receivable                       298,000                  -                    -
Cancellation of Series C Preferred stock                      (850,000)                 -                    -
                                                      -----------------   ----------------    ------------------
         Net cash provided by  financing activities          1,541,000          4,058,000            8,195,000
                                                      -----------------   ----------------    -----------------

         Net change in cash and cash equivalents               625,000           (161,000)             315,000

Cash and cash equivalents, beginning of period                 201,000            362,000               47,000
                                                      -----------------   ----------------    -----------------

Cash and cash equivalents, end of period               $       826,000     $      201,000      $       362,000
                                                      =================   ================    =================

See notes to consolidated financial statements

</TABLE>



                                       63
<PAGE>



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

MCS AS DEEMED ACQUIRER OF CARECENTRIC, INC.

On March 7, 2000, CareCentric,  Inc. (formerly known as Simione Central Holdings
Inc.)  ("CareCentric")  and MCS,  Inc.  ("MCS")  merged in a  transaction  ("the
CareCentric/MCS  merger," also described as "the MCS/Simione  merger") accounted
for as a reverse  acquisition for financial  reporting  purposes.  In connection
with the acquisition, CareCentric issued 1,489,853 shares of its common stock in
exchange for all the  outstanding  common stock of MCS, and thereby,  the former
shareholders of MCS acquired control of CareCentric.  As a result, for financial
reporting  purposes  MCS  is  considered  the  acquiring  company;   hence,  the
historical   financial   statements  of  MCS  became  the  historical  financial
statements of  CareCentric  and include the results of operations of CareCentric
only from the effective acquisition date.

     The weighted average common shares for the year ended December 31, 2000 are
recast in the accompanying  Consolidated Statements of Operations to give effect
to the 1,489,853 shares of CareCentric  common stock that were issued to the MCS
shareholders in connection with the  CareCentric/MCS  merger on March 7, 2000 as
though such shares had been  outstanding  for the entire period.  For the period
from  January 1, 2000  through  March 6, 2000,  therefore,  1,489,853  shares of
issued and  outstanding  CareCentric  common stock are deemed to be owned by the
MCS  shareholders.  For the period from March 7, 2000 through December 31, 2000,
there were 3,849,816 total shares of issued and outstanding Company common stock
(after giving effect to the CareCentric/MCS merger).

BASIS OF PRESENTATION

The  consolidated  financial  statements  prepared  by the  Company  include the
results of operations of the parent  company and its wholly owned  subsidiaries.
All inter-company balances and transactions have been eliminated.

     These financial  statements do not include any adjustments  relating to the
recoverability and classification of recorded asset amounts or classification of
liabilities  that might be necessary should the Company be unable to continue to
operate  in the  normal  course  of  business.  See Note 17 to the  accompanying
Consolidated Financial Statements.

     Certain prior period amounts have been  reclassified to conform to the 2001
financial statement presentation of discontinued operations.

DESCRIPTION OF BUSINESS

     The Company is a provider  of  information  technology  systems and related
services and consulting  services  designed to enable home health care providers
to more  effectively  operate their  businesses  and compete in the  prospective
payment system (PPS) and managed care  environments.  The Company's  focus is to
help home health care  providers  streamline  their  operations and better serve
their patients.  CareCentric offers several  comprehensive  software  solutions.
Each of these software solutions is designed to enable customers to generate and
utilize comprehensive financial, operational and clinical information.

MANAGEMENT ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  as well as the  reported  amounts  of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.



                                       64
<PAGE>

REVENUE RECOGNITION

     The Company  recognizes  revenue  under SOP 97-2.  The  Company  recognizes
software  license revenue when the following  criteria are met: (1) a signed and
executed contract is obtained; (2) delivery has occurred; (3) the license fee is
fixed  and  determinable;   (4)  collection  is  probable;   and  (5)  remaining
obligations  under the license  agreement are immaterial.  The Company sells and
invoices software  licenses and maintenance fees as separate contract  elements,
except  with  respect to first year  maintenance  which is sold in the form of a
bundled turnkey system.  The Company has established  vendor specific  objective
evidence related to the value of maintenance fees. Where applicable, the Company
uses the residual value method to allocate software revenue between licenses and
first year maintenance.

     Revenues are derived from the licensing and sub-licensing of software,  the
sale of computer hardware, accessories and supplies, implementation and training
products  and  services,  forms and case plans,  and  software  maintenance  and
support  services.  For the year ended December 31, 2002,  the Company  recorded
total revenues of $22.0  million.  The Company's core product lines of STAT2 and
MestaMed(R)  accounted for 24.4% and 36.3%  respectively of the $22.0 million in
revenues.

     To the extent that  software and  services  revenues  result from  software
support,  implementation,  training  and  technical  consulting  services,  such
revenues  are  recognized  monthly as the related  services are rendered or, for
software support revenues, over the term of the related agreement. To the extent
that  software and services  revenues  result from software  licenses,  computer
hardware and third party software  revenues,  such revenues are recognized  when
the related products are delivered and  collectability  of fees is determined to
be probable, provided that no significant obligation remains under the contract.
Limited amounts of revenues derived from the sale of software licenses requiring
significant modification or customization are recorded based upon the percentage
of completion method using labor hours or contract milestones.  Software support
or  maintenance  allows  customers  to  receive  unspecified   enhancements  and
regulatory data updates in addition to telephone support.

     Third-party software and computer hardware revenues are recognized when the
related  products  are  shipped.   Software  support  agreements  are  generally
renewable  for one-year  periods,  and revenue  derived from such  agreements is
recognized  ratably  over  the  period  of  the  agreements.   The  Company  has
historically  maintained high renewal rates with respect to its software support
agreements. The Company generally charges for software implementation,  training
and technical  consulting services as well as management  consulting services on
an hourly or daily  basis.  The Company is now  offering  "tiered  pricing"  for
implementation  of new  systems  whereby  the  customer  pays a fixed  fee for a
certain  level of  packaged  services  and daily  fees for  services  beyond the
package.

Revenues for post-contract customer support are recognized ratably over the term
of the support  period,  which is typically  one year.  Post  contract  customer
support  fees  typically  cover  incremental  product  enhancements,  regulatory
updates  and  correction  of  software  errors.  Separate  fees are  charged for
significant product  enhancements,  new software modules,  additional users, and
migrations to different operating system platforms.

     Subsequent to delivery, the Company frequently delivers a variety of add-on
software and hardware components.  Revenues from these sales are recognized upon
shipment.

     In addition to software  licenses,  software  maintenance and support,  and
related hardware, the Company also provides computer-based training, CD-ROMs and
a number of ancillary  services  including on site  implementation and training,
classroom training,  consulting and "premium" and after-hours support.  Revenues
from such  products  and services are  recognized  monthly as such  products are
delivered and such services are performed.

     Unbilled  receivables  typically represent revenues from ancillary services
performed  and earned in the  current  period but not  billed  until  subsequent
periods,  usually within one month.  Unearned revenues  represent amounts billed
for which revenue recognition has not yet occurred.




                                       65
<PAGE>

PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

     Purchased   software,   furniture   and  equipment  are  carried  at  cost.
Depreciation and amortization are computed using the  straight-line  method over
the estimated  useful lives of the assets.  When assets are retired or otherwise
disposed of, the cost and related accumulated  depreciation are removed from the
accounts and any resulting gain or loss is reflected in income for the period.


SOFTWARE DEVELOPMENT EXPENSES

     Costs  incurred to  establish  the  technological  feasibility  of computer
software  products  are  expensed  as  incurred.  The  Company's  policy  is  to
capitalize  costs  incurred  between  the  point of  establishing  technological
feasibility and general release only when such costs are material. For the years
ended December 31, 2002,  2001,  2000,  the Company had no capitalized  computer
software and development costs.

CASH EQUIVALENTS

     All highly liquid investments  purchased with an original maturity of three
months or less are considered to be cash equivalents.


INTANGIBLE ASSETS AND LONG-LIVED ASSETS

     Statement of Financial  Accounting  Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of"  requires  impairment  losses to be  recorded on  long-lived  assets used in
operations when indicators of impairment are present and the  undiscounted  cash
flows  estimated  to be  generated  by those  assets  are less than the  asset's
carrying amount.  The application of SFAS No. 121 resulted in an impairment loss
of $11.8 million  recorded in the fourth  quarter of 2001,  see Note 7. Prior to
the   impairment   adjustment,   the   intangible   assets   arising   from  the
CareCentric/MCS  merger were amortized using the  straight-line  method over the
estimated  useful lives of the related assets as more fully disclosed in Notes 6
and 7. The  measurement of the recorded  impairment was based upon comparing the
projected  undiscounted  future cash flow from the use of the assets against the
unamortized carrying value of the assets in the financial statements.

     Effective  July 1,  2001,  the  Company  adopted  SFAS No.  141,  "Business
Combinations".  Effective  January 1, 2002,  the company  adopted  SFAS No. 142,
"Goodwill and Intangible  Assets in 2001" and SFAS No. 144,  "Accounting for the
Impairment or Disposal of Long-Lived Assets". These new standards superseded the
Company's  previous  accounting  for  Intangible  Assets  under  SFAS No. 121 as
discussed below in the section Recent Accounting Pronouncements.

     In  adopting  SFAS No. 142,  the Company  ceased  amortizing  goodwill  and
reassessed  the  remaining  life for  developed  technologies  from 6 years to 4
years.  An impairment test is required to be performed upon the adoption of SFAS
No. 142 and at least  annually  thereafter.  On an  ongoing  basis  (absent  any
impairment indicators requiring interim review), the Company performs impairment
testing at the end of each fiscal year. Impairment  adjustments  recognized from
future  impairment  tests,  if any,  generally  are required to be recognized as
operating  expenses.  In connection with adopting SFAS No. 142, the Company also
reassesses  the  useful  lives  and  the   classification  of  its  identifiable
intangible assets to determine that they continue to be appropriate.

     Actual  results of  operations  for the year ended  December  31,  2002 and
adjusted  results of operations  for the year ended  December 31, 2001,  had the
Company  applied the provisions of SFAS No. 142 in that period,  are as follows.
The  adjustments  to the results of operations  for the year ended  December 31,
2001 are i) the impact on amortization  expense  resulting from the cessation of
amortization  of  goodwill;  ii) the effect of changing  the  remaining  life of


                                       66
<PAGE>

developed technologies; and iii) the effect of the impairment charge recorded in
the fourth quarter of the year ended December 31, 2001):

<TABLE>
<CAPTION>
<S>                                              <C>                  <C>
                                                          YEAR ENDED DECEMBER 31,
                                                  ---------------------------------------
                                                        2002                 2001
                                                  ------------------  -------------------

NET INCOME (LOSS) AVAILABLE TO COMMON              $       (174,000)   $     (25,390,000)
SHAREHOLDERS

Add back: Goodwill amortization                                   -            1,709,000
Add back: Technology amortization                                 -              334,000
                                                  ------------------  -------------------
Adjusted net income                                $       (174,000)   $     (23,347,000)
                                                  ==================  ===================

NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED

Reported net income                                $          (0.04)   $           (5.94)
Goodwill amortization                                             -                 0.40
Technology amortization                                           -                 0.08
                                                  ------------------  -------------------
Adjusted net income                                $          (0.04)   $           (5.47)
                                                  ==================  ===================

Weighted average common shares-
                                                  ------------------  -------------------
basic and diluted                                         4,371,000            4,272,000
                                                  ==================  ===================


</TABLE>

     SFAS No. 144,  which  became  effective  for fiscal years  beginning  after
December  15,  2001,  provides a single  accounting  model for the  disposal  of
long-lived  assets.  New criteria  must be met to classify the asset as an asset
held for sale.  SFAS No. 144 also focuses on reporting the effect of a disposal.
The  adoption  of SFAS No. 144 did not have a material  impact on the  Company's
financial position or results of operations.

INCOME TAXES

     The Company  accounts  for income  taxes using the  asset/liability  method
which  requires  recognition  of  deferred  tax  liabilities  and assets for the
expected future tax consequences of temporary  differences between the financial
statement carrying amount and the tax bases of assets and liabilities.

NET (LOSS) EARNINGS PER SHARE

     The Company calculates earnings per share under SFAS No. 128, "Earnings Per
Share."  Basic  earnings  per share  exclude  any  dilutive  effects of options,
warrants and convertible  securities.  Diluted  earnings per share for the years
2002,  2001 and 2000  exclude the effects of options,  warrants  and  conversion
rights  as they  would be  anti-dilutive,  and as a result,  basic  and  diluted
earnings are the same for the years 2002, 2001 and 2000.

                                       67




<PAGE>
<TABLE>
     <S>                                            <C>                  <C>                  <C>
                                                                    FOR YEAR ENDED DECEMBER 31,
                                                    ------------------------------------------------------------
                                                         2002                 2001                  2000
                                                    ----------------     ----------------     ------------------
     Numerator:
        Net (loss) income after cumulative
           deferred dividends                        $    (174,000)       $  (25,390,000)      $    (10,245,000)
                                                    ================     ================     ==================

     Denominator:
        Denominator for basic and diluted earnings
           per share- weighted - average shares          4,371,000             4,272,000              3,418,000
                                                    ===============      ================     ==================

     Net (loss) income per share - basic
        and diluted for common shareholders          $       (0.04)       $        (5.94)      $          (3.00)
                                                    ================     ================     ==================

</TABLE>

STOCK BASED COMPENSATION

     Employee  stock  options  are  accounted  for under  SFAS No.  123 (and its
related  interpretations)  which allows the use of Accounting  Principles  Board
Opinion  No.  25,  "Accounting  for Stock  Issued  to  Employees"  which  allows
providing  disclosure  of  compensation  cost - see Note 12 to the  Consolidated
Financial Statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  following  methods  and  assumptions  were  used  by  the  Company  in
estimating its fair value disclosures for financial instruments:

Cash and cash  equivalents:  The carrying  amounts reported in the balance sheet
for cash and cash equivalents approximate their fair value.

     Notes  receivable and payable:  The carrying amounts of the Company's notes
receivable and payable approximates their fair value.

RECENT ACCOUNTING PRONOUNCEMENTS

     On December 3, 1999, the SEC released Staff  Accounting  Bulletin 101, (SAB
101) "Revenue  Recognition in Financial  Statements".  This bulletin established
more clearly  defined  revenue  recognition  criteria than  previously  existing
accounting  pronouncements.  On June 26, 2000, the SEC released SAB 101B,  which
delayed the  required  implementation  of SAB 101 until no later than the fourth
quarter of fiscal years ending  December 31, 2000.  The effects of this bulletin
were not material to its financial position, results of operations or cash flow.

     The  Financial  Accounting  Standards  Board  (FASB)  issued  SFAS No. 141,
Business  Combinations and SFAS No. 142, Goodwill and Intangible Assets in 2001.
SFAS No. 141 is effective for all business combinations completed after June 30,
2001.  SFAS No. 142 is effective for fiscal years  beginning  after December 15,
2001; however,  certain provisions of this Statement apply to goodwill and other
intangible  assets acquired  between July 1, 2001 and the effective date of SFAS
No. 142. Major  provisions of these Statements and their effective dates for the
Company are as follows:  i) all business  combinations  initiated after June 30,
2001 must use the purchase method of accounting.  The pooling of interest method
of accounting is prohibited  except for  transactions  initiated  before July 1,
2001, ii) intangible assets acquired in a business  combination must be recorded
separately from goodwill if they arise from contractual or other legal rights or
are separable from the acquired entity and can be sold,  transferred,  licensed,


                                       68
<PAGE>

rented or exchanged, either individually or as part of a related contract, asset
or liability, iii) goodwill and intangible assets with indefinite lives acquired
after June 30,  2001,  will not be  amortized  (effective  January 1, 2002,  all
previously  recognized goodwill and intangible assets with indefinite lives will
no longer be subject to amortization),  iv) effective January 1, 2002,  goodwill
and  intangible  assets  with  indefinite  lives will be tested  for  impairment
annually  and  whenever  there is an  impairment  indicator  and v) all acquired
goodwill must be assigned to reporting units for purposes of impairment  testing
and segment reporting.  Following the accounting for impairment discussed below,
which was made under the rules of SFAS 121, the Company believes that the effect
of  adopting  SFAS No. 141 and 142 will be  limited  to changes in  amortization
expense for periods after December 31, 2001. Additionally,  effective January 1,
2003 with the adoption of SFAS No. 142, the assembled workforce intangible asset
previously recognized under SFAS 121 was recharacterized as goodwill, which will
not be amortized under the rules of SFAS No. 142.

     On  October  3,  2001,  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment  or Disposal  of  Long-Lived  Assets,"  that  replaced  SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To
Be Disposed  Of." The primary  objectives  of this  project  were to develop one
accounting  model  based  on the  framework  established  in  SFAS  No.  121 for
long-lived  assets  to be  disposed  of by  sales  and  to  address  significant
implementation issues. The accounting model for long-lived assets to be disposed
of by sale applies to all long-lived assets,  including discontinued operations,
and replaces the  provisions of Account  Principles  Board (APB) Opinion no. 30,
Reporting Results of  Operations-Reporting  the Effects of Disposal of a Segment
of a Business, for the disposal of segments of a business. SFAS No. 144 requires
that those long-lived assets be measured at the lower of carrying amount or fair
value  less  cost to sell,  whether  reported  in  continuing  operations  or in
discontinued  operations.  Therefore,  discontinued operations will no longer be
measured at net realizable  value or include  amounts for operating  losses that
have not yet occurred.  The effect of adoption of SFAS No. 144 effective January
1, 2002 had no material impact on the Company's financial  position,  results of
operations or cash flow.

     On December 31,  2002,  the  Financial  Accounting  Standards  Board (FASB)
issued FASB No. 148,  "Accounting for Stock-Based  Compensation--Transition  and
Disclosure"  This  Statement  amends  FASB  Statement  No. 123,  Accounting  for
Stock-Based  Compensation,  to provide  alternative  methods of  transition  for
companies that voluntarily change to the  fair-value-based  method of accounting
for stock-based employee  compensation.  In addition,  this Statement amends the
disclosure requirements of FASB No. 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results. The Company does not believe FAS 148 will have a material effect on its
financial statements.


NOTE 2 -- DISCONTINUED OPERATIONS

     The discontinued operations reported in the Company's results of operations
for the year ending December 31, 2001 relate to the Company's Simione Consulting
segment which was sold on September 28, 2001. The Consulting business,  previous
to its sale, was the Company's  only  separately  reported  segment of business.
Accordingly,  the Company no longer reports segment information.  The Consulting
business  segment was discontinued  through a transaction  which sold certain of
the assets of the Company's wholly-owned subsidiary,  Simione Consulting,  Inc.,
to Simione  Consultants,  L.L.C.  ("Simione"),  which is owned and controlled by
William  Simione,  Jr., a director  of the  Company.  The total  sales price was
approximately  $2.0  million  plus the  assumption  of  certain  liabilities  by
Simione.  The Company's net pre-tax loss on the disposal was approximately  $2.6
million and resulted from a write-off of the intangible  assets  associated with
the  Consulting  segment as  identified at the merger date of March 7, 2000 with
MCS.

     Summarized financial information for the discontinued Consulting segment is
as follows:



                                       69
<PAGE>

                                                          000'S
                                                  ----------------------
                                                     2002       2001
                                                  ----------- ----------
Operating Revenue                                   $      -   $  3,417

(Loss) before Provision for Income Taxes                   -       (484)

(Loss) from Discontinued Operations
   Net of Income Tax                                       -       (484)

Current Assets                                             -          -
Total Assets                                               -          -

Net Assets of Discontinued Operations               $      -   $      -



NOTE 3 -  RESTRUCTURING CHARGE

     A  restructuring  charge  of  $675,000  (including  terminated  leases  and
contracts of $244,000 and severance of $431,000,  respectively)  was incurred in
April 2001 as the  result of the  Company  approving  a plan to close one remote
support  office and to downsize the  workforce at its remaining  facilities.  At
December 31, 2001,  that plan was fully completed and the  restructuring  charge
was completely expended.

NOTE 4 - CARECENTRIC/MCS MERGER

     On March 7, 2000, MCS completed the merger with CareCentric, Inc. (formerly
known as Simione  Central  Holdings Inc.)  ("CareCentric").  CareCentric  issued
1,489,853  shares of common stock to MCS stockholders in exchange for all of the
outstanding  shares of MCS common stock. This number of shares has been adjusted
to reflect a one-for-five  reverse stock split that was completed by CareCentric
immediately  prior to the merger.  In connection with the closing of the merger,
Mestek  invested $6.0 million in  CareCentric in exchange for 5.6 million shares
of Series B preferred stock and warrants to purchase  400,000 shares (on a split
adjusted  basis) of  CareCentric  common stock and $0.87 million in exchange for
170,000 shares of Series C Preferred Stock.

     As required by generally accepted accounting principles (GAAP), the effects
of the merger on the Company's  assets and  liabilities  have been excluded from
the operating section of the cash flow statement for reporting purposes.

     Pro-forma unaudited results assuming the merger took place as of January 1,
2000 are as follows:

                                                     FOR YEAR ENDED DECEMBER 31,
                                                                2000
                                                     ---------------------------
Revenue                                                        $  23,586,000
(loss) continuing operations                                   $ (11,654,000)
(loss) discontinued operations                                 $           -
(loss) per share -continuing basic and diluted                 $       (3.41)
(loss) per share -discontinuing basic and diluted              $        0.00
Net (loss) per share - basic and diluted                       $       (3.41)


NOTE 5 - NOTES RECEIVABLE

     The Company has certain Notes  Receivable of varying  maturities which have
resulted from the sale of the assets of the Consulting  segment,  financing to a
customer for  purchase of a new software  system.  The  Consulting  segment Note


                                       70
<PAGE>

Receivable  is due from Mr.  William  Simione  Jr.,  currently a Director of the
Company,  and the President and Chief  Executive  Officer of the acquirer of the
Consulting business,  Simione Consulting,  LLC, and past Chief Executive Officer
of the  Consulting  segment when it was part of the Company.  The Customer  note
occurred in the normal course of business.

         The amounts and term of each note is summarized in the table below.

                                           NOTES RECEIVABLE
                           ------------------------------------------------
                            CONSULTING     CUSTOMER NOTE         TOTAL
                           -------------  -----------------   ------------

 Balance 12-31-01           $   707,000    $       137,000     $  844,000
                           =============  =================   ============

 Balance 12-31-02           $   409,000    $             -     $  409,000
                           ==============  ================   =============

  Interest Rate                   8.50%              5.65%

Obligation Term
Principal amounts due
             2003           $   215,000                  -     $  215,000
             2004           $   194,000                  -     $  194,000
                           -------------  -----------------  -------------
                            $   409,000                  -     $  409,000
                           =============  =================  =============


NOTE 6 - PURCHASED SOFTWARE, FURNITURE AND EQUIPMENT

         Purchased software, furniture and equipment consisted of the following:

                                                                DEPRECIATION
                               DECEMBER 31,      DECEMBER 31,   ESTIMATED
                                   2002          31, 2001       USEFUL LIVES
                               -------------   --------------   -------------

Furniture and Fixtures          $  1,447,000    $ 1,428,000     10 years
Computer equipment and
   purchased software              6,288,000      6,237,000     5 years
                               -------------   --------------
                                   7,735,000      7,665,000

Accumulated depreciation          (6,699,000)    (6,132,000)
                               -------------   --------------
                                $  1,036,000    $ 1,533,000
                               =============   ==============


NOTE 7 - INTANGIBLE ASSETS

     As a  result  of the  merger  with  MCS  on  March  7,  2000,  the  Company
capitalized  $26.5 million of  intangible  assets.  Those assets were  amortized
according to various lives ranging from five to nine years.  In accordance  with
Financial  Accounting  Standard No. 121, the Company is required to periodically
review the value of its  intangible  assets.  During the fourth quarter of 2001,
the Company's  analysis and review,  utilizing the  methodology of SFAS No. 121,
resulted in an $11.8 million  impairment  loss of the  intangible  assets of the
Company.  The major  reasons  for the  impairment  were new  technologies  being
integrated in the  Company's  current and future  products  causing its existing
product platforms to have reduced future revenue generation  capability,  and an
expectation that immediate  opportunities  for new software sales are lower than
were forecasted at the time of the merger with MCS.



                                       71
<PAGE>

     The following table  summarizes the Company's  changes in account  balances
for its Intangible Assets during the year ended December 31, 2002.

<TABLE>
<CAPTION>
<S>                        <C>           <C>             <C>           <C>             <C>           <C>
                                                                                         12/31/02
                             ORIGINAL       ASSETS        IMPAIRMENT    ACCUMULATED      NET BOOK     AMORTIZATION
                               COST        DISPOSED       WRITE-DOWN    AMORTIZATION      VALUE          PERIOD
                           -------------  ------------   -------------  -------------  -------------  --------------
Developed technology        $ 10,650,000  $         -    $ (4,220,000)  $ (3,438,000)   $ 2,992,000      4 years
Customer base                  1,700,000     (510,000)              -       (374,000)       816,000      9 years
Goodwill                      14,151,000   (2,906,000)     (7,580,000)    (3,165,000)       500,000              -
                           -------------  ------------   -------------  -------------  -------------
                            $ 26,501,000  $(3,416,000)   $(11,800,000)  $ (6,977,000)   $ 4,308,000
                           =============  ============   =============  =============  =============
</TABLE>


NOTE 8 - NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

On July 1, 2002,  the Company  completed a  recapitalization  plan  initiated on
April 8, 2002. The recapitalization plan was approved by the common shareholders
of the Company at the June 6, 2002 annual  stockholders'  meeting. The effect of
the  recapitalization  plan is  summarized  below  for  each  note  payable  and
presented comparatively in the following chart at December 31, 2002 and 2001. In
accordance  with the terms of the  recapitalization  plan, the December 31, 2002
balances of Long term convertible  notes payable to B. C. O'Donnell,  J. E. Reed
and Mestek include  capitalized  interest accrued from July 1, 2002 and December
31, 2002.

<TABLE>
<CAPTION>
         <S>                                               <C>                      <C>

                                                            DECEMBER 31, 2002        DECEMBER 31, 2001
                                                            -------------------      -------------------
         SHORT TERM:
         Line of Credit                                      $     4,525,000          $    5,572,000
                                                            -------------------      -------------------
                                                             $     4,525,000          $    5,572,000
                                                            ===================      ===================

         LONG TERM:
         Convertible Note Payable - J. E. Reed               $             -          $    3,500,000
         Note Payable  - Mestek                                            -               1,019,000
         Convertible Note Payable - B. C. O'Donnell                  619,000                 600,000
         Note Payable  - J. E. Reed Capitalized interest                   -                 184,000
         Note Payable  - Mestek Capitalized Interest                       -                  40,000
         Convertible Note - Mestek                                         -               4,126,000
         Convertible Note - J.E. Reed                                      -               3,668,000
         Note Payable - J.E. Reed Accrued Interest                         -                 107,000
                                                             -----------------       ------------------
                                                             $     8,520,000          $    5,343,000
                                                             =================       ==================
</TABLE>


     LINE OF CREDIT:

     On July 12, 2000, the Company entered into a $6.0 million Loan and Security
Agreement  Facility  with  Wainwright  Bank and Trust  Company  (the  Wainwright
Facility),  a commercial  bank, under which the Company granted a first priority


                                       72
<PAGE>

position on substantially all of its assets as security. The Wainwright Facility
was  used to pay off the  line of  credit  with  Silicon  Valley  Bank,  certain
short-term  loans from Mestek,  Inc. (a related  party,  see Note 9), and a loan
from David O. Ellis. Borrowings under the Wainwright Facility accrue interest at
the bank's prime rate per annum and require  monthly  payments of interest.  The
Wainwright  Facility  currently  matures  on  October  1,  2004.  The  Company's
obligations   under  the  Wainwright   Facility  are  guaranteed  by  Mestek  in
consideration  of which  the  Company  issued a warrant  to  Mestek to  purchase
104,712  shares of the Company's  common stock.  As a result of the July 1, 2002
recapitalization, the warrant was cancelled.

     CONVERTIBLE NOTE PAYABLE - BARRETT C. O'DONNELL:

     On November 11, 1999,  Simione borrowed  $500,000 from Barrett C. O'Donnell
and  $250,000  from David O. Ellis,  both on an  unsecured  basis,  and executed
promissory  notes in  connection  therewith.  Dr.  Ellis and Mr.  O'Donnell  are
directors of the Company. When the CareCentric/MCS merger was completed on March
7, 2000, the Company succeeded to both of these obligations. The note payable to
Dr. Ellis,  which accrued interest at 9% per annum, was paid in full on July 12,
2000 in  advance  of its  August  15,  2000  maturity.  The note  payable to Mr.
O'Donnell  included interest at 9% per annum, was scheduled to mature on May 11,
2002, and required  quarterly  payments of accrued interest.  On August 8, 2000,
the $500,000 note payable to Mr.  O'Donnell,  together with $100,000 of deferred
salary, was cancelled in exchange for a $600,000 subordinated note,  convertible
into  CareCentric  common  stock at a strike  price of  $2.51  per  share,  with
interest at 9% per annum and a five-year  maturity.  In January 2002,  this loan
was amended to change the interest  rate to prime plus two percent and to change
the terms of  payment  of  interest  for 2002 to require  that  one-half  of the
accrued  interest  be timely  paid each  quarter  and the  balance to be paid on
December 31, 2003 or to be converted  into an  additional  convertible  note. In
December 2002, Mr.  O'Donnell  agreed to adjust the terms of the Note Payable to
provide  consistent  treatment with the Mestek and J.E. Reed  convertible  notes
payable as existing after the July 1, 2002 recapitalization  plan. The effect of
this  adjustment  was to reduce the interest rate on the note payable to a fixed
rate of 6.25% and to defer all  interest  earned from July 1, 2002  through June
30,  2004 at which  time  the  accumulated  interest  totaling  $75,000  will be
capitalized  into the  principal of the note payable.  After June 30, 2004,  the
principal and  capitalized  interest will  accumulate  interest at the per annum
rate equal to six and one-quarter  percent (6.25%) with interest  compounded and
payable  quarterly  beginning on September  30, 2004.  Together  with any unpaid
principal and accrued  interest,  the Barrett C.  O'Donnell note will mature and
become payable on June 30, 2007.  Additionally,  the $600,000 note together with
the value of accrued  interest  may be  converted at the rate of $1.00 per share
into  CareCentric  common stock  exercisable at any time after July 1, 2002. The
new notes are subordinated to the Wainwright Bank $6.0 million line of credit.

     CONVERTIBLE NOTE PAYABLE - MESTEK:

     Prior to the July 1, 2002 recapitalization  plan, the Company was obligated
under a) an  18-month  unsecured  promissory  note in the  principal  amount  of
$1,019,000  payable to Mestek Inc.,  that earned  interest at prime plus one and
one half percent  (1.5%),  with  interest  payable  semiannually  and matured on
September 30, 2003 and b)  additional  notes payable to Mestek in the amounts of
$40,000,  $535,000 and $350,000.  These additional notes payable earned interest
at prime plus two percent (2.0%) for the $40,000 note and prime plus one percent
(1.0%) for the  $535,000  and  $350,000  notes until all  principal  and accrued
interest  amounts  were paid in full.  These  funds were  advanced  by Mestek to
CareCentric to cover payroll and accounts  payable  obligations  incurred by the
Company,  working  capital  needs  of  the  Company  during  the  period  of its
transition of senior  lenders from Silicon  Valley Bank to  Wainwright  Bank and
Trust Company,  accrued and unpaid interest thereon and the unreimbursed portion
of Mr. Bruce Dewey's salary for the periods from November 9, 1999 to October 31,
2001 when he was Chief Executive Officer of the Company.

     On July 1, 2002,  under the terms of the  recapitalization  plan, all notes
payable to Mestek by the Company were  consolidated  together with a) $1,000,000
of Mestek's previous participation in the J. E. Reed facility, b) accrued unpaid
interest on all notes payable to Mestek aggregating  $42,560,  c) accrued unpaid
interest on Mestek's  participation  in the J. E. Reed  facility of $33,750,  d)
$850,000 of cancelled  Mestek Series C Preferred  stock, and e) $129,748 of cash
paid on July 1, 2002 by Mestek to the  Company  to create a single  consolidated
$4,000,000 convertible note payable. The terms of the single consolidated Mestek


                                       73
<PAGE>

note are that interest  accrues and accumulates at a per annum rate equal to six
and  one-quarter  percent  (6.25%)  through  June 30,  2004,  at which  time the
accumulated  interest will be capitalized  into the related note. After June 30,
2004, the principal and capitalized interest will accumulate interest at the per
annum rate equal to six and one-quarter percent (6.25%) with interest compounded
and payable quarterly  beginning on September 30, 2004. Together with any unpaid
principal and accrued  interest,  the Mestek note will mature and become payable
on June 30, 2007.  Additionally,  the new $4.0 million  Mestek note and the $3.6
million J. E. Reed note,  together  with the value of accrued  interest,  may be
converted  at the  rate  of  $1.00  per  share  into  CareCentric  common  stock
exercisable at any time after July 1, 2002. The new notes are subordinate to the
Wainwright Bank $6.0 million line of credit.

     CONVERTIBLE NOTE PAYABLE - J. E. REED:

     Prior to the July 1, 2002 recapitalization  plan, the Company was obligated
under a financing  facility (the J. E. Reed Facility)  provided by John E. Reed,
Chairman of CareCentric and the Chairman and Chief Executive  Officer of Mestek,
Inc. The J. E. Reed Facility  consisted of a $6.0 million  subordinated  line of
credit,  convertible into common stock of the Company at a strike price of $2.51
per share,  with  interest at 9% per annum and a five-year  maturity.  The J. E.
Reed  Facility  was  secured by a second  position on  substantially  all of the
Company's  assets.  At  December  31,  2002 and 2001,  borrowings  were equal to
$4,668,000 and $3,500,000 respectively,  $1,000,000 of which was participated to
Mestek at December 31, 2002 and 2001.  On December  31,  2001,  the facility was
amended to change the  interest  rate to prime  plus two  percent  (2.0%) and to
change the payment term for unpaid 2001 interest to require  payment on December
31, 2003, or convert the outstanding  unpaid interest to additional  convertible
notes, in the amount of $184,438 at the option of Mr. Reed, and in the amount of
$40,463 at the option of Mestek,  and to change the terms of payment of interest
for 2002 to require that one-half be timely paid each quarter and the balance be
paid on December 31, 2003 or be converted to additional  convertible  notes.  On
March 27, 2002 the Company  received an additional  $871,117 advance on the J.E.
Reed Facility.

On July 1, 2002,  under the terms of the  recapitalization  plan,  all principal
amounts advanced under the J.E. Reed Facility, less the $1,000,000 participation
by Mestek,  together  with  interest  accrued  through  December  31,  2001 were
consolidated into a single consolidated $3,555,555 convertible note payable. The
terms of the single  consolidated  J.E. Reed note are that interest  accrues and
accumulates  at a per annum rate equal to six and  one-quarter  percent  (6.25%)
through  June  30,  2004,  at  which  time  the  accumulated  interest  will  be
capitalized  into the related  note.  After June 30,  2004,  the  principal  and
capitalized interest will accumulate interest at the per annum rate equal to six
and one-quarter  percent (6.25%) with interest  compounded and payable quarterly
beginning on September 30, 2004.  Together with any unpaid principal and accrued
interest,  the J. E. Reed note will mature and become  payable on June 30, 2007.
Additionally,  the new $3.6 million J. E. Reed note,  together with the value of
accrued  interest  may  be  converted  at the  rate  of  $1.00  per  share  into
CareCentric  common stock  exercisable  at any time after July 1, 2002.  The new
notes are subordinated to the Wainwright Bank $6.0 million line of credit.

     NOTE PAYABLE - J. E. REED ACCRUED INTEREST:

Under  the  terms of the July 1,  2002  recapitalization,  $103,818  of  accrued
interest  earned on all advances under the J.E. Reed Facility  during the period
January 1, 2002 and June 30, 2002 was  capitalized  into a separate note payable
that  accrues  and  accumulates  interest  at a per annum  rate equal to six and
one-quarter percent (6.25%) through September 30, 2004, with interest compounded
quarterly.   After  September  30,  2004,  the  accumulated   interest  will  be
capitalized  into the related note and the  principal and  capitalized  interest
will  accumulate  interest  at the per annum rate  equal to six and  one-quarter
percent (6.25%) with interest  compounded and payable  quarterly.  Together with
any unpaid  principal  and accrued  interest,  the  separate J. E. Reed  accrued
interest  note will mature and become  payable on June 30, 2007.  The J. E. Reed
accrued  interest note is  subordinated to the Wainwright Bank $6.0 million line
of credit.



                                       74
<PAGE>

     CAPITAL LEASE OBLIGATIONS:

     The  Company  is  obligated  under a number of  capital  lease  obligations
originally  entered into by CareCentric  related to computer  equipment formerly
used in CareCentric's business.

     The fair value of the Company's  long-term  debt is estimated  based on the
current  interest  rates  offered  to the  Company  for debt  offered  under the
liquidity conditions and credit profile of the Company.  Management believes the
carrying value of debt and the contractual values of the outstanding  letters of
credit approximate their fair values as of December 31, 2002.

     Cash paid  interest was  $285,000,  $491,000 and $510,000  during the years
ended December 31, 2002, 2001 and 2000, respectively.

     Maturities of long-term  debt in each of the next five years are as follows
in thousands:

          2003                $       -
          2004                        -
          2005                        -
          2006                        -
          2007                    8,520
                              ----------
                  Total       $   8,520
                              ==========


NOTE 9 - COMMITMENTS AND CONTINGENCIES

     CONTINGENCIES

     The Company is engaged in various legal and regulatory  proceedings arising
in the normal  course of  business  which  management  believes  will not have a
material adverse effect on its financial position or results of operations.

     Simione Central Holding,  Inc., a subsidiary of CareCentric now known as SC
Holding,  Inc.  ("SC  Holding")  was  one  of  several  defendants  named  in  a
"whistleblower"  lawsuit related to alleged Medicare fraud filed under the False
Claims  Act in the  Northern  District  of  Georgia  (U.S.  ex re.  McLendon  v.
Columbia/HCA  Healthcare  Corp., et al., No. 97-VC-0890 (N.D. Ga.)). The lawsuit
involves alleged claims that SC Holding  allegedly  participated in a conspiracy
with Columbia/HCA and other third parties to bill inflated and fraudulent claims
to Medicare.  On July 21, 1999, the Justice Department issued notice that it had
elected  not to join  in the  claims  asserted  against  SC  Holding  by  Donald
McLendon,  who  is a  former  employee  of  an  unrelated  service  provider  to
Columbia/HCA.  Although  the Justice  Department  joined the suit with regard to
other  defendants,  it  specifically  declined  to  intervene  with regard to SC
Holding.  In late 2000,  CareCentric was advised by Mr. McLendon's attorney that
notwithstanding the declination by the Justice Department,  Mr. McLendon intends
to pursue "whistleblower" claims against SC Holding directly.  Through March 22,
2002,  no such  action has been taken and  nothing  further  has been heard from
McLendon's attorney over one year.  Management believes that this claim has been
abandoned. In the event a claim is asserted, however, CareCentric and SC Holding
intend to vigorously defend against it.

     COMMITMENTS

     The  Company  leases its office  facilities  and  certain  equipment  under
various  operating  lease  agreements.  These leases  require the Company to pay
taxes,  insurance,  and maintenance  expenses and provide for renewal options at
the then fair market rental value of the property.



                                       75
<PAGE>

     Aggregate annual rental payments for operating  leases with  non-cancelable
lease  terms in excess  of one year,  net of  non-cancelable  subleases,  are as
follows:

                                       LEASE OBLIGATIONS
                                --------------------------------
                                                     Net of
            Years Ending            Gross           Sublease
            December 31,         Obligations       Agreements
          ------------------    --------------    --------------
          2002                   $    771,000      $    744,000
          2003                        761,000           761,000
          2004                        540,000           540,000
          2005                        255,000           255,000
          2006                        263,000           263,000
          Thereafter                   85,000            84,000
                                --------------    --------------
                      Total      $  2,675,000      $  2,647,000
                                ==============    ==============

          Aggregate   annual   rental   payments  for   operating   leases  with
          non-cancelable lease terms in excess of one year.

     Rent expense approximated $0.8 million,  $1.1 million and $1.2 million, for
the years ended December 31, 2002, 2001 and 2000, respectively.


NOTE 10 - INCOME TAXES

     Deferred  income  taxes  reflect  the net effect of  temporary  differences
between the financial  reporting  carrying amounts of assets and liabilities and
income tax carrying  amounts of assets and  liabilities.  The  components of the
Company's deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
<S>                                                  <C>                <C>
                                                           YEARS ENDED DECEMBER 31,
                                                     ----------------------------------
                                                          2002                 2001
                                                     ---------------     --------------
Deferred tax assets:
     Net operating loss                              $  14,619,000       $  13,946,000
     Severance and other restructuring charges                   -             837,000
     Allowance for doubtful accounts                       496,000             396,000
     Deferred revenue                                    2,158,000           2,264,000
     Depreciation                                           43,000              33,000
     Other                                                 342,000             333,000
                                                     ---------------     --------------
Total deferred tax assets                               17,658,000          17,809,000
Valuation allowance                                    (17,658,000)        (17,809,000)
                                                     ---------------     --------------
                                                     $           -       $           -
                                                     ===============     ==============
</TABLE>

     The Company has  approximately  $38.5 million of net  operating  losses for
income tax purposes,  including  approximately $22.0 million incurred by Simione
Central Holdings, Inc. prior to the merger on March 7, 2000, available to offset
future taxable income.  Such losses begin expiring in 2008. The Company's use of
the net operating  losses  incurred by Simione prior to the merger is subject to
limitations  in the Internal  Revenue Code relating to changes in  ownership.  A
valuation  allowance  reducing the total net deferred tax assets set forth above
to zero has been  recorded  based on  management's  assessment  that it is "more
likely than not" that this net asset is not realizable as of December 31, 2002.



                                       76
<PAGE>

     Actual income tax expense differs from the "expected"  amount  (computed by
applying the U.S.  Federal  corporate  income tax rate of 34% to the loss before
income taxes) as follows:
<TABLE>
<CAPTION>
<S>                                                  <C>                   <C>                 <C>
                                                                     YEARS ENDED DECEMBER 31,
                                                          2002                 2001                 2000
                                                     ----------------    -----------------     ---------------

Federal tax benefit computed at statutory rates       $      100,000      $   (7,853,000)        $ (3,483,000)
State income taxes, net of federal effect                     13,000          (1,351,000)            (615,000)
Other, net                                                    38,000           5,217,000              463,000
Change in valuation allowance                               (151,000)          4,002,000            3,481,000
                                                     ----------------    -----------------     ---------------
Income tax expense (Benefit)                          $            -      $       15,000         $   (154,000)
                                                     ================    =================     ===============
</TABLE>


NOTE 11 - EMPLOYEE BENEFIT PLANS

     The  Company  has  adopted  401(k)  plans  that  cover   substantially  all
employees.  The Company contributes to the plans based upon the dollar amount of
each participant's  contribution.  The Company made contributions to these plans
of  approximately  $114,000,  $140,000  and  $189,000  in 2002,  2001 and  2000,
respectively.  These contributions  relate to the CareCentric,  Inc. 401(k) Plan
(formerly Simione Central Holdings,  Inc. Plan),  which survived the merger with
MCS, Inc., for 2002, 2001 and 2000.


NOTE 12 - SHAREHOLDERS' EQUITY

     COMMON SHARES - 20,000,000 SHARES AUTHORIZED

     Common Shares - 20,000,000 shares  authorized,  $.001 par value,  4,371,350
shares issued and outstanding as of December 31, 2002 and 2001. Of the 4,371,350
shares of common  stock  outstanding,  1,489,853  of such  shares were issued on
March 7, 2000 to the former MCS common  shareholders  and 606,904 of such shares
were  issued  on  March  7,  2000  to  the  former  preferred  shareholders  and
noteholders of  CareCentric  Solutions,  Inc.,  which shares were converted from
Series A Preferred  Stock into  CareCentric  (formerly  known as Simione Central
Holdings, Inc.) common shares in connection with the merger.

     Pursuant  to the  terms of the  July 12,  1999  merger  agreement  by which
Simione  acquired  the stock of  CareCentric  Solutions,  Inc.,  the Company was
required  to issue up to an  additional  606,904  shares of common  stock to the
former preferred  shareholders  and noteholders of CareCentric  Solutions if the
average  closing  price of the  Company's  stock for the period  October 1, 2000
through  December  31,  2000 is not equal to or greater  than  $15.00 per share.
Since the Company's  average  closing stock price for the fourth quarter of 2000
was less than $15.00 per share,  on March 19, 2001,  the Company  issued 593,688
shares of its common stock to the former preferred  shareholders and noteholders
of  CareCentric   Solutions.   As  required  by  generally  accepted  accounting
principles, no value was assigned to these shares as it was deemed not to impact
total consideration paid. The Company asserted that it was not required to issue
13,216 additional shares of its common stock as well as 150,740 shares of common
stock  that  were  being  held in  escrow  under  the  terms of the  CareCentric
Solutions  Merger  Agreement  based upon  various  indemnification  and  expense
overages  claims  the  Company  had  against  the former  CareCentric  Solutions
preferred shareholders and noteholders. On May 16, 2001, the Company finalized a
settlement  of these claims with the  representative  of the former  CareCentric
Solutions  parties pursuant to which 88,586 shares of common stock were released
from  escrow and  distributed  to the  former  CareCentric  Solutions  preferred
shareholders and noteholders, the remaining 62,154 escrow shares were cancelled,
no additional shares of common stock will be issued,  and the parties executed a
comprehensive settlement agreement.

     Pursuant to a comprehensive  settlement agreement on June 28, 2001, between
Sterling  Star,  Inc., Mr. Ted Wade  (President of Sterling Star,  Inc.) and the
Company, certain disputes related to the acquisition of a product named Tropical


                                       77
<PAGE>

Software  were  settled.  Under the terms of the  settlement,  10,000  shares of
common stock originally issued to Sterling Star were returned to the Company and
were cancelled.

     PREFERRED STOCK-10,000,000 SHARES AUTHORIZED

     Series B Preferred  Stock -$.001 par value,  5,600,000  shares issued.  The
shares of Series B Preferred  Stock are held by Mestek,  Inc.  (Mestek) and were
issued in  consideration  of $6,000,000 paid to CareCentric on March 7, 2000, in
the  form of cash and debt  forgiveness.  The  Series  B  Preferred  shares,  as
originally  issued,  carried  2,240,000  common share votes (on a split-adjusted
basis) and were entitled to a 9% annual cumulative dividend, among other rights.
In connection with the Company's  application for listing on the Nasdaq SmallCap
Market,  the Company  reached an agreement  with Mestek on June 12, 2000,  under
which Mestek agreed to allow the aforementioned  number of common share votes to
be reduced to  1,120,000  in  consideration  for the  issuance by the Company to
Mestek of a warrant to acquire up to 490,396 shares of CareCentric common stock,
as more  fully  described  below.  On March 29,  2002,  in  connection  with the
refinancing  commitments  made to the  Company  by  Mestek  and John E. Reed (as
further  described in Note 14), Mestek  transferred the voting rights associated
with the Series B Preferred  Stock to Mr. Reed.  As a result of the July 1, 2002
recapitalization plan, the terms of the Series B Preferred Stock were amended to
provide that each share is convertible into 1.072 shares of common stock.

     Series C Preferred  Stock - $.001 par value,  850,000 shares  issued.  As a
result of the July 1, 2002  recapitalization  plan, the Series C Preferred Stock
was cancelled,  and the $850,000 of cash value originally  contributed by Mestek
was consolidated into a Mestek  convertible Note as more fully described in Note
8 above. In addition,  $208,000 of accumulated and unpaid dividends through June
30,  2002 on the Series C  Preferred  Stock were  cancelled  and  recorded  as a
reduction  in preferred  dividend  expense and an increase in net income at June
30, 2002.

     Prior to the July 1, 2002  capital  restructuring,  the  shares of Series C
Preferred  Stock were held by Mestek and  resulted  from the  conversion  at the
March 7, 2000 merger of a  pre-existing  $850,000  convertible  note  payable to
Mestek.  The Series C Preferred  shares carried 170,000 common share votes (on a
split adjusted  basis) and were entitled to an 11% annual  cumulative  dividend,
among other rights.

     Series D Preferred  Stock - $.001 par value,  398,406  shares  issued.  The
shares of Series D  Preferred  Stock are held by John E. Reed and were issued on
June 12, 2000 in  consideration of $1.0 million paid to the Company in cash. The
Series D Preferred shares have a 9% annual cumulative dividend,  are convertible
into common stock at an initial  conversion price of $2.51 per share,  limit the
ability to issue dilutive stock options and have voting rights equal to those of
the  common  stock,  among  other  rights.  As a  result  of the  July  1,  2002
recapitalization  plan, the Series D Preferred Stock  conversion price per share
was amended from $2.51 to $1.00.

     Series E Preferred  Stock - $.001 par value,  210,000 shares issued under a
restricted  stock award. The shares of Series E Preferred Stock are held by John
R. Festa and the rights to those shares were  granted on November 10, 2001.  The
Series E  Preferred  shares  have a 3.5%  annual  non-cumulative  dividend,  are
convertible into common stock at an initial  conversion price of $1.00 per share
and have voting rights equal to those of common stock, among other rights.

     As of December 31, 2002, the Company had a cumulative  preferred  dividends
liability of $1,755,350  comprised of $1,521,000 for Series B Preferred  shares,
$227,000 for Series D Preferred shares and $7,350 for Series E Preferred shares.
Cumulative  preferred  dividends payable are included in the accrued liabilities
account  presented  on the  Consolidated  Balance  Sheets  in  the  accompanying
financial statements.

     WARRANTS AND OPTIONS

     Common  Stock  Warrants - In  connection  with the issuance of the Series B
Preferred  Stock  described  above,  Mestek  received a warrant to acquire up to
400,000 shares of the Company's common stock at a per share exercise price equal
to $10.875.  In  connection  with the waiver by Mestek of certain  voting rights
previously  granted to it, Mestek received on June 12, 2000 a warrant to acquire


                                       78
<PAGE>

up to 490,396  shares of the  Company's  common stock for a term of 3 years at a
per share exercise price equal to $3.21. In connection  with Mestek's  guarantee
of the Company's  obligations  under the line of credit from Wainwright Bank and
Trust Company, as more fully explained in Note 6 to these Financial  Statements,
Mestek  received on July 12,  2000 a warrant to acquire up to 104,712  shares of
the Company's  common stock for a term of 3 years at a per share  exercise price
equal to $2.51. The aforementioned  number of shares and per share prices is all
on  a  split-adjusted  basis.  Other  warrants  existing  prior  to  the  merger
transaction to acquire up to 25,000 shares of common stock remain outstanding.

     As a result of the July 1, 2002 capital restructuring,  the warrants issued
to Mestek to purchase  490,396 and 400,000  shares of Company  common stock were
cancelled  and  reissued  with an  exercise  price of  $1.00  per  share  and an
expiration date of June 15, 2004. Additionally, the warrants issued to Mestek to
purchase  104,712  shares of the  Company's  common  stock  were  cancelled.  In
accordance  with SFAS No. 123, the fair value of the Mestek warrants to purchase
491,396  and  400,000  shares was  reviewed  immediately  prior to and after the
cancellation  and  reissuance.  There was no material  accounting  impact of the
cancellation and reissuance of the warrants.

At December 31, 2002, the Company had outstanding warrants to purchase shares of
the Company's common stock as follows

<TABLE>
<CAPTION>
<S>                                      <C>              <C>                       <C>            <C>

                                                  BEFORE JULY 1, 2002                        After July 1, 2002
                                         ----------------------------------         ----------------------------------
DESCRIPTION OF WARRANTS                  EXERCISE PRICE     EXPIRATION DATE         EXERCISE PRICE   EXPIRATION DATE
-----------------------                  --------------     ---------------         --------------   -----------------

  25,000 - Barrett C. O'Donnell            $   5.00        February 24 ,2005          $   5.00       February 24 ,2005
400,000 - Mestek, Inc.                     $  10.88           March 7 2003            $   1.00          June 15, 2004
490,396 - Mestek, Inc.                     $   3.21          June 30, 2003            $   1.00          June 15, 2004
104,712 - Wainwright Bank                  $   2.51          July 12, 2003            Cancelled          Cancelled
</TABLE>


Stock Options - Options  totaling 1,000 shares were outstanding and vested under
the now  discontinued  1997 SCHI NQ  (Directors)  Plan at an  exercise  price of
$60.00.   Non-plan  options   totaling  97,933  shares,   of  which  89,600  are
exercisable,  were  outstanding at exercise prices ranging from $2.51 to $45.00.
The Simione Central Holding Inc. 1997 Omnibus  Equity-Based Plan (the "Plan") is
the only  continuing  stock  option  plan of the  Company.  The Plan offers both
incentive  stock  options  and  non-qualified  stock  options.  The  Company  is
authorized  to grant options of up to 900,000  shares of common  stock.  Options
totaling  516,414  shares  were   outstanding,   of  which  292,749  shares  are
exercisable,  at exercise prices ranging from $1.00 to $73.55. In 2002,  options
totaling 59,000 shares of common stock were granted to employees of the Company,
pursuant  to the Plan at  exercise  prices  ranging  at  $1.00  per  share.  The
following information is provided as of February 28, 2003.

     A summary of the Company's  stock option activity from December 31, 2000 is
as follows:



                                                            WEIGHTED
                                              NUMBER         AVERAGE
                                                OF           EXERCISE
                                              OPTIONS        PRICE
                                            ------------   -----------
   Outstanding at December 31, 2000             571,659     $       -
                                            ------------   -----------
Options Assumed                                 152,500     $   12.45
Granted                                                     $    2.15
Exercised                                             -     $       -
Forfeited and Cancelled                        (145,870)    $   16.11
                                            ------------   -----------
Outstanding at December 31, 2001                578,289     $    8.11
                                            ------------   -----------

                                       79
<PAGE>
Granted                                          59,000     $    1.00

Exercised                                             -     $       -
Forfeited and Cancelled                         (21,942)    $   16.11
                                            ------------   -----------
Outstanding at December 31, 2002                615,347     $    7.56
                                            ============   ===========


<TABLE>
<CAPTION>
<S>                                <C>           <C>                <C>              <C>              <C>
                                                                AS OF DECEMBER 31, 2002
                                -----------------------------------------------------------------------------------
                                              OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                                -------------------------------------------------    ------------------------------
                                                    WEIGHTED
                                                     AVERAGE         WEIGHTED                           WEIGHTED
                                                    REMAINING         AVERAGE                            AVERAGE
                                    NUMBER         CONTRACTUAL       EXERCISE            NUMBER         EXERCISE
RANGE OF EXERCISE PRICES           OUTSTANDING     LIFE IN YEARS        PRICE          EXERCISABLE        PRICE
-----------------------------   ----------------  ---------------  --------------    ---------------  -------------
    $   1.00        $   7.36            433,000        8.40             $   2.97            201,002        $  3.44
    $   7.36        $  14.71            112,768        5.70             $   9.88            112,768        $  9.88
    $  14.71        $  22.07             13,000        3.20             $  15.96             13,000        $ 15.96
    $  29.42        $  36.78             40,965        4.30             $  32.22             40,965        $ 32.22
    $  36.78        $  44.13              5,000        3.70             $  42.50              5,000        $ 42.50
    $  44.13        $  51.49              8,000        5.00             $  45.00              8,000        $ 45.00
    $  51.49        $  58.84              1,580        4.70             $  55.63              1,580        $ 55.63
    $  58.84        $  66.20              1,000        4.40             $  60.00              1,000        $ 60.00
    $  66.20        $  73.55                 34        6.30             $  73.55                 34        $ 73.55
                                ----------------  ---------------  --------------    ---------------  -------------
                                        615,347        7.40             $   7.56            383,349        $ 10.58
                                ================                                     ===============

</TABLE>

     In  connection  with the  Simione/MCS  merger on March 7, 2000,  Mestek was
granted a series of options to purchase a total of approximately  378,295 shares
of the Company's  common stock (on a  split-adjusted  basis).  These options are
exercisable only to the extent that outstanding CareCentric options, warrants or
other  conversion  rights are exercised.  These options were designed to prevent
dilution of Mestek's  ownership  interest  in the Company  after the merger.  As
options,  warrants and other common rights are forfeited or cancelled,  Mestek's
option rights are correspondingly reduced. Due to the contingent nature of these
options,  they have been excluded  from the above tables.  At December 31, 2002,
159,573  shares of such  options  were  available  under the  original  terms of
issuance.

     For the purposes of pro forma disclosures,  the estimated fair value of the
stock  options  is  amortized  to expense  over the  options'  vesting  periods.
Risk-free  interest rates of 4.13% and 4.31%; no dividends;  a volatility factor
of the  expected  market  price of the  Company's  common  stock of 1.97998  and
1.40685; and a weighted-average expected life (unchanged) of the options of 3.97
years for 2002 and 2001.  The weighted  average  fair value  assigned to options
granted  in 2002 and 2001 was $0.63 and $1.35,  respectively.  For 2002 and 2001
respectively  the Company's pro forma net loss and net loss per share (basic and
diluted) are $144,000 and $25,514,000 and $0.03 and $5.97.


NOTE 13  -- SELECTED QUARTERLY INFORMATION (UNAUDITED)

     The table below sets forth  selected  quarterly  information  for each full
quarter of 2002 and 2001.



                                       80
<PAGE>

<TABLE>
<CAPTION>
<S>                                             <C>            <C>           <C>           <C>

                                                                   FISCAL YEAR 2002
                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                               ---------------------------------------------------------
                                                 MAR. 31,       JUNE 30,     SEPT. 30,       DEC. 31,
                                               -------------  ------------- -------------  -------------

Net revenues:                                   $     5,253    $     5,848   $     5,646    $     5,268

Costs and expenses:
     Cost of revenues                                 1,676          1,785         1,739          1,208
     Selling, general and administrative              2,699          2,589         2,064          2,418
     Research and development                           947            942           891            651
     Amortization and Depreciation                      425            423           424            424
                                               -------------  ------------- -------------  -------------
     Total costs and expenses                         5,747          5,739         5,118          4,701
                                               -------------  ------------- -------------  -------------

Income (loss) from operations                          (494)           109           528            567

Other income (expense):
     Other income                                         -              -             -            250
     Interest expense                                  (168)          (153)         (174)          (217)
     Interest and other income                           (2)            15            12             20
                                               -------------  ------------- -------------  -------------
Income (loss) before taxes                             (664)           (29)          366            620
                                               -------------  ------------- -------------  -------------

     Income tax benefit (expense)                         -              -             -              -

Net income (loss) income from continuing
   operations                                          (664)           (29)          366            620
                                               -------------  ------------- -------------  -------------

Discontinued operation
     Loss on disposal of discontinued
       operations                                         -              -             -              -

     Loss from operations of discontinued
     segment before taxes                                 -              -             -              -

     Applicable tax expense                               -              -             -              -
                                               -------------  ------------- -------------  -------------
Net (loss) from operations and disposal of
   discontinued segment                                   -              -             -              -
                                               -------------  ------------- -------------  -------------

Net income (loss)                               $      (664)   $       (29)  $       366    $       620
                                               =============  ============= =============  =============

Cumulative preferred dividends                         (180)            34          (184)          (137)
                                               -------------  ------------- -------------  -------------
Net income (loss) available to common
  shareholders                                  $      (844)   $         5   $       182    $       483
                                               =============  ============= =============  =============

Net income (loss) per share - basic and
    diluted from continuing operations          $     (0.15)   $     (0.01)  $      0.08    $      0.14
Weighted average common shares -
     Basic and diluted                                4,371          4,371         4,371          4,371
                                               =============  ===========================  =============

 Net (loss) per share - basic and diluted
     from discontinued operations               $         -    $         -   $         -    $         -
Weighted average common shares - basic and
     diluted                                          4,371          4,371         4,371          4,371
                                               =============  ===========================  =============

Net income (loss) per share - basic and
   diluted                                      $     (0.15)   $     (0.01)  $      0.08    $      0.14


                                       81
<PAGE>

Weighted average common shares -basic and
     diluted                                          4,371          4,371         4,371          4,371
                                               =============  ============= =============  =============

Net income (loss) per share - basic and
     diluted available to common shareholders   $     (0.19)   $     (0.00)  $      0.04    $      0.11

Weighted average common shares - basic and
     diluted                                          4,371          4,371         4,371          4,371
                                               =============  ============= =============  =============

</TABLE>

<TABLE>
<CAPTION>
<S>                                      <C>            <C>            <C>           <C>
                                                                 FISCAL YEAR 2001
                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                          ---------------------------------------------------------
                                             MAR. 31,       JUNE 30,      SEPT. 30,      DEC. 31,
                                          -------------  ------------- -------------- -------------

Net revenues:                              $     5,679    $     5,302   $      4,769   $     4,696

Costs and expenses:
     Cost of revenues                            2,108          2,004          1,646         2,459
     Selling, general and administrative         2,825          2,711          2,550         2,629
     Research and development                    1,767          1,609          1,413         1,369
     Write down of intangibles                       -              -              -        11,799
     Amortization and Depreciation                 951            950          1,011           952
     Restructuring Charges                           -            675              -             -
                                          -------------  ------------- -------------- -------------
     Total costs and expenses                    7,651          7,949          6,620        19,209
                                          -------------  ------------- -------------- -------------

(Loss) from operations                          (1,972)        (2,647)        (1,851)      (14,513)

Other income (expense):
     Interest expense                             (124)          (149)           (39)         (280)
     Interest and other income                     126             68             29          (187)
                                          -------------  ------------- -------------- -------------
(Loss) before taxes                             (1,970)        (2,728)        (1,861)      (14,980)
                                          -------------  ------------- -------------- -------------

     Income tax benefit (expense)                    -              -              -           (15)
                                          -------------  ------------- -------------- -------------
Net (loss) income from continuing
   operations                                   (1,970)        (2,728)        (1,861)      (14,995)
                                          -------------  ------------- -------------- -------------

Discontinued operation
     Loss on disposal of discontinued
       operations                                    -              -         (2,632)            -

     Loss from operations of
     discontinued segment before taxes            (185)           (73)          (226)            -

     Applicable tax expense                          -              -              -             -

Net (loss) from operations and disposal
   of discontinued segment                        (185)           (73)        (2,858)            -
                                          -------------  ------------- -------------- -------------
Net (loss) income                          $    (2,155)   $   (2 ,801)  $     (4,719)  $   (14,995)
                                          =============  ============= ============== =============

Cumulative preferred dividends                    (176)          (178)          (180)         (186)

Net (loss) available to common
  shareholders                             $    (2,331)   $    (2,979)  $     (4,899)  $   (15,181)
                                          =============  ============= ============== =============

                                       82
<PAGE>

(Loss) per share - basic and diluted
    from continuing operations             $     (0.50)   $     (0.62)  $      (0.43)  $     (3.43)
Weighted average common shares -
     basic and diluted                           3,922          4,418          4,371         4,371
                                          =============  ============================ =============

 Net (loss) per share - basic and
     diluted from discontinued
     operations                            $     (0.05)   $     (0.02)  $      (0.65)  $         -
Weighted average common shares - basic
     and diluted                                 3,922          4,418          4,371         4,371
                                          =============  ============================ =============

Net (loss) per share - basic and diluted   $     (0.55)   $     (0.63)  $      (1.08)  $     (3.43)
Weighted average common shares -basic
     and diluted                                 3,922          4,418          4,371         4,371
                                          =============  ============= ============== =============

Net (loss) per share - basic and
     diluted available to common
     shareholders                          $     (0.59)   $     (0.67)  $      (1.12)  $     (3.47)
Weighted average common shares - basic
     and diluted                                 3,922          4,418          4,371         4,371
                                          =============  ============= ============== =============

</TABLE>

     Quarterly  earnings per share figures do not arithmetically add to the full
year of 2001  earnings  per share due to  interim  changes in  weighted  average
shares  outstanding  during 2001 and due to rounding.  The numbers above reflect
the effect of a one for five reverse stock split effected in connection with the
MCS/Simione merger on March 7, 2000.


NOTE 14 - RELATED PARTY TRANSACTIONS

     The  Company  subleased  certain  space  to  Healthfield,  Inc.  which is a
MestaMed(R)  customer and has a significant  shareholder who was a former member
of the board of  directors  of the  Company.  The  original  lease  and  related
sublease  expired on December 31, 2002 and  required  annual  sublease  payments
equal to the original lease payments of approximately $730,000.

     Winston R. Hindle, Jr., a director of the Company, is a director of Mestek,
Inc.  Mestek  has  certain  investments  in the  Company  in the form of  notes,
convertible notes,  warrants,  stock options and preferred stock as described in
Note 8 and Note 12 to the Financial Statements included in this Report.

     The Company has a note receivable from Simione Consultants, LLC of $409,000
at December  31, 2002.  On September  28,  2001,  the Company  discontinued  its
Consulting  business segment by closing the sale of certain of the assets of its
wholly-owned  subsidiary,  Simione  Consulting,  Inc.  ("Consulting") to Simione
Consultants,  LLC, which is owned and  controlled by William J. Simione,  Jr., a
director  and  former  officer  of  CareCentric.   The  total  sales  price  was
approximately $2.0 million plus the assumption of certain liabilities.  The sale
was made  pursuant to an asset  purchase  agreement.  William  Simione,  Jr. has
resigned as an officer of CareCentric,  however,  William Simione, Jr. remains a
director  of  CareCentric.  The assets  sold under the  agreement  included  the
Consulting accounts receivable,  computer equipment,  and miscellaneous  prepaid
expenses. Consideration received consisted of approximately $1.0 million in cash
and $1.0 million in notes,  $770,000  with a 36-month  term and $230,000  with a
5-month  term.  The cash proceeds  were used to pay down  CareCentric's  line of
credit.

     On  December  13,  2002,  the  Company  entered  into a racing  sponsorship
agreement  for a  one-year  sponsorship  of a  racing  team at a  total  cost of
approximately $125,000. The son of John Festa, the Company's President and Chief
Executive Officer, is one of several members of the racing team being sponsored.
The Company  believes that the terms of the agreement are  arms-length  and that
third  parties are paying  comparable  amounts of at least  $120,000 for similar
arrangements.  The Company will use the sponsorship in its advertising  program,

                                       83
<PAGE>

tradeshows  and launch of the  AC-CURA(TM)  product.  Mr.  Festa will receive no
financial benefit from the sponsorship.

     As of December 31, 2002, the Company had a promissory  note  outstanding to
Barrett C. O'Donnell,  a director of the Company,  as described in Note 8 to the
Financial  Statements  included in this report.  Barrett C.  O'Donnell also owns
25,000  warrants for the purchase of common shares of the Company at an exercise
price of $5.00 per share.

     John  E.  Reed  is a  director  and a  significant,  but  not  controlling,
shareholder  of the  Wainwright  Bank and Trust  Company  which has provided the
Company with a $6.0 million line of credit, as more fully explained in Note 8 to
the Financial Statements included in this report.

     John E. Reed,  Chairman  of the Company and  Chairman  and Chief  Executive
Officer of Mestek,  Inc.,  has at December  31, 2002  provided  the Company $3.7
million, including accrued interest, (unrelated to the Wainwright Bank and Trust
$6.0  million  line of  credit  described  above)  of  financing  in the form of
convertible  notes  payable as more fully  described in Note 8 to the  Financial
Statements and also owns $1.0 million of the Company's  Series D Preferred Stock
as more fully described in Note 12 to the Financial  Statements included in this
report. An independent committee of the Company's Board of Directors, consisting
of Barrett C.  O'Donnell and David O. Ellis,  negotiated the terms of Mr. Reed's
debt and equity  investments  in the Company.  The issuance of 398,406 shares of
Series D Preferred Stock to Mr. Reed for his $1.0 million equity  investment was
based on a per share price of $2.51,  which was the 5-day average  closing price
of CareCentric common stock as of the date of the final negotiation of the terms
of Mr. Reed's purchase. On July 1, 2002, the Company recapitalized certain loans
and preferred stock in accordance  with a shareholder  approved plan under which
the  conversion  price for Mr. Reeds notes payable and Series D Preferred  Stock
was changed to $1.00. See Note 8 to the Financial Statements.

     Mestek,  Inc. has, at December 31, 2002,  provided the Company $4.1 million
of financing in the form of convertible notes payable as more fully described in
Note 8 to the Financial Statements and also is the Guarantor of the $6.0 million
Wainwright Bank and Trust line of credit.  Additionally,  Mestek, Inc. owns $6.0
million of the Company's Series B Preferred Stock. Warrants were granted in June
2000 by the  Company to Mestek,  Inc. in  connection  with its waiver of certain
voting rights  previously  granted to it in connection  with its purchase of the
Series  B  Preferred  Stock  of the  Company.  On  July  1,  2002,  the  Company
recapitalized certain loans and preferred stock in accordance with a shareholder
approved plan under which the conversion  price for Mestek's  Series B Preferred
Stock and notes  payable was  changed to $1.00.  The terms of the  warrants  (as
described in more detail in Note 12 to the Financial  Statements)  were based on
negotiations by independent committees of the Boards of Directors of the Company
and Mestek.


NOTE 15 -  LICENSE AGREEMENTS

     The Company  licenses  certain  software  products  from third  parties for
incorporation  in, or other use  with,  its  products  and is  obligated  to pay
license fees in connection  with such  products.  The Company  sublicenses  such
products  to  its  customers   and  collects   fees  in  connection   with  such
sublicensees.


NOTE 16 -  EXECUTIVE COMPENSATION

The Company has entered into an  employment  agreement  with its  President  and
Chief  Executive  Officer,  Mr. John Festa on October 22,  2001.  The  agreement
provided for: i) the grant of 210,000  shares of Series E preferred  stock,  one
half of which  vest  evenly  over the  course of three  years from his hire date
dependent  upon his  continued  employment  as President and CEO and one half of
which are  forfeitable  pro rata over a three year  period if certain  financial
milestones  are not met,  ii)  payment  of an  annual  bonus of up to 50% of his
annual salary based on completion of annual performance objectives; and iii) the
possibility  of receiving a special  bonus which varies in dollar  amount in the
event there is a sale of the Company  while Mr. Festa is  President  and CEO and
for nine months thereafter.



                                       84
<PAGE>

     The Company,  with Mr. Festa's consent,  agreed to terminate his right to a
$100,000 cash bonus for the year ending December 31, 2002 and to deploy funds to
a marketing,  sales and promotional  motorsports  racing-based initiative of the
Company.


NOTE 17 - LIQUIDITY

     As disclosed in the financial  statements,  the Company's  operations  used
significant  amounts of cash in 2002. The Company has a working  capital deficit
of $12.1 million at December 31, 2002.

     The merger of MCS with Simione added additional products and resources and,
importantly,  added to the Company's  critical  mass of installed  sites but the
Company's  longer-term  success will depend upon increased sales of new software
systems and successful  installation  performance.  Additionally,  the Company's
continuing  efforts to  develop  new  products  using the  latest  software  and
hardware platforms will be most important to its long-term success.

     As of  February  28,  2003,  the  Company  had unused  credit  capacity  of
approximately  $1.8 million from the Wainwright Bank Loan Facility.  The Company
believes that the combination of unused credit capacity from the Wainwright Bank
facility  and  the  funds  available  from  cash  to be  generated  from  future
operations  will be  sufficient  to meet the  Company's  operating  requirements
through at least December 31, 2003,  assuming no material  adverse change in the
operation of the Company's business.


 NOTE 18 - SUBSEQUENT EVENTS

     In January 2003, the Company reached  agreement with Columbia HCA regarding
certain litigation between the companies involving services contract obligations
related to health agency activities which the Company had been involved in prior
to 1999 when it was called  Simione  Central  Holdings,  Inc. The settlement was
completed in February 2003 with no future  obligation due from the Company and a
payment of $290,000 made to the Company.

     On January  29,  2003,  CareCentric  received an offer to merge with Borden
Associates,   Inc.  In  the  proposed  transaction,   Borden  would  merge  into
CareCentric  and  purchase  the shares of  shareholders  holding less than 4,000
shares for $0.55 per share.  Each share of  CareCentric  common  stock  owned of
record by a holder of 4,000  shares or more of  CareCentric  common  stock  will
continue  to  represent  one  share  of  common  stock  after  the  merger.  The
outstanding shares of Borden Associates capital stock will, in the aggregate, be
converted into the right to receive that number of shares of CareCentric  common
stock equal to the quotient of the total cash  consideration paid to the holders
of fewer than 4,000 shares of CareCentric  common stock divided by the $0.55 per
share price.  CareCentric would remain the surviving entity. The Company filed a
Form  8-K  on  February  4,  2003  summarizing  the  terms  of the  offer.  This
transaction, if consummated,  may result in the Company becoming private so that
it would no longer be a reporting  company under SEC  regulations or be publicly
traded on the OTC  Bulletin  Board.  The Board of Directors  is  evaluating  the
proposal and has formed a special committee of independent directors, consisting
of Winston R. Hindle, Jr. and William J. Simione,  Jr., to evaluate,  respond or
negotiate  the  proposal  with  the  principals  of  Borden  Associates.  Borden
Associates is an investment  company formed for the purpose of this  transaction
and owned by John Reed,  Stewart Reed and James Burk. John Reed and Stewart Reed
are material  shareholders of CareCentric and members of its Board of Directors.
As of March 10, 2003,  the special  committee  of the Board has  selected  legal
counsel and an  investment  banking  firm to assist in the  special  committee's
review of the offer by Borden Associates.



                                       85
<PAGE>

                                CARECENTRIC, INC.

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
<S>                                      <C>             <C>             <C>               <C>
                                                           ADDITIONS
                                           BALANCE AT      CHARGES TO                         BALANCE AT
                                          BEGINNING OF      COST AND                             END OF
                                             PERIOD          EXPENSE      DEDUCTIONS(1)          PERIOD

Year ended December 31, 2002
Allowance for Doubtful Accounts           $   1,042,000         350,000            85,000     $  1,307,000
                                         ===============  ==============  ================   ==============

Year ended December 31, 2001
Allowance for Doubtful Accounts           $     551,000    $    500,000    $        9,000     $  1,042,000
                                         ===============  ==============  ================   ==============

Year ended December 31, 2000
Allowance for Doubtful Accounts           $     166,000    $    538,000    $      153,000     $    551,000
                                         ===============  ==============  ================   ==============

</TABLE>

(1) Net Write-offs of uncollectible accounts





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