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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K/A


|  |  |                                                                                                                
|- |  | ---------------------------------------------------------------------------------------------------------------
|þ |  | AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
| 
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934                   
| 
|  |  | For the fiscal year ended December 31, 2004                                                                    

Commission file number 000-29273


Quovadx, Inc.


(Exact name of registrant as specified in its charter)


|                                                                                                                |  |                                         
|--------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                                        |  | 85-0373486                              
|(State or other jurisdiction of
    incorporation or organization)                                              |  | (I.R.S. Employer
    Identification No.)
|                                                                                                               
|6400 S. Fiddlers Green Circle,
    Suite 1000,
    Englewood, Colorado(Address of principal executive offices) |  | 80111(Zip Code)                         

Registrants telephone number, including area code:


(303) 488-2019


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


None


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


|                                        |  |                                          
|--------------------------------------- |  | -----------------------------------------
|Title of Each Class                     |  | Name of Each Exchange on Which Registered
|                                        |  |                                          
|Common Stock, par value $0.01 per share |  | NASDAQ                                   

þ o


þ


þ o






DOCUMENTS INCORPORATED BY REFERENCE












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EXPLANATORY NOTE






| |   |                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Managements annual report on internal control over
    financial reporting; and                                                                                                                                         
|
| |  | Report of Independent Registered Public Accounting Firm relating
    to the Companys assessment of internal control over
    financial reporting and the effectiveness of internal control
    over financial reporting.





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|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Disclosure Controls and Procedures




Managements Annual Report on Internal Control over
Financial Reporting






| |   |                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of the Company;                                                                                                                                                                                          
|
| |  | provide reasonable assurance that transactions are recorded, as
    necessary, to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the Company are being made
    only in accordance with authorizations of management and
    directors of the company; and
|
| |  | provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on the
    financial statements.                                                                                                                                         









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The analysis and recording of revenue in multiple element
    transactions. We have concluded that the internal controls
    over the recording and analysis of revenue in multiple element
    transactions are not effective, and are indicative of a material
    weakness in software revenue accounting control. Many of our
    products are sold in bundled packages and we have established
    policies and pricing based on the fair value of each element.
    Revenue was not properly recognized on a relatively new bundled
    product that includes a term

2



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | license. This revenue was deferred and will be recognized over
    the term of the agreement. In addition, our revenue recognition
    on a multiple element contract incorrectly separated a service
    element from the software component resulting in recognition of
    revenue before completion of the services. The revenue
    recognition was corrected and the service revenue will be
    recognized with the completion of the software installation
    services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Calculation and recording of accrued liabilities. We have
    concluded that controls over the recording of accrued
    liabilities are not effective and are indicative of a material
    weakness. We were significantly over-accrued in two areas,
    medical claims and vacation liability, and under accrued in two
    areas, payroll taxes and 401(k) matching funds. Our accruals for
    health insurance benefits contain elements that must be
    estimated and the historical-trend information we used to
    estimate these elements of the accrual resulted in over-accrual
    of these accounts. The calculation of the accrual for vacation
    included a mathematical error resulting in an over-accrual. The
    under-accruals were caused by errors in estimating accruals for
    401(k) matching and employer-related payroll tax liabilities.
    Also, several invoices were not accrued at year end and the
    amount payable to contractors was over-accrued due to an
    inaccurate calculation. Adjustments were recorded to correct
    these errors that were material to the financial statements.
|
| |  | Analysis of capitalized software impairment. Our analysis
    of capitalized software did not identify asset impairments for
    software products that are not expected to generate future
    revenue, and was indicative of a material weakness in control
    over the accounting for asset impairment. This resulted in an
    adjustment that was material to the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Capitalization and amortization of software. We have
    concluded that our internal controls over software
    capitalization and amortization are not effective and indicate a
    material weakness. There were errors identified in the
    amortization life, expense accounts used to record amortization,
    and the over-amortization of several software assets. In
    addition, costs for three projects continued to be capitalized
    after project completion. These errors resulted in adjustments
    and reclassifications that were material to the financial
    statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



Remediation Steps to Address Material Weaknesses.




| |                                                                           
| | --------------------------------------------------------------------------
| | The analysis and recording of revenue in multiple element
    transactions



| |   |                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Provide additional training on software revenue recognition for
    the accounting department and throughout the organization.                                                                               
|
| |  | Advise senior management and division personnel on the various
    business models for pricing before new products and new bundles
    are brought to market in an effort to clarify revenue
    recognition.



| |                                                 
| | ------------------------------------------------
| | Calculation and recording of accrued liabilities



| |   |                                                                                                 
| | - | ------------------------------------------------------------------------------------------------
| |  | Expand the controls and procedures over the elements used in
    monthly estimates for accruals.
|
| |  | Implement additional review and approval procedures over
    accruals.                          
|
| |  | Use independent third party data as the basis for accruals where
    possible.                  

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| |                                            
| | -------------------------------------------
| | Analysis of capitalized software impairment



| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | Improve communication between product management and accounting
    to determine on a timely basis when products are discontinued.
|
| |  | Perform more frequent evaluations of software to identify
    impairments on a more timely basis.                                 



| |                                            
| | -------------------------------------------
| | Capitalization and amortization of software



| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Improve communication between each divisions research and
    development function and accounting.                                                                         
|
| |  | Develop procedures for monthly evaluation of software project
    status and carrying value (if appropriate), with review and
    written approval by the development group.
|
| |  | Implement a periodic review of asset lives and amortization
    expense for all software projects.                                                                          







Changes in Controls








| |   |                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We hired a new President and Chief Executive Officer and a new
    Chief Financial Officer who have expertise in financial controls
    and reporting, to improve the overall quality and level of
    experience in our finance and accounting organization.                                                                          
|
| |  | We enhanced our disclosure committee and increased the
    committees authority.                                                                                                                                                                                                                                                      
|
| |  | We implemented a Code of Business Conduct and Ethics.                                                                                                                                                                                                                                                                                  
|
| |  | We implemented, communicated and trained employees on a formal
    whistle blower reporting system through a third party provider
    to enable employees to identify potential concerns or ethical
    issues on an anonymous basis.                                                                                                  
|
| |  | We made improvements to our shipping procedures to provide more
    detailed information regarding product shipments and we have
    consolidated our shipping function to one location.                                                                                                                                               
|
| |  | We improved our procedures for verifying the creditworthiness of
    prospective customers.                                                                                                                                                                                                                                            
|
| |  | We made changes to procedures for estimating fees and have
    established revenue recognition on our services work.                                                                                                                                                                                                                   
|
| |  | We initiated additional training of our sales organizations
    regarding revenue recognition rules and improved communication.                                                                                                                                                                                                        
|
| |  | We formed a multidisciplinary price book committee that controls
    new product introductions and determines legal and accounting
    requirements for all products; implementation of processes to
    improve communication among our various functional groups during
    the transaction approval and contract negotiation phases.



4



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| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We formalized and enhanced our revenue recognition guidelines
    and processes.                                                                                     
|
| |  | We formalized the documentation of the financial review process.                                                                                                     
|
| |  | We implemented additional internal controls surrounding the
    credit management function.                                                                          
|
| |  | We separated duties in accounting, financial reporting and
    information technology functions to improve checks and balances.                                      
|
| |  | We enhanced and clarified accounting, financial reporting and
    information technology policies and procedures.                                                    
|
| |  | We implemented processes to monitor adherence to the accounting
    policies.                                                                                        
|
| |  | We formalized and/or improved internal control surrounding
    access to accounting systems and eliminated certain automatic
    approvals in the accounting systems.





5



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Report of Independent Registered Public Accounting Firm














6



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SIGNATURES






| |              
| | -------------
| | Quovadx, Inc.



| |     |                     
| | --- | --------------------
| | By: | /s/ Harvey A. Wagner

| |                                      
| | -------------------------------------
| |                                      
| | Harvey A. Wagner                     
| | President and Chief Executive Officer



|                                                     |  |                                                                                                       |  |                |  | 
|---------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                            |  | Title                                                                                                 |  | Date          
|                                                     |  |                                                                                                       |  |               
|                                                    
|/s/ Harvey A. WagnerHarvey
    A. Wagner             |  | Director, and President and Chief Executive Officer
    (Principal Executive Officer)                 |  | April 14, 2005
|                                                    
|/s/ Melvin L. KeatingMelvin
    L. Keating           |  | Executive Vice President, Chief Financial Officer and
    Treasurer
    (Principal Financial Officer) |  | April 14, 2005
|                                                    
|/s/ Juan C. PerezJuan
    C. Perez                   |  | Vice President and Controller
    (Principal Accounting Officer)                                      |  | April 14, 2005
|                                                    
|/s/ Jeffrey M. KraussJeffrey
    M. Krauss           |  | Chairman of the Board                                                                                 |  | April 14, 2005
|                                                    
|/s/ Fred L. BrownFred
    L. Brown                   |  | Director                                                                                              |  | April 14, 2005
|                                                    
|/s/ J. Andrew CowherdJ.
    Andrew Cowherd           |  | Director                                                                                              |  | April 14, 2005
|                                                    
|/s/ James B. HooverJames
    B. Hoover               |  | Director                                                                                              |  | April 14, 2005
|                                                    
|/s/ Charles J.
    RoessleinCharles
    J. Roesslein |  | Director                                                                                              |  | April 14, 2005
|                                                    
|/s/ James A. GilbertJames
    A. Gilbert             |  | Director                                                                                              |  | April 14, 2005

8



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INDEX TO EXHIBITS


|        |    |                         |  |                                                                                                                                                                                                              
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 23 | .1                      |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                    
|        | 31 | .1                      |  | Certification of Chief Executive Officer of the Registrant
    pursuant to Rule 13a-14(a) and Rule 15d-14(a),
    promulgated under the Securities Exchange Act of 1934, as
    amended.                     
|        | 31 | .2                      |  | Certification of Chief Financial Officer of the Registrant
    pursuant to Rule 13a-14(a) and Rule 15d-14(a),
    promulgated under the Securities Exchange Act of 1934, as
    amended.                     
|        | 32 | .1*                     |  | Certification of Chief Executive Officer of the Registrant
    pursuant to Rule 13a-14(b) and Rule 15d-14(b),
    promulgated under the Securities Exchange Act of 1934, as
    amended, and 18 U.S.C. §1350.
|        | 32 | .2*                     |  | Certification of Chief Financial Officer of the Registrant
    pursuant to Rule 13a-14(b) and Rule 15d-14(b),
    promulgated under the Securities Exchange Act of 1934, as
    amended, and 18 U.S.C. §1350.






|  |                                                                                                                                                                                                                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | This certification is furnished to, but not filed, with the
    Commission. This certification shall not be deemed to be
    incorporated by reference into any filing under the Securities
    Act of 1933 or the Securities Exchange Act of 1934, except to
    the extent that the Registrant specifically incorporates it by
    reference.