CAREADVANTAGE, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS See Notes to Unaudited Condensed Consolidated Financial Statements.
March 31, December 31, 2010 2010 Unaudited ASSETS Current assets: Cash and cash equivalents $ 160,000 $ 457,000 Accounts receivable 114,000 125,000 Prepaid expenses and other assets 118,000 86,000
Total current assets 392,000 668,000
Property and equipment, at cost net of accumulated depreciation 33,000 47,000 Other assets 75,000 -
Total Assets $ 500,000 $ 715,000
LIABILITIES AND STOCKHOLDERS' (DEFICIT)/EQUITY
Current liabilities: Accounts payable $ 93,000 $ 70,000 Accrued compensation and related benefits 85,000 64,000 Accrued professional fees 50,000 50,000 Other current liabilities 1,000 1,000 Note payable – current 33,000 - Deferred revenue 156,000 227,000 Capital lease obligation – current 16,000 26,000
Total current liabilities 434,000 438,000
Long term liabilities:
Note payable – long term 78,000 - Deferred rent 303,000 316,000
Total long term liabilities 381,000 316,000
Total Liabilities 815,000 754,000
Stockholders' deficit: Preferred stock-par value $.10 per share; authorized 10,000,000 shares; none issued Common stock-par value $.001 per share; authorized 200,000,000 shares; 145,250,442 issued and outstanding at March 31, 2011 and December 31, 2010 145,000 145,000 Additional paid in capital 24,446,000 24,446,000 Accumulated deficit (24,906,000 ) (24,630,000 ) Total stockholders' deficit (315,000 ) (39,000 )
Total Liabilities and Stockholders' (Deficit)/Equity $ 500,000 $ 715,000
2 CAREADVANTAGE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) See Notes to Unaudited Condensed Consolidated Financial Statements.
Three Months Ended March 31, 2011 2010
License fees and service revenue $ 456,000 $ 860,000
Costs of services 232,000 348,000
Gross profit 224,000 512,000
Selling, general and administrative 478,000 679,000 Depreciation and amortization 14,000 16,000 Total operating expenses 492,000 695,000
Operating loss (268,000 ) (183,000 )
Interest expense 8,000 5,000
Loss on building lease - (224,000 )
Net loss $ (276,000 ) $ (412,000 )
Net loss per share of common stock - Basic and diluted $ (.00 ) $ (.00 )
Weighted average number of common shares outstanding –
Basic and diluted 145,250,000 143,448,000
3 CAREADVANTAGE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) See Notes to Unaudited Condensed Consolidated Financial Statements.
Three Months Ended March 31, 2011 2010
Cash flows from operating activities:
Net loss $ (276,000 ) $ (412,000 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 14,000 16,000 Stock based compensation - 5,000 Loss on building lease – security deposit - 167,000 Loss on building lease - deferred rent - 57,000
Deferred revenue (71,000 ) 23,000 Accounts receivable 11,000 (56,000 ) Prepaid expenses and other assets (107,000 ) 33,000 Accounts payable 23,000 53,000 Accrued expenses and other liabilities 21,000 37,000 Deferred rent (13,000 ) (68,000 )
Net cash used in operating activities (398,000 ) (145,000 )
Cash flows from financing activity:
Proceeds from exercise of stock options, net of costs - 11,000 Proceeds from note payable 111,000 - Repayment of capital leases (10,000 ) (14,000 )
Net cash provided by/(used in) financing activities 101,000 (3,000 )
Net decrease in cash (297,000 ) (148,000 )
Cash and cash equivalents - beginning of period 457,000 510,000
Cash and cash equivalents - end of period $ 160,000 $ 362,000
4 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CareAdvantage, Inc. ( the “Company”) and its direct and indirect subsidiaries, CareAdvantage Health Systems, Inc. (“CAHS”) and Contemporary HealthCare Management, Inc. (“CHCM”), are in the business of providing healthcare consulting services, data warehousing and analytic services designed to enable integrated health care delivery systems, healthcare plans, employee benefit consultants, other care management organizations, self insured employers and unions to reduce the costs, while improving the quality, of medical services provided to the healthcare participants. The services include care management program enhancement services, executive and clinical management services, training programs, risk stratification and predictive modeling. The Company operates in one business segment. As part of offering its healthcare consulting services, the Company has developed RightPath ® Navigator (“RPNavigator”), a proprietary tool to help its customers better understand and forecast resource consumption, risk, and costs associated with their respective populations. In providing its services, the Company licenses RPNavigator to its customers and provides consulting services in connection with that licensing.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been omitted or condensed. These interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes hereto included in our Annual Report on Form 10-K for the year ended December 31, 2010.
The unaudited condensed consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of results of operations, financial position and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. The results for the interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year.
The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company generates most of its revenue from the licensing of RPNavigator and providing consulting services in connection with that licensing. Based on cash on hand at March 31, 2011 and a forecast prepared by management, which takes into account executed contracts and a pipeline of new business from existing and prospective clients, management has determined that the Company may not be able to meet its obligations as they become due during the next twelve months unless the Company obtains the proposed financing discussed in Note [A] below and/or other financing, and there can be no assurance that the Company will obtain such financing. For the three months ended March 31, 2011, the Company had a net loss of $276,000. Additionally, at March 31, 2011, the Company has an accumulated deficit of $24,906,000, stockholders deficit of $315,000 and cash and cash equivalents of $160,000. These factors, combined with the termination of the BCBSTX Agreement as discussed in Note [A] below, raise doubt regarding the Company’s ability to continue as a going concern. If the Company does not attain management’s plans, the Company will have to curtail operations, which will have a material adverse effect on the Company’s business prospects. If the Company is unable to fund continuing operations, the Company will continue to operate at a loss and will be required to wind up its operations, sell its assets, restructure the business, or liquidate, as a result of which there is substantial doubt about its ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As previously reported by the Company on the Form 8-K filed on September 2, 2010, Blue Cross and Blue Shield of Texas (“BCBSTX”), a division of Health Care Service Corporation (“HCSC”), terminated the Service and License Agreement between the Company and BCBSTX effective November 30, 2010. In so doing, HCSC nevertheless indicated a desire to continue to obtain ad hoc reports using the Company’s RPNavigator tool, as well as do business with the Company, and Mr. Mouras has proposed providing HCSC assistance regarding Accountable Care Organizations (“ACOs”) and “Medical Home” (wherein the health plan uses the physician’s office to manage care). An officer of HCSC has indicated to Mr. Mouras that HCSC continues to be interested in working with the Company regarding ACOs and Medical Home, but it must first develop its strategy for these initiatives. Accordingly, at present, it is uncertain whether the Company will obtain additional work from HCSC and if so, the timing and extent of any such additional work. The Company recognized approximately $500,000 and $1,835,000 of revenues for the three months ended March 31, 2010 and year ended December 31, 2010, respectively, from BCBSTX.
 Business:  Basis of Presentation and Going Concern:  Termination of Blue Cross and Blue Shield of Texas Agreement:
5 In October 2009, the FASB issued Accounting Standards Update N
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