8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 8, 2006

CAREGUIDE, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

0-22319	16-1476509
(Commission File No.)	(IRS Employer Identification No.)

12301 N.W. 39^th Street

Coral Springs, FL 33065

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (954) 796-3714

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

Pursuant to an Agreement and Plan of Merger dated November 3, 2006, by and among CareGuide, Inc. (the “Registrant”), Haelan Acquisition Corporation, a wholly-owned subsidiary of the Registrant (“Merger Sub”) and Haelan Corporation (“Haelan”), Merger Sub merged with and into Haelan (the “Merger”), and Haelan became a wholly-owned subsidiary of the Registrant. The Merger closed and became effective on December 8, 2006.

The Registrant reported the closing of the Merger and certain related matters under Item 2.01 of its Current Report on Form 8-K dated December 12, 2006 and undertook therein to file with the Securities and Exchange Commission (the “Commission”) the financial statements required by Item 9.01(a) of Form 8-K (the “Historical Financial Statements”) and the pro forma financial information required by Item 9.01(b) of Form 8-K (the “Pro Forma Financial Information”), in each case, in connection with the closing of the Merger, by amendment to the Form 8-K within 71 calendar days of December 14, 2006.

The Historical Financial Statements and the Pro Forma Financial Information are being filed herewith under Item 9.01 of this Current Report on Form 8-K/A (Amendment No. 1).

Item 9.01.		Financial Statements and Exhibits.
(a)	Financial statements of businesses acquired.

The audited balance sheet of Haelan as of December 31, 2005, audited statement of operations and retained deficit of Haelan for the year ended December 31, 2005, audited statement of cash flows of Haelan for the year ended December 31, 2005, and notes to the audited financial statements are included as Exhibit 99.1 and are hereby incorporated by reference.

The unaudited balance sheet of Haelan as of September 30, 2006, unaudited statements of operations and retained deficit of Haelan for the nine months ended September 30, 2006 and 2005, unaudited statements of cash flows of Haelan for the nine months ended September 30, 2006 and 2005 and notes to the unaudited financial statements are included as Exhibit 99.2 and are hereby incorporated by reference.

(b) Pro forma financial information.

The unaudited condensed pro forma combined balance sheet as of September 30, 2006, unaudited condensed pro forma combined statement of operations for the six months ended September 30, 2006, unaudited condensed pro forma combined statement of operations for the twelve months ended March 31, 2006 and notes to unaudited condensed pro forma combined financial statements are included as Exhibit 99.3 and are hereby incorporated by reference.

(d) Exhibits:

99.1 Audited balance sheet of Haelan as of December 31, 2005, audited statement of operations and retained deficit of Haelan for the year ended December 31, 2005, audited statement of cash flows of Haelan for the year ended December 31, 2005, and notes to the audited financial statements.

99.2 Unaudited balance sheet of Haelan as of September 30, 2006, unaudited statements of operations and retained deficit of Haelan for the nine months ended September 30, 2006

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and 2005, unaudited statements of cash flows of Haelan for the nine months ended September 30, 2006 and 2005 and notes to the unaudited financial statements.

99.3 Unaudited condensed pro forma combined balance sheet as of September 30, 2006, unaudited condensed pro forma combined statement of operations for the six months ended September 30, 2006, unaudited condensed pro forma combined statement of operations for the twelve months ended March 31, 2006 and notes to unaudited condensed pro forma combined financial statements.

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SIGNATURES

Pursuant to the requirements 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.

	CAREGUIDE, INC.
Dated:  February 20, 2007	By: /s/ Glen A. Spence
	Glen A. Spence
	Executive Vice President and Chief Financial Officer

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EXHIBITS

99.1 Audited balance sheet of Haelan as of December 31, 2005, audited statement of operations and retained deficit of Haelan for the year ended December 31, 2005, audited statement of cash flows of Haelan for the year ended December 31, 2005, and notes to the audited financial statements.

99.2 Unaudited balance sheet of Haelan as of September 30, 2006, unaudited statements of operations and retained deficit of Haelan for the nine months ended September 30, 2006 and 2005, unaudited statements of cash flows of Haelan for the nine months ended September 30, 2006 and 2005 and notes to the unaudited financial statements.

99.3 Unaudited condensed pro forma combined balance sheet as of September 30, 2006, unaudited condensed pro forma combined statement of operations for the six months ended September 30, 2006, unaudited condensed pro forma combined statement of operations for the twelve months ended March 31, 2006 and notes to unaudited condensed pro forma combined financial statements.

EX-99

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On December 8, 2006, CareGuide, Inc. ("CareGuide"), completed a business combination with Haelan Corporation ("Haelan") (the "Merger"). As a result of the Merger, Haelan has become a wholly-owned subsidiary of CareGuide. Accordingly, the assets and liabilities of Haelan will be recorded, as of the date of the business combination, at their respective fair values and added to those of CareGuide. The purchase price for all outstanding shares of capital stock of Haelan and all rights to acquire such shares of Haelan consisted of (i) cash paid at closing in the amount of $1.5 million, (ii) convertible promissory notes in the aggregate amount of $6.5 million and (iii) estimated transaction-related expenses in the amount of approximately $247,000, for a total purchase price of approximately $8.25 million. Pursuant to the agreement of merger, CareGuide may be obligated to pay to the former Haelan securityholders an additional amount up to $3.0 million in the event that certain conditions have been satisfied, the result of which will not be known until after December 31, 2007. This additional contingent payment has not been included in the calculation of the purchase price. In the event that CareGuide is obligated to make all or any portion of such contingent payment, it will be reflected as an adjustment to the purchase price. Such contingent payment may be made in cash or a combination of cash and common stock of CareGuide, at the discretion of CareGuide, subject to certain restrictions contained in the agreement of merger.

Set forth below are the following unaudited pro forma financial statements, including:

• the unaudited pro forma condensed combined balance sheet as of September 30, 2006, assuming that the merger between CareGuide and Haelan occurred as of the balance sheet on such date;

• the unaudited pro forma condensed combined statement of operations for the year ended March 31, 2006, assuming that the merger between CareGuide and Haelan occurred as of April 1, 2005; and

• the unaudited pro forma condensed combined statement of operations for the six months ended September 30, 2006, assuming that the merger between CareGuide and Haelan occurred as of April 1, 2006.

The unaudited pro forma condensed combined financial statements give effect to the transaction between Haelan and CareGuide. The purchase price has been allocated among the fair values of the assets and liabilities of Haelan, while the historical results of CareGuide are reflected in the results of the combined company. The transaction has been accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.” Under the purchase method of accounting, the total estimated purchase price, calculated as described in Note 2 to these unaudited pro forma condensed combined financial statements, is allocated to the net tangible and intangible assets acquired and liabilities assumed in connection with the transaction, based on their estimated fair values as of the completion of the transaction. Management has made a preliminary allocation of the estimated purchase price to the tangible and intangible assets acquired and liabilities assumed based on various preliminary estimates. A final determination of these estimated fair values will be based on the actual net tangible and intangible assets of Haelan that exist as of the date of completion of the transaction.

The unaudited pro forma condensed combined financial statements with respect to CareGuide and Haelan include historical financial data derived from the historical financial statements of Haelan included as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K/A and in the historical financial statements of CareGuide set forth in CareGuide’s Form 10-KSB for the year ended March 31, 2006 and

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its Form 10-QSB for the quarter ended September 30, 2006. The historical financial statements used for Haelan were derived from its audited financial statements for the fiscal year ended December 31, 2005 and its unaudited financial statements for the six months ended September 30, 2006 which are not presented herein. The historical financial statements used for CareGuide were derived from the applicable quarterly unaudited financial statements.

The unaudited pro forma condensed combined financial statements are presented for informational purposes only, are based on certain assumptions that CareGuide and Haelan believe to be reasonable, and do not purport to represent the companies’ combined financial condition nor results of operations had the merger occurred on or as of the dates noted above or to project results for any future date or period. In the opinion of management, all adjustments have been made that are needed to present fairly the unaudited pro forma condensed combined financial information. The information is subject to a number of uncertainties, relating to the merger and related matters, including among other things, estimates, assumptions and uncertainties regarding the amount of accruals for direct acquisition costs and the amount of expenses and other costs relating to the merger and the actual amount of identified intangible assets and goodwill that will result from the merger. Accordingly, the unaudited pro forma condensed combined financial information does not purport to be indicative of the actual results of operations or financial condition that would have been achieved had the merger in fact occurred on the dates indicated, nor does it purport to be indicative of the results of operations or financial condition that may be achieved in the future.

Further, the unaudited pro forma condensed combined financial statements do not include any adjustments for liabilities resulting from integration planning, as CareGuide's management is in the process of making these assessments and estimates of these costs are not currently known. It is believed that the Company will incur certain restructuring charges related to the merger in future periods.

These unaudited pro forma condensed combined financial statements have been prepared based on preliminary estimates of fair values. Amounts preliminarily allocated to intangible assets with definite lives may change, which could result in a material change in amortization of intangible assets. Therefore, the actual amounts recorded as of the completion of the transaction may differ materially from the information presented in these unaudited pro forma condensed combined financial statements. In addition to the receipt of the final valuation, the impact of future integration activities could cause material differences in the information presented.

The unaudited pro forma condensed combined financial information should be read in conjunction with Haelan’s audited financial statements and unaudited condensed financial statements and related attached notes included in this Form 8-K/A and CareGuide’s audited financial statements and unaudited condensed financial statements and related attached notes included in CareGuide’s Form 10-KSB for the year ended March 31, 2006 and its Form 10-QSB for the quarter ended September 30, 2006 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in CareGuide’s Form 10-KSB for the year ended March 31, 2006 and its Form 10-QSB for the quarter ended September 30, 2006.

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CareGuide, Inc. and Haelan Corporation

Pro Forma Balance Sheet

As of September 30, 2006

(Dollars in thousands)

		Haelan
	CareGuide, Inc.	Corporation	Adjustments		Pro Forma
Assets
Current assets:
Cash and cash equivalents	$               6,873	$                   47	$    (1,575)	(a)	$       5,345
Restricted cash available for current liabilities	4,516	-			4,516
Securities available for sale	38	-			38
Securities held for trading	441	-			441
Notes receivable	350	-			350
Accounts receivable, net of allowance for doubtful accounts	3,500	311			3,811
Prepaid expenses and other current assets	458	139	(106)	(b)	491
Current assets of discontinued operations	1,000	-			1,000
Total current assets	17,176	497	(1,681)		15,992
Property and equipment, net	1,295	1,390	1,065	(e)	3,750
Intangibles and other assets, net	3,674	-	2,600	(f)	6,274
Goodwill	28,695	-	4,309	(g)	33,004
Restricted cash	884	-			884
Total assets	$51,724	$1,887	$6,293		$59,904
Liabilities, redeemable preferred stock, and stockholders’ equity (deficit)
Current liabilities:
Claims payable	$               6,843	$                      -	$               -		$       6,843
Accounts payable and accrued expenses	4,103	1,427	172	(a)	5,702
Deferred revenue	1,312	70			1,382
Note payable	300	509	(509)	(c)	300
Notes payable to Haelan securityholders	-	-	6,500	(a)	6,500
Current tax liability	126	-			126
Current portion of capital lease obligations	1	1			2
Current liabilities of discontinued operations	1,129	-			1,129
Total current liabilities	13,814	2,007	6,163		21,984
Long-term liabilities:
Line of credit	8,000	425	(425)	(c)	8,000
Capital lease obligations, net of current portion	-	3			3
Deferred tax liability	-	7			7
Legal settlement payable, net of current portion	300	-			300
Total liabilities	22,114	2,442	5,738		30,294
Commitments and contingencies
Redeemable Series A Preferred Stock		1,053	(1,053)	(d)	-
Stockholders’ equity (deficit):
Common stock, $.01 par value, 80,000,000 shares;
authorized 67,538,976 shares issued and outstanding	675	1,473	(1,473)	(d)	675
Additional paid-in capital	62,014	-			62,014
Other comprehensive loss	(23)	-			(23)
Accumulated deficit	(33,056)	(3,081)	3,081	(d)	(33,056)
Total stockholders’ equity (deficit)	29,610	(555)	555		29,610
Total liabilities, redeemable preferred stock, and stockholders’ equity (deficit)	$51,724	$1,887	$6,293		$59,904

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CareGuide, Inc. and Haelan Corporation

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Twelve Months Ended March 31, 2006

(In thousands, except per share data)

		Haelan
	CareGuide, Inc.	Corporation
	Year Ended	Year Ended
	March 31,	December 31,
	2006	2005	Adjustments		Pro Forma
Revenues:
Capitation revenue	$               39,508	$                   -	$           -		$      39,508
Administrative and fee revenue	15,186	1,746			16,932
Total revenues	54,694	1,746	-		56,440
Cost of services – direct service costs	47,331	1,113			48,444
Gross profit	7,363	633	-		7,996
Operating costs and expenses:
Selling, general and administrative expense	6,873	1,361			8,234
Depreciation and amortization	1,484	163	1,696	(h)	3,343
Total operating costs and expenses	8,357	1,524	1,696		11,577
Loss from continuing operations	(994)	(891)	(1,696)		(3,581)
Other income (expense):
Interest and other income	345	(2)	(39)	(i)	304
Interest expense	(1,518)	(25)	25	(j)
			(325)	(k)	(1,843)
Loss from continuing operations before income
taxes and discontinued operations	(2,167)	(918)	(2,035)		(5,120)
Income tax (expense) benefit	(54)	68	(68)	(b)	(54)
Loss from continuing operations	(2,221)	(850)	(2103)		(5,174)
Accretion of preferred stock	(125)	-			(125)
Net loss from continuing operations
attributable to common stockholders	$              (2,346)	$            (850)	$(2,103)		$     (5,299)
Net loss per common share-basic and diluted
from continuing operations	$                (0.13)				$        (0.28)
Weighted average common shares outstanding - basic
and diluted	18,814				18,814

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CareGuide, Inc. and Haelan Corporation

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Six Months Ended September 30, 2006

(In thousands, except per share data)

		Haelan
	CareGuide, Inc.	Corporation	Adjustments		Pro Forma
Revenues:
Capitation revenue	$               17,994	$                        -	$           -		$          17,994
Administrative and fee revenue	9,554	2,273			11,827
Total revenues	27,548	2,273	-		29,821
Cost of services – direct service costs	20,689	867			21,556
Gross profit	6,859	1,406	-		8,265
Operating costs and expenses:
Selling, general and administrative expense	4,549	861			5,410
Depreciation and amortization	958	62	897	(h)	1,917
Total operating costs and expenses	5,507	923	897		7,327
Income from continuing operations	1,352	483	(897)		938
Other income (expense):
Interest and other income	219	5	(20)	(i)	204
Trading portfolio loss	(387)	-			(387)
Interest expense	(818)	(36)	36	(j)
			(163)	(k)	(981)
Income from continuing operations before income
taxes and discontinued operations	366	452	(1,044)		(226)
Income tax (expense) benefit	(138)	21	(21)	(b)	(138)
Income (loss) from continuing operations	228	473	(1,108)		(407)
Net income (loss) per common share-basic and diluted
from continuing operations	$                         -				$           (0.01)
Weighted average common shares outstanding
Basic	67,539				67,539
Diluted	70,411				70,411

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Notes to Unaudited Pro Forma Condensed Combined Financial Statements

1. Basis of Presentation

On November 3, 2006, CareGuide, Inc. ( “CareGuide”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among CareGuide, Haelan Acquisition Corporation, an Indiana corporation and newly formed wholly-owned subsidiary of CareGuide (“Merger Sub”) and Haelan Corporation, an Indiana corporation (“Haelan”), pursuant to which Merger Sub will merged with and into Haelan (the “Merger”), with Haelan resulting as a wholly owned subsidiary of CareGuide. The Merger was consummated on December 8, 2006.

In accordance with the terms of the Merger Agreement, at the closing of the Merger, CareGuide paid to Haelan a cash amount equal to $1.5 million, which was used to satisfy certain existing liabilities of Haelan specified in the Merger Agreement. CareGuide also issued convertible promissory notes to the former Haelan securityholders in exchange for their Haelan securities. The aggregate principal amount of the convertible promissory notes was $6.5 million, which amount is subject to reduction in accordance with the terms of the Merger Agreement. The promissory notes carry an interest rate of 5% per year, compounding annually, mature on the three-year anniversary of the closing of the Merger and are convertible into shares of CareGuide’s common stock, par value $0.01 per share, valued based upon the average closing price of the common stock on the OTC Bulletin Board, or any exchange on which CareGuide’s common stock is then traded, for the 20 consecutive trading days ending on the date prior to conversion. The maturity date of the notes may be accelerated in the event of a sale transaction, as defined in the notes, involving CareGuide.

Accordingly, the transaction has been accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.”

2. Purchase Price

The estimated purchase price of the Merger is as follows (dollars in thousands):

Cash paid at closing	$ 1,500
Notes issued to Haelan securityholders	6,500
Estimated transaction-related expenses	247
Total estimated purchase price	$ 8,247

Under the purchase method of accounting, the total purchase price is allocated to the acquired tangible and intangible assets and assumed liabilities of Haelan based on their estimated fair values as of the Merger closing date of December 8, 2006. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is allocated to goodwill. A third party valuation consultant has been engaged to assist in the process of determining the fair value of the assets acquired and liabilities assumed. No assurance can be given that actual goodwill will not be more or less than the estimated amount reflected in the pro forma financial statements. The resulting goodwill is subject to an annual impairment test. If the goodwill is impaired CareGuide will recognize a non-cash charge to earnings during the period the impairment is determined.

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3. Pro Forma Adjustments

Pro forma adjustments are necessary to reflect the estimated purchase price, to adjust amounts related to Haelan’s net tangible and identifiable intangible assets to a preliminary estimate of their fair values and to reflect the amortization expense related to the estimated amortizable intangible assets.

The unaudited pro forma condensed combined financial statements do not include any adjustments for liabilities resulting from integration planning, as CareGuide’s management is in the process of making these assessments, and estimates of these costs are not currently known. It is believed that CareGuide will incur certain restructuring charges related to the merger in future periods.

The pro forma adjustments included in the unaudited pro forma condensed combined financial statements are as follows:

(a) Reflects the $1,500,000 in cash paid at closing, $75,000 of related expenses paid before closing, estimated additional expenses of $172,000 resulting from the transaction and $6,500,000 of convertible promissory notes payable issued to former Haelan securityholders.

(b) Reflects the recording of a valuation allowance on deferred tax assets and the reduction of income tax expense due to including Haelan in the consolidated tax return.

(c) Reflects debt repaid by Haelan at the closing of the Merger.

(d) Reflects the elimination of equity of former Haelan securityholders.

(e) Reflects the estimated value of the developed technology included as property of Haelan. A third party valuation consultant has been engaged to assist in the process of determining the fair value of the assets acquired and liabilities assumed. No assurance can be given that actual value will not materially differ from the amounts presented herein. Any difference in the valuation as compared to the values presented herein will result in a corresponding change to the goodwill recorded as a result of the Merger.

(f) For pro forma presentation purposes, the estimated value attributed to identifiable intangible assets of $2,600,000 has been added. Such assets consist of customer contracts, trademarks, non-compete agreements and other intellectual properties of Haelan. A third party valuation consultant has been engaged to assist in the process of determining the fair value of the assets acquired and liabilities assumed. No assurance can be given that actual value will not materially differ from the amounts presented herein. Any difference in the valuation as compared to the values presented herein will result in a corresponding change to the goodwill recorded as a result of the Merger.

(g)

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Goodwill is computed as follows (dollars in thousands):

Cash paid	$ 1,575
Convertible promissory notes to former Haelan securityholders	6,500
Unpaid transaction costs	172
Total purchase consideration	8,247
Total book value of Haelan Corporation assets	(1,887)
Valuation allowance recorded	106
Purchase accounting adjustment to basis in developed technology	(1,065)
Purchase accounting adjustment to identifiable intangible assets	(2,600)
Liabilities assumed	1,508
Goodwill	$ 4,309

(h) Reflects amortization expense which would have been realized had the Merger been completed at the beginning of the period presented. Approximately $4 million of the estimated identifiable intangible assets are amortizing assets that have been given a useful life of between 3 and 5 years and were amortized using accelerated and straight-line methods.

(i) Reflects interest income which would not have been realized during the period presented due to the $1,575,000 decrease in cash. Assumes a 2.5% annual interest rate.

(j) Elimination of interest expense related to debt repaid by Haelan at the closing of the Merger.

(k) Interest on the convertible promissory notes issued to the Haelan securityholders accrues at 5% per year.

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EX-99

HAELAN CORPORATION

(d/b/a The Haelan Group)

Financial Statements

As of September 30, 2006

and for the Nine Months Ended

September 30, 2006 and 2005

HAELAN CORPORATION

(d/b/a The Haelan Group)

TABLE OF CONTENTS

Financial Statements

Balance Sheet		1
Statements of Operations and Retained Deficit		2
Statements of Cash Flows		3
Notes to Financial Statements	4-16

HAELAN CORPORATION
(d/b/a The Haelan Group)
Balance Sheet
(Unaudited)
September 30, 2006
	Assets
Current Assets
	Cash and cash equivalents	$ 47,163
	Accounts receivable	311,045
	Prepaid expenses	32,936
	Deferred tax asset (Note 5)	106,183
	Total Current Assets	497,327
Property and Equipment
	Developed software	1,968,863
	Furniture and fixtures	32,530
	Office equipment	214,292
	Leasehold improvements	13,450
	Accumulated depreciation	(839,481)
	Net Property and Equipment	1,389,654
	Total Assets	$ 1,886,981

HAELAN CORPORATION
(d/b/a The Haelan Group)
Balance Sheet
(Unaudited)
September 30, 2006
	Liabilities and Shareholders' Deficit
Current Liabilities
	Bank line of credit (Note 2)	$ 250,000
	Current maturities of shareholder notes payable (Note 3)	259,000
	Current maturities of notes payable	1,364
	Accounts payable	974,240
	Accrued payroll	143,835
	Accrued property taxes	1,755
	Accrued interest	54,861
	Accrued dividends (Note 6)	252,620
	Deferred revenue	69,572
	Total Current Liabilities	2,007,247
Long-term Liabilities
	Convertible notes payable (Note 4)	425,000
	Notes payable	2,635
	Deferred tax liability (Note 5)	7,276
	Total Long-term Liabilities	434,911
	Total Liabilities	2,442,158
Redeemable Series A Preferred Stock (Note 6)		1,052,589
Shareholders' Deficit (Note 7)
	Common stock	1,473,475
	Retained deficit	(3,081,241)
	Total Shareholders' Deficit	(1,607,766)
	Total Liabilities and Shareholders' Deficit	$ 1,886,981

See accompanying notes to unaudited interim financial statements.

1

HAELAN CORPORATION
(d/b/a The Haelan Group)
Statements of Operations and Retained Deficit
For the Nine Months Ended September 30, 2006 and 2005
	(Unaudited)	(Unaudited)
	September 30,	September 30,
	2006	2005
Revenues	$ 2,989,887	$ 1,105,660
Cost of Revenues
Salaries and wages	237,253	147,830
Contracted services	444,494	247,370
Other	514,437	306,762
Total Cost of Revenues	1,196,184	701,962
Gross Profit	1,793,703	403,698
Operating Expenses	1,312,332	1,046,875
Operating Income (Loss)	481,371	(643,177)
Other Income (Expense)
Interest income	5,795	432
Interest expense	(49,971)	(17,441)
Bad debt expense	647	0
Loss on disposal of assets	0	(3,633)
Total Other Income (Expense)	(43,529)	(20,642)
Income (Loss) before Income Taxes	437,842	(663,819)
Income Tax Benefit (Note 5)	(13,712)	(24,985)
Net Income (Loss)	451,554	(638,834)
Retained Deficit, Beginning of Year	(3,532,795)	(2,619,350)
Retained Deficit, End of Period	$ (3,081,241)	$ (3,258,184)

See accompanying notes to unaudited interim financial statements.

2

HAELAN CORPORATION
(d/b/a The Haelan Group)
Statements of Cash Flows
For the Nine Months Ended September 30, 2006 and 2005
		(Unaudited)	(Unaudited)
		September 30,	September 30,
		2006	2005
Cash Flows from Operating Activities
	Net income (loss)	$ 451,554	$ (638,834)
	Adjustments to reconcile net income (loss) to net cash
	provided by (used in) operating activities:
	Depreciation (Note 1)	94,207	114,733
	Loss on disposal of assets	0	3,633
	Deferred income taxes (Note 5)	(13,712)	(24,985)
	Increase in accounts receivable	(137,995)	(209,001)
	Decrease in survey inventory	0	5,862
	Increase in prepaid expenses	(24,004)	(7,124)
	Increase in accounts payable	446,305	348,554
	Increase in other liabilities	13,767	68,406
	Net cash provided by (used in) operating activities	830,122	(338,756)
Cash Flows from Investing Activities
	Capital expenditures	(67,360)	(109,518)
	Payments for One Care Street software development	(1,179,518)	(5,230)
	Net cash used in investing activities	(1,246,878)	(114,748)
Cash Flows from Financing Activities
	Net borrowings under line of credit	100,000	133,000
	Proceeds from issuance of short-term debt	84,697	175,667
	Proceeds from issuance of long-term debt	102,635	250,000
	Principal payments under capital lease obligations	(530)	(4,120)
	Issuance of common stock for services performed	0	12,000
	Net cash provided by financing activities	286,802	566,547
Net Increase (Decrease) in Cash and Cash Equivalents		(129,954)	113,043
Cash and Cash Equivalents, Beginning of Period		177,117	0
Cash and Cash Equivalents, End of Period		$ 47,163	$ 113,043
Supplemental Cash Flow Disclosures
	Interest paid	$ 7,050	$ 5,578

See accompanying notes to unaudited interim financial statements.

3

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 1 - Nature of Operations and Summary of Significant Accounting Policies:

Nature of Operations

The Haelan Group (the Company) is a Health Improvement Solutions Company that provides innovative systems that help individuals improve their health, productivity and financial outcomes. The Haelan Group has developed a revolutionary population health management system, One Care Street™, that prospectively finds individuals at greatest risk of accessing the health care system and then links them to highly tailored coaching interventions. The One Care Street system provides organizations with the ability to reduce overall health care costs while improving participants’ health. 

Revenue and Cost Recognition

The Company recognizes revenue when earned which is generally as contract milestones are reached. The Company also recognizes revenue on a straight-line basis over the contract period for contracts that do not contain milestones. Certain revenues are deferred until collectibility is reasonably certain and other criteria are met.

Accounts Receivable

The Company carries its accounts receivable at invoiced amounts less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on history of past write-offs and collections and current credit conditions. As of September 30, 2006, the Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is provided. The Company’s policy is not to accrue interest on past due accounts receivable.

Property, Equipment, and Depreciation

Property and equipment are carried at cost and includes expenditures for new additions and those, which substantially increase the useful lives of existing assets. Depreciation is computed at various rates by use of the straight-line method. Depreciable lives generally range from 3 to 7 years.

Expenditures for normal repairs and maintenance are charged to operations as incurred. The cost of property or equipment retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts in the year of disposal with the resulting gain or loss reflected in earnings.

The provision for depreciation amounted to $94,207 and $114,733 for the nine months ended September 30, 2006 and 2005, respectively.

4

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Continued):

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes. Those differences relate primarily to fixed assets (use of different depreciation methods and lives for financial statement and income tax purposes), and certain accrued expenses (use of accrual method for financial statement purposes and cash method for income tax purposes). The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for any operating loss carryforwards, charitable contribution carryforwards, and tax credit carryforwards that are available to offset future income taxes.

Earnings per Share

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Equity-Based Charges

The Company has elected to account for its employee stock plans in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and to adopt the disclosure-only provisions as required under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123).

The Company accounts for stock awards to nonemployees in accordance with the provisions of SFAS 123 and Emerging Issues Task Force Consensus No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (EITF 96-18). Under SFAS 123 and EITF 96-18, stock awards issued to nonemployees are accounted for at their deemed fair value based on independent valuations or by using the Black-Scholes method, as appropriate.

5

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Continued):

Equity-Based Charges (Continued)

As allowed by Statement of Financial Accounting Standards, Statement No. 148, “Accounting for Stock Based Compensation – Transition and Disclosure” (SFAS 148), which amends SFAS Statement No. 123, “Accounting for Stock Based Compensation”, the Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and to adopt the disclosure-only provisions as required under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), and Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure (SFAS No. 148). The Company accounts for stock awards to non-employees in accordance with the provisions of SFAS 123 and SFAS 148, and Emerging Issues Task Force Consensus No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or

Services” EITF 96-18. Under SFAS 123, SFAS 148, and EITF 96-18, stock awards issued to nonemployees are accounted for at their deemed fair value based on independent valuations using an option-pricing model, or other means as appropriate.

In December 2004, the FASB issued Statement No. 123R (SFAS 123R), “Share-Based Payment,” a revision of SFAS 123. SFAS 123R requires the measurement of all stock-based payments to employees, including grants of employee stock options and stock purchase rights granted pursuant to certain employee stock purchase plans, using a fair-value based method and the recording of such expense in operations. The accounting provisions of SFAS 123R for the Company are effective, and will be adopted, for the year ended December 31, 2006. The proforma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. SFAS 123R provides two alternatives for adoption: (1) a modified prospective” method in which compensation cost is recognized for all awards granted subsequent to the effective date of this statement as well as for the unvested portion of awards outstanding as of the effective date; or (2) a “modified retrospective” method which follows the approach in the “modified prospective” method, but also permits entities to restate prior periods to record compensation cost calculated under SFAS 123 for the proforma disclosure. The Company has not yet determined which method of adoption it will apply.

Although SFAS 123R is effective beginning January 1, 2006, the Company has not adopted the standard as of September 30, 2006; and the impact from implementation of the "modified prospective" method would approximate the impact of SFAS 123, using the Black-Scholes model. As a result, implementation of SFAS 123R would have an immaterial impact on the Company's reported net income in the Statement of Operations and Retained Deficit for the period ended September 30, 2006.

Advertising

The Company charges advertising costs to expense as incurred. Advertising expenses amounted to $54,698 and $53,641 for the nine months ended September 30, 2006 and 2005, respectively.

6

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Continued):

Cash Flows

For purposes of the Statements of Cash Flows, the Company considers all highly liquid instruments that are purchased within three months or less of an instruments maturity date to be cash equivalents.

During the period ended September 30, 2005, the Company exchanged 40 shares of common stock for consulting services.

During the period ended September 30, 2005, one officer of the Company exercised 450 stock options in exchange for a stock subscription receivable.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2 - Line of Credit:

The Company has a $150,000 available line of credit through September 2007. Borrowings bear interest at the bank’s prime rate (8.25% as of September 30, 2006) Outstanding borrowings on the line of credit amounted to $150,000 at September 30, 2006. The line of credit is secured by (a) substantially all the assets of the Company and (b) a certificate of deposit with a shareholder of the Company.

The Company has an additional $200,000 available line of credit through December 2006. Borrowings bear interest at the bank’s prime rate (8.25% as of September 30, 2006). Outstanding borrowings on this line of credit amounted to $100,000 as of September 30, 2006. The line of credit is secured by a third party.

Note 3 - Notes Payable to Shareholders:

In 2005 the Company issued a note to a shareholder in the amount of $166,667. The note is due in June 2006. Interest is charged at prime plus 2.5% (10.75% at September 30, 2006). Another advance was made in the amount of $83,333 in 2006. The note has an automatic extension for one year to June 2007.

In 2005 the Company also issued a note to a shareholder in the amount of $9,000. The note was due in June 2006. Interest is charged at 6.0% but increases to 18.0% after one year if the note has not been paid in full at that time. As of September 30, 2006, the note had not been paid in full.

7

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 4 - Convertible Notes Payable:

The Company issued convertible notes payable in the cumulative amount of $425,000 from the period ranging between December 2004 through March 2006. The unpaid principal and interest of all convertible notes may be converted into common stock, in whole or in part, at the holders’ option at any time during the life of the notes at $300 per common share. In addition, certain events, as defined in the agreements, may trigger conversion of such notes to common stock at $300 per share or the applicable conversion rate. The notes bear interest at 6% and expire on either (a) December 2010 through September 2011, at which time principal and interest are due, or (b) certain other events as defined in the agreement.

Note 5 - Income Taxes:

Federal and state income tax expense (benefit) for the periods ended September 30, 2006 and 2005, is summarized as follows:

		2006	2005
Federal:
	Current expense	$ 175,115	$ 0
	Deferred expense (benefit)	(187,727)	19,508
		(12,612)	19,508
State:
	Current expense	73,285	0
	Deferred expense (benefit)	(74,385)	(44,493)
		(1,100)	(44,493)
	Total tax benefit	$ (13,712)	$ (24,985)

8

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 5 - Income Taxes (Continued):

The Company's deferred tax assets and liabilities as of September 30, 2006, are summarized as follows:

		2006
Federal:
	Deferred tax assets	$ 72,947
	Deferred tax liabilities	(5,890)
		67,057
State:
	Deferred tax assets	33,236
	Deferred tax liabilities	(1,386)
		31,850
	Net deferred tax asset	$ 98,907

The net deferred tax asset (liability) has been reflected in the Company’s balance sheets as follows:

	2006
Current assets	$ 106,183
Long-term liabilities	(7,276)
	$ 98,907

The Company has operating loss carryforwards of approximately $1,550,000 to reduce future federal taxable income at September 30, 2006. These carryforwards expire at various dates through December 31, 2025. A valuation allowance of approximately $600,000 as of September 30, 2006, representing 100% of the net operating loss carryforward has been recognized to offset the long-term deferred tax asset associated with the net operating loss carryforward at September 30, 2006.

9

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 6 - Redeemable Series A Preferred Stock:

The Company is authorized to issue 20,000 shares of no par value preferred stock. In December 2001, the Company issued 4,210 shares of Series A Preferred Stock for $250 per share. The 4,210 shares of preferred stock are issued and outstanding for the period ended September 30, 2006.

Each share of preferred stock will automatically be converted into shares of common stock at the conversion rate in effect upon the earlier of a “Trigger Event” or a date specified by the majority of the holders of the Series A Preferred Stock. A “Trigger Event” is defined as (a) any representation made by Company hereunder shall prove to be false, (b) Company shall fail to observe or perform any covenant or material condition of the agreement, and (c) Company shall fail to comply with any material provision of the Series A Preferred Stock agreement. The conversion rate is subject to adjustment for future stock splits and certain other transactions. In conjunction with this agreement, the Company cancelled all of its Series A convertible promissory notes and converted it into Series A Preferred Stock. As a result, all Series A convertible promissory note agreements were void and null on the effective date of this agreement. Additionally, the holders of the preferred stock have the right to convert in whole or in part, and at any time, into fully paid and nonassesable shares of common stock, as defined in the agreement.

On or after the fifth anniversary of the effective date, the holders have the right to put to the Company all or a portion of the preferred shares outstanding at a price equal to the Preferred Stock Conversion Price of $250 per share, plus any accrued dividends of 6% per annum. At the

time of a put notice, the other preferred stock holders have the right to purchase the outstanding put shares on a pro rata basis. The Company shall purchase all put shares not acquired by the other holders. The $1,052,289 is classified as temporary equity on the Company’s balance sheet at September 30, 2006, since potential exercise of the put options are outside the Company’s control.

The holders of the Company’s Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, dividends at the rate of 6% per annum on the original issuance price. Dividends shall accrue from the date of reissuance (December 19), and shall accumulate if not paid, whether or not declared, on an annual basis.

The shares of the Preferred Stock vote together with the common stock as a single group, and each share of Preferred Stock is entitled to one vote for each share of common stock into which the Preferred Stock could be converted.

10

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 7 - Common Stock and Warrants:

The Company has voting stock with equal voting rights. All of the stock is no par value.

The following summarizes the Company’s shares of common stock at September 30, 2006:

Authorized	100,000
Issued	9,198
Outstanding	9,198

Amounts do not include an additional 450 shares of common stock issued to an officer of the Company during 2005 related to exercise of stock options in exchange for a note receivable. The note receivable constitutes a stock subscription receivable and eliminates the equity increase related to exercise of the options.

Warrants

The Company periodically issues warrants on a one-for-one basis for the purchase of shares of its common stock. The exercise prices of the warrants are no less than the fair market value of the common stock on the dates of grant. The estimated fair market value of the warrants is measured on the date of grant (measurement date), and accounted for as part of the related transaction.

In connection with the Company’s Series A Preferred Stock described in Note 6, the Company retired certain convertible debentures in exchange for the issuance of stock warrants to purchase 1,907 shares of the Company’s common stock in January of 2001 at an exercise price of $.01 per share. The warrants are exercisable after April 2001 and expire ten years after the date of grant. None of these warrants have been exercised at September 30, 2006.

In connection with the Company’s Series A Preferred Stock described in Note 6, the Company issued cancelable basic warrants to purchase 3,539 shares of common stock in January of 2001. Of these warrants, 1,769.5 were issued at an exercise price of $250 per share and the remaining 1,769.5 warrants were issued at an exercise price of $1 per share. These warrants are exercisable prior to the first anniversary, or after the second anniversary of the date of grant and expire ten years after the date of grant. None of these warrants have been exercised at September 30, 2006.

In connection with the Company’s Series A Preferred Stock described in Note 6, the Company issued additional warrants to purchase 1,769 shares of common stock in January of 2001 at an exercise price of $250 per share. The warrants are exercisable beginning January 2006 and expire ten years after the date of grant.

In connection with the Series A Preferred Stock Purchase Agreement described in Note 6, the Company issued “new” warrants to purchase 1,700 shares of common stock, in December 2001 at an exercise price of $0.01 per share. The warrants became exercisable after December 31, 2003, and expire eight years from the date of grant. None of these warrants have been exercised at September 30, 2006.

11

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 7 - Common Stock and Warrants (Continued):

Warrants (Continued)

In connection with the Series A Preferred Stock Purchase Agreement described in Note 6, the Company issued warrants to purchase 604 shares of the Company’s common stock in exchange for deferred employee compensation, deferred consulting compensation, and deferred board of director compensation. The stock warrants were issued in December 2001 at an exercise price of $0.01 per share. The warrants became exercisable after December 31, 2003, and expire eight years from the date of grant. None of these warrants have been exercised at September 30, 2006.

During the year ended December 31, 2003, the Company’s board of directors approved issuance of 1,118 warrants to an outside investor. The warrants were vested on the date of grant at an exercise price of $300 per share. The warrants expire at various dates during the year ended December 31, 2008. During the year ended December 31, 2003, the holder purchased 1,000 warrants at the required price of $300,000. The warrants were simultaneously converted into 1,000 shares of the Company’s common stock pursuant to the agreement. The remaining 118 warrants have not been exercised at September 30, 2006.

During the year ended December 31, 2005, the Company’s board of directors approved issuance of 50 warrants in exchange for consulting services. The warrants were vested on the date of grant at an exercise price of $300 per share. None of the warrants have been exercised at September 30, 2006.

At September 30, 2006, management believes the exercise price of all warrants exceed their respective fair value at the date of grant.

Note 8 - Stock Purchase Agreement:

The shareholders have entered into a buy-sell agreement which creates certain restrictions on the transfer of stock. The agreement covers voluntary and involuntary transfers of stock, as well as transfers initiated by death, permanent disability, and termination of employment. The purchase price of the stock is based upon annual valuations mutually agreed upon by the shareholders.

12

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 9 - Stock Option Plan:

The Company adopted the 2000 Stock Option Plan (the Plan) on April 1, 2000. The Plan allows for the issuance of non-qualified stock options to executive officers and employees who are materially responsible for the management or operation of the business of the Company. The number of shares, exercise price of shares, and vesting conditions are to be determined by the Board of Directors. Options generally become exercisable in equal installments between three and ten years of grant. The exercise price of approximately $83,400 issued under the Plan in 2006; was equal to or greater than the fair value at the date of grant. Consequently no unearned deferred compensation expense was recorded.

The following summarizes changes in stock options under the Plan for the period ended September 30, 2006.

	2006
		Weighted
		Average
	Shares	Exercise Price
Options outstanding, beginning of year	1,674	$ 223.03
Shares granted	278
Options exercised	0
Shares cancelled	0
Options outstanding, end of period	1,952	$ 233.99
Weighted average fair value of options granted during the period
		$ 300.00
Options available for grant at end of period	848
Options exercisable at end of period	1,952

The weighted average remaining contractual life of the options outstanding was approximately 5 years for the period ended September 30, 2006.

If compensation cost had been determined based on the fair value at the grant date for awards under the Plan in accordance with FAS 123, the proforma net loss would have an immaterial impact on the Company’s reported net loss included in the Statement of Operations and Retained Earnings (Deficit), for the periods ended September 30, 2006 and 2005.

13

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 9 - Stock Option Plan (Continued):

The effects of applying FAS No. 123 in this proforma disclosure may not be indicative of effects on reported net income for future years.

Expected future dividend yield	0.0%
Risk-free interest rate	2.5%
Expected life (years)	5

Note 10 - Operating Lease Commitments:

During the period ended September 30, 2005, the Company entered into a sublease agreement for office space that extends through January 2009. In addition to base monthly rent, the Company could be responsible for their proportionate share of operating expenses if amounts exceed certain pre-established budgets. Rent expense under this agreement was $46,555 and $10,346 for the periods ended September 30, 2006 and 2005, respectively.

The Company previously leased its office space from a related party. Rent expense under this agreement was $0 and $11,520 for the periods ended September 30, 2006 and 2005, respectively.

The Company is committed to several operating leases for office equipment with expiration dates through August 2010. Lease expense under these agreements amounted to $15,270 and $2,545 for the periods ended September 30, 2006 and 2005, respectively.

Future minimum commitments under all agreements are as follows at September 30, 2006:

2007	$ 141,628
2008	100,318
2009	11,792
2010	4,147
	$ 257,885

14

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 11 - Earnings per Share:

The following is a reconciliation of the numerators and denominators used in computing earnings per share:

	For the
	Period Ended
	September 30,
	2006
Net income	$ 451,554
Basic income per share:
Less: Preferred Stock Dividends	0
	$ 451,554
Weighted - average number of common shares outstanding
	9,198
Basic income per share	$ 49.09
Diluted income per share:
Weighted-average number of common shares
outstanding - basic	9,198
Effect of dilutive convertible notes payable and related accrued interest	1,509
Effect of dilutive warrants
	9,687
Effect of dillutive convertible preferred stock	4,210
Effect of dillutive stock options	1,952
Weighted - average number of common shares outstanding - dilutive	26,556
Diluted income per share	$ 17.00

At September 30, 2005, basic loss per share was $(72.56) and all common stock equivalents were anti-dilutive.

15

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

September 30, 2006

Note 12 - Concentration of Credit Risk:

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. The Company places its cash and cash equivalents with high credit quality institutions. At times, such amounts may be in excess of the FDIC insured limit. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its accounts receivable credit risk exposure is limited.

Note 13 - Major Customer:

The Company has three customers that accounted for approximately 68% of net sales and 49% of accounts receivable for the period ended September 30, 2006.

The Company has three customers that accounted for approximately 52% of net sales and 61% of accounts receivable for the period ended September 30, 2005.

Note 14 - Subsequent Event:

In November 2006, the Company entered into a definitive merger agreement with CareGuide, Inc. (“CareGuide”), a publicly-held disease and healthcare management company headquartered in Coral Springs, Florida. This transaction is expected to close on or before December 31, 2006, subject to the conditions to closing that are contained in the merger agreement. As currently contemplated by the merger agreement, CareGuide will pay the Company cash of $1.5 million to satisfy certain liabilities. Additionally, CareGuide will issue convertible promissory notes to shareholders of the Company in the aggregate principal amount of up to $6.5 million, which notes are convertible by their terms into shares of CareGuide’s common stock. If certain revenue targets set forth in the merger agreement are achieved in 2007, CareGuide will pay an additional amount of up to $3.0 million to the former shareholders of the Company.

16

EX-99

HAELAN CORPORATION

(d/b/a The Haelan Group)

Financial Statements

Year Ended December 31, 2005

HAELAN CORPORATION

(d/b/a The Haelan Group)

TABLE OF CONTENTS

Independent Auditors’ Report on the Financial Statements Page 1

Financial Statements

Balance Sheet		2
Statement of Operations and Retained Deficit		3
Statement of Cash Flows		4
Notes to Financial Statements	5-16

Independent Auditors’ Report

To the Board of Directors

HAELAN CORPORATION

(d/b/a The Haelan Group)

Indianapolis, Indiana

We have audited the accompanying balance sheet of HAELAN CORPORATION (d/b/a The Haelan Group) as of December 31, 2005, and the related statements of operations and retained deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the Unites States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 HAELAN CORPORATION (d/b/a The Haelan Group) as of December 31, 2005, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/Somerset CPAs, P.C.

November 16, 2006

HAELAN CORPORATION
(d/b/a The Haelan Group)
Balance Sheet
December 31, 2005
	Assets
Current Assets
	Cash and cash equivalents	$ 177,117
	Accounts receivable	173,050
	Prepaid expenses	8,934
	Deferred tax assets (Note 6)	92,394
	Total Current Assets	451,495
Property and Equipment
	Developed software	789,345
	Furniture and fixtures	30,984
	Office equipment	150,278
	Leasehold improvements	11,650
	Accumulated depreciation	(745,274)
	Net Property and Equipment	236,983
	Total Assets	$ 688,478

	Liabilities and Shareholders' Equity (Deficit)
Current Liabilities
	Bank line of credit (Note 2)	$ 150,000
	Current maturities of shareholder notes payable (Note 3)	175,667
	Current maturities of capital lease obligations (Note 5)	530
	Accounts payable	527,935
	Accrued payroll	75,519
	Accrued property taxes	1,200
	Accrued interest	16,480
	Accrued dividends (Note 7)	252,620
	Deferred revenue	163,059
	Total Current Liabilities	1,363,010
Long-term Liabilities
	Convertible notes payable (Note 4)	325,000
	Deferred tax liabilities (Note 6)	7,199
	Total Long-term Liabilities	332,199
	Total Liabilities	1,695,209
Redeemable Series A Preferred Stock (Note 7)		1,052,589
Shareholders' Equity (Deficit) (Note 8)
	Common stock	1,473,475
	Retained deficit	(3,532,795)
	Total Shareholders' Equity (Deficit)	(1,006,731)
	Total Liabilities and Shareholders' Equity (Deficit)	$ 688,478

See accompanying notes.

2

HAELAN CORPORATION
(d/b/a The Haelan Group)
Statement of Operations and Retained Deficit
For the Year Ended December 31, 2005
Revenues	$ 1,746,146
Cost of Revenues
Salaries and wages	223,993
Contracted services	421,901
Other	467,681
Total Cost of Revenues	1,113,575
Gross Profit	632,571
Operating Expenses	1,523,769
Operating Loss	(891,198)
Other Income (Expense)
Interest income	1,728
Interest expense	(25,081)
Loss on disposal of assets	(3,633)
Total Other Income (Expense)	(26,986)
Loss before Income Taxes	(918,184)
Income Tax Benefit (Note 6)	(67,834)
Net Loss	(850,350)
Retained Deficit, Beginning of Year	(2,619,350)
Dividends	(63,095)
Retained Deficit, End of Year	$ (3,532,795)

See accompanying notes.

3

HAELAN CORPORATION
(d/b/a The Haelan Group)
Statement of Cash Flows
For the Year Ended December 31, 2005
Cash Flows from Operating Activities
	Net loss	$ (850,350)
	Adjustments to reconcile net loss to net cash
	used in operating activities:
	Depreciation (Note 1)	162,926
	Loss on disposal of assets	3,633
	Deferred income taxes (Note 6)	(67,834)
	Increase in accounts receivable	(135,951)
	Decrease in survey inventory	5,860
	Increase in prepaid expenses	(1,702)
	Increase in accounts payable	416,843
	Increase in accrued payroll	44,253
	Increase in deferred revenue	142,550
	Increase in other liabilities	16,304
	Net cash used in operating activities	(263,468)
Cash Flows from Investing Activities
	Capital expenditures	(114,100)
	Payment for One Care Street software development	(12,392)
	Net cash used in investing activities	(126,492)
Cash Flows from Financing Activities
	Net borrowings under line of credit	133,000
	Proceeds from issuance of short-term debt	175,667
	Proceeds from issuance of long-term debt	250,000
	Principal payments under capital lease obligations	(3,590)
	Issuance of common stock for services performed	12,000
	Net cash provided by financing activities	567,077
Net Increase in Cash and Cash Equivalents		177,117
Cash and Cash Equivalents, Beginning of Year		0
Cash and Cash Equivalents, End of Year		$ 177,117
Supplemental Cash Flow Disclosures
	Interest paid	$ 8,678

See accompanying notes.

4

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 1 - Nature of Operations and Summary of Significant Accounting Policies:

Nature of Operations

The Haelan Group (the Company) is a Health Improvement Solutions Company that provides innovative systems that help individuals improve their health, productivity and financial outcomes. The Haelan Group has developed a revolutionary population health management system, One Care Street™, that prospectively finds individuals at greatest risk of accessing the health care system and then links them to highly tailored coaching interventions. The One Care Street system provides organizations with the ability to reduce overall health care costs while improving participants’ health.

Revenue and Cost Recognition

The Company recognizes revenue when earned which is generally as contract milestones are reached. The Company also recognizes revenue on a straight-line basis over the contract period for contracts that do not contain milestones. Certain revenues are deferred until collectibility is reasonably certain and other criteria are met.

Accounts Receivable

The Company carries its accounts receivable at invoiced amounts less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on history of past write-offs and collections and current credit conditions. As of December 31 2005, the Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is provided. The Company’s policy is not to accrue interest on past due accounts receivable.

Inventories

Inventories consist of survey and pre-printed mailing materials and are expensed when incurred.

Property, Equipment, and Depreciation

Property and equipment are carried at cost and includes expenditures for new additions and those, which substantially increase the useful lives of existing assets. Depreciation is computed at various rates by use of the straight-line method. Depreciable lives generally range from 3 to 7 years.

Expenditures for normal repairs and maintenance are charged to operations as incurred. The cost of property or equipment retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts in the year of disposal with the resulting gain or loss reflected in earnings.

The provision for depreciation amounted to $162,926 for the year ended December 31, 2005.

5

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Continued):

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes. Those differences relate primarily to fixed assets (use of different depreciation methods and lives for financial statement and income tax purposes), and certain accrued expenses (use of accrual method for financial statement purposes and cash method for income tax purposes). The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for any operating loss carryforwards, charitable contribution carryforwards, and tax credit carryforwards that are available to offset future income taxes.

Equity-Based Charges

The Company has elected to account for its employee stock plans in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and to adopt the disclosure-only provisions as required under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123).

The Company accounts for stock awards to nonemployees in accordance with the provisions of SFAS 123 and Emerging Issues Task Force Consensus No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (EITF 96-18). Under SFAS 123 and EITF 96-18, stock awards issued to nonemployees are accounted for at their deemed fair value based on independent valuations or by using the Black-Scholes method, as appropriate.

As allowed by Statement of Financial Accounting Standards, Statement No. 148, “Accounting for Stock Based Compensation – Transition and Disclosure” (SFAS 148), which amends SFAS Statement No. 123, “Accounting for Stock Based Compensation”, the Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and to adopt the disclosure-only provisions as required under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), and Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure (SFAS No. 148). The Company accounts for stock awards to nonemployees in accordance with the provisions of SFAS 123 and SFAS 148, and Emerging Issues Task Force Consensus No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” EITF 96-18. Under SFAS 123, SFAS 148, and EITF 96-18, stock awards issued to nonemployees are accounted for at their deemed fair value based on independent valuations using an option-pricing model, or other means as appropriate.

6

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Continued):

Equity-Based Charges (Continued)

In December 2004, the FASB issued Statement No. 123R (SFAS 123R), “Share-Based Payment,” a revision of SFAS 123. SFAS 123R requires the measurement of all stock-based payments to employees, including grants of employee stock options and stock purchase rights granted pursuant to certain employee stock purchase plans, using a fair-value based method and the recording of such expense in operations. The accounting provisions of SFAS 123R for the Company are effective, and will be adopted, for the year ended December 31, 2006. The proforma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. SFAS 123R provides two alternatives for adoption: (1) a modified prospective” method in which compensation cost is recognized for all awards granted subsequent to the effective date of this statement as well as for the unvested portion of awards outstanding as of the effective date; or (2) a “modified retrospective” method which follows the approach in the “modified prospective” method, but also permits entities to restate prior periods to record compensation cost calculated under SFAS 123 for the proforma disclosure. The Company has not yet determined which method of adoption it will apply.

The adoption of SFAS 123R may have an impact on the Company’s results of operations, although it will have no impact on the Company’s overall financial position. The impact of adopting SFAS 123R cannot be accurately estimated at this time, as it will depend on the market value and the amount of stock-based awards granted in future periods. However, had the Company adopted SFAS 123R in a prior period, the impact would approximate the impact of SFAS 123, using the Black-Scholes model. SFAS 123R also requires tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow, in the Consolidated Statements of Cash Flows. Excess tax deductions for future periods cannot be accurately estimated at this time, as they depend on the timing of stock option exercises and the Company’s share price on the exercise date.

Advertising

The Company charges advertising costs to expense as incurred. Advertising expenses amounted to $69,393 for the year ended December 31, 2005.

Cash Flows

For purposes of the Statements of Cash Flows, the Company considers all highly liquid instruments that are purchased within three months or less of an instruments maturity date to be cash equivalents.

During the year ended December 31, 2005, the Company exchanged 40 shares of common stock for consulting services.

During the year ended December 31, 2005, one officer of the Company exercised 450 stock options in exchange for a stock subscription receivable. Refer to Note 10 for detail.

7

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Continued):

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2 - Line of Credit:

The Company has a $150,000 available line of credit through September 2006. During 2006, the Company extended the line of credit through February 2007. Borrowings bear interest at the bank’s prime rate (7.25% as of December 31, 2005). Outstanding borrowings amounted to $150,000 as of December 31, 2005.

The line of credit is secured by (a) substantially all assets of the Company and (b) a certificate of deposit with a shareholder of the Company.

Note 3 - Notes Payable to Shareholders:

In 2005 the Company issued a note to a shareholder in the amount of $166,667. The note is due in June 2006 with interest at prime plus 2.5% (10% at December 31, 2005). The note also includes a provision for another advance to be made in the amount of $83,333 in 2006. The note has an automatic extension for one year to June 2007.

In 2005 the Company also issued a note to a shareholder in the amount of $9,000. The note is due in June 2006 with interest initially at 6.0%, with interest rate increases to 18.0% after one year in the event the note has not been paid in full at that time.

Note 4 - Convertible Notes Payable:

The Company issued convertible notes payable in the amounts of $75,000 in December 2004. The Company issued convertible notes payable in the amounts of $50,000 and $200,000 on April 28, 2005 and September 19, 2005, respectively. The unpaid principal and interest of the notes may be converted into common stock, in whole or in part, at the holders’ option at any time during the life of the notes at $300 per common share. In addition, certain events, as defined in the agreements, may trigger conversion of such notes to common stock at $300 per share or the applicable conversion rate. The notes bear interest at 6% and expire on either (a) December 2010 through September 2011, at which time principal and interest are due, or (b) certain other events as defined in the agreement.

8

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 5 - Capital Leases:

Long-term leases relating to the financing of property and equipment are accounted for as installment purchases. The capital lease obligations reflect the present value of future rental payments, discounted at the interest rate implicit in the lease, and a corresponding amount is capitalized as the cost of the equipment. The equipment is being depreciated over a five year period.

The following is an analysis of property and equipment under capital lease at December 31, 2005:

Equipment	$ 26,863
Less allowances for depreciation	24,727
	$ 2,136

Following is a schedule of future minimum lease payments due under the capital lease obligations together with the present value of net minimum lease payments as of December 31, 2005:

Year Ending December 31,
2006	$ 573
Total minimal lease payments	573
Less amounts representing interest	43
Present value of net minimum lease payments	530
Less current portion	(530)
Long-term portion	$ 0

9

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 6 - Income Taxes:

Federal and state income tax expense (benefit) for the year ended December 31, 2005, is summarized as follows:

Federal:
	Current expense	$ 0
	Deferred expense (benefit)	(4,782)
		(4,782)
State:
	Current expense	0
	Deferred benefit	(63,052)
		(63,052)
	Total	$ (67,834)

The Company's deferred tax assets and liabilities as of December 31, 2005, are summarized as follows:

Federal:
	Deferred tax assets	$ 63,454
	Deferred tax liabilities	(7,199)
		56,255
State:
	Deferred tax assets	28,940
	Deferred tax liabilities	0
		28,940
	Net deferred tax asset	$ 85,195

10

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 6 - Income Taxes (Continued):

The net deferred tax asset (liability) has been reflected in the Company’s balance sheets as follows:

Current assets	$ 92,394
Long-term liabilities	(7,199)
	$ 85,195

The Company has net operating loss carryforwards of approximately $1,827,000 to reduce future federal taxable income as of December 31, 2005. These carryforwards expire at various dates through December 31, 2025. A valuation allowance of approximately $489,000 representing 100% of the net operating loss carryforward has been recognized to offset the long-term deferred tax asset associated with net operating loss carryforwards as of

December 31, 2005.

Note 7 - Redeemable Series A Preferred Stock:

The Company is authorized to issue 20,000 shares of no par value preferred stock. In December 2001, the Company issued 4,210 shares of Redeemable Series A Preferred Stock for $250 per share. The 4,210 shares of redeemable preferred stock are issued and outstanding for the year ended December 31, 2005.

Each share of redeemable preferred stock will automatically be converted into shares of common stock at the conversion rate in effect upon the earlier of a “Trigger Event” or a date specified by the majority of the holders of the Series A Preferred Stock. A “Trigger Event” is defined as (a) any representation made by Company hereunder shall prove to be false, (b) Company shall fail to observe or perform any covenant or material condition of the agreement, and (c) Company shall fail to comply with any material provision of the Redeemable Series A Preferred Stock agreement. The conversion rate is subject to adjustment for future stock splits and certain other transactions. In conjunction with this agreement, the Company cancelled all of its Series A convertible promissory notes and converted it into Redeemable Series A Preferred Stock. As a result, all Series A convertible promissory note agreements were void and null on the effective date of this agreement. Additionally, the holders of the redeemable preferred stock have the right to convert in whole or in part, and at any time, into fully paid and nonassesable shares of common stock, as defined in the agreement.

On or after the fifth anniversary of the effective date, the holders have the right to put to the Company all or a portion of the preferred shares outstanding at a price equal to the Preferred Stock Conversion Price of $250 per share, plus any accrued dividends of 6% per annum. At the time of a put notice, the other preferred stock holders have the right to purchase the outstanding put shares on a pro rata basis. The Company shall purchase all put shares not acquired by the other holders. The $1,052,289 is classified as temporary equity on the Company’s balance sheet at December 31, 2005, since potential exercise of the put options by the shareholders are outside the Company’s control.

11

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 7 - Redeemable Series A Preferred Stock (Continued):

The holders of the Company’s Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, dividends at the rate of 6% per annum on the original issuance price. Dividends shall accrue from the date of reissuance (December 19), and shall accumulate if not paid, whether or not declared, on an annual basis.

The shares of the Preferred Stock vote together with the common stock as a single group, and each share of Preferred Stock is entitled to one vote for each share of common stock into which the Preferred Stock could be converted.

Note 8 - Common Stock and Warrants:

The Company has voting stock with equal voting rights. All of the stock is no par value.

The following summarizes the Company’s shares of common stock at December 31, 2005:

Authorized	100,000
Issued	9,198
Outstanding	9,198

Warrants

The Company periodically issues warrants on a one-for-one basis for the purchase of shares of its common stock. The exercise prices of the warrants are no less than the fair market value of the common stock on the dates of grant. The estimated fair market value of the warrants is measured on the date of grant (measurement date), and accounted for as part of the related transaction.

In connection with the Company’s Redeemable Series A Preferred Stock described in Note 7, the Company retired certain convertible debentures in exchange for the issuance of stock warrants to purchase 1,907 shares of the Company’s common stock in January of 2001 at an exercise price of $.01 per share. The warrants are exercisable after April 2001 and expire ten years after the date of grant. None of these warrants have been exercised at December 31, 2005.

In connection with the Company’s Redeemable Series A Preferred Stock described in Note 7, the Company issued cancelable basic warrants to purchase 3,539 shares of common stock in January of 2001. Of these warrants, 1,769.5 were issued at an exercise price of $250 per share and the remaining 1,769.5 warrants were issued at an exercise price of $1 per share. These warrants are exercisable prior to the first anniversary, or after the second anniversary of the date of grant and expire ten years after the date of grant. None of these warrants have been exercised at December 31, 2005.

12

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 8 - Common Stock and Warrants (Continued):

Warrants (Continued)

In connection with the Company’s Redeemable Series A Preferred Stock described in Note 7, the Company issued additional warrants to purchase 1,769 shares of common stock in January of 2001 at an exercise price of $250 per share. The warrants are exercisable beginning January 2006 and expire ten years after the date of grant.

In connection with the Redeemable Series A Preferred Stock Purchase Agreement described in Note 7, the Company issued “new” warrants to purchase 1,700 shares of common stock, in December 2001 at an exercise price of $0.01 per share. The warrants became exercisable after December 31, 2003, and expire eight years from the date of grant. None of these warrants have been exercised at December 31, 2005.

In connection with the Redeemable Series A Preferred Stock Purchase Agreement described in Note 7, the Company issued warrants to purchase 604 shares of the Company’s common stock in exchange for deferred employee compensation, deferred consulting compensation, and deferred board of director compensation. The stock warrants were issued in December 2001 at an exercise price of $0.01 per share. The warrants became exercisable after December 31, 2003, and expire eight years from the date of grant. None of these warrants have been exercised at December 31, 2005.

During the year ended December 31, 2003, the Company’s board of directors approved issuance of 1,118 warrants to an outside investor. The warrants were vested on the date of grant at an exercise price of $300 per share. The warrants expire at various dates during the year ended December 31, 2008. During the year ended December 31, 2003, the holder purchased 1,000 warrants at the required price of $300,000. The warrants were simultaneously converted into 1,000 shares of the Company’s common stock pursuant to the agreement. The remaining 118 warrants have not been exercised at December 31, 2005.

During the year ended December 31, 2005, the Company’s board of directors approved issuance of 50 warrants in exchange for consulting services. The warrants were vested on the date of grant at an exercise price of $300 per share. None of the warrants have been exercised at December 31, 2005.

At December 31, 2005, management believes the exercise price of all warrants exceed their respective fair value at the date of grant.

Note 9 - Stock Purchase Agreement:

The shareholders have entered into a buy-sell agreement which creates certain restrictions on the transfer of stock. The agreement covers voluntary and involuntary transfers of stock, as well as transfers initiated by death, permanent disability, and termination of employment. The purchase price of the stock is based upon annual valuations mutually agreed upon by the shareholders.

13

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 10 - Stock Option Plan:

The Company adopted the 2000 Stock Option Plan (the Plan) on April 1, 2000. The Plan allows for the issuance of non-qualified stock options to executive officers and employees who are materially responsible for the management or operation of the business of the Company. The number of shares, exercise price of shares, and vesting conditions are to be determined by the Board of Directors. Options generally become exercisable in equal installments between three and ten years of grant. The exercise price of approximately $67,000 issued under the Plan in 2005; was equal to or greater than the fair value at the date of grant. Consequently no unearned deferred compensation expense was recorded.

The following summarizes changes in stock options under the Plan for the year ended December 31, 2005:

			Weighted
			Average
	Shares		Exercise Price
Options outstanding, beginning of year	1,046		$ 173.09
Shares granted	728
Options exercised	0	*
Shares cancelled	100
Options outstanding, end of year	1,674		$ 223.03
Weighted average fair value of options granted during the year
			$ 300.00
Options available for grant at end of year	1,126
Options exercisable at end of year	1,674

The weighted average remaining contractual life of the options outstanding was approximately 6 years for the year ended December 31, 2005.

* An officer of the Company exercised 450 options in exchange for a note receivable during the year ended December 31, 2005. The note receivable constitutes a stock subscription receivable and eliminates the equity increase related to exercise of the options. Consequently, the shares are included in the stock option table above and the impact of exercising these options’ exercise is immaterial to the Company’s balance sheet at December 31, 2005.

14

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 10 - Stock Option Plan (Continued):

If compensation cost had been determined based on the fair value at the grant date for awards under the Plan in accordance with FAS 123, the proforma net loss would have an immaterial impact on the Company’s reported net loss included in the Statement of Operations and Retained Earnings (Deficit), for the year ended December 31, 2005.

The effects of applying FAS No. 123 in this proforma disclosure may not be indicative of effects on reported net income for future years.

Expected future dividend yield	0.0%
Risk-free interest rate	2.5%
Expected life (years)	6

Note 11 - Operating Lease Commitments:

During the year ended December 31, 2005, the Company entered into a sublease agreement for office space that extends through January 2009. In addition to base monthly rent, the Company could be responsible for their proportionate share of operating expenses if amounts exceed certain pre-established budgets. Rent expense under this agreement was $26,872 for the year ended December 31, 2005.

The Company previously leased its office space from a related party. Rent expense under this agreement was $10,080 for the year ended December 31, 2005.

The Company is committed to several operating leases for office equipment with expiration dates through August 2010. Lease expense under these agreements amounted to $68,644 for the year ended December 31, 2005.

Future minimum commitments under all agreements are as follows at December 31, 2005:

Year Ending December 31,
2006	$ 113,777
2007	112,252
2008	99,343
2009	11,393
2010	4,147
	$ 340,912

15

HAELAN CORPORATION

(d/b/a The Haelan Group)

Notes to Financial Statements

December 31, 2005

Note 12 - Concentration of Credit Risk:

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. The Company places its cash and cash equivalents with high credit quality institutions. At times, such amounts may be in excess of the FDIC insured limit. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its accounts receivable credit risk exposure is limited.

Note 13 - Major Customer:

The Company has three customers that accounted for approximately 63% of net sales and 42% of accounts receivable for the year ended December 31, 2005.

Note 14 - Subsequent Event:

In November 2006, the Company entered into a definitive merger agreement with CareGuide, Inc. (“CareGuide”), a publicly-held disease and healthcare management company headquartered in Coral Springs, Florida. This transaction is expected to close on or before December 31, 2006, subject to the conditions to closing that are contained in the merger agreement. As currently contemplated by the merger agreement, CareGuide will pay the Company cash of $1.5 million to satisfy certain liabilities. Additionally, CareGuide will issue convertible promissory notes to shareholders of the Company in the aggregate principal amount of up to $6.5 million, which notes are convertible by their terms into shares of CareGuide’s common stock. If certain revenue targets set forth in the merger agreement are achieved in 2007, CareGuide will pay an additional amount of up to $3.0 million to the former shareholders of the Company.

16