<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

[X]    Quarterly report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

       For the period ended August 31, 2000.

[ ]    Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

       For the transition period from                to              .
                                      -------------     -------------
       Commission File Number 1-9927

                         COMPREHENSIVE CARE CORPORATION
             (Exact name of registrant as specified in its charter)

        DELAWARE                                       95-2594724
-------------------------------            ---------------------------------
(State or other jurisdiction of            (IRS Employer Identification No.)
 incorporation or organization)

              4200 WEST CYPRESS STREET, SUITE 300, TAMPA, FL 33607
             -----------------------------------------------------
             (Address of principal executive offices and zip code)

                                 (813) 876-5036
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                                                           Yes [X]  No [ ]

         Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date:


                  CLASSES                     OUTSTANDING AT OCTOBER 9, 2000
--------------------------------------        -------------------------------
Common Stock, par value $.01 per share                 3,817,805


<PAGE>   2




                                      INDEX
<TABLE>
<CAPTION>

                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                              <C>
PART I - FINANCIAL INFORMATION

         ITEM 1-- CONSOLIDATED FINANCIAL STATEMENTS

                  Consolidated Balance Sheets,
                           August 31, 2000 and May 31, 2000.......................................................3

                  Consolidated Statements of Operations for
                           the Three Months ended August 31, 2000 and 1999........................................4

                  Consolidated Statements of Cash Flows for
                           the Three Months ended August 31, 2000 and 1999........................................5

                  Notes to Consolidated Financial Statements...................................................6-10

         ITEM 2--  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                   RESULTS OF OPERATIONS......................................................................11-14

PART II - OTHER INFORMATION

         ITEM 1-- LEGAL PROCEEDINGS...........................................................................15-16

         ITEM 6-- EXHIBITS AND REPORTS ON FORM 8-K...............................................................17

         SIGNATURE...............................................................................................18
</TABLE>



                                       2
<PAGE>   3

                COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

PART I. - FINANCIAL INFORMATION

ITEM 1 -- CONSOLIDATED FINANCIAL STATEMENTS




                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                    AUGUST 31,        MAY 31,
                                                                                      2000             2000
                                                                                  --------------  ---------------
                                                                                   (unaudited)
                                                                                      (Amounts in thousands)

<S>                                                                                   <C>            <C>
 ASSETS
 Current assets:
    Cash and cash equivalents.............................................            $  1,921       $   2,518
    Restricted cash.......................................................               1,451           1,444
    Accounts receivable, less allowance for doubtful accounts
      of $27 and $13......................................................                 349             276
    Accounts receivable - pharmacy and laboratory costs...................              10,469          10,469
    Other receivable......................................................               2,548           2,548
    Other current assets..................................................                 481             147
                                                                                        ------          ------
 Total current assets.....................................................              17,219          17,402

 Property and equipment, net..............................................                 937           1,086
 Notes receivable.........................................................                 166           1,145
 Goodwill, net............................................................                 990           1,008
 Restricted cash..........................................................                 490             486
 Other assets.............................................................                 155             148
                                                                                        ------          ------
 Total assets.............................................................            $ 19,957        $ 21,275
                                                                                        ======          ======

 LIABILITIES AND STOCKHOLDERS' DEFICIT
 Current liabilities:
    Accounts payable and accrued liabilities..............................           $   3,714       $   4,028
    Accrued claims payable................................................               3,139           3,014
    Accrued pharmacy and laboratory costs payable.........................              10,469          10,469
    Unbenefitted tax refunds received.....................................              12,092          12,092
    Income taxes payable..................................................                  33              44
                                                                                        ------          ------
 Total current liabilities................................................              29,447          29,647
                                                                                        ------          ------

 Long-term liabilities:

    Long-term debt, excluding current maturities..........................               2,244           2,244
    Other liabilities.....................................................                  42              56
                                                                                        ------          ------
 Total long-term liabilities..............................................               2,286           2,300
                                                                                        ------          ------
 Total liabilities........................................................              31,733          31,947
                                                                                        ------          ------
 Commitments and Contingencies (Notes 5 and 7)
 Stockholders' deficit:

    Preferred stock, $50.00 par value; authorized 60,000 shares;
     none issued and outstanding..........................................                  --              --
    Common stock, $0.01 par value; authorized 12,500,000 shares; issued
     and outstanding 3,817,806 and 3,817,822..............................                  38              38
    Additional paid-in-capital............................................              51,812          51,812
    Deferred compensation.................................................                  (4)            (10)
    Accumulated deficit...................................................             (63,622)        (62,512)
                                                                                        ------          ------
 Total stockholders' deficit..............................................             (11,776)        (10,672)
                                                                                        ------          ------
 Total liabilities and stockholders' deficit..............................            $ 19,957        $ 21,275
                                                                                        ======          ======
</TABLE>

                             See accompanying notes.



                                       3
<PAGE>   4













                COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                   THREE MONTHS ENDED
                                                                       AUGUST 31,
                                                             -------------------------------
                                                                  2000            1999
                                                             ---------------  --------------
                                                             (Amounts in thousands, except
                                                                    per share data)
<S>                                                             <C>              <C>
OPERATING REVENUES ....................................         $ 3,739          $ 5,250

COSTS AND EXPENSES:
  Healthcare operating expenses .......................           3,217            4,081
  General and administrative expenses .................             952            2,089
  Recovery of doubtful accounts .......................             (15)            (336)
  Depreciation and amortization .......................             172              215
                                                                  -----            -----
                                                                  4,326            6,049
                                                                  -----            -----
OPERATING LOSS BEFORE ITEMS SHOWN BELOW ...............            (587)            (799)

OTHER INCOME (EXPENSE):
  Loss in connection with prepayment of note receivable            (496)              --
  Interest income .....................................              50              120
  Interest expense ....................................             (76)             (69)
                                                                  -----            -----
LOSS BEFORE INCOME TAXES ..............................          (1,109)            (748)
Income tax expense ....................................               1               --
                                                                  -----            -----

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS ..........         $(1,110)         $  (748)
                                                                  =====            =====

BASIC AND DILUTED EARNINGS PER SHARE:
Net loss ..............................................         $ (0.29)         $ (0.20)
                                                                  =====            =====
</TABLE>

                             See accompanying notes



                                       4
<PAGE>   5


                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                   THREE MONTHS ENDED
                                                                                       AUGUST 31,
                                                                                --------------------------
                                                                                   2000          1999
                                                                                ------------  ------------
                                                                                 (Amounts in thousands)
<S>                                                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ..............................................................         $(1,110)         $  (748)

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING
   ACTIVITIES:
   Depreciation and amortization ......................................             172              215
   Compensation expense - stock options issued ........................               6               --
   Loss in connection with prepayment of note receivable ..............             496               --

CHANGES IN ASSETS AND LIABILITIES:
   Accounts receivable ................................................             (73)             533
   Other current assets, restricted funds, and other non-current assets            (376)              (7)
   Accounts payable and accrued liabilities ...........................            (313)            (300)
   Accrued claims payable .............................................             125           (1,156)
   Income taxes payable ...............................................             (11)             (13)
   Other liabilities ..................................................             (14)             (13)
                                                                                -------          -------
   NET CASH USED IN OPERATIONS ........................................          (1,098)          (1,489)
                                                                                -------          -------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Payments received on note receivable ...............................             507                6
   Additions to property and equipment ................................              (6)             (87)
                                                                                -------          -------
   NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ................             501              (81)
                                                                                -------          -------
Net decrease in cash and cash equivalents .............................            (597)          (1,570)
Cash and cash equivalents at beginning of year ........................           2,518            7,776
                                                                                -------          -------
CASH AND CASH EQUIVALENTS AT END OF YEAR ..............................         $ 1,921          $ 6,206
                                                                                =======          =======
</TABLE>

                             See accompanying notes



                                       5
<PAGE>   6
                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The consolidated balance sheet as of August 31, 2000, and the related
consolidated statements of operations and cash flows for the three months ended
August 31, 2000 and 1999 are unaudited and have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the
opinion of management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted only of
normal recurring items. The results of operations for the three months ended
August 31, 2000 are not necessarily indicative of the results to be expected
during the balance of the fiscal year.

         The consolidated financial statements do not include all information
and footnotes necessary for a complete presentation of financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles. The balance sheet at May 31, 2000 has been derived from
the audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statement presentation. Notes to consolidated financial
statements included in Form 10-K for the year ended May 31, 2000 on file with
the Securities and Exchange Commission provide additional disclosures and a
further description of accounting policies.

         The Company's financial statements are presented on the basis that it
is a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The consolidated
financial statements do not include any adjustments to reflect the possible
future effects on the recovery and classification of assets or the amount and
classification of liabilities that may result from the outcome of the
uncertainties described in Note 2-- "Liquidity and Capital Resources".

         The accrued claims payable liability represents the estimated ultimate
net amounts owed for all behavioral healthcare services provided through the
respective balance sheet dates. The unpaid claims liability is estimated using
an actuarial paid completion factor methodology and other statistical analyses.
These estimates are subject to the effects of trends in utilization and other
factors. Although considerable variability is inherent in such estimates,
management believes that the unpaid claims liability is adequate. The estimates
are continually reviewed and adjusted as experience develops or new information
becomes known with adjustments included in current operations.

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.

NOTE 2 -- LIQUIDITY AND CAPITAL RESOURCES

         At August 31, 2000, the Company had unrestricted cash and cash
equivalents of $1.9 million. During the three months ended August 31, 2000, the
Company used $1.1 million in operations. Additionally, $0.5 million was provided
by its investing activities. The Company reported a net loss of $1.1 million for
the quarter ended August 31, 2000, which included the $0.5 million non-operating
loss related to the note receivable prepayment arrangement (see Note 4 - "Notes
Receivable"). This compares to a net loss of $0.7 million for the quarter ended
August 31, 1999. The Company has an accumulated deficit of $63.6 million and
total stockholders' deficit of $11.8 million as of August 31, 2000.
Additionally, the Company's current assets at August 31, 2000 amounted to
approximately $17.2 million and current liabilities were approximately $29.4
million, resulting in a working capital deficiency of approximately $12.2
million. The working capital deficiency referred to above results primarily from
a $12.1 million liability related to Federal income tax refunds received in
prior years. The ultimate outcome of the Internal Revenue Service audit whereby
it is seeking recovery of the refunds from the Company, including the amount to
be repaid, if any, and the timing thereof, is not determinable (see Note 5 --
"Income Taxes").

         The Company cannot state with any degree of certainty whether any
required additional equity or debt financing to meet its obligations will be
available to it during Fiscal 2001 and, if available, that the source of
financing would be available on terms and conditions acceptable to the Company.

         The above conditions raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying consolidated financial
statements do not include any adjustment that may result from the outcome of
this uncertainty.



                                       6
<PAGE>   7

                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES


         During Fiscal 2000, management took steps to trim costs and save cash,
including making significant staff reductions, centralizing certain contract
management and clinical functions, and eliminating the Company's California
administrative office and related executive staff positions. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to obtain
additional financing as may be required and, ultimately, to attain
profitability.

NOTE 3 -- MAJOR CUSTOMERS/CONTRACTS

(1)      The Company has contracts with Humana Health Plans ("Humana") under
         which it provides services to members in Florida. For the quarter ended
         August 31, 2000, such contracts accounted for 16.8%, or $0.6 million,
         of the Company's operating revenues compared to 31.9%, or $1.7 million,
         for the quarter ended August 31, 1999.

         Effective June 30, 2000, Humana, Inc. ("Humana") completed the sale of
         its North Florida Medicaid business to HealthEase of Florida, Inc.
         Effective July 1, 2000, the Company has entered into a one-year
         contract with HealthEase of Florida, Inc. to continue to provide
         behavioral healthcare services to approximately 100,000 of 160,000
         Florida members that were managed by the Company under contracts with
         Humana as of June 2000. Additionally, Humana's contracts with the
         Company, which cover specific commercial, Medicaid and Medicare
         populations of approximately 60,000 members, will terminate September
         30, 2000.

         The combined revenue from the contracts that were transitioned to
         HealthEase of Florida, Inc., plus one existing contract that the
         Company has with this HMO, accounted for 14.8%, or $0.6 million, of the
         Company's operating revenues during the quarter ended August 31, 2000
         compared to 2.3%, or $0.1 million, for the quarter ended August 31,
         1999.

(2)      The Company has two contracts with one HMO to provide behavioral
         healthcare services to contracted members in Texas. These combined
         contracts represented approximately 13.4%, or $0.5 million, and 10.2%,
         or $0.5 million, of the Company's operating revenue for the quarter
         ended August 31, 2000 and 1999, respectively. The Company renewed these
         contracts for two years, with effective dates of February 8, 2000.

(3)      During the quarter ended August 31, 2000, the Company implemented five
         new contracts to provide behavioral healthcare services to Florida
         members under contracts with one HMO. For the quarter ended August 31,
         2000, these five contracts represented approximately 10.5%, or $0.4
         million, of the Company's operating revenue.

NOTE 4 -- NOTES RECEIVABLE

         On August 31, 2000, the Company entered into a prepayment agreement and
note modification with Jefferson Hills Corporation ("JHC") in connection with
the secured promissory note, which originated out of the sale in Fiscal 1999 of
the Company's Aurora, Colorado facility to JHC. The terms of the prepayment
agreement required JHC to immediately remit $500,000 to the Company as a
prepayment on the note. Additionally, the note was modified to reflect a
remaining balance due totaling $170,000 and to require JHC to make monthly
principal and interest payments until April 2006. One final principal payment in
the amount of approximately $146,000 will be due from JHC in April 2006. As an
inducement to JHC to make such prepayment, the Company credited JHC with an
aggregate of approximately $996,000. As a result, the Company recorded a
non-operating loss during the quarter ended August 31, 2000 of approximately
$496,000 in connection with this transaction.

NOTE 5 -- INCOME TAXES

         The Company's provision for income taxes differs from the statutory
rate of 34% due, primarily, to the Company's increased valuation allowance for
losses generated during the three months ended August 31, 2000 and 1999.

         In connection with the filing of its Federal income tax returns for
fiscal year 1995 and 1996, the Company filed a tentative refund claim to carry
back losses described in Section 172(f) of the Internal Revenue Code ("IRC"),
requesting a refund of $9.4 million and $5.5 million, respectively, of which
refunds of $9.4 million and $5.4 million were received. In addition, the Company
also filed amended Federal income tax returns for fiscal years prior to


                                       7
<PAGE>   8

                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

1995, requesting similar refunds for losses carried back under Section 172(f) of
$6.2 million for 1986; $0.4 million for 1985; $0.7 million for 1983; and $0.4
million for 1982, a total of $7.7 million.

         Section 172(f) of the IRC provides for a ten year net operating loss
carryback for specific losses attributable to (1) a product liability or (2) a
liability arising under a federal or state law or out of any tort if the act
giving rise to such liability occurs at least three years before the beginning
of the taxable year. The applicability of Section 172(f) to the type of business
in which the Company operates is unclear. No assurance can be provided that the
Company will be able to retain the refunds received to date or that the other
refunds requested will be received.

         During fiscal years 1997 and 1996, the Company recognized a portion of
the refunds received as a tax benefit of $0.3 million and $2.4 million,
respectively. The balance of the refunds received, $12.1 million, is recorded as
a deferred liability, "Unbenefitted tax refunds received", pending resolution by
the Internal Revenue Service ("IRS") of the appropriateness of the 172(f)
carryback. The other refunds requested under Section 172(f) for prior years of
$7.7 million have not been received nor has the Company recognized any tax
benefit related to these potential refunds.

         On August 21, 1998, the Company received an examination report, dated
August 6, 1998, from the IRS advising the Company that it was disallowing $12.4
million of the $14.8 million of refunds previously received, and the additional
refunds requested of $7.7 million. If the position of the IRS were to be upheld
the Company would be required to repay $12.4 million in refunds previously
received, plus accrued interest of approximately $5.6 million through August 31,
2000. Accordingly, the Company would be entitled to a repayment of the fees
advanced to its tax advisor relating to these refunds of approximately $2.5
million, which is reported as "other receivable" in the accompanying balance
sheets. This report commenced the administrative appeals process. The Company
filed a protest letter with the IRS on November 6, 1998 and believes that its
position with respect to its right to the tax refunds will be upheld. The
Company's tax advisor relating to these refund claims has advised management
that the administrative appeals process could take twelve to eighteen months. In
the event the Company wishes to further protest the results of its
administrative appeal, it may further appeal to the United States Tax Court
following the final determination of the administrative appeal. The Company has
been advised that a determination by the United States Tax Court could take up
to an additional twelve months from the commencement of the appeals process in
the United States Tax Court. The IRS reserves the right to assess and collect
the tax previously refunded to the Company at any time during the appeals
process.

         On July 11, 2000, the Company submitted an Offer in Compromise (the
"Offer") to the Appeals Office of the IRS to resolve the controversy with
respect to the refunds at a substantially reduced amount. In reference to this
Offer, the Company has scheduled a preliminary meeting in October 2000 with the
IRS. There can be no assurance that the IRS will accept the Offer.

NOTE 6 -- EARNINGS PER SHARE

         The following table sets forth the computation of basic and diluted
earnings per share in accordance with Statement No. 128, Earnings Per Share:

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                            AUGUST 31,
                                                                                  -------------------------------
                                                                                      2000             1999
                                                                                  --------------  ---------------
                                                                                      (Amounts in thousands,
                                                                                      except per share data)
                                                                                              (Unaudited)
<S>                                                                                <C>                <C>

NUMERATOR:
Net loss from operations available to common stockholders ................         $  (1,110)         $    (748)
                                                                                   =========          =========

DENOMINATOR:
Denominator for basic and diluted loss per share -- adjusted
     weighted average shares .............................................             3,818              3,818
                                                                                   =========          =========

BASIC AND DILUTED EARNINGS PER SHARE:
Net loss .................................................................         $   (0.29)         $   (0.20)
                                                                                   =========          =========
</TABLE>


                                       8
<PAGE>   9

                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

         The following number of potentially convertible shares of common stock
related to convertible debentures and stock options are as follows at August 31,
2000:

         For conversion of convertible debentures .........             9,044
         Outstanding stock options ........................           897,925
         Possible future issuance under stock options plans           222,284
                                                                    ---------
             Total ........................................         1,129,253
                                                                    =========

NOTE 7 -- COMMITMENTS AND CONTINGENCIES

(1)      During the fiscal year ended May 31, 2000, the Company renewed one
         contract, which included a requirement that the Company maintains a
         $550,000 performance bond throughout the two-year renewal term of the
         contract. This bond was secured by a $150,000 cash deposit, which is
         included in the non-current, restricted cash balance at August 31,
         2000. The term of the bond is for one year and the bond is
         automatically renewable as long as the contract remains in force.

(2)      In June 2000, the Company submitted a bid to provide substance abuse
         treatment services to a specific population covered through the
         Department of Justice in Puerto Rico. The bid included a $300,000 bid
         bond requirement, which is to be maintained until the bid has been
         awarded. As of October 2000, there has been no award or announcement in
         connection with this bid. The Company secured this bond with a $300,000
         cash deposit. This deposit is included in the other current assets
         balance at August 31, 2000.

(3)      In July 2000, Steiner Corporation, a Colorado linen service company,
         commenced an action against the Company seeking damages in the amount
         of, approximately, $145,000 by reason of an alleged early termination
         of a laundry service contract. While this claim has only recently been
         asserted, the Company intends to deny liability. Additionally, the
         Company does not believe that this claim will have a material adverse
         effect on the Company's financial position, results of operations and
         cash flows.

(4)      The Company's subsidiary, Careunit Hospital of Ohio, Inc. ("Careunit")
         has been named as a third party defendant in the principal action
         entitled "Vencor, Inc. v. Empe, Inc." The principal action arises out
         of the sale by Careunit of its Ohio hospital facility to Vencor, Inc.
         ("Vencor") and relates to an alleged asbestos condition at the Ohio
         facility. Empe, Inc. ("Empe") apparently was Vencor's environmental
         expert in connection with this transaction. In making Careunit a third
         party defendant, Empe claims that it was misled and that Careunit
         allegedly failed to disclose the asbestos condition in the facility
         when Vencor conducted its environmental assessment. No specific amount
         of damages is claimed, but rather, the third party complaint seeks
         apportionment, indemnity and compensatory damages as may be determined
         at trial. The Company's insurance carrier has provided a defense of
         this action, which is only in its formative stages. The Company does
         not believe that this claim will have a material adverse effect on the
         Company's financial position, results of operations and cash flows.

(5)      On February 19, 1999, the California Superior Court denied the
         Company's Petition for Writ of Mandate of an adverse administrative
         appeal decision regarding application of the Maximum Inpatient
         Reimbursement Limitation ("MIRL") to Medi-Cal reimbursement paid to
         Brea Neuropsychiatric Hospital for its fiscal periods 1983 through
         1986. This facility was owned by the Company until its disposal in
         fiscal year 1991. The subject matter of the Superior Court action
         involved the refusal of the administrative law judge to order further
         reductions in the liability for costs associated with treating high
         cost, long stay Medi-Cal patients, which are commonly referred to as
         "outliers". The Company does not plan to appeal the California Superior
         Court decision for which the Notice of Entry of Judgment was entered on
         February 26, 1999. As of August 31, 2000, the Company has $1.2 million
         accrued relating to this matter.

(6)      With respect to the contingency related to prior years' income taxes,
         see Note 5, "Income Taxes".

(7)      During Fiscal 1999, the Company provided services to members of Humana
         Health Plans of Puerto Rico, Inc. ["Humana of Puerto Rico" (successor
         in interest to PCA Health Plans of Puerto Rico, Inc.)] under the terms
         of management service agreements entered into pursuant to healthcare
         contracts awarded to Humana of Puerto Rico by the Puerto Rico Insurance
         Administration. These contracts expired on March 31, 1999, with an
         extension period that ended April 30, 1999. The contract with Humana
         established an amount that was withheld from Humana's monthly
         remittances to the Company to cover pharmacy and laboratory costs that
         are the financial responsibility of the Company, but were administered
         by Humana. Because of the uncertainty surrounding the determination of
         the actual pharmacy and laboratory costs


                                       9
<PAGE>   10

                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

         incurred, the Company has reported the contract at a 100% loss ratio
         for the contract to date pending clarification of the actual costs
         incurred. As a result, the Company has reported $10.5 million as
         accounts receivable and accrued claims payable in the accompanying
         balance sheets at May 31, 2000 and 1999. During Fiscal 1999, Humana
         sent written notice to the Company that the Company owed $3.0 million
         to Humana in connection with these pharmacy and laboratory costs. The
         Company has expressed to Humana its total disagreement with Humana's
         position. The Company believes that Humana owes the Company in excess
         of $3.0 million in relation to this same issue. Efforts are being made
         to work with Humana to resolve the uncertainty.

         Additionally, in connection with the legal matter described in Item 8
         below, the Company filed a Third Party Complaint against Humana
         claiming that the final amount determined to be paid to Hato Rey
         Psychiatric Hospital, d/b/a Mepsi Center ("MEPSI"), should be paid from
         the equity reserve account maintained by the Company's Puerto Rico
         subsidiary, jointly with Humana, to guarantee payment to providers. The
         Third Party Complaint also requests that the Court order Humana to
         release the remaining balance to the Company after payment to MEPSI was
         satisfied. Humana filed an answer to the Third Party Complaint alleging
         that the equity reserve account also guarantees payment of monies owed
         by the Company to Humana. While the legal matter with MEPSI has been
         fully settled, Humana continues to withhold the balance of the reserve
         funds due the Company. The Company plans to actively pursue the release
         of these funds.

(8)      The legal matter involving Puerto Rico provider Hato Rey Psychiatric
         Hospital, d/b/a Mepsi Center, was settled September 27, 2000 for an
         amount that did not exceed the Company's reserve for such claims. The
         settlement amount was paid from the equity reserve account (see Item 7
         above). This account is included in restricted cash and reported under
         current assets at August 31, 2000.

         From time to time, the Company and its subsidiaries are also parties
and their property is subject to ordinary, routine litigation incidental to
their business. In some pending cases, claims may exceed insurance policy limits
and the Company or any one of its subsidiaries may have exposure to a liability
that is not covered by insurance. Management believes that the outcome of such
lawsuits will not have a material adverse impact on the Company's financial
statements.

REGULATORY MONITORING AND COMPLIANCE

         The Company is subject to extensive and evolving state and federal
regulations. These regulations range from licensure and compliance with
regulations related to insurance companies and other risk-assuming entities, to
licensure and compliance with regulations related to healthcare providers. These
laws and regulations may vary considerably among states. As a result, the
Company may be subject to the specific regulatory approach adopted by each state
for the regulation of managed care companies and for providers of behavioral
healthcare treatment services.

         Currently, management cannot quantify the potential effects of
additional regulation of the managed care industry, but such costs could have an
adverse effect on future operations to the extent that they are not able to be
recouped in future managed care contracts. Management believes that the Company
is currently in material compliance with the laws and regulations of the
jurisdictions in which it operates.


                                       10
<PAGE>   11

                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES


ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

         This Quarterly Report on Form 10-Q includes forward-looking statements,
the realization of which may be impacted by certain important factors discussed
below under "Risk Factors - Important Factors Related to Forward-Looking
Statements and Associated Risks" (page 12).

GENERAL

RESULTS OF OPERATIONS

         The Company reported a net loss of $1.1 million for the quarter ended
August 31, 2000, which included the $0.5 million non-operating loss related to
the note receivable prepayment arrangement (see Note 4 to the consolidated
financial statements -- "Notes Receivable").

         The following table summarizes the Company's financial data for the
three months ended August 31, 2000 and 1999 (in thousands):

THE THREE MONTHS ENDED AUGUST 31, 2000 COMPARED TO THE THREE MONTHS ENDED AUGUST
31, 1999:
<TABLE>
<CAPTION>

                                                               CORPORATE AND
THREE MONTHS ENDED                                                 OTHER          CONSOLIDATED
AUGUST 31, 2000                               MANAGED CARE       OPERATIONS        OPERATIONS
------------------                           ----------------  ---------------  ------------------

<S>                                               <C>                <C>              <C>
Operating revenues.....................           $  3,625           $   114          $   3,739

Healthcare operating expenses..........              3,089               128              3,217
General/administrative expenses........                616               336                952
Other operating expenses...............                173               (16)               157
                                                     -----             -----              -----
                                                     3,878               448              4,326
                                                     -----             -----              -----
                                                  $   (253)          $  (334)         $    (587)
                                                     =====             =====              =====
</TABLE>


<TABLE>
<CAPTION>
                                                               CORPORATE AND
THREE MONTHS ENDED                                                 OTHER          CONSOLIDATED
AUGUST 31, 1999                               MANAGED CARE       OPERATIONS        OPERATIONS
------------------                           ----------------  ---------------  ------------------

<S>                                               <C>                <C>              <C>
Operating revenues.....................           $  5,076           $   174          $   5,250

Healthcare operating expenses..........              3,902               179              4,081
General/administrative expenses........              1,380               709              2,089
Other operating expenses...............                (63)              (58)              (121)
                                                    ------              ----              -----
                                                     5,219               830              6,049
                                                     -----               ---              -----
                                                  $   (143)          $  (656)         $    (799)
                                                     =====              ====              =====
</TABLE>

         The Company reported an operating loss of approximately $0.6 million
for the quarter ended August 31, 2000. Additionally, operating revenues
decreased by $1.5 million, or 28.8%, for the quarter ended August 31, 2000
compared to the quarter ended August 31, 1999. This decrease is primarily
attributable to the loss of two major, managed care contracts during the third
quarter of Fiscal 2000.

         Healthcare operating expenses decreased by approximately $0.9 million,
or 21.2%, for the quarter ended August 31, 2000 as compared to the quarter ended
August 31, 1999. This decrease is attributable to the loss of revenues specific
to two major contracts that terminated during Fiscal 2000. Healthcare operating
expense as a percentage of net revenue for managed care operations increased
from 76.9% for the quarter ended August 31, 1999 to 85.2% for the quarter ended
August 31, 2000. This percentage increase is due to continuing fixed costs that
cannot be tied to the specific contracts that were terminated during Fiscal
2000. Efforts are being made to increase revenues during Fiscal 2001 without
adding significantly to our healthcare operating costs.

         General and administrative expenses decreased by approximately $1.1
million, or 54.4%, for the quarter ended August 31, 2000 as compared to the
quarter ended August 31, 1999. General and administrative expense as a
percentage of revenue decreased from 39.8% for the quarter ended August 31, 1999
to 25.5% for the quarter ended August 31, 2000. This decrease is attributable to
the significant cost reductions that were initiated following the loss

                                       11
<PAGE>   12

                COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES


of two major, managed care contracts in Fiscal 2000. The Company is continuing
efforts to reduce its general and administrative costs.

         Other operating expenses increased by $0.3 million for the quarter
ended August 31, 2000 compared to the quarter ended August 31, 1999. This
increase is attributable to $0.2 million of bad debt recoveries in the quarter
ended August 31, 1999 specific to the Puerto Rico contract performance
guarantees. Additionally, results for the quarter ended August 31, 1999 included
$0.1 million of bad debt recoveries specific to the discontinued operations and
$0.1 million of bad debt recoveries specific to one existing managed care
contract.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Except for historical
information, the matters discussed that may be considered forward-looking
statements may be subject to certain risks and uncertainties that could cause
the actual results to differ materially from those projected, including
uncertainties in the market, pricing, competition, procurement efficiencies,
other matters discussed in this quarterly report on Form 10-Q, and other risks
detailed from time to time in the Company's SEC reports.

RISK FACTORS

IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

         This Quarterly Report on Form 10-Q contains certain forward-looking
statements that are based on current expectations and involve a number of risks
and uncertainties. Factors that may materially affect revenues, expenses and
operating results include, without limitation, the Company's success in (i)
expanding the managed behavioral healthcare operations, (ii) effective
management in the delivery of services, (iii) risk and utilization in context of
capitated payouts, and (iv) retaining certain refunds from the IRS.

CONCENTRATION OF RISK

         The Company currently has thirteen contracts with four HMOs to provide
behavioral healthcare services under commercial, Medicaid, and Medicare plans,
to contracted members in Florida and Texas. These combined contracts represent
approximately 55.5% and 44.4% of the Company's operating revenue for the
quarters ended August 31, 2000 and 1999, respectively. The terms of each
contract are generally for one-year periods and are automatically renewable for
additional one-year periods unless terminated by either party.

UNCERTAINTY OF FUTURE PROFITABILITY

         As of August 31, 2000, the Company had stockholders' deficit of $11.8
million and a working capital deficiency of approximately $12.2 million. The
Company had a net loss for the quarter ended August 31, 2000 of $1.1 million.
There can be no assurance that the Company will be able to achieve and sustain
profitability or that the Company can achieve and maintain positive cash flow on
an ongoing basis. Present results of operations are not necessarily indicative
of anticipated future results of operations.

NEED FOR ADDITIONAL FUNDS; UNCERTAINTY OF FUTURE FUNDING

         During prior fiscal years, a principal source of liquidity has been the
private sale of equity securities and debt securities convertible into equity.
Issuance of additional equity securities by the Company could result in
substantial dilution to stockholders.

         The Company may be required to repay a portion of the tax refunds
received from the Internal Revenue Service for Fiscal 1996 and 1995, which
amounted to $9.4 million and $5.4 million, respectively (see "Taxes" below and
Note 5 to the consolidated financial statements - "Income Taxes"). Further, the
Company may be required to repay some amount to Medi-Cal in connection with the
judgment entered on February 26, 1999, which is more fully described under Part
II - Item 5, Legal Proceedings, below.


                                       12
<PAGE>   13
                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES


TAXES

         In connection with the filing of its Federal income tax returns for
fiscal years 1995 and 1996, the Company filed a tentative refund claim to carry
back losses described in Section 172(f) of the IRC, requesting a refund to the
Company of $9.4 million and $5.5 million, respectively, of which refunds of $9.4
million and $5.4 million were received. In addition, the Company also filed
amended Federal income tax returns for fiscal years prior to 1995, requesting
similar refunds of losses carried back under Section 172(f) of $6.2 million for
1986; $0.4 million for 1985; $0.7 million for 1983; and $0.4 million for 1982, a
total of $7.7 million.

         During fiscal years 1997 and 1996, the Company recognized a portion of
the refunds received as a tax benefit of $0.3 million and $2.4 million,
respectively. The balance of the refunds received, $12.1 million, are recorded
as a deferred liability, "Unbenefitted tax refunds received", pending resolution
by the IRS of the appropriateness of the Section 172(f) carryback. The
additional refunds requested under Section 172(f) for prior years of $7.7
million have not been received, nor has the Company recognized any tax benefit
related to these potential refunds.

         Section 172(f) of the IRC provides for a ten-year net operating loss
carryback for specific losses attributable to (1) a product liability or (2) a
liability arising under a federal or state law or out of any tort if the act
giving rise to such liability occurs at least three years before the beginning
of the taxable year. The applicability of Section 172(f) to the type of business
in which the Company operates is unclear. No assurance can be provided that the
Company will be able to retain the refunds received to date or that the other
refunds requested will be received.

         As a result of the Section 172(f) carryback claims filed by the
Company, and the tentative refunds received, the Company came under audit with
respect to the tax years previously mentioned.

         On August 21, 1998, the Company received an examination report, dated
August 6, 1998, from the IRS advising the Company that it was disallowing $12.4
million of the $14.8 million of refunds previously received, and the additional
refunds requested of $7.7 million. If the position of the IRS were to be upheld,
the Company would be required to repay $12.4 million in refunds previously
received, plus accrued interest of approximately $5.6 million through August 31,
2000. Accordingly, the Company would be entitled to a repayment of the fees
advanced to its tax advisor relating to these refund claims of approximately
$2.5 million, which is reported as "other receivable" in the accompanying
balance sheet. This report commenced the administrative appeals process. The
Company filed a protest letter with the IRS on November 6, 1998. The Company's
tax advisor relating to these refund claims has advised management that the
administrative appeals process could take twelve to eighteen months. In the
event the Company wishes to further protest the results of its administrative
appeal, it may further appeal to the United States Tax Court following the final
determination of the administrative appeal. The Company has been advised that a
determination by the United States Tax Court could take up to an additional
twelve months from commencement of the appeals process in the United States Tax
Court. Additionally, the IRS reserves the right to assess and collect the tax
previously refunded to the Company at any time during the appeals process.

         On July 11, 2000, the Company submitted an Offer in Compromise
("Offer") to the Appeals Office of the IRS to resolve the controversy with
respect to the refunds at a substantially reduced amount. In reference to this
Offer, the Company has scheduled a preliminary meeting in October 2000 with the
IRS. There can be no assurance that the IRS will accept the Offer.

UNCERTAINTY OF PRICING; HEALTHCARE REFORM AND RELATED MATTERS

         Managed care operations are at risk for costs incurred to supply agreed
upon levels of service. Failure to anticipate or control costs could have
material, adverse effects on the Company. Additionally, the business of
providing services on a full-risk capitation basis exposes the Company to the
additional risk that contracts negotiated and entered into may ultimately be
determined to be unprofitable if utilization levels require the Company to
deliver and provide services at capitation rates which do not account for or
factor in such utilization levels.

         The levels of revenues and profitability of healthcare companies may be
affected by the continuing efforts of governmental and third party payors to
contain or reduce the costs of healthcare through various means. In the United
States, there have been, and the Company expects that there will continue to be,
a number of federal and state proposals to implement governmental controls on
the price of healthcare. It is uncertain what legislative proposals will be
adopted or what actions federal, state or private payors for healthcare goods
and services may take in response to any healthcare reform proposals or
legislation. The Company cannot predict the effect healthcare

                                       13
<PAGE>   14
                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES


reforms may have on its business and no assurance can be given that any such
reforms will not have a material adverse effect on the Company.

SHARES ELIGIBLE FOR FUTURE SALE

         The Company has issued or committed to issue 9,000 shares related to
the 7 1/2% convertible subordinated debentures due April 15, 2010, and options
or other rights to purchase approximately 1,120,000 shares. The Company may
contemplate issuing additional amounts of debt, equity or convertible securities
in public or private transactions for use in fulfilling its future capital needs
(see "Need for Additional Funds; Uncertainty of Future Funding"). Issuance of
additional equity could adversely affect the trading price of the Company's
Common Stock.

ANTI-TAKEOVER PROVISIONS

         The Company's Restated Certificate of Incorporation provides for 60,000
authorized shares of Preferred Stock, the rights, preferences, qualifications,
limitations and restrictions of which may be fixed by the Board of Directors
without any vote or action by the stockholders that could have the effect of
diluting the Common Stock or reducing working capital that would otherwise be
available to the Company. As of August 31, 2000, there are no outstanding shares
of Preferred Stock. The Company's Restated Certificate of Incorporation also
provides for a classified board of directors with directors divided into three
classes serving staggered terms. The Company's stock option plans generally
provide for the acceleration of vesting of options granted under such plans in
the event of certain transactions which result in a change of control of the
Company. Section 203 of the General Corporation Law of Delaware prohibits the
Company from engaging in certain business combinations with interested
stockholders. In addition, each share of the Company's Common Stock includes one
right on the terms and subject to the conditions of the Rights Agreement between
the Company and Continental Stock Transfer & Trust Company. These provisions may
have the effect of delaying or preventing a change in control of the Company
without action by the stockholders and therefore could adversely affect the
price of the Company's Common Stock or the possibility of sale of shares to an
acquiring person.

LIMITATIONS ON THE DEDUCTIBILITY OF COMPENSATION UNDER CERTAIN CIRCUMSTANCES

         Pursuant to the 1993 Omnibus Budget Reconciliation Act, a portion of
annual compensation payable after 1993 to any of the Company's five highest paid
executive officers would not be deductible by the Company for federal income tax
purposes to the extent such officers' overall compensation exceeds $1.0 million
per executive officer. Qualifying performance-based incentive compensation,
however, would be both deductible and excluded for purposes of calculating the
$1.0 million base. The Board of Directors has determined that no portion of
anticipated compensation payable to any executive officer in Fiscal 2001 would
be non-deductible.

         Assumptions relating to the foregoing involve judgments that are
difficult to predict accurately and are subject to many factors that can
materially affect results. Budgeting and other management decisions are
subjective in many respects and thus susceptible to interpretations and periodic
revisions based on actual experience and business developments, the impact of
which may cause the Company to alter its budgets which may in turn affect the
Company's results. In light of the factors that can materially affect the
forward-looking information included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved.



                                       14
<PAGE>   15
                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

PART II - OTHER INFORMATION

ITEM 1 -- LEGAL PROCEEDINGS

(1)  In July 2000, Steiner Corporation, a Colorado linen service company,
     commenced an action against the Company seeking damages in the amount of,
     approximately, $145,000 by reason of an alleged early termination of a
     laundry service contract. While this claim has only recently been asserted,
     the Company intends to deny liability. Additionally, the Company does not
     believe that this claim will have a material adverse effect on the
     Company's financial position, results of operations and cash flows.

(2)  The Company's subsidiary, Careunit Hospital of Ohio, Inc. ("Careunit") has
     been named as a third party defendant in the principal action entitled
     "Vencor, Inc. v. Empe, Inc." The principal action arises out of the sale
     by Careunit of its Ohio hospital facility to Vencor, Inc. ("Vencor") and
     relates to an alleged asbestos condition at the Ohio facility. Empe, Inc.
     ("Empe") apparently was Vencor's environmental expert in connection with
     this transaction. In making Careunit a third party defendant, Empe claims
     that it was misled and that Careunit allegedly failed to disclose the
     asbestos condition in the facility when Vencor conducted its environmental
     assessment. No specific amount of damages is claimed, but rather, the
     third party complaint seeks apportionment, indemnity and compensatory
     damages as may be determined at trial. The Company's insurance carrier has
     provided a defense of this action, which is only in its formative stages.
     The Company does not believe that this claim will have a material adverse
     effect on the Company's financial position, results of operations and cash
     flows.

(3)  In May, 1999, the Company commenced an action against Richard Powers, a
     former Executive Vice President of the Company, and his current employer,
     American Psych Systems ("APS"), in the Circuit Court in and for
     Hillsborough County, Florida. The Company claims that Mr. Powers breached
     his agreements with the Company by attempting to divert customers to APS.
     The Company further claims that APS tortuously interfered with the
     Company's business relationships by directing Powers to solicit these
     customers in violation of his agreements. The suit is still in its early
     stages. The Court has denied a motion to dismiss filed by Powers and APS,
     and the parties have begun the discovery process. The complaint seeks
     unspecified damages.

(4)  Although no formal claim has been made or asserted, Humana Health Plans of
     Puerto Rico, Inc. ("Humana") has claimed that the Company owes $3.0 million
     to Humana in connection with the contract that was terminated by Humana on
     March 31, 1999. Humana's claim relates to the pharmacy and laboratory costs
     incurred by Humana throughout the contract period. The Company has
     expressed to Humana its total disagreement with Humana's position. The
     Company believes that Humana owes the Company in excess of $3.0 million in
     relation to this same issue; however, the Company has not formally asserted
     such claim. The Company does not believe that Humana's claim will have a
     material adverse effect on the Company's financial position, results of
     operations and cash flows.

     Additionally, in connection with the legal matter described in Item 7
     below, the Company filed a Third Party Complaint against Humana claiming
     that the final amount determined to be paid to Hato Rey Psychiatric
     Hospital, d/b/a Mepsi Center ("MEPSI"), should be paid from the equity
     reserve account maintained by the Company's Puerto Rico subsidiary, jointly
     with Humana, to guarantee payment to providers. The Third Party Complaint
     also requests that the Court order Humana to release the remaining balance
     to the Company after payment to MEPSI was satisfied. Humana filed an answer
     to the Third Party Complaint alleging that the equity reserve account also
     guarantees payment of monies owed by the Company to Humana. While the legal
     matter with MEPSI has been fully settled, Humana continues to withhold the
     balance of the reserve funds due the Company. The Company plans to actively
     pursue the release of these funds.

(5)  On February 19, 1999, the California Superior Court denied the Company's
     Petition for Writ of Mandate of an adverse administrative appeal decision
     regarding application of the Maximum Inpatient Reimbursement Limitation
     ("MIRL") to Medi-Cal reimbursement paid to Brea Neuropsychiatric Hospital
     for its fiscal periods 1983 through 1986. The Company owned this facility
     until its disposal in fiscal year 1991. The subject matter of the Superior
     Court action involved the refusal of the administrative law judge to order
     further reductions in the liability for costs associated with treating high
     cost, long stay Medi-Cal patients, which are commonly referred to as
     "outliers". The Company does not plan to appeal the California Superior
     Court decision for which the Notice of Entry of Judgment was entered on
     February 26, 1999. As of August 31, 2000, the Company has $1.2 million
     accrued relating to this matter.



                                       15
<PAGE>   16
                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES


(6)  In connection with the filing of its Federal income tax returns for fiscal
     years 1995 and 1996, the Company filed a tentative refund claim to carry
     back losses described in Section 172(f) of the IRC, requesting a refund to
     the Company of $9.4 million and $5.5 million, respectively, of which
     refunds of $9.4 million and $5.4 million were received. In addition, the
     Company also filed amended Federal income tax returns for fiscal years
     prior to 1995, requesting similar refunds of losses carried back under
     Section 172(f) of $6.2 million for 1986; $0.4 million for 1985; $0.7
     million for 1983; and $0.4 million for 1982, a total of $7.7 million.

     During fiscal years 1997 and 1996, the Company recognized a portion of the
     refunds received as a tax benefit of $0.3 million and $2.4 million,
     respectively. The balance of the refunds received, $12.1 million, is
     recorded as a deferred liability, "Unbenefitted tax refunds received"
     pending resolution by the IRS of the appropriateness of the Section 172(f)
     carryback. The additional refunds requested under Section 172(f) for prior
     years of $7.7 million have not been received, nor has the Company
     recognized any tax benefit related to these potential refunds.

     Section 172(f) of the IRC provides for a ten-year net operating loss
     carryback for specific losses attributable to (1) a product liability or
     (2) a liability arising under a federal or state law or out of any tort if
     the act giving rise to such liability occurs at least three years before
     the beginning of the taxable year. The applicability of Section 172(f) to
     the type of business in which the Company operates is unclear. No assurance
     can be provided that the Company will be able to retain the refunds
     received to date or that the additional refunds requested will be received.

     As a result of the Section 172(f) carryback claims filed by the Company,
     and the tentative refunds received, the Company came under audit with
     respect to the tax years previously mentioned.

     On August 21, 1998, the Company received an examination report, dated
     August 6, 1998, from the IRS advising the Company that it was disallowing
     $12.4 million of the $14.8 million of refunds previously received, and the
     additional refunds requested of $7.7 million. If the position of the IRS
     were to be upheld, the Company would be required to repay $12.4 million in
     refunds previously received, plus accrued interest of approximately $5.6
     million through August 31, 2000. Accordingly, the Company would be entitled
     to a repayment of the fees advanced to its tax advisor relating to these
     refund claims of approximately $2.5 million, which is reported as "other
     receivable" in the accompanying balance sheet. This report commenced the
     administrative appeals process. The Company filed a protest letter with the
     IRS on November 6, 1998. The Company's tax advisor relating to these refund
     claims has advised management that the administrative appeals process could
     take twelve to eighteen months. In the event the Company wishes to further
     protest the results of its administrative appeal, it may further appeal to
     the United States Tax Court following the final determination of the
     administrative appeal. The Company has been advised that a determination by
     the United States Tax Court could take up to an additional twelve months
     from commencement of the appeals process in the United States Tax Court.
     Additionally, the IRS reserves the right to assess and collect the tax
     previously refunded to the Company at any time during the appeals process.

     On July 11, 2000, the Company submitted an Offer in Compromise (the
     "Offer") to the Appeals Office of the IRS to resolve the controversy with
     respect to the refunds at a substantially reduced amount. In reference to
     this Offer, the Company has scheduled a preliminary meeting in October 2000
     with the IRS. There can be no assurance that the IRS will accept the Offer.

(7)  The legal matter involving Puerto Rico provider Hato Rey Psychiatric
     Hospital, d/b/a Mepsi Center, was settled September 27, 2000 for an amount
     that did not exceed the Company's reserve for such claims. The settlement
     amount was paid from the equity reserve account (see Item 4 above). This
     account is included in restricted cash and reported under current assets at
     August 31, 2000.

         From time to time, the Company and its subsidiaries are also parties to
and their property is subject to ordinary, routine litigation incidental to
their business. In some pending cases, claims may exceed insurance policy limits
and the Company or any one of its subsidiaries may have exposure to liability
that is not covered by insurance. Management believes that the outcome of such
lawsuits will not have a material adverse impact on the Company's financial
statements.



                                       16
<PAGE>   17


ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         27 - Financial Data Schedules (filed herewith).

(b)      Reports on Form 8-K

         None.




                                      17
<PAGE>   18

                 COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES


SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                COMPREHENSIVE CARE CORPORATION

October 13, 2000                By /s/   ROBERT J. LANDIS
                                   ----------------------------------------
                                         Robert J. Landis
                                         Chairman of the Board of Directors,
                                         Chief Financial Officer, and Treasurer



                                       18
<PAGE>   19