##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
 FORM 10-Q þ
    

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the period ended February 28, 2005.o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from to  .Commission File Number 1-9927
 COMPREHENSIVE CARE CORPORATION 
  Delaware
    
    95-2594724(State or other jurisdiction of incorporation
or organization)
    
    (IRS Employer Identification No.)
 204 South Hoover Blvd, Suite 200, Tampa, FL 33609 
  (813) 288-4808 
  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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). Yes o No þ 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 April 4, 2005Common Stock, par value $.01 per share
    

5,578,547




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES Index  
 PagePART I  FINANCIAL INFORMATIONItem 1 Consolidated Financial StatementsConsolidated Balance Sheets, February 28, 2005 and May 31, 2004
    
    
    3Consolidated Statements of Operations for the Three and Nine months ended February 28, 2005 and February 29, 2004
    
    
    4Consolidated Statements of Cash Flows for the Nine months ended February 28, 2005 and February 29, 2004
    
    
    5Notes to Consolidated Financial Statements
    
    
    6-10Item 2Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11-14Item 3Quantitative and Qualitative Disclosures About Market Risk
    
    
    14Item 4Controls and Procedures
    
    
    14PART II  OTHER INFORMATIONItem 1Legal Proceedings
    
    
    14Item 2Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    15Item 3Defaults Upon Senior Securities
    
    
    15Item 4Submission of Matters to a Vote of Security Holders
    
    
    15-16Item 5Other Information
    
    
    16Item 6Exhibits
    
    
    16Signatures
    
    
    17Certifications
    
    
    18-21Ex-31.1 Section 302 CEO CertificationEx-32.1 Section 302 CFO CertificationEx-32.1 Section 906 CEO CertificationEx-32.2 Section 906 CFO Certification
  2




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES 
 PART I.  FINANCIAL INFORMATION 
 Item 1  Consolidated Financial Statements 
 Consolidated Balance Sheets
(Amounts in thousands) February 28,
    
    
    May 31,2005
    
    
    2004(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    4,439
    
    
    $
    3,209Marketable securities
    
    
    17
    
    
    
    Accounts receivable, less allowance for doubtful accounts of $2 and $10,
respectively
    
    
    264
    
    
    
    191Accounts receivable  managed care reinsurance contract
    
    
    346
    
    
    
    553Other current assets
    
    
    276
    
    
    
    524Total current assets
    
    
    5,342
    
    
    
    4,477Property and equipment, net
    
    
    393
    
    
    
    390Goodwill, net
    
    
    991
    
    
    
    991Restricted cash
    
    
    72
    
    
    
    325Other assets
    
    
    292
    
    
    
    42Total assets
    
    $
    7,090
    
    
    $
    6,225LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    1,614
    
    
    $
    1,720Accrued claims payable
    
    
    3,509
    
    
    
    3,647Accrued reinsurance claims payable
    
    
    3,255
    
    
    
    3,183Income taxes payable
    
    
    27
    
    
    
    25Total current liabilities
    
    
    8,405
    
    
    
    8,575Long-term liabilities:Long-term debt
    
    
    2,244
    
    
    
    2,244Other liabilities
    
    
    73
    
    
    
    131Total long-term liabilities
    
    
    2,317
    
    
    
    2,375Total liabilities
    
    
    10,722
    
    
    
    10,950Stockholders deficit:Preferred stock, $50.00 par value; authorized 18,740 shares; none issued
    
    
    
    
    
    
    Common stock, $0.01 par value; authorized 12,500,000 shares; issued
and outstanding 5,500,547 and 4,673,048, respectively
    
    
    55
    
    
    
    47Additional paid-in-capital
    
    
    53,737
    
    
    
    52,950Deferred compensation
    
    
    
    
    
    
    (4
    )Accumulated deficit
    
    
    (57,312
    )
    
    
    (57,718
    )Other comprehensive loss
    
    
    (112
    )
    
    
    Total stockholders deficit
    
    
    (3,632
    )
    
    
    (4,725
    )Total liabilities and stockholders deficit
    
    $
    7,090
    
    
    $
    6,225
 See accompanying notes to consolidated financial statements. 3




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##### Table of Contents



COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES 
 Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share amounts) Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 29,
    
    
    February 28,
    
    
    February 29,2005
    
    
    2004
    
    
    2005
    
    
    2004Operating revenues
    
    $
    6,241
    
    
    $
    6,348
    
    
    $
    18,511
    
    
    $
    21,252Costs and expenses:Healthcare operating expenses
    
    
    5,134
    
    
    
    5,520
    
    
    
    15,630
    
    
    
    18,571General and administrative expenses
    
    
    846
    
    
    
    799
    
    
    
    2,275
    
    
    
    2,677Recovery of doubtful accounts
    
    
    (2
    )
    
    
    ( 2
    )
    
    
    (6
    )
    
    
    (14
    )Depreciation and amortization
    
    
    24
    
    
    
    27
    
    
    
    71
    
    
    
    826,002
    
    
    
    6,344
    
    
    
    17,970
    
    
    
    21,316Operating income (loss) from continuing operations before
items shown below
    
    
    239
    
    
    
    4
    
    
    
    541
    
    
    
    (64
    )Other income (expense):Loss from prepayment of note receivable
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    (20
    )Interest income
    
    
    4
    
    
    
    4
    
    
    
    9
    
    
    
    22Interest expense
    
    
    (51
    )
    
    
    (57
    )
    
    
    (157
    )
    
    
    (159
    )Other non-operating income
    
    
    33
    
    
    
    
    
    
    
    55
    
    
    
    1Income (loss) from continuing operations before income
taxes
    
    
    225
    
    
    
    (69
    )
    
    
    448
    
    
    
    (220
    )Income tax expense
    
    
    13
    
    
    
    9
    
    
    
    42
    
    
    
    29Income (loss) from continuing operations
    
    $
    212
    
    
    $
    (78
    )
    
    $
    406
    
    
    $
    (249
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (387
    )Net income (loss) attributable to common stockholders
    
    $
    212
    
    
    $
    (78
    )
    
    $
    406
    
    
    $
    (636
    )Income (loss) per common share  basic:Income (loss) from continuing operations
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.09
    
    
    $
    (0.06
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.09
    )Net income (loss)
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.09
    
    
    $
    (0.15
    )Income (loss) per common share  diluted:Income (loss) from continuing operations
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.08
    
    
    $
    (0.06
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.09
    )Net income (loss)
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.08
    
    
    $
    (0.15
    )Weighted average common shares outstanding:Basic
    
    
    4,794
    
    
    
    4,585
    
    
    
    4,722
    
    
    
    4,154Diluted
    
    
    5,316
    
    
    
    4,585
    
    
    
    5,285
    
    
    
    4,154
 See accompanying notes to consolidated financial statements. 4




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES 
 Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands) Nine Months EndedFebruary 28,
    
    
    February 29,2005
    
    
    2004Cash flows from operating activities:Net income (loss) from continuing operations
    
    $
    406
    
    
    $
    (249
    )Adjustments to reconcile net income (loss) from continuing
operations to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    71
    
    
    
    82Loss from prepayment of note receivable
    
    
    
    
    
    
    20Compensation expense  stock, stock options and warrants issued
    
    
    30
    
    
    
    62Amortization of deferred revenue
    
    
    (43
    )
    
    
    Changes in assets and liabilities:Accounts receivable, net
    
    
    (73
    )
    
    
    (346
    )Accounts receivable  managed care reinsurance contract
    
    
    207
    
    
    
    (66
    )Other current assets, restricted cash, and other assets
    
    
    251
    
    
    
    240Accounts payable and accrued liabilities
    
    
    (145
    )
    
    
    (420
    )Accrued claims payable
    
    
    (138
    )
    
    
    (495
    )Accrued reinsurance claims payable
    
    
    72
    
    
    
    (126
    )Income taxes payable
    
    
    2
    
    
    
    7Other liabilities
    
    
    (1
    )
    
    
    Net cash provided by (used in) continuing operations
    
    
    639
    
    
    
    (1,291
    )Net cash used in discontinued operations
    
    
    (112
    )
    
    
    (53
    )Net cash provided by (used in) continuing and discontinued
operations
    
    
    527
    
    
    
    (1,344
    )Cash flows from investing activities:Payments received on note receivable
    
    
    
    
    
    
    139Additions to property and equipment
    
    
    (29
    )
    
    
    (159
    )Net cash used in investing activities
    
    
    (29
    )
    
    
    (20
    )Cash flows from financing activities:Proceeds from the issuance of common stock
    
    
    769
    
    
    
    974Repayment of debt
    
    
    (37
    )
    
    
    (25
    )Net cash provided by financing activities
    
    
    732
    
    
    
    949Net increase (decrease) in cash and cash equivalents
    
    
    1,230
    
    
    
    (415
    )Cash and cash equivalents at beginning of period
    
    
    3,209
    
    
    
    3,590Cash and cash equivalents at end of period
    
    $
    4,439
    
    
    $
    3,175Supplemental disclosures of cash flow information:Cash paid during the nine month period for:Interest
    
    $
    114
    
    
    
    101Income taxes
    
    $
    48
    
    
    
    16Non-cash financing and investing activities:Warrants issued in connection with issuance of common stock
    
    $
    234
    
    
    
    Property and equipment acquired under capital leases
    
    $
    43
    
    
    
    61
 See accompanying notes to consolidated financial statements. 5




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES Note 1  Summary of Significant Accounting Policies The consolidated balance sheet as of February 28, 2005, and the related consolidated
statements of operations and cash flows for the nine months ended February 28, 2005 and February
29, 2004 are unaudited and have been prepared in accordance with accounting principles generally
accepted in the United States of America 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 consolidated financial statements have been
included. Such adjustments consisted only of normal recurring items. The results of operations
for the nine months ended February 28, 2005 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 accounting principles generally accepted in the United States of America. The
consolidated balance sheet at May 31, 2004 has been derived from the audited, consolidated
financial statements at that date, but does not include all of the information and footnotes
required by accounting principles generally accepted in the United States of America for complete
financial statement presentation. Notes to consolidated financial statements included in Form 10-K
for the fiscal year ended May 31, 2004 are on file with the Securities and Exchange Commission and
provide additional disclosures and a further description of accounting policies. The Companys consolidated 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  Basis of Presentation. Marketable Securities The Companys marketable securities are classified as available for sale, and accordingly
are reflected in the consolidated balance sheet at fair market value, with the unrealized loss
included as an other comprehensive loss within stockholders deficit. Restricted Cash During the quarter ended February 28, 2005, the trust agreement specific to the Companys
Directors and Officers liability insurance policy was terminated and all funds, which amounted to
approximately $253,000, were released to the Company. As such, as of February 28, 2005, restricted
cash consists only of the non-current amount of $72,000 representing a required deposit under the
terms of the Companys Tampa office lease. Revenue Recognition The Companys managed care activities are performed under the terms of agreements with health
maintenance organizations (HMOs), preferred provider organizations, and other health plans or
payers to provide contracted behavioral healthcare services to subscribing participants. Revenue
under a substantial portion of these agreements is earned monthly based on the number of qualified
participants regardless of services actually provided (generally referred to as capitation
arrangements). The information regarding qualified participants is supplied by the Companys
clients and the Company relies extensively on the accuracy of the client remittance and other
reported information to determine the amount of revenue to be recognized. Such agreements
accounted for 88.5%, or $16.4 million, of revenue for the nine months ended February 28, 2005 and
85.9%, or $18.2 million, of revenue for the nine months ended February 29, 2004. The remaining
balance of the Companys revenues is earned on a fee-for-service basis and is recognized as
services are rendered. Accrued Claims Payable The accrued claims payable liability represents the estimated ultimate net amounts owed for
all behavioral healthcare services provided through the respective balance sheet dates, including
estimated amounts for claims incurred but not yet reported (IBNR) to the Company. The unpaid
claims liability is estimated using an actuarial paid completion factor methodology and other
statistical analyses and is continually reviewed and adjusted, if necessary, to reflect any change
in the estimated liability. These estimates are subject to the effects of trends in 6




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES utilization and other factors. However, actual claims incurred could differ from the estimated
claims payable amount reported as of February 28, 2005. Although considerable variability is
inherent in such estimates, management believes that the unpaid claims liability is adequate. Income Taxes The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes. Under the asset and liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for the future tax consequences attributable to net operating
loss carryforwards and to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect of a
change in tax rates on deferred tax assets or liabilities is recognized in the consolidated
statements of operations in the period that included the enactment. A valuation allowance is
established for deferred tax assets unless their realization is considered more likely than not. Stock Options The Company periodically grants stock options to employees and non-employee directors
(optionees) allowing optionees to purchase the Companys common stock pursuant to shareholder
approved stock option plans. As permitted by Statement of Financial Accounting Standards (SFAS)
No. 148, Accounting for Stock-Based Compensation-Transitional Disclosure, the Company has elected
to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
and related interpretations in accounting for its employee stock options (APB 25). Under APB 25,
in the event that the exercise price of the Companys employee stock options is less than the
market price of the underlying stock on the date of grant, compensation expense is recognized. No
stock-based employee compensation cost is reflected in net income (loss), as all options granted
under the Companys employee stock options plans had an exercise price equal to the market value of
the underlying common stock on the date of grant. The following table illustrates the effect on net
income (loss) and net income (loss) per share if the Company had applied the fair value recognition
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation (amounts in thousands, except per share data). Three
    
    
    Three
    
    
    Nine
    
    
    NineMonths
    
    
    Months
    
    
    Months
    
    
    MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended2/28/05
    
    
    2/29/04
    
    
    2/28/05
    
    
    2/29/04Net income (loss), as reported
    
    $
    212
    
    
    $
    (78
    )
    
    $
    406
    
    
    $
    (636
    )Deduct:Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax
effects
    
    
    (91
    )
    
    
    (96
    )
    
    
    (145
    )
    
    
    (206
    )Pro forma net income (loss)
    
    $
    121
    
    
    $
    (174
    )
    
    $
    261
    
    
    $
    (842
    )Income (loss) per common share:Basic  as reported
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.09
    
    
    $
    (0.15
    )Diluted  as reported
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.08
    
    
    $
    (0.15
    )Basic  pro forma
    
    $
    0.03
    
    
    $
    (0.04
    )
    
    $
    0.06
    
    
    $
    (0.20
    )Diluted  pro forma
    
    $
    0.02
    
    
    $
    (0.04
    )
    
    $
    0.05
    
    
    $
    (0.20
    )
 On December 16, 2004, the FASB issued Statement No. 123R, Share-Based Payment, which
requires companies to record compensation expense for stock options issued to employees at an
amount determined by the fair value of the options. SFAS No. 123R is effective for the Company
for interim or annual periods beginning after June 15, 2005. As such, effective with the Companys
second fiscal quarter of fiscal 2006, SFAS No. 123R will eliminate our ability to account for stock
options using the method permitted under APB 25 and instead require us to recognize compensation
expense should the Company issue stock options to its employees or non-employee directors. The
Company is in the process of evaluating the impact adoption of SFAS No. 123R will have on the
consolidated financial statements. 7




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES Per Share Data In calculating basic income (loss) per share, net income (loss) is divided by the weighted
average number of common shares outstanding for the period. Diluted income (loss) per share
reflects the assumed exercise or conversion of all dilutive securities, such as options, warrants,
and convertible debentures. No such exercise or conversion is assumed where the effect is
antidilutive, such as when there is a net loss. The following table sets forth the computation of
basic and diluted income (loss) per share in accordance with Statement No. 128, Earnings Per Share
(amounts in thousands, except per share data): Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 29,
    
    
    February 28,
    
    
    February 29,2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator:Numerator for diluted income (loss) per share from continuing
operations
    
    $
    212
    
    
    $
    (78
    )
    
    $
    406
    
    
    $
    (249
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (387
    )Net income (loss) attributable to common stockholders
    
    $
    212
    
    
    $
    (78
    )
    
    $
    406
    
    
    $
    (636
    )Denominator:Weighted average shares
    
    
    4,794
    
    
    
    4,585
    
    
    
    4,722
    
    
    
    4,154Effect of dilutive securities:Warrants
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    Employee stock options
    

    
    520
    
    
    
    
    
    
    
    561
    
    
    
    Denominator for diluted income (loss) per share-adjusted
weighted average shares after assumed conversions
    
    
    5,316
    
    
    
    4,585
    
    
    
    5,285
    
    
    
    4,154Basic income (loss) per share:Income (loss) from continuing operations
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.09
    
    
    $
    (0.06
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.09
    )Net income (loss)
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.09
    
    
    $
    (0.15
    )Diluted income (loss) per share:Income (loss) from continuing operations
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.08
    
    
    $
    (0.06
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.09
    )Net income (loss)
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.08
    
    
    $
    (0.15
    )
 Authorized shares of common stock reserved for possible issuance for convertible debentures, stock
options, and warrants are as follows at February 28, 2005: Convertible debentures
    
    
    9,044Outstanding stock options
    
    
    1,276,790Possible future issuance under stock option plans and warrants (a)
    
    
    553,669Total
    
    
    1,839,503
   (a)
    
    Excludes 500,000 options, which became available for grant under the Companys 2002 Incentive
Plan (Plan) upon shareholder approval of an amendment to the Plan effective March 11, 2005 to
increase by 500,000 the number of shares of common stock available for issuance under such Plan.
Such amendment had been previously adopted by the Board of Directors subject to approval by the
Companys stockholders. Note 2  Basis of Presentation The accompanying consolidated financial statements are prepared on a going concern basis. As
of February 28, 2005, the Company had a working capital deficiency of $3.1 million and a
stockholders deficit of $3.6 million. Prior to the current quarter, during which the Company
generated $527,000 from operating activities, the Companys cash position had declined in the first
and second quarters of fiscal 2005, as well as during the 2004 and 2003 fiscal years. In addition
to sustaining operations, the Companys future cash requirements will include the funding of
increased marketing efforts and additional payments toward the $170,000 that remains to be paid in
connection with its new information system, which has expected total costs of approximately
$370,000. Once implemented, this system will enable the Company to meet HIPAA requirements,
streamline the Companys entire clinical and claims functions, and offer service improvements to
the Companys participating providers. 8




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES A private placement of the Companys common stock was completed in February 2005, generating
approximately $730,000 in net cash proceeds. The Company will continue to pursue sources of
financing on terms that would support the Companys capital needs and provide available funds for
working capital. Management cannot state with any degree of certainty whether
any required additional equity or debt financing will be available to
the Company during the remaining months of fiscal 2005 and, if available, that the source of financing would be available on terms and conditions
acceptable to the Company. Further, the Company has incurred operating losses in recent years,
including the fiscal year ended May 31, 2004. These conditions raise substantial doubt about the
Companys ability to continue as a going concern, which is dependent upon its ability to continue
to generate sufficient cash flow to meet its obligations on a timely basis, obtaining additional
financing as may be required and, ultimately, sustaining an operating profit. The accompanying
consolidated financial statements do not include any adjustments that may result from the outcome
of this uncertainty. Note 3  Total Comprehensive Income (Loss) Total comprehensive income (loss) is net income (loss) adjusted for the unrealized holding
losses on available-for-sale securities, which amounted to $112,000 and $0 as of February 28, 2005
and February 29, 2004, respectively: Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended2/28/05
    
    
    2/29/04
    
    
    2/28/05
    
    
    2/29/04Net income (loss)
    
    $
    212
    
    
    $
    (78
    )
    
    $
    406
    
    
    $
    (636
    )Other comprehensive loss:Unrealized holding loss
    
    
    (61
    )
    
    
    
    
    
    
    (112
    )
    
    
    Total comprehensive income (loss)
    
    $
    151
    
    
    $
    (78
    )
    
    $
    294
    
    
    $
    (636
    )
 Note 4  Major Customers/Contracts (1) Beginning January 1, 2003, the Company contracted with a new HMO client to provide
behavioral healthcare services to contracted Medicaid members in Florida. This business accounted
for 20.8%, or $4.4 million, of the Companys operating revenues during the nine months ended
February 29, 2004. On October 30, 2003, the HMO, whose contract was scheduled to renew in January
2004, advised the Company that it had determined to insource behavioral health and, therefore,
would not renew its contract with the Company. Accordingly, the Companys contract with this HMO
customer terminated effective December 31, 2003. (2) The Company has one contract to provide behavioral healthcare services to Connecticut
members under contract with one HMO. This agreement represented approximately 21.1%, or $3.9
million, and 12.7%, or $2.7 million, of the Companys operating revenue for the nine months ended
February 28, 2005 and February 29, 2004, respectively. Additionally, this contract provides that
the Company, through its contract with this HMO, receives additional funds directly from a state
reinsurance program for the purpose of paying providers. During the nine months ended February 28,
2005 and February 29, 2004, the Company filed reinsurance claims totaling approximately $2.2
million and $1.5 million, respectively. Such claims represent cost reimbursements and, as such,
are not included in the reported operating revenues and are accounted for as reductions of
healthcare operating expenses. As of February 28, 2005 and May 31, 2004, respectively, the Company
has reported $0.3 million and $0.6 million as accounts receivablemanaged care reinsurance
contracts, with $3.3 million and $3.2 million reported as accrued reinsurance claims payable in the
accompanying balance sheets. In the event that the Company does not collect the amounts receivable
related to reinsurance amounts, the Company could remain liable for the costs of the specific
services provided to members that qualify for such reimbursements. The difference between the
reinsurance receivable amount and the reinsurance payable amount is related to timing differences
between the authorization date, the date the money is received by the Company, and the date the
money is paid to the provider. In certain cases, providers have submitted claims for authorized
services having incorrect service codes or otherwise incorrect information that has caused payment
to be denied by the Company. In such cases, there are contractual and statutory provisions that
allow the provider to appeal a denied claim. If no appeal is received by the Company within the
prescribed amount of time, the Company may be required to remit the reinsurance funds back to the
appropriate party. For non-reinsurance claims incurred but not yet reported under this contract,
the Company estimates its claims payable using a similar method as that used for other existing
contracts. This HMO has been a customer since March 2001. The original contract term ended
December 31, 2002 and, in accordance with its terms, has automatically renewed for three
consecutive one-year periods, with the current term ending December 31, 2005. In October 2004, the
Company submitted a bid to the State of Connecticut in response to its request for proposal for
administrative services only (ASO) in connection with a 9




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES contract that is expected to begin by October 1, 2005. On January 7, 2005 the Company was informed
that another bidder was selected to negotiate this ASO contract. If the State of Connecticut is
successful in their negotiations with the selected bidder and the State of Connecticut continues
with the implementation of its ASO plans, the Companys existing contract may be terminated
sometime during the Companys second quarter of fiscal 2006, which begins September 1, 2005. (3) The Company has contracts with one HMO to provide behavioral healthcare services to
contracted commercial, Medicaid, and Childrens Health Insurance Program (CHIP) members in Texas.
This business accounted for approximately 21.1%, or $3.9 million, and 13.0%, or $2.8 million, of
the Companys operating revenues during the nine months ended February 28, 2005 and February 29,
2004, respectively. This HMO has been a customer of the Company since November 1998. The original
contract term was for one year and the contract provides for automatic one-year renewal terms. In general, the Companys contracts with its customers are typically for initial one-year terms,
with automatic annual extensions. Such contracts generally provide for cancellation by either
party with 60 to 90 days written notice. Note 5  Discontinued Operations Results for the nine months ended February 29, 2004 include a change in estimate resulting in
a net charge of approximately $387,000 related to hospital operations disposed of in prior years,
which is included under discontinued operations in the accompanying consolidated financial
statements. The charge primarily relates to settlement of the Companys fiscal 1999 Medicare cost
report for its Aurora, Colorado facility that was sold by the Company during fiscal 1999. The
settlement requires the Company to repay a net amount of $294,000 by means of a two-year
installment plan. At February 28, 2005, approximately $94,000 remains outstanding and is included
in accounts payable and accrued expenses in the accompanying consolidated balance sheet. Note 6  Commitments and Contingencies (1) In connection with the Companys Preferred Provider Network license in Connecticut,
the Company is required to maintain a performance bond during all applicable terms of the license.
As such, the Company maintains a performance bond of $2,400,000 in compliance with this
requirement. (2) Related to the Companys discontinued hospital operations, Medicare guidelines allow
the Medicare fiscal intermediary to re-open previously filed cost reports. Management believes
that the Companys fiscal 1998 and 1999 cost reports remain eligible for re-opening at some future
date, in which case the intermediary may determine that additional amounts are due to or from
Medicare. (3) The Company is subject to the requirements of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA). The purpose of the HIPAA provisions is to improve the
efficiency and effectiveness of the healthcare system through standardization of the electronic
data interchange of certain administrative and financial transactions and, also, to protect the
security and privacy of protected health information. Entities subject to HIPAA include some
healthcare providers and all healthcare plans. To meet the specific requirements of HIPAA, the
Company determined it needed to make a significant investment in its current information system or
in a new information system that would better meet the Companys future needs. As a result, the
Company has entered into a Software License Maintenance and Services Agreement with Qualifacts
Systems, Inc. (Qualifacts), a vendor that has provided the Company with an immediate, temporary
solution to meet HIPAA compliance rules specific to the Electronic Health Care Transactions and
Code Sets Standards Model Compliance Plan with the Centers for Medicare and Medicaid Services and,
additionally, to design a new, customized management information system that will enable the
Company to continue to meet HIPAA requirements in the future. The Company expects to incur a total
of approximately $370,000 of costs to customize the Qualifacts system and activate the licenses
needed for Qualifacts and other, related third-party software. 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 which case 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 is not aware of any such lawsuits that
could have a material adverse impact on the Companys consolidated financial statements. 10




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

Item 2  Managements Discussion and Analysis of Financial Condition and Results of
Operations In addition to historical information, the following information contains forward-looking
statements as defined under federal securities laws. Such statements include, but are not limited
to, statements concerning the Companys anticipated operating results, financial resources,
increases in revenues, increased profitability, interest expense, growth and expansion, and the
ability to obtain new behavioral healthcare contracts. These statements are based on current
expectations, estimates and projections about the industry and markets in which Comprehensive Care
Corporation (CompCare or the Company) operates, and managements beliefs and assumptions.
Forward-looking statements are not guarantees of future performance and involve certain known and
unknown risks and uncertainties that could cause actual results to differ materially from those
expressed or implied by such statements. Such risks and uncertainties include, but are not limited
to, changes in local, regional, and national economic and political conditions, the effect of
governmental regulation, competitive market conditions, varying trends in member utilization, cost
of care, and seasonality, the Companys ability to obtain additional financing, and other risks
detailed herein and from time to time in the Companys SEC reports. The following discussion should
be read in conjunction with the accompanying consolidated financial statements and notes thereto of
CompCare appearing elsewhere herein. General Introduction The Company has provided managed behavioral healthcare services and products since 1992.
Services are marketed primarily through business development staff who are responsible for
developing new sales leads and for preparing responses to formal commercial and public sector
Requests for Proposals (RFPs). The Company typically has several RFPs in process, with
submissions being made to a diverse selection of existing and prospective clients. Current
services include a broad spectrum of inpatient and outpatient mental health and substance abuse
therapy, counseling, and supportive interventions. We have experienced an overall decline in operating revenues during fiscal 2004 and for the
nine months ended February 28, 2005, which is due primarily to two changes in our client base. In
September 2003, revenues from Texas CHIP contracts were temporarily eliminated due to State
legislative changes. Although revenues resumed after a five-month hiatus, reinstated revenue
levels are approximately 60% of the former amounts primarily due to a reduction in the benefits
made available to Texas CHIP members. Additionally, the State changed the eligibility requirements
for Texas CHIP members, which limits membership growth for our Texas CHIP business. On December
31, 2003, we experienced the loss of one major Florida customer who determined to internally manage
behavioral health services to its members. This contract accounted for 20.8%, or $4.4 million, of
our revenue during the first nine months of fiscal 2004. In the past year, we have experienced
membership expansion in existing contracts and, additionally from several new clients. As a
result, the year-to-year variance in revenue was limited to a decline of $2.7 million from fiscal
2004 to 2005. In preparation for the loss of revenue specific to the major Florida customer, we
restructured our regional and corporate operations, centralized certain clinical and administrative
functions, reassigned or downsized staff, and eliminated certain expenses that could not be
supported with remaining revenues. Consequently, our fiscal 2005 healthcare operating expenses and
general and administrative expenses are lower than in the prior fiscal year both in amount and as a
percentage of revenue. Effective February 28, 2005, a private placement of the Companys common stock was completed,
which generated approximately $730,000 in net cash proceeds. Results of Operations For the nine months ended February 28, 2005, the Company reported net income of $406,000, or
$0.09 earnings per basic share ($0.08 per diluted share). In comparison, the Company reported a
loss from continuing operations of $249,000, or $0.06 loss per share (basic and diluted), and a net loss
of $636,000, or $0.15 loss per share (basic and diluted), for the nine months ended February 29, 2004. Results for the nine months ended February 29, 2004 include a change in estimate resulting in
a net charge of approximately $387,000 that has been included under discontinued operations in the
unaudited, consolidated financial statements for the nine months ended February 29, 2004 (see Note
5  Discontinued Operations to the unaudited, consolidated financial statements). 11




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES The following tables summarize the Companys operating results from continuing operations for
the three and nine months ended February 28, 2005 and February 29, 2004 (in thousands): The Three Months Ended February 28, 2005 Compared to the Three Months Ended February 29,
2004: Three
    
    
    ThreeMonths
    
    
    MonthsEnded
    
    
    EndedFebruary 28, 2005
    
    
    February 29, 2004Operating revenues
    
    $
    6,241
    
    
    $
    6,348Healthcare operating expenses
    
    
    5,134
    
    
    
    5,520General/administrative expenses
    
    
    846
    
    
    
    799Other operating expenses
    
    
    22
    
    
    
    256,002
    
    
    
    6,344Operating income
    
    $
    239
    
    
    $
    4
 The Company reported operating income of $239,000 and net income of $212,000, or $0.04
earnings per share (basic and diluted), for the quarter ended February 28, 2005 compared to
operating income of $4,000 and a net loss of $78,000, or $0.02 loss per share (basic and diluted),
for the quarter ended February 29, 2004. Operating revenues decreased by 1.7%, or approximately
$107,000, to $6.2 million for the quarter ended February 28, 2005 compared to $6.3 million for the
quarter ended February 29, 2004. This decrease is primarily due to the loss of one major customer
in Florida, which was partially offset by revenue increases attributable to the Companys
Connecticut client and its CHIP programs in Texas. Healthcare operating expenses decreased by approximately $386,000, or 7.0%, for the quarter
ended February 28, 2005 as compared to the quarter ended February 29, 2004. This decrease is
primarily attributable to reductions in revenue along with clinical program improvements resulting
in reduced costs of care, and secondarily to lower personnel costs resulting from restructuring our
regional and corporate operations. Healthcare operating expense as a percentage of operating
revenue decreased by 4.7%, from 87.0% for the quarter ended February 29, 2004 to 82.3% for the
quarter ended February 28, 2005. This decrease is primarily due to the loss of one major contract
in Florida that consistently returned a high medical loss ratio. General and administrative expenses increased by $47,000, or 5.9%, for the quarter ended
February 28, 2005 as compared to the quarter ended February 29, 2004. This increase is due to
expanded marketing efforts, greater utilization of certain professional services, and a one-time
expense with respect to one unemployment tax matter. These increased costs were partially offset
by savings in other areas, primarily in personnel and related costs, resulting from the Companys
restructuring of regional and corporate operations. General and administrative expense as a
percentage of operating revenue increased from 12.6% for the quarter ended February 29, 2004 to
13.6% for the quarter ended February 28, 2005. The Nine Months Ended February 28, 2005 Compared to the Nine Months Ended February 29,
2004: Nine
    
    
    NineMonths
    
    
    MonthsEnded
    
    
    EndedFebruary 28, 2005
    
    
    February 29, 2004Operating revenues
    
    $
    18,511
    
    
    $
    21,252Healthcare operating expenses
    
    
    15,630
    
    
    
    18,571General/administrative expenses
    
    
    2,275
    
    
    
    2,677Other operating expenses
    
    
    65
    
    
    
    6817,970
    
    
    
    21,316Operating income (loss)
    
    $
    541
    
    
    $
    (64
    )
 The Company reported operating income of $541,000 and net income of $406,000, or $0.09
earnings per basic share, and $0.08 earnings per diluted share, for the nine months ended February
28, 2005 compared to an operating loss of $64,000 and a net loss of $636,000, or $0.15 loss per
share (basic and diluted), for the nine months 12




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES ended February 29, 2004. Operating revenues decreased by 12.9%, or approximately $2.7 million,
to $18.5 million for the nine months ended February 28, 2005 compared to $21.2 million for the nine
months ended February 29, 2004. This decrease is primarily attributable to the loss of one major
customer in Florida that accounted for $4.4 million of revenue during the nine months ended
February 29, 2004, offset by increased revenues primarily in Connecticut and Texas. Healthcare operating expenses decreased by approximately $2.9 million, or 15.8%, for the nine
months ended February 28, 2005 as compared to the nine months ended February 29, 2004. This
decrease is primarily attributable to revenue reductions along with clinical program improvements
resulting in reduced costs of care, and secondarily to lower personnel costs resulting from
restructuring our regional and corporate operations. Healthcare operating expense as a percentage
of operating revenue decreased by 3.0%, from 87.4% for the nine months ended February 29, 2004 to
84.4% for the nine months ended February 28, 2005. This decrease is primarily due to the loss of
one major contract in Florida that consistently returned a high medical loss ratio. General and administrative expenses decreased by $402,000, or 15.0%, for the nine months ended
February 28, 2005 as compared to the nine months ended February 29, 2004. This decrease is
primarily attributable to a decrease in salaries and benefits resulting from the Companys
restructuring of regional and corporate operations and less usage of outside professional services.
General and administrative expense as a percentage of operating revenue decreased from 12.6% for
the nine months ended February 29, 2004 to 12.3% for the nine months ended February 28, 2005. Seasonality of Business Historically, we have experienced consistently low utilization by members during our first
fiscal quarter, which comprises the months of June, July, and August, and increased member
utilization during our fourth fiscal quarter, which comprises the months of March, April and May.
Such variations in member utilization impact our costs of care during these months, generally
having a positive impact on our gross margins and operating profits during the first fiscal quarter
and a negative impact on our gross margins and operating profits during the fourth quarter. Concentration of Risk We currently have contracts with six health plans to provide behavioral healthcare services
under commercial, Medicaid, and CHIP plans. These combined contracts represent approximately 71.7%
and 46.5% of our operating revenue for the nine months ended February 28, 2005 and February 29,
2004, 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. The
loss of one or more of these clients, without replacement by new business, could negatively affect
the financial condition of the Company. Liquidity and Capital Resources During the nine months ended February 28, 2005, net cash provided by continuing operations
amounted to $639,000, while cash used in discontinued operations totaled $112,000. During the
remaining months of fiscal 2005, we expect to pay $50,000 towards the $170,000 that remains to be
paid in connection with our new information system, which will enable us to continue to meet the
requirements of the Health Insurance Portability and Accountability Act of 1990 (HIPAA). We
expect the balance of $120,000 to be paid in equal monthly installments of $5,000 beginning in
fiscal 2006. The timing of all remaining installments is dependent on the success of meeting
specific implementation goals at set times. Our expected total costs of this system are
approximately $370,000 of which $200,000 was paid prior to February 28, 2005. Once implemented,
this system will enable us to continue to meet HIPAA requirements, streamline our entire clinical
and claims functions, and offer service improvements to our participating providers. A private
placement of the Companys common stock was completed in February 2005, generating approximately
$730,000 in net cash proceeds. As of February 28, 2005, the Company had a working capital
deficiency of $3.1 million and a stockholders deficit of $3.6 million. We are continuing to pursue
sources of financing on terms that would support our future capital needs and provide available
funds for working capital. We cannot state with any degree of certainty whether any required
additional equity or debt financing will be available to us during
the remaining months of fiscal 2005 and, if available,
that the source of financing will be available on terms and conditions acceptable to us. These
conditions raise substantial doubt about the Companys ability to continue as a going concern,
which is dependent upon our ability to continue to generate sufficient cash flow to meet our
obligations on a timely basis, obtaining additional financing as may be required and, ultimately,
to sustain an operating profit. 13




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES Our 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. Any significant increase in member utilization that falls outside
of our estimations would increase healthcare operating expenses and may impact our ability to
sustain profitability and achieve positive cash flow. Although considerable variability is inherent
in such estimates, we believe that our unpaid claims liability is adequate. However, actual results
could differ from the $3.5 million claims payable amount reported as of February 28, 2005. In October 2004, we submitted a bid to the State of Connecticut in response to its request for
proposal for administrative services only (ASO) in connection with a contract that is expected to
begin by October 1, 2005. On January 7, 2005 the Company was informed that another bidder was
selected to negotiate this ASO contract. If the State of Connecticut is successful in their
negotiations with the selected bidder and the State of Connecticut continues with the
implementation of its ASO plans, the Companys existing contract may be terminated sometime during
the Companys second quarter of fiscal 2006, which begins September 1, 2005. This contract
represented approximately 21.1%, or $3.9 million, of our operating revenue for the nine months
ended February 28, 2005(see Note 4(2)  Major Customers/Contracts  to the unaudited,
consolidated financial statements). Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations is based upon
the Companys consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation of these
consolidated financial statements requires us to make significant estimates and judgments to
develop the amounts reflected and disclosed in the consolidated financial statements, most notably
our estimate for claims incurred but not yet reported (IBNR). On an on-going basis, we evaluate
the appropriateness of our estimates and we maintain a thorough process to review the application
of our accounting policies. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions. We believe our accounting policies specific to our accrued claims payable and revenue
recognition involve our most significant judgments and estimates that are material to our
consolidated financial statements (see Note 1  Summary of Significant Accounting Policies to the
unaudited, consolidated financial statements). 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk While we currently have market risk sensitive instruments, we have no significant exposure to
changing interest rates as the interest rate on our long-term debt is fixed. Since November 10,
2004, the Company has held one marketable security classified as available-for-sale, which is
subject to price risk. The fair market value of such investment as of February 28, 2005 was
$17,000. We do not use derivative financial instruments for investment or trading purposes and the
remainder of our investments is generally limited to cash deposits. 
 Item 4. Controls and Procedures Under the supervision and with the participation of the Companys management, including the
Companys Chief Executive Officer and Chief Financial Officer, the Company has evaluated the
effectiveness of the design and operation of its disclosure controls and procedures as of the end
of the period covered by this report, and, based on their evaluation, the Chief Executive Officer
and Chief Financial Officer have concluded that these disclosure controls and procedures are
effective. There have been no changes in the Companys internal controls over financial reporting
identified in connection with this evaluation that occurred during the period covered by this
report and that have affected, or are reasonably likely to materially affect, the Companys
internal controls over financial reporting. 
 PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings From time to time, the Company and its subsidiaries may be parties to and their property
subject to ordinary, routine litigation incidental to their business, in which case 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 is not aware of any such lawsuits that
could have a material adverse impact on the Companys consolidated financial statements. 14




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter ended February 28, 2005, the Company issued an aggregate of 4,000 shares of
its common stock in exchange for marketing services provided to the Company by one vendor who
received shares of the Companys common stock in lieu of an aggregate of $8,000 of cash
compensation. Of the total 4,000 shares issued during the quarter, we issued 1,000 shares on
December 1, 2004; 1,000 shares on December 23, 2004; 1,000 shares on February 3, 2005; and 1,000
shares on February 16, 2005. The foregoing sales of securities were made in reliance upon the
exemptions from the registration provisions of the Securities Act of 1933, as amended, provided for
by Section 4(2) thereof for transactions not involving a public offering. 
 Item 3. Defaults Upon Senior Securities Not applicable. 
 Item 4. Submission of Matters to a Vote of Security Holders On March 11, 2005, the Company held its 2004 Annual Meeting of Stockholders. The meeting was
held to elect one (1) Class III Director to the Companys Board of Directors and to obtain
stockholder approval to amend the Companys 2002 Incentive Plan. Stockholders of the Companys Common Stock, $.01 par value, of record as of January 21, 2005
(the Record Date) were entitled to notice of the Annual Meeting and to vote at such meeting. As
of the Record Date, there were 4,798,547 shares of Common Stock entitled to vote at the meeting.
Stockholders holding 4,426,635 shares of Common Stock, representing a majority of the Common Stock
and representing a quorum (approximately 92.2% of the total shares entitled to vote), were
represented at the meeting either in person or by proxy. RESULTS OF ELECTION OF DIRECTORS Stockholders were asked to elect one (1) Class III Director to the Companys Board of
Directors. Set forth below is the name of the person nominated for and elected to serve on the
Companys Board of Directors for a term of three (3) years until the year 2007 Annual Meeting of
Stockholders and until his successor is duly elected and qualified as well as the results of the
voting for the nominee. Name
    
    Votes For
    
    Votes WithheldRobert J. Landis
    
    
    4,342,786
    
    
    
    83,849
 The Board of Directors of the Company is now comprised of the following four (4) directors:
Ms. Mary Jane Johnson, the sole Class I Director whose term expires at the 2006 Annual Meeting of
Stockholders, Mr. Howard A. Savin and Mr. Eugene L. Froelich, each a Class II Director whose term
expires at the 2005 Annual Meeting of Stockholders, and Mr. Robert J. Landis, the sole Class III
Director whose term expires at the 2007 Annual Meeting of Stockholders. RESULTS OF AMENDMENT OF THE COMPREHENSIVE CARE CORPORATION 2002 INCENTIVE PLAN Stockholders were asked to amend the Comprehensive Care Corporation 2002 Incentive
Plan (2002 Plan) for use in connection with the issuance of stock, options and other
stock purchase rights to executive officers, key employees, and other persons who render
significant services to the Company and its subsidiaries. The holders of record of the
following number of shares entitled to vote, voted for or against the Companys proposal to
adopt the 2002 Plan. NUMBER OF SHARES For
    
    Against
    
    Abstain
    
    Broker Non-Votes1,837,527
    
    
    417,589
    
    
    
    15,126
    
    
    
    2,156,393
 15




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES As a result of receiving stockholder approval of the amendment to the 2002 Plan, the Company
will reserve and register 500,000 shares of Common Stock for future issuance in the form of stock
options to be granted to employees and other persons who render significant services to the
Company. 
 Item 5. Other Information Not applicable. 
 Item 6. Exhibits EXHIBITNUMBER
    
    DESCRIPTION
    
    PAGE NUMBER31.1
    
    Comprehensive Care Corporation CEO Certification pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    
    1831.2
    
    Comprehensive Care Corporation CFO Certification pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    
    1932.1
    
    Comprehensive Care Corporation CEO Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    
    2032.2
    
    Comprehensive Care Corporation CFO Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    
    21
 16




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COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES 
 SIGNATURES 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 CORPORATIONApril 7, 2005By
    
    /s/ Mary Jane JohnsonMary Jane Johnson
President and Chief Executive Officer
(Principal Executive Officer)By
    
    /s/ Robert J. LandisRobert J. Landis
Chairman, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
 17