UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DCD.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended JuneSeptember 30, 20132020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________

Commission File NumberNumber: 1-9927

COMPREHENSIVE CARE CORPORATION

(Exact name of registrant as specified in its charter)

3405 W. Dr. Martin Luther King Jr. Blvd, Suite 101, Tampa, FL 33607

(Address of principal executive offices and zip code)

(813) 288-4808

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: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 filingfling requirements for the past 90 days. Yesx ☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx☒ No ¨☐

Indicate by check mark whether the Registrantregistrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and large accelerated filer”“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrantregistrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒

As of August 9, 2013, there were 62,887,902September 15, 2021, the registrant had outstanding 119,907,316 shares of the registrant’s common stock,its $0.01 par value outstanding.Common Stock.

ADVANZEON SOLUTIONS, INC

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

TABLETABLE OF CONTENTS CONTENTS

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

PART I – FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)September 30, 2020 (unaudited) and December 31, 2019

See

The accompanying notes toare an integral part of these consolidated financial statements.

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in thousands, except per share amounts)For the Three and Nine-Month Periods Ended September 30, 2020 and 2019 (unaudited)

SeeThe accompanying notes toare an integral part of these consolidated financial statements.

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)For the Nine-Month Periods Ended September 30, 2020 and 2019 (unaudited)

See

The accompanying notes toare an integral part of these consolidated financial statements.

ADVANZEON SOLUTIONS, INC. ( PARENT COMPANY DEBTOR-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMPREHENSIVE CARE CORPORATION1. DESCRIPTION OF THE COMPANY’S BUSINESS AND SUBSIDIARIESBASIS OF PRESENTATION

NOTE 1 – DESCRIPTIONOFTHE COMPANY’S BUSINESSAND BASISOF PRESENTATION

The accompanying unaudited interim consolidated financial statements for Comprehensive Care Corporation (referred to herein as the “Company,” or “CompCare”) and its subsidiaries have been prepared in accordance with the Securities and Exchange Commission (“SEC”) rules for interim financial information and do not include all information and notes required for annual financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Interim results for the current periods are not necessarily indicative of the results that may be expected for the entire fiscal year. The accompanying financial information should be read in conjunction with the consolidated financial statements and the notes thereto in our most recent annual report on Form 10-K. Our consolidated financial statements include the accounts of the CompanyAdvanzeon Solutions, Inc and our wholly-owned subsidiaries, each with theirits wholly owned subsidiary, and its respective wholly-owned subsidiaries (collectively referred to herein as, “we,”the “Company” ,”Advanzeon” ,”we”, “us” or “our”).

On September 4, 2020, in a matter entitled Dr. Jerry Katzman v. Comprehensive Care Corporation n/k/a/ Advanzeon Solutions, Inc. a receiver was appointed for Advanzeon Solution, Inc. ( the “Company”). The order granting the Plaintiff’s motion for appointment of a receiver was issued in the Circuit Court of the 13^th Judicial Circuit in and for Hillsborough County Florida, Case number 12-002570-Division L. The name of the receiver is Burton W. Wiand.

On September 7, 2020, the Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida, Tampa Division, Case number 8:20-bk-6764. Also, on September 7, 2020, the Company filed a Notice of Case Under Chapter 11 of the United States Bankruptcy Code and Notice of Automatic Stay with the Circuit Court of the 13^th Judicial District in and for Hillsborough County, Florida.

The Company will continue to operate its business as “debtor-in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company’s financial position as of December 31, 2019, the changes therein for the three and nine-month periods then ended and the results of operations for the three and nine-month periods ended September 30, 2020 and 2019.

The financial statements included in the Form 10-Q are presented in accordance with the requirements of the Form and do not include all of the disclosures required by accounting principles general accepted in the United States of America. For additional information, reference is made to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2019, filed April 9, 2020. The results of operations for the three and nine-month periods ended September 30, 2020 and 2019 are not necessarily indicative of operating results for the full year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Established in 1969, Advanzeon Solutions, Inc., (formerly Comprehensive Care Corp.) (“Advanzeon”, “we”, “Parent”, or the “Company”), through its wholly-owned subsidiary Pharmacy Value Management Solutions, Inc., and its wholly-owned subsidiaries during 2015, and partly in 2016, provided managed care services by acting as the administrator for certain administrative service agreements in the behavioral health and substance abuse fields. We primarily offered these services to commercial, Medicare, Medicaid, Children’s Health Insurance Program (“CHIP”) health plans, as well as self-insured companies. Our managed care operations consisted solely of servicing administrative service agreements. Starting in July of 2015, we implemented our comprehensive sleep apnea program, called “SleepMaster Solutions” ™. SleepMaster Solutions (“SMS”) utilizes an administrative system for the convenient identification/testing and therapy of Obstructive Sleep Apnea (“OSA”). We partnered with a national health care provider by initiating a sleep apnea wellness program whereby we screened, tested and when needed, offered treatment programs for treating this disorder. We also contracted with a union to treat its driver members. Beginning in 2017, our only business was our SMS sleep apnea program.

The Company has elected to not adopt the option available under United States generally accepted accounting principles (“GAAP”) to measure any eligible financial instruments or other items at fair market value at this time. Accordingly, the Company measures all of its assets and liabilities on the historical cost basis of accounting, except as otherwise required by GAAP.

Inter-company accounts and transactions have been eliminated in consolidation. Certain minor reclassifications of prior period amounts have been made to conform to the current period presentation.

We provide managed care services

Use of Estimates- The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts. Actual results could differ from these estimates. Estimates involved in the behavioral health, substance abuse,determination of an allowance for doubtful accounts receivable are considered by management as particularly susceptible to material change in the next year. Other significant estimates relate to stock-based compensation, warrants and pharmacy management fields for commercial, Medicare, Medicaid and Children’s Health Insurance Program (“CHIP”) health plans, as well as self-insured companies, unions, and Taft-Hartley health and welfare funds. Our managed care operations include administrative service agreements, fee-for-service agreements, and capitation contracts. Thebeneficial conversion features.

Accounts Receivable - Accounts receivable is carried at its estimated collectible value. Since customer base for our services includes both private and governmental entities. Our services are provided by unrelated vendorscredit is generally extended on a subcontract basis.

We assume the financial risk for the costs of member behavioral healthcare services under at-risk contracts in exchange for a fixed, per member per month fee. We may also manage behavioral healthcare programs or perform various managed care functions, such as clinical care management, provider network development and claims processing without assuming financial risk for member behavioral healthcare costs under administrative services only (“ASO”) contracts. In addition, we manage pharmaceutical services for the members of health plans on either an at-risk or ASO basis. In general, our contracts with our other customers have one-year or two-year initial terms, with automatic annual extensions, but they generally provide for cancellation by either party upon 60 to 90 days written notice or, under certain circumstances, the right to request a renegotiation of terms.

NOTE 2 – ACCOUNTS RECEIVABLE

Ourshort-term basis, accounts receivable at June 30, 2013,does not bear interest and December 31, 2012, are concentrateduncollateralized. We manage credit risk and determine necessary allowances by evaluating customers’ credit worthiness before extending credit and periodically for collectability, based primarily on customers’ past credit history and current financial conditions and general economic conditions, results of prior collection efforts, the relative strength of our relationship therewith and, in one account relatedthe event of a dispute, its legal position and the estimated cost of proposed collection proceedings. Management has not established a policy for when to charge off uncollectible accounts receivable or to use external collection agencies and makes such decisions on a major contract in Puerto Ricocase-by-case basis. The maximum losses that expired December 31, 2012.the Company would incur if a customer failed to pay would be limited to the carrying value of the receivable.

Outside Service Company - During the six months ended June 30, 2013, we collected approximately $2.9 millionapplicable period, the Company, from our Puerto Rico client.time to time, utilized the services of Administrative Service Company, Inc., an independent corporate entity, for purposes of paying its account payables, including payroll. The remaining receivable balance was further reduced by approximately $0.8 millionCEO of claims payments made on our behalf by the Puerto Rico client.Company also served as President of Administrative Service Company, Inc. No fees were paid to Administrative Service Company, nor its principals, officers or directors. Administrative Service Company accounts to the Company, monthly, for all funds it receives and disburses.

Pursuant to an Assignment agreement executed April 10, 2013 and effective March 15, 2013,

Revenue Recognition - In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers”, the receivable, then totaling $1.3 million, from our former Puerto Rico client was assigned to a creditor (Note 3).

NOTE 3 – NOTES PAYABLE

In April 2013, a 14%, $100,000 convertible note matured and was renewed on the same terms until July 31, 2013 at which time the note was again renewed. The new note utilizes the same terms as the previous note and has a maturity date of October 31, 2013.

In May 2013, a zero-coupon note in the amount of $230,000 matured and was replaced by a new note of similar terms with the same face value and a maturity date of August 31, 2013.

On March 15, 2013, we executed an agreement with a creditor to modifyCompany recognizes revenue when obligations under the terms of a previously matured but unpaid note for $1.4 million. Under such modified terms, the maturity date was extended to January 31, 2014 and the conversion price per common share was reduced to $0.125. In addition, the exercise price per common share of a warrant issued in conjunctioncontract with the note was reset to $0.22. We also assigned a customer receivable from our former Puerto Rico client and a potential arbitration recovery to the creditor as a source of future repayment of a second loan from the creditor of $625,000 and a $75,000 loan from an individual related to the creditor. The modification was accounted for as a troubled debt restructuring, but we recognized no gain because the effective interest rateare satisfied. Generally, this occurs upon shipment of the modified promissory note wasCPAP to their customer or when the test is performed.

Property and Equipment - Property and equipment (Note 4) is stated at cost less thanaccumulated depreciation. Depreciation and amortization are computed using the effective interest ratestraight-line method over the estimated useful lives ranging from 2 to 12 years.

Leasehold Improvement - Leasehold improvement (Note 5) is stated at cost less accumulated amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives ranging from 2 to 12 years. Leasehold improvements are amortized over the shorter of the original promissory note.

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

On May 8, 2013, by agreement with the creditor, the maturity date of the $625,000 loan was extended to July 15, 2013, the conversion price per common share was reduced to $0.125, and the exercise price per common share of a warrant issued in conjunction with the note was likewise decreased $0.22. However, the note was not repaid on its July 15, 2013 due date and is currently the subject of ongoing resolution negotiations. The $75,000 loan from the creditor-related individual was repaid on May 6, 2013.

In addition, we were unable to repay our 14% senior promissory notes of approximately $1.8 million on their maturity date of April 15, 2013. However, prior to June 30, 2013, we completed agreements to extend the maturity date to April 15, 2014, for approximately $1.7 million of the notes. We are currently in negotiations with the remaining holders.

On May 3, 2013, we entered into a Senior Secured Revolving Credit Facility Agreement that will allow us to borrow up to $5,000,000 to fund our general working capital needs. On the closing date, our current maximum allowable amount to borrow was $1,000,000. Increased borrowing amounts above the $1 million are subject to the sole and absolute discretion of the lender. Our initial draw on the credit facility occurred May 3, 2013 in the amount of approximately $884,000, which represents an initial draw of $1 million less transaction expenses. As of August 8, 2013, our current outstanding balance on the credit facility is approximately $800,000 and there is currently no availability to draw additional funds on the credit facility. The credit facility is guaranteed by the current and future assets of CompCare and its subsidiaries, with the exception of our Puerto Rico subsidiary. Borrowings under the credit facility will bear interest at an annual rate of 12%, payable weekly. The credit facility will mature on November 3, 2013. The Agreement contains financial covenants such as, but not limited to, minimum revenues, positive earnings before interest, tax, depreciation and amortization expenses, and loan-to-value ratio. The Agreement also specifies events of default and related remedies, including acceleration and increased interest rates following an event of default.

Loans under the credit facility will be evidenced by a Revolving Convertible Promissory Note. In the event of a default by the Company, the lender may convert all or any portion of the outstanding principal, accrued but unpaid interest and other sums payable under the Note into shares of our common stock at a price equal to (i) the amount to be converted, divided by (ii) 85% of the lowest daily volume weighted average price of our common stock during the five business days immediately prior to the conversion date. The Note or any portion thereof may also be converted in a likewise manner with the consent of the Company.

As consideration for investment banking and advisory services provided to us by the lender, we paid a fee to the lender in the form of 1,470,588 restricted shares of our common stock, which in accordance with the terms of the Agreement, was equivalent to $125,000. The Agreement specifies that if the lender has not realized $125,000 in cash proceeds from the sale of the shares within one year following the Agreement date, we will issue to the lender additional shares of our common stock such that upon lender’s sale of such additional shares, lender may realize $125,000 in cash proceeds. Alternatively, one year after the Agreement date, the lender may require us to redeem any shares that remain in its possession for cash equal to $125,000 less proceeds realized by the lender on previous sales of shares of our common stock. Should the lender realize $125,000 of proceeds without selling all shares, the remaining shares will be returned to us.

The ability of the lender, at its sole discretion, to redeem all or a portion of the shares constitutes a put option. Although the put option is not eligible for settlement until one year after the Agreement date, if it were settled as of June 30, 2013, it would require us to pay the lender $125,000. The following settlement amounts would result from $.01 changes in our stock price below and above the $0.085 per share price at which the initial quantity of shares were issue to the lender, assuming settlement after one year:

In the foregoing table, at a stock price of $.075 and below, the lender would receive cash or additional shares of stock, but not both.

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

The maximum amount that we potentially would be required to pay to redeem the shares issued to the lender is $125,000.

We were also unable to repay a $1 million loan from a related party when due May 8, 2013.

In July 2013, a 10%, $50,000 promissory note that had matured May 31, 2013 was repaid.

NOTE 4 LONG TERM DEBT

In June 2013, a 14%, $100,000 note payable matured and was renewed with the same terms until December 2014.

As of June 30, 2013, we were in payment default of $140,000 in principal related to a promissory note requiring monthly $10,000 principal reductions. The note holder has not provided the Company with formal notice of default.

NOTE 5 CONTINGENCIES

Going concern uncertainty:

At June 30, 2013, we had a working capital deficiency of approximately $25.3 million and a stockholders’ equity deficiency of approximately $25.2 million resulting primarily from a history of operating losses and costs of capital. As of June 30, 2013, past due principal and interest totaled approximately $6.0 million, of which $4.7 million was owed to a related party who had not provided the Company with formal notice of default. As a result of these conditions, our ability to continue as a going concern will be dependent upon the success of management’s plans, as set forth in the following paragraph, and is subject to significant uncertainty. Except for consideration in determining the valuation allowance for deferred tax assets from net operating loss carryforwards (Note 8), the accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Additional Financing

Although our existing capital may not be sufficient to meet our cash needs, we expect to be able to sustain current operations over the near term with our new Senior Secured Revolving Credit Facility, existing customer contracts, the addition of new pharmacy management contracts that we are close to obtaining through our marketing efforts, the collection of receivables, and the extension of vendor payments. However, we will need additional financing in the future and we will continue to explore various alternative sources of financing. Nevertheless, there can be no assurance that we will be able to find such financing in amounts or on terms acceptable to us, if at all, or that we will be able to achieve or sustain profitable operations and positive operating cash flows in the near term. Our ability to achieve our business objectives and continue as a going concern for a reasonable period of time is dependent upon the success of our plans.

Concentration, major customer contract:

We currently provide behavioral health services on an at-risk basis to approximately 37,000 members of a health plan providing Medicare benefits. This contract accounted for 46.0%, or approximately $1.0 million, of our revenue for the six months ended June 30, 2013. This contract is for a three-year period effective January 1, 2012, and may be terminated by either party with 90 days written notice.

Legal matters:

Aside from the litigation described below, as of the date of this report, we are not currently involved in any legal proceeding that we believe would have a material adverse effect on our business, financial condition or operating results.

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

Management believes that it has established a provision for legal expenses that it believes is adequate for the estimated probable minimum losses, including legal defense costs, to be incurred from these matters.

NOTE 6 – FAIRVALUEOFFINANCIALINSTRUMENTS

Fair Value Measurements - The carrying amounts of cash, accounts receivable and accounts payable approximate their estimated fair value due to the short-term nature of these instruments. Since our other financial liabilities are not traded in an open market, we generally use a present value technique, which is a level 3 input, as defined in generally accepted accounting principles,GAAP, to measure the estimated fair value of these financial instruments, except for valuing stock options and warrants (see Note 7 below). The rate used for discounting expected cash flows is a risk-free rate adjusted for systematic and unsystematic risk.

The carrying amounts of long-term debt and estimated fair values of these financial instruments (all are liabilities)the attached warrants at JuneSeptember 30, 2013,2020 and December 31, 2019 are as follows (in thousands):follows:

Due

During the nine-month period ended September 30, 2020, there have been 12 additional convertible notes issued totaling $628,540. During the nine-month period ended September 30, 2020, 56 convertible notes totaling $3,802,213 plus accrued interest was converted to the inherent nature of related party transactions, we have not attempted to estimate the fair value of liabilities payable to related parties of the Company. As such, related party notes payable with a carrying value of $3,000,000 are excluded from the table above.

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

We may be obligated to issue shares under a redemption provision within the Revolving Credit Facility (see Note 3). The redemption provision constitutes a put option for which we calculated a fair value at the issuanceCost of the Revolving Credit FacilityRevenues - Costs of services consist of supplies and recorded the value as a component of other accrued expenses on our balance sheet. We valued the put option using the Black Scholes options pricing model, a level 3 input, using a risk free interest rate, estimated volatility of our stock price, an estimated term, and expected dividend yield. At each reporting date, we revalue the put option using the same pricing model.

NOTE 7 – EQUITY INSTRUMENTS

Our Series C preferred stock is currently convertible into common stock at the rate of approximately 316.28 common shares for each share of Series C preferred, adjustable for any dilutive issuances of common occurringoperating expenses. Supplies are recognized in the future. Series C preferred shares vote withperiod in which a patient receives the common stockholders on an as-converted basis. The shares are nonparticipating except that dividends, when declared by our Board of Directors on the common stock, must be paid on the Series C stock on an as-converted basis before any dividends are paid on our common stock. The Series C is also cumulative with respect to dividends on common stock and junior series of preferred stock. Other significant rights and preferences of the Series C preferred include:supplies.

We also have a class of convertible preferred stock, Series D,leases. See Notes 10 and 11 within the financial statement for which 7,000 shares are authorized and 250 shares were issued and outstanding as of June 30, 2013. The shares, which were granted in January 2012, do not vest until the tenth anniversary of the grant date. Such shares were issued in exchange for the cancelation of 120 previously granted warrants to purchase Series D shares. Once vested, a Series D preferred share will be convertible at any time into 100,000 shares of common stock, subject to adjustment in the event of any common stock dividend, split, combination thereof or other similar recapitalization, without additional consideration. Prior to vesting and thereafter, each Series D convertible preferred share is entitled to all voting, dividend, liquidation and other rights accorded a share of Series D convertible preferred stock. As to dividends, the Series D stock is noncumulative. If a dividend is declareddisclosure on the common stock, each share of Series D stock is entitled to receive a dividend equal to 50% of the dividend declared for the common stock as if the Series D stock had been converted. Despite their nonvested status, voting rights of each share nevertheless consist of the right to cast the number of votes equal to those of 500,000 shares of common stock. Unless otherwise required by applicable law, holders of shares of Series D have the right to vote together with holders of common stock as a single class on all matters submitted to a vote of our stockholders. At June 30, 3013, approximately $3.2 million of compensation expense remained to be recognized over the next 8.5 years related to the Series D shares.

We may periodically issue shares of common stock as payment for services, interest and debt. During the six months ended June 30, 2013, we issued approximately 2.9 million shares of common stock to consultants, vendors, and creditors in lieu of cash payment.

Our common stock activity for the six months ended June 30, 2013 and 2012 is summarized below:

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

STOCK INCENTIVE COMPENSATION PLANSIncome Taxes

WARRANTS:

During the six months ended June 30, 2013, we issued to note holders and consultants warrants to purchase an aggregate of 3.7 million shares of our common stock. The warrants were immediately exercisable at prices ranging from $0.15 to $0.25 and had terms of from two to three years. We recognized approximately $109,000 and $165,000, respectively, of compensation costs related to warrants during the three and six months ended June 30, 2013. Total unrecognized compensation costs related to warrants as of June 30, 2013 was approximately $1,000 which is expected to be recognized over a weighted-average period of six months. The total fair value of warrants vested during the three and six months ended June 30, 2013 was approximately $108,000 and $167,000.

A summary of our warrant activity for the three and six months ended June 30, 2013 and 2012 follows:

OPTIONS:

As of June 30, 2013, there were a total of 44,518,000 options available for grant and 6,443,000 options outstanding, 6,116,334 of which were exercisable, under our employee stock option plans.

As of June 30, 2013, there were 801,668 shares available for option grants and 100,000 options outstanding under the non-qualified directors’ plan, 80,000 of which were exercisable.

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

A summary of our option activity for the three and six months ended June 30, 2013 and 2012 follows:

Total recognized compensation costs during the three and six months ended June 30, 2013 were approximately $8,000 and $23,000, respectively. As of June 30, 2013, there was approximately $35,000 of unrecognized compensation cost related to options expected to be recognized over a weighted-average period of 10 months. We might have recognized approximately $5,000 and $8,000, respectively, of tax benefits attributable to stock-based compensation expense recorded during the three and six months ended June 30, 2013. However, this potential benefit was fully offset by our valuation allowance due to the aforementioned significant uncertainty of future realization. The total fair value of options vested during the three and six months ended June 30, 2013 was approximately $20,000 and $30,000, respectively.

The following table lists the assumptions utilized in applying the Black-Scholes valuation model for options and warrants.

NOTE 8 – INCOMETAXES

- We are subject to the income tax jurisdictions of the U.S. and multiple state tax jurisdictions. OurHowever, our provisions for income taxes for the three2020 and six months ended June 30, 2013 and 2012, consist solely of certain2019 include only state taxes.

At June 30, 2013, we have federal net operating loss carryforwards of approximately $35.5 million, the deductibility of $29.1 million of which is available but subject to limitations under Section 382 of the Internal Revenue Code. Approximately $361,000 of any net operating losses prior to the January 2009 ownership change (“the earlier change”) can be used to offset taxable income annually. In addition, we can offset our taxable income each year by approximately $274,000 of the net operating losses which incurred between the earlier change and the August 2011 ownership change. We estimate that 59.6% of the $29.1 million pre-change losses will expire and be unavailable to offset our future taxable income.

COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES

Management has evaluated our tax positions taken or to be taken on income tax returns that remain subject to examination (i.e.(i.e., tax years 20092017 and thereafter federally, and earlier for certain other jurisdictions)federally), and has concluded that there arehave been no uncertain tax positions as(as defined in generally accepted accounting principles,GAAP) taken that require recognition or disclosure in the consolidated financial statements. In the event of any income tax-related interest or penalties are incurred, they would be included in general and administrative expense.

Concentration of Credit Risk - The Company maintains its cash and cash equivalents with a financial institution which management believes to be of high credit quality. Their accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 in coverage. The Company had an uninsured cash balance of $595,340 as of September 30, 2020 and no uninsured cash balances as of December 31, 2019.

Stock Options and Warrants - We grant stock options and warrants to our employees, non-employee directors, note holders and certain consultants allowing them to purchase our common stock pursuant to approved terms. The estimated value of the warrants issued with debt instruments is recorded as a discount on notes payable and amortized as interest expense over the term of the notes using the effective interest method.

3. CURRENT ASSETS

NOTE 9 – PERSHAREDATA

ForCash and Restricted Cash - On April 23, 2020, the periods presented,Company’s wholly owned subsidiary, Pharmacy Value Management Solutions, Inc. (‘PVMS”) received a loan in the principal amount of $1,243,840 from Mechanics Bank (the “Bank”) pursuant to the Paycheck Protection Program “PPP”. On May 22, 2020, the Bank notified PVMS that the loan was in default as a result of false statements made in the loan application. PVMS disputes the Bank’s claim and believes that it made no false statements in it’s PPP loan application. The statements relate to the number of employees and the monthly payroll amounts. As a result, PVMS’ account with Mechanics Bank has been frozen with a balance of $845,340. Both PVMS and the Bank are seeking guidance from the Small Business Administration as to how to resolve this dispute. Until resolved, it is likely that this account will remain frozen.

Cash and restricted cash consists of the following table sets forthat September 30, 2020 and December 31, 2019: