- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter Ended December 31, 1997
Commission File Number 0-11895
KUALA HEALTHCARE, INC.
Formerly known as Continental Health Affiliates, Inc.
(Exact name of registrant as specified in its charter)
Delaware 22-2362097
(State of other jurisdicti(I.R.S. Employer Identification Number)
incorporation or organization)
910 Sylvan Avenue, Englewood Cliffs, NJ 07632
(Address of principal executive offices)
(201) 567-4600
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such short period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of February 11, 1998, the Registrant had outstanding 10,222,844
shares of its $.02 par value Common Stock.
- -------------------------------------------------------------------------------
<PAGE>
KUALA HEALTHCARE, INC.
Index
Part I - Financial Information:
Page
Item 1
Consolidated Balance Sheets at December 31, 1997 (Unaudited)
and June 30, 1997...................................................... 3
Consolidated Statements of Operations (Unaudited) for the three months
ended December 31, 1997 and 1996....................................... 4
Consolidated statements of Operations (Unaudited) for the six months
ended December 31, 1997 and 1996........................................5
Consolidated Statements of Cash Flows (Unaudited) for the six months
ended December 31, 1997 and 1996...................................... 6 - 7
Notes to Unaudited Consolidated Financial Statements.................... 8 - 10
Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations..................................................11- 14
Part II - Other Information................................................ 15
Signatures........................................................ 16
<PAGE>
<TABLE>
<CAPTION>
KUALA HEALTHCARE, INC.
Consolidated Balance Sheets
(Dollars in thousands)
December 31, June 30,
1997 1997
---- ----
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents..............................................................$ 1,034 $ 3,796
Patients' funds........................................................................ 150 188
Accounts receivable, net of allowances for uncollectible accounts
of $3,854 and $4,252................................................................ 13,203 13,346
Inventories............................................................................ 1,797 1,861
Deferred income taxes.................................................................. 702 702
Prepaid expenses and other current assets.............................................. 1,442 803
------------ -----------
Total current assets............................................................... 18,328 20,696
Property and equipment, at cost, net of accumulated depreciation
and amortization of $5,667 and $4,916.................................................. 46,907 46,991
Goodwill, net of accumulated amortization................................................. 132 139
Other assets.............................................................................. 4,014 3,524
------------ -----------
Total assets.......................................................................$ 69,381 $ 71,350
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings..................................................................$ 70 $ 105
Current portion of long term debt...................................................... 3,939 5,686
Income taxes payable................................................................... 405 437
Accounts payable....................................................................... 9,720 9,696
Other current liabilities.............................................................. 3,581 4,260
----------- -----------
Total current liabilities.......................................................... 17,716 20,184
Long-term debt, net of current portion ................................................... 41,582 41,129
Mandatorily redeemable preferred stock (includes $730 current portion).................... 1,552 1,989
----------- -----------
Total liabilities.................................................................. 60,850 63,302
=========== ===========
Minority interest in subsidiary ........................................................ 2,636 2,424
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.02 par value; $100 liquidation preference; 1,000,000
shares authorized; 13,884 shares outstanding ........................................ 1 1
Series A 11% Convertible Preferred stock $.02 par value, $1,000 liquidation
preference, 34 shares outstanding.................................................... 34 34
Common stock, $.02 par value; 15,000,000 shares authorized; 10,222,844
and 10,119,101 shares outstanding ................................................... 208 206
Additional paid-in capital............................................................. 23,590 23,401
Accumulated deficit.................................................................... (17,938) (18,018)
----------- ----------
Total stockholders' equity......................................................... 5,895 5,624
------------ ----------
Total liabilities and stockholders' equity.........................................$ 69,381 $ 71,350
============ ==========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
KUALA HEALTHCARE, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
Three Months Ended December 31,
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
Revenues:
Nursing home services.................................................................$ 8,720 $ 11,035
Infusion therapy and other medical services........................................... 7,584 6,724
----------- -----------
Total revenues............................................................. 16,304 17,759
------------ -----------
Personnel.......................................................................... 7,035 8,794
Medical and nutritional product.................................................... 4,100 2,971
Health care and lodging............................................................ 1,919 2,387
Selling, general and administrative................................................ 1,536 2,011
Provision for uncollectible accounts............................................... 153 333
Depreciation and amortization...................................................... 408 586
----------- -----------
Total operating expenses................................................... 15,151 17,082
------------ -----------
Income from operations..................................................... 1,153 677
Interest and dividend income.......................................................... 16 26
Interest and other financing costs.................................................... (1,266) (1,441)
Other income (expense), net........................................................... 159 (74)
Minority interest in earnings of subsidiary........................................... (70) (118)
----------- ------------
Income (loss) before income taxes, extraordinary gains....................... (8) (930)
Provision for income taxes............................................................ 115 199
----------- -----------
Income (loss) before extraordinary gains..................................... (123) (1,129)
------------ ------------
Extraordinary gains................................................................... 150 1,175
----------- -----------
Net income................................................................... 26 46
Preferred dividends................................................................... -- (60)
----------- -----------
Net income available to common shareholders................................$ 26 $ (14)
=========== ===========
Income (loss) per share:
Basic
Income (loss) before extraordinary gains.......................................$ (.01) $ (.012)
Extraordinary gains............................................................ 0.01 0.12
----------- -----------
Net income available to common shareholders................................$ 0.00 $ 0.00
=========== ===========
Diluted
Income (loss) before extraordinary items.......................................$ (.01) (0.12)
Extraordinary gains............................................................ 0.01 .12
----------- -----------
Net income available to common shareholders................................$ 0.00 $ 0.00
=========== ===========
Basic weighted average number of common shares.................................... 10,121,849 9,395,379
Diluted weighted average number of common shares.................................. 10,591,689 9,941,012
See accompanying notes to consolidated financial statements
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
KUALA HEALTHCARE, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
Six Months Ended December 31,
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
Revenues:
Nursing home services.................................................................$ 17,975 $ 23,017
Infusion therapy and other medical services........................................... 14,586 13,505
------------ -----------
Total revenues............................................................. 32,561 36,522
------------ -----------
Personnel.......................................................................... 14,016 17,570
Medical and nutritional product.................................................... 7,745 6,094
Health care and lodging............................................................ 4,157 4,951
Selling, general and administrative................................................ 3,283 3,665
Provision for uncollectible accounts............................................... 268 582
Depreciation and amortization...................................................... 770 1,077
----------- -----------
Total operating expenses................................................... 30,239 33,939
------------ -----------
Income from operations..................................................... 2,322 2,583
Interest and dividend income.......................................................... 32 54
Interest and other financing costs.................................................... (2,551) (3,160)
Other income (expense), net........................................................... 490 65
Minority interest in earnings of subsidiary........................................... (136) (231)
----------- ------------
Income (loss) before income taxes, extraordinary gains....................... 157 (689)
Provision for income taxes............................................................ 227 388
----------- -----------
Income (loss) continuing operations before extraordinary gains............... (70) (1,077)
------------ ------------
Extraordinary gains................................................................... 150 1,175
----------- -----------
Net income................................................................. 80 98
Preferred dividends................................................................... (35) (95)
----------- -----------
Net income available to common shareholders................................$ 45 $ 3
=========== ===========
Income (loss) per share:
Basic
Income (loss) before extraordinary gains.......................................$ (0.01) $ (0.12)
Extraordinary gains............................................................ 0.01 0.12
----------- -----------
Net income available to common shareholders................................$ 0.00 $ 0.00
=========== ===========
Diluted
Income (loss) before extraordinary gains.......................................$ (0.01) $ (0.12)
Extraordinary gains............................................................ 0.01 .12
----------- -----------
Net income available to common shareholders................................$ 0.00 $ 0.00
=========== ===========
Basic weighted average number of common shares........................................ 10,121,849 9,341,797
Diluted weighted average number of common shares..................................... 10,604,288 9,887,430
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
KUALA HEALTHCARE, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
Six Months Ended December 31,
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
Operating activities:
Net income.......................................................................$ 80 $ 98
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization expense...................................... 770 1077
Amortization of deferred financing costs................................... 86 145
Provision for uncollectible accounts....................................... 268 582
Amortization of deferred income taxes...................................... -- 63
(Gain) loss on translation of foreign currency debt........................ -- (80)
Minority interest.......................................................... 136 231
Increase (decrease) in cash from changes in:
Patient funds............................................................ 38 4
Accounts receivable...................................................... (125) (2969)
Inventories.............................................................. 64 66
Prepaid expenses and other current assets................................ (649) (587)
Other assets............................................................. (442) 69
Taxes payable............................................................ (31) --
Accounts payable......................................................... 24 823
Other current liabilities................................................ (679) 553
Other liabilities........................................................ -- (5)
------------- --------------
Net cash (used in) operating activities...................................... (460) 70
------------- --------------
Investing activities:
Investment in Bach Pharmacy ..................................................... 75 --
Expenditures for property and equipment ......................................... (592) (293)
------------- --------------
Net cash used in investing activities........................................ (517) (293)
------------- --------------
Financing activities:
Conversion of trade payables into notes.......................................... -- 904
Payment on mandatorily redeemable preferred stock................................ (437) --
Payments on debt................................................................. (1,329) (2,207)
Debt to equity conversion........................................................ -- 474
Net proceeds from exercise of common stock options............................... 16 19
Payment of preferred dividends................................................... (35) (48)
------------- --------------
Net cash (used in ) provided by financing activities......................... (1,785) (858)
-------------- ---------------
Net (decrease ) increase in cash and cash equivalents..............................$ (2,762) $ (1,081)
Cash and cash equivalents, beginning of period..................................... 3,796 2,900
--------------- ---------------
Cash and cash equivalents, end of period...........................................$ 1,034 $ 1,819
=============== ===============
Supplemental disclosure of cash flow data:
Interest paid.................................................................$ 1,158 $ 2,831
=============== ===============
Income taxes paid.............................................................$ 105 $ 53
============== ===============
Non cash investing and financing activity:
Debt to equity conversion.....................................................$ --- $ 474
Dividend conversion...........................................................$ --- $ 47
Stock issued in connection with investment....................................$ 210 $ ---
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
KUALA HEALTHCARE, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. The Company
The Company's operations consist primarily of nursing home and assisted
living services, infusion therapy and other medical services. Nursing home
and assisted living services include the ownership, leasing, operation and
management of nursing homes and assisted living facilities. Infusion
therapy and other medical services include enteral and other medical
services, primarily for patients in nursing homes, and intravenous and
other infusion therapies for patients at home and in nursing homes.
The Company is subject to certain risks and uncertainties as a result of
changes that could occur in the healthcare industry, including Medicare and
Medicaid reimbursement rates.
On December 1, the Company acquired a 75% interest in a limited liability
company to provide institutional pharmacy services (LLC). The minority
interest is held by Bach's Drug Store, a Hackettstown, New Jersey
Corporation ("Bach's") which contributed its existing business to the LLC.
The Company paid $210,000 in Kuala stock to a principal of Bach's in
consideration for a four-year employment agreement (at $120,000/year) with
the pharmacist of Bach's (the manager of the LLC) and (b) a four-year lease
with the shareholders of Bach's to leasing the premises (at $18,000/year)
where the LLC operates. The Company has guaranteed the employment and lease
agreements.
2. Basis of Presentation
The consolidated financial statements include the accounts of Kuala
Healthcare, Inc, ("Kuala") and its subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Kuala owns 58% of the common stock of Infu-Tech, Inc. ("Infu-Tech"); 42% of
the common stock of Infu-Tech is publicly traded. The minority interest in
the consolidated financial statements represents the minority stockholders'
proportionate share of equity in Infu-Tech.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments, consisting of normal recurring accrual adjustments,
considered necessary for a fair presentation have been included.
Operating results for the six month period ended December 31, 1997, are not
necessarily indicative of the result that may be expected for year end June
30, 1998.
These financial statements and notes should be read in conjunction with the
Company's audited financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1997.
3. Cash and Cash Equivalents
Cash and cash equivalents at December 31, 1997 and June 30, 1997 includes
$93,000 and $512,000 respectively, held by Infu-Tech. A management and
non-competition agreement between Continental and Infu-Tech, which, as
extended, expires September 30, 2000, prohibits Infu-Tech from lending
money to (or borrowing money from) Kuala.
The Company classifies all highly liquid investments with maturities of
three months or less when purchased as cash equivalents.
4. Earnings Per Share
Options excluded from the computation of diluted earnings per share since
such options would not have a diluted effect as the exercise price is above
the average market price for the period were as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Options excluded for the three month period ending...................... 305,111 6,000
December 31,
Options excluded for the six month period ending
December 31,......................................................... 219,668 6,000
</TABLE>
5. Subsequent Event
On January 27, 1998 shareholders approved was granted for a one-for three
reverse split of its common stock. In conjunction with the reverse split,
the Company has changed its name to Kuala Healthcare, Inc. and will be
listed on the Nasdaq Small Cap market under the symbol "KUAL".
Common share and per share amounts in the financial statements do not
reflect the impact of the reverse stock split. If restated for the reverse
split, figures in this filing for the six month periods would be as
follows:
Weighted average number of common shares and common share equivalents
outstanding:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
As reported
Basic........................................................ 10,121,849 9,341,797
Diluted...................................................... 10,604,288 9,887,430
Split Basis
Basic........................................................ 3,373,949 3,199,885
Diluted...................................................... 3,534,762 3,295,810
Earnings per common share:
As reported
Basic
Income (loss) before extraordinary gains................ (.01) (0.12)
Extraordinary gains..................................... .01 .12
----------- -----------
Net income available to common shareholders 0.00 0.00
=========== ===========
Diluted
Income (loss) before extraordinary gains................ (.01) (.12)
Extraordinary gains..................................... .01 .12
----------- -----------
Net income available to common shareholders 0.00 0.00
=========== ============
Split Basis
Basic
Income (loss) before extraordinary gains................ (.02) (.34)
Extraordinary gains..................................... .04 .37
Preferred dividends..................................... (.00) (.03)
----------- -----------
Net income available to common shareholders .02 .00
=========== ============
Diluted
Income (loss) before extraordinary gains................ (.02) (.33)
Extraordinary gains..................................... .04 .36
Preferred dividends..................................... (.01) (.03)
----------- -----------
Net income available to common shareholders 0.01 0.00
=========== ===========
</TABLE>
<PAGE>
KUALA HEALTHCARE, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto.
RESULTS OF OPERATIONS
Three Months ended December 31, 1997 Compared with Three Months Ended
December 31, 1996
Total revenues were $1,455,000, or 8% lower for 1997 compared with 1996,
primarily due to the sale of two facilities whose revenues were included in the
prior period and slightly lower occupancy at the existing facilities.
Infusion therapy and other medical services revenues increased by $860,000 or
13%, from $6,724,000 in 1996 to $7,584,000 in 1997.
Personnel costs decreased by $1,759,000, or 20%. The reduction is primarily
attributable to the sale of two facilities in June 1997, together with overall
reduction in staff in the nursing home division.
Costs of medical and nutritional products sold to patients and other customers
increased by $1,129,000 or 38%, from $2,971,000 in 1996 to $4,100,000 in 1997.
As a percentage of infusion therapy and other medical services revenues, medical
and nutritional product costs were 54% in 1997 and 44% in 1996. The increase in
the medical and nutritional product costs as a percentage of sales is primarily
attributable to Infu-Tech's increased revenues associated with Ceredase, a high
cost drug, a capitation agreement, and margin reductions from operating in a
managed care environment.
Health care and lodging expenses, which are incurred in connection with nursing
home services, decreased by $468,000 or 20%, primarily as a result of the sale
of the two facilities.
Selling, general and administrative costs decreased by $475,000 or 24% as a
result of the sale of the two facilities partially offset by increased costs at
Infu-Tech.
The provision for uncollectible accounts was 1% of revenues in 1997 and 2% in
1996.
Other income, net of $159,000 resulted from the write-off of accounts payable
and the re-evaluation of certain accruals. Other expense of $74,000 in 1996
consisted of amortization of deferred income of $32,000 and an unrealized
foreign currency translation gain of $3,000 offset by $115,000 of legal
settlements.
Minority interest in earnings of subsidiary of $70,000 in 1997 represents the
portion of the net income of Infu- Tech and Bach's Pharmacy Services allocable
to minority stockholders.
The provision for income taxes of $115,000 in 1997 and $199,000 in 1996 reflects
a full tax charge for Infu- Tech, a 58% owned subsidiary which files its own
federal tax return.
The Company has prepaid debt of approximately $300,000 and received a $150,000
credit, which was recorded as an extraordinary gain during the quarter.
The net income available to common shareholders in 1997 was $26,000 or $.00
cents per share compared to a net loss applicable to common shareholders in 1996
of $14,000 or $.00 cents per share.
Six Months ended December 31, 1997 Compared with Six Months Ended December
31, 1996
Total revenues were $3,961,000, or 11% lower for 1997 compared with 1996,
primarily due to the sale of two facilities whose revenues were included in the
prior period and slightly lower occupancy at the existing facilities.
Infusion therapy and other medical services revenues increased by $1,081,000 or
8%, from $13,505,000 in 1996 to $14,586,000 in 1997.
Personnel costs decreased by $3,554,000, or 20%. The reduction is primarily
attributable to the sale of two facilities in June 1997, together with overall
reduction in staff in the nursing home division.
Costs of medical and nutritional products sold to patients and other customers
increased by $1,651,000 or 27%, from $6,094,000 in 1996 to $7,745,000 in 1997.
As a percentage of infusion therapy and other medical services revenues, medical
and nutritional product costs were 53% in 1997 and 45% in 1996. The increase in
the medical and nutritional product costs as a percentage of sales is primarily
attributable to Infu-Tech's increased revenues associated with Ceredase, a high
cost drug, a capitation agreement, and margin reductions from operating in a
managed care environment.
Health care and lodging expenses, which are incurred in connection with nursing
home services, decreased by $794,000 or 16%, primarily as a result of the sale
of the two facilities.
Selling, general and administrative costs decreased by $382,000 or 10% as a
result of the sale of the two facilities partially offset by increased costs on
Infu-Tech.
The provision for uncollectible accounts was 1% of revenues in 1997 and 2% in
1996.
Other income , net, of $490,000 resulted from the write-off of accounts payable
and the re-evaluation of certain accruals. Other income, net of $65,000 in 1996
consisted of amortization of deferred income of $32,000 and an unrealized
foreign currency translation gain of $80,000 offset by $115,000 of legal
settlements.
Minority interest in earnings of subsidiary of $136,000 represents the portion
of the net income of Infu-Tech and Bach's Pharmacy Services allocable to
minority stockholders. Minority interest in earnings of subsidiary of $231,000
represents the portion of net income of Infu-Tech allocable to minority
stockholders.
The provision for income taxes of $227,000 in 1997 and $388,000 in 1996 reflects
a full tax charge for Infu- Tech, a 58% owned subsidiary which files its own
federal tax return.
The Company has prepaid debt of approximately $300,000 and received a $150,000
credit, which was recorded as an extraordinary gain during the quarter.
The net income available to common shareholders in 1997 was $45,000 or $.00
cents per share compared to net income available to common shareholders in 1996
of $3,000 or $.00 cents per share.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had stockholders' equity of $5,895,000 and
total liabilities of $60,850,000. At December 31, 1997 debt amounted to
$47,073,000 of which approximately $35,000,000 relates to mortgages on three of
the nursing homes.
Debt also includes a mortgage secured by a facility of $2,196,000 due October 1,
1997. This mortgage is being extended while refinancing is completed.
Other debt included SFr 600,425 (approximately $411,000) principal amount of 6%
Swiss franc denominated bonds which remain unpaid although they matured on June
27, 1995 (the "Bonds"); SFr 619,500 (approximately $424,000) principal amount of
8% Swiss franc denominated bonds due June 27, 1998; $1,213,000 principal amount
of 8% notes due 1999; and $3,400,000 principal amount of 6% notes due 2003.
When the Bonds matured on June 27, 1995, SFr 2,900,000 (approximately
$2,525,000) principal amount, together with accrued interest of SFr 174,000
(approximately $152,000), was outstanding. Between June 30, 1995 and June 30,
1996, the Company acquired SFr 2,164,000 principal amount of Bonds, including
accrued interest on those Bonds, for a total of SFr 1,122,375 and $315,000 plus
a SFr 619,500 note maturing in June 1998. As of December 31, 1997 the Company
had acquired an additional SFr 110,000 principal amount of bonds (with interest)
for $88,500.
The Company's cash and cash equivalents balance decreased from $3,796,000 at
June 30, 1997 to $1,034,000 at December 31, 1997. Included in the December 31,
1997 balance is $93,000 held by Infu-Tech. A management and non-competition
agreement with Infu-Tech, which, as extended, expires September 30, 2000,
prohibits Infu-Tech from lending money to (or borrowing money from) the
remainder of the Company.
The Company in total used $460,000 of cash in operating activities.
At December 31, 1997, the balance in net accounts receivable for Infu-Tech was
7% higher than the balance at June 30, 1997. Infu-Tech's net accounts receivable
has increased to 106 days sales at December 31, 1997, primarily as a result of
continued slow payments from Medicare and managed care companies. Medicare
payments have been delayed due to changes in reimbursement policies, while
managed care companies have experienced delays in processing payments due to
their higher volume of claims.
The Company has no arrangements under which it can make borrowings. At December
31, 1997, the Company had working capital of $612,000. Excluding Infu-Tech,
which had working capital of $5,395,000, the Company had a working capital
deficit of $4,783,000. Further, at December 31, 1997, Infu-Tech's cash and cash
equivalents of $93,000 were $419,000 less than the balance of $512,000 at June
30, 1997.
During the six months ended December 31, 1997, the Company repaid $1,329,000 of
debt, redeemed $437,000 of mandatorily redeemable preferred stock and paid
preferred stock dividends of $35,000.
While the Company continues to experience cash flow constraints, it continues to
use a combination of operating cash flow and realization of assets into cash as
a means of meeting ongoing obligations. It has certain assets which can be
used for this purpose if needed.
<PAGE>
KUALA HEALTHCARE, INC.
Part II - Other Information
Item 1. Legal Proceedings
Presently, there are no pending material legal
proceedings other than as reported in the Company's Form
10-K for the year ended June 30, 1997.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A. Reports on Form 8-K during the quarter ended
December 31, 1997
----------------------------------------------
None
<PAGE>
KUALA HEALTHCARE, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Kuala Healthcare, Inc.
Date: February 17, 1998 /S/ JACK ROSEN
- ----------------------- --------------
Jack Rosen
Chairman and Director
(Chief Executive Officer)
Date: February 17, 1998 /S/ ALLISON K. ALLEN
- ------------------------ --------------------
Allison K. Allen
Principal Accounting Officer
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000354761
<NAME> KUALA HEALTHCARE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,034
<SECURITIES> 0
<RECEIVABLES> 17,057
<ALLOWANCES> 3,854
<INVENTORY> 1,797
<CURRENT-ASSETS> 18,328
<PP&E> 52,574
<DEPRECIATION> 5,667
<TOTAL-ASSETS> 69,381
<CURRENT-LIABILITIES> 17,716
<BONDS> 0
1,552
35
<COMMON> 208
<OTHER-SE> 5,895
<TOTAL-LIABILITY-AND-EQUITY> 69,381
<SALES> 32,561
<TOTAL-REVENUES> 32,561
<CGS> 7,745
<TOTAL-COSTS> 29,971
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 268
<INTEREST-EXPENSE> 2,551
<INCOME-PRETAX> 157
<INCOME-TAX> 227
<INCOME-CONTINUING> (70)
<DISCONTINUED> 0
<EXTRAORDINARY> 150
<CHANGES> 0
<NET-INCOME> 80
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
