-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A63yytDjxjBFrWyVayRv73YbW3oU00/02YvdH993+B14zJVcARQm50MuDI4EXK31 j+Y2RyYSOB5pBBQ3v2d1Ew== 0000354761-98-000002.txt : 19980218 0000354761-98-000002.hdr.sgml : 19980218 ACCESSION NUMBER: 0000354761-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980217 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KUALA HEALTHCARE INC CENTRAL INDEX KEY: 0000354761 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 222362097 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09255 FILM NUMBER: 98540960 BUSINESS ADDRESS: STREET 1: 900 SYLVAN AVE CITY: ENGLEWOOD CLIFFS STATE: NJ ZIP: 07632 BUSINESS PHONE: 2015674600 MAIL ADDRESS: STREET 1: 910 SYLVAN AVENUE CITY: ENGLEWOOD STATE: NJ ZIP: 07632 FORMER COMPANY: FORMER CONFORMED NAME: CONTINENTAL HEALTH AFFILIATES INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q FOR KUALA HEALTHCARE, INC. - -------------------------------------------------------------------------------- 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 $.02 par value Common Stock. - ------------------------------------------------------------------------------- KUALA HEALTHCARE, INC. Index Part I - Financial Information: Page Item 1 Consolidated Balance Sheets at December 31, 1997 (Unaudited) and June 30, 1997...................................................... 3 Consolidated Statements of Operations (Unaudited) for the three months ended December 31, 1997 and 1996....................................... 4 Consolidated statements of Operations (Unaudited) for the six months ended December 31, 1997 and 1996........................................5 Consolidated Statements of Cash Flows (Unaudited) for the six months ended December 31, 1997 and 1996...................................... 6 - 7 Notes to Unaudited Consolidated Financial Statements.................... 8 - 10 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations..................................................11- 14 Part II - Other Information................................................ 15 Signatures........................................................ 16
KUALA HEALTHCARE, INC. Consolidated Balance Sheets (Dollars in thousands) December 31, June 30, 1997 1997 ---- ---- (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents..............................................................$ 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
KUALA HEALTHCARE, INC. Consolidated Statements of Operations (Dollars in thousands, except per share amounts) Three Months Ended December 31, 1997 1996 ---- ---- (Unaudited) 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
4
KUALA HEALTHCARE, INC. Consolidated Statements of Operations (Dollars in thousands, except per share amounts) Six Months Ended December 31, 1997 1996 ---- ---- (Unaudited) 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
KUALA HEALTHCARE, INC. Consolidated Statements of Cash Flows (Dollars in thousands) Six Months Ended December 31, 1997 1996 ---- ---- (Unaudited) 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
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:
1997 1996 ---- ---- 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
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:
1997 1996 ---- ---- 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 =========== ===========
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. 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 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 EX-27 2 FDS --
5 0000354761 KUALA HEALTHCARE, INC. 1,000 6-Mos JUN-30-1998 JUL-01-1997 DEC-31-1997 1,034 0 17,057 3,854 1,797 18,328 52,574 5,667 69,381 17,716 0 1,552 35 208 5,895 69,381 32,561 32,561 7,745 29,971 0 268 2,551 157 227 (70) 0 150 0 80 .00 .00
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