SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 1998.
Commission file number: 0-11895
KUALA HEALTHCARE, INC.
FORMERLY NAMED CONTINENTAL HEALTH AFFILIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2362097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
910 Sylvan Avenue
Englewood Cliffs, N.J. 07632
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 567-4600
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
par value $.06
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of September 23, 1998 the aggregate market value of the voting stock held
by non-affiliates of the registrant was $13,384,207.
As of September 23, 1998, 3,409,732 shares of the registrant's common stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
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DIRECTORS
Served on
the Board of
Directors
Name Age Since
---- --- -----
Jack Rosen.................................. 52 1981
Joseph Rosen................................ 47 1981
Israel Ingberman............................ 52 1981
Joseph Giglio............................... 57 1981
Bruce Slovin................................ 62 1988
Carl D. Glickman............................ 72 1989
Jack Rosen has served as the chief executive officer (the President
or Chairman of the Board) and as a Director of the Company since its
incorporation in 1981 and of its subsidiaries from their respective dates of
incorporation, the first of which was in 1976. Mr. Rosen is also the President
and a Director of CompreMedx Corporation ("CompreMedx"), an 89.1%-owned
subsidiary of the Company, and the Chairman of the Board of Directors and
Chief Executive Officer of Infu-Tech, Inc. ("Infu-Tech"), a 59% owned
subsidiary of the Company. He first became involved in the health care field
in September 1971 when he became a director of Garden State Health Care Center
of East Orange, New Jersey. He is actively engaged, together with Joseph Rosen
and Israel Ingberman, who are officers and directors, and along with Jack
Rosen, are the three principal stockholders of the Company (the "Principal
Stockholders"), in a variety of enterprises, including real estate development
and hotel ownership (the "Rosen-Ingberman Enterprises"). Jack Rosen is the
brother of Joseph Rosen.
Joseph Rosen has served as a Vice President and as a Director of the
Company since its incorporation in 1981 and as a director and officer of all
its subsidiaries (including CompreMedx and Infu-Tech) from their respective
dates of incorporation. He became an Assistant Secretary of the Company in
March 1983. He first became involved in the health care field in October 1974
with the organization of Jayber, Inc., which operates a nursing home in West
Orange, New Jersey and now is a subsidiary of the Company. He is actively
engaged, together with the other Principal Stockholders, in the
Rosen-Ingberman Enterprises and with Israel Ingberman in nursing home
ownership and management ("R-I nursing homes"). He is the brother of Jack
Rosen.
Israel Ingberman has served as Secretary, Treasurer and as a Director
of the Company since its incorporation in 1981 and as a director and officer
of all its subsidiaries (including CompreMedx and Infu-Tech) from their
respective dates of incorporation. He first became involved in the health care
field in October 1974 with the organization of Jayber, Inc. He is actively
engaged, together with the other Principal Stockholders, in the
Rosen-Ingberman Enterprises and in the R-I nursing homes with Joseph Rosen.
Joseph M. Giglio has been a director of the Company since January
1983 and is also a Director of Infu- Tech. Since September 1996, he has been
serving as Executive Professor at the Graduate School of Business at
Northeastern University. Since December 1993, he has been serving as the
Chairman of Apogee Research, Inc., an infrastructure consulting firm. From
December 1993 until August 1994, he was the Senior Advisor to the First
Southwest Company. From April 1992 to November 1993, he was an Executive Vice
President of Smith Barney & Co. And from June 1991 to April 1992, he was a
Managing Director of that firm. From January 1990 to June 1991, he was the
President of Chase Municipal Securities, Inc., an affiliate of The Chase
Manhattan Bank, N.A. From August 1988 through December 1989, Mr. Giglio was a
Senior Vice President at Chase Securities, Inc. in the Municipal Finance
Division. For more than five years prior to joining Chase, Mr. Giglio was the
Senior Managing Director of the Public Finance Department at Bear Stearns &
Co., Inc. Mr. Giglio served as Chairman of the National Council on Public
Works Improvement, which released its final report, "Fragile Foundation," in
February 1988. Mr. Giglio chaired the U.S. Senate Budget Committee's Private
Sector Advisory Panel on Infrastructure Financing. He serves on the board of
directors of The Hudson Institute. Mr. Giglio has served as
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an Associate Professor of Finance at New York University. He is a graduate of
Rutgers University, and holds a Master of Public Administration degree from
New York University and a Master's degree in Business from Columbia
University.
Carl D. Glickman has been a director of the Company since August 1989
and is also a Director of Infu- Tech. Since 1953, he has been the president of
The Glickman Organization, a real estate ownership and management company. In
addition, Mr. Glickman is a director of Bear Stearns Companies, Inc. (an
investment banking company), Jerusalem Economic Corporation (an Israeli real
estate company), Alliance Tyre and Rubber Co. (an Israeli tire manufacturer),
Lexington Corporate Properties, Inc. (a real estate investment trust), and
Office Max, Inc. (an office supply retailer).
Bruce Slovin has been a Director of the Company since June 1988 and
is also a Director of Infu-Tech. Mr. Slovin is a graduate of Harvard Law
School and Cornell University. Since 1980, he has been president and a
director of MacAndrews & Forbes Group, Inc., an industrial holding company.
Since 1985, he has been president and a director of Revlon Group Incorporated,
a consumer products holding company. In addition, Mr. Slovin is a director of
Andrews Group Incorporated (industrial holding company), M&F Worldwide Corp.,
(producer of licorice extract and other flavoring agents) and Cantel
Industries, Inc. (distributor of medical equipment).
ITEM 11. EXECUTIVE COMPENSATION.
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The following table sets forth the compensation received during each
of the years ended June 30, 1998, 1997 and 1996, by the Company's chief
executive officer and its other executive officers whose annual salary and
bonus from the Company during fiscal 1998 totalled more than $100,000:
SUMMARY COMPENSATION TABLE
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Annual Compensation Long-Term Compensation
------------------------------------------------------------------
Awards Payouts
--------------------------
Other
Annual Restricted All Other
Compen- Stock Options/ LTIP Compen-
Name and Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($)* ($)* ($) ($) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Jack Rosen, Chairman, 1998 400,000 $792,100 100,000
President and Chief 1997 368,000 150,000 None None None None None
Executive Officer 1996 300,000 None --
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Israel Ingberman 3,333
Treasurer, Secretary 1998 150,000 None None None None
and President of TNS 1997 150,000 None None --
Nursing Homes, Inc. 1996* 150,000
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* Includes compensation paid by Infu-Tech
- -------------------------------------------------------------------------------
DIRECTORS' COMPENSATION
Since 1993, the directors have waived directors' fees (which, prior
to 1993, had been paid to directors who were not employees at the rate of
$10,000 plus $500 for each directors' meeting attended). Since 1994 Directors
have received options in consideration of their waiver of directors fees. In
January 1997 the Board of Directors approved the annual grant of options to
purchase 10,000 shares of the Company's common stock to each of the
independent directors. During February, 1998, the Compensation Committee
approved the grant of stock options to Joseph Rosen and Israel Ingberman to
purchase 10,000 common shares each (prior to the one-for-three reverse split
of its common stock).
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OPTION PLANS
The following table sets forth certain information with regard to
options granted during the year end June 30, 1998 to the Company's chief
executive officer and its other executive officers whose salary and bonus from
the Company during 1998 totalled more than $100,000:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
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Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term
- -----------------------------------------------------------------------------------------------------------------------------------
Percent of
Total
Number of Options/SARs
Securities Granted to
underlying Employees in Exercise or
option/SARs Fiscal Year Base Price Expiration
Name Granted (#) (%) ($/Sh) Date 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Jack Rosen 100,000 44 5.82 1/26/03 $160,800 $355,300
- -----------------------------------------------------------------------------------------------------------------------------------
Israel Ingberman 3,333(1) 1.5 7.98 01/15/08 16,700 42,400
===================================================================================================================================
The following table sets forth certain information with regard to
exercises of options and SARs during year end June 30, 1998 and options and
SARs held at June 30, 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
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Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options/SARs Options/SARs
at Fiscal Year-End* at Fiscal Year End
(#) ($)**
--------------------------------------------------------------------
Shares Value
Acquired on Realized Exercisable(E)/ Exercisable(E)/
Name Exercise (#) ($) Unexercisable(U) Unexercisable(U)
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Jack Rosen -- -- 166,667(E) $750,000(E)
100,000(U) 168,000(U)
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Israel Ingberman -- -- 0(E) 0(E)
3,333(U) 0(U)
===================================================================================================================================
* The Corporation has not granted any SARs.
** Based upon the amount by which the market price of the Company's
Common Stock on June 30, 1998 ($7.00 per share) exceeded the exercise
price of the options.
(1) Adjusted to give effect to a 1-3 reverse split in January 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the year ended June 30, 1998, the Company's Compensation
Committee reviewed and approved the compensation of the Chairman of the Board.
Compensation of the Company's senior executive officers, other than its
Chairman of the Board, was set by the Chairman of the Board.
Transactions between the Company and members of its Board of
Directors during fiscal 1998 were as follows:
Early in 1990 a dispute over management fees between the Company and
three nursing homes owned by the Principal Stockholders was resolved by the
nursing homes' agreeing to pay a total of $1,940,000 in satisfaction of all
their December 31, 1989 obligations to the Company. In early 1992, the
settlement agreement between the Company and the three nursing homes was
modified to provide that the then-existing balance of $1,046,000 would be paid
in sixteen equal quarterly payments of $76,000 each (which included interest
at 7 1/2%
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and principal) beginning June 15, 1992 and continuing through March 15, 1996.
The balances remaining on the modified settlement agreement at December 31,
1994 and 1993 (including accrued interest due to payment delinquencies) were
$839,000 and $783,000. In January 1995 the settlement agreement was further
modified to provide for a $227,000 principal and interest payment to be made
on or before March 30,1995 and the remaining balance of $626,000 to be paid in
twelve equal quarterly installments of $60,000 each (including interest at
8 1/2%) beginning July 1, 1995 and continuing through March 31, 1998. In June
1997, a credit of $300,000 was applied against the balance then due, because
the purchase price obtained by the Company for the sale of one of its
properties was enhanced by $300,000 due to the contemporaneous sale of a
property owned by the principal stockholders to the same buyer. The remaining
balance was paid prior to June 1998.
At June 30, 1998, the Company was owed a total of $246,000 from two
entities owned by the Principal Stockholders resulting from loans to the
entities from various corporations which now are subsidiaries of the Company,
but which were not owned by the Company when the loans were made.
During fiscal 1998, the Company (including its Infu-Tech subsidiary)
was charged $31,000 by a corporation owned by Jack Rosen for use of an
airplane owned by that corporation. The Company believes the rates it was
charged for use of that airplane were lower than those which would have been
available from an independent charter company for use of a similar airplane.
During fiscal 1998, Carl Glickman, a director of the Company and
Infu-Tech, was paid $54,000 by the Company for financial consulting fees.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- -------- ---------------------------------------------------------------
The following table contains information concerning the ownership of
the Company's Common Stock on September 30, 1998 by each person known to the
Company to be a beneficial owner of more than 5% of any class of the Company's
voting securities, by the Company's directors, by each of the executive
officers of the Company who was among the five most highly compensated
executive officers of the Company in 1998 and by directors and executive
officers as a group are as follows:
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Amount and Nature
Name and Address of
Title of Class Of Beneficial Owner Beneficial Ownership Percent of Class
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock Colonial Management Associates, Inc. 176,666 shares 5.2%
1 Financial Center
Boston, MA 02111
Common Stock U.S. Management, Inc. 180,392 shares 5.3%
129 South 8th Street
Brooklyn, NY 11211
Common Stock Private Opportunity Partners, II Ltd. 258,333 shares 7.6%
201 South Biscayne Blvd., Suite 2950
Miami, FL 33131
Common Stock Carl D. Glickman 36,000 shares (a) 1.1%
1140 Leader Building
526 Superior Avenue East
Cleveland, OH 44114
Common Stock Israel Ingberman 290,122 shares (a)(b)(c) 8.5%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Jack Rosen 573,398 shares (a)(b)(c) 16.8%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Joseph Rosen 310,941 shares (a)(b)(c) 9.1%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Bruce Slovin 45,333 shares (a) 1.3%
35 E. 62nd Street
New York, NY 10021
Common Stock Joseph M. Giglio 48,851 shares (a) 1.4%
4350 East West Highway, Suite 600
Bethesda, MD 20814
Common Stock All directors and executive officers 1,304,645 shares 38.2%
as a group (6 persons)
-----------------
(a) Includes shares of Common Stock issuable on exercise of outstanding
stock options which were exercisable within 60 days after September
30, 1998 as follows: Mr. Jack Rosen, 266,666 shares; Mr. Joseph
Rosen, 3,333 shares; Mr. Ingberman, 3,333 shares; Mr. Giglio, 38,333
shares; Mr. Glickman, 35,000 shares; Mr. Slovin, 38,333 shares; all
directors and executive officers as a group, 384,998 shares.
(b) Includes shares of common stock held by children as follows: Jack
Rosen, 6,500 shares, Joseph Rosen, 3,250 shares and Israel Ingberman,
13,888 shares.
(c) Includes shares of common stock held as Custodian for children as
follows: Jack Rosen, 41,666 shares, Joseph Rosen, 48,166 shares and
Israel Ingberman, 27,777 shares.
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On September 23, 1998, Cede & Co. owned of record 2,243,147 shares of
the Company's Common Stock, constituting 65.8 % of the outstanding Common
Stock. The Company understands those shares were held beneficially for members
of the New York Stock Exchange, some of whom may in turn have been holding
shares beneficially for customers.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ------- -----------------------------------------------
Transactions between the Company and members of its Board of
Directors are described under "Compensation Committee Interlocks and Insider
Participation."
FILING OF REPORTS
To the best of the Company's knowledge, no director, officer, or
beneficial owner of more than 10% of the Company's stock failed to file on a
timely basis reports required by Section 16(a) of the Securities and Exchange
Act of 1934, as amended, with regard to the year ended June 30, 1998.
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SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amended Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
KUALA HEALTHCARE, INC.
By: /S/ JACK ROSEN
--------------------------------
Date: October , 1998 Jack Rosen
Principal Executive Officer
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