SCOTTSDALE, Ariz.-(BUSINESS WIRE)-Kahala Corp. (OTC BB: KAHA.OB) (the "Company") - today announced its earnings for the second quarter of 2002 of $250,548, or $0.01 per share, compared to earnings of $9,558, or ($0.02) per share, during the second quarter of 2001. For the first six months of 2002, Kahala Corp. reported net income of $367,867, or $0.02 per share, compared to net income of $119,473, or ($0.04) during the same six month period of 2001. The net loss per share, despite the positive earnings, for both the three and six month periods ending June 30, 2001 was caused by dividends paid on the Company's preferred stock during such periods of 2001. As previously announced, the Company's Board of Directors approved the suspension of the quarterly dividends payable on all three of the Company's outstanding classes of preferred stock effective December 1, 2001 until further notice. Since inception, the dividend on all three classes of the Company's preferred stock had been paid in shares of the Company's common stock. Simultaneous with the Board of Director's action, the holders of the Company's Series A, B, and C preferred stock each waived the cumulative feature of their preferred shares during this dividend suspension period.

Kahala Corp. also announced that it completed its acquisition of one hundred percent (100%) of Ranch * 1, Inc. during the second quarter of 2002, bringing 48 more quick service restaurant units to the Company.

The Company also reported that a total of ten new outlets of the Company's concepts opened during the second quarter of 2002 as follows: (i) Surf City Squeeze in Main Place Mall, Santa Ana, California; (ii) Surf City Squeeze at Santa Rosa Plaza in Santa Rosa, California; (iii) Surf City Squeeze in the Grove @ Farmers Market in Los Angeles, California; (iv) Surf City Squeeze in the Muscat City Center in Muscat, Oman; (v) Surf City Squeeze in the Sharjah City Center in Sharjah, United Arab Emirates; (vi) Surf City Squeeze at the Valley Plaza Shopping Center in Bakersfield, California; (vii) Frullati Café & Bakery in the Allen Premium Outlet Malls in Allen, Texas; (viii) Frullati Café & Bakery in the Willowbrook Athletic Club in Willowbrook, Illinois; (ix) Rollerz in the Newport Centre in Jersey City, New Jersey; and (x) Rollerz in the North Riverside Mall in Riverside, Illinois.