<PAGE>   1

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                                  FORM 10-Q/A
                                AMENDMENT NO. 1
                       (Amending Part I - Items 1 and 2)

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                      For the Quarter Ended March 31, 1997



                          Commission File No. 0-26288




                             CONTOUR MEDICAL, INC.                 
             -----------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)



           Nevada                                      77-0163521            
------------------------------             ----------------------------------
(State or Other Jurisdiction of           (IRS Employer Identification Number)
Incorporation or Organization)



                               3340 Scherer Drive
                         St. Petersburg, Florida 33716      
                    ----------------------------------------
                    (Address of Principal Executive Offices)


                               (813) 572-0089                     
              ----------------------------------------------------
              (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 shorter period that the
Registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.

                              Yes [ X ]   No [   ]


There were 8,042,043 shares of the Registrant's $.001 par value Common Stock
outstanding as of March 31, 1997.
<PAGE>   2

                             CONTOUR MEDICAL, INC.

                                  FORM 10-Q/A

                                     INDEX


<TABLE>
<CAPTION>
Part I.  Financial Information
------   ---------------------

Item 1.  Financial Statements                                            Page
<S>                                                                     <C>
         Consolidated Balance Sheets as of March 31, 1997
         and June 30, 1996                                                3-4

         Consolidated Statements of Operations for the Three
         and Nine Months Ended March 31, 1997 and 1996                    5-6

         Consolidated Statement of Stockholder's Equity
         for the Nine Months Ended March 31, 1997                         7-8

         Consolidated Statements of Cash Flows for the
         Nine Months Ended March 31, 1997 and 1996                       9-10

         Notes to Consolidated Financial Statements                     11-16

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                            17-19


         Signatures                                                        20
</TABLE>





                                       2
<PAGE>   3

                    CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                          Consolidated Balance Sheet



<TABLE>
<CAPTION>
                                              March 31,      June 30,
                                                1997           1996   
                                            ------------    ----------
                                             (Unaudited)
<S>                                         <C>            <C>
ASSETS

Current:
  Cash                                      $    97,580     $  146,219
  Accounts receivable - trade
    Related parties (Note 4)                  2,720,620      1,918,000
    Other                                     9,235,987      2,527,676
  Inventories (Note 5)                        7,047,944      2,876,792
  Refundable income taxes                            --         21,406
  Prepaid expenses and other                    740,988         51,519
  Due from parent (Note 4)                      973,164        618,897        
                                            -----------     ----------        
      Total Current Assets                   20,816,283      8,160,509
                                            -----------     ----------
Property and Equipment, less
accumulated depreciation (Note 6)             1,958,945      1,223,195
                                            -----------     ----------
Other Assets:

  Goodwill                                    9,713,392      1,286,165
  Deposit on equipment                          671,760        416,184
  Other                                         977,933        172,215 
                                            -----------     ---------- 
      Total Other Assets                     11,363,085      1,874,564  
                                            -----------     ----------  
                                            $34,138,313    $11,258,268
</TABLE>





         See accompanying notes to consolidated financial statements.

                                       3
<PAGE>   4

                     CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheet



<TABLE>
<CAPTION>
                                              March 31,       June 30,
                                                1997            1996   
                                            -------------   -----------
                                             (Unaudited)
<S>                                          <C>           <C>   
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Notes payable to banks -
   credit lines (Note 7)                     $ 6,098,902    $ 1,391,535
  Accounts payable                             2,919,974      2,036,652
  Accrued expenses                             1,119,131        366,716
  Current maturities of long-term
   debt (Note 8)                                 200,700        433,658
                                              ----------     ----------
      Total Current Liabilities               10,338,707      4,228,561

Long-term debt, less current
maturities (Note 8)                            1,066,076      1,352,937   
                                              ----------     ----------   
      Total Liabilities                       11,404,783      5,581,498

Convertible debentures, 9% interest
due monthly through July 1, 2003               5,000,000             --
                                              ----------     ----------
Stockholders' Equity:
  Preferred stock - Series A conver-
   tible, $.001 par value, shares
   authorized 1,265,000; issued
   600,000, outstanding 170,000 and
   600,000, respectively, at aggregate
   liquidation preference                        741,681     2,528,000
  Common stock $.001 par - shares
   authorized 76,000,000; issued
   8,042,043 and 4,802,280 (net of
   $765 discount)                                  7,277         4,449
  Additional paid-in capital                  15,563,769     2,911,696
  Retained earnings                            1,420,803       232,625  
                                              ----------     ---------
      Total stockholders' equity              17,733,530     5,676,770

                                             $34,138,313   $11,258,268
</TABLE>





          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>   5

                     CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                     Consolidated Statements of Operations



<TABLE>
<CAPTION>
                                                 Three Months Ended
                                             March 31,        March 31,
                                               1997             1996   
                                            ----------       ----------
                                            (Unaudited)      (Unaudited)
<S>                                         <C>              <C>
SALES TO NON-RELATED PARTIES                $11,626,229      $ 2,197,566

SALES TO RELATED PARTIES                      1,511,178        1,582,000
                                            -----------      -----------

TOTAL SALES                                  13,137,407        3,779,566

COST OF SALES                                 9,345,136        2,751,524
                                            -----------      -----------
GROSS PROFIT                                  3,792,271        1,028,042


OPERATING EXPENSES                            3,211,310          775,212

OTHER INCOME (EXPENSE)                          (63,696)          10,031    
                                            -----------      -----------    
INCOME BEFORE INCOME TAXES                      517,265          262,861

INCOME TAX EXPENSE                              196,750           89,373       
                                            -----------      -----------       
NET INCOME                                  $   320,515      $   173,488

NET INCOME PER COMMON SHARE                 $       .04      $       .03

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES                                        7,817,379        4,967,739
</TABLE>





          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>   6

                     CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                     Consolidated Statements of Operations



<TABLE>
<CAPTION>
                                                   Nine Months Ended
                                              March 31,        March 31,
                                                1997             1996    
                                            ------------     ------------
                                            (Unaudited)      (Unaudited)

<S>                                         <C>              <C>
SALES TO NON-RELATED PARTIES                $34,592,701      $5,294,915

SALES TO RELATED PARTIES                      4,460,016       3,235,000
                                            -----------      ----------

NET SALES                                    39,052,717       8,529,915

COST OF SALES                                27,616,620       6,171,863
                                            -----------      ----------

GROSS PROFIT                                 11,436,097       2,358,052

OPERATING EXPENSES                            9,105,887       1,760,156

OTHER INCOME (EXPENSE)                         (368,019)         13,251      
                                            -----------      ----------      
INCOME BEFORE INCOME TAXES                    1,962,191         611,147

INCOME TAX EXPENSE                              746,750         207,790        
                                            -----------      ----------        

NET INCOME                                  $ 1,215,441      $  403,357

NET INCOME PER COMMON SHARE                 $       .19      $      .07

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES                                        6,488,405       4,885,602
</TABLE>





          See accompanying notes to consolidated financial statements.

                                       6
<PAGE>   7

                     CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                 Consolidated Statement of Stockholders' Equity


<TABLE>
<CAPTION>
                                                           Additional
                                    Common Stock            Paid-in
                                  Shares     Amount         Capital     
                                 ---------   ------        ----------   
<S>                             <C>         <C>           <C>                 
Balance, June 30, 1996           5,214,223   $4,449        $2,911,696

Exercise of common stock
 warrants                          326,320      326           684,574

Conversions of preferred
 stock                             430,000      430         1,719,549

Conversion dividend                 21,500       22                --

Preferred dividends in
 arrears                                --       --                --

Stock issued for guarantee         100,000      100           499,900

Exercise of convertible note     1,950,000    1,950         9,748,050

Net income                              --       --                --

Balance, March 31, 1997          8,042,043   $7,277       $15,563,769   
                                ==========  =======       ===========
</TABLE>






          See accompanying notes to consolidated financial statements.

                                       7
<PAGE>   8

                     CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                 Consolidated Statement of Stockholders' Equity




<TABLE>
<CAPTION>
                                    Convertible
                                   Preferred Stock
                                 -----------------        Retained
                                Shares       Amount       Earnings  
                               --------     --------     -----------
<S>                            <C>         <C>           <C>
Balance, June 30, 1996          600,000    $2,528,000    $  232,625

Conversions of preferred
stock                          (430,000)   (1,720,000)           --

Payment of Preferred Dividend        --      ( 88,519)      ( 5,063)

Preferred dividends in
 arrears                             --        22,200       (22,200)

Net income                           --            --     1,215,441

Balance, March 31, 1997          170,000   $  741,681    $1,420,803 
                                ========   ==========    ==========
</TABLE>





          See accompanying notes to consolidated financial statements.

                                       8
<PAGE>   9

                     CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                  Nine Months Ended
                                             March 31,        March 31,
                                               1997             1996   
                                            ----------       ----------
                                            (Unaudited)      (Unaudited)
<S>                                         <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)                           $1,215,441        $ 403,357

Adjustments to reconcile net income
 (loss) to net cash provided (used) by
 operating activities:

   Depreciation & Amortization                 577,505          111,863
   Tax benefit from NOL                             --          207,790

     (Increase) decrease in accounts
       receivable                           (7,510,931)        (825,785)
     (Increase) decrease in inventories     (4,171,152)        (234,060)
     (Increase) decrease in other
       current assets and other assets      (9,656,584)         ( 5,837)
     Increase (decrease) in accounts
       payable                                 883,322          290,257
     Increase (decrease) in accrued
       expenses and other liabilities          752,415           61,239        
                                           -----------       ----------       
       Net cash provided (used) by
            operating activities           (19,125,425)           8,824

CASH FLOW FROM INVESTING ACTIVITIES:

   Acquisition of equipment                 (1,313,255)        (549,017)
   (Increase)Decrease in due from             (354,267)         555,338
      Parent
   Acquisition of AmeriDyne, net of
     cash acquired                                  --         (322,297)
                                           -----------       ----------       
     Net cash used by investing
       activities                           (1,667,522)        (315,976)
</TABLE>





         See accompanying notes to consolidated financial statements.

                                       9
<PAGE>   10

                     CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows



<TABLE>
<CAPTION>
                                                   Nine Months Ended
                                              March 31,        March 31,
                                                1997             1996     
                                            ------------     ------------ 
                                            (Unaudited)      (Unaudited)
<S>                                         <C>              <C>
CASH FLOWS FROM FINANCING ACTIVITIES:

Convertible debentures issued               $  5,000,000             --
Net borrowing (payments) on loans              4,187,548        193,103
Proceeds from exercise of options                 59,395         50,000
Payment of short-swing liability
  by shareholder                                      --         36,531
Proceeds from issuance of common
  stock                                        9,750,000             --
Payment of preferred stock dividends             (93,582)            --
Exercise of Warrants                             625,506             -- 
                                            ------------      ---------

Net cash provided by financing
  activities                                  19,528,867        279,634       
                                            ------------      ---------
NET INCREASE (DECREASE) IN CASH                  (48,639)       (27,518)

CASH BEGINNING OF PERIOD                         146,219         96,235        
                                            ------------      ---------
CASH END OF PERIOD                          $     97,580      $  68,717
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION AND NON-CASH
ACTIVITIES:

  Cash paid for interest                    $    576,944      $ 109,168

  Cash paid for income tax                  $         --      $     930
</TABLE>





          See accompanying notes to consolidated financial statements.

                                       10
<PAGE>   11

                     CONTOUR MEDICAL, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Unaudited)

1.   BASIS OF PRESENTATION

         The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information.  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 accruals, considered necessary for
a fair presentation have been included.  It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the June 30, 1996, audited financial statements for
Contour Medical, Inc.  The results of operations for the periods ended March
31, 1997 and 1996 are not necessarily indicative of the operating results for
the full year.

     The consolidated financial statements include the accounts of Contour
Medical, Inc. ("CMI") and its wholly-owned subsidiaries, Contour Fabricators,
Inc. ("CFI"), Contour Fabricators of Florida, Inc. ("CFFI") and, since March 1,
1996, AmeriDyne Corporation ("AmeriDyne"), and effective July 1, 1996 Atlantic
Medical Supply Company, Inc. ("Atlantic') collectively referred to as the
Company.  All material intercompany accounts and transactions have been
eliminated.  CMI is a majority-owned subsidiary of Retirement Care Associates,
Inc. ("Parent").

         On March 1, 1996, Contour Medical, Inc. acquired AmeriDyne through a
merger which was accounted for as a purchase.  The Company issued 369,619
shares of its common stock and paid $250,000 to the sole stockholder of
AmeriDyne in connection with this purchase.

         On August 6, 1996, the Company acquired all of the outstanding stock
of Atlantic Medical Supply Company, Inc.  (Atlantic Medical), a distributor of
disposable medical supplies and a provider of third-party billing services to
the nursing home and home health care markets.  The acquisition was made
retroactively to July 1, 1996.  The Company paid $1.4 million in cash and $10.5
million in promissory notes for all of the outstanding stock of Atlantic
Medical.  The promissory notes beared interest at 7% per annum and were paid in
full on January 10, 1997.  The promissory notes were paid with $9,750,00 in
proceeds from the issuance of 1,950,000 shares of the Company's common stock
and the balance came from the Company's line of credit.

         In addition, on August 9, 1996, the Company acquired the remaining
minority interest of Facility Supply, Inc., a majority owned subsidiary of
Atlantic Medical.  The acquisition was made retroactively to July 1, 1996.  The
Company paid $50,000 in cash and $350,000 in promissory notes for the remaining
outstanding stock of Facility Supply, Inc.  The promissory notes beared
interest at 7% per annum and were paid in full on January 10, 1997.





                                       11
<PAGE>   12

2.   CHANGE IN METHOD OF ACCOUNTING FOR TAXES AND INCOME

     Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109") which
requires recognition of estimated income taxes payable or refundable on income
tax returns for the current year and for the estimated future tax effect
attributable to temporary differences and carry forwards.  Measurement of
deferred income tax assets being reduced by available tax benefits not expected
to be realized.

3.   CHANGE IN YEAR END

     The Company changed its fiscal year end from December 31 to June 30 during
1995. Atlantic also changed its fiscal year end from December 31 to June 30
during 1996.

4.   RELATED PARTY TRANSACTIONS

      During 1995, the Company began distributing medical supplies to health
care facilities owned, leased or managed by the Parent. Sales to these
facilities approximated $4,460,016 for the nine month period ended March 31,
1997, and $1,511,778 for the three month period ended March 31, 1997. Trade
accounts receivable of $2,720,620 and $1,918,000 were outstanding as of March
31, 1997 and June 30, 1996, respectively, as related to health care facility
sales to the Parent.  Additionally, the Company had an outstanding loan
receivable due from its Parent of approximately $1,000,000 at March 31, 1997,
which is due within 45 days of advance with interest at prime and $619,000 at
June 30, 1996, which is due on demand with no stated interest rate.

         On January 10, 1997, the Parent loaned the Company $9,750,000 in
exchange for a convertible promissory note.  The Parent immediately exercised
its conversion rights under the convertible promissory note in full, and
received 1,950,000 shares of the Company's Common Stock.  The $9,750,000
received by the Company in this transaction was used toward the repayment of
the promissory notes issued in connection with the acquisition of Atlantic
Medical Supply Company, Inc. described in Note 9 below.

5.   INVENTORIES

     Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                         March 31,       June 30,
                                           1997            1996   
                                        ----------      ----------
      <S>                               <C>            <C>
      Raw Materials                     $  352,485     $  330,699
      Work in process                       84,181         96,647
      Finished goods                     6,611,278      2,449,446 
                                        ----------     ----------
                                        $7,047,944     $2,876,792
</TABLE>
All inventories are pledged as collateral.





                                       12
<PAGE>   13

6.   PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

<TABLE>
<CAPTION>
                            Useful Lives    March 31, 1997    June 30, 1996
                            ------------    --------------    -------------
<S>                          <C>            <C>                <C>
Land & Land Improvements        --               59,842        $   50,000
Building                     5-45 years         596,247           596,247
Computer Equipment           3-7  years      $1,189,782                --
Machinery and equipment      3-7  years       2,370,686         1,798,520
Furniture and fixtures       5-7  years         239,211           146,536
Leasehold improvements       5    years         312,153           251,352
Vehicles                     3-5  years         188,202            72,245
                                             ----------        ----------
                                              4,956,123         2,914,900
Less accumulated depreciation                 2,997,178         1,691,705
                                             ----------        ----------
                                             $1,958,945        $1,223,195
</TABLE>

Certain property and equipment are pledged as collateral (see Notes 7 and 8).

7.   NOTES PAYABLE         

     Notes payable at March 31, 1997 and June 30, 1996 consisted of the
following:
<TABLE>
<CAPTION>
                                                 March 31,         June 30,
                                                   1997              1996  
                                                ----------        ---------
<S>                                               <C>              <C>
Note payable to bank, interest at prime plus
1% (9.25% at June 30, 1996), principal of
$5,000 plus interest due monthly through
June 2000, collateralized by equipment            173,556          217,559

Note payable to bank, interest at prime plus
 .75% (9.00% at June 30, 1996) principal of
$7,605 plus interest due monthly through
May 2000, collateralized by equipment and
real property                                     432,819          496,171

Mortgage payable to bank, bearing interest
at 8.58%, principal and interest of $6,793,
due monthly through December 2003,
collateralized by equipment and real property     420,409          456,233

Mortgage payable to bank, interest at prime
plus .75% (9.00% at June 30, 1996) principal
of $1,190 plus interest due monthly through
December 2000, collateralized by equipment and
real property                                      53,570           64,284
</TABLE>





                                       13
<PAGE>   14

<TABLE>

<S>                                             <C>              <C>
Borrowings under $7,000,000 line of credit,
interest at 30 day libor plus 200bp (7.44%
at September 30, 1996), payable monthly,
collateralized by accounts receivable and
inventory. Principal due October 31, 1997       6,098,902               --

Borrowings under $100,000 line of credit,
interest at prime plus .75% (9.00%
at June 30, 1996), payable monthly,
collateralized by accounts receivable,
inventory, equipment, and real property                --           65,000

Note payable to bank, interest at 8.75%
principal and interest at $1,282 due monthly
through April 2001, collateralized by equipment    52,630           60,436

Borrowings under $500,000 line of credit,
interest at prime plus .25% (8.5% at June
30, 1996) payable monthly, collateralized
by accounts receivable, inventory and
equipment, and guarantees by
Parent                                                 --          433,535

Note payable to leasing institution,
interest at 14.6%, monthly installments of
$309 plus sales tax. Matures June 1997,
collateralized by computer equipment                  306            2,924
Note payable to equipment company, interest at
11%, monthly installments of $533 including
interest.  Matures December 1997,
collateralized by equipment                         4,580            8,805

Note payable to stockholder, interest at 10%,
principal and interest of $5,693, due monthly
through March 1999                                123,362          163,646

Note payable to bank, interest at 9%, principal
and interest of $3,600 due monthly through May
1997, collateralized by accounts receivable,
inventory, furniture, fixtures, equipment,
machinery, bank accounts, and guarantees of
Parent                                                 --           38,924

Note payable to equipment company, interest at
14.1%, monthly installments of $405 including
interest.  Matures October 1998 collataralized
by equipment.                                       6,544               --

Note payable to bank, interest at 9%, principal
and interest of $5,266 due monthly through
October 1997, collateralized by accounts
receivable, inventory, furniture, fixtures,
equipment, machinery, bank accounts, and
guarantees of Parent                                   --          212,613
</TABLE>





                                       14
<PAGE>   15

<TABLE>
      
<S>                                           <C>              <C>
Borrowings under $975,000 line of credit, 
interest at prime plus 1.25% (9.5% at 
June 30, 1996). Principal is due on 
demand but no later than May 15, 1997.  
Collateralized by accounts receivable,
inventory, furniture, fixtures, equipment,
machinery, bank accounts, and guarantees of
Parent                                                 --          958,000

                                              -----------      -----------
                                              $ 7,365,678      $ 3,178,130
Less current maturities                         6,299,602        1,825,193
                                              -----------      -----------
                                              $ 1,006,076      $ 1,352,937
</TABLE>

     Certain of the above agreements contain financial and operating covenants,
including requirements that the Company maintain certain net worth levels and
satisfy current and debt-to-net-worth ratios.  The Company was in compliance
with all debt covenants as of March 31, 1997.

The aggregate maturities of long-term debt are as follows as of March 31, 1997:

<TABLE>
         <S>                                           <C>
         1997                                          $ 6,299,602
         1998                                              186,741
         1999                                              303,777
         2000                                              491,884
         2001                                               83,674
</TABLE>                                               

SFAS No. 107, "Disclosure About Fair Value of Financial Instruments," requires
that the Company disclose estimated fair values for its financial instruments.
Fair value is defined as the price at which a financial instrument could be
liquidated in an orderly manner over a reasonable time period under present
market conditions.  The rates of the Company's fixed obligations approximate
those rates of the adjustable loans.  Therefore, the fair value of those loans
has been estimated to be approximately equal to their carrying value.

Commitments and Contingencies:

         The company is obligated under various noncancelable leases for
         equipment and office space.  Future minimum lease commitments under
         operating leases were as follows as of March 31, 1997.

<TABLE>
         <S>                                           <C>
         1997                                          $  389,974
         1998                                             412,224
         1999                                             385,974
         2000                                             307,224
         2001                                             305,062
</TABLE>                                               

         EMPLOYMENT AGREEMENT - The Company has entered into an employment
         agreement with a key executive for a five- year period ending June
         1998. The agreement provides for annual base compensation of $100,000.

         LITIGATION - During 1994, the Company was a defendant in an employment
         injury lawsuit filed by one of its employees.  The Company settled
         this dispute for approximately $30,000.





                                       15
<PAGE>   16

         The Company was a defendant in a lawsuit filed by one of its former
         employees for wrongful discharge of employment.  During the year ended
         December 31, 1993, the Company settled this dispute for $85,000.


8.   INCOME TAXES:

         Income taxes are provided based on the liability method of accounting
pursuant to Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes."

9.       ACQUISITION:

         Effective March 1, 1996, the Company acquired all of the outstanding
common stock of AmeriDyne Corporation (AmeriDyne) for approximately $2.475
million in cash and stock.  AmeriDyne distributes medical supplies to
hospitals, clinics, physicians, pharmacies, nursing homes and other health care
providers.

         The purchase price exceeded the fair value of the net assets acquired
by approximately $1.3 million.  The acquisition was accounted for as a
purchase.  The resulting goodwill is being amortized on the straight-line basis
over 40 years.

         On August 6, 1996, the Company acquired all of the outstanding stock
of Atlantic Medical Supply Company, Inc.  (Atlantic Medical), a distributor of
disposable medical supplies and a provider of third-party billing services to
the nursing home and home health care markets.  The acquisition was made
retroactively to July 1, 1996.  The Company paid $1.4 million in cash and $10.5
million in promissory notes for all of the outstanding stock of Atlantic
Medical.  The promissory notes bore interest at 7% per annum and were due in
full on January 10, 1997.  On January 10, 1997, the Company repaid the
promissory notes, with interest.

         The following unaudited pro forma consolidated results of operations
presents information as if the acquisitions had occurred at the beginning of
the fiscal year in 1995.  The pro forma information is provided for information
purposes only.  It is based on historical information and does not necessarily
reflect the results that would have occurred nor is it necessarily indicative
of future results of operations of the combined enterprise.

<TABLE>
<CAPTION>
                                      Unaudited         Unaudited
                                   Nine Months Ended    Year Ended
                                    March 31, 1996     June 30, 1996
                                   ----------------    -------------
          <S>                       <C>                <C>
          Sales                     $  35,341,890      $ 34,333,727
          Net Income                $     785,516*     $    585,784*
          Per share                 $        0.16      $       0.10
</TABLE>


         * Full year earnings reflect write down of approximately $1.1 million
         recorded in Atlantic Medical's historical financial statements for
         prior to July 1, 1995.





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<PAGE>   17

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

     The following should be read in conjunction with the attached Financial
Statements and Notes thereto of the Company.

THREE MONTHS ENDED March 31, 1997 COMPARED TO THREE MONTHS ENDED March 31, 1996

     As a result of the factors discussed below, for the three months ended
March 31, 1997, the Company had net income of $321,009 compared to $173,488 for
the three months ended March 31, 1996.

     Sales increased by $ 9,357,841 for the three months ended March 31, 1997
as compared to the three months ended March 31, 1996. Approximately $2,807,618
of the increase resulted from sales of bulk medical supplies by AmeriDyne and
approximately $6,505,882 from sales of bulk medical supplies by Atlantic.
AmeriDyne and Atlantic were businesses acquired in March 1996 and August 1996,
respectively.  Sales of the Company's manufacturing division remained
relatively unchanged.

     Gross profit for the three months ended March 31, 1997, was $3,792,265 or
28.4% of sales, as compared to $1,028,042 or 27.2% of sales, for the same
period of the previous year.  The increase in gross profit as a percentage of
sales is primarily the result of higher gross profit margins on businesses
acquired.

     Operating expenses for the three month period ending March 31, 1997, were
$3,211,310 as compared to $775,212 in 1996.  The operating expenses increased
approximately 314% as the result of the acquisitions of AmeriDyne and Atlantic,
although as a percent of sales the increase represented a 3.93% increase.  The
increase of $2,436,098 in operating expenses is directly related to the
increase of $9,357,841 in revenues.  The largest components of operating
expenses are indirect labor (including sales salaries and commissions),
occupancy expense, depreciation and amortization, and insurance.  Specifically,
prior to the acquisitions of AmeriDyne and Atlantic, Contour did not have a
direct sales force and, therefore, incurred minimal selling expenses as a
percentage of sales.  Selling expenses as a percentage of sales now represents
approximately 4% of total sales.

     Indirect labor, including sales salaries and commissions increased to
approximately $1,575,339, an increase of $1,252,711 compared to the same period
last year.  Occupancy expense, depreciation and amortization and insurance
costs increased to approximately $762,873, an increase of $459,204 compared to
the same period last year.

     Other income and expenses are made up of interest expense, debts recovered
that were previously written off, service charge income, and gains and losses
on the disposition of assets.  Interest expense for the three month period
ending March 31, 1997 was $214,700 compared to $43,107 for the same period last
year.  Interest expense has increased primarily as a result of the $5,000,000
convertible debentures issued on July 12, 1997, bearing interest at 9% per
annum.

NINE MONTHS ENDED March 31, 1997 COMPARED TO NINE MONTHS ENDED March 31, 1996

     As a result of the factors discussed below, for the nine months ended
March 31, 1997, Contour had net income of $ 1,215,441 compared to $403,357 for
the nine months ended March 31, 1996.

     Sales increased by $30,522,802 for the nine months ended March 31, 1997 as
compared to the nine months ended March 31, 1996. Approximately $8,945,433 of
the increase resulted from sales of bulk medical supplies by AmeriDyne and
approximately $19,927,927 from sales of bulk medical supplies by Atlantic.
Approximately $1,225,016 of the increase resulted from the sales of bulk
medical supplies to Contour's majority shareholder.  The balance of the sales
increase, or approximately $426,426, resulted from sales of manufactured
products.

                                                   17
<PAGE>   18

     Gross profit for the nine months ended March 31, 1997, was $11,436,097 or
29.3% of sales, as compared to $2,358,052 or 27.6% of sales, for the same
period of the previous year.  The increase in gross profit as a percentage of
sales is primarily the result of higher gross profit margins on businesses
acquired.

     Operating expenses for the nine month period ending March 31, 1997, were
$9,105,887 as compared to $1,760,156 in 1996.  The operating expenses increased
approximately 417% as the result of the acquisitions, although as a percent of
sales the increase represented a 2.68% increase.  The increase of $7,345,731 in
operating expenses is directly related to the increase of $30,522,802 in
revenues.  The largest components of operating expenses are indirect labor
(including sales salaries and commissions), occupancy expense, depreciation and
amortization, and insurance.  In particular, prior to the acquisitions of
AmeriDyne and Atlantic, the Company did not have a direct sales force and
therefore incurred minimal selling expenses as a percentage of sales.  Selling
expenses as a percentage of sales now represents approximately 4% of total
sales.

     Indirect labor, including sales salaries and commissions increased by
$3,853,099 compared to the same period last year, to approximately $4,635,437.
Occupancy expense, depreciation and amortization and insurance costs increased
by $1,681,804 compared to the same period last year, to approximately
$2,366,002.

     Other income and expenses are made up of interest expense, debts recovered
that were previously written off, service charge income, and gains and losses
on the disposition of assets.  Interest expense for the nine month period
ending March 31, 1997 was $576,944 compared to $109,168 for the same period
last year.  Interest expense has increased primarily as a result of the
$5,000,000 convertible debentures issued on July 12, 1997, bearing interest at
9% per annum.

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 1997, the Company had $10,565,112 of working capital as
compared to $3,931,948 on June 30, 1996.

     Operating activities for the nine months ended March 31, 1997, utilized
cash of $19,125,425 as compared to operating activities during the nine months
ended March 31, 1996, which provided cash of $8,824.  The increased use of cash
was primarily due to increases in inventory, accounts receivable and other
assets.

     The cash flows utilized for investing activities of $1,506,438 during the
nine months ended March 31, 1997, were a result of the draw of $354,267 from
Contour's parent and by the use of $1,313,255 for the acquisition of and
deposits on additional equipment.

     Cash flow of $19,528,867 was provided from financing activities in the
nine months ended March 31, 1997, whereas in the same period in 1996, cash
flows from financing activities provided cash of $279,634. During the nine
months ended March 31, 1997, $5,000,000 was provided from debenture borrowings,
$9,750,000 was provided from the issuance of common stock, $625,506 was
provided by the exercise of stock warrants, $59,395 was provided by the
exercise of employee stock options and $4,187,548 was provided from additional
borrowings.  The Company also paid out $93,582 in preferred stock dividends.

     Contour currently maintains revolving lines of credit totaling $7 million
with its banks for short-term working capital needs.  As of March 31, 1997,
$6,098,902 had been borrowed against these lines.





                                      18
<PAGE>   19

     On August 6, 1996, Contour acquired all of the outstanding stock of
Atlantic Medical Supply Company, Inc.  ("Atlantic"), a distributor of
disposable medical supplies and a provider of third-party billing services to
the nursing home and home health care markets.  The acquisition was made
retroactively to July 1, 1996.  Contour paid $1,400,000 in cash and promissory
notes totaling $10,500,000 (the "Atlantic Promissory Notes") for the stock of
Atlantic, and subsequently paid an additional $50,000 in cash and issued a
promissory note for $350,000 to acquire a minority interest in a subsidiary of
Atlantic, Facility Supply, Inc.  The cash for this transaction came from the $5
million debenture placement that was completed on July 12, 1996.  Contour paid
the Atlantic Promissory Notes from the proceeds of a $9,750,000 loan from its
parent, payable in accordance with the terms of a promissory note that was
convertible into shares of Contour Common Stock at the option of the note
holder.  Contour's parent simultaneously converted this promissory note into
1,950,000 shares of Contour Common Stock.  The balance of the Atlantic
Promissory Notes was paid by borrowing under Contour's lines of credit.

     Contour presently does not anticipate any commitments for material capital
expenditures.


SEASONALITY AND INFLATION

     Contour's business is relatively consistent and stable on a monthly basis,
and has not indicated any seasonality over the prior three fiscal periods.

     In addition, Contour does not believe that inflation has had a material
effect on its results from operations during the past three fiscal years.
There can be no assurance, however, that Contour's business will not be
affected by inflation in the future.


                                       19
<PAGE>   20

                                   SIGNATURES

         Pursuant to the requirements of the Securities and Exchange Act of
19934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.


                                     CONTOUR MEDICAL, INC.


Date: July 29, 1997                  By: /s/ Donald F. Fox 
                                         -------------------------------------
                                         Donald F. Fox, President, Treasurer
                                         and Chief Financial Officer



























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