UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark one)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1996
--------------------------------------------------
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
--------- --------
Commission file number 0-19170
JUNIPER FEATURES LTD.
(Exact name of small business issuer as specified in its charter)
New York 11-2866771
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
111 Great Neck Road, Suite 604, Great Neck, New York 11021
(Address of principal executive offices)
(516) 829-4670
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange act during the past 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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: August 2, 1996 - 17,532,493 shares of
common stock - $.001 par value, outstanding.
1
<PAGE>
JUNIPER FEATURES LTD.
JUNE 30, 1996
(Unaudited)
INDEX
Page No.
--------
PART I - Financial Information:
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 (Unaudited)...................................... 3
Consolidated Statements of Income for the Three
Months Ended June 30, 1996 and 1995 (Unaudited)........................ 4
Consolidated Statements of Income for the Six
Months Ended June 30, 1996 and 1995 (Unaudited)........................ 5
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1996 and 1995 (Unaudited)........................ 6
Notes to Financial Statements.......................................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................................... 8-11
PART II - Other Information............................................ 12-13
Signatures............................................................. 14
2
<PAGE>
JUNIPER FEATURES LTD.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
June December
30, 1996 31, 1995
----------- -----------
ASSETS
Current Assets
Cash $ 5,203 $ 129,558
Accounts receivable - trade 664,081 804,681
Due from affiliates 102,699 86,087
Prepaid expenses and other
current assets 167,303 150,148
Due from officer 27,599 --
----------- -----------
Total current assets 966,885 1,170,474
Film licenses 3,030,088 2,980,678
Property and equipment net of
accumulated depreciation of
$75,707 and $55,798, respectively 102,794 122,703
Other assets 4,059 2,396
----------- -----------
$ 4,103,826 $ 4,276,251
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 825,228 $ 878,612
Notes payable - current 98,216 179,163
Due producers - current 80,407 93,289
Due to shareholders 7,000 7,000
----------- -----------
Total current liabilities 1,010,851 1,158,064
Notes payable - long term -- 54,752
Due to producers - long term 244,025 266,039
Due to officers -long term -- 4,566
----------- -----------
Total liabilities 1,254,876 1,483,421
----------- -----------
Shareholders' Equity
12% Non-Voting convertible redeemable
preferred stock: $.10 par value,
875,000 shares authorized, 235,900
shares issued and outstanding at
June 30, 1996 and December 31, 1995:
aggregate liquidation preference,
$471,800 at June 30, 1996
and December 31, 1995 23,590 23,590
Common Stock - $.001 par value, 20,000,000
shares authorized, 17,081,696 and
15,504,696 issued and outstanding
at June 30, 1996 and December
31, 1995, respectively 17,082 15,505
Capital contributions in excess of par:
Attributed to preferred stock 210,303 210,303
Attributed to common stock 7,006,571 6,741,804
Retained earnings (deficit) (4,408,596) (4,198,372)
----------- -----------
Total shareholders' equity 2,848,950 2,792,830
----------- -----------
$ 4,103,826 $ 4,276,251
=========== ===========
See notes to consolidated financial statements
3
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JUNIPER FEATURES LTD.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,
1996 1995
------------ ------------
Revenues:
Healthcare $ 475,202 $ 1,148,035
Entertainment 11,000 7,000
------------ ------------
486,202 1,155,035
------------ ------------
Operating costs:
Healthcare 289,629 746,227
Entertainment 6,376 2,091
Selling, general and administrative expenses 330,715 334,865
------------ ------------
626,720 1,083,183
------------ ------------
Net income (loss) $ (140,518) $ 71,852
============ ============
Weighted average number of
shares outstanding 16,583,432 13,143,614
============ ============
Net income (loss) per common share $ (0.01) $ (0.00)
============ ============
See notes to consolidated financial statements
4
<PAGE>
JUNIPER FEATURES LTD.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended June 30,
1996 1995
------------ ------------
Revenues:
Healthcare $ 1,133,575 $ 1,995,317
Entertainment 20,150 7,000
------------ ------------
1,153,725 2,002,317
------------ ------------
Operating costs:
Healthcare 696,570 1,329,818
Entertainment 11,203 2,091
Selling, general and administrative expenses 656,175 621,588
------------ ------------
1,363,948 1,953,497
------------ ------------
Net income (loss) $ (210,223) $ 48,820
============ ============
Weighted average number of
shares outstanding 16,234,449 12,594,459
============ ============
Net income (loss) per common share $ (0.01) $ (0.00)
============ ============
See notes to consolidated financial statements
5
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JUNIPER FEATURES LTD.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
1996 1995
--------- ---------
Operating Activities
Net income (loss) $(210,223) $ 48,820
Adjustments to reconcile net cash provided
by operating activities:
Amortization of film licenses 10,590 2,000
Depreciation expense 19,909 18,828
Payment of officer's compensation
with equity -- 26,250
Payment of various liabilities with equity -- (1,850)
Payment of directors compensation with equity -- 15,000
Changes in assets and liabilities:
Accounts receivable 140,600 (260,205)
Prepaid expenses and other current assets (17,155) (13,676)
Other assets (1,464) (1,021)
Due to/from officers (32,165) (46,895)
Due from affiliates (16,812) (6,079)
Accounts payable and accrued expenses (53,384) 340,934
--------- ---------
Net cash provided from (used for)
operating activities (160,104) 122,106
--------- ---------
Financing activities:
Reduction in borrowings (135,699) (161,020)
Payments to and on behalf of producers (45,896) (82,847)
Proceeds from exercise of options -- 20,500
Proceeds from private placements 217,344 --
--------- ---------
Net cash provided from (used for)
financing activities 35,749 (223,367)
--------- ---------
Net increase (decrease) in cash (124,355) (101,261)
Cash at beginning of period 129,558 130,169
--------- ---------
Cash at end of period $ 5,203 $ 28,908
========= =========
Supplemental cash flow information:
Interest paid $ 13,437 $ 5,703
--------- ---------
See Notes to Consolidated Financial Statements
6
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JUNIPER FEATURES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - Basis of Presentation:
The interim consolidated financial statements included herein have been
prepared without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC"). Certain information and footnote disclosures,
normally included in the financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or omitted
pursuant to SEC rules and regulations; nevertheless, management of the Company
believes that the disclosures herein are adequate to make the information
presented not misleading. The consolidated financial statements and notes should
be read in conjunction with the audited consolidated financial statements and
notes thereto as of December 31, 1995, included in the Company's Form 10-KSB
filed with SEC.
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary to present fairly the consolidated financial
position of the Company with respect to the interim consolidated financial
statements have been made. The results of operations for the interim periods are
not necessarily indicative of the results to be expected for the full year.
7
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21A of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements.
OVERVIEW
The Company was organized in July 1987. Its principal business is composed
of two (2) segments: (i) healthcare, which consists of (a) revenue enhancement
management for hospitals which is conducted by PartnerCare, Inc. ("PCI") and (b)
healthcare cost containment for healthcare payors which is conducted by Juniper
Healthcare Containment Systems, Inc. ("Containment"); and (ii) entertainment,
consisting of the acquisition, exploitation and distribution of rights to films
to the various media (i.e., home video, pay-per view, pay television, cable
television, networks and independent syndicated television stations) in the
domestic and foreign marketplace, which is primarily conducted by Juniper
Pictures, Inc. ("Pictures").
During the second quarter of 1996, the Company took several actions that it
believes will improve the results of its hospital revenue enhancement management
business. It changed the name of its subsidiary that conducts that business from
Diversified Health Affiliates, Inc. to PartnerCare, Inc. The Company believes
that this name better characterizes the nature of the relationship sought to be
developed between PCI and the hospitals that it serves. In addition, the Board
of Directors of PCI determined that it was necessary to aggressively and
strategically re-position PCI's direction in order to pursue new managed care
markets and initiatives. To that end, PCI replaced its president with a new
president, whose management and marketing skills and extensive experience in the
managed care field will, in management's opinion, better serve the future needs
and direction of the Company. In addition, the Company is currently seeking to
retain other experienced managers who it believes can help to move PCI in a new
direction. This new management team will be charged with the task of
re-engineering PCI's servicing capabilities with enhanced information systems,
diversification of product, and a focus on product and customer support.
Although the entertainment segment has not generated significant
revenues, management does not believe that the slow down in its entertainment
business is indicative of a continuing negative market trend, but is the result
of a confluence of various temporary factors (which are mentioned below) and the
decision by the Company to focus on the growth of the healthcare segment at the
present time, which is currently the most efficient and cost effective strategy
for the Company to maximize revenues. The Company is currently in negotiations
for the possible licensing of films with various television syndicators for
domestic distribution.
8
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 vs Three Months Ended June 30, 1995
The Company's revenues decreased to $486,000 in the second quarter of 1996
from $1,155,000 in the second quarter of 1995, a 58% decrease.
Revenue related to the Healthcare segment decreased to $475,000 in the
second quarter of 1996 from $1,148,000 in the second quarter of 1995, a 59%
decrease. The decrease in revenue during the second quarter of 1996 was
predominately attributed to Containment, which had revenue of approximately
$408,000 in the second quarter of 1996, compared to approximately $946,000 in
the second quarter of 1995, a 57% decrease. The decrease in revenue is partially
attributable to a procedural change by a major client of Containment's in this
quarter. We have been assured by our client that this will not occur in the
future. Consequently, we expect our revenue to return to anticipated levels.
Additionally, Containment entered into a new Joint Venture Agreement in January
1, 1996, under which Containment only recognizes one-half of the revenues and
operating costs of the Joint Venture. One half of such revenue amounted to
approximately $131,000 in the second quarter of 1996. The new joint venture
generates a greater operating profit than Containment has historically
generated, because a higher percentage of savings is billed and the additional
revenue is shared by the joint venture partners. PCI's (formerly DHA) revenue
decreased to $67,000 in 1996 from $202,000 in 1995.
Revenue from the entertainment segment was $11,000 in the second quarter of
1996, compared to $7,000 in 1995. The non-realization of entertainment revenue
in both quarters was attributed to the following factors: (i) the Company
experienced a slow down of activity in foreign sales; and (ii) the Company
experienced a slower closing cycle in the domestic market due to a large number
of films which were unavailable for broadcast during the period because of
scheduling rotation with cable licensees. This scheduling rotation was delayed
because of lengthy negotiations with cable licensors, therefore making the films
unavailable for broadcast. Certain of the Company's films that generated revenue
when the contracts were signed are still under license, and are currently being
aired by the licensees.
Healthcare operating costs decreased to $290,000 in the second quarter of
1996 from $746,000 in the second quarter of 1995, a 61% decrease. As a
percentage of revenue, operating costs of the Healthcare operations decreased to
61% in the second quarter of 1996 from 65% in the second quarter of 1995. The
decrease is due to the fact that operating costs for Containment were lower
because of the new Joint Venture.
Selling, general and administrative expenses decreased to $331,000 in the
second quarter of 1996 from $335,000 in the second quarter of 1995, a 1%
decrease.
Six Months Ended June 30, 1996 vs Six Months Ended June 30, 1995
The Company's revenues decreased to $1,154,000 through the second quarter
of 1996 from $2,002,000 through the second quarter of 1995, a 42% decrease.
9
<PAGE>
Revenue related to the Healthcare segment decreased to $1,134,000 through
the second quarter of 1996 from $1,995,000 through the second quarter of 1995, a
43% decrease. The decrease in revenue through the second quarter of 1996 was
predominately attributed to Containment, which had revenue of approximately
$970,000 through the second quarter of 1996, compared to approximately
$1,710,000 through the second quarter of 1995, a 43% decrease. The decrease in
revenue is partially attributable to a procedural change by a major client of
Containment's in this quarter. We have been assured by our client that this will
not occur in the future. Consequently, we expect our revenue to return to
anticipated levels. Additionally, Containment entered into a new Joint Venture
Agreement in January 1, 1996, under which Containment only recognizes one-half
of the revenues and operating costs of the Joint Venture. One half of such
revenue amounted to approximately $225,000 through the second quarter of 1996.
The new joint venture generates a greater operating profit than Containment has
historically generated, because a higher percentage of savings are billed and
the additional revenue is shared by the joint venture partners. PCI's (formerly
DHA) revenue decreased to $163,000 in 1996 from $286,000 in 1995.
Revenue from the entertainment segment was $20,150 through the second
quarter of 1996, compared to $7,000 in 1995. The non-realization of
entertainment revenue in both quarters was attributed to the following factors:
(i) the Company experienced a slow down of activity in foreign sales; and (ii)
the Company experienced a slower closing cycle in the domestic market due to a
large number of films which were unavailable for broadcast during the period
because of scheduling rotation with cable licensors. This scheduling rotation
was delayed because of lengthy negotiations with cable licensors, therefore
making them unavailable for Broadcast. Certain of the Company's films that
generated revenue when the contracts were signed are still under license, and
are currently being aired by the licensees.
Healthcare operating costs decreased to $697,000 through the second quarter
of 1996 from $1,330,000 through the second quarter of 1995, a 48% decrease. As a
percentage of revenue, operating costs of the Healthcare operations decreased to
61% through the second quarter of 1996 from 67% through in the second quarter of
1995. The decrease is due to the fact that operating costs for Containment were
lower because of the new Joint Venture.
Selling, general and administrative expenses increased to $656,000 through
the second quarter of 1996 from $622,000 through the second quarter of 1995, a
5% increase. The increase in selling, general and administrative expenses is
primarily attributed to an increase in legal expense of $29,000, relating to
Picture's arbitration proceeding, which has been resolved.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1996 was ($44,000), compared to working capital
of $12,000 at December 31, 1995. The ratio of current assets to current
liabilities was .96:1 at June 30, 1996 and 1.01:1 at December 31, 1995. Cash
flow used in operations during the second quarter of 1996 was $160,000, compared
to cash flow provided by operations during the second quarter of 1995, of
$122,000.
10
<PAGE>
Accounts receivable - trade decreased to $664,000 from $805,000 at December
31, 1995.
Accounts payable decreased to $825,000 from $879,000 at December 31, 1995.
The Company has no material commitments for capital expenditures or the
acquisition of films.
Through the second quarter of 1996, the Company raised $217,000 from
Private Placements of its securities.
The Company believes that it will have sufficient liquidity to meet its
operating cash requirements for the current level of operations during the
remainder of 1996. If the Company is unable to fund its operating cash flow
needs, the Company may scale back operations.
The Company currently does not have available any unused lines of credit.
11
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
Preferred Stockholders are entitled to receive out of assets legally
available for payment a dividend at a rate of 12% per annum of the
Preferred Stock liquidation preference of $2.00 (or $.24 per annum) per
share, payable quarterly on March 1, June 1, September 1 and December 1, in
cash or in shares of Common Stock having an equivalent fair market value.
Unpaid dividends on the Company's Preferred Stock cumulate. The quarterly
payments due on September 1 and December 1, 1992, in 1993, in 1994, in
1995; and on March 1, and June 1, 1996 have not yet been paid. Accordingly,
these dividends are accumulating. These dividends have not been declared
because earned surplus is not available to pay a cash dividend.
Accordingly, dividends will accumulate until such time as earned surplus is
available to pay a cash dividend or until a post effective amendment to the
Company's registration statement covering a certain number of common shares
reserves for the payment of Preferred Stock dividends is filed and declared
effective, or if such number of common shares are insufficient to pay
cumulative dividends, then until additional common shares are registered
with the Securities and Exchange Commission (SEC). No dividends shall be
declared or paid on the Common Stock (other than a dividend payable solely
in shares of Common Stock) and no Common Stock shall be purchased, redeemed
or acquired by the Company unless full cumulative dividends on the
Preferred Stock have been paid or declared, or cash or shares of Common
Stock have been set apart which is sufficient to pay all dividends accrued
on the Preferred Stock for all past and then current dividend periods.
Holders of Common Stock will not participate in dividends paid on the
Preferred Stock.
As stated above, pursuant to the terms of the Preferred Stock, the
Company has the option of making quarterly dividend payments in cash or
shares of Common Stock. The Company does not intend to make any Preferred
Stock dividends in cash in the foreseeable future.
Prospectively, subject to the Company's Prospectus being current, and
a sufficient number of common shares being registered with the SEC, the
Company anticipates making quarterly dividend payments in shares of Common
Stock for the foreseeable future including the quarterly dividend payments
which were due on September 1 and December 1, 1992; in 1993; in 1994; in
1995; and on March 1, and June 1, 1996, which have not yet been paid.
12
<PAGE>
There are currently 235,900 shares of Preferred Stock outstanding.
Accordingly, the total cash value of the arrearage of unpaid dividends is
$226,500.
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
The Company filed a Form 8-K on April 27, 1996, relating to the
extension of its Class A Warrants by one year until May 1,1997,
and its Class B Warrants by one year until May 1, 1998.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed by the undersigned, thereunto duly authorized.
JUNIPER FEATURES LTD.
Date:
By: /s/ V. Paul Hreljanovic
----------------------------------
V. Paul Hreljanovic
Chairman of the Board, Director
President, Chief Executive Officer
and Acting Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF INCOME FOUND ON
PAGES 3 & 5 OF THE COMPANY'S FORM 10-QSB FOR THE SIX MONTHS ENDED JUNE 30,
1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,203
<SECURITIES> 0
<RECEIVABLES> 664,081
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 966,885
<PP&E> 178,501
<DEPRECIATION> 75,707
<TOTAL-ASSETS> 4,103,826
<CURRENT-LIABILITIES> 1,010,851
<BONDS> 0
0
23,590
<COMMON> 17,082
<OTHER-SE> 2,808,278
<TOTAL-LIABILITY-AND-EQUITY> 4,103,826
<SALES> 0
<TOTAL-REVENUES> 1,153,725
<CGS> 0
<TOTAL-COSTS> 1,363,948
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (210,223)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (210,223)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
