UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1997
---------------------------------------------
Commission file number 0-19170
JUNIPER GROUP, INC.
-------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New York 11-2866771
- -------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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
--- ---
The number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date, May 8, 1997, was 19,614,493 shares of
common stock - $.001 par value.
Transitional Small Business Disclosure Format: Yes No X
--- ---
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
March December
Assets 31, 1997 31, 1996
----------- -----------
Current Assets
Cash ........................................... $ 252 $ 14,593
Accounts receivable - trade .................... 812,893 795,091
Due from affiliates ............................ 58,869 59,359
Prepaid expenses and other current assets ...... 131,661 105,995
Due from officer ............................... 34,250 23,318
----------- -----------
Total current assets ....................... 1,037,925 998,356
Film licenses .................................. 2,963,729 2,963,729
Property and equipment net of accumulated
depreciation of $108,980 and $98,564
respectively ................................. 104,322 114,738
Other assets ................................... 3,431 3,519
----------- -----------
$ 4,109,407 $ 4,080,342
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses .......... $ 1,232,743 $ 1,177,736
Notes payable - current ........................ 143,541 105,587
Due to producers - current ........................ 67,399 67,556
Due to shareholders ............................ 7,000 7,000
----------- -----------
Total current liabilities ................. 1,450,683 1,357,879
Notes payable - long term ........................ 1,069 1,069
Due to producers - long term ..................... 171,500 196,741
----------- -----------
Total liabilities ......................... 1,623,252 1,555,689
----------- -----------
Shareholders' Equity
12% Non-voting convertible redeemable
preferred stock: $.10 par value, 875,000
shares authorized, 235,900 shares issued
and outstanding at March 31, 1997, and
December 31, 1996: aggregate liquidation
preference, $471,800 at March 31, 1997
and December 31, 1996 ......................... 23,590 23,590
Common Stock - $.001 par value, 300,000,000
shares authorized, 21,153,406 and 19,027,516
issued and outstanding at March 31, 1997
and December 31, 1996 respectively ........... 21,153 19,027
Capital contributions in excess of par:
Attributed to preferred stock ................. 210,303 210,303
Attributed to common stock .................... 7,218,821 7,160,265
Retained earnings (deficit) .................... (4,987,712) (4,888,532)
----------- -----------
Total shareholders' equity .................... 2,486,155 2,524,653
----------- -----------
$ 4,109,407 $ 4,080,342
=========== ===========
See Notes to Consolidated Financial Statements
2
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31, March 31,
1997 1996
------------ ------------
Revenues:
Healthcare .............................. $ 496,089 $ 658,373
Entertainment ........................... - 9,150
------------ ------------
496,089 667,523
------------ ------------
Operating Costs:
Healthcare .............................. 176,964 406,941
Entertainment ........................... - 4,827
Selling, general and administrative expenses . 418,305 325,460
------------ ------------
595,269 737,228
------------ ------------
Net income (loss) ............................ $ ( 99,180) $ (69,705)
============ ============
Weighted average number of shares outstanding 19,027,516 15,885,465
============ ============
Net income (loss) per common share $ (0.01) $ (0.01)
============ ============
See Notes to Consolidated Financial Statements
3
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31, March 31,
1997 1996
------------ ------------
Operating Activities
Net income (loss) ............................ $( 99,180) $ (69,705)
Adjustments to reconcile net cash provided
by operating activities:
Amortization expense...................... 88 4,827
Depreciation expense ........................ 10,416 9,903
Payment of officer's compensation with equity 8,592 --
Payment of various liabilities with equity .. 35,840 --
Payment of directors compensation with equity -- --
Payment of employees compensation with equity 16,250 --
Changes in assets and liabilities:
Accounts receivable ......................... (17,802) (3,809)
Prepaid expenses and other current assets ... (25,666) (19,418)
Due to/from officers ........................ (10,932) (22,237)
Due from affiliates ......................... 490 (6,008)
Accounts payable and accrued expenses ....... 55,007 (42,169)
--------- ---------
Net cash provided from (used for)
operating activities ...................... (26,897) (148,616)
--------- ---------
Investing activities:
Sale (purchase) of equipment ................ -- --
--------- ---------
Financing activities:
Reduction in borrowings ..................... (37,046) (19,188)
Proceeds from borrowings .................... 75,000 --
Payments to and on behalf of producers ...... (25,398) (59,584)
Proceeds from exercise of options ........... -- --
Proceeds from private placements ............ -- 110,000
--------- ---------
Net cash provided from (used for)
financing activities ...................... 12,556 31,228
--------- ---------
Net increase (decrease in cash) ............. ( 14,341) (117,388)
Cash at beginning of period ................. 14,593 129,558
--------- ---------
Cash at end of period ....................... $ 252 $ 12,710
========= =========
Supplemental cash flow information:
Interest paid .............................. $ 1,082 $ 8,963
--------- ---------
See Notes to Consolidated Financial Statements
4
<PAGE>
JUNIPER GROUP, INC.
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, 1996 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.
5
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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
- --------
Juniper Group, Inc. (formerly Juniper Features Ltd., the "Company") is a
New York Corporation. Its principal businesses are composed of two (2) segments,
healthcare and entertainment: (i) the healthcare operations are conducted
through two subsidiaries of Juniper Medical Systems, Inc. ("JMSI"), which is a
wholly owned subsidiary of the Company: (a) PartnerCare, Inc. ("PCI", formerly
Diversified Health Affiliates, Inc.), a managed care revenue enhancement company
providing various types of services such as: Physician Practice Management,
Managed Care Revenue Enhancement, Comprehensive Pricing Reviews, MSOs and
Liability Assessment Programs to newly evolving integrated hospital and
physician markets and (b) Juniper Healthcare Containment Systems, Inc.
("Containment"), which develops and provides full service healthcare networks
for insurance companies and managed care markets in the Northeast U.S.; and (ii)
the entertainment segment is conducted principally through Juniper Pictures,
Inc. ("Pictures"), a wholly owned subsidiary of Juniper Entertainment, Inc.
("JEI"), a wholly owned subsidiary of the Company, which engages in 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. The Company's operations are based at 111 Great Neck Road,
Suite 604, Great Neck, New York 11021.
RESULTS OF OPERATIONS
- ---------------------
Three Months Ended March 31, 1997 vs Three Months Ended March 31, 1996
- ------------------------------------------------------------------------------
The Company's revenues decreased to $496,000 in the first quarter of 1997
from $668,000 in the first quarter of 1996, representing a 26% decrease.
Revenue related to the Healthcare segment decreased to $496,000 in the
first quarter of 1997 from $658,000 in the first quarter of 1996, representing a
25% decrease. The decrease in revenue during the first quarter of 1997 was
predominately attributed to Containment, which had revenue of approximately
$284,000 in the first quarter of 1997, compared to approximately $562,000 in the
first quarter of 1996, a 49% decrease. This is a result of the following three
factors: (1) a reduction in indemnity claims due to the national trend in the
markets toward managed care; (2) a reduction in claims to be repriced from
Containmen's major client. This facilitated the client's decision to rapidly
process a backlog of claims rather than delay their payment, by having
Containment reprice such claims and avail themselves of greater savings; and (3)
a new joint venture arrangement which replaces Containment's previous
arrangement and results in lower gross revenue, but substantially greater gross
profit margins. PCI's revenue increased to $212,000 in 1997, from $96,000 in
1996. This was the result of PCI's change in direction from a DRG audit company
to a Managed Care Revenue Enhancement company.
The entertainment segment recognized no revenue in the first quarter of
1997, compared to $9,150 in 1996. This can be attributed to the following: (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 $177,000 in the first quarter of
1997 from $407,000 in the first quarter of 1996, a 57% decrease. As a percentage
of revenue, operating costs of the healthcare operations decreased to 36% in the
first quarter of 1997 from 62% in the first quarter of 1996. 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 $418,000 in the
first quarter of 1997 from $325,000 in the first quarter of 1996, a 29%
increase. This increase is primarily due to increases in public relations
expense of $19,000, the cost of the annual meeting and the issuance of
shareholders' proxy statement of $32,000, consulting expenses of $12,000,
information system development expenses of $12,000, and bad debt expenses of
$28,000, offset by a reduction in interest expense of $7,000. Most of these
increases were related to the management changes in PCI and the corresponding
redirection of time and resources of management initiatives to re-engineer and
diversify product lines through the development of the new information systems.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Working capital deficiency at March 31, 1997 was 413,000, compared to
working capital deficiency of $360,000 at December 31, 1996. The ratio of
current assets to current liabilities was .72:1 at March 31, 1997 and .74.1 at
December 31, 1996. Cash flow used in operations during the first quarter of 1997
was $27,000, compared to cash flow used in operations during the first quarter
of 1996, of $149,000.
Accounts receivable - trade increased to $813,000 from $795,000 at December
31, 1996.
Accounts payable increased to $1,233,000 from $1,178,000 at December 31,
1996.
Although the Company plans to continue to expand its healthcare business to
the extent that resources are available, the Company has no firm material
commitments for capital expenditures in other areas of its business and has no
plans to acquire additional films.
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 1997. If the Company is unable to fund its operating cash flow
needs, the Company may scale back operations.
The Company currently does not have any bank lines of credit.
At the Company's annual meeting, management eliminated shareholders'
pre-emptive rights, which previously existed under New York law. Notwithstanding
these rights, the Company has on a number of occasions issued shares without
affording shareholders the opportunity to exercise pre-emptive rights and
without procuring waivers of such rights. No shareholder has alleged any damage
resulting to him as a result of the sale of shares by the Company without
offering pre-emptive rights. The amount of damages incurred by shareholders by
reason of the failure of the Company to offer pre-emptive rights, if any, is not
ascertainable with any degree of accuracy. Management believes that if claims
were asserted alleging damages, the Company may have valid defenses.
8
<PAGE>
PART II: OTHER INFORMATION
Item 2. Changes in Securities
-----------------------
(a) The information disclosed in Item 4 below is incorporated herein by
reference.
(b) N/A
(c) Common Stock, $0.001 par value, sold in the first quarter of 1997 were as
follows:
<TABLE>
<CAPTION>
Date Purchaser Amount (#) Amt. Paid ($) Description Exemption
- -------------------- ------------------ ------------------- ------------------ ------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
3/31/97 Officers 936,890 24,843 (1) 4(2)
3/31/97 Producers 500,000 15,000 (2) 4(2)
3/31/97 Lender 402,000 12,500 (3) 4(2)
3/31/97 Consultant 287,000 8,340 (4) Reg. S
</TABLE>
_______________________
(1) Two officers of the Company accepted common stock in lieu of accrued
salary.
(2) A film producer accepted common stock in lieu of unpaid minimum license
fees.
(3) A lender accepted common stock in repayment of a loan to the Company.
(4) A non-U.S. consultant accepted common stock in lieu of consulting fees
relating to public relations services provided to the Company.
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, and all payments due in 1993, in 1994, in 1995 and in
1996 and the payment due on March 1, 1997 have not yet been paid and 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 reserved 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.
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 payments which have not
yet been made. The total cash value of the arrearage of unpaid dividends is
$269,000.
9
<PAGE>
Item 4. Submission of Matters to Vote of Security Holders
-------------------------------------------------
In February 1997, at the Company's annual meeting of shareholders (The
"Annual Meeting"), the shareholders approved a proposal to change the Company's
state of incorporation from New York to Nevada. Reincorporation in Nevada will
allow the Company to take advantage of certain provisions of the corporate law
of Nevada but will not result in any change in the business, management, assets,
liabilities or net worth of the Company.
In order to effect the Company's reincorporation in Nevada, the Company
will be merged into a newly formed, wholly-owned subsidiary of the Company
incorporated in Nevada. The Nevada subsidiary, named Juniper Group, Inc., which
was formed on January 22, 1997, has not engaged in any activities except in
connection with the proposed transaction.
The Annual Meeting of shareholders was held on February 12, 1997, for the
purposes described below, and the number of votes cast for, against
or withheld are reflected in the tabulation below:
1. Election of the following Directors to serve for a term of one year:
<TABLE>
<CAPTION>
Withheld
For Authority
---------- ----------
<S> <C> <C>
(a) Vlado P. Hreljanovic 13,971,941 356,536
(b) Harold A. Horowitz 13,835,725 492,752
(c) Peter W. Feldman 13,971,941 356,536
Abstain/
For Against Broker Non-Votes
--------------- ------------ ----------------
2. Amendment to the Certificate of Incorporation to
change the name of the Company to Juniper Group, Inc. 14,263,868 55,659 8,950
3. Amendment to the Certificate to eliminate the preemptive
rights of holders of the Company's Common Stock $0.001
par value 10,077,101 352,006 3,899,370
4. Amendment to the Certificate of Incorporation to increase
the authorized Common Stock from 20,000,000 to
300,000,000 Shares 13,569,821 730,606 28,050
5. Amendment to the Certificate of Incorporation to require
the vote of holders of 80% of the issued and outstanding
shares of Common Stock to approve certain business
combinations involving the Company and a related person 10,270,369 158,838 3,899,270
6. Amendment to the Company's By-Laws to provide for
a pre-takeover notification requirement 10,058,758 383,949 3,885,770
7. Change the Company's state of domicile from New York
to Nevada 12,344,301 295,696 1,688,480
8. Company's 1996 Stock Option Plan 9,538,512 873,795 3,916,170
9. Appointment of Goldstein & Ganz, P.C. as the Company's
independent public accountants for year ending December
31, 1996 14,018,768 295,359 14,350
</TABLE>
10
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit Description
3.1 Certificate of Incorporation of the Registrant, as amended (1)
3.2 Amendment to the Certificate of Incorporation of the Registrant, filed
March 7, 1997 (2)
3.3 Certificate of Incorporation of Juniper Group, Inc., a Nevada
corporation.(3)
3.4 By-Laws of the Registrant (1)
3.5 Amendment to the By-Laws of the Registrant approved by the shareholders
of the Registrant on February 12, 1997 (3)
3.6 By-Laws of Juniper Group, Inc., a Nevada corporation (3)
27.1 Financial Data Schedule
- ---- -----------------------
(1) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1995
(2) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1996
(3) Incorporated by reference to the Company's Proxy Statement for its
Annual Meeting held in February 1997
(b) Reports on Form 8-K.
NONE
11
<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 GROUP, INC.
Date: May 14, 1997
By:/s/ Vlado P. Hreljanovic
------------------------
Vlado P. Hreljanovic
Chairman of the Board, President,
Chief Executive Officer and Acting
Chief Financial Officer
12
<PAGE>
EXHIBIT INDEX
Exhibit Description
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME FOUND ON PAGES
3 & 4 OF THE COMPANY'S FORM 10-QSB FOR THE THREE MONTHS ENDED MARCH 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> Mar-31-1997
<CASH> 252
<SECURITIES> 0
<RECEIVABLES> 812,893
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,037,925
<PP&E> 213,302
<DEPRECIATION> 108,980
<TOTAL-ASSETS> 4,109,407
<CURRENT-LIABILITIES> 1,450,683
<BONDS> 0
0
23,590
<COMMON> 21,153
<OTHER-SE> 2,441,412
<TOTAL-LIABILITY-AND-EQUITY> 4,109,407
<SALES> 0
<TOTAL-REVENUES> 496,089
<CGS> 0
<TOTAL-COSTS> 595,269
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (99,180)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (99,180)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
