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, 1998
---------------------------------------------
Commission file number 0-19170
JUNIPER GROUP, INC.
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(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 6, 1998, was 51,979,513 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, 1998 31, 1997
----------- -----------
Current Assets
Cash ........................................... $ 185,912 $ 30,187
Accounts receivable - trade .................... 403,173 363,480
Due from affiliates ............................ 11,466 15,570
Prepaid expenses and other current assets ...... 149,014 141,098
Due from officer ............................... 121,000 -
----------- -----------
Total current assets ....................... 870,565 550,335
Film licenses .................................. 2,954,562 2,954,562
Property and equipment net of accumulated
depreciation of $73,526 and $127,382
respectively ................................. 62,476 98,911
Other assets ................................... 183 2,049
----------- -----------
$ 3,887,786 $ 3,605,857
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses .......... $ 796,957 $ 835,427
Notes payable - current ........................ 562,075 342,571
Due to producers - current ..................... 62,086 62,086
Due to officer ................................. - 68,662
Due to shareholders ............................ 7,000 7,000
----------- -----------
Total current liabilities ................. 1,428,118 1,315,746
Due to producers - long term ..................... 87,406 93,814
----------- -----------
Total liabilities ......................... 1,515,524 1,409,560
----------- -----------
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, 1998, and
December 31, 1997: aggregate liquidation
preference, $471,800 at March 31, 1998
and December 31, 1997 ......................... 23,590 23,590
Common Stock - $.001 par value, 300,000,000
shares authorized, 51,121,139 and 37,995,083
issued and outstanding at March 31, 1998
and December 31, 1997 respectively ........... 51,121 37,995
Capital contributions in excess of par:
Attributed to preferred stock ................. 210,303 210,303
Attributed to common stock .................... 8,331,186 7,934,744
Retained earnings (deficit) .................... (6,243,938) (6,010,335)
----------- -----------
Total shareholders' equity .................... 2,372,262 2,196,297
----------- -----------
$ 3,887,786 $ 3,605,857
=========== ===========
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,
1998 1997
------------ ------------
Revenues:
Healthcare .............................. $ 208,435 $ 496,089
Entertainment ........................... - -
------------ ------------
208,435 496,089
------------ ------------
Operating Costs:
Healthcare .............................. 21,775 176,964
Entertainment ........................... - -
Selling, general and administrative expenses . 420,263 418,305
------------ ------------
442,038 595,269
------------ ------------
Net income (loss) ............................ $ (233,603) $ (99,180)
============ ============
Weighted average number of shares outstanding 47,385,792 19,027,516
============ ============
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,
1998 1997
------------ ------------
Operating Activities
Net income (loss) ............................ $(233,603) $ (99,180)
Adjustments to reconcile net cash provided
by operating activities:
Amortization expense......................... -- 88
Depreciation expense ........................ 10,211 10,416
Gain on disposition of assets ............... (6,362) --
Payment of officer's compensation with equity 209,724 8,592
Payment of various liabilities with equity .. 3,950 35,840
Payment of employees compensation with equity -- 16,250
Changes in assets and liabilities:
Accounts receivable ......................... (39,693) (17,802)
Prepaid expenses and other current assets ... (7,916) (25,666)
Due to/from officers ........................ (189,662) (10,932)
Due from affiliates ......................... 4,104 490
Accounts payable and accrued expenses ....... (38,470) 55,007
--------- ---------
Net cash provided from (used for)
operating activities ...................... (287,717) (26,897)
--------- ---------
Investing activities:
Sale (purchase) of equipment ................ (5,250) --
--------- ---------
Financing activities:
Reduction in borrowings ..................... (90,794) (37,046)
Proceeds from borrowings .................... 400,000 75,000
Payments to and on behalf of producers ...... (6,408) (25,398)
Proceeds from private placements ............ 145,894 --
--------- ---------
Net cash provided from (used for)
financing activities ...................... 448,692 12,556
--------- ---------
Net increase (decrease in cash) ............. 155,725 (14,341)
Cash at beginning of period ................. 30,187 14,593
--------- ---------
Cash at end of period ....................... $ 185,912 $ 252
========= =========
Supplemental cash flow information:
Interest paid .............................. $ 6,340 $ 1,082
--------- ---------
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, 1997 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
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's consolidated
financial statements and notes thereto included elsewhere herein. The statements
disclosed herein include forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company's actual results could
differ materially from those projected in the forward-looking statements as a
result of certain risks and uncertainties, including, but not limited to, the
Company's historical lack of profitability, the Company's need for additional
financing, competition in the managed health care industry, and other risks
detailed from time to time in the Company's filings with the Securities and
Exchange Commission.
OVERVIEW
- --------
Juniper Group, Inc. (the "Company")is a Nevada Corporation. Its principal
businesses are composed of two 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"), 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, 1998 vs Three Months Ended March 31, 1997
- ---------------------------------------------------------------------------
Revenue related to the Healthcare segment decreased to $208,000 in the
first quarter of 1998 from $496,000 in the first quarter of 1997, representing a
58% decrease. The decrease in revenue during the first quarter of 1998 was
predominately attributed to Containment, which had revenue of approximately
$108,000 in the first quarter of 1998, compared to approximately $284,000 in the
first quarter of 1997, a 62% decrease. This is a result of changes instituted in
December 1997, whereby Containment discontinued a joint venture arrangement and
its arrangement with the Guardian Insurance Company. The loss of this business
has been temporarily replaced with a settlement agreement which will generate
revenue with no corresponding expense throughout 1998. PCI's revenue decreased
to $100,000 in 1998, from $212,000 in 1997. 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
1998, or the first quarter of 1997. 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. The Company is currently utilizing
its resources to build the healthcare segment of its business, and has not
devoted resources toward the promotion and solicitation of the films in 1997.
However, the Company has begun looking for outside salesmen to help market and
marchandise the films that are not currently under license.
Healthcare operating costs decreased to $22,000 in the first quarter of
1998 from $177,000 in the first quarter of 1997, a 88% decrease. As a percentage
of revenue, operating costs of the healthcare operations decreased to 11% in the
first quarter of 1998 from 36% in the first quarter of 1997. 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 $420,000 in the
first quarter of 1998 from $418,000 in the first quarter of 1997, a 1% increase.
This increase is primarily due to increases in bad debt expense of $70,000(due
to a more conservative evaluation of the Company's accounts receivable) and
public relations expense of $31,000, offset by a reduction of employee medical
benefits of $28,000, costs associated with the 1997 annual meeting and issuance
of proxy statements of $30,000, office related expenses of $16,000, salaries and
related taxes of $13,000 and information system expenses of $12,000. Most of
these decreases were related to the management changes in PCI during 1997 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.
6
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Working capital deficiency at March 31, 1998 was $558,000, compared to
working capital deficiency of $765,000 at December 31, 1997. The ratio of
current assets to current liabilities was .61:1 at March 31, 1998 and .42.1 at
December 31, 1997. Cash flow used in operations during the first quarter of 1998
was $288,000, compared to cash flow used in operations during the first quarter
of 1997, of $27,000.
Accounts receivable - trade increased to $403,000 from $363,000 at December
31, 1997.
Accounts payable decreased to $797,000 from $835,000 at December 31,
1997.
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 may not have sufficient liquidity to meet its
operating cash requirements for the current level of operations during the
remainder of 1998. The Company will require additional financing. There can be
no assurance that financing will be available, or if available, on terms
acceptable to the Company. If the Company is unable to fund its operating cash
flow needs, the Company may be required to substantially curtail 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.
7
<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, $0.001 par value, sold in the first quarter of 1998 were as
follows:
<TABLE>
<CAPTION>
Date Purchaser Amount (#) Amt. Paid ($) Description Exemption
- -------------------- ------------------ ------------------- ------------------ ------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
3/31/98 Officers 6,990,802 209,724 (1) 4(2)
3/31/98 Vendors 56,461 3,950 (2) 4(2)
3/31/98 Reg S 6,078,793 195,894 (3) Reg. S
</TABLE>
_______________________
(1) The President and CEO of the Company accepted common stock in lieu of
accrued salary.
(2) Vendors accepted common stock in lieu of unpaid fees.
(3) 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
1997 and the payment due on March 1, 1998 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
$326,000.
8
<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, 1998 (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, 1998 (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, 1997
(3) Incorporated by reference to the Company's Proxy Statement for its
Annual Meeting held in February 1998
(b) Reports on Form 8-K.
NONE
9
<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, 1998
By:/s/ Vlado P. Hreljanovic
------------------------
Vlado P. Hreljanovic
Chairman of the Board, President,
Chief Executive Officer and Acting
Chief Financial Officer
10
<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, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> Mar-31-1998
<CASH> 185,912
<SECURITIES> 0
<RECEIVABLES> 403,173
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 870,565
<PP&E> 136,002
<DEPRECIATION> 73,526
<TOTAL-ASSETS> 3,887,786
<CURRENT-LIABILITIES> 1,428,118
<BONDS> 0
0
23,590
<COMMON> 51,121
<OTHER-SE> 2,297,551
<TOTAL-LIABILITY-AND-EQUITY> 3,887,786
<SALES> 0
<TOTAL-REVENUES> 208,435
<CGS> 0
<TOTAL-COSTS> 442,038
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (233,603)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (233,603)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
