U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998
Commission File Number: 0-19170
JUNIPER GROUP, INC.
(Name of small business issuer in Its Charter)
Nevada 11-2866771
- - -------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
111 Great Neck Road, Suite 604,
Great Neck, New York 11021
(address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (516) 829-4670
Securities registered pursuant to Section 12(b) of the Exchange Act: NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of Each Class:
Common Stock (par value $.001 per share)
12% Non-Voting Convertible Redeemable Preferred Stock $.10 par value
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that Registrant was required to
file such reports) and (2) has been subject to such filing requirements for the
past 90 days. YES X NO
-- --
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ X ]
State issuer's revenues for its most recent fiscal year. - $1,420,871.
The aggregate market value of the Common Stock held by non-affiliates of
the Registrant was approximately $5,806,551 based upon the $2.44 average bid
price of these shares on the NASDAQ Stock Market for the period March 1, 1999
through March 16, 1999.
As of March 16, 1999, there were 2,379,734 outstanding shares of Common
Stock, $.001 par value per share.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Juniper Group, Inc.'s (the "Company") principal businesses are composed of
two (2) segments, healthcare and entertainment.
Healthcare: The healthcare operations are conducted through two wholly
owned subsidiaries of Juniper Medical Systems, Inc. ("JMSI"), which is a wholly
owned subsidiary of the Company:
(a) PartnerCare, Inc. ("PCI") is a managed care revenue enhancement company
providing various types of services such as: Physician Practice Management,
Managed Care Revenue Enhancement, Comprehensive Pricing Reviews, MSOs,
Receivable Financing (through a subsidiary of PCI, PartnerCare Funding,
Inc.) to newly evolving integrated hospital and physician markets, and
Write-off Review, appeals of any third party rejections denials of accounts
and recovery of any third party bad debt accounts, including commercial
insurance, managed care, MediCare, Medicaid, Champus, etc.
(b) Juniper Healthcare Containment Systems, Inc. ("Containment") is a
company which develops and provides full service healthcare networks for
insurance companies and managed care markets in the Northeast U.S.
In addition, the Company holds a 49% interest in Nuclear Cardiac Imaging,
Inc.("NCI"), a New Jersey corporation. NCI is a newly formed company developing
the business of providing cardiac Spect Imaging to cardiologists at their
offices without charge to the doctor. NCI charges the insurance carrier or
managed care company directly.
Entertainment: 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 was incorporated in July 1987 under the name Juniper Features,
Ltd. as a New York corporation, and commenced entertainment operations in
January 1988. In late 1991, the Company recognized an opportunity to expand into
healthcare and formed JMSI in September, 1991. In December 1991, JMSI, acquired
all of the outstanding capital stock of PCI. Containment commenced operations in
September 1992. Containment and PCI operate their business from the Company's
Great Neck location.
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
allowed the Company to take advantage of certain provisions of the corporate law
of Nevada but did 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, in 1997, the
Company was merged into a newly formed, wholly-owned subsidiary of the Company
incorporated in Nevada. The Nevada subsidiary, named Juniper Group, Inc., was
formed on January 22, 1997.
Business of Issuer
(i) Healthcare Cost Containment Services and Revenue Enhancement
(a) Managed Care Revenue Enhancement Program ("MCREP")
During the last few years, the country has experienced an explosive growth
of managed care markets. The Company's new direction into the managed care arena
parallels the evolving growth within these markets. The New York Times reported
that managed care plans enrolled 85% of employees in 1997, which is
substantially higher than the 48% enrollment just five years ago. PartnerCare is
riding a wave of new opportunities, especially those arising from the plethora
of contracts executed between hospitals, physicians and managed care companies.
PCI has developed a comprehensive program that addresses the entire
spectrum of business and revenue issues pertaining to the hospital's managed
care relationships. PCI ensures that hospitals obtain all the dollars that they
are entitled to under their managed care agreements.
PCI's program also includes the profiling of managed care contracts and the
performance bench marking of these agreements. PCI validates whether or not the
projected financial value anticipated from these arrangements can be obtained.
PCI's assessments include line item audits of claims generated through these
relationships, as well as trending reviews to identify, and document "Silent
PPO" activity. PCI also identifies managed care claims that have not been
properly paid, or have been written-off. PCI then actively pursues payors to
expedite payments to the hospital for rebilled claims.
<PAGE>
These programs have given the Company an opportunity to service the growing
number of hospitals and integrated networks that are facing the complexities
associated with managed care contracts. These relationships result in payment
errors on claims and non-compliance issues that foster sizable revenue losses to
hospitals. PCI's new product lines target these problems and provides services
which recapture lost revenue.
PCI's MCREP business consists of the essential ingredients needed to assist
hospitals in maximizing the business value of their managed care contracts. The
components of this Program are as follows:
* Managed Care Contract Compliance
PCI identifies all managed care contracts and benchmarks performance
requirements for each contract. Its clients are provided with comprehensive,
easy to read profiles of the managed care contracts in the hospital's portfolio.
PCI evaluates claims actively generated by each payor for contract compliance.
Per diems and percentage discounts taken by payors are validated in accordance
with hospital expectations. MCREP provides the hospital with an immediate source
of additional revenue from closed accounts. MCREP becomes a second filter of
claims adjudication. The quality process results in a correct bill and assures
the hospital that all revenue due is properly billed.
* Line Item Reviews and Administration
PCI's team identifies and recovers all charges overlooked subsequent to the
presentation of the final hospital bill, as well as reviews previously submitted
claims. PCI's unique Line Item Reviews simultaneously match units of service to
the medical record documentation at the time of discharge. Line Item Reviews
identify the claims under and over charged by the payor. While reviewing the
bills, PCI is simultaneously auditing the medical records. This critical
component of the Managed Care Revenue Enhancement Program also serves as a
quality assurance review of the hospital's medical records. By ensuring an
accurate final bill for submission to the insurance company, the hospital avoids
additional billing and collection expenses.
* Regulatory Compliance
With the growth of managed care companies and the increasing dependence of
hospitals and physicians on such companies for payment, the scrutiny of the
managed care contracts between the hospitals and physicians and the managed care
companies for proper compliance becomes critically important.
During 1998, PCI has reviewed managed care contracts for hospitals and
physicians to ensure compliance and proper reimbursement. It has, through this
process, identified unreimbursed claims on behalf of its clients. For one major
hospital system, PCI has identified over $1.5 million in unreimbursed claims.
* Silent PPO Reviews
In the present era of managed care, hospitals often contract with a PPO for
the PPO to bring patients to the hospital in exchange for a discount on the
hospital's fees. A practice has arisen whereby a PPO may sell or lease the
discounts that it has with a hospital to another PPO (with whom the hospital has
no agreement to provide discounted fees) and, unknown to the hospital, the
patients of the second PPO receive substantial discounts even though the
hospital never agreed to such an arrangement. This is referred to as a "Silent
PPO". This causes the hospital to lose substantial fees because it is
discounting fees that it never agreed to.
PCI performs reviews for hospitals and hospital groups to identify Silent
PPOs and thus save substantial revenues for its clients.
* Receivable Financing
In May 1998 PCI formed PartnerCare Funding, Inc. ("PCFI"). PCFI, in
conjunction with PCI, arranges loan financing based upon the receivables of
hospitals and physician groups, thus allowing such groups to have a more
flexible cash flow. As of December 31, 1998, PCFI has arrangements with two
integrated systems in New York. An integrated system is a grouping of
hospitals and physicians.
(b) PartnerCare Synergy
In March 1999, the Company formed a joint venture called PartnerCare
Synergy ("PCS") with Synergy, Inc., a Texas corporation. PCS will provide
professional quality services to the healthcare industry by specializing in the
recovery of denied third party insurance claim to hospitals and physicians. PCS
also provides services for retrospective audits of paid-out (zero balance)
managed care accounts for contract compliance and payment accuracy.
(c) Healthcare Cost Containment Services
Although revenues from previously existing contracts were recognized during
1998, new arrangements ceased as of December 17, 1997. As of December 31, 1998,
the Company is not providing such services to providers or networks.
<PAGE>
Containment is a provider of healthcare cost containment services for third
party healthcare payors. Containment provides its clients with savings on
hospital expenditures through a geographically tailored network of high-quality,
cost-effective healthcare providers. In addition, Containment provides its
clients with timely, informative data claims analysis and reporting. Containment
assists third party healthcare payors, including group health insurance
companies, in reducing their costs associated with the delivery of health
services. Containment arranges with networks of healthcare providers and
facilities (preferred provider organizations, "PPOs") to discount their charges
in return for prompt payment and access to a higher volume of patients. Group
health insurance companies agree to channel their enrollees to a preferred
provider organization network, resulting in lower insurance premiums to their
clients. Containment provides supervision through sub-contractors to ensure that
the appropriate and necessary medical services are provided to the patient in a
cost effective manner. Containment also provides health network coverage to its
insurance clients and their enrollees.
Independent PPO cost management firms, such as Containment, offer numerous
programs designed to meet these collective objectives. PPO services have only
recently been offered on a commercially significant scale by independent firms
which are engaged primarily in providing these types of services. The industry
is currently highly fragmented with numerous independent firms providing medical
utilization review and PPO services, the vast majority of which provide such
services on a regional or local level.
From 1992 through December 17, 1997, Containment has had an on-going
agreement with The Guardian Life Insurance Company ("Guardian"), whereby
Containment was paid a percentage of the savings it generated for the insurance
company. Containment provided this service for Guardian in New Jersey and
Connecticut.
The Company has, over the past several years, worked closely with a
healthcare professional to bring the Company both health insurance company group
plan customers as well as professional healthcare providers and networks. The
healthcare professional has assisted in arranging the relationships among the
Company, the Guardian, and the network of providers previously under contract
with Containment. The agreement with the healthcare professional for his
services continued until December 17, 1997 and provided that the Company pay the
healthcare professional commissions at varying rates and grant options to
purchase common stock if certain contract renewals were realized or certain
revenue levels were achieved.
Competition
Based upon data generated by the healthcare industry and U.S. Government
sources, healthcare expenditures have increased from $249 billion in 1980 (9.1%
of gross national product) to an estimated $700 billion in 1990 (12% of gross
national product). It is anticipated that healthcare expenditures will exceed $1
trillion in the year 2000. Many have modified their traditional insurance
coverage or made available to their employees the opportunity to participate in
HMOs and PPOs. In a national survey by Foster Higgins, reported by the New York
Times on January 20, 1998, "managed care plans enrolled 85% of employees in
1997, up from 77% in 1996, and only 48% five years ago." The same article
reported that 1997 was "the biggest one year shift out of traditional indemnity
coverage since 1994." This has enabled them to take a more active role in
managing healthcare benefits and costs. In response to the trend towards
self-insurance and increasing competition from HMOs and PPOs, group insurance
carriers have sought to control premium increases through the adoption of cost
containment programs.
Although its MCREP services are different from those offered by other
hospital consulting services, the Company competes for consulting business
primarily with revenue-optimization services companies. The Company competes for
its MCREP clients by distinguishing its services from those provided by revenue
optimization service companies, which generally do not use benchmark performance
levels of managed care agreements or target "Silent PPO" practices as does the
Company. Numerous companies of varying size offer revenue-optimization services
that may be considered competitive with the Company. The Company does not
believe that any single company commands significant market share. Larger, more
established consulting firms have an enhanced competitive position, due in part
to established name recognition and direct access to hospital clients through
the provision of other services. Small firms, although not necessarily offering
those particular services comparable to those of the Company, compete on the
basis of price.
The managed care industry is highly competitive. The Company's MCREP
programs will compete with other providers of healthcare services, including
regional groups as well as national firms. Based upon these competitive factors,
the Company believes that it will be able to compete successfully in the markets
by adhering to its business strategy, although there can be no assurance that
the Company will be able to compete successfully.
<PAGE>
Sales and Marketing
The Company's 1998 growth initiative has also driven new sales and
marketing strategies, resulting in a growing interest in PCI's new product lines
which capture unrecovered dollars that hospitals are entitled to under their
managed care agreements. The initiatives have also been received well by
national hospital chains, regional hospital networks, and larger hospitals that
have numerous managed care contracts. The result has been a growing portfolio of
hospital contracts in the New York Metropolitan area. Efforts have been underway
to address these requirements which, when completed, will foster greater sales
opportunities.
In addition to the above sales and marketing efforts, new initiatives are
also underway targeting geographic markets which are characterized by an
accelerated growth of the managed care industry. Specifically, resources and
sales efforts were invested into developing both the New York and New Jersey
markets. This included seminars as well as numerous meetings with corporate
officers and representatives of hospital chains that have a large presence in
Florida. These markets represent a great deal of opportunity since managed care
revenue represents a growing revenue source to hospitals within these areas.
As of December 31, 1998, PCI had five contracts for its MCREP business, a
decrease from fourteen at December 31, 1997. Revenue to PCI is contingent upon
generating revenue for each hospital under contract. For each contract in place,
based upon PCI's experience, each contract may be expected to average revenue on
an annualized basis of approximately $110,000. The annual revenue for each
contract fluctuates significantly depending upon many factors including, but not
limited to, the number of managed care agreements the hospital had entered, the
capacity of the hospital's information system, the nature of the work under
contract and the length of the period under contract.
Major Customers
In 1998, New York Hospital accounted for 51% of the total revenue of the
Company. In 1997, New York Hospital accounted for 7% of the total revenue of the
Company. Throughout the year the Company performed two distinct types of
services for New York Hospital and is arranging to add a third type of service
in 1999.
In 1998, Guardian accounted for 19% of the total revenue of the Company. In
1997, Guardian accounted for 62% of the total revenue of the Company. Effective
December 17, 1997, the Company no longer has any contractual arrangement with
the Guardian. The loss of this business was replaced with a settlement agreement
between the Company and a healthcare professional with whom the Guardian is
doing similar business. The loss of the contract with Guardian will have a
material adverse effect on the operations of the Company after 1998. However,
the Company is pursuing contracts with other insurance companies and other
healthcare providers, such as the New York Hospital contract which, if
successful, may reduce the impact of the loss of Guardian's business.
The Company does not have any other customers the loss of which would have
a materially adverse effect upon the Company.
(ii) Entertainment
Pictures is engaged in the distribution of films through licensing to home
video, pay-per-view, pay-cable, and commercial television broadcast media
domestically as well as in foreign markets. Pictures has exclusive distribution
rights to eighty-one (81) films in various media within various international
markets.
During 1998 and 1997, the Company significantly curtailed its efforts in
the distribution of film licenses to commit and focus its resources on the
growth of the healthcare segment, which during that time was, and currently is,
the most efficient and cost effective strategy for the Company to maximize
revenue. In 1998, the Company began directing efforts toward reestablishing a
foothold in the film industry. The Company expects to begin recognizing growth
in revenues from the sale of film licenses in 1999.
Pictures acquires worldwide rights to films which are saleable to various
markets. In acquiring the rights to a film, Pictures analyzes the viability of
the product for distribution in an effort to target the film's audience appeal.
Armed with its analysis, Pictures markets the film, using sales representatives
and the efforts of its officers, to the various media in a selective manner. In
addition, Pictures aids the media to which it markets its films by producing a
strategy for the presentation of the film, with a view to
programming/counterprogramming against competitive media in the same market and
directing a film to the proper demographic population (i.e., female, male,
child, teenager and middle age) in order to produce the most favorable outcome
regarding ratings and advertising revenue.
<PAGE>
Pictures acquires its film rights from independent film production
companies. Pictures monitors the industry for available films, concentrating on
content, quality, theme, actors and actresses, plot, format and certain other
criteria to determine the film's suitability for the home video, pay-per-view,
pay/cable and commercial media to which Pictures markets its product, both
domestically and internationally.
Pictures markets its product through its sales representatives, who also
assist Pictures at domestic and international trade shows to market Pictures'
film library.
Pictures acquires domestic and/or foreign distribution rights to films for
a license period that typically spans between 10 and 20 years, during which time
Pictures has the right to distribute such films in various media (video, pay
cable, syndication and free T.V.). Pictures earns a distribution fee, which is
based upon a percentage of gross receipts received for the license. In addition,
the Company recoups its expenses incurred in making the sale (i.e. market costs,
travel and entertainment, advertising, fax, phone, mail, etc.), along with
recouping any advances made to producers upon signing or within a fixed period
of time thereafter (minimum guarantee) from the gross receipts. The balance of
gross receipts after such recoupment is paid to the producer. Any minimum
guarantees paid to the producer are payable over a period of 3-8 years.
Competition
Competition is intense in the motion picture distribution industry. The
Company is in competition with other motion pictures distribution companies
including many which have greater resources than the Company, both in the
acquisition of distribution rights to movie properties and the sales of these
properties to the various markets (i.e. pay, cable and television).
Employees
As of March 17, 1999, the Company had 7 full-time employees and 5 part-time
employees and independent contractors. Of the full-time employees, all 7 work at
the Company's offices, some of whom spend portions of their time at clients.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive, healthcare and film distribution offices are
located at 111 Great Neck Road, Suite 604, Great Neck, New York 11021. This
property consists of 2,026 square feet of offices and is subleased from
Entertainment Financing Inc.("EFI"), an entity affiliated with the Chief
Executive Officer of the Company, currently at approximately $6,000 per month.
EFI's lease, and the Company's sublease on this space expires on May 31, 2002.
EFI has agreed that for the term of the sub-lease the rent paid to it will be
substantially the same rent that it pays under its master lease to the landlord.
In addition, in January 1995, the Company opened an office in Boca Raton,
Florida. In September 1998, this office was closed. This property consisted of
1900 square feet of offices and was sub-leased from EFI Funding, Ltd.
("Funding"), an entity affiliated with the Chief Executive Officer of the
Company, currently at $1,150 per month. Funding's lease and the Company's
sublease on this space expired on November 30, 1997, and was being leased on a
month to month basis. Funding agreed that for the term of the sub-lease the rent
paid to it was substantially the same rent that it paid under its master lease
to the landlord. Minor additional charges are made by EFI and Funding to the
Company to cover administrative costs.
In September 1998, NCI which is 49% owned by the Company, opened an office
in New Jersey. The property consists approximately 950 square feet of offices,
currently at $1,400 per month. NCI's lease expires in September 2000.
ITEM 3. LEGAL PROCEEDINGS
On May 22, 1996, Ordinary Guy, Inc. and Crow Productions, Inc. commenced an
action against the Company, its CEO and an affiliate of the CEO in the United
States District Court for the Eastern District of New York seeking damages in
the amount of $464,470.50, plus interest alleging that the Company has successor
liability for a judgment entered in March of 1993 by the Plaintiffs against
Juniper Releasing, Inc. ("Releasing"), a company affiliated with the Company's
CEO. It is alleged that the Company was formed in 1989 as a successor to
Releasing and that the Company and others transferred assets out of Releasing to
avoid the payment of Releasing's creditors. This matter was settled in April
1998 for a payment of $310,000 which is paid out over three years ending April
20, 2001. The payment is secured by 93,320 shares of the Company's common stock.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on December 30, 1998.
The following resolutions were proposed and the vote tally was as set forth next
to each resolution:
(1) The foregoing nominees for election to the Board of Directors received the
number of votes for their election set forth opposite their respective
names:
VOTES CAST
------------
FOR WITHHELD
NOMINEES ELECTION AUTHORITY
Vlado Paul Hreljanovic 1,568,816 10,420
Harold Horowitz 1,568,816 10,420
Marvin Rostolder 1,568,816 10,420
(2) Proposal 2 proposed that the Company's certificate of incorporation be
amended to increase the number of authorized shares from 6,000,000 to
75,000,000. The following number of shares were voted by proxy or by ballot
for and against the proposal to amend the Certificate of Incorporation to
increase the total amount of authorized shares of Common Stock from
6,000,000 to 75,000,000.
FOR 1,567,926 AGAINST 11,290 ABSTAIN 20
--------- ------ ----
<PAGE>
(3) Proposal 3 asked for approval of the Company's 1998 Stock Option Plan. The
following number of shares were voted by proxy or by ballot for and against
the ratification of the Company=s 1998 Stock Option Plan.
FOR 1,567,726 AGAINST 11,510 ABSTAIN 0
--------- ------ ----
(4) Proposal 4 sought ratification of the appointment of the auditors of the
Company for the fiscal year ended December 31, 1997. The following number
of shares were voted by proxy or by ballot for and against the ratification
of the appointment of the auditors for the year ended December 31, 1997.
FOR 1,579,036 AGAINST 0 ABSTAIN 200
--------- --- -----
(5) Proposal 5 was a proposal requested by a shareowner of the Company and
sought to remove the Chairman of the Company. The following number of
shares were voted by proxy or by ballot for and against the share owner
proposal.
FOR 11,187 AGAINST 1,567,589 ABSTAIN 460
------- --------- ---
(6) Proposal 6 pertained to the ratification of the appointment of the
Company's auditors for the fiscal year ended December 31, 1998. The
following number of shares were voted by proxy or by ballot for and against
the ratification of the appointment of the auditors for the year ended
December 31, 1998.
FOR 1,579,036 AGAINST 0 ABSTAIN 200
--------- --- ----
There were no broker non-votes.
BALANCE OF PAGE HAS BEEN LEFT BLANK INTENTIONALLY
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is traded on the National Association of
Securities Dealer Automated Quotation System ("NASDAQ") Small Cap Market, under
the symbol "JUNI". The Company's 12% Convertible Redeemable Preferred Stock
("Preferred Stock") is traded in the Over-the-Counter Market on the NASD OTC
Bulletin Board. The Company's Class A Warrants expired on May 1, 1997 and the
Company's Class B Warrants expired on May 1, 1998. The following constitutes the
high and low sales prices for the common stock, the Class A Warrants and the
Class B Warrants as reported by NASDAQ for each of the quarters of 1998 and
1997. The quotations shown below reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
1998 HIGH LOW
---- ---- ---
FIRST QUARTER
Common Stock ...............(2) 9.38 3.15
Class B Warrants ........... (1) (1)
SECOND QUARTER
Common Stock ...............(2) 6.25 1.10
Class B Warrants ........... (1) (1)
THIRD QUARTER
Common Stock ............... 1.56 0.75
FOURTH QUARTER
Common Stock ............... 1.44 0.75
1997 HIGH LOW
---- ---- ---
FIRST QUARTER
Common Stock ...............(2) 10.95 3.15
Class A Warrants ........... (1) (1)
Class B Warrants ........... (1) (1)
SECOND QUARTER
Common Stock ...............(2) 7.80 3.15
Class A Warrants ........... (1) (1)
Class B Warrants ........... 0.031 0.031
THIRD QUARTER
Common Stock ...............(2) 14.05 3.15
Class B Warrants ........... 0.063 0.031
FOURTH QUARTER
Common Stock ...............(2) 8.60 3.15
Class B Warrants ........... 0.219 0.094
(1) Issue did not trade
(2) Prices have been adjusted to reflect a post 50 to 1 reverse stock split
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, in 1996,
in 1997, in 1998, and the payment due on March 1, 1999 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.
<PAGE>
On March 16, 1999, the Company made a selftender for all of the 233,900
outstanding shares of 12% Non-Voting Convertible Redeemable Preferred Stock (the
"12% Preferred") for 400,489 shares of the Company's Common Stock. The election
period for the holders of the 12% Preferred expires April 16, 1999. The 12%
Preferred that are the subject of this tender offer constitutes all of the 12%
Preferred that is issued and outstanding. The exchange will be computed as
follows: each holder will be issued the number of shares that he would be
entitled to upon conversion under the Company's existing Certificate of
Incorporation, or an aggregate of 9,436 shares of Common Stock if all of the
holders of the 12% Preferred tender all of their shares. In addition, each
holder will be issued an amount of shares of Common Stock equal to the result of
dividing (a) the accrued dividend on the 12% Preferred share by (b) $0.9688, the
closing price for the Company's Common Stock on December 31, 1998. The 12%
Preferred presently entitle the holder to convert to 0.04 shares of Common
Stock, par value $.001, of the Company, and the accrued dividend, before
conversion, of 12% per annum, payable, when declared by the Board of Directors,
in cash or stock at the Company's option, per share of 12% Preferred. This
tender is conditioned upon the tender of at least 60% of the outstanding shares
of the 12% Preferred or it will be withdrawn. Shares tendered during the
election period will be held in escrow until the minimum condition is reached.
Any shareholders not tendering their 12% Preferred will continue to have the
rights set forth in the Company's Certificate of Incorporation. The total cash
value of the arrearage of unpaid dividends as of December 31, 1998 is $364,884.
The Company has not declared cash dividends on its Common Stock and does
not intend to do so in the foreseeable future. If the Company generates
earnings, management's policy is to retain such earnings for further business
development. It plans to maintain this policy as long as necessary to provide
funds for the Company's operations. Any future dividend payments will depend
upon the full payment of Preferred Stock dividends, the Company's earnings,
financial requirements and other relevant factors, including approval of such
dividends by the Board of Directors.
As of March 16, 1999, there were 229 shareholders of record of the
Company's common stock, excluding shares held in street name.
Recent Sales of Unregistered Securities
From January through April of 1998, the Company sold 90,775 shares of the
Company's common stock issued to non-US persons in offerings under Regulation S,
under the Securities Act of 1933, as amended, for $150,000, at prices from $1.62
to $2.25 per share.
In 1998, the Company sold $625,000 of convertible debentures. In 1997, the
Company sold $100,000 of convertible debentures. During 1998, $631,000 of
debentures were converted to 1,016,000 shares of the Company's common stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
Fiscal Year 1998 vs Fiscal Year 1997
The Company's revenues increased to $1,421,000 in 1998 from $1,387,000 in
1997, representing a 2% increase.
Revenue related to the Healthcare segment increased to $1,375,000 in 1998,
from $1,367,000 in 1997, representing a 1% increase. The increase in revenue
during 1998 was predominately attributed to PCI whose revenue increased to
$1,105,000 in 1998, from $513,000 in 1997. This was the result of PCI's change
in direction from a DRG audit company to a Managed Care Revenue Enhancement
company.
Revenue related to entertainment increased to $46,000 in 1998 from $20,000
in 1997.
Operating costs decreased to $154,000 in 1998 from $606,000 in 1997, a 75%
decrease. The Healthcare operating costs decreased to $136,000 in 1998 from
$599,000 in 1997, a 77% decrease. As a percentage of revenue, operating costs
for the Healthcare segment decreased to 10% in 1998 from 44% in 1997. This is
the result of the joint venture arrangement which replaced Containment's
previous business and resulted in lower gross revenue but substantially greater
gross profit margins.
Operating costs for Entertainment include film amortization and producers
royalties. Where the Company acquires licensing rights through guaranteed
payments, it records such guarantees on its balance sheet. The amortization of
such licensing rights is calculated under the film forecast method. Film
amortization represents amortization of the original acquisition price
capitalized on the balance sheet. Producers royalties reflect current amounts
due producer's for their share of current revenue for films with no minimum
guarantee obligation.
<PAGE>
Selling, general and administrative expenses decreased to $1,709,000 in
1998 from $1,902,000 in 1997, a 10% decrease. The decreases in selling, general
and administrative expenses were primarily attributable to the following: Public
Relations expenses of $129,000; Salaries of $69,000; office expense of $56,000
and Legal Expenses of $23,000; offset by increases in Commissions of $67,000 and
Interest of $32,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $69,000 at December 31, 1998. The ratio
of current assets to current liabilities was 1.06:1 at December 31, 1998. Cash
flow used by operating activities during 1998 was $358,000.
The Company has no material commitments for capital expenditures or the
acquisition of films. If cash flow permits, however, the Company plans to
enhance its information system capabilities to more efficiently and effectively
provide its healthcare services and to acquire additional films during 1999.
Between January and April 1998, the Company raised an aggregate of $150,000
through the private sales of the Company's stock, pursuant to Section 4(2) and
Regulation S, prior to the most recent amendments to that regulation, under the
Securities Act of 1933, as amended (the "Act"). Additionally, during 1998, the
Company sold convertible debentures aggregating $625,000 and borrowed $185,000
from private lenders.
The Company believes that it will need additional financing to meet its
operating cash requirements for the current level of operations during the next
twelve months, and will require additional capital in order to complete its
planned expansion. The Company has developed a plan to reduce its liabilities
and improve cash flow through expanding operations and raising additional funds
either through issuance of debt or equity. From January 1, 1999 through March
16, 1999, the Company raised $100,000 from the sale of convertible debentures
through offerings under private placements. The Company anticipates that it will
be able to raise the necessary funds it may require for the remainder of 1999
through public or private sales of securities. If the Company is unable to fund
its cash flow needs the Company may have to reduce or stop planned expansion, or
possibly scale back operations. The Company currently does not have any lines of
credit.
The Company has issued shares of its Common Stock on a number of occasions
without offering preemptive rights to existing Shareholders or procuring waivers
of their preemptive rights. No Shareholder has alleged any damage resulting to
him as a result of the sale of shares of Common Stock by the Company without
offering preemptive rights. The amount of damages incurred by Shareholders by
reason of the failure to offer preemptive right, if any, is not ascertainable
with any degree of accuracy. The Company believes that if any such claims were
asserted, the Company may have valid defenses.
During 1998 and 1997, the Company focused its resources on the growth of
the healthcare segment, which, during that time, was and currently is the most
efficient and cost-effective strategy for the Company to maximize revenue.
Although resources and capital remain limited, the Company has begun directing
efforts toward reestablishing a foothold in the film industry. The Company
expects to continue recognizing growth in revenues from the sale of film
licenses in 1999.
Healthcare
- - ----------
The transition of PCI from a DRG audit company offering limited services
and markets, to a full service Managed Care Revenue Enhancement company has
required a major investment of time, manpower and Company resources. This
engendered a period of the phasing out old services, while at the same time
committing increased resources to non-revenue producing, but nevertheless
critical development activities.
The transition to a Managed Care Revenue Enhancement company has also
required a retooling of the Company's infrastructure as well as the development
of new marketing strategies and materials. The Company incurred approximately
$2,750 and $9,000 for this retooling and development in 1998 and 1997,
respectively. New contracts which clearly define PCI's new services have been
developed. In addition, these contracts create payment terms which expedite the
collection process of PCI revenue from its new business.
This also required new staffing including the recruitment of experienced
personnel from the insurance and managed care industry. Infrastructure
initiatives, especially those associated with information systems capabilities,
are continuing to be addressed through investments in new hardware, software,
staffing and technical support, and the Company incurred approximately $88,000
and $31,000 on these initiatives in 1998 and 1997, respectively.
<PAGE>
PCI will also need to invest in the upgrading of its communication
resources, since telemarketing and sales initiatives associated with national
companies require improvement in the number and quality of communications
equipment. These additional costs have also been factored into PCI's expansion
into the national managed care arena. Fax capabilities, electronic mailing and
other considerations to improve connectivity between PCI and its clients have
been actively reviewed and addressed.
With increasing sales efforts to seek out national market opportunities,
the Company intends to continue to invest resources in underwriting costs
associated with travel and lodging and sales contacts. PCI has also developed
revenue incentive arrangements with established individuals in the managed care
industry. Their contacts and recognition of our services' value, will serve as
another source of sales opportunities.
Entertainment
- - -------------
Although the Company's resources and capital remain limited, the Company
has begun directing efforts toward reestablishing a foothold in the film
industry. The Company expects to continue recognizing growth in revenues from
the sale of film licenses in 1999.
In 1999, the Company will consider searching for full time sales personnel
and utilizing outside sales representatives. Initially, the Company will begin
promoting its film library in the domestic television markets. Secondarily, it
will utilize representatives to attend film festivals and penetrate film
markets.
Year 2000
- - ---------
The Company has completed the process of becoming year 2000 compliant. All of
the Company's systems have been updated so that none of its systems will be
affected by the Year 2000. This process cost the Company less than $5,000.
The Company is in the process of identifying and contacting the hospitals it
services to determine the extent to which the Company's business may be affected
by those third parties failure to remedy their own Year 2000 issues. It is
expected that full identification will be completed by March 31, 1999. The
company does not currently have any formal information concerning the Year 2000
compliance status of the hospitals it services but has received indications that
most of the hospitals are working on Year 2000 compliance. In the event that any
of the significant hospitals that the Company services do not successfully and
timely achieve Year 2000 compliance, the Company's business or operations could
be adversely affected.
ITEM 7. FINANCIAL STATEMENTS
The response to this item follows Item 13, and is hereby incorporated
herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
The Company's Certificate of Incorporation provides for no less than three
(3) Directors. Each Director shall hold office until the next annual meeting of
shareholders and until his successor has been elected and qualified. At the
present time there are a total of three (3) Directors. The Board of Directors is
empowered to fill vacancies on the Board. The Company's Directors and Executive
Officers are listed below:
POSITIONS
NAME AGE W/COMPANY DIRECTOR SINCE
Vlado Paul Hreljanovic 51 Chairman of the Board, 1987
President, CEO and
acting CFO
Harold A. Horowitz 48 Director 1991
Marvin Rostolder 56 Director 1998
<PAGE>
Yvonne T. Paultre 60 Secretary ---
Richard O. Vazquez 46 President-PCI ---
DIRECTORS
- - ---------
Vlado Paul Hreljanovic has been the President, Chief Executive Officer and
Chairman of the Board since 1987. Upon graduation from Fordham University, he
joined KPMG (formerly Peat Marwick Mitchell & Co.) as an accountant. Mr.
Hreljanovic is and has been the sole shareholder, officer and director of
Entertainment Financing, Inc., which only business is as lessee of the Company's
offices in Great Neck, New York, and the sub-lessor of such premises to the
Company.
Harold A. Horowitz has been a Director of the Company since January 1991.
Since October 1, 1995, he has been a principal and Chairman of the Board of
In-Stock Business Forms and Paper Products, Ltd., and an independent consultant
to various public and private companies. Until October 1, 1995, Mr. Horowitz was
a Partner of the law firm of Finkelstein, Bruckman, Wohl, Most and Rothman,
which firm was securities counsel to the Company. Mr. Horowitz received his JD
degree in 1976 from Columbia University School of Law and masters degree in
economics from Columbia University in 1973. He received his BA degree from
Yeshiva University in 1971.
Marvin Rostolder was elected to the Board of Directors of the Company on
May 18, 1998. Mr. Rostolder is the Chairman of the Board of Directors and Chief
Executive Officer of JM Marketing, Inc., the licensee of SmallFrye Footwear. He
has served in that capacity since March 1998. Mr. Rostolder has served as
independent consultant to various companies including MedTech Co., BioImaging
Technology, Inc., Amba Sciences, Inc. and T.M. Marketing, Inc. From 1985 through
1998, Mr. Rostolder served in various capacities with North American Transfer
Co., a registered Stock Transfer Agent and Registrar. Mr. Rostolder is a
graduate of the City University of New York and holds a Masters degree from Long
Island University in healthcare administration.
OTHER OFFICER
- - -------------
Yvonne T. Paultre has been Secretary since 1991. Ms. Paultre has
supervisory responsibilities for the Company's employees, customer relations and
office policies. She is also responsible for operations of the Company's
television syndication area.
KEY EMPLOYEE
- - ------------
Richard O. Vazquez was formerly Vice President for Integrated Networks at
MultiPlan, Inc. During his tenure he was responsible for developing and
marketing all integrated strategies for MultiPlan. This included network
contracting throughout the USA, Latin America and the Caribbean. Prior to that
he was the Associate Executive Director of Elmhurst Hospital and Medical Center,
responsible for all capital programs, including a $230 million major
modernization project. He has been a speaker and guest lecturer at numerous
managed care conferences and forums, as well as being published on healthcare
issues. He is a National Urban Fellow, having attained an MPA from Baruch
College and a BA from New York University.
Section 16(a) Beneficial Ownership Reporting Compliance
To the Company's knowledge, based solely on a review of copies of Forms 3,
4 and 5 furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1998, the
Company's officers, directors, and 10% shareholders complied with all applicable
Section 16(a) filing requirements.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
of the Chief Executive Officer of the Company for services provided to the
Company and its subsidiaries in 1998, 1997 and 1996. No other executive officer
received salary and bonus in excess of $100,000 in any such year.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Securities
Compensation Other Annual Underlying
Name and Principal Position Year Salary Bonus Compensation Options (#)
- - --------------------------- ---- ------ ----- ------------ -----------
<S> <C>
Vlado Paul Hreljanovic 1998 $175,460 $86,191 (1) $31,200 (2) -
Chairman of the Board and
Chief Executive Officer 1997 $172,757 $19,500 (3) $52,900 (4) -
1996 $267,774 $45,931 (6) $56,800 (5) -
</TABLE>
(1) Paid in 57,461 shares of the Company's unregistered common stock, valued at
$86,191 issued on January 1, 1998, in recognition of efforts exerted by Mr.
Hreljanovic on behalf of the Company and its subsidiaries.
(2) Other compensation for Mr. Hreljanovic in 1998 was primarily comprised of,
among other things, automobile repairs and insurance of $12,900, and health
and life insurance of $18,200.
(3) Paid in 13,000 shares of the Company's unregistered common stock, valued
at $19,500 issued on June 18, 1997, in recognition of efforts exerted by
Mr. Hreljanovic on behalf of the Company and its subsidiaries.
(4) Other compensation for Mr. Hreljanovic in 1997 was primarily comprised of,
among other things, automobile payments, including lease, maintenance and
insurance of $30,600, and health and life insurance of $22,300.
(5) Other compensation for Mr. Hreljanovic in 1996 was primarily comprised of,
among other things, automobile payments, including lease, maintenance, and
insurance of $29,300, and health and life insurance of $27,500.
(6) Paid in 13,400 shares of the Company's unregistered common stock valued at
$45,931, which were issued to Mr. Hreljanovic on July 1, 1996 (11,200
shares), and December 24, 1996 (2,200 shares), in recognition of efforts
exerted by Mr. Hreljanovic on behalf of the Company and its subsidiaries.
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Year-End Options
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Year-end (#) Year-end ($)
On Value Exercisable Exercisable
Name and Principal Position Exercise Realized Unexercisable Unexercisable
- - ---------------------------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Vlado Paul Hreljanovic - - 384,880/0 $206,000/$0
Chairman of the Board and
Chief Executive Officer
</TABLE>
Compensation of Directors: In 1998, Mr. Horowitz, Mr. Rostolder and Mr.
Feldman were issued 15,000 Shares each of the Company's unregistered common
stock, valued at $5,625 each, in recognition of efforts exerted on behalf of the
Company as Board Members during 1998. Mr. Horowitz and Mr. Rostolder received
options to purchase 100,000 and 110,000 shares of common stock at $.48, per
share, respectively, as additional compensation as a member of the Board of
Directors.
Non-employee directors are entitled to five hundred ($500.00) dollars for
each meeting attended and to reimbursement for their out-of-pocket expenses in
attending such meetings.
<PAGE>
Employment Agreements: Mr. Hreljanovic has an Employment Agreement with the
Company which expires on April 30, 2005, and that provides for his employment as
President and Chief Executive Officer at an annual salary adjusted annually for
the CPI Index and for the reimbursement of certain expenses and insurance. Based
on the foregoing formula, Mr. Hreljanovic's salary in 1998 was approximately
$175,000. Additionally, the employment agreement provides that Mr. Hreljanovic
may receive shares of the Company's common stock as consideration for raising
funds for the Company. Due to a working capital deficit, the Company is unable
to pay the entire salary in cash to Mr. Hreljanovic pursuant to his employment
agreement. In the best interests of the Company, in lieu of cash, Mr.
Hreljanovic has agreed to accept and the Board of Directors has approved the
issuance of shares of the Company's common stock as payment for the unpaid
salary of 1998 and 1997. The Company issued 187,636 shares of common stock to
Mr. Hreljanovic in 1998 to liquidate the amount owed to him for his 1998 and
1997 salary and 57,461 shares of common stock as additional compensation for
achieving certain performance benchmarks for obtaining new hospital contracts.
Under the terms of this employment agreement, the Chief Executive Officer
of the Company is entitled to receive a cash bonus of a percentage of the
Company's pre-tax profits if the Company's pre-tax profit exceeds $100,000.
Additionally, if during the term, the employment agreement is terminated by
the Company after a change in control (as defined by the agreement), the officer
is entitled to a lump sum cash payment equal to approximately three times his
base salary.
Mr. Vazquez has an employment agreement, as amended, with PCI which expires
on June 30, 1999 and provides for his employment as President of PCI with annual
compensation of $135,000. Unless terminated under the agreement, the employment
agreement automatically extends to June 30, 2000. In accordance with an
amendment to Mr. Vazquez's employment agreement, in 1998 he received options to
purchase 16,000 shares of the Company's common stock at $3.75 per share in
consideration to forego receipt of 7,366 shares of common stock. Additionally,
Mr. Vazquez is entitled to an annual bonus to be determined by the Board of
Directors of the Company and options to purchase 23,600 shares of the Company's
Common Stock under the Company's 1996 Incentive Stock Option Plan. Such options
will vest as Mr. Vazquez achieves certain annual gross revenue thresholds,
ranging from $1,000,000 to $5,000,000 during the term of his employment
agreement.
STOCK OPTION PLANS
1989 Restricted Stock, Non-Qualified and Incentive Stock Option Plan
On December 7, 1989, a restricted stock, non-qualified and incentive stock
option plan was adopted. The Company has authorized 7,500 shares of common stock
to be reserved for issuance thereunder. Under the terms of this plan, restricted
stock awards are authorized for employees. Additionally, non-qualified options
may be granted to employees directors, consultants and others who render
services to the Company. 5,392 shares of restricted stock have been issued to
employees, pursuant to the plans. In addition, 5,000 options have been issued to
the Chief Executive Officer under the Plan. The Company intends to increase the
number of shares authorized under this Plan. Under the terms of the restricted
stock awards, restricted stock may be issued to employees in consideration of
(i) cash in an amount not less than the par value thereof or such greater amount
as may be determined by the Compensation Committee of the Board of Directors and
(ii) the continued employment of the employees during the restricted period,
which will in no event be less than one year.
Under the Non-Qualified Option aspect of the Incentive Compensation Plan,
options may be granted to employee, directors, consultants and other individuals
who render services to the Company. The option price for each option granted
will be determined by the Compensation Committee. Each option will have a term
of not more than 10 years from the date of grant and may be exercisable in
installments as prescribed by the Compensation Committee.
The Company's Incentive Stock Option aspect of the Incentive Compensation
Plan provides for granting incentive options to employees to purchase shares of
common stock of the Company at option prices which are not less than the fair
market value of the Company's common stock at the date of grant, except that any
Incentive Option granted to an employee holding 10% or more of the outstanding
voting securities of the Company must be for an option price not less than 110%
of fair market value.
<PAGE>
Incentive Options granted under the Incentive Compensation Plan will expire
not more than 10 years from the date of the grant (five years from the date of
the grant in the case of a 10% Stockholder), and the Incentive Option agreements
entered into with the holders will specify the extent to which Incentive Options
may be exercised during their respective terms. The aggregate fair market value
of the shares of common stock subject to Incentive Options that become first
exercisable by an optionee in a particular calendar year may not exceed
$100,000.
1996 Stock Option Plan
On February 12, 1997, the shareholders of the Company adopted the 1996
Stock Option Plan. The Plan supplements the Company's 1989 Restricted Stock,
Non-Qualified and Incentive Stock Option Plan. This Plan allows the Company to
grant incentive stock options, non-qualified stock options and stock
appreciation rights (collectively "options") to purchase up to an aggregate of
100,000 shares of common stock to employees, including officers, and to
non-employees involved in the continuing development and success of the Company.
The terms of the options are to be determined by the Board of Directors. Options
will not have expiration dates later than ten years from the date of grant (five
years from the date of the grant in the case of a 10% stockholder). The option
prices may not be less than the fair market value of the common shares on the
date of grant, except that any option granted to an employee holding 10% or more
of the outstanding voting securities of the Company must be for an option price
not less than 110% of fair market value. An option to purchase 16,000 shares of
common stock was granted to Mr. Vazquez under the plan. No other options have
been granted as of the date of this report.
1998 Stock Option Plan
On December 30, 1998, the shareholders of the Company adopted the 1998
Stock Option Plan. The Plan supplements the Company's 1989 Restricted Stock,
Non-Qualified and Incentive Stock Option Plan. This Plan allows the Company to
grant incentive stock options, non-qualified stock options and stock
appreciation rights (collectively "options") to purchase up to an aggregate of
5,000,000 shares of common stock to employees, including officers, and to
non-employees involved in the continuing development and success of the Company.
The terms of the options are to be determined by the Board of Directors. Options
will not have expiration dates later than ten years from the date of grant (five
years from the date of the grant in the case of a 10% stockholder). The option
prices may be set at any amount in the discretion of the Board's Compensation
Committee. No options have been granted under the Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 16, 1999: (i) the name and
address of each person who owns of record or who is known by the Board of
Directors to be beneficial owner of more than five percent (5%) of the Company's
outstanding common stock, (ii) each of the Company's Directors, and (iii) all of
the Company's Executive Officers and Directors as a group.
NAME AND BENEFICIAL PERCENT OF COMMON
ADDRESS OWNERSHIP STOCK OUTSTANDING
Vlado Paul Hreljanovic 340,837 14.3%
111 Great Neck Road
Suite 604
Great Neck, NY 11021
Harold A. Horowitz 28,000 1.2%
111 Great Neck Road
Suite 604
Great Neck, NY 11021
Peter W. Feldman 19,650 0.8%
777 Yamato Road
Suite 135
Boca Raton, FL 33134
Marvin Rostolder 15,000 0.6%
Hoffstat Lane
Sands Point, Port Washington 11050
Bluffdale Corporation 525,168 22.1%
c/o Harris Organization
P.O. Box 0832-0858
Panama City, Panama
Officers and Directors as a
group (5 Persons) 411,177 17.3%
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company paid rent under two subleases during 1998 to companies
affiliated with the Chief Executive Officer of the Company. The rents paid and
terms under the subleases are the same as those under the affiliate's lease
agreements with the landlords. Rent expense for the years ended December 31,
1998, 1997, and 1996 was $77,000, $75,000 and $95,000, respectively. In prior
years, the Company made advances to or received advances from one of those
companies for working capital requirements. As a result, at December 31, 1998,
the balances due from the affiliates were approximately $4,800 and $900,
respectively. Amounts payable under those leases in 1999 and subsequent years
are set forth below:
1999 - $61,962
2000 - $63,988
2001 and
thereafter - $93,027
The Company acquired distribution rights to two films from a company
affiliated with the Chief Executive Officer of the Company, for a ten-year
license period, which expires on June 5, 2003. The Company is obligated to pay
such company producers' fees at the contract rate. Such payments will be charged
against earnings. In 1998 and 1997, no payments were made to such company, and
no revenue was recognized from such films.
During 1998, the Company's Chief Executive Officer made loans directly to
the Company, made payments to unaffiliated parties on behalf of the Company,
incurred travel expenses while conducting business for the Company, and received
repayments of loans and reimbursement of certain expenses during the year. With
regard to loans to the Company, interest accrues at 12% per annum. The Company
also made advances to its Chief Executive Officer for business expenses
anticipated to be incurred by him during 1998. At December 31, 1998, the net
balance due from the Chief Executive Officer for all activities above was
$102,000.
In 1998, the Company's President and Chief Executive Officer was issued
57,461 shares of Common Stock, valued at $86,191 as additional compensation for
services performed in 1998, and 17,000 shares valued at $6,375 as directors'
compensation. Further, the Company issued 30,000 shares valued at an aggregate
of $11,250 to non-employee directors as directors' compensation.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Description:
2.1 Agreement and Plan of Merger dated as of January 20, 1997 between the
Registrant and Juniper Group, Inc., a Nevada corporation (2)
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 (3)
3.3 Certificate of Incorporation of Juniper Group, Inc., a Nevada
corporation.(2)
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 (2)
3.6 By-Laws of Juniper Group, Inc., a Nevada corporation (2)
4.1 1998 Stock Option Plan (2)
10.1 Admendment to Employment Agreement between the Registrant and V. Paul
Hreljanovic, dated February 11, 1998
10.3 Consulting Agreement between Juniper Medical Systems, Inc. and Jeffrey Mann
dated June 6, 1998
10.4 Consulting Agreement between Registrant and Global Financial Group, Inc.
dated November 24, 1998
10.5 Employment Agreement between PCI, Inc. and Richard O. Vazquez, dated June
7, 1996 (3)
10.6 Agreement between PartnerCare, Inc.and Synergy Business Services dated
December 7, 1997
<PAGE>
21.1 Subsidiaries
23.1 Consent of Independent Certified Public Accountants
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, 1996
(2) Incorporated by reference to the Company's Proxy Statement for its Annual
Meeting held on December 30, 1998
(3) Incorporated by reference to the Company's annual report on Form 10-KSB for
the fiscal year ended December 31, 1997
(b) Reports on Form 8-K.
The Company filed a Form 8-K on April 1, 1998, relating to the sale of
4,544,444 (prior to the fifty to one reverse stock split on May 18, 1998) shares
of the Company's common stock at offering prices of between $.045 and $.32 per
share in accordance with Regulation S under the Securities Act of 1933, as
amended.
The Company filed a Form 8-K on April 28, 1998, relating to the settlement
of a litigation.
The Company filed a Form 8-K on May 19, 1998, relating to the fifty to one
reverse stock split of the Company's common stock.
BALANCE OF PAGE LEFT BLANK INTENTIONALLY
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants.................. F-2
Consolidated Balance Sheets as of December 31, 1998 and 1997........ F-3
Consolidated Statements of Income
for the two years ended December 31, 1998........................... F-4
Consolidated Statements of Cash Flows
for the two years ended December 31, 1998........................... F-5
Consolidated Statements of Shareholders'
Equity for the two years ended December 31, 1998.................... F-6
Notes to Consolidated Financial Statements.......................... F-7
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
JUNIPER GROUP, INC.
We have audited the accompanying consolidated balance sheets of Juniper
Group, Inc. and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income, cash flows and shareholders' equity for each
of the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as, evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Juniper
Group, Inc. and subsidiaries as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years then ended, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 8 to
the consolidated financial statements, the Company has suffered recurring losses
from operations which raises substantial doubt about its ability to continue as
a going concern. Management's plans regarding those matters are also described
in Note 8. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/GOLDSTEIN & GANZ, CPA's, P.C.
Great Neck, New York
March 30, 1999
F-2
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
December December
ASSETS 31, 1998 31, 1997
--------- -----------
Current Assets
Cash ........................................... $ 48,925 $ 30,187
Accounts receivable - trade .................... 788,410 363,480
Due from affiliates ............................ 8,085 15,570
Investment in NCI 152,879 --
Prepaid expenses and other current assets ...... 215,764 141,098
Due from officer ............................... 101,755 --
---------- ----------
Total current assets ....................... 1,315,818 550,335
Film licenses .................................. 2,939,960 2,954,562
Property and equipment net of accumulated
depreciation of $85,554 and $127,382,
respectively ................................. 141,677 98,911
Other assets ................................... 167,540 2,049
----------- ----------
$4,564,995 $ 3,605,857
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses .......... $1,023,541 $ 835,427
Notes payable - current ........................ 168,725 342,571
Due to producers - current ..................... 47,178 62,086
Due to officer ................................. - 68,662
Due to shareholders ............................ 7,000 7,000
----------- -----------
Total current liabilities ................. 1,246,444 1,315,746
Notes payable - long term ........................ 166,667 --
Due to producers - long term ..................... 17,692 93,814
----------- ---------
Total liabilities ......................... 1,430,803 1,409,560
----------- ----------
Shareholders' Equity
12% Non-voting convertible redeemable
preferred stock: $.10 par value, 875,000
shares authorized, 233,900 and 235,900 shares
issued and outstanding at December 31, 1998,
and December 31, 1997: aggregate liquidation
preference, $467,800 and $471,800 at December
31, 1998 and December 31, 1997................. 23,390 23,590
Common Stock - $.001 par value,75,000,000
shares authorized, 3,072,204 and 759,915
issued and outstanding at December 31, 1998
and December 31, 1997, respectively ........... 3,072 760
Capital contributions in excess of par:
Attributed to preferred stock ................. 208,523 210,303
Attributed to common stock .................... 9,855,404 7,971,979
Retained earnings (deficit) .................... (6,956,197) (6,010,335)
----------- -----------
Total shareholders' equity ................ 3,134,192 2,196,297
----------- -----------
$4,564,995 $ 3,605,857
=========== ===========
See Notes to Consolidated Financial Statements
F-3
<PAGE>
JUNIPER GROUP, INC
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
1998 1997
------------ ------------
Revenues:
Healthcare .......................... $ 1,374,871 $ 1,366,666
Entertainment ....................... 46,000 20,000
------------ ------------
1,420,871 1,386,666
------------ ------------
Operating Costs:
Healthcare .......................... 136,095 598,702
Entertainment ....................... 17,795 7,338
Selling, general and administrative expenses 1,708,874 1,902,429
Settlement expense ....................... 310,828 -
------------ ------------
2,173,592 2,508,469
------------ ------------
Net income (loss) before income (loss)
from minority interest.................. $ (752,721) $ (1,121,803)
Income (loss) from minority interest...... (193,141) -
----------- -----------
Net income (loss) ......................... (945,862) (1,121,803)
============ ===========
Weighted average number of shares outstanding 1,500,511 500,886
============ ============
Net income (loss) per common share .......... $ (.67) $ (2.35)
============ ============
See Notes to Consolidated Financial Statements
F-4
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1998 1997
--------- ---------
Operating Activities
Net income (loss) ................................ $(945,862) $(1,121,803)
Adjustments to reconcile net cash provided
by operating activities:
Settlement expense............................... 310,828 -
Amortization of film licenses ................... 14,601 9,167
Loss from minority interest ..................... 193,141 -
Depreciation expense ............................ 22,239 37,668
Gain on sale of assets (6,362) -
Payment of various expenses with equity ......... 197,954 134,589
Payment of directors' compensation with equity .. 17,625 18,000
Payment of employees' compensation with equity .. 11,040 32,208
Payment of officers' compensation with equity.... 253,589 -
Changes in assets and liabilities:
Accounts receivable ............................. (459,930) 431,611
Prepaid expenses and other current assets ....... 8,667 (35,103)
Other assets .................................... (690) 1,470
Due to/from officers and shareholders ........... (42,705) 91,980
Due from affiliates ............................. 7,485 43,789
Accounts payable and accrued expenses ........... 60,403 (342,309)
--------- ---------
Net cash provided from (used for)
operating activities .......................... (357,977) (698,733)
--------- ---------
Investing activities:
Purchase of equipment ............................ (96,479) (21,841)
Purchase of film licenses ........................ -- --
--------- ---------
Net cash provided from (used for) investing
activities ..................................... (96,479) (21,841)
--------- ---------
Financing activities:
Reduction in borrowings ........................... (253,414) (75,815)
Proceeds from borrowings .......................... 810,000 466,730
Payments to and on behalf of producers ............ (22,122) (10,197)
Proceeds from exercise of options ................. - 203,500
Proceeds from private placements .................. 150,000 151,950
Investment in NCI ................................. (211,270) --
--------- ---------
Net cash provided from (used for)
financing activities ............................ 473,194 736,168
--------- ---------
Net increase (decrease ) in cash .................. 18,738 15,594
Cash at beginning of period ....................... 30,187 14,593
--------- ---------
Cash at end of period ............................. $ 48,925 $ 30,187
========= =========
See Notes to Consolidated Financial Statements
F-5
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------------------- ----------------------------
Capital Capital
Contributions Contributions Retained
Par Value in excess Par Value in excess Earnings
at $.10 of par at $.001 of par (Deficit) Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 23,590 $210,303 $ 381 $7,178,911 $(4,888,532) $2,524,653
Proceeds from private
placements - - 69 151,881 - 151,950
Shares issued as payment for
various expenses - - 60 134,529 - 134,589
Shares issued as compensation
to employees - - 49 32,159 - 32,208
Shares issued to members of
the Board of Directors - - 12 17,988 - 18,000
Shares issued from exercise of
stock options 62 203,438 - 203,500
Shares issued to convert debt
to equity 127 253,073 - 253,200
Net loss for the year ended
December 31, 1997 - - - - (1,121,803) (1,121,803)
_______ ________ _______ __________ ___________ __________
Balance, December 31, 1997 23,590 210,303 760 7,971,979 (6,010,335) 2,196,297
Proceeds from private
placements - - 91 149,909 - 150,000
Shares issued as payment for
various expenses - - 416 332,287 - 332,703
Shares issued as compensation
to officer - - 245 253,344 - 253,589
Shares issued as compensation
to employees - - 23 11,017 - 11,040
Shares issued to members of
the Board of Directors - - 47 17,578 - 17,625
Shares issued to convert debt
to equity 1,490 1,117,310 - 1,118,800
Preferred stock conversion (200) (1,780) - 1,980 - -
Net loss for the year ended
December 31, 1998 - - - - (945,862) (945,862)
_______ ________ _______ __________ ___________ __________
Balance, December 31, 1998 $23,390 $208,523 $ 3,072 $9,855,404 $ (6,956,197) $3,134,192
======= ======== ======= ========== =========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of all
subsidiaries. Intercompany profits, transactions and balances have been
eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Financial Instruments
The estimated fair values of accounts receivable, accounts payable and
accrued expenses approximate their carrying values because of the short maturity
of these instruments. The Company's debt (i.e. Due to Producers, Creditor Notes
and other obligations) does not have a ready market. These debt instruments are
shown on a discounted basis (see Notes 4 & 5) using market rates applicable at
the effective date. If such debt were discounted based on current rates, the
fair value of this debt would not be materially different than their carrying
value.
Supplemental Cash Flow Information
Cash paid for interest totaled $24,985 and $12,237 in 1998 and 1997,
respectively.
During 1998, the following transactions occurred which did not require the
use of cash, but instead were paid by the issuance of the Company's common
stock: payments to producers amounting to $112,500; officers compensation of
$253,589; directors compensation of $17,625; payment of corporate debt amounting
to $1,006,300; certain corporate expenses amounting to $332,703; and employee
compensation amounting to $11,040.
During 1997, the following transactions occurred which did not require the
use of cash but instead were paid by the issuance of the Company's common stock:
payments to producers amounting to $98,200; director's compensation of $18,000;
employee compensation of $32,208; payment of corporate debt amounting to
$155,000; certain corporate expenses amounting to $134,589.
Accounts Receivable
The Company estimates an allowance for doubtful accounts, which allowance
amounted to approximately $436,000 and $108,000 at December 31, 1998 and 1997,
respectively.
Film Licenses
Film costs are stated at the lower of estimated net realizable value
determined on an individual film basis, or cost, net of amortization. Film costs
represent the acquisition of film rights for cash and guaranteed minimum
payments. Producers retain a participation in the profits from the sale of film
rights, however, producer's share of profits is earned only after payment to the
producer exceeds the guaranteed minimum, where minimum guarantees exist. In
these instances, the Company records as participation expense an amount equal to
the producer's share of the profits. The Company incurs expenses in connection
with its film licenses, and in accordance with license agreements, charges these
expenses against the liability to producers. Accordingly, these expenses are
treated as payments under the film license agreements.
When the Company is obligated to make guaranteed minimum payments over
periods greater than one year, all long term payments are reflected at their
present value. Accordingly, in such case, original acquisition costs represent
the sum of the current amounts due and the present value of the long term
payments.
F-7
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 1 - Summary of Significant Accounting Policies (Continued)
The Company maintains distribution rights to eight films for which it has
no financial obligations unless and until the rights are sold to third parties.
The value of such distribution rights has not been reflected in the balance
sheet. The Company was able to acquire these film rights without guaranteed
minimum financial commitments as a result of its ability to place such films in
various markets.
Amortization of Film Licenses
Amortization of film licenses is calculated under the film forecast method.
Accordingly, licenses are amortized in the proportion that revenue recognized
for the period bears to the estimated future revenue to be received. Estimated
future revenue is reviewed annually and amortization rates are adjusted
accordingly.
Property and Equipment
Property and equipment including assets under capital leases are stated at
cost. Depreciation is computed generally on the straight-line method for
financial reporting purposes over their estimated useful lives.
Recognition of Revenue from License Agreements
Revenue from licensing agreements is recognized when the license period
begins and the licensee and the Company become contractually obligated under a
noncancellable agreement. All revenue recognition for license agreements is in
compliance with the Statement of Financial Accounting Standards No.53.
Operating Costs
Operating costs include costs directly associated with earning revenue.
PCI's operating costs include salary or fees and travel expenses of the
individuals performing the services, and sales commissions. Containment's
revenue was associated with the settlement of a joint venture arrangement and,
therefore, had no operating costs associated with it. Pictures operating costs
include film amortization and producer's royalties.
Major Customers
In 1998 and 1997, New York Hospital accounted for 51% and 7%, respectively,
of the total revenue of the Company. Throughout the year the Company performed
two distinct types of services for New York Hospital and is arranging to add a
third type of service in 1999 expecting to further increase its fees.
During 1998 and 1997, the Company had revenues from The Guardian Life
Insurance Company ("Guardian"), that represented 19% and 62% of total revenue,
respectively. Effective December 17, 1997, the Company no longer had any
contractual arrangement with the Guardian. The loss of this business was
replaced with a settlement agreement between the Company and a healthcare
professional with whom the Guardian is conducting similiar business. The loss of
the contract with Guardian will have a material adverse effect on the operations
of the Company after 1998. However, the Company is pursuing contracts with other
healthcare providers and payors, which if successful, may reduce the impact of
the loss of the Guardian's business, and the dependence upon New York Hospital.
Recapitalization
On May 18, 1998, the Board of Directors autorized a reverse stock split of
the Company's common shares at the rate of one share for each fifty outstanding
shares. All amounts from prior years have been restated after giving effect to
this fifty to one reverse split.
Net Income Per Common Share
In February 1997, the Financial Accounting Standards Board (FASB) issued
SFAS No. 128, "Earnings per Share," which requires the presentation of both net
income per common share and net income per common share-assuming dilution. The
Company adopted the provisions of SFAS No. 128 effective December 31, 1997. The
adoption did not impact the Company's net income per common share. The
provisions of SFAS No. 128 preclude the inclusion of any potential common shares
in the computation of any diluted per-share amounts when a loss from continuing
operations exists. Accordingly, net income per common share-assuming dilution is
not presented.
<PAGE>
Reclassifications
Certain amounts in the 1997 financial statements were reclassified to
conform to the 1998 presentation.
F-8
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 2 - Accounts Payable and Accrued Expenses
At December 31, 1998 and 1997, accounts payable and accrued expenses
consisted primarily of legal fees of $360,000 and $325,000, respectively,
commissions of $56,000 and $51,000, respectively, payroll taxes of $342,000 and
$167,000, respectively, and the cost of Sub-contractors of nothing and $40,000,
respectively. Other accruals relate to selling, general and administrative
expenses incurred in the normal course of business.
NOTE 3 - Film Licenses
At December 31, 1998 and 1997 film licenses amounted to $2,939,959 and
$2,954,562, respectively. These reflect the Company's original acquisition price
less accumulated amortization for the distribution rights to 77 film licenses.
Such amortization amounted to $319,139 and $304,536 at December 31, 1998 and
1997, respectively.
The Company has directed predominantly all its time and efforts toward
building the healthcare segment of the business. Since early 1995, due to the
limited availability of capital, personnel and resources, the volume of film
sales activity was significantly diminished. Although the Company's resources
and capital remain limited, the Company has begun directing efforts toward
reestablishing a foothold in the film industry. Growth in revenues from the sale
of film licenses is expected in 1999.
Initially, the Company began promoting its film library in the domestic
television markets. Secondarily, it will utilize representatives to attend film
festivals and penetrate foreign markets, subject to the Company capital
resources.
Based upon the Company's estimates of future revenue as of December 31,
1998, approximately 25% of the amortized film licenses will be amortized during
the three years ended December 31, 2001. Management expects that greater than
60% of the film licenses applicable to related television and films will be
amortized by 2003.
The Company's policy is to amortize film licenses under the film forecast
method. Depending upon the Company's success in marketing and achieving its
sales forecast, it is reasonably possible that the Company's estimate that it
will recover the carrying amount of its film library from future operations,
will change in the near term. As a result of this potential change, the carrying
amount of the film library may be reduced materially in the near term.
NOTE 4 - Notes Payable
The composition of Notes Payable at December 31, 1998 and 1997, were as
follows:
1998 1997
---- ----
Demand Notes bearing interest at varying rate
of up to 2% per month $ 58,387 $125,000
12% Convertible Secured Promisory Notes
maturing at June 30, 1999
(see Note 6) 68,700 100,000
Settlement agreements and arbitration awards
maturing at April 2001 207,236 76,800
Capital equipment loans maturing January 1999
bearing interest at varying rates to 9.0% 1,069 40,771
-------- --------
335,392 342,571
Less current portion ......................... 168,725 342,571
-------- --------
Long term portion ............................ $166,667 $ -
======== ========
F-9
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 5 - Producer's Minimum Guarantees and Participations
Obligations incurred in connection with the acquisition of film licenses,
including minimum guarantees, producer's participations and settlements with
producers were $64,870 at December 31, 1998. During 1998, the Company reduced
its obligations to producers by $135,000.
The following schedule summarizes the maturities of the balances at
December 31, 1998:
1999 $ 47,178
2000 4,020
2001 7,929
2002 870
2003 4,873
--------
$ 64,870
========
NOTE 6 - Shareholders' Equity
Throughout 1998, the Company issued common stock through various private
placements and the exercise of options. The prices at which the shares were
negotiated and sold varied, depending upon the bid and ask prices of the
Company's common stock quoted on the NASDAQ stock exchange. In the aggregate,
the Company received $150,000 for 90,775 shares, and $355,450 for 130,786 shares
of common stock in 1998 and 1997, respectively.
In connection with payments to creditors for notes payable and indebtedness
to producers (including for the acquisition of films), the Company issued
1,490,096 and 127,553 shares, valued at $1,118,800 and $253,200, in 1998 and
1997, respectively. In connection with payables for operating activities, the
Company issued 416,241 shares, valued at $332,704, and 59,684 shares valued at
$134,589 in 1998 and 1997, respectively. During the year, as compensation to its
Board of Directors, the Company issued 47,000 shares of common stock, valued at
$17,625, and 12,000 shares valued at $18,000 in 1998 and 1997, respectively.
Also, in 1998 and 1997, the Company issued 23,000 shares and 49,336 shares
to employees as compensation, valued at $11,040 and $32,208, respectively.
All shares issued in 1998 and 1997, were not registered and, as such, were
restricted shares under the Securities Act of 1933, as amended.
Net income (loss) per common share for 1998 and 1997 has been computed by
dividing net income (loss), after preferred stock dividend requirements of
$56,136 in 1998 and $56,520 in 1997, by the weighted average number of common
shares outstanding throughout the year of 1,500,511 and 500,886, respectively.
Options Granted
In January 1994, in connection with an amendment to the Employment
Agreement for the President and Chief Executive Officer, the Company issued
options to purchase 5,000 shares of common stock at $20.35 per share, 110% of
the market value at the effective date (see Note 9). The options are for a term
of five years. At December 31, 1998, none of the options had been exercised.
On October 4, 1994, the Company engaged a consultant to assist the Company
in public relations and marketing of certain products and services. In
consideration for these services, the consultant received options to purchase
2,000 shares of the Company's common stock at $15.50 per share. During 1997, the
option price was amended to $3.00 per share and all options were exercised.
On February 26, 1996, the Company granted options to purchase 13,740 shares
of common stock to a consultant in consideration for assistance in developing
new markets in Latin America in healthcare services targeted to ethnic markets.
During 1996, 8,000 options were exercised. On February 28, 1998, all remaining
outstanding options expired.
F-10
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 6 - Shareholders' Equity (Continued)
On August 1, 1997, the Company entered into a consulting agreement for
promoting and marketing of PCI's products and services in the state of
Connecticut. As consideration, the Company granted an option to purchase 10,000
shares of common stock at $4.75 per share. The term of the option was one year.
On September 30, 1997, all 10,000 options were exercised.
On July 21, 1997, the Company entered into an agreement to receive public
relations and communication services to develop, implement and maintain a
program to increase the investing community's awareness of the Company's
activities. In addition to receiving a monthly fee, the Company granted an
option to purchase 50,000 shares of common stock at an exercise price of $3.00
per share. The options were issued for a term through July 21, 2002. On October
1, 1997, all options were exercised.
In accordance wth an amendment to the employment agreement of the President
of PCI, the Company issued options to purchase 16,000 shares of the Company's
common stock at $3.75 per share in consideration to forego receipt of 7,366
shares of common stock issuable pursuant to the terms of his original agreement.
Additionally, this key employee is entitled to an annual bonus to be determined
by the Board of Directors of the Company and options to purchase 23,600 shares
of the Company's Common Stock under the Company's 1996 Incentive Stock Option
Plan. Such options will vest as certain annual gross revenue thresholds are
achieved during the term of his employment agreement. The exercise price of
these options will be equal to the fair market value of the shares on each date
such options vest.
On December 30, 1998, the Company issued to the members of the Board of
Directors and officers of the Company, options to purchase 465,000 shares of the
Company's common stock for $.375 per share. The term of the options are five
years. Additionally, on December 30, 1998, the Company issued options to
purchase 180,000 shares of the Company's common stock to three consultants
(60,000 to each) for $.48 per share for services performed for the Company. The
term of the options are five years. Further, on December 30, 1998, the Company
issued to the Chairman of the Board and President options to purchase 189,880
shares of the Company's common stock for $.48 per share in recognition of his
success in raising funds for the Company during 1998. The term of these options
are five years. At December 31, 1998, none of the options were exercised.
Convertible Preferred Stock
The Company's Preferred Stock entitles the holder to dividends equivalent
to a rate of 12% of the Preferred Stock liquidation preference of $2.00 per
annum (or $.24 per annum) per share payable quarterly on March 1, June 1,
September 1, December 1 in cash or common stock of the Company having an
equivalent fair market value, thereafter. Further, each share of the Preferred
Stock is convertible at the holder's option into two shares of Common Stock.
At December 31, 1998, 233,900 shares of Convertible Preferred Stock were
outstanding. Pending effectiveness of a post-effective amendment to the
Company's registration statement, the outstanding Preferred Stock cannot be
converted.
On March 16, 1999, the Company made a selftender for all of the 233,900
outstanding shares of 12% Non-Voting Convertible Redeemable Preferred Stock (the
"12% Preferred") for 400,489 shares of the Company's Common Stock. The election
period for the holders of the 12% Preferred expires April 16, 1999. The 12%
Preferred that are the subject of this tender offer constitutes all of the 12%
Preferred that is issued and outstanding. The exchange will be computed as
follows: each holder will be issued the number of shares that he would be
entitled to upon conversion under the Company's existing Certificate of
Incorporation, or an aggregate of 9,436 shares of Common Stock if all of the
holders of the 12% Preferred tender all of their shares. In addition, each
holder will be issued an amount of shares of Common Stock equal to the result of
dividing (a) the accrued dividend on the 12% Preferred share by (b) $0.9688, the
closing price for the Company's Common Stock on December 31, 1998. The 12%
Preferred presently entitle the holder to convert to 0.04 shares of Common
Stock, par value $.001, of the Company, and the accrued dividend, before
conversion, of 12% per annum, payable, when declared by the Board of Directors,
in cash or stock at the Company's option, per share of 12% Preferred. This
tender is conditioned upon the tender of at least 60% of the outstanding shares
of the 12% Preferred or it will be withdrawn. Shares tendered during the
election period will be held in escrow until the minimum condition is reached.
Any shareholders not tendering their 12% Preferred will continue to have the
rights set forth in the Company's Certificate of Incorporation. The total cash
value of the arrearage of unpaid dividends as of December 31, 1998 is $367,944.
<PAGE>
Warrants
On May 1, 1997, the Company's Class A Warrants expired. On May 1, 1998, the
Company's Class B Warrants expired.
On May 31, 1995, the Company entered into an investment banking agreement
for a five year period. In consideration, the Company issued warrants to
purchase 11,350 shares of the Company's common stock at an exercise price of
$6.75 per share. The warrants are exercisable for five years, commencing at
various dates from May 31, 1996 to May 31, 2001. At December 31, 1998, all
warrants were outstanding. In connection with the investment banking agreement
and the services provided to complete that agreement, the Company issued to a
consultant, warrants to purchase 1,135 shares of the Company's common stock at
an exercise price of $6.75 per share. These warrants are exercisable for five
years, commencing at various dates from May 31, 1996 to May 31, 2001. At
December 31, 1998, all warrants were outstanding.
On November 24, 1998, the Company entered into a consulting agreement
whereby the consultant will perform corporate finance, provide due diligence on
mergers and acquisition candidates, and assist the Company on internal
structuring and the placement of new debt and equity issues. In consideration,
the Company granted warrants to purchase 300,000 shares of the Company's common
stock at $.05 per share. The warrants became available 50% immediately and 50%
after 90 days from the date of the agreement. The term of the warrants are three
years. At December 31, 1998, none of the warrants were exercised.
Convertible Debt
During July and August of 1997, the Company issued a series of 12% Secured
Convertible Promissory Notes which, in the aggregate, amounted to $100,000 (see
Note 4). The notes are secured by the Company's Film Licenses, as well as the
personal guarantee, as to payment, of the President and Chief Executive Officer.
During 1998, $31,300 of the Notes were paid. At December 31, 1998 the Company
has loans remaining of $68,700. The notes are convertible through June 30, 1999
into 49,964 shares of the Company's common stock (conversion price of $1.375 or
70% of the closing price of the Company's common stock, whichever is less).
F-11
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 7 - Related Parties
The Company paid rent under two sub-leases during 1998 and 1997, to
companies affiliated with the Chief Executive Officer. The rents paid and terms
under the subleases were substantially the same as those under the affiliate's
lease agreements with the landlords. Rent expense for the years ended December
31, 1998, and 1997 was approximately $77,000 and $75,000, respectively (see Note
8). In prior years, the Company made advances to or received advances from the
affiliates for working capital requirements. As a result, at December 31, 1998,
the balances from one affiliate was approximately $900 and the balance due from
the second affiliate was approximately $4,800.
The Company acquired distribution rights to two films from a company
affiliated with the Chief Executive Officer for a ten year license period, which
expires on June 5, 2003. The Company is obligated to pay the affiliated
producers fees at the contract rate when revenue is recognized from the sale of
the films. Such payments will be charged against earnings. In 1998 and 1997, no
payments were made to the affiliate, and no revenue was recognized.
The Company owns distribution rights to two films which were acquired
through a company affiliated with the Chief Executive Officer, that is the
exclusive agent for the producers. This exclusive agent is 100% owned by the
principal shareholder of the Company, but receives no compensation for the sale
of the licensing rights. Additionally, after recoupment of original acquisition
costs, the principal shareholder has a 5% interest as a producer in the revenue
received by unaffiliated entities. The Company has received no revenue relating
to these films during 1998 and 1997.
At December 31, 1997, the balance due from a company affiliated with the
Chief Executive Officer was $13,805. This balance was the result of advances
made, from time to time, to the affiliated company during 1991 and 1992. Based
upon the affiliates inability to repay these amounts since 1992, the outstanding
balance of $13,805 was written-off during 1998.
Throughout 1998, the Company's principal shareholder and officer made loans
to, and payments on behalf of the Company and received payments from the Company
from time to time. The largest net balance due from the officer was $121,000.
The net outstanding balance due from the officer at December 31, 1998, was
$102,000.
One of the Company's directors was a partner in a law firm engaged by the
Company as general counsel in years prior to 1997. The Board member is no longer
affiliated with the law firm. During 1998, as consideration for his efforts on
behalf of the Company, the Board Member received 15,000 Shares, valued at
$5,625. During 1998 and 1997, the law firm billed nothing in fees, and at
December 31, 1998, the outstanding balance due the firm was approximately
$100,000.
As part of salary, bonuses and other compensation, the Company's President
and Chief Executive Officer (see Note 6), was issued 262,097 shares of common
stock, valued at $259,964, (of which, 17,000 shares valued at $6,375 was for
services as a member of the Board of Directors). Further, the Company issued
30,000 shares valued at $11,250 to other non-employee directors.
NOTE 8 - Commitments and Contingencies
Year 2000
The Company has completed the process of becoming year 2000 compliant. All of
the Company's systems have been updated so that none of its systems will be
affected by the Year 2000. This process cost the Company less than $5,000.
The Company is in the process of identifying and contacting the hospitals it
services to determine the extent to which the Company's business may be affected
by those third parties failure to remedy their own Year 2000 issues. It is
expected that full identification will be completed by March 31, 1999. The
company does not currently have any formal information concerning the Year 2000
compliance status of the hospitals it services but has received indications that
most of the hospitals are working on Year 2000 compliance. In the event that any
of the significant hospitals that the Company services do not successfully and
timely achieve Year 2000 compliance, the Company's business or operations could
be adversely affected.
Leases
The Company leased its New York office facilities under a sublease. The
Florida office lease expired on November 30, 1997 and was paid on a month to
month basis through September 1998 when it was closed. The New York lease
expires in May 2002 (see Note 7). Future minimum annual base rental commitments
as of December 31, 1998 are as follows:
1999 $ 61,962
2000 63,988
2001 66,014
2002 27,013
--------
$218,977
========
F-12
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 8 - Commitments and Contingencies (Continued)
License Agreements
In some instances, film licensors have retained an interest in the future
sale of distribution rights owned by the Company above the guaranteed minimum
payments. Accordingly, the Company may become obligated for additional license
fees as sales occur in the future.
Employment Agreements
Mr. Hreljanovic has an Employment Agreement with the Company which expires
on April 30, 2005, and that provides for his employment as President and Chief
Executive Officer at an annual salary adjusted annually for the CPI Index and
for the reimbursement of certain expenses and insurance. Based on the foregoing
formula, Mr. Hreljanovic's salary in 1998 was approximately $175,000.
Additionally, the employment agreement provides that Mr. Hreljanovic may receive
shares of the Company's common stock as consideration for raising funds for the
Company. Due to a working capital deficit, the Company is unable to pay the
entire salary in cash to Mr. Hreljanovic pursuant to his employment agreement.
In the best interests of the Company, in lieu of cash, Mr. Hreljanovic has
agreed to accept and the Board of Directors has approved the issuance of shares
of the Company's common stock as payment for the unpaid salary of 1998 and 1997.
The Company issued 187,636 shares of common stock to Mr. Hreljanovic in 1998 to
liquidate the amount owed to him for his 1998 and 1997 salary and 57,641 shares
of common stock as additional compensation for achieving certain performance
benchmarks for obtaining new hospital contracts.
Under the terms of this employment agreement, the Chief Executive Officer
of the Company is entitled to receive a cash bonus when the Company's pre-tax
profit exceeds $100,000.
Additionally, if the employment agreement is terminated by the Company
after a change in control (as defined by the agreement), the officer is entitled
to a lump sum cash payment equal to approximately three times his base salary.
Mr. Vazquez has an employment agreement, as amended, with PCI which expires
on June 30, 1999 and provides for his employment as President of PCI with annual
compensation of $135,000. Unless terminated under the agreement, the employment
agreement automatically extends to June 30, 2000. In accordance with an
amendment to Mr. Vazquez's employment agreement, in 1998 he received options to
purchase 16,000 shares of the Company's common stock at $3.75 per share in
consideration to forego receipt of 7,366 shares of common stock. Additionally,
Mr. Vazquez is entitled to an annual bonus to be determined by the Board of
Directors of the Company and options to purchase 23,600 shares of the Company's
Common Stock under the Company's 1996 Incentive Stock Option Plan. Such options
will vest as Mr. Vazquez achieves certain annual gross revenue thresholds,
ranging from $1,000,000 to $5,000,000 during the term of his employment
agreement.
Preemptive Rights
Shareholders of a New York corporation have preemptive rights unless
otherwise provided in the certificate of incorporation or bylaws. Until February
12, 1997, the Company's Certificate of Incorporation did not limit or eliminate
the Shareholders' preemptive rights. Accordingly, if the Company were to offer
to sell for cash additional shares of common stock or shares convertible into or
exchangeable for common stock, each Shareholder would have the right to purchase
that number of shares as would enable him to maintain his proportionate interest
in the Company's common stock.
The Company has recently determined that, notwithstanding the Shareholders'
preemptive rights, the Company has issued shares on a number of occasions
without offering preemptive rights to existing Shareholders or procuring waivers
of their preemptive rights. No Shareholder has alleged any damage resulting to
him as a result of the sale of shares of common stock by the Company without
offering preemptive rights. The amount of damages incurred by Shareholders by
reason of failure to offer preemptive rights, if any, is not ascertainable with
any degree of accuracy. Management believes that if any such claims were
asserted, the Company may have valid defenses.
F-13
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 8 - Commitments and Contingencies (Continued)
Litigation
On May 22, 1996, Ordinary Guy, Inc. and Crow Productions, Inc. commenced an
action against the Company, its CEO and an affiliate of the CEO in the United
States District Court for the Eastern District of New York seeking damages in
the amount of $464,470.50, plus interest alleging that the Company has successor
liability for a judgment entered in March of 1993 by the Plaintiffs against
Juniper Releasing, Inc. ("Releasing"), a company affiliated with the Company's
CEO. It is alleged that the Company was formed in 1989 as a successor to
Releasing and that the Company and others transferred assets out of Releasing to
avoid the payment of Releasing's creditors. This matter was settled in April
1998 for a payment of $310,000 which is paid out over four years ending April
20, 2001. The payment is secured by 93,320 shares of the Company's common stock.
Going Concern
As shown in the accompanying financial statements, the Company's:
* Revenue increased slightly to $1,421,000 in 1998, from $1,387,000 in 1997;
* Net loss was ($946,000) in 1998, and ($1,122,000) in 1997;
* Working capital was $69,000 at December 31, 1998 and was a negative
($765,000) at December 31, 1997.
Additionally, the Company has, over the past several years, worked closely
with a healthcare professional to bring the Company both health insurance
company group plan customers, as well as, professional healthcare providers and
networks. The healthcare professional has assisted in arranging the
relationships between the Company, the Guardian, and the network of providers
previously under contract with the Company. Effective December 17, 1997, the
Company no longer has any contractual arrangement with the healthcare provider
or the Guardian. The loss of this business was temporarily replaced with a
settlement agreement during 1998 between the Company and a healthcare
professional with whom the Guardian is conducting similar business. The loss of
the contract with the Guardian will have a material adverse effect on the
operations of the Company after 1998.
The fact that the Company continued to sustain losses in 1998; has minimal
working capital at December 31, 1998; still requires additional sources of
outside cash to sustain operations, and has lost a material contract, continues
to create uncertainty about the Company's ability to continue as a going
concern.
Management of the Company has developed a plan to reduce its liabilities
and improve cash flow through expanding operations and raising additional funds
either through the issuance of debt or equity. The ability of the Company to
continue as a going concern is dependent upon the Company's ability to raise
additional funds either through the issuance of debt or the sale of additional
common stock and the success of Management's plan to expand operations. The
Company anticipates that it will be able to raise the necessary funds it may
require for the remainder of 1999 through public or private sales of securities.
The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
NOTE 9 - Incentive Compensation Plans
1989 Restricted Stock, Non-Qualified and Incentive Stock Option Plan
On December 7, 1989, a restricted stock, non-qualified and incentive stock
option plan was adopted. The Company has authorized 7,500 shares of common
stock to be reserved for issuance thereunder. Under the terms of this plan,
restricted stock awards are authorized for employees. Additionally,
non-qualified options may be granted to employees, directors, consultants and
others who render services to the Company. Under the terms of the restricted
stock awards, restricted stock may be issued to employees in consideration of
(i) cash in an amount not less than the par value thereof or such greater amount
as may be determined by the Compensation Committee of the Board of Directors and
(ii) the continued employment of the employees during the restricted period. The
Compensation Committee sets the terms of the restricted period, which will in no
event be less than one year. Pursuant to the plan, during 1995, 5,000 options
were issued to the President (see Note 6).
F-14
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 9 - Incentive Compensation Plans (Continued)
During 1998, the Board of Directors authorized the issuance of 23,000
shares of restricted common stock, under the incentive compensation plans to
employees. These shares were valued at $11,040 (see Note 6).
Under the Non-Qualified Option aspect of the Incentive Compensation Plan,
options may be granted to employees, directors, consultants and other
individuals who render services to the Company. The option price for each option
granted will be determined by the Compensation Committee. Each option will have
a term of not more than 10 years from the date of grant and may be exercisable
in installments as prescribed by the Compensation Committee.
The Company's Incentive Stock Option aspect of the Incentive Compensation
Plan provides for the grant to employees of incentive options to purchase shares
of common stock of the Company at option prices which are not less than the fair
market value of the Company's common stock at the date of grant, except that any
Incentive Option granted to an employee holding 10% or more of the outstanding
voting securities of the Company must be for an option price not less than 110%
of fair market value.
Incentive Options granted under the Incentive Compensation Plan will expire
not more than 10 years from the date of the grant (five years from the date of
the grant in the case of a 10% Stockholder), and the Incentive Option agreements
entered into with the holders will specify the extent to which the Incentive
Options may be exercised during their respective terms. The aggregate fair
market value of the shares of common stock subject to Incentive Options that
become first exercisable by an optionee in a particular calendar year may not
exceed $100,000.
1996 Stock Option Plan
On February 12 , 1997, the shareholders of the Company adopted the 1996
Stock Option Plan. The Plan supplements the Company's 1989 Restricted Stock,
Non-Qualified and Incentive Stock Option Plan. This Plan, which allows the
Company to grant incentive stock options, non-qualified stock options and stock
appreciation rights (collectively "options"), to employees, including officers,
and to non-employees involved in the continuing development and success of the
Company, authorizes the grant of 100,000 shares of common stock. The terms of
the options are to be determined by the Board of Directors. Options will not
have expiration dates later than ten years from the date of grant (five years
from the date of the grant in the case of a 10% Stockholder). The Option Prices
may not be less than the fair market value of the common shares on the date of
grant, except that any option granted to an employee holding 10% or more of the
outstanding voting securities of the Company must be for an option price not
less than 110% of fair market value.
1998 Stock Option Plan
On December 30, 1998, the shareholders of the Company adopted the 1998
Stock Option Plan. The Plan supplements the Company's 1989 Restricted Stock,
Non-Qualified and Incentive Stock Option Plan. This Plan allows the Company to
grant incentive stock options, non-qualified stock options and stock
appreciation rights (collectively "options") to purchase up to an aggregate of
5,000,000 shares of common stock to employees, including officers, and to
non-employees involved in the continuing development and success of the Company.
The terms of the options are to be determined by the Board of Directors. Options
will not have expiration dates later than ten years from the date of grant (five
years from the date of the grant in the case of a 10% stockholder). The option
prices may be set at any amount in the discretion of the Board's Compensation
Committee. No options have been granted under the Plan.
Statement of Financial Accounting Standards No. 123
At December 31, 1998, the Company had one stock-based compensation plan,
which is described above. The Company applies APB Opinion 25, Accounting for
Stock Issued to Employees, and related Interpretations in accounting for its
plan. Accordingly, no compensation cost has been recognized for its fixed stock
option plan or for options issued to non-employees for services performed. Had
compensation costs for these options been determined, based on the fair market
value at the grant dates consistent with the method of FASB Statement 123,
Accounting for Stock-Based Compensation, the Company's net income (loss) and net
income (loss) per common share would have been reduced to the pro forma amounts
indicated below:
1998 1997
---- ----
Net income (loss) ................ As reported $ (945,862) $(1,121,803)
Pro forma $(1,285,075) $(1,456,507)
Net income (loss) per common share As reported $ (0.67) $ (0.05)
Pro forma $ (0.89) $ (0.06)
F-15
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 10 - Income Taxes
For the years ended December 31, 1998 and 1997, no provision was made for
Federal and state income taxes due to the losses incured during these periods.
As a result of losses incurred through December 31, 1998, the Company has net
operating loss carryforwards of approximately $5,685,000. These carryforwards
expire as follows:
2006 $ 490,000
2007 1,451,000
2008 165,000
2009 717,000
2010 231,000
2011 568,000
2012 1,107,000
2013 956,000
---------
$5,685,000
==========
In accordance with Financial Accounting Standards Board Statement No. 109
"Accounting for Income Taxes", the Company recognized deferred tax assets of
$2,331,000, at December 31, 1998. The Company is dependent on future taxable
income to realize deferred tax assets. Due to the uncertainty regarding their
utilization in the future, the Company has recorded a related valuation
allowance of $2,331,000. Deferred tax assets at December 31, 1998 primarily
reflect the tax effect of net operating loss carryforwards.
NOTE 11 - Business Segment Information
The operations of the Company are divided into two business segments:
healthcare - consisting of managed care revenue enhancement and healthcare cost
containment services; and entertainment - consisting of the acquisition and
distribution of rights to films. The Company markets its managed care revenue
enhancement services throughout the United States; its healthcare cost
containment services are predominantly located in the Northeast; and films are
available to be marketed throughout the world.
Financial information by business segment is as follows:
1998 1997
---- ----
Revenue:
Healthcare ........ $ 1,374,871 $ 1,366,666
Entertainment ..... 46,000 20,000
----------- -----------
$ 1,420,871 $ 1,386,666
=========== ===========
Operating Income (Loss):
Healthcare ........ $ 99,998 $ (246,006)
Entertainment...... (93,930) (90,790)
Corporate ......... (951,930) (785,007)
----------- -----------
$ (945,862) $(1,121,803)
=========== ===========
F-16
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 11 - Business Segment Information (Continued)
1998 1997
---- ----
Identifiable Assets:
Healthcare ......... $ 674,416 $ 315,038
Entertainment ...... 3,130,078 3,157,157
Corporate .......... 760,501 133,660
---------- ----------
$4,564,995 $3,605,855
========== ==========
Depreciation:
Healthcare ......... $ 16,036 $ 7,383
Corporate .......... 6,203 30,284
---------- ----------
$ 22,239 $ 37,667
========== ==========
Capital Expenditures:
Healthcare ......... $ 96,479 $ 4,145
Corporate .......... - 17,696
---------- ----------
$ 96,479 $ 21,841
========== ==========
NOTE 12 - Quarterly Results of Operations (Unaudited)
Below is a summary of the quarterly results of operations for each quarter
of 1998 and 1997:
<TABLE>
<CAPTION>
1998 First Second Third Fourth
<S> <C> <C> <C> <C>
Revenue .......................... $ 208,435 $ 294,144 $ 493,342 $ 424,950
Gross profit ..................... 186,661 257,167 431,912 391,242
------- ------- ------- -------
Net income (loss) ................ $ (233,603) $ (484,459) $ (31,768) $ (196,032)
======= ======== ======== ========
Net income (loss) per common share $ (.26) $ (.47) $ (.03) $ (.09)
==== ==== ==== ====
1997
Revenue .......................... $ 496,089 $ 302,493 $ 311,654 $ 276,430
Gross profit ..................... 319,124 178,379 138,464 144,659
------- ------- ------- -------
Net income (loss) ................ $ (99,180) $ (265,497) $ (372,726) $ (384,401)
======= ====== ======= ========
Net income (loss) per common share $ (0.30) $ (0.65) $ (0.78) $ (0.58)
===== ===== ===== =====
</TABLE>
NOTE 13 - Subsequent Events
From January 1, 1999 to March 16, 1999, the Company sold $100,000 of
convertible debentures which were converted to 133,333 shares of the Company's
common stock.
On March 16, 1999, the Company made a selftender for all of the 233,900
oustanding shares of the Company's 12% Non-voting Convertible Redeemable
Preferred Stock (see Note 6).
F-17
<PAGE>
SIGNATURES
In accordance with section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed by the undersigned,
thereunto duly authorized.
Date: March 31, 1999 JUNIPER GROUP, INC.
By: /s/ Vlado Paul Hreljanovic
--------------------------
Vlado Paul Hreljanovic
President and
Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Signatures Titles Date
By:/s/ Vlado Paul Hreljanovic Chairman of the Board,
-------------------------- President, Chief Executive
Vlado Paul Hreljanovic Officer (Principal Executive
and Financial Officer) March 31, 1999
By: /s/ Harold A. Horowitz Director March 31, 1999
-----------------------
Harold A. Horowitz
By:/s/Peter W. Feldman Director March 31, 1999
-------------------
Peter W. Feldman
<PAGE>
EXHIBIT INDEX
Exhibit Description
10.1 Admendment to Employment Agreement between the Registrant and V. Paul
Hreljanovic, dated February 11, 1998.
10.3 Consulting Agreement between Juniper Medical Systems, Inc. and Jeffrey Mann
dated June 6, 1998.
10.4 Consulting Agreement between Registrant and Global Financial Group, Inc.
dated November 24, 1998.
10.5 Employment Agreement between PCI, Inc. and Richard O. Vazquez, dated June
7, 1996 (3)
10.6 Agreement between PartnerCare, Inc.and Synergy Business Services dated
December 7, 1997
21.1 Susidiaries
23.1 Consent of Independent Certified Public Accountants
27.1 Financial Data Schedule
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
JUNIPER GROUP, INC. AND VLADO PAUL HRELJANOVIC
THIS AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made and entered
into this 11th day of February, 1998, by and between Juniper Group, Inc., a
Nevada corporation (hereinafter referred to as the "Company"), with offices at
111 Great Neck Road, Suite 604, Great Neck, New York 11021, and Vlado P.
Hreljanovic (hereinafter referred to as "Executive") with offices at 111 Great
Neck Road, Suite 604, Great Neck, New York 11021.
WHEREAS, the Executive has been employed by the Company pursuant to the
terms of an employment agreement dated January 1, 1990 (the "Original
Agreement"), as amended December 5, 1990, (the "1990 Amendment"), January 3,
1994 (the "1994 Amendment"), and April 15, 1995 (the "1995 Amendment")
(collectively, the "Executive Agreement");
WHEREAS, the Company desires to continue to employ the Executive to perform
the duties described in the Original Agreement (as amended by the 1990
Amendment, the 1994 Amendment and the 1995 Amendment, the "Employment
Agreement").
WHEREAS, the Executive desires to accept such continued employment with the
Company; and
WHEREAS, the Executive and the Company desire to amend the Employment
Agreement as set forth herein;
NOW THEREFORE, based on the foregoing premises and in consideration of the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the parties hereto agree as follows:
1. Paragraph 2 of the Original Employment Agreement as amended by paragraph 1
of the 1995 Amendment, is amended to make the term of the Employment
Agreement a period of seven years commencing on the date hereof (hereby the
"Effective Date"), and shall continue until the seventh anniversary date of
the Effective Date, provided however that the term of this Agreement may be
continued thereafter by renewal on a year to year basis, subject to mutual
agreement of the parties to the Employment Agreement, if at least one
hundred and eighty (180) days before the date of termination of the date of
the initial term of this agreement and any renewal hereof, either party
gives the other written notice of the intention not to extend this
Employment Agreement as so provided. All other terms and conditions with
this paragraph shall remain in full force and effect.
2. Paragraph 2 (a), (b)(i), (ii) and 2 (c) of the 1995 Amendment is superseded
by the following provisions:
Options
(i) The Executive shall have the right to receive up to 40% of his annual Base
Salary in the form of ten (10) year non-qualified stock options (as
described in Section 422 of the Internal Revenue Code of 1986, as amended)
to purchase common stock, $.001 par value (the "Common Stock") of the
Company ("NQSOs"). The Executive shall provide written notice to the
Company of his intent to receive NQSOs in lieu of a portion (not to exceed
40%) of his salary (the "NQSO Notice") no less than five days prior to the
date on which his salary is payable. The number of NQSOs issuable in lieu
of Base Salary shall be determined by dividing the amount of the Base
Salary for which options are being issued by one half of the closing bid
price on the date the Base Salary is payable as reported on the NASDAQ
Stock Market ("NASDAQ").
(ii) In addition to the options that Executive may elect to receive during the
year at his option, in lieu of base salary payments, and in order to
encourage the Executive to use his maximum efforts on behalf of the
Company, the Company shall grant to the Executive each year during the
Initial Term and each renewal term additional ten (10) year NQSOs to
purchase one hundred thousand (100,000) shares of the Company's Common
Stock pursuant to the Company's 1998 Stock Option Plan or such other option
plan as may then be in effect (the "Plan"). The exercise price of the
options being issued shall be one half of the closing bid price as reported
on NASDAQ on the date of the acquisition's closing.
(iii)As an additional part of the Executive's incentive option arrangement, in
the event that during the Initial Term or any renewal term, the Company
acquires any other business entity (whether a corporation or otherwise)
introduced to the Company by the Executive, the Executive shall be entitled
to receive additional ten (10) year NQSOs to purchase (x) a number of
shares of the Company's Common Stock having a fair market value (based upon
the market price of the Common Stock on the date of such acquisition) in an
amount equal to ten percent (10%) of the consideration paid in cash, plus
(y) 10% of the number of shares of the Company's Securities issued in such
acquisition (with same rights as are attached to the securities issued to
the seller). The exercise price of the options being issued shall be one
half of the closing bid price as reported on NASDAQ on the date of the
acquisition's closing.
(iv) As an additional part of the Executive's incentive option arrangement, in
the event that during the Initial Term or any renewal term, the Company
organizes a subsidiary or enters into a joint venture or strategic business
alliance with a third party introduced by the Employee and the Company owns
a majority of the capital stock and other equity interests of such
subsidiary or other entity, the Employee shall be entitled to receive
additional ten (10) year NQSOs to purchase a number of shares of the
Company's Common Stock having a fair market value (based upon the average
of the closing market prices of the Common Stock for the 30 trading days
immediately preceding the end of each fiscal year of the subsidiary or such
other entity) in an amount equal to ten percent (10%) of the pre-tax net
profits of such subsidiary or other entity for each of the first five (5)
fiscal years of such subsidiary or other entity. The exercise price should
be fifty percent of the closing bid price of the Company's stock on the day
of the end of the fiscal year of such subsidiary or other entity.
(v) As an additional part of the Executive's incentive option arrangement, in
the event that the Executive is successful in raising additional capital
for the Company during the terms hereof or any extension of such term, the
Executive shall be entitled to receive additional ten (10) year NQSOs in
amount equal to the product of dividing 10% of the capital raised by the
fair market value of the Company's common stock at the date of closing. The
exercise price for the options being issued will be at one half of the
closing bid price on the date of the financial transaction or at the end of
the Company's fiscal year, whichever bid price is lower. Such NQSOs shall
vest on the closing date of any such acquisition and be exercisable at a
price equal to one half of the closing bid price for the Company's Common
Stock as reported on the NASDAQ on such date.
(vi) As additional compensation, the Company will grant to the Executive the
following number of Shares of the Company's Common Stock, which are not
registered under the Act, upon the occurrence of any of the following
events:
(a) Options to purchase 100,000 Shares in the fiscal year that "Operating
Income" (as defined in Paragraph 2(d) in the 1995 Amendment), is equal
to or greater than $100,000, and (2) in each successive fiscal year
Operating Income increases by 10% as compared to the previous fiscal
year; and
(b) Options to purchase 50,000 Shares if Gross Revenue of any subsidiary
or intermediary subsidiary increases by 15% in any fiscal year
compared to the previous fiscal year.
The exercise price of such options granted hereunder shall be fifty
percent the closing bid price on the last day of the fiscal year.
(vii)(a) If there is any stock dividend, stock split, or combination of
shares of Common Stock of the Company, the number and amount of shares
then subject to this option shall be proportionately and appropriately
adjusted; no change shall be made in the aggregate purchase price to
be paid for all shares subject to this option, but the aggregate
purchase price shall be allocated among all shares, subject to this
option after giving effect to the adjustment.
(b) If there is any change in the Common Stock of the Company, including
recapitalization, reorganization, sale or exchange of assets, exchange
of shares, offering of subscription rights, or a merger or
consolidation in which the Company is the surviving corporation, all
of the options granted to the Executive under the Executive's
Agreement, shall be immediately exercisable. Failure of the Board of
Directors to provide for an adjustment pursuant to this subparagraph
prior to the effective date of any Company action referred to herein
shall be conclusive evidence that no adjustment is required in
consequence of such action.
(c) If the Company is merged into or consolidated with any other
corporation, or if it sells all or substantially all of its assets to
any other corporation, then either (i) the Company shall cause
provisions to be made for the continuance of this option after such
event, or for the substitution for this option of an option covering
the number and class of securities which the Executive would have been
entitled to receive in such mergers or consolidation by virtue of such
sale if the Executive had been the holder or record of a number of
shares of Common Stock of the Company equal to the number covered by
the unexercised portion of this option, or (ii) the Company shall give
to the Executive written notice of its election not to cause such
provision to be made and this option shall be exercisable in full (or,
at the election of the Executive, in part) at any time during a period
of twenty days, to be designated by the Company, ending not more than
10 days prior to the effective date of the merger, consolidation or
sale, in which case this option shall not be exercisable to any extent
after the expiration of such 20 day period. In no event, however,
shall this option be exercisable after the Termination Date.
3. Expenses
The Company shall pay all original issue and transfer taxes with respect to
the issuance and transfer of shares of stock pursuant thereto and all other fees
and expenses necessarily incurred by the Company in connection therewith.
4. Notice of Exercise of Options
(a) The person exercising an option shall not be considered a record holder of
the Stock so purchased for any purpose until the date on which he is
actually recorded as the holder of such stock in the records of the
Company.
(b) This option shall be exercisable whether or not Executive shall continue to
be an employee of the Company, or early, normal or deferred retirement or
prior to the earlier date on which the option expires in accordance with
its terms, except that if the Executive is an employee of the Company at
the time of his death, then this option shall be exercisable by his
personal representative or heirs, as the case may be, within the twelve
month period next succeeding the death of the Executive, or prior to the
earlier date on which the option expires in accordance with its terms.
5. Binding Upon Heirs, Successors and Assigns. This Amendment shall inure to
the benefit of and be binding upon, The Company, its successors and
assigns, including, without limitation, any person, partnership, company or
corporation which may acquire substantially all of The Company's assets or
business, or with or into which The Company may be liquidated,
consolidated, merged, or otherwise combined, and shall inure to the benefit
of the Executive, his heirs, distributees and personal representatives, and
be binding upon the Executive.
6. Waiver. The failure of either party to insist in any one or more instances,
upon performance of any of the terms, covenants or conditions of this
Amendment shall not be construed as a waiver of further performance of any
such term, covenant or condition, but the obligations of either party with
respect thereto shall continue in full force and effect.
7. Notices. Any notice given hereunder shall be in writing and personally
delivered or mailed by registered or certified mail, return receipt
requested to the parties' respective address first set forth above, and in
the case of notice to the Company, addressed to the Secretary of the
Company with a copy to Snow Becker Krauss, Attention: Jack Becker, Esq.,
either party may, by notice as aforesaid; designate a different address.
Any notice given hereunder shall be effective on the date of mailing.
8. Entire Agreement. The parties hereto agree that, effective as of February
11, 1998, this Amendment supersedes the terms and provisions of the
Employment Agreement and any previous agreements between the Executive and
The Company only to the extent of a direct modification or addition or
conflicting provision set forth in this Amendment, as amended hereby,
contains the entire understanding and agreement between the parties with
respect to the subject matter hereof and cannot be amended, modified or
supplemented in any respect, except by a subsequent written agreement
entered into by both parties hereto. All other provisions not amended in
the Original Agreement, 1990 Amendment, 1994 Amendment and 1995 Amendment
shall continue to be survive and be in full force and effect.
9. Severability. If any provision of this Agreement shall, for any reason, be
adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Agreement, but shall be confined in its operation to the
provisions of this Agreement directly involved in the controversy in which
such judgment shall have been rendered.
10. Governing Law/Jurisdiction/Dispute Resolution. This Agreement shall be
governed by and construed under the laws of the State of New York and
disputes in connection therewith shall be resolved in courts located in the
County of Nassau, State of New York or arbitrated before the American
Arbitration Association (the "AAA") in the County of Nassau, State of New
York pursuant to the then Rules of the AAA. The parties consent to the
jurisdiction of the Supreme Court of the State of New York and of the U.S.
District Court sitting in the Eastern District of the State of New York
with respect to any and all proceedings and further agree that any and all
process and notices of motions or applications in relation to any Court
proceedings or arbitration may be served upon a party personally or by
registered or certified mail, return receipt requested. The service may be
accomplished either within or without the State of New York, and such
notice shall be given of all applications and hearings as is provided by
the laws of the State of New York. The award of the Courts or arbitrators
shall be final and binding upon the parties and judgment thereon may be
entered as provided by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first herein above written.
/S/ Vlado P. Hreljanovic
------------------------
Vlado P. Hreljanovic
JUNIPER GROUP, INC.
By:__________________________
EXECUTIVE:
By:__________________________
CONSULTING AGREEMENT
This Consulting Agreement is made effective this 6th day of June, 1998, by
and between Jeffrey Mann ("Consultant"), an individual with offices at 1929
Wingfield Drive, Longwood, FL 32779, and JUNIPER MEDICAL SYSTEMS, INC.
("Client"), a New York corporation, with offices a:111 Great Neck Road, Suite
604, Great Neck 11021.
PREMISES
A. Client is engaged in the business of securing the services of healthcare
professionals, hospitals and medical provider networks in various
healthcare disciplines.
B. Consultant is engaged in the business of securing ancillary healthcare
services for physician practices.
C. Client desires to retain Consultant to perform these services and to
compensate Consultant for these services by issuing Consultant options to
purchase shares of the parent company, Juniper Group, Inc.'s ("Juniper")
common stock.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is expressly acknowledged, Client and Consultant
agree as follows:
1. Engagement of Consultant
Client hereby retains Consultant to perform the following services:
A. The acquisition of physician practice management
organizations and the development and implementation of
ancillary healthcare services to such physician practices.
2. Compensation.
A. As compensation for the Consulting Services, Client shall pay
Consultant:
( i) Client shall pay Consultant total compensation of $75,000 for
the term of this Agreement, which shall be paid in Juniper's
Common Stock.
(ii) Client shall pay Consultant monthly, after the Consultant has
rendered the Consulting Services for that month, an irrevocable
option to purchase up to twelve thousand five hundred ($12,500)
dollars in value of Juniper's Common Stock, par value $0.001 per
share. The number of shares issued in each monthly option shall
be determined by dividing $12,500 by the average 30 day trading
price immediately preceding the issuance of the option. The term
of this option to purchase shares of Juniper's Common Stock shall
be in full force for a period of five (5) years from the date of
this Agreement. If termination occurs for any reason,
Consultant's option remains in effect through last date of
service.
B. Consultant shall exercise options by delivering the option price,
along with the executed Investment Letter annexed hereto as
Exhibit A to Client. Consultant will release such funds to Client
upon execution of the Investment Letter and Juniper shall make
delivery of Certificates representing the number of shares of
common stock exercised.
C. The granting of the share purchase rights are being made pursuant
to a resolution adopted by the Board of Directors of Juniper on
even date herewith, which specified that Consultant is to receive
the rights to purchase shares in the manner set forth herein.
D. Juniper shall make immediate delivery of such shares, upon full
payment and receipt of a duly executed investment representation
letter, provided that if any law or regulation requires Juniper
to take any action with respect to the shares specified in such
notice before the issuance hereof. The date of such delivery of
such shares shall be extended for the period necessary to take
such action.
E. The parties hereto acknowledge that the issuance of Juniper's
shares upon the exercise of the share purchase rights hereunder
is being made without registration under the Securities Act of
1933, as amended, (the "Securities Act"), or any other state or
federal law, that the shares issued upon exercise of the
Investment Letter will therefore be "restricted Securities"
within the meaning of the Securities Act and Rule 144 promulgated
under the Securities Act. All certificates representing the
shares issued pursuant to this Agreement, any and all
certificates issued in replacement thereof or in exchange
therefore, shall bear a legend, in substantially the following
form, which Consultant has read and understands:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES ACT") AND ARE
"RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 PROMULGATED
UNDER THE SECURITIES ACT. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT, THE AVAILABILITY OF WHICH IS ESTABLISHED TO THE
SATISFACTION OF JUNIPER.
F. Proxy - Consultant agrees that, upon the issuance of Juniper's
Shares to the Consultant hereunder upon the exercise of any of
the share purchase rights, Consultant shall enter into a
Shareholder's Agreement with Vlado P. Hreljanovic (Hreljanovic),
a Shareholder of Juniper Group, Inc., substantially in the form
of Exhibit "B" hereto, whereby Consultant shall grant to
Hreljanovic and irrevocable proxy to vote Consultant's Shares for
a period of ( ) years earned by this Agreement, or for so long as
Consultant, or any affiliate of Consultant, or any member of
Consultant's family owns the Shares. The parties hereby
acknowledge that this proxy is coupled with an interest. Nothing
contained in this paragraph shall preclude Consultant, in his
sole discretion, from the lawful disposition of Shares acquired
by him in accordance with this Agreement.
The Certificate representing the shares will contain the following legend
reflecting the foregoing:
THE VOTE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE GOVERNED BY A
SHAREHOLDER'S AGREEMENT DATED ___________________ BETWEEN VLADO P.
HRELJANOVIC ("VPH") AND JEFFREY MANN ("JM"), INCLUDING AN IRREVOCABLE PROXY
TO VOTE THE SHARES GRANTED BY JM TO VPH.
3. Person Entitled to Exercise.
The Option can only be exercised by Consultant, Consultants beneficiary or
Consultant's estate, and neither this nor any rights hereunder can be
transferred other than by testamentary disposition or the laws of descent and
distribution. Neither this Option, nor any right hereunder, shall be subject to
lien, attachment, execution, or similar process. In the event of any alienation,
pledge, or hypothecation, of any other transfer of this Option, or any right
hereunder, or in the event of any levy, attachment, execution or similar
process, this Option and all rights granted hereunder shall immediately null and
void.
4. Term of Agreement, Extensions and Renewals.
This Agreement shall have an initial term of six (6) months (the "Term of
Agreement") from the date hereon, and shall terminate on December 31, 1998.
5. Termination of Agreement by the Client.
Despite anything to the contrary contained in this Agreement hereunder,
Client may terminate this Agreement and Client's consulting agreement if any of
the following events occur. In the event of such termination, Consultant may
exercise any options which have issued for services already rendered, but
Consultant is not entitled to any portion of the options which would have been
issued for services which had not been performed prior to this termination.
A. Failure to Follow Instructions. Client can terminate this Agreement in
the event Consultant fails to follow Client's instructions. Client
must advise Consultant that his actions or inactions are unacceptable
and give Consultant a reasonable time to comply. If Consultant fails
to comply, or a later time makes the same unacceptable action or
inaction, he may be terminated hereunder by Client's service of
"Notice of Termination" to Consultant.
B. Breach of Consultant's Duties. Client can terminate this Agreement if
in the sole judgment of the Chief Executive Officer, Consultant's
actions or conduct would make it unreasonable to require Client to
retain Consultant. Such acts include, but are not limited to,
dishonesty, illegal activities, activities harmful to the reputation
of the Client, and or activities that create civil or criminal
liability for the Client.
C. Sale of Client's Assets. The sale of substantially all of Client's
assets to a single purchaser or group of associated partners.
D. Termination of Client's Business. Client's bona fide decision to
terminate its business and liquidate its assets.
E. Merger on Consolidation. The merger or consolidation of Client.
6. Restrictive Covenants: Non-Circumvention:
6.1 Covenant of Nondisclosure of Confidential Information.
(a) Both Client and Consultant acknowledge that the confidential
proprietary information, including but not limited to customer lists,
financial information, contacts, customer policies, intellectual
property and production processes used in each party's business is
secret, confidential, unique, and valuable and that it was developed
by that party over a long period of time, at great cost, and that
disclosure of any item of confidential proprietary information to
anyone other than either party's officers, agents or authorized
employees will cause irreparable injury. Consultant will not disclose
to any person or entity not authorized in writing by Client, directly
or indirectly, any of Client's confidential proprietary information
and Client will not disclose to any person or entity not authorized in
writing by Consultant, directly or indirectly, any of Consultan's
confidential proprietary information. This covenant will survive the
termination of this Agreement.
(b) Notwithstanding the foregoing, either party may disclose confidential
information of the other party if required to do so by (i) subpoena,
which has not been quashed as provided in Paragraph 6.2(c); (ii) order
of any court or governmental authority (from which no further appeal
may be taken as provided in Paragraph 6.2; or (iii) if in the
reasonable opinion of the disclosing party's counsel, failure or
refusal to disclose the confidential information would result in
criminal or civil penalties.
(c) The disclosing party shall, prior to disclosing any confidential
information as set forth in Paragraph 6.2 (b), afford the other party
the reasonable opportunity to (i) quash the subpoena or (ii) appeal
the order, requiring the disclosure of the confidential information,
as the case may be.
6.2 In the event of a breach of any of the provisions of this Paragraph 6
by either party, in addition to all other remedies as allowed by law,
the other party shall be entitled to an accounting and payment of all
profits realized as a result of any such violation, consequential
damages and in addition, as a matter of right, to injunctive relief in
any court of competent jurisdiction, all of which remedies the injured
party shall be entitled to pursue simultaneously and cumulatively.
7. Best Efforts Basis.
Consultant agrees that he will at all times faithfully and to the best of
his experience, ability and talents, perform all the duties that may be required
of and from Consultant, pursuant to the terms of this Agreement. Consultant does
not guarantee that his efforts will have any impact on Client's business or that
any subsequent financial improvement will result from Consultant's efforts.
Client understands and acknowledges that the success or failure of Consultant's
efforts will be predicated on Client's assets and operating results.
8. Client's Rights to Approve Transactions.
Client expressly retains the right to approve, in its sole discretion, each
and every transaction introduced by Consultant that involves Client. Consultant
and Client agree that consultant is not authorized to enter into agreements on
behalf of Client.
9. Client Under No Duty or Obligation to Accept or Close on any
Transactions.
It is mutually understood and agreed that Client is not obligated to accept
or close any promotional proposal, acquisition, or merger transactions submitted
by Consultant.
10. Costs and Expenses.
Consultant shall be responsible for all out-of-pocket expenses, travel
expenses, third party expenses, filing fees, copy and mailing expenses that
Consultant may incur in performing Consulting Services under this Agreement.
However, such costs shall be reimbursed to Consultant if approved in writing by
Client within thirty (30) days from the date that the Consultant submits
approved expense report to Client.
11. Work Stoppage or Early Termination.
Notwithstanding anything to the contrary contained herein, Client shall
have the right to direct the work to be performed by Consultant hereunder on any
matter. In addition, Client shall have the right, at any time, to direct
Consultant to cease work or abandon its efforts on Client's behalf, and to
refrain from commencing any new work or providing any further Consulting
Services hereunder. If at any time Client directs Consultant to stop work,
Consultant shall retain all rights to exercise any remaining Option Shares which
have then been issued.
12. Non-exclusive Services.
Client acknowledges that Consultant is currently providing services of
dissimilar nature to other parties and Client agrees that Consultant is
prevented or barred from rendering services of the same nature or a similar
nature to any other individual or entity. Consultant will advise Client of its
position with respect to any activity, employment, business arrangement, or
potential conflict of interest, which may be relevant to this Agreement. Client
shall solely determine that Consultant is devoting a reasonable amount of time
to Client to meet Client's consulting services.
13. All Prior Agreements Terminated.
This Agreement constitutes the entire understanding of the parties with
respect to the engagement of Consultant, and all prior agreement with respect
thereto are hereby terminated and shall be of no force or effect.
14. Representations and Warranties of Client.
Client hereby represents and warrants to Consultant that:
A. Corporate Existence. Client is a corporation duly organized and
validly existing, under the laws of the State of New York, with
corporate power to own property and carry on its business as it is now
being conducted
B. Financial Statements. Juniper has or will cause to be delivered,
concurrent with the execution of this Agreement, copies of the most
recent Form 10-KSB, and all subsequent 10-QSBS, which accurately set
forth the financial condition of Client as of the respective dates of
such documents.
C. No Conflict. This Agreement has been duly executed by Client and the
execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in any agreement,
instrument, judgment, decree, or order to which Client is a party or
to which Client is subject, nor will such execution and performance
constitute a violation or conflict of any fiduciary duty to which
Client is subject.
15. Representations and Warranties of Consultant.
A. Information. No representation or warranty contained herein, nor a
statement in any document, certificate or schedule furnished or to be
furnished, pursuant to this Agreement by Consultant, or in connection
with the transaction contemplated hereby, contains or contained any
untrue statement of material fact.
B. Inside Information Securities Laws Violations. In the course of the
performance of his duties, consultant may become aware of information
which may considered "inside information" within the meaning of the
Federal Securities Laws, Rules and Regulations. Consultant
acknowledges that his use of such information to purchase or sell
securities of client, or its affiliates, or to transmit such
information to any other party with a view to buy, sell, or otherwise
deal in Client's securities, is prohibited by law and would constitute
a breach of this Agreement and notwithstanding the provisions of this
Agreement, will result in the immediate termination of the Options.
C. No Restrictions. There is no pending or threatened suit, action, or
legal, administrative arbitration or other proceeding of claim by any
governmental agency, whether federal, state, local or foreign, against
the Consultant or any individual or entity which the Consultant
controls, is controlled by, or is under common control with, which
adversely, or might adversely, effect the (i) Consultant's ability to
provide the services set forth herein; or (ii) the Company.
The Consultant's performance of the services hereunder is not in
violation of any law, statute or regulation of any governmental
authority, whether federal, state, local or foreign, or any of the
terms, conditions, or provisions of any judgement, order, injunction,
decree or ruling of any court or governmental authority, whether
federal, state, local or foreign.
The Consultant has all requisite licenses, authorizations and
consents, if any, necessary to perform the services hereunder.
D. Reliance Upon Representations. The information provided pursuant to
this Agreement may be relied upon by Client, as true and correct as of
the date of delivery of any shares received by Consultant through
executions of options hereunder.
(a) By reason of Consultant's knowledge and experience of financial
and business matters in general, and investments in particular,
Consultant is capable of evaluating the merits of this
transaction and in bearing the economic risks of an investment in
the shares and the Company in general and fully understand the
speculative nature of such securities and the possibility of such
loss;
(b) Consultant has had the opportunity to ask questions and receive
answers concerning the terms and conditions of the Shares to be
issued hereby and reserved for issuance pursuant hereto, and to
obtain any additional information which Client possesses or can
acquire without unreasonable effort or expense that is necessary
to verify the accuracy of information furnished; and
(c) Consultant has been furnished with a copy of Juniper's most
recent Annual Report on Form 10-KSB and all reports or documents
required to be filed under Sections 13(a), 14(a) and 15(d)of the
Securities and Exchange Act of 1933, as amended, including but
not limited to, quarterly reports on Form 10-QSB; and, in
addition, that Consultant has been furnished with a brief
description of Juniper's capital structure and any material
changes in Juniper's affairs that may not have been disclosed in
the Disclosure Documents.
16. Consultant is Not an Agent or Employee.
Consultant's obligations under this Agreement consist solely of the
Consulting Services described herein. In no event shall Consultant be considered
as the employee or agent of Client or otherwise represent or bind Client. For
purposes of this Agreement, Consultant is an independent contractor. All final
decisions with respect to acts of Client or its affiliates, whether or not made
pursuant to, or in reliance on, information or advice furnished by Consultant
hereunder, shall be those of Client or such affiliates, and consultant shall
under no circumstances be liable for any expense incurred or loss suffered by
Client as a consequence of such action or decisions.
17. Miscellaneous.
A. Authority. The execution and performance of this Agreement has
been duly authorized by all requisite corporate action. This
Agreement constitutes a valid and binding obligation of the
parties hereto.
B. Amendment. This Agreement may be amended or modified at any time
and in any manner, but only by an instrument in writing executed
by the parties hereto.
C. Waiver. All the rights and remedies of either party under this
Agreement are cumulative and are not exclusive of any other
rights and remedies provided by law. No delay or failure on the
part of either party in the exercise of any right or remedy
arising from a breach of this Agreement shall operate as a waiver
of any subsequent right or remedy arising from a subsequent
breach of this Agreement. The consent of any party where required
hereunder to any act or occurrence shall not be deemed to be a
consent to any other act of occurrence.
D. Assignment:
( i) Neither party to this Agreement shall assign any right
created by it without the prior written consent of the
other;
(ii) Nothing in this Agreement, expressed or implied, is intended
to confer upon any person, other than the parties and their
successors, any rights or remedies under this Agreement.
E. Notices. Any notice or other communication required or permitted
by this Agreement must be in writing and shall be deemed to be
properly given when delivered in person to an officer of the
other party, when deposited in the United States mails for
transmittal by certified or registered mail postage prepaid, or
when deposited with a public telegraph company for transmittal or
when sent by facsimile transmission, charges prepared, provided
that the communication is addressed:
( i) In the case of the Consultant to:
Jeffrey Mann
1929 Wingfield Drive
Longwood, FL 32779
Telephone: (407) 805-0315
Fax: (407) 977-8726
(ii) In the case of Client to:
Juniper Medical Systems, Inc.
111 Great Neck Road
Suite 604
Great Neck, NY 11021
Telephone: (516) 829-4670
Facsimile: (516) 829-4691
or to such other person or address designated by the parties to receive
notice.
F. Headings and Captions. The headings of paragraphs are included
solely for convenience. If a conflict exists between any heading
and the text of this Agreement, the text shall control.
G. Entire Agreement. This instrument and the exhibits to this
instrument contain the entire Agreement between the parties with
respect to the transaction contemplated by the Agreement. It may
be executed in any number of counterparts, but the aggregate of
the counterparts together constitute only one and the same
instrument.
H. Effect of Partial Invalidity. In the event that any one or more
of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, but this
Agreement shall be constructed as if its never contained any such
invalid, illegal or unenforceable provisions.
I. Controlling Law. The validity, interpretation, and performance of
this Agreement shall be controlled by and construed under the
laws of the State of New York, County of Nassau, the state in
which this Agreement is being executed.
J. Attorney's Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be
entitled to recover actual attorney's fees from the other party.
The attorney's fees may be ordered by the court in the trial of
any action described in this paragraph or may be enforced in a
separate action brought for determining attorney's fees.
K. Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve this purpose of this Agreement and shall execute
such other and further documents and take such other and further
actions as may be necessary or convenient to effect the
transactions described herein.
L. Further Actions. At any time and from time to time, each party
agrees, at its or their expense, to take actions and to execute
and deliver documents as may be reasonably necessary to
effectuate the purposes of this Agreement.
M. Indemnification. Client and Consultant agree to indemnify, defend
and hold each other harmless from and against all demands,
claims, actions, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and
attorney's fees and expenses asserted against or imposed or
incurred by either party by reason of, or resulting from, a
breach of any representation, warranty, covenant, condition or
agreement of the other party to this Agreement.
N. No Third Part Beneficiary. Nothing in this Agreement, expressed
or implied, is intended to confer upon any person, other than the
parties hereto, and their successors, any rights or remedies
under or by reason of this Agreement, unless this Agreement
specifically states such intent.
O. Facsimile Counterparts. If a party signs this Agreement and
transmits an electronic facsimile of the signature page to the
other party, the party who receives the transmission may rely
upon the electronic facsimile as a signed original of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
herein above written.
CONSULTANT:
/s/ Jeffrey Mann
- - ----------------
Jeffrey Mann
CLIENT:
JUNIPER MEDICAL SYSTEMS, INC.
By:/s/ Vlado P. Hreljanovic
-------------------------
Vlado P. Hreljanovic, Chairman of the Board, CEO & President
CONSULTING AGREEMENT
This agreement is made as of this 24th day of November, 1998, by and
between Juniper Group, Inc. with principal offices at 111 Great Neck Road. Suite
604, Great Neck, NY 11021 (the "Company") and Global Financial Group, Inc. with
offices at 100 Washington Square, Suite 1319, Minneapolis, Minnesota 55041 (the
"Consultant")
WITNESSETH
WHEREAS, the Company desires to retain the Consultant, and the Consultant
desires to be retained by the Company, pursuant to terms and conditions
hereinafter set forth;
1. Retention: The Company hereby retains the Consultant to perform
non-exclusive consulting services related to corporate finance and other
matters, and the Consultant hereby accepts such retention and shall
undertake reasonable efforts to perform for the Company the duties
described herein. In this regard, subject to paragraph 8 hereof, the
Consultant shall devote such time and attention to the business of the
Company, as shall be determined by the Consultant, subject to the direction
of the Chairman of the Company.
(a) The Consultant agrees, to the extent reasonably required in the
conduct of the business of the Company, and at the Company's request,
to place at the disposal of the Company its judgement and experience
and to provide business development services to the Company,
including, without limitation, the following:
(i) To investigate and provide written due diligence package on a
minimum of two (2) merger and acquisition candidates previously
identified to you by Company;
(ii) The Consultant will introduce a minimum of 2 (two) merger
candidates per year for the next thirty (30) months, and provide
a written due diligence report on the target candidate;
(iii)Over the next ninety (90) days the Consultant will provide 2
(two) immediate candidates for consideration for merger or
acquisition and provide due diligence information on the
candidates.
(iv) Provide plan which will include creating public awareness of the
Company and providing investor relations support with regard to
the Company's recent 50 to 1 reverse split within 60 days.
(v) Provide a plan and devise a strategy for possible conversion of
the Company's preferred stock within 60 days.
(b) At the Consultant's request, the Company will provide "due
diligence" packages to registered representatives of the
Consultant and other brokerage firms.
(c) Nothing in this Agreement shall impose any obligation upon
on the Company to consummate any transactions or to enter
into any discussions or negotiations with respect thereto.
2. Term: The Consultant's retention hereunder shall be for a term of
thirty (30) months, commencing on the date of this agreement.
3. Compensation: The Company shall grant to the Consultant warrants (the
"warrants") to purchase an aggregate of 300,000 shares of the
Company's common stock (the "common stock") exercisable at $0.05 per
share.
(a) Vesting of the warrants shall be as follows:
(i) One-half immediately and one-half in 90 days from the date of
this agreement. The warrants shall be exercisable for a period of
three (3) years from the date hereof. Said warrants shall be
issued to Global Financial Group, Inc. The warrants shall be
assignable as directed in writing by Global Financial Group, Inc.
offices at 100 Washington Square, Suite 1319, Minneapolis,
Minnesota 55041.
(ii) The Company shall grant to the Consultant "piggy back"
registration rights to include the shares of Common Stock
issuable upon exercise of the Warrants in any registration
statement filed by the Company under the Securities Act of 1933,
as amended, except registration statements on Form S-4 and Form
S-8.
(b) The Consultant and/or its assignees shall receive a 10% aggregate
fee for any funds it is directly responsible for raising for the
Company and a 3% aggregate fee shall be paid for Consultant or
its assignees if Consultant or its assignees act as placement
agent and is so designated in writing by the Company to act on
the Company's behalf in such transaction that leads to a funding
consummated by the Company. In the event that the Consultant or
its assignees introduces a prospective merger or acquisition
which merger or acquisition is consummated by the Company,
Consultant or its assignees shall be entitled to an aggregate fee
of 3% of the purchase price of said merger or acquisition. No fee
shall be paid by the Company for any funding, merger or
acquisition in the event that the funding agent or target company
were solicited directly by the Company or in the event the
funding agent of the target company solicited the Company without
the direct intervention of the Consultant or its assignees.
4. Expenses: The Company agrees to reimburse the Consultant for
reasonable expenses incurred by the Consultant in connection with the
services rendered hereunder. Any such expenses shall require the prior
written approval of the Company.
5. Indemnification: The Company agrees to indemnify and hold harmless the
Consultant and its affiliates, the respective directors, officers,
partners, agents and employees and each other person, if any,
controlling the Consultant or any of its affiliates (collectively the
"Consultant Parties"), from and against all losses, claims, damages,
liabilities and expenses incurred by them (including reasonable
attorney's fees and actual disbursements) that result from the action
taken or omitted to be taken (including any untrue statements made or
any statements omitted to be made) by the Company, its agents or
employees. The Consultant will indemnify and hold harmless the Company
and the respective directors, officers, agents and employees of the
Company (the "Company Parties") from and against all losses, claims,
damages, liabilities and expenses (including reasonable attorney's
fees and actual disbursements) that result from bad faith, negligence,
misrepresentations, omissions or unauthorized representation of the
Consultant. Each person or entity seeking indemnification hereunder
shall promptly notify in writing the Company or Consultant, as
applicable, who may become liable pursuant to this paragraph and shall
not pay settle or acknowledge liability under any such claim without
consent of the party liable for such indemnification and shall permit
the Company or the Consultant, as applicable, a reasonable opportunity
to cure any underlying situation, and or to mitigate any actual or
potential damages. The scope of this indemnification between the
Consultant and the Company shall be limited to, and pertain only to,
those certain transactions contemplated or entered into pursuant to
this agreement.
The Company, or the Consultant, as applicable, shall have the opportunity
to defend any claim for which it may liable hereunder, provided it notifies the
party claiming the right to indemnification within fifteen (15) days of notice
of the claim.
The rights stated pursuant to the above two paragraphs shall be in addition
to any rights that the Consultant or the Company or any person entitled to
indemnification have under common law or otherwise, including, without
limitation, any right to contribution.
6. Status of Consultant: The Consultant shall be deemed to be an
independent contractor and, except as expressly provided or authorized
in this Agreement, shall have no authority to act for or represent the
Company.
7. Other Activities of Consultant: The Company recognizes that the
Consultant now renders and may continue to render financial consulting
and other investment banking services to other companies which may not
conduct business or activities similar to those of the Company. The
Consultant shall not be required to devote its full time and attention
to the performance of its duties under this Agreement but shall devote
only so much of its time and attention as it deems necessary for such
purposes in the reasonable exercise of its duties, subject to the
direction of the Chairman of the Company.
8. Control: Nothing contained herein shall be deemed to require the
Company to take any action contrary to its certificate of
incorporation or bylaws as each may be amended from time to time, or
any applicable statute or regulation, or to deprive its Board of
Directors of their responsibility for any control of the conduct to
the affairs of the Company.
9. Notices: Any notices hereunder shall be sent to the Company and the
Consultant at their respective addresses above set forth. Any notice
shall be given by registered or certified mail, postage paid, and
shall be deemed to have been given when deposited in the United States
mail. Either party may designate any other address to which, or manner
in which, notice shall be given, by giving written notice to the other
of such change of address in the manner herein provided.
10. Governing Law: This agreement has been made in the State of New York
and shall be construed and governed in accordance with the laws
thereof without regard to conflict of laws.
11. Termination: The Company may terminate this Agreement upon Sixty (60)
days notice to the Consultant for breach, without having same been
cured by the Consultant within five (5) business days.
12. Entire Agreement: This agreement contains the entire agreement between
the parties, may not be altered or modified, except in writing and
signed by the party to be charged thereby and supersedes any and all
previous agreements between the parties.
13. Binding Effects: This agreement shall be binding upon the parties
hereto and their respective heirs, administrators, successors, and
assignees; provided, however, that this agreement, and the rights and
obligations hereunder, may not be assigned by either party hereto
without the prior written consent of the other party.
14. Counterparts: This agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all
of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year above written.
By: Global Financial Group, Inc.
/s/ Kevin S. Miller, President
-------------------------------
By: Juniper Group, Inc.
/s/ Vlado Paul Hreljanovic
--------------------------
Vlado Paul Hreljanovic
Chairman, President & CEO
AGREEMENT
This Joint Venture Agreement is made effective this 9th day of December,
1997, by and between Synergy Business Services, Inc., ("Synergy"), a Texas
corporation with offices at 2537 South Gessner, Suite 128, Houston, TX 77063 and
PartnerCare, Inc. ("PCI"), a New York corporation, with offices at 111 Great
Neck Road, Suite 604, Great Neck 11021.
WHEREAS, Synergy is in the business of consulting in the health field
regarding managed care revenue enhancement and other similar allied enterprises,
and
WHEREAS, Synergy provides consultation services in the healthcare industry,
and
WHEREAS, PCI is desirous of obtaining the services of Synergy on a private
label basis, and Synergy is desirous is performing its services for PCI, and
WHEREAS, Synergy, in furtherance of its obligations, pursuant to the terms
of this Agreement will seek to assist PCI to provide its services for accounts
which will become exclusive accounts of PCI for PCI's services or products.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is expressly acknowledged, Synergy agrees to
provide its services for PCI as follows:
1. Services Provided By Synergy
a. Review Hospital agreements with payors and managed care companies to assess
performance requirements.
b. Review Hospital claims to ensure that anticipated revenues on those claims
reviewed are actually being generated pursuant to the agreement with the
payor.
c. Conduct claims audits to determine whether Hospita's reimbursement is
consistent with its billing and in accordance with its agreement with
payors.
d. Identify and recover charges subsequent to the presentation of the
Hospital's final bill to the payor, as well as review previously submitted
claims.
e. Negotiate any and all settlements. Hospital shall only have the right to
approve or disapprove of the settlement amount, which approval or
disapproval shall not be unreasonably withheld.
f. Be responsible for all payor communications, correspondences and follow-up
pertaining to the collection of all monies owed to PartnerCare hospital
clients.
g. PCI shall provide Synergy with an "800" toll-free number which shall be
noted on all billing and collection documents. Synergy personnel shall
respond to the "800" number and respond to all communications as a
representative of PCI.
h. Synergy shall not bill patients directly, unless written approval is
obtained by PCI.
i. Since Synergy will be private labeled, all communication with PCI
clients and hospital payors shall not reference Synergy. PCI
letterheads, stationary and name shall always be referenced as the
company providing services pursuant to the contracts with its hospital
clients.
2. Compensation.
PCI shall compensate Synergy for the Services provided as follows:
A. Synergy shall be entitled to seventeen and a half (17.5%) percent of
the cash received by PCI for services provided. Payments to Synergy
shall be made on the 10th of each month following the month that
cleared funds have been received by PCI. PCI shall be responsible to
make payments to Synergy as called for in this Agreement.
B. All billing to Hospital's Payors and to patients shall identify PCI as
the billing agent for Hospital and shall utilize a designated PO Box
address for purposes of payment to reduce the clerical demands on
Hospital's personnel. All payments received by PCI shall be retained
in a lock-box account. PCI will post all payments promptly so as to
eliminate, wherever possible, unnecessary re-billing and follow-up on
claims previously paid. PCI shall also report payments directly
received to the Hospital via facsimile on a monthly basis.
3. Term of Agreement:
A. This Agreement shall have an initial term of twelve (12) months from
the date hereof.
B. Despite anything to the contrary contained in this Agreement
hereunder, PCI may terminate this Agreement if any of the following
events occur.
1. Failure to Follow Instructions. PCI can terminate this Agreement
in the event Synergy fails to follow PCI's instructions. PCI must
advise Synergy that its actions or inactions are unacceptable and
give Synergy a reasonable time to comply. If Synergy fails to
comply, or a later time makes the same unacceptable action or
inaction, it may be terminated hereunder by PCI's service of
"Notice of Termination" to Synergy.
2. Breach of Synergy's Duties. PCI can terminate this Agreement in
its sole judgment.
3. Notice of Breach: Any party claimed to have breached or defaulted
under this Agreement shall be notified of such breach or default
in writing by certified mail, return receipt requested, at the
address listed below, and shall have thirty (30) days from the
date of receipt of such notice to cure such breach.
C. Post Termination payments to Synergy. Payments due to Synergy shall
continue as long as PCI receives cash based on this Agreement in which
Synergy has performed work on PCI clients.
5. Nondisclosure of Confidential Information.
In consideration of each party entering into this Agreement, each party
agrees that the following items used in their respective businesses are secret,
confidential, unique and valuable, were developed by each party at great cost
and over a long period of time, and disclosure of any of the items to anyone
other than each party's officers, agents, or authorized employees will cause the
other party irreparable injury;
A. Non-public financial information and other information, accounting
information, plans of operations, possible mergers or acquisitions
prior to the public announcement;
B. Customer lists, call lists, and other confidential customer data;
C. Memoranda, notes and records concerning the technical processes
conducted by Synergy; and
D. Sketches, plans drawings, and other confidential research and
development data.
E. Any other data, lists, processes, etc. that are shared in confidence
between the parties.
F. All client work products that are developed and used by Snyergy in
order to perform services for PCI accounts shall be the property of
PCI. Such work should enable PCI to follow-up on its clients claims in
the event of a default or expiration of this agreement.
6. Best Efforts Basis.
Synergy agrees that it will at all times faithfully and to the best of its
experience, ability and talents, perform all the duties that may be required of
and from Synergy, pursuant to the terms of this Agreement. Synergy does not
guarantee that its efforts will have any impact on PCI's business or that any
subsequent financial improvement will result from Synergy's efforts.
7. Place of Services.
Services contemplated to be performed by Synergy or its agents will be
performed through Synergy's offices and at hospitals designated by PCI.
8. Exclusive Services.
a. Synergy acknowledges that the services provided under this Agreement
are exclusive in nature for the hospitals contracting with PCI.
b. Synergy and PCI shall enter into a non-circumvention/non-disclosure
agreement attached hereto and made a part hereof.
9. All Prior Agreements Terminated.
This Agreement constitutes the entire understanding of the parties, and all
prior agreements with respect thereto are hereby terminated and shall be of no
force or effect.
10. Representations and Warranties of PCI.
PCI hereby represents and warrants to Synergy that:
A. Corporate Existence. PCI is a corporation duly organized and validly
existing, under the laws of the State of New York, with corporate
power to own property and carry on its business as it is now being
conducted.
B. Authority. This Agreement constitutes a valid and binding obligation
of the PCI.
C. No Conflict. This Agreement has been duly executed by PCI and the
execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in any agreement,
instrument, judgment, decree, or order to which PCI is a party or to
which PCI is subject, nor will such execution and performance
constitute a violation or conflict of any fiduciary duty to which PCI
is subject.
11. Representations and Warranties of Synergy.
Synergy hereby represents and warrants as follows:
A. Corporate Existence. Synergy is a corporation duly organized and
validly existing, under the laws of the State of Texas, with corporate
power to own property and carry on its business as it is now being
conducted.
B. Authority. This Agreement constitutes a valid and binding obligation
of Synergy.
C. Prior Experience. Synergy has extensive experience in the areas of the
services it is to perform hereunder and has performed the services
contemplated by this Agreement for the benefit of other companies.
D. Information. No representation or warranty contained herein, nor a
statement in any document, certificate or schedule furnished or to be
furnished, pursuant to this Agreement by Synergy, or in connection
with the transaction contemplated hereby, contains or contained any
untrue statement of material fact to the best of Synergy's knowledge.
E. Inside Information Securities Laws Violations. In the course of the
performance of his duties, Synergy may become aware of information
which may considered "inside information" within the meaning of the
Federal Securities Laws, Rules and Regulations. Synergy acknowledges
that its use of such information to purchase or sell securities of
PCI's parent company, Juniper Group, Inc. or its affiliates, or to
transmit such information to any other party with a view to buy, sell,
or otherwise deal in PCI's securities, is prohibited by law and would
constitute a breach of this Agreement and notwithstanding the
provisions of this Agreement.
F. No Restrictions. There is no pending or threatened suit, action, or
legal, administrative arbitration or other proceeding of claim by any
governmental agency, whether federal, state, local or foreign, against
Synergy or any individual or entity which Synergy controls, is
controlled by, or is under common control with, which adversely, or
might adversely, effect Synergy's ability to provide the services set
forth herein.
Synergy's performance of the services hereunder is not in violation of any
law, statute or regulation of any governmental authority, whether federal,
state, local or foreign, or any of the terms, conditions, or provisions of any
judgment, order, injunction, decree or ruling of any court or governmental
authority, whether federal, state, local or foreign.
Synergy has all requisite licenses, authorizations and consents, if any,
necessary to perform the services hereunder.
G. Subsequent Events. Synergy will notify PCI if, subsequent to the date
hereof, either party incurs obligations which could compromise its
efforts and obligations under this Agreement.
12. Miscellaneous.
A. Amendment. This Agreement may be amended or modified at any time and
in any manner, but only by an instrument in writing executed by the
parties hereto.
B. Waiver. All the rights and remedies of either party under this
Agreement are cumulative and are not exclusive of any other rights and
remedies provided by law. No delay or failure on the part of either
party in the exercise of any right or remedy arising from a breach of
this Agreement shall operate as a waiver of any subsequent right or
remedy arising from a subsequent breach of this Agreement. The consent
of any party where required hereunder to any act or occurrence shall
not be deemed to be a consent to any other act of occurrence.
C. Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or the breach hereof, shall be settled by
binding arbitration to be held in New York, New York, in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association, currently in effect. The costs of which shall be shared
equally by both parties. Any Arbitration award can be enforced in the
Courts of New York.
D. Assignment:
( i) Neither party to this Agreement shall assign any right created
by it without the prior written consent of the other;
(ii) Nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the parties and their
successors, any rights or remedies under this Agreement.
E. Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly
given when delivered in person to an officer of the other party, when
deposited in the United States mails for transmittal by certified or
registered mail postage prepaid, or when deposited with a public
telegraph company for transmittal or when sent by facsimile
transmission, charges prepared, provided that the communication is
addressed:
( i) In the case of Synergy to:
SYNERGY
2537 South Gessner
Suite 128
Houston, TX 77063
Attn.: Micheal J. Maher, Esq.
President
(ii) In the case of PCI to:
PARTNERCARE, INC.
111 Great Neck Road
Suite 604
Great Neck, NY 11021
Attn.: Richard O. Vazquez
President
or to such other person or address designated by the parties to receive
notice.
F. Headings and Captions. The headings of paragraphs are included
solely for convenience. If a conflict exists between any heading
and the text of this Agreement, the text shall control.
G. Entire Agreement. This instrument and the exhibits to this
instrument contain the entire Agreement between the parties with
respect to the transaction contemplated by the Agreement. It may
be executed in any number of counterparts, but the aggregate of
the counterparts together constitute only one and the same
instrument.
H. Effect of Partial Invalidity. In the event that any one or more
of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, but this
Agreement shall be constructed as if its never contained any such
invalid, illegal or unenforceable provisions.
I. Controlling Law. The validity, interpretation, and performance of
this Agreement shall be controlled by and construed under the
laws of the State of New York, the state in which this Agreement
is being executed.
J. Attorney's Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be
entitled to recover actual attorney's fees from the other party.
The attorney's fees may be ordered by the court in the trial of
any action described in this paragraph or may be enforced in a
separate action brought for determining attorney's fees.
K. Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve this purpose of this Agreement and shall execute
such other and further documents and take such other and further
actions as may be necessary or convenient to effect the
transactions described herein.
L. Further Actions. At any time and from time to time, each party
agrees, at its or their expense, to take actions and to execute
and deliver documents as may be reasonably necessary to
effectuate the purposes of this Agreement.
M. Indemnification.
( i) PCI and Synergy agree to indemnify, defend and hold each
other harmless from and against all demands, claims,
actions, losses, damages, liabilities, costs and expenses,
including without limitation, interest, penalties and
attorney's fees and expenses asserted against or imposed or
incurred by either party by reason of, or resulting from, a
breach of any representation, warranty, covenant, condition
or agreement of the other party to this Agreement.
(ii) In all managed care revenue enhancement contracts
disseminated after December 1, 1997, PCI will include the
following hospital indemnification clause: Client agrees
that it will comply with all required billing compliance
procedures. Client agrees to maintain an effective fraud and
abuse program for its billing procedures. Client shall
remain solely responsible for any coding errors that may
occur. Client agrees that all information that PCI obtains
to provide billing services to PCI solely from Client and
Client is responsible for its accuracy. Client agrees to
indemnify and hold PCI harmless from and against any and all
losses, claims, damages, liabilities and obligations of any
kind and descriptions, including any reasonable attorney's
fees incurred by PCI in investigating, defending or settling
such losses, damages and obligations, arising out of
Client's errors in coding or any other errors in procedures
required to properly bill charges and collect on accounts
and matters thereto.
(iii)Approval or disapproval of Item ii by hospital clients will
not constitiute a
breach of this Agreement.
N. No Third Party Beneficiary. Nothing in this Agreement, expressed
or implied, is intended to confer upon any person, other than the
parties hereto, and their successors, any rights or remedies
under or by reason of this Agreement, unless this Agreement
specifically states such intent.
O. Facsimile Counterparts. If a party signs this Agreement and
transmits an electronic facsimile of the signature page to the
other party, the party who receives the transmission may rely
upon the electronic facsimile as a signed original of this
Agreement.
P. Accounting. PCI shall provide Synergy with a copy of all payments
received into the lockbox on a monthly basis.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
herein above written.
SYNERGY BUSINESS SERVICES PARTNERCARE, INC.
By: /s/ Michael L.Maher By:/s/ Vlado P. Hreljanovic
------------------- ------------------------
Michael L. Maher, Esq. Vlado P. Hreljanovic
President Chairman/CEO
EXHIBIT 21.1
JUNIPER GROUP, INC.
SUBSIDIARIES
All of the Company's subsidiaries are wholly-owned.
Juniper Group, Inc. Subsidiaries Incorporated In
Juniper Entertainment, Inc. .................................. New York
Juniper Medical Systems, Inc. ................................ New York
Juniper Entertainment, Inc. Subsidiary Incorporated In
Juniper Pictures, Inc. ....................................... New York
Juniper Medical Systems, Inc. Subsidiaries Incorporated In
PartnerCare, Inc. ............................................ New York
Juniper Healthcare Containment Systems, Inc. ................. New York
PartnerCare Funding, Inc. .................................... New York
PartnerCare Select, Inc. ..................................... New York
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-89952) of Juniper Group, Inc. of our report dated
March 30, 1999, appearing on page F-2 of this Form 10-KSB.
Goldstein & Ganz, CPA's, P.C.
Great Neck, New York
March 30, 1999
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