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, 1999
Commission File Number: 0-19170
JUNIPER GROUP, INC.
(Name of small business issuer in Its Charter)
Nevada 11-2866771
- -------------------------------------------------------------------------------
(State or other jurisdiction (IRS 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. - $717,630.
The aggregate market value of the Common Stock held by non-affiliates of
the Registrant was approximately $18,301,440 based upon the $2.65 average bid
price of these shares on the NASDAQ Stock Market for the period March 1, 2000
through March 22, 2000.
As of March 22, 2000, there were 6,906,204 outstanding shares of Common
Stock, $.001 par value per share.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. General
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. The Company and its subsidiaries 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. Re-incorporation 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 re-incorporation 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.
Juniper Group, Inc.'s (the "Company") principal businesses are composed of
two (2) segments, healthcare and entertainment.
Healthcare: The healthcare operations are conducted through three 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: Managed Care Revenue
Enhancement, Comprehensive Pricing Reviews to newly evolving integrated
hospital, and Write-off Review, appeals of any third party rejections
denials of 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. During 1999 and
1998, no services were performed by this subsidiary.
(c) Nuclear Cardiac Imaging, Inc.("NCI"), a New Jersey corporation. NCI is a
company newly formed in 1998 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., internet and audio streaming, home video, pay-per view,
pay television, cable television, networks and independent syndicated television
stations) in the domestic and foreign marketplace.
B. Business of Issuer
Managed Care Revenue Enhancement and Cost Containment Services
Managed Care Revenue Enhancement Program ("MCREP")
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 assists hospitals in obtaining 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 re-billed claims.
These programs have enabled the Company to offer services to the growing
number of hospitals and integrated networks that are facing the complexities
associated with managed care contracts
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 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.
During 1999, PCI has reviewed managed care contracts for sevene hospitals
to ensure compliance and proper reimbursement. It has, through this process,
identified unreimbursed claims on behalf of its clients.
* 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.
* 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 by discounting fees for
which it is not contractually obligated.
During 1999, PCI has performed Silent PPO reveiws for seven hospitals.
* 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 1999, PCI has reviewed managed care contracts for five hospitals to
ensure compliance and proper reimbursement. It has, through this process,
identified unreimbursed claims on behalf of its clients.
Healthcare Cost Containment Services
Although revenues from previously existing contracts were recognized during
1998, new arrangements ceased as of December 17, 1997. Since that date, the
Company is not providing such services to providers or networks.
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.
The Company competes for consulting business primarily with multiple
service companies. The Company competes for its MCREP clients by distinguishing
its services from those provided by multiple 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.
Sales and Marketing
The Company's sales and marketing strategies during 1999 and 1998 have
resulted in only a minimal number of new clients for PCI's managed care review
services. Further, no new contracts have been developed outside the New York
Metropolitan area and of the four contracts within the New York area, two
represented only marginal revenue potential to PCI. Outside of the New York
Metropolitan area, the sales and marketing effort for 1999 specifically targeted
New Jersey and Florida hospital chains and has not generated any sales to date
for PCI. The former President of PCI, Mr. Richard Vazquez tendered his
resignation effective December 1999, having arrived at terms mutually agreeable
with the Company for the early termination of his employment contract.
As of December 31, 1999, PCI had three contracts for its MCREP business, a
decrease from five at December 31, 1998. 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.
The Company does not have any other customers the loss of which would have
a materially adverse effect upon the Company.
Entertainment
Pictures is engaged in the distribution of films through licensing to the
Internet, 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 1999 and 1998, the Company 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 the most efficient and cost
effective strategy for the Company to maximize revenue. In 1999, the Company
began directing efforts toward reestablishing a foothold in the film industry.
As a result, during 1999, the Company entered into two sales contracts totaling
$137,000. The Company expects to continue recognizing growth in revenues from
the sale of film licenses in 2000.
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/counter-programming 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.
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 (Internet
streaming, video, pay cable, syndication and free TV). 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. Internet, pay, cable and television).
Major Customers
In 1999 and 1998, New York Hospital accounted for 20% and 51%,
respectively, of the total revenue of the Company. No other customer accounted
for greater than 10% of the Company's total revenue in 1998. In 1999, Maimonides
Hospital and New York Downtown Hospital accounted for 17% and 12% of total
revenue, respectively. Additionally, JPI sold film rights to Eyeblast, Inc.,
which accounted for 17% of total revenue.
Employees
As of March 22, 2000, the Company had 6 full-time employees and 3 part-time
employees and independent contractors. Of the full-time employees, 5 work at the
Company's offices, some of whom spend portions of their time at clients.
Recent Developments
-------------------
Presently, the Company believes has recruited personnel whose skills and
experience bring a focused, operational and team-oriented business strategy. The
Company is pursuing a series of initiatives to the Internet and e-commerce
marketplace. Potential acquisitions in the computer technology field are being
evaluated. The Company believes that this new direction toward providing
networks, web hosting and web development will position the Company as a conduit
for intellectual materials, such as video and audio streaming for the Internet.
During 1999, the Company acquired a 1.8% interest in the common stock of
NetDIVE, Inc., a privately held Internet company which provides a platform to
corporations for collaborative communication. In addition, during 1999, the
Company actively pursued several acquisition candidates in the healthcare and
computer technology industries.
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.
NCI maintained an office in New Jersey from September 1998 through April
1999.
ITEM 3. LEGAL PROCEEDINGS
On May 22, 1996, Ordinary Guy, Inc. and Crow Productions, Inc. commenced an
action against the Company, 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. This
matter was settled in April 1998 for a payment of $310,000, which is being paid
out over four years ending April 20, 2001. The payment was secured by 93,320
shares of the Company's common stock .
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on December 27, 1999.
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 3,290,744 889
Harold Horowitz 3,290,744 889
Marvin Rostolder 3,290,744 889
(2) Proposal 2 asked for approval of the Company's 1999 Stock Option Plan. The
following number of shares were voted by proxy or by ballot for and against
the ratification of the Company's 1999 Stock Option Plan.
FOR 3,290,250 AGAINST 1,383 ABSTAIN 0
--------- ------ ----
(3) Proposal 3 sought ratification of the appointment of the auditors of the
Company for the fiscal year ended December 31, 1999. 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, 1999.
FOR 3,290,744 AGAINST 889 ABSTAIN 0
--------- --- -----
There were no broker non-votes.
<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 B Warrants expired on May 1, 1998. The
following constitutes the high and low sales prices for the common stock, the
Class B Warrants as reported by NASDAQ for each of the quarters of 1999 and
1998. The quotations shown below reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
1999 HIGH LOW
---- ---- ---
FIRST QUARTER
Common Stock .................. 3.13 1.00
SECOND QUARTER
Common Stock .................. 2.19 1.25
THIRD QUARTER
Common Stock .................. 7.88 1.38
FOURTH QUARTER
Common Stock .................. 4.56 1.34
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
(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, in 1999, and the payment due on March 1, 2000 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.
On March 16, 1999, the Company made a self-tender for all of the 233,900
outstanding shares of 12% Non-Voting Convertible Redeemable Preferred Stock (the
"12% Preferred") for 475,777 shares of the Company's common stock. As a result,
191,153 shares of preferred stock were redeemed for 315,403 shares of the
Company's common stock. As a result, there is currently 42,747 shares of
Preferred Stock which remain outstanding.
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. The total
cash value of the arrearage of unpaid dividends as of December 1, 1999 is
$89,769.
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 22, 2000, there were 234 shareholders of record of the
Company's common stock, excluding shares held in street name.
Recent Sales of Unregistered Securities
In 1999, the Company sold $658,700 of convertible debentures. In 1998, the
Company sold $625,000 of convertible debentures. During 1999, $358,700 of
debentures were converted to 690,000 shares of the Company's common stock.
Changes in Securities
(a) The information disclosed in Item 4 below is incorporated herein by
reference.
(b) N/A
(c) Shares of Common Stock, $0.001 par value, sold during 1999 were as follows:
<TABLE>
Date Purchaser No. of Shares Consideration Exemption
- ------------- -------------- ------------------ ---------------------------- ----------
<CAPTION>
<S> <C> <C> <C> <C> <C>
3/31/99 Officers 142,835 The President and CEO of the Company
accepted common stock in lieu of accrued
salary and other amounts owed to him in
the amount of $53,563. 4(2)
3/31/99 Vendors 126,254 Vendors accepted common stock in lieu of 4(2)
unpaid fees in the amount of $64,489.
3/31/99 Employees 50,667 An employee accepted common stock in lieu 4(2)
of accrued salary in the amount of $19,000.
3/31/99 Debentures 133,333 A debenture for $100,000 was converted to 4(2)
common stock
5/10/99 Owners of Preferred
Stock 315,403 Shares of Preferred Stock 3a(9)
5/20/99 Cordelle Investments 250,000 Purchase of 51% of Nuclear 4(2)
Ltd. Cardiac Imaging
5/26/99 Warrant Holders 300,000 Conversion of Warrants 4(2)
6/30/99 Officers 238,315 The President and CEO of the
Company accepted common
stock in lieu of accrued salary
and other amounts owed to him
in the amount of $93,488. 4(2)
6/30/99 Vendors 167,734 Vendors accepted common stock
in lieu of unpaid fees in the amount
of $90,261. 4(2)
6/30/99 Employees 52,885 An employee accepted common
stock in lieu of accrued salary in the
amount of $20,384. 4(2)
6/30/99 Debentures 579,423 A debenture for $318,700 was
converted to common stock 4(2)
7/16/99 Officers 18,966 The President and CEO of the
Company accepted common stock
in lieu of accrued salary and
other amounts owed to him in
the amount of $7,112. 4(2)
7/20/99 Private Holders 530,909 Debentures for $340,000 were
converted to common stock 4(2)
9/30/99 Option Holders 84,808 Conversion of Options for $45,000 4(2)
9/30/99 Vendors 87,979 Vendors accepted common stock in
lieu of unpaid fees in the amount
of $66,790. 4(2)
12/30/99 Employees 35,156 Employment 4(2)
10/31-12/31/99 Consultants 120,614 Services Rendered 4(2)
10/21-12/20/99 Private Holders 95,588 Satisfaction of indebtedness 4(2)
10/11-11/24/99 Officers 167,887 Services rendered 4(2)
11/03/99 Former Directors 20,000 Payment in cash 4(2)
11/18/99 Directors 87,395 Services rendered 4(2)
11/18/99 Employees 21,849 Services rendered 4(2)
12/20/99 Private Holders 8,889 Payment in cash 4(2)
During 1999 the following options to purchase the Company's common stock were issued.
No.
Date Purchaser of Options Consideration Exemption
- ------------- --------- --------------- ------------------- ---------
5/17-12/30/99 Officer 243,542 Services rendered 4(2)
5/17/99 Board of Directors 390,000 Services rendered 4(2)
5/17/99 Employees 25,000 Services rendered 4(2)
12/30/99 Consultants 120,000 Services rendered 4(2)
During 1999 the following debentures were issued by the Company.
Value
Date Purchaser of Debentures Consideration Exemption
- ------------- --------- --------------- ------------------- ---------
3/29-7/8/99 Private Holders 658,000 Payment in cash
</TABLE>
___________________
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
Fiscal Year 1999 vs Fiscal Year 1998
The Company's revenues decreased to $718,000 in 1999 from $1,421,000 in
1998, representing a 49.5% decrease.
Revenue related to the Healthcare segment decreased to $581,000 in 1999,
from $1,315,000 in 1998, representing a 58% decrease. The decrease in revenue
during 1999 was predominately attributed to PCI whose revenue decreased to
$581,000 in 1999, from $1,105,000 in 1998. This was the result of PCI's client
pool of hospitals decreasing from seven in 1998 to three in 1999. Additionally,
the joint venture relationship with Containment ended in 1998, resulting in a
$270,000 reduction in gross revenue.
Revenue related to entertainment increased to $137,000 in 1999 from $46,000
in 1998.
Operating costs increased to $270,000 in 1999 from $154,000 in 1998, a 75%
increase. The Healthcare operating costs increased to $213,000 in 1999 from
$136,000 in 1998, a 57% increase. As a percentage of revenue, operating costs
for the Healthcare segment increased to 36% in 1999 from 10% in 1998. This is
the result of 1) the termination of the joint venture with Containment; and 2)
the operating costs of PCI, a portion of which is not directly correlated to the
volume of revenue.
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.
Selling, general and administrative expenses increased to $1,984,000 in
1999 from $1,709,000 in 1998, a 16% increase. Included in selling, general and
administrative expenses are uncollectible receivables of $643,000, depreciation
of $28,000 and other expenses which did not require use of the Company's cash in
1999 totaling approximately $500,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company had negative working capital of $312,000 at December 31, 1999.
The ratio of current assets to current liabilities was 0.64:1 at December 31,
1999. Cash flow used by operating activities during 1999 was $577,212.
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.
During 1999, the Company raised approximately $1,200,000 for working
capital, acquisition of its interest in NetDIVE, Inc. and payment of debt
through the sale of unregistered securities (convertible debentures, notes
payable and common stock).
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, 2000 through March
22, 2000, the Company raised $178,000 from the sale of convertible debentures
and 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
2000 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 1999 and 1998, the Company focused its resources on the growth of
the healthcare segment, which, during that time, was 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 2000.
Healthcare
During 1999 and 1998, the Company was unsuccessful in developing a quality,
comprehensive national marketing effort. This was primarily due to the
restricted cash flow which was not available to support such a national campaign
needed to succeed fully into today's ever changing healthcare environment. The
marketing methods used previously did not succeed and a more technologically
drive plan is currently being developed. This period of change will require
increased investment in new and better technology infrastructures that should
make it more cost effective to serve PCI clients.
New contracts which clearly define PCI's services have been developed. In
addition, these contracts create payment terms which should 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. The Company incurred approximately $98,000 and
$88,000 on these initiatives in 1999 and 1998, respectively.
Entertainment
Although the Company's resources and capital remain limited, the Company
has begun directing efforts toward reestablishing a foothold in the film
industry. As a result, the Company obtained two sales contracts for film
licenses totaling $137,000 in 1999. The Company expects to continue recognizing
growth in revenues from the sale of film licenses in 1999.
In 2000, the Company will consider searching for full time sales personnel
and utilizing outside sales representatives. Further, the Company is evaluating
opportunities in the Internet and audio streaming industry and in e-commerce
technology. If cash flow permits, the Company plans to enhance its information
system capabilities to actively host web sites and create a conduit for video
and audio streaming of entertainment products to the Internet. Additionally, the
Company will consider seeking alliances with other e-commerce companies and
utilizing outside sales representatives. Initially, the Company will begin
promoting its film library in the Internet markets.
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
<PAGE>
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 52 Chairman of the Board, 1987
President, CEO and
acting CFO
Harold A. Horowitz 49 Director 1991
Marvin Rostolder 57 Director 1998
Yvonne T. Paultre 61 Secretary ---
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 is an adjunct
professor of economics at Yeshiva University. 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, which is the Company's
Transfer Agent. 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 resigned December 14, 1999, effective March 15, 2000.
Mr. Vazquez was formerly Vice President for Integrated Networks at MultiPlan,
Inc. Prior to that he was the Associate Executive Director of Elmhurst Hospital
and Medical Center. Mr. Vazquez has attained an MPA from Baruch College and a BA
from New York University.
Section 16(a) Beneficial Ownership Reporting Compliance
To the best of 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, 1999, 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 1999, 1998 and 1997. No other executive officer
received salary and bonus in excess of $100,000 in any such year.
SUMMARY COMPENSATION TABLE
<TABLE>
Long Term
Compensation
Annual Securities
Compensation Other Annual Underlying
Name and Principal Position Year Salary Bonus Compensation Options (#)
- --------------------------- ---------- ------ ------------- ----------- ------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Vlado Paul Hreljanovic 1999 $178,377 - (1) $40,400 (2) -
Chairman of the Board and 1998 $175,460 $86,191 (3) $31,200 (4) -
Chief Executive Officer 1997 $172,757 $19,500 (5) $52,900 (6) -
</TABLE>
(1) Throughout 1999, Mr. Hreljanovic received 383,542 options with a cashless
exercise feature to purchase shares of the Company's common stock. Such
options were issued in recognition of efforts exerted on behalf of the
Company and its subsidiaries. The exercise prices of the options ranged
from $.48 to $.68. As of December 31, 1999, 220,000 options remained
unexercised.
(2) Other compensation for Mr. Hreljanovic in 1999 was primarily comprised of,
among other things, automobile repairs and insurance of $13,000, and health
and life insurance of $27,400.
(3) 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.
(4) 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.
(5) 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.
(6) 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 $22,300.
Aggregate Option Exercises in Last Fiscal Year and Year-end Options
<TABLE>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Year-end (#) Year-end ($)
On Value Exercisable Exercisable
Name and Principal Position Exercise Realized Unexercisable Unexercisable
- ---------------------------- -------- ---------- --------------- -----------------
<CAPTION>
<S> <C> <C> <C> <C>
Vlado Paul Hreljanovic 528,773 $2,836,064 220,000/0 $407,000/$0
Chairman of the Board and
Chief Executive Officer
Harold A. Horowitz 87,395 $ 185,714 160,000/0 $312,000/$0
Director
Marvin Rostolder - - 190,000/0 $395,000/$0
Director
Yvonne T. Paultre 21,849 $ 46,427 25,000/0 $ 51,000/$0
Secretary
</TABLE>
1) As of December 31, 1999, the closing price was $2.53.
Compensation of Directors: In 1999, Mr. Horowitz and Mr. Rostolder received
options to purchase 160,000 and 80,000 shares of common stock at exercise prices
from $.48 to $.68, per share, respectively, as additional compensation as a
member of the Board of Directors.
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 1999 was approximately
$178,000. 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 1999 and 1998. In 1999, the Company issued options to purchase 383,542
shares of common stock at prices ranging from $.48 to $.68. In 1998, the Company
issued 187,636 shares of common stock to Mr. Hreljanovic 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 the employment agreement is terminated early 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, President of PCI, had an employment agreement which terminated
on June 30, 2000. Under the terms of his agreement, as amended, Mr. Vazquez
received options to purchase shares of the Company's common stock. Effective
December 1999, Mr. Vazquez and the Company agreed to an early termination of the
Agreement. Accordingly, Mr. Vazquez surrendered all options previously issued to
him and agreed to forego any stock or options to which he was entitled.
STOCK OPTION PLANS
1989 Restricted Stock, Non-Qualified and Incentive Stock Option Plan
On December 7, 1999, the 1989 restricted stock, non-qualified and incentive
stock option plan terminated in accordance with the provisions of the Plan.
1996 Stock Option Plan
On February 12, 1997, the shareholders of the Company adopted the 1996
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. All the options under the Plan 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. The Plan also supplements the
Company's 1996 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 1,000,000 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. All the options
under the Plan have been granted as of the date of this report.
1999 Stock Option Plan
On December 27, 1999, the shareholders of the Company adopted the 1999
Stock Option Plan. The Plan supplements the Company's 1989 Restricted Stock,
Non-Qualified and Incentive Stock Option Plan. The Plan also supplements the
Company's 1996 and 1998 Stock Option Plans.
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 1,500,000 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. At December 31, 1999, 605,000 options were granted
under the Plan and 895,000 options remain unissued.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 22, 2000: (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.
BENEFICIAL PERCENT OF COMMON
NAME AND ADDRESS OWNERSHIP (1) STOCK OUTSTANDING
Vlado Paul Hreljanovic 1,145,284 15.3%
111 Great Neck Road
Suite 604
Great Neck, NY 11021
Harold A. Horowitz 210,000 2.8%
111 Great Neck Road
Suite 604
Great Neck, NY 11021
Marvin Rostolder 205,000 2.7%
Hoffstat Lane
Sands Point, Port Washington 11050
Bluffdale Corporation 525,168 7.3%
c/o Harris Organization
P.O. Box 0832-0858
Panama City, Panama
Officers and Directors as a
group (5 Persons) 1,669,116 22.3%
(1) Includes options of 220,000, 160,000, 190,000 and 25,000 to purchase
the Company's common stock for each of the officers and directors above,
respectively.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company paid rent under one sublease 1999 and 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, 1999 and 1998 was $72,400 and $77,000, respectively. In prior
years, the Company made advances to or received advances from one of these
affiliated companies for working capital requirements. As a result, at December
31, 1999 and 1998, the balances due from the affiliates were approximately
$4,800 and $900, respectively. Amounts payable under the remaining leases in
2000 and subsequent years are set forth below:
2000 - $63,988
2001 - $66,014
2002 and
thereafter - $27,013
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 1999 and 1998, no payments were made to such company, and
no revenue was recognized from such films.
During 1999, 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 1999. At December 31, 1999, the net
balance due from the Chief Executive Officer for all activities above was
$3,900.
In 1999, the Company's President and Chief Executive Officer was issued
options to purchase 383,542 shares of the Company's common stock with exercise
prices ranging from $.48 to $.68 as additional compensation for services
performed in 1999, including options for 140,000 shares as directors'
compensation. Further, the Company issued options for 250,000 shares 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)
4.2 1999 Stock Option Plan (4)
10.1 Amendment to Employment Agreement between the Registrant and Vlado P.
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 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
(4) Incorporated by reference to the Company's Proxy Statement for its Annual
Meeting held on December 27, 1999
(b) Reports on Form 8-K.
NONE
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, 1999 and 1998........ F-3
Consolidated Statements of Income
for the two years ended December 31, 1999........................... F-4
Consolidated Statements of Cash Flows
for the two years ended December 31, 1999........................... F-5
Consolidated Statements of Shareholders'
Equity for the two years ended December 31, 1999.................... 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, 1999 and 1998, 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, 1999 and 1998, 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 10. 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 29, 2000
F-2
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
December December
ASSETS 31, 1999 31, 1998
Current Assets
Cash ........................................... $ 3,290 $ 48,925
Accounts receivable - trade (net of allowance).. 329,875 788,410
Due from affiliates ............................ 44 8,085
Investment in NCI .............................. - 152,879
Prepaid expenses and other current assets ...... 206,514 215,764
Due from officer ............................... 3,857 101,755
Total current assets .................... 543,580 1,315,818
Film licenses .................................. 2,887,267 2,939,960
Property and equipment net of accumulated
depreciation of $123,354 and $85,554,
respectively ................................. 110,462 141,677
Investment in NetDIVE, Inc. .................... 200,000 -
Goodwill........................................ 409,886 -
Other assets ................................... 82,620 167,540
$4,233,815 $ 4,564,995
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses .......... $ 796,104 $ 1,023,541
Notes payable - current ........................ 52,910 168,725
Due to producers - current ..................... - 47,178
Due to shareholders ............................ 7,000 7,000
Total current liabilities ........................ 856,014 1,246,444
Notes payable - long term ........................ 400,606 166,667
Due to producers - long term ..................... 11,958 17,692
Total liabilities ................................ 1,268,578 ,430,803
--------- ---------
Shareholders' Equity
12% Non-voting convertible redeemable
preferred stock: $.10 par value, 875,000
shares authorized, 42,747 and 233,900 shares
issued and outstanding at December 31, 1999,
and December 31, 1998: aggregate liquidation
preference, $85,494 and $467,800 at December
31, 1999 and December 31, 1998................. 4,275 23,390
Common Stock - $.001 par value,75,000,000
shares authorized, 6,741,618 and 3,072,204
issued and outstanding at December 31, 1999
and December 31, 1998, respectively ........... 6,742 3,072
Capital contributions in excess of par:
Attributed to preferred stock ................. 38,109 208,523
Attributed to common stock .................... 11,409,017 9,855,404
Retained earnings (deficit) .................... (8,492,906) (6,956,197)
Total shareholders' equity ................ 2,965,237 3,134,192
---------- ---------
$4,233,815 $ 4,564,995
========== ===========
See Notes to Consolidated Financial Statements
F-3
<PAGE>
JUNIPER GROUP, INC
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
1999 1998
------------ ------------
Revenues:
Healthcare .......................... $ 580,594 $ 1,374,871
Entertainment ....................... 137,036 46,000
------------ ------------
717,630 1,420,871
------------ ------------
Operating Costs:
Healthcare .......................... 113,148 136,095
Entertainment ....................... 57,475 17,795
Selling, general and administrative expenses 1,984,168 1,708,874
Settlement expense ....................... - 310,828
------------ ------------
2,154,791 2,173,592
------------ ------------
Net (loss) before (loss) from
from minority interest.................. (1,437,161) (752,721)
(Loss) from minority interest............. (99,548) (193,141)
----------- -----------
Net (Loss) ............................... $ (1,536,709) $ (945,862)
============ ===========
Weighted average number of shares outstanding 4,883,783 1,500,511
============ ============
Net (loss) per common share .............. $ (0.32) $ (0.67)
============ ============
See Notes to Consolidated Financial Statements
F-4
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1999 1998
--------- ---------
Operating Activities
Net loss ......................................... $(1,536,709) $ (945,862)
Adjustments to reconcile net cash provided by
operating activities:
Amortization of film licenses ................... 52,693 14,601
Settlement expense............................... - 310,828
Depreciation expense ............................ 37,800 22,239
Gain on sale of assets - (6,362)
Expense from minority interest .................. 99,548 193,141
Payment of officers' compensation with equity.... 71,301 253,589
Payment of various liabilities with equity ...... 294,741 197,954
Payment of directors' compensation with equity .. - 17,625
Payment of employees' compensation with equity .. 55,540 11,040
Changes in assets and liabilities:
Accounts receivable ............................. 458,535 (459,930)
Prepaid expenses and other current assets ....... 9,250 8,667
Other assets .................................... 1,587 (690)
Due to/from officers and shareholders ........... 97,898 (42,705)
Due from affiliates ............................. 8,041 7,485
Accounts payable and accrued expenses ........... (227,437) 60,403
--------- ----------
Net cash (used for) operating activities ........ (577,212) (357,977)
--------- ----------
Investing activities:
Purchase of equipment ........................... (6,585) (96,479)
--------- ----------
Net cash provided from (used for) investing
activities ....................................... (6,585) (96,479)
--------- ----------
Financing activities:
Investment in NCI and NetDIVE...................... (400,305) --
Reduction in borrowings ........................... (217,702) (253,414)
Proceeds from borrowings .......................... 1,153,981 810,000
Payments to and on behalf of producers ............ (20,312) (22,122)
Proceeds from exercise of options ................. 22,500 (211,270)
Proceeds from private placements .................. -- 150,000
--------- ---------
Net cash provided from (used for)
financing activities ............................ 538,162 473,194
--------- ---------
Net increase (decrease ) in cash .................. (45,635) 18,738
Cash at beginning of period ....................... 48,925 30,187
--------- ---------
Cash at end of period ............................. $ 3,290 $ 48,925
======== =========
See Notes to Consolidated Financial Statements
F-5
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
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
------------- ------------------ ------------- ---------------- -------------- ----------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
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
- ----------------
Proceeds from private
placements - - - - - -
Shares issued as
payment for
various expenses - - 820 293,921 - 294,741
Shares issued as
compensation
to employees - - 105 55,435 - 55,540
Shares issued as compensation
to officers - - 467 70,834 - 71,301
Shares issued to producers as
payment for debt - - 66 32,534 - 32,600
Shares issued from exercise of
stock options - - 428 22,072 - 22,500
Shares issued in private
placements - - 1,219 733,603 - 734,822
Shares issued as payment for
acquisition of NCI - - 250 156,000 - 156,250
Tender offer of preferred
stock in exchange for
common stock (19,115) (170,414) 315 189,214 - -
Net loss for the year ended
December 31, 1999 - - - - (1,536,709) (1,536,709)
_______ _________ _______ ___________ _________ __________
Balance
December 31, 1999 $ 4,275 $ 38,109 $ 6,742 $11,409,017 $(8,492,906) $ 2,965,237
========== ============ ========== =========== =========== ===========
</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
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 three 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: Managed Care Revenue
Enhancement, and Comprehensive Pricing Reviews, to newly evolving
integrated hospital markets, and Write-off Review, appeals of any third
party rejections denials of accounts.
(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.
(c) Nuclear Cardiac Imaging, Inc.("NCI"), a New Jersey corporation. NCI is a
company newly formed in 1998 developing the business of providing cardiac
Spect Imaging to cardiologists at their offices without charge to the
physician. 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., Internet, home video, pay-per view, pay television,
cable television, networks and independent syndicated television stations) in
the domestic and foreign marketplace.
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.
F-7
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 1 - Summary of Significant Accounting Policies (Continued)
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 6 & 7) 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.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to significant
concentrations of credit risk are principally trade accounts receivable.
Concentrations of credit risk with respect to trade accounts receivable is
significantly limited as a result of the Company's deriving a substantial
portion of its revenue from virtually all the major insurance companies in the
United States. Although the Company has few hospitals as customers, the payors
of the claims generated by PCI's operations are insurance companies which pay
the cost of healthcare. Accordingly, the Company does not foresee a credit risk
associated with these receivables, since repayment is primarily dependent upon
the financial stability of the largest insurance companies in the United States.
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-8
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 1 - Summary of Significant Accounting Policies (Continued)
Film Licenses (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 Intangibles
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.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of
acquired companies and is being amortized on a straight line basis over forty
years. The Company assesses long-lived assets for impairment under Financial
Accounting Standards Board's (FASB) Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets to be
Disposed Of." Under those rules, goodwill associated with assets required in a
purchase business combination is included in impairment evaluations when events
or circumstances exist that indicate the carrying amount of those assets may not
be recoverable. No reduction of goodwill for impairment was necessary in 1999.
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. Pictures operating
costs include film amortization and producer's royalties.
F-9
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 1 - Summary of Significant Accounting Policies (Continued)
Recapitalization
On May 18, 1998, the Board of Directors authorized 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 periods have been restated after giving effect to
this fifty to one reverse split.
On March 16, 1999, the Company issued a tender offer to the stockholders of
its preferred stock to redeem all the 233,900 outstanding shares in exchange for
475,777 shares of the Company's common stock. On May 10, 1999, the offer was
concluded and 191,153 shares of preferred stock were redeemed in exchange for
315,403 shares of common stock.
Net Income Per Common Share
The provisions of 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 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.
Reclassifications
Certain amounts in the 1998 financial statements were reclassified to
conform to the 1999 presentation.
NOTE 2 - Accounts Receivable
The Company estimates an allowance for doubtful accounts, which allowance
amounted to approximately $306,000 and $436,000 at December 31, 1999 and 1998,
respectively.
During the past three years, a significant portion of PCI's revenue was the
result of work performed for New York Hospital ("NYH") in connection with
identifying and collecting claims which may have been incorrectly underpaid in
violation of New York State law. PCI did identify approximately $1.6 million of
such underpayments and with the consent of, and on behalf of NYH, organized the
appropriate legal actions in an effort to effectuate collection. Based upon the
Company's successful results with other hospitals having smaller claims for the
same violation of New York law, the Company expected the NYH legal actions to be
collectible.
In late December 1999, NYH notified the Company that it no longer sought
collection of the underpayments and that the legal actions the Company had
commenced on their behalf were to be discontinued.
Accordingly, the receivables recorded by PCI in connection with this matter
were written-off, resulting in PCI's bad debt expense for 1999 of approximately
$600,000. Presently, the Company is evaluating its position in this matter.
F-10
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3 - Investment in NetDIVE, Inc.
During 1999, in an effort to expand its interests into the Internet and in
e-commerce technology, the Company negotiated with an investment banker and with
NetDIVE, Inc. whereby the investment banker agreed to raise sufficient funds
from the sale of the Company's common stock to provide the Company with the
capital needed to purchase a 33% interest in NetDIVE, Inc., a privately owned
company specializing in collaborative communications on the Internet.
In the early stages of this acquisition, the Company borrowed $300,000 (see
Note 6) which was used to provide $200,000 for the initial purchase of NetDIVE
stock (equal to approximately 1.8% of NetDIVE), and to provide the Company with
$100,000 of working capital. The investment banker was unable to raise the
required capital in a timely fashion and, accordingly, NetDIVE attempted to
renegotiate the terms of the Company's investment.
NOTE 4 - Accounts Payable and Accrued Expenses
At December 31, 1999 and 1998, accounts payable and accrued expenses
consisted primarily of legal fees of $328,000 and $360,000, respectively,
commissions of $44,000 and $56,000, respectively, and payroll taxes of $183,000
and $342,000, respectively. Other accruals relate to selling, general and
administrative expenses incurred in the normal course of business.
NOTE 5 - Film Licenses
At December 31, 1999 and 1998 film licenses amounted to $2,887,267 and
$2,939,959, respectively. These reflect the Company's original acquisition price
less accumulated amortization for the distribution rights to 77 film licenses.
Such amortization amounted to $371,831 and $319,139 at December 31, 1999 and
1998, 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. Revenues grew in 1999 to 137,036
from $46,000 in 1998. Growth in revenues from the sale of film licenses is
expected to continue in 2000.
Initially, the Company is promoting its film library in the Internet
markets as well as domestic television markets. Secondarily, it will utilize
representatives to attend film festivals and penetrate foreign markets, subject
to the Company capital resources.
F-11
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 5 - Film Licenses (Continued)
Based upon the Company's estimates of future revenue as of December 31,
1999, approximately 25% of the amortized film licenses will be amortized during
the three years ended December 31, 2002. Management expects that greater than
60% of the film licenses applicable to related television and films will be
amortized by 2004.
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 6 - Notes Payable
The composition of Notes Payable at December 31, 1999 and 1998, was as
follows:
1999 1998
---- ----
Demand Note bearing interest at varying rates
of up to 2% per month $ 6,354 $ 58,387
6% Convertible Secured Promissory Note
maturing in January, 2001 300,000 -
Settlement agreements and arbitration awards
maturing at April 2001 147,162 207,236
12% Convertible Secured Promissory Notes
maturing on June 30, 1999 (see Note 8) - 68,700
Capital equipment loans maturing January 1999
bearing interest at varying rates to 9.0% - 1,069
-------- --------
453,516 335,392
Less current portion ............................ 52,910 168,725
Long term portion ............................... $400,606 $166,667
======== ========
NOTE 7 - Producer's Minimum Guarantees and Participations
Obligations incurred in connection with the acquisition of film licenses,
including minimum guarantees and producer's participations were $11,958 at
December 31, 1999. During 1999, the Company reduced its obligations to producers
by $53,000.
F-12
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 7 - Producer's Minimum Guarantees and Participations (Continued)
The following schedule summarizes the maturities of the balances at
December 31, 1998:
2000 $ -
2001 5,784
2002 8
2003 6,166
--------
$ 11,958
========
NOTE 8 - Shareholders' Equity
Throughout 1999 and 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 $757,322 for 1,538,719 shares, and $150,000 for 90,775
shares of common stock in 1999 and 1998, respectively.
In connection with payments to creditors for notes payable and indebtedness
to producers (including for the acquisition of films), the Company issued 65,625
and 1,490,096 shares, valued at $32,600 and $118,800, in 1999 and 1998,
respectively. In connection with payables for operating activities, the Company
issued 819,631 shares, valued at $294,741, and 416,241 shares valued at $332,704
in 1999 and 1998, respectively. During 1998, as compensation to its Board of
Directors, the Company issued 47,000 shares of common stock, valued at $17,625.
Also, in 1999 and 1998, the Company issued 104,585 shares and 23,000 shares
to employees as compensation, valued at $55,540 and $11,040, respectively.
All shares issued in 1999 and 1998, were not registered and, as such, were
restricted shares under the Securities Act of 1933, as amended.
Net (loss) per common share for 1999 and 1998 has been computed by dividing
net (loss), after preferred stock dividend requirements of $10,259 in 1999 and
$56,136 in 1998, by the weighted average number of common shares outstanding
throughout the year of 4,883,783 and 1,500,511, 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, 1999, none of the options had been exercised. In
January 2000, all the options expired.
F-13
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 8 - Shareholders' Equity (Continued)
Options Granted (Continued)
On November 24, 1998, the Company issued to the members of the Board of
Directors and officers of the Company, options to purchase 445,000 shares of the
Company's common stock for $.375 per share. The term of the options are five
years. As of December 31, 1999, 110,000 remain unexercised. Additionally, on
November 24, 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.
As of December 31, 1999, 60,000 remain unexercised. Further, on November 24,
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 $.375 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, 1999, none of the options
were outstanding.
On May 17, 1999, the Company issued options to purchase shares of the
Company's common stock as follows: 240,000 to the Board of Directors; 41,667 to
the President of the Company and 25,000 to an employee of the Company. These
options issued in recognition of the services provided to the Company, have an
exercise price of $.48 and a five year term through May 17, 2004. As of December
31, 1999, 155,000 options remain unexercised.
Additionally on May 17, 1999, the Company issued 41,667 options to the
Company's President in recognition of his successful efforts in raising
additional capital for the Company. The options had an exercise price of $.48
and were all exercised during 1999.
On June 23, 1999, the Company issued 21,875 options to the Company's
President in recognition of having raised additional capital for the Company.
The shares had an exercise price of $.48 with a five year term through June 22,
2004. As of December 31, 1999, none of the options were outstanding.
On December 30, 1999, the Company issued options to purchase shares of the
Company's common stock as follows: 120,000 to consultants for services provided
to the Company, 100,000 to the Board of Directors in recognition of their
efforts and 230,000 to the President of the Company, and a board member in
recognition of their efforts in connection with the acquisition of the Company's
interest in NetDIVE, Inc.
Convertible Preferred Stock
The Company's 12% non-voting convertible 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 0.4
shares of Common Stock.
F-14
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 8 - Shareholders' Equity (Continued)
Convertible Preferred Stock (Continued)
On March 16, 1999, the Company made a self-tender for all of the 233,900
outstanding shares of 12% Non-Voting Convertible Redeemable Preferred Stock (the
"12% Preferred") for 475,777 shares of the Company's common stock. As a result,
191,153 shares of preferred stock were redeemed for 315,403 shares of the
Company's common stock.
At December 31, 1999, 42,747 shares of the Preferred Stock were
outstanding. Pending effectiveness of a post-effective amendment to the
Company's registration statement, the outstanding Preferred Stock cannot be
converted.
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. The total
cash value of the arrearage of unpaid dividends as of December 31, 1999 is
$89,769.
Warrants
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, 1999, 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, 1999, 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, 1999, all the warrants had been exercised.
F-15
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 8 - Shareholders' Equity (Continued)
Warrants (Continued)
On October 5, 1999, the Company entered into an investment advisory
agreement whereby the investment advisor will provide introductions to the
financial community, assist in raising capital, provide merger and acquisition
candidates, provide other advisory services. In consideration, the Company
granted warrants to purchase 250,000 shares of the Company's common stock at
$4.00 per share. The term of the warrants are five years and expire on October
14, 2004. At December 31, 1999, 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 6). 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
had loans remaining of $68,700. During 1999, the remaining loans were paid.
NOTE 9 - Related Parties
The Company paid rent under one sub-lease during 1999 and two sub-leases
during 1998 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, 1999, and 1998 was approximately $72,400 and $77,000,
respectively (see Note 10). In prior years, the Company made advances to or
received advances from the affiliates for working capital requirements. As a
result, at December 31, 1999, the balances from one affiliate was approximately
$4,400 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 1999 and 1998, 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 1999 and 1998.
F-16
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 9 - Related Parties (Continued)
Throughout 1999, 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
$143,000. The net outstanding balance due from the officer at December 31, 1999,
was $3,900.
As part of salary, bonuses and other compensation, the Company's President
and Chief Executive Officer (see Note 8), was issued 467,267 shares of common
stock, valued at $71,301. Additionally, during 1999, the Company's President
received options for 383,542 shares at prices from $0.48 to $0.68 per share.
These options were issued for services as a Board of Directors member and for
additional efforts on behalf of the Company. Further, the Company issued options
for 250,000 shares to other non-employee directors.
NOTE 10 - Commitments and Contingencies
Leases
The Company leased its New York office facilities under a sublease. The
Florida office lease was paid on a month to month basis through September 1998
at which time it was closed. The New York lease expires in May 2002 (see Note
9). Future minimum annual base rental commitments as of December 31, 1998 are as
follows:
2000 $ 63,988
2001 66,014
2002 27,013
--------
$157,015
========
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 1999 was approximately $178,000.
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.
F-17
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 10 - Commitments and Contingencies (Continued)
Employment Agreements
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 up to 40% of his unpaid salary during 1999
and 1998. During 1999, the Company issued 190,136 shares of stock in lieu of
cash payments for Mr. Hreljanovic's salary. Additionally, the Company issued
options for 383,542 shares of stock to Mr. Hreljanovic as compensation for his
services as a member of the Board of Directors, and for other efforts on behalf
of the Company (see Note 8). 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, former President of PCI, had an employment agreement which
terminated on June 30, 2000. Under the terms of his agreement, as amended, Mr.
Vazquez received options to purchase shares of the Company's common stock.
Effective December 1999, Mr. Vazquez and the Company agreed to an early
termination of the Agreement (see Note 10). Accordingly, Mr. Vazquez surrendered
all options previously issued to him and agreed to forego any stock or options
to which he was entitled.
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.
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-18
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 10 - Commitments and Contingencies (Continued)
Litigation
On May 22, 1996, Ordinary Guy, Inc. and Crow Productions, Inc. commenced an
action against the Company, 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. This
matter was settled in April 1998 for a payment of $310,000 which is being paid
out over four years ending April 20, 2001. The payment was secured by 93,320
shares of the Company's common stock (see Note 6).
Going Concern
As shown in the accompanying financial statements, the Company's:
* Revenue decreased sharply to $718,000 in 1999, from $1,421,000 in 1998;
* Net loss was ($1,537,000) in 1999, and ($946,000) in 1998;
* Working capital was negative ($312,000) at December 31, 1999 and was
$69,000 at December 31, 1998.
The fact that the Company continued to sustain losses in 1999; has negative
working capital at December 31, 1999; and still requires additional sources of
outside cash to sustain operations; 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, including moving into the
Internet and e-commerce marketplace, 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 2000 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 11 - Incentive Compensation Plans
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.
F-19
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 11 - Incentive Compensation Plans (Continued)
1996 Stock Option Plan (Continued)
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. At December
31, 1999, all options under the Plan had been granted.
1998 Stock Option Plan
On December 30, 1998, the shareholders of the Company adopted the 1998
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 1,000,000 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. At December 31,
1999, all options under the Plan had been granted.
1999 Stock Option Plan
On December 27, 1999, the shareholders of the Company adopted the 1999
Stock Option Plan. The Plan supplements the Company's 1989 Restricted Stock,
Non-Qualified and Incentive Stock Option Plan. The Plan also supplements the
Company's 1996 and 1998 Stock Option Plans.
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 1,500,000 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. At December 31, 1999, 605,000 options had been
granted and 895,000 remain unissued.
F-20
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 11 - Incentive Compensation Plans (Continued)
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:
1999 1998
Net income (loss) ................ As reported $(1,536,709) $ (945,862)
Pro forma $(2,280,618) $(1,285,075)
Net income (loss) per common share As reported $ (0.32) $ (0.67)
Pro forma $ (0.47) $ (0.89)
NOTE 12 - Income Taxes
For the years ended December 31, 1999 and 1998, no provision was made for
Federal and state income taxes due to the losses incurred during these periods.
As a result of losses incurred through December 31, 1999, the Company has net
operating loss carryforwards of approximately $6,942,000. 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
2016 956,000
2017 1,257,000
$6,942,000
In accordance with Financial Accounting Standards Board Statement No. 109
"Accounting for Income Taxes", the Company recognized deferred tax assets of
$2,846,000, at December 31, 1999. 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 $2,846,000. Deferred tax assets at December 31, 1999 primarily
reflect the tax effect of net operating loss carryforwards.
F-21
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 13 - Acquisition of Nuclear Cardiac Imaging, Inc.
On June 23, 1999, the Company completed its acquisition of 51% of Nuclear
Cardiac Imaging, Inc. ("NCI"), a New York Corporation. The acquisition, recorded
under the purchase method of accounting, included the purchase of the
outstanding shares of common stock in exchange for 250,000 shares of the
Company's common stock valued at $156,000. A portion of the purchase price
(including the 49% interest previously owned by the Company) has been allocated
to assets acquired and liabilities assessed, based on estimated fair market
value at the date of acquisition, while the balance of $409,886 was recorded as
goodwill and is being amortized over forty years on a straight-line basis.
NOTE 14 - 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; and films are available to be
marketed throughout the world.
Financial information by business segment is as follows:
1999 1998
---- ----
Revenue:
Healthcare ........ $ 580,594 $ 1,374,871
Entertainment ..... 137,036 46,000
----------- -----------
$ 717,630 $ 1,420,871
=========== ===========
1999 1998
---- ----
Operating Income (Loss):
Healthcare ........ $ (749,663) $ 99,998
Entertainment...... (15,783) (93,930)
Corporate ......... (771,263) (951,930)
----------- -----------
$(1,536,709) $ (945,862)
=========== ===========
Identifiable Assets:
Healthcare ......... $ 3,069,067 $ 674,416
Entertainment ...... (464,671) 3,130,078
Corporate .......... 8,137,360 760,501
---------- ----------
$ 4,603,621 $ 4,564,995
========== ==========
F-22
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 14 - Business Segment Information (Continued)
Depreciation:
Healthcare ......... $ 33,853 $ 16,036
Corporate .......... 3,947 6,203
---------- ----------
$ 37,800 $ 22,239
========== ==========
Capital Expenditures:
Healthcare ......... $ - $ 96,479
Corporate .......... 6,584 -
---------- ----------
$ 6,584 $ 96,479
========== ==========
NOTE 15 - Quarterly Results of Operations (Unaudited)
Below is a summary of the quarterly results of operations for each quarter
of 1999 and 1998:
1999 First Second Third Fourth
Revenue ............$ 153,929 $ 141,097 $ 288,180 $ 134,423
Gross profit ....... 122,043 107,259 259,031 58,495
------- ------- ------- -------
Net income (loss) ..$ (270,695) $ (286,375) $ (304,786) $ (674,877)
======= ====== ======= =======
Net income (loss)
per common share....$ (0.09) $ (0.16) $ (0.20) $ (0.32)
===== ===== ===== =====
1998 First Second Third Fourth
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)
==== ==== ==== ====
NOTE 16 - Supplemental Cash Flow Information
Cash paid for interest totaled $12,393 and $24,985 in 1999 and 1998,
respectively.
F-23
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 16 - Supplemental Cash Flow Information (Continued)
During 1999, 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 $32,600; officer's compensation of $71,301;
employee compensation of $55,540; payment of corporate debt amounting to
$734,822; certain corporate expenses amounting to $294,741.
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.
NOTE 17 - Major Customers
In 1999 and 1998, New York Hospital accounted for 20% and 51%,
respectively, of the total revenue of the Company. No other customer accounted
for greater than 10% of the Company's total revenue in 1998. In 1999, Maimonides
Hospital and NY Downtown Hospital accounted for 17% and 12% of total revenue,
respectively. Additionally, JPI sold film rights to Eyeblast, Inc., which
accounted for 17% of total revenue.
NOTE 18 - Subsequent Events
From January 1, 2000 to March 22, 2000, the Company issued 449,000 shares
of common stock in connection with the conversion of convertible debentures, the
payment of debt and the exercise of options. The debentures, which were issued
and converted during the first quarter of 2000 provided the Company with
$178,000.
On March 21, 2000, the Company filed a registration statement on Form S-8
to register 1,500,000 options (and the underlying stock) to be granted under the
Company's 1999 Stock Option Plan and to register 100,000 shares of the Company's
common stock issuable upon exercise of options granted to a consultant in
consideration of services rendered.
F-25
<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 30, 2000 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 30, 2000
By: /s/ Harold A. Horowitz Director March 30, 2000
-----------------------
Harold A. Horowitz
By:/s/Marvin Rostolder Director March 30, 2000
-------------------
Marvin Rostolder
F-26
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,290
<SECURITIES> 0
<RECEIVABLES> 636,046
<ALLOWANCES> 306,172
<INVENTORY> 0
<CURRENT-ASSETS> 543,580
<PP&E> 233,816
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4,275
<COMMON> 6,742
<OTHER-SE> 2,954,221
<TOTAL-LIABILITY-AND-EQUITY> 4,233,815
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<CGS> 0
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<NET-INCOME> (1,536,709)
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