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EX-31 - RESTATED EX. 31 FOR 10Q SEPTEMEBER 30, 2010 - JUNIPER GROUP INCrestatedex_31sept2010.htm
EX-32 - RESTATED EX. 32 FOR 10Q SEPTEMEBER 30, 2010 - JUNIPER GROUP INCrestatedex_32sept2010.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q /A
Amendment No. 1

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ______________
 
COMMISSION FILE NUMBER 0-19170

[Missing Graphic Reference]
(Exact name of small business issuer as specified in its charter)

Nevada
 
11-2866771
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer Identification No.)

20283 State Road 7, Suite 300
Boca Raton, Florida  33498
---------------------------------------------------------------
(Address of principal executive offices)

(561) 807-8990
-----------------------------------
(Issuer's telephone number)

Indicate by check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes     No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large Accelerated Filer   
Accelerated Filer 
Non-Accelerated Filer 
Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes     No  x

Number of shares outstanding of the issuer’s common stock as of the latest practicable date:  540,413,600 shares of common stock, $.0001 par value per share, as of November 15, 2010.

 
 

 

EXPLANATORY NOTE

We are filing this amendment to our Form 10-Q for the quarter ended September 30, 2010 to correct the calculation pertaining to the derivative liability relating to convertible debentures and the resulting loss on adjustment of derivative and warrant liabilities to fair value.


JUNIPER GROUP, INC. and SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
INDEX


PART I:
FINANCIAL INFORMATION
PAGE NO.
     
Item 1.
Financial Statements
 
     
 
Condensed Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009 (audited)
4
     
 
Condensed Consolidated Statements of Operations for the three months ended September 30, 2010 and 2009 (unaudited)
5
     
 
Condensed Consolidated Statements of Operations for the nine months ended September 30, 2010 and 2009 (unaudited)
6
     
 
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 (unaudited)
7
     
 
Condensed Consolidated Statement of Changes in Stockholders’ Deficit as of September 30, 2010 (unaudited)
8
     
 
Notes To Condensed Consolidated Financial Statements (unaudited)
9
     
Item 2.
Management’s Discussion and Analysis of Financial Condition
18
     
Item 4.
Controls and Procedures
27
     
PART II:
OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
27
     
Item 1A.
Risk Factors
30
     
Item 2.
Unregistered Sale of Equity Securities and Use of Proceeds
30
     
Item 3.
Defaults Upon Senior Securities
31
     
Item 4.
Removed and Reserved
31
     
Item 5.
Other Information
31
     
Item 6.
Exhibits
31
     
 
SIGNATURES
32
     
 
Index to Exhibits
33


 
- 2 -

 



PART 1.  FINANCIAL INFORMATION

As used herein, the terms “Us,” “Ours,” “We,” "Juniper" or "the Company" refers to Juniper Group, Inc., a Nevada corporation, its subsidiary corporations and predecessors unless otherwise indicated. The accompanying unaudited, condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of our financial position, results of operations, cash flows and stockholders' equity in conformity with generally accepted accounting principles in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
 
This Quarterly Report contains statements that constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995.  In this Quarterly Report there are statements concerning our future operating and future financial performance.  Words such as “expects”, “anticipates”, “believes”, “estimates”, “may”, “will”, “should”, “could”, “potential”, “continue”, “intends”, “plans” and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements.  Investors are cautioned that such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors.  Factors that may cause such differences to occur include, but are not limited to:
 
 
·
the level of our revenues;
 
·
competition from existing competitors  and new competitors entering our industry;
 
·
demand for our services;
 
·
the cost of industry conditions;
 
·
changes in the laws or regulations affecting the industry in which we operate;
 
·
the outcome of litigation and other proceedings, including the matters described under Part II, Item 1. Legal Proceedings and Note 9 of the condensed consolidated financial statements;
 
·
general economic conditions in the areas in which we operate;
 
·
the state of the market for debt securities and bank loans;
 
·
the level of our expenses; and
 
·
the factors described in our filings with the Securities and Exchange Commission, including under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.






 

 
 

 
 

 
 

 

 
- 3 -

 

 
ITEM 1. Financial Statements
 


JUNIPER GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
       
September 30
 
December 31,
       
2010
 
2009
       
(Unaudited)
 
(Audited)
ASSETS
           
           
Current Assets
         
 
Cash
 
$
10,651
$
87,663
 
Accounts receivable-trade (net of allowance)
   
133,003
 
466,041
 
Unbilled accounts receivable
   
151,851
 
99,462
 
Inventory
   
8,882
 
-
 
Other current assets
   
34,021
 
33,679
 
Total current assets
   
338,408
 
686,845
           
Property and equipment, net
   
116,500
 
122,034
Note receivable
   
605,000
 
605,000
Other assets
   
23,521
 
14,050
Total assets
 
$
1,083,429
$
1,427,929
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT
         
           
Current Liabilities:
         
 
Bank overdraft
 
$
61,508
$
-
 
Accounts payable and accrued expenses
   
2,718,597
 
2,802,868
 
Convertible debentures and notes payable – current portion
   
2,843,387
 
2,256,056
 
Preferred stock dividend payable
   
51,718
 
47,154
 
Due to officer
   
1,029,801
 
866,503
 
Due to shareholders & related parties
   
40,267
 
12,495
 
Total current liabilities
   
6,745,278
 
5,985,076
           
Convertible debentures and notes payable, less current portion
   
1,153,938
 
924,336
Derivative liability related to convertible debentures
   
21,424,485
 
16,053,105
Warrant liability related to convertible debentures
   
249
 
7,550
Total liabilities
   
29,323,950
 
22,970,067
           
Stockholders’ Deficit:
         
           
12% Non-voting convertible redeemable preferred stock: $0.10 par value, 25,357 shares authorized: 25,357 shares issued and outstanding at September 30, 2010 and December 31, 2009: aggregate liquidation preference, $50,714 at September 30, 2010 and December 31, 2009
         
         
         
   
2,536
 
2,536
Voting convertible redeemable series B preferred stock: $0.10 par value 135,000 shares authorized: 106,294 shares issued and outstanding at September 30, 2010, and 106,670 shares issued and outstanding at December 31, 2009
         
         
   
10,629
 
10,667
Voting convertible redeemable series C preferred stock: $0.10 par value 300,000 shares authorized, issued and outstanding at September 30, 2010 and December 31, 2009
         
   
30,000
 
30,000
Voting non-convertible series D preferred stock: $0.001 par value 6,500,000 shares authorized, issued and outstanding at September 30, 2010 and December 31, 2009
         
   
6,500
 
6,500
Voting non-convertible series E preferred stock: $0.001 par value, 100,000,000 shares authorized: 31,000,000 shares issued and outstanding at September 30, 2010 and December 31, 2009
         
   
31,000
 
 
31,000
Common Stock: $0.0001 par value, 10,000,000,000 shares authorized; 514,868,447 shares issued and outstanding at September 30, 2010 and 81,807,548 shares issued and outstanding at December 31, 2009
         
   
 
51,487
 
 
8,181
Additional paid-in capital:
         
 
Attributed to 12% preferred stock non-voting
   
22,606
 
22,606
 
Attributed to series B preferred stock voting
   
2,433,113
 
2,444,367
 
Attributed to series C preferred stock voting
   
22,000
 
22,000
 
Attributed to common stock
   
24,065,448
 
23,628,851
Accumulated deficit
   
(54,915,840)
 
(47,748,846)
Total stockholders’ deficit
   
(28,240,521)
 
(21,542,138)
Total liabilities & stockholders’ deficit
 
$
1,083,429
$
1,427,929


See Notes to Condensed Consolidated Financial Statements














 
- 4 -

 


JUNIPER GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)

     
Three Months Ended September 30,
 
     
2010
 
2009
 
             
Revenues:
         
 
Wireless infrastructure services
$
381,513
$
102,451
 
Total revenues
 
381,513
 
102,451
 
             
Operating costs:
         
 
Wireless infrastructure services
 
302,308
 
133,817
 
Total operating costs
 
302,308
 
133,817
 
             
Gross profit (loss)
 
79,205
 
(31,366)
 
             
Costs and expenses:
         
 
Selling, general and administrative expenses
 
685,549
 
247,425
 
 
Impairment of film licenses
 
-
 
6,890
 
Total costs and expenses
 
685,549
 
254,315
 
             
Loss from operations before other income (expense)
 
(606,344)
 
(285,681)
 
             
Other income (expense):
         
 
(Loss) gain on adjustment of derivative and warrant liabilities to fair value
 
(4,399,515)
 
7,100,560
 
 
Amortization of debt discount
 
(549,107)
 
(65,624)
 
 
Interest expense
 
(164,214)
 
(119,639)
 
 
Settlement Income
 
-
 
(5,000)
 
     
(5,112,836)
 
6,910,297
 
             
(Loss) income before provision for income taxes
 
(5,719,180)
 
6,624,616
 
             
Provision for income taxes
 
-
 
-
 
             
(Loss) income before preferred stock dividends
 
(5,719,180)
 
6,624,616
 
           
Preferred stock dividend
 
(1,521)
 
(1,521)
 
             
Net (loss) income available to common stockholders
$
(5,720,701)
$
6,623,095
 
             
Weighted average number of shares outstanding
 
425,363,386
 
10,466,302
 
Basic and diluted net (loss) income per common share
$
(0.01)
$
0.63
 


See Notes to Condensed Consolidated Financial Statements









 
- 5 -

 



JUNIPER GROUP, INC.
AND SUBSIDIARIES,
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)

   
Nine Months Ended
September 30,
   
   
2010
   
2009
           
Revenues:
         
Wireless infrastructure services
  $ 2,079,969     $ 211,524    
Total revenues
    2,079,969       211,524    
                   
Operating costs:
                 
Wireless infrastructure services
    1,471,487       191,046    
Total operating costs
    1,471,487       191,046    
                   
Gross profit
    608,482       20,478    
                   
Costs and expenses:
                 
Selling, general and administrative expenses
    1,708,221       807,509    
Impairment of film licenses
    -       13,781    
Total costs and expenses
    1,708,221       821,290    
                   
Loss from operations before other income (expense)
    (1,099,739 )     (800,812 )  
                   
Other income (expense):
                 
(Loss) gain on adjustment of derivative and warrant liabilities to fair value
    (4,471,064 )     45,528,116    
Amortization of debt discount
    (1,174,384 )     (570,784 )  
Interest expense
    (417,243 )     (339,715 )  
Settlement Income
    -       (21,000 )  
      (6,062,691 )     44,596,617    
                   
(Loss) income before provision for income taxes
    (7,162,430 )     43,795,805    
                   
Provision for income taxes
    -       -    
                   
(Loss) income before preferred stock dividends
    (7,162,430 )     43,795,805    
                   
Preferred stock dividend
    (4,564 )     (4,564 )  
                   
Net (loss) income available to common stockholders
  $ (7,166,994 )   $ 43,791,241    
                   
Weighted average number of shares outstanding
    361,651,204       5,672,176    
Basic net (loss) income per common share
  $ (0.02 )   $ 7.72    


See Notes to Condensed Consolidated Financial Statements










 
- 6 -

 



JUNIPER GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009,
(UNAUDITED)


         
Nine Months Ended
September 30,
         
2010
 
2009
Operating Activities:
       
Net (loss) income
$
(7,166,994)
$
43,791,241
Adjustments to reconcile net cash used in operating activities:
       
 
Unrealized loss (gain) of derivative liabilities
 
4,471,064
 
(45,528,116)
 
Amortization of debt discount
 
1,174,384
 
570,784
 
Depreciation
 
22,795
 
9,346
 
Issuance of convertible debentures in exchange for goods and services
 
153,367
   
 
Amortization of film licenses
 
-
 
13,781
Changes in operating assets and liabilities:
       
 
Accounts receivable
 
333,038
 
(139,151)
 
Unbilled accounts receivable
 
(52,389)
 
-
 
Inventory
 
(8,882)
   
 
Other current assets
 
(342)
 
(30,862)
 
Other assets
 
(9,648)
 
(1,035)
 
Accounts payable and accrued expenses
 
321,090
 
614,772
 
Due to officers and shareholders
 
191,070
 
160,370
 
Preferred stock dividend payable
 
4,565
 
4,565
Net cash used in operating activities
 
(566,882)
 
(534,305)
         
Investing activities:
       
 
Purchase of equipment and licenses
 
(51,945)
 
(8,546)
Net cash used in investing activities:
 
(51,945)
 
(8,546)
         
Financing activities:
       
 
Bank overdraft
 
61,508
 
23,216
 
Repayment of borrowings
 
(54,825)
 
(138,187)
 
Proceeds from borrowings
 
535,132
 
722,489
 
Repayments to officers and shareholders
 
-
 
(49,949)
Net cash provided by financing activities:
 
541,815
 
557,569
         
Net (decrease) increase  in cash and equivalents
 
(77,012)
 
14,718
Cash at beginning of the period
 
87,663
 
7
Cash at end of the period
$
10,651
$
14,725
Supplemental cash information:
       
Interest paid
$
-
$
201
Taxes paid
$
-
$
429

See Notes to Condensed Consolidated Financial Statements

 
- 7 -

 


JUNIPER GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
AS OF SEPTEMBER 30, 2010 (UNAUDITED)
 
 Preferred Stock
 Series B Preferred Stock
 Series C Preferred Stock
 Series D Preferred Stock
 Series E Preferred Stock
 Common Stock
 Accumulated Deficit
 
 Total Stockholders’ Deficit
 
 Shares
 
 Par
 APIC
 Shares
 Par
 APIC
 Shares
 Par
 APIC
 Shares
 Par
 APIC
 Shares
 Par
 APIC
 Shares
 Par
 APIC
     
                                             
Balances at December 31, 2009
 
25,357
$
2,536
 
22,606
106,670
 
10,667
2,444,367
 
300,000
30,000
 
22,000
6,500,000
 
6,500
-
 
31,000,000
31,000
 
-
81,807,548
 
8,181
23,628,851
 
(47,748,846)
$
(21,542,138)
Common stock issued  in exchange for current liabilities
                               
7,045,454
705
15,420
   
16,125
Common stock issued in exchange for Series B preferred stock
       
(376)
(38)
(11,254)
                 
4,577,000
457
10,835
   
-
Common Stock issued in exchange of convertible debentures
                               
421,438,445
 
42,144
410,342
   
452,486
Net income
                                     
(7,166,994)
 
(7,166,994)
Balances at September 30, 2010
 
25,357
$
2,536
 
22,606
106,294
 
10,629
2,433,113
 
300,000
30,000
 
22,000
6,500,000
 
6,500
-
 
31,000,000
31,000
 
-
514,868,447
 
51,487
24,065,448
 
(54,915,840)
$
(28,240,521)

 





See Notes to Condensed Consolidated Financial Statements

 
- 8 -

 

JUNIPER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 – BUSINESS

Our wireless infrastructure services operating subsidiaries primarily focus their activities in the Eastern and Central United States.  Our intention is to be able to support the increased demand in the deployment of wireless infrastructure services with leading wireless telecommunication companies in providing them with maintenance and upgrading of wireless telecommunication network sites, site acquisitions, site surveys, co-location facilitation, tower construction and antenna installation to tower system integration, hardware and software installations.


NOTE 2 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements for Juniper Group, Inc. and Subsidiaries (“Juniper” or “the Company”) have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company’s most recent annual consolidated financial statements and notes thereto included in its December 31, 2009 Annual Report on Form 10-K. Operating results for the three and nine months ended September 30, 2010 are not indicative of the results that may be expected for the year ending December 31, 2010.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Standards Codification.  In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance now codified under Accounting Standards Codification (“ASC”) Topic 105-10, which establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with GAAP.  ASC Topic 105-10 explicitly recognizes rules and interpretive releases of the SEC under federal securities laws as authoritative GAAP for Securities and Exchange Commission (“SEC”) registrants.  Upon adoption of this guidance under ASC Topic 105-10, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative.  The guidance under ASC Topic 105-10 became effective for the Company as of December 31, 2009.  References made to authoritative FASB guidance throughout this document have been updated to the applicable Codification section.

 
- 9 -

 

Consolidation. The condensed consolidated financial statements include the accounts of Juniper and its wholly-owned subsidiaries.  All significant intercompany transactions and balances have been eliminated in consolidation.
 
Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Revenue and Cost Recognition.  In the wireless infrastructure construction services, the Company enters into contracts principally on the basis of competitive bids, the final terms and prices of which are frequently negotiated with the customer. Although the terms of its contracts vary considerably, most services are made on a cost- plus or time and materials basis. The Company completes most projects within six months.

The Company follows the guidance in the ASC 605-25 in recognizing income. Revenue is recognized when all of the following conditions exist: persuasive evidence of an arrangement exists; services have been rendered or delivery occurred; the price is fixed or determinable; and collectability is reasonably assured. The actual costs required completing a project and, therefore, the profit eventually realized, could differ materially in the near term. .

Accounts Receivable.  Accounts receivable is stated at the amount billed to customers. The Company provides allowances for doubtful accounts, which are based upon a review of outstanding receivables, historical performance and existing economic conditions. Accounts receivable are ordinarily due 30 to 60 days after issuance of the invoice. The Company establishes reserves against receivables by customers whenever it is determined that there may be corporate or market issues that could eventually affect the stability or financial status of these customers or their payments to the Company. The Company’s policy is not to accrue interest on past due trade receivables.

Unbilled Accounts Receivable. Unbilled accounts receivable represents revenue on work performed for which the Company is waiting to receive a purchase order from the customer.  Due to the nature of the industry, customers often request that maintenance and repair and emergency work be performed prior to issuing purchase orders.

Concentration of Credit Risk.  Financial instruments which potentially subject the Company to significant concentrations of credit risk are principally trade accounts receivable. Concentration of credit risk with respect to the wireless infrastructure services are primarily subject to the financial condition of the largest customers.

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, which generally ranges from 3 to 5 years.  Expenditures for normal repairs and maintenance are charged to operations as incurred.  The cost of property or equipment retired are otherwise disposed of and the related accumulated depreciation are removed from the accounts in the period of disposal with the resulting gain or loss reflected in earnings or in the cost of the replacement. 

Financial Instruments.  The estimated fair values of accounts payable and accrued expenses approximate their carrying values because of the short maturity of these instruments. The Company's debt (i.e., notes payable, convertible debentures and other obligations) does not have a ready market. These debt instruments are shown on a discounted basis 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 from their carrying value.

 
- 10 -

 


ASC 815-10 requires that due to indeterminable number of shares which might be issued the imbedded convertible host debt feature of the Callable Secured Convertible Notes, the Company is required to record a liability relating to both the detachable warrants and embedded convertible feature of the notes payable (included in the liabilities as a “derivative liability”) and to all other warrants issued and outstanding as of December 28, 2005, except those issued to employees.  The result of adjusting these derivative liabilities to market generated an unrealized loss of approximately $7.2 million and an unrealized gain of approximately $7.1 million for the three months ended September 30, 2010 and 2009, respectively, and an unrealized loss of approximately $4.5 million and an unrealized gain of approximately $45.5 million for the nine months ended September 30, 2010 and 2009, respectively.


Stock-Based Compensation.  In February 2007, the FASB adopted ASC 825-10 which provides companies with an option to report selected financial assets and financial liabilities at fair value.  Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each subsequent reporting date.  ASC 825-10 is effective for fiscal years beginning after November 15, 2007.  We have adopted this process.  There was no compensation expense for stock options calculated in 2010 and 2009.

Derivative Instruments.  Effective December 28, 2005, the Company adopted ASC 815. ASC 815 requires that all derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are reported as other income or expense in the period of change.
 
Income Taxes.  The Company provides for income taxes in accordance with ASC 740-10 which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities.

Net Income (loss) per Common Share.  Earnings per share have been calculated in accordance with Topic 260 “Earnings Per Share” (“EPS”). Topic 260 requires dual presentation of basic EPS and diluted EPS for all entities with complex capital structures.  Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and convertible debentures.

Net income (loss) per common share for the three and nine months ended September 30, 2010 and 2009 has been computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding throughout the period.

All of the weighted average number of common shares outstanding has been adjusted to reflect the one-for-five hundred reverse stock split on August 27, 2009.

Warrants Issued With Convertible Debt.  The Company has issued warrants along with debt and equity instruments to third parties. These issuances are recorded based on the fair value of these instruments. Warrants and equity instruments require valuation using the Black-Scholes model and other techniques, as applicable, and consideration of assumptions including but not limited to the volatility of the Company’s stock, and expected lives of these equity instruments.

Reclassifications.  Certain amounts in the 2009 condensed consolidated financial statements have been reclassified to conform to the 2010 presentation.

New Accounting Pronouncements.  In June 2009, the FASB issued Statement of Financial Accounting Standards No.168, The FASB Accounting Standards Codification and Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No.162 (the “Codification”) The Codification reorganized existing U.S. accounting and reporting standards issued by the FASB and other related private sector standard setters into a single source of authoritative accounting principles arranged by topic. The Codification supersedes all existing U.S. accounting standards; all other accounting literature not included in the Codification (other than Securities and Exchange Commission guidance for publicly-traded companies) is considered non-authoritative. The Codification is effective on a prospective basis for interim and annual reporting periods ending after September 15, 2009. The adoption of the Codification changed how the Company refers to U.S. GAAP accounting standards but did not impact the Company’s results of operations, financial position or liquidity.

 
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In May 2009, the FASB issued new guidance for accounting for subsequent events. The new guidance, which is now part of Accounting Standards Codification (“ASC”) 855, incorporates the subsequent events guidance contained in the auditing standards literature into authoritative accounting literature. It also requires entities to disclose the date through which they have evaluated subsequent events and whether the date corresponds with the release of their financial statements. ASC 855 is effective for all interim and annual periods ending after September 15, 2009. We adopted ASC 855 upon its issuance and it had no material impact on our financial statements.

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.

The Company is currently directing all its resources and efforts toward building the Company's wireless infrastructure services business. Due to the limited availability of capital, personnel and resources, the volume of film sales activity has been significantly diminished.  Although we have not fully discontinued the film distribution business, due to the limited availability of capital and personnel management has determined that it will not aggressively devote resources of the Company in this area.

Subsequent Events.  In preparing the accompanying condensed consolidated financial statements, in accordance with FASB ASC No. 855, the Company has reviewed events that have occurred after September 30, 2010, through the date of issuance of the financial statements on November 19, 2010. During this period the Company did not have any material subsequent events that have not been disclosed herein.

NOTE 4 – OTHER CURRENT ASSETS

At September 30, 2010 other current assets consisted primarily of prepaid insurance of approximately $24,500 and advances to employees of approximately $9,500.  At December 31, 2009, other current assets consisted primarily of prepaid insurance of approximately $17,000, deposits of $8,700, advances to employees of approximately $4,500 and other prepaid expenses of approximately $3,500.


NOTE 5 - PROPERTY AND EQUIPMENT

Depreciation expense for the nine months ended September 30, 2010 and 2009 was $22,618 and $9,346, respectively. At September 30, 2010 and December 31, 2009, property and equipment consisted of the following:

   
September 30,
   
December 31,
 
   
2010
   
2009
 
Vehicles
  $ 15,141     $ 62,266  
Equipment
    129,101       85,662  
Website costs
    14,891       43,131  
Leasehold improvements
    23,337       23,337  
Furniture and fixtures
    25,388       25,388  
Total property and equipment
    207,858       239,784  
Accumulated depreciation
    91,358       117,750  
Property and equipment, net
  $ 116,500     $ 122,034  



NOTE 6 – CONVERTIBLE DEBENTURES AND NOTES PAYABLE

The following is a summary of the convertible debentures and notes payable on the consolidated balance sheets at September 30, 2010 and December 31, 2009.

   
September 30,
   
December 31,
 
Description
 
2010
   
2009
 
Note payable to bank
  $ 321,907     $ 321,907  
Notes payable to others
    64,000       106,207  
Callable Secured Convertible Notes (net of unamortized debt discount of $205,385 at September 30, 2010 and $576,782 at December 31, 2009)
    2,320,130       1,955,330  
2009 Convertible Notes (net of unamortized debt discount of $507,237 at September 30, 2010 and $810,970 at December 31, 2009)
    419,887       176,530  
2010 Convertible Notes (net of unamortized debt discount of $73,342 at September 30, 2010)
    6,658       -  
Convertible Notes (net of unamortized debt discount of $1,462,499 at September 30, 2010 and $1,142,079 December 31, 2009)
    864,743       620,418  
      3,997,325       3,180,392  
Less: current portion
    2,843,387       2,256,056  
    $ 1,153,938     $ 924,336  
    

A subsidiary of the Company had a bank line of credit of approximately $322,000, including accrued interest, all of which was outstanding at September 30, 2010 and December 31, 2009, at an interest rate of 7.75% with a maturity on June 6, 2008. The obligation to the bank remains outstanding and is classified as a current liability at September 30, 2010 and December 31, 2009.

Notes payable to others includes a 7% Convertible Note which matured in 2007 and is currently classified in the current portion of Notes Payable. In addition, Notes payable to others at December 31, 2009 includes the settlement of a lawsuit against a former consultant originally for $310,000. As of September 30, 2010 this obligation had been fully satisfied.
 

 
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Callable Secured Convertible Notes. The Company entered into a series of Securities Purchase Agreements with New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (collectively referred to hereinafter as “NIR Group”) starting in December 28, 2005, with the last financing for $50,000 occurring on March 11, 2009.  Various Callable Secured Convertible Notes (the “Callable Notes”) initially bore interest at a rate of 8% with the right to convert into shares of common stock based upon the average of the three lowest intraday trading prices for the common stock for the 20 trading days before, but not including, the conversion date at a discount of 65%.  As a result of various adjustments and the additional financing from NIR Group, the interest rate on all of the Callable Notes was adjusted to 15%.  Furthermore, the discount was increased from 65% to 72% on a majority of the Callable Notes. In connection with the Callable Notes the NIR Group also received warrants to purchase a total of 500,317 shares of common stock of the Company, as adjusted for reverse stock splits, at exercise prices ranging from $0.50 to $5,000 per share and expire on dates through December 2015 (see footnote 7). On January 31, 2008 and November 10, 2008 the NIR Group agreed to convert an aggregate of $338,642 of accrued interest into Callable Notes bearing interest at 2%.  The total principal outstanding relating to all of the Callable Notes at September 30, 2010 was $2,525,515, of which $2,198,415, including $1,805,873 which is past due, is classified as a current liability in the accompanying condensed consolidated balance sheet.

In addition, the conversion price of the Callable Notes and the exercise price of the warrants will be adjusted in the event that we issue common stock at a price below the fixed conversion price, below market price, with the exception of any securities issued in connection with the Securities Purchase Agreement. The conversion price of the Callable Notes and the exercise price of the warrants may be adjusted in certain circumstances such as if we pay a stock dividend, subdivide or combine outstanding shares of common stock into a greater or lesser number of shares, or take such other actions as would otherwise result in dilution of the selling stockholder's position. The selling stockholders have contractually agreed to restrict their ability to convert or exercise their warrants and receive shares of our common stock such that the number of shares of common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. In addition, NIR Group may have a security interest in substantially all of our assets and registration rights.

2009 Convertible Notes. On March 11, 2009 the Company entered into an additional convertible note with NIR Group in the amount of $50,000 (the “2009 NIR Note”).  The 2009 NIR Note has a three year term, bears interest at 15% and is convertible into common stock of the Company on the same terms as the Callable Notes.

On May 11, 2009 the Company entered into a financing agreement with JMJ Financial (“JMJ”). The Company issued a Convertible Promissory Note to JMJ (the “JMJ Note”) in the amount of $825,000 with an interest rate of 13.2% and JMJ issued a Secured & Collateralized Promissory Note to the Company in the amount of $750,000 with an interest rate of 12%. Both notes mature three years from the effective date. The interest on both notes was incurred as a one-time charge on the effective date of the notes and is equal to $99,000 on each note. As of September 30, 2010 the Company has received $145,000 toward the satisfaction of the Secured & Collateralized Promissory Note from JMJ. The JMJ Note is convertible into the common stock of the Company at a conversion price based on 70% of the lowest trade price in the 20 trading days prior to the conversion.  Any conversions by JMJ are limited to the JMJ remaining under 4.99% ownership of the outstanding common stock of the Company.  Pursuant to the terms of the note, the Company is not permitted to prepay the note unless approved by JMJ.

On August 20, 2009, the Company entered into a $50,000 convertible note with Redwood Management LLC.  (“Redwood Note-I”) The Redwood Note-I has a three year term, bears interest at 10% and is convertible into common stock at an exercise price equal to 75% of the lowest closing bid price for the 10 trading days prior to conversion. Pursuant to the terms of the Redwood Note-I, the Company may prepay the note in whole or in part at 125% of the amount to be prepaid upon seven (7) days notice prior to redemption.

On October 19, 2009, the Company entered into a $12,500 convertible note with Redwood Management LLC.  (“Redwood Note-II”) The Redwood Note-II has a three year term, bears interest at 10% and is convertible into common stock at an exercise price equal to 40% of the lowest closing bid price for the 10 trading days prior to conversion. Pursuant to the terms of the Redwood Note-II, the Company may prepay the note in whole or in part at 125% of the amount to be prepaid upon seven (7) days notice prior to redemption.


 
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The 2009 NIR Note, the JMJ Note, the Redwood Note-I and the Redwood Note-II are collectively referred to as the 2009 Convertible Notes. All of the 2009 Convertible Notes, totaling $927,125 at September 30, 2010, are classified as a long term liability in the accompanying condensed consolidated balance sheet.

2010 Convertible Notes.  On June 23, 2010, the Company entered into a $50,000 convertible note with Redwood Management LLC.  (“Redwood Note-III”) The Redwood Note-III has a three year term, bears interest at 7% and is convertible into common stock at an exercise price equal to 50% of the lowest closing bid price for the 10 trading days prior to conversion. Pursuant to the terms of the Redwood Note-III, the Company may prepay the note in whole or in part at 125% of the amount to be prepaid upon seven (7) days notice prior to redemption.

On July 14, 2010 Redwood Management LLC acquired an outstanding Convertible Note in the amount of $30,000 (“Redwood Note IV”) from a holder of a Convertible Note. The Redwood Notes IV has a three year term, bears interest at 12% and is convertible into common stock at an exercise price equal to 50% of the lowest closing bid price for the 10 trading days prior to conversion. Pursuant to the terms of the Redwood Note-III, the Company may prepay the note in whole or in part at 150% of the amount to be prepaid upon seven (7) days notice prior to redemption.

The 2010 Convertible Notes are all classified as a long term liability in the accompanying condensed consolidated balance sheet.

Convertible Notes.  The Company has entered into a series of convertible notes (the “Convertible Notes”) in exchange for cash proceeds, accrued interest payable, and goods or services.  The Convertible Notes have maturities ranging from two to seven years and interest at rates ranging from 2% to 15%.  The Convertible Notes are generally convertible into common stock of the Company at an exercise price equal to or discounted up to 50% from the lowest closing bid price for the 10 trading days prior to conversion. In addition, at September 30, 2010 there was a total of $68,350 of Convertible Notes that had a fixed conversion price. The Company issued approximately $1,013,000 of new Convertible Notes during the nine months ended September 30, 2010. At September 30, 2010 the Convertible Notes had an aggregate outstanding principal balance of approximately $2,327,000 of which approximately $357,100 is classified as a current liability in the accompanying condensed consolidated balance sheet.

Due to the indeterminate number of shares which might be issued under the convertible conversion feature of the Callable Notes, the 2009 Convertible Notes, the 2010 Convertible Notes and the Convertible Notes outstanding, the Company is required to record a liability relating to both the detachable warrants and embedded convertible feature of the convertible debentures payable which is included in the liabilities in the accompanying condensed consolidated balance sheets as a “derivative liability”.

The accompanying condensed consolidated financial statements comply with current requirements relating to warrants and embedded derivatives as follows:

  
a.
The Company treats the full fair market value of the derivative and warrant liability on the convertible secured debentures as a discount on the debentures (limited to their face value). The excess, if any, is recorded as an increase in the derivative liability and warrant liability with a corresponding increase in loss on adjustment of the derivative and warrant liability to fair value.

 
b.
Subsequent to the initial recording, the change in the fair value of the detachable warrants, determined under the Black-Scholes option pricing formula and the change in the fair value of the embedded derivative (utilizing the Black-Scholes option pricing formula) in the conversion feature of the convertible debentures are recorded as adjustments to the derivative liability as of each balance sheet date with a corresponding change in gain (loss)  on adjustment of derivative and warrant liabilities to fair value.

  
c.
The expense relating to the change in the fair value of the Company’s stock reflected in the change in the fair value of the warrants and derivatives (noted above) is included in other income in the accompanying consolidated statements of operations.


NOTE 7 - PREFERRED STOCK
  
Convertible Preferred Stock. The Articles of Incorporation of the Company authorized the issuance of 375,000 shares of 12% non-voting convertible redeemable preferred stock at $0.10 par value per share and up to 500,000 shares of “blank check” preferred stock, from time to time in one or more series.  Such shares upon issuance will be subject to the limitations contained in the Articles of Incorporation and any limitations prescribed by law to establish and designate any such series and to fix the number of shares and the relative rights, voting rights and terms of redemption and liquidation preferences. In 2006, the total Preferred Shares authorized was increased to 10 million shares. On April 24, 2008, the Company increased its total authorized Preferred Shares from 10 million shares to 500 million shares. All Preferred Stock authorized by the Company was created from this “blank check” pool.
  
12% Convertible Non-Voting Preferred Stock.  The Company's 12% non-voting convertible redeemable preferred stock (“12% Non-Voting Preferred Stock”) entitles the holder to dividends equal to 12% of the 12% Non-Voting Preferred Stock liquidation preference of $2.00 per annum, or $.24 per annum per share, payable quarterly on March 1, June 1, September 1, and December 1 in cash or common stock of the Company having an equivalent fair market value. At September 30, 2010 and December 31, 2009, 25,357 shares of the 12% Non-Voting Preferred Stock were issued and outstanding.

On February 15, 2010, the Board of Directors authorized the payment of the accrued 12% Non-Voting Preferred Stock dividend to be settled in shares of the Company's common stock or cash, at the discretion of the Chief Executive Officer. Accrued and unpaid dividends at September 30, 2010 were $50,197.  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 the 12% Non-Voting Preferred Stock dividend 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”).

The Company's 12% Non-Voting Preferred Stock is convertible into shares of common stock at a rate of two shares of common stock (subject to adjustments) for each share of 12% Non-Voting Preferred Stock. The 12% Non-Voting Preferred Stock is redeemable at the option of the Company, at any time on not less than 30 days written or published notice to the holders of record of the 12% Non-Voting Preferred Stock, at a price $2.00 per share (plus all accrued and unpaid dividends). The holders of the Preferred Stock shall have the opportunity to convert shares of 12% Non-Voting Preferred Stock into common stock during the notice period. The Company does not have nor does it intend to establish a sinking fund for the redemption of the 12% Non-Voting Preferred Stock.  As adjusted, the 12% Non-Voting Preferred Stock is currently convertible into an aggregate of fifteen shares of common stock.


 
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Series B Voting Preferred Stock. The Company filed a Certificate of Designation of Convertible Redeemable Series B Preferred Stock (“Series B Preferred Stock”) on January 4, 2006, pursuant to which the Company authorized for issuance 135,000 shares of Series B Preferred Stock, par value $0.10 per share, which shares are convertible at a conversion price equal to the volume weighted average price of our common stock, as reported by Bloomberg, during the ten consecutive trading days preceding the conversion date. The holders of Series B Preferred Stock have the right to vote together with holders of the Corporation’s common stock, on a 30 votes per share basis, not as a separate class, on all matters presented to the holders of the common stock. As of September 30, 2010 and December 31, 2009, 106,294 and 106,670 shares of Series B Preferred Stock, respectively, were issued and outstanding.

Shares of Series B Preferred Stock are convertible into shares of common stock of the Company at a conversion price equal to 50% of the closing bid price of the Company’s common stock.

Series C Voting Preferred Stock. The Company filed a Certificate of Designation of Convertible Redeemable Series C Preferred Stock (“Series C Preferred Stock”) on March 23, 2006, pursuant to which the Company authorized for issuance 300,000 shares of Series C Preferred Stock, par value $0.10 per share, which shares are convertible after (i) the market price of the common stock is above $1.00 per share; (ii) the Company’s common stock is trading on the OTCBB market or the AMEX; (iii) the Company is in good standing; (iv) the Company must have more than 500 stockholders; (v) the Company must have annual revenue of at least $4 million; (vi) the Company has a minimum of $100,000 EBITA for the fiscal year preceding the conversion request. The holders of the Series C Preferred Stock shall have the right to vote together with the holders of the Corporation’s common stock, on a 30 votes per share basis, not as a separate class, on matters presented to the holders of the common stock. On February 14, 2008, 220,000 shares of Series C Preferred Stock were issued to the Company’s President. As of September 30, 2010 and December 31, 2009, 300,000 shares of Series C Preferred Stock were issued and outstanding.

Non-Convertible Series D Voting Preferred Stock.  The Company filed a Certificate of Designation of Series D Preferred Stock (“Series D Preferred Stock”) on February 5, 2007 and a Certificate of Change of Number of Authorized Shares and Par Value of Series D Preferred Stock on March 26, 2007, pursuant to which the Company authorized for issuance 6,500,000 of shares of Series D Preferred Stock, par value $0.001 per share.   Holders of the Series D Preferred Stock have the right to vote together with holders of the Company’s common stock, on a 60 votes per share basis, and not as a separate class, on all matters presented to the holders of the common stock.  The shares of Series D Preferred Stock are not convertible into common stock of the Company.  The Company issued 6,500,000 shares of Series D Preferred Stock to the Company’s President all of which was outstanding at September 30, 2010 and December 31, 2009.

Non-Convertible Series E Voting Preferred Stock.  On July 7, 2009 the Board of Directors unanimously approved for issuance 100,000,000 shares of Series E Preferred Stock, par value $0.001 per share The Company filed a Certificate of Designation of Series E Preferred Stock (”Series E Preferred Stock”) on July 10, 2009. Holders of Series E Preferred Stock have the right to vote together with holders of the Company’s common stock, on a 95 votes per share basis, not as a separate class, on all matters presented to the holders of the common stock.  The shares of the Series E Preferred Stock are not convertible into common stock of the Company.  The Company issued 31,000,000 shares of Series E Preferred Stock to the Company’s President, all of which was outstanding at September 30, 2010 and December 31, 2009.


Warrants. A summary of warrants outstanding at September 30, 2010, after giving effect to the one-for-five hundred reverse stock split on August 27, 2009 is as follows:

 
Warrants
Date Issued
Expiration Date
Price
   
 
317
Various
Various through 6/15/15
$500 - $5,000
   
 
70,000
7/29/08
7/29/15
$2.50
   
 
100,000
9/24/08
9/24/15
$2.50
   
 
50,000
11/5/08
11/5/15
$0.50
   
 
180,000
12/3/08
12/3/15
$0.50
   
 
100,000
12/5/08
12/5/15
$0.25
   
 
500,317
         


NOTE 8 - RELATED PARTY TRANSACTIONS

The Company’s subsidiary, Juniper Services, Inc., entered into a sublease for its New York offices from a company owned 100% by the Company’s President.  The lease and the sublease on this space expire on November 30, 2016.  The rent paid and terms under the sublease are the same as those under the affiliate’s lease agreement with the landlord   Rent expense for the nine and three months ended September 30, 2010 and 2009 was approximately $49,200 and $16,600, respectively.

Throughout 2010 and 2009, 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 net outstanding balance due to the officer at September 30, 2010 and December 31, 2009 was approximately $1,028,000 and $867,000, respectively.


NOTE 9 - COMMITMENTS AND CONTINGENCIES

Employment Agreements

Mr. Hreljanovic has an Employment Agreement with the Company, which has been extended by the Board of Directors to December 31, 2010 and provides for his employment as President and Chief Executive Officer at an annual salary of approximately $242,000, as adjusted by the CPI, and for the reimbursement of certain expenses and insurance. Additionally, the Employment Agreement provides that Mr. Hreljanovic may receive shares of the Company’s common stock as consideration for services rendered to the Company. Due to a working capital deficit, for the nine months ended September 30, 2010 Mr. Hreljanovic actually received compensation of $45,750 and the balance due of $135,750 was accrued at September 30, 2010. Mr. Hreljanovic has accrued salary of approximately $1,006,000 which is included in due to officer at September 30, 2010.

Under the terms of this extended employment agreement, our Chief Executive Officer is entitled to receive a cash bonus of a percentage of our pre-tax profits if our pre-tax profit exceeds $100,000.

 
- 15 -

 

Additionally, if the employment agreement is terminated early by us after a change in control (as defined by the agreement), Mr. Hreljanovic is entitled to receive his accrued salary and to a lump sum cash payment equal to approximately three times his current base salary.

Mr. Hreljanovic incorporated Tower West Communications, Inc. a Florida corporation, organized in January 2009 (“Tower West”) and Ryan Pierce Group, Inc., a Florida corporation, organized in July 2009 (“Ryan Pierce”).  Mr. Hreljanovic paid all fees and costs associated with the organization of these companies.   Juniper Services, Inc. owns a 100% interest in both Tower West and Ryan Pierce subject to a first position security interest held by Mr. Hreljanovic. Mr. Hreljanovic’s security interest in Tower West and Ryan Pierce extinguishes upon payment in full of all compensation owed to him.


The Company subleases its New York office from Entertainment Financing Inc. (“EFI”); an entity owned 100% by the Company’s Chief Executive Officer. The master lease and the Company’s sublease on this space expire on November 30, 2016. EFI has agreed that for the term of the sublease the rent paid to it will be substantially the same rent that it pays under its master lease to the landlord. Rent due under the lease with EFI is as follows:


                           Year
Amount
2010
$16,000
2011
$67,200
2012
$69,200
2013
$71,300
2014
$73,400
Thereafter
$153,500

On March 19, 2010, the Company received a “Notice of Default and Demand for Payment” from JMJ Financial (“JMJ”). The letter states that as a result of the alleged defaults the holder is accelerating the notes and demanded full payment of the outstanding balance of principal and interest on the original Note on or before April 2, 2010.  The Company believes it has meritorious defenses and disputes JMJ’s claim.

On May 10, 2010 Ryan Pierce and Tower West, both indirect, wholly owned subsidiaries of Juniper, secured a temporary restraining order prohibiting certain former employees from soliciting current employees of the subsidiaries or using or disclosing the subsidiaries’ proprietary information pending a preliminary injunction hearing.

The court has now extended the order, insofar as it pertains to any use or dissemination of Juniper’s proprietary information, property or software, for the duration of the litigation. The two subsidiaries filed suit in the Supreme Court of the State of New York in the county of Nassau against five former employees and a consultant.  Among other things the complaint alleges that the former employees acted in concert and conspired to misappropriate the business, good will, employees and proprietary information of the Company and to intentionally and maliciously damage the business of the Company. The complaint seeks injunctive relief and damages arising out of the actions of the former employees and consultant.

 
NOTE 10 - INCOME TAXES

No provision has been made for Federal and state income taxes due to the losses incurred. As a result of losses incurred through December 31, 2009, the Company has net operating loss carry forwards of approximately $28.8 million. These carry forwards expire through 2028.

In accordance with ASC 740, the Company recognized deferred tax assets of approximately $11.6 million at December 31, 2009. A full valuation allowance has been established due to the uncertainly regarding the Company’s ability to generate income sufficient to utilize the tax losses during the carryforward period.


 
- 16 -

 

NOTE 11 -STOCK SPLITS

On July 10, 2009, the Company’s shareholders approved a one-for-five hundred reverse stock split of the Company’s common stock.  Accordingly, on July 10, 2009 the Board of Directors authorized a one-for-five hundred reverse split that took effect on August 27, 2009. In addition, the authorized common stock of the Company was increased to ten billion (10,000,000,000) shares and the par value was changed to $0.0001 per share Unless stated otherwise, all amounts from prior periods have been restated after giving effect to the reverse stock split.

On August 3, 2010 the Company filed a definitive Schedule 14C with the Securities and Exchange Commission.  The information statement was mailed to the shareholders on August 4, 2010 and became effective on August 25, 2010.   The purpose of the statement was to notify  the Company’s shareholders that the Board of Directors, with the written consent of a stockholder holding a majority of the Company’s voting power, had approved a reverse stock split of up to one for three hundred (1-for-300) (the “Stock Split”). The Stock Split will become effective at a date and time to be determined by the Board of Directors, if it deems it advisable, within the next 12 months, and then after the filing of a Certificate of Amendment to our Certificate of Incorporation with the Secretary of State of the State of Nevada.


NOTE 12 -GOING CONCERN

The Company's condensed consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At September 30, 2010 the Company had a working capital deficit of approximately $6.4 million and a stockholders’ deficit of approximately $28.3 million. In addition, the Company has defaulted on several of its liabilities. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Primarily, revenues have not been sufficient to cover the Company’s operating costs. Management’s plans to enable the Company to continue as a going concern include the following:

Obtaining additional wireless and broadband contracts;

Using stock and stock option-based compensation to cover payroll and other permissible labor costs;

Raising additional capital through the sale of various debt and/or equity instruments;
Leveraging the Companies’ resources by retaining and increasing our work force through subcontractors;
Negotiating and settling existing debts for less than current amounts owed;
Reducing expenses through consolidating or disposing of certain subsidiary companies;

Converting certain debt into shares of the Company’s common stock;
Implementing a major marketing campaign to increase the demand for our broadband and wireless services; and
Seeking strategic acquisition candidates to guarantee its growth in the broadband and wireless sectors.

There can be no assurance that the Company can or will be successful in implementing any of its plans or that it will be successful in enabling the Company to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
- 17 -

 

NOTE 13 - SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
 

During the nine months ended September 30, 2010 and 2009 the Company:

 
·
issued approximately 421,438,000  and 2,245,000 shares, respectively, of its common stock upon conversion of approximately $452,000 and $75,000, respectively, of its Convertible Debentures;
 
·
issued 7,045,000 and approximately 680,000 shares, respectively, of its common stock upon conversion of approximately $16,000 and $101,000, respectively, of current liabilities;
 
·
issued approximately 4,577,000 and 16,629,000 shares, respectively, of its common stock upon conversion of  376 and 17,827 shares, respectively, of Series B Preferred Stock;
 
·
issued 0 and 31,000,000 shares, respectively, of Series E Preferred Stock to the Company’s President as settlement of $31,000 of the accrued compensation;
 
·
recognized approximately $893,000  and $0, respectively, of unamortized debt discount and $893,000  and $0, respectively, of derivative liability relating to the issuance of new convertible debentures;
 
·
returned property and equipment originally purchased in 2009 thereby reducing property and equipment by $37,069, accumulated depreciation of $2,208 and accounts payable of $34,861;
 
·
disposed of fully depreciated assets in 2010 having a cost of $51,766; and
 
·
issued $354,375 and $0, respectively, of convertible debentures in exchange for current liabilities.

NOTE 14 – SUBSEQUENT EVENT

Management has determined that the Forms 10-Q filed with the SEC for the quarterly periods ended March 31, 2010 and June 30, 2010 need to be restated due to a clerical error in the calculation for the derivative liability related to convertible debentures. The Company expects that the Amended Form 10-Q for each of these periods will be filed as soon as the revised financial statements are prepared.

 
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Result of Operations
 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. Information presented herein is based on the nine and three month periods ended September 30, 2010 and 2009. Our fiscal year end is December 31.

Company Overview

Juniper Group, Inc. is a holding company (herein after referred to as “We,” “Us,” “Our,” “Juniper” or “the Company”).  Our wireless infrastructure services operating subsidiaries support the increased demand in the deployment of wireless infrastructure services with leading wireless telecommunication companies in providing them with maintenance and upgrading of wireless telecommunication network sites, site acquisitions, site surveys, co-location facilitation, tower construction and antenna installation to tower system integration, hardware and software installations.  Our business is primarily focused in the Eastern and Central United States, The Company’s headquarters are located in Boca Raton, FL and our business is conducted through several wholly owned subsidiaries.

The Company’s predominant focus is on wireless infrastructure service.  These services are conducted through Juniper Services, Inc. (“JSI”), which is wholly owned by Juniper Entertainment, Inc. (“JEI”), a wholly owned subsidiary of the Juniper Group, Inc., and their wholly owned subsidiaries.

 
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Management’s strategic focus is to support the growth of its operations by increasing revenues, managing costs and creating earnings growth.  The Company’s strategy is to seek strategic acquisitions to guarantee its growth in the broadband and wireless infrastructure business.  The Company is directing its infrastructure services and its marketing effort to a national customer base utilizing subcontractors.

Wireless Infrastructure Services

The Company’s wireless infrastructure services are conducted by Ryan Pierce and Tower West, both wholly owned subsidiaries of JSI. The Company’s wireless installation services are performed primarily in the Eastern and Central United States. Services are aimed at supporting the demand in the deployment and maintenance of wireless, tower systems services with leading telecommunication companies, providing site surveys, tower construction, microwave system and software installations for leading telecommunications companies.

Operations primarily consist of infrastructure services for the maintenance of wireless towers and other structures.  The Company is able to leverage its abilities to perform its infrastructure services on a nationwide basis by using local subcontractors in various regions that it obtains contracts throughout the United States.  As a result of using subcontractors, we should be capable of providing our services anywhere within the United States. 

We currently have contracts with Verizon, Clearwire (currently in process of building out nationwide mobile WIMAX network and is on track to cover over 120 million people in 80 markets by the end of 2010), American Tower, Ericsson, Cricket, SBA, Aero Solutions, Global Wireless Construction, Crown Castle, and Oddville Communications.  We expect to utilize our new abilities to provide our wireless and broadband infrastructure services nationwide.  In some instances, our current clients may be used as the platform for our national expansion aspirations and fuel what could be substantial future growth.

Management has or will consider taking the following actions to improve the operating performance of its wireless infrastructure services: (1) utilize staffing agencies; (2) hire new management teams and reorganize management’s responsibilities; (3) align labor costs with market conditions; (4) evaluate our geographic footprint and customer needs with customer contracts; and (5) utilize accounts receivable financing.
 
 
We believe that the demand for wireless infrastructure services will increase in the wireless broadband segment during the balance of 2010 and beyond through the continued support of the cellular market and through a robust wireless industry.  More specifically, the consumer demand for smartphones is increasing which will require more and more bandwidth on millions of these wireless devices throughout the United States.  This demand is fueling the need to update existing towers or the construction of new towers that support third generation (“3G”) and/or fourth generation (“4G”) technologies at increasing rates.  The increased consumer demand is expected to propel the Company’s business well into the future. Consequently, the Company’s efforts are focused on being able to handle these opportunities with existing and new staff in order to meet its client’s needs utilizing staffing agencies.

The Company through its marketing program is exploring new opportunities in its wireless infrastructure and broadband service business. The Company will seek to achieve a greater more diversified balance in its business base among the various competing segments of rapidly expanding wireless providers.  The Company will continue to evaluate potential opportunities in terms of the capital investments required, cash flow requirements of the opportunity, and the margins achievable in each market segment.

 
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The Company plans to concentrate its efforts for the balance of 2010 and into 2011and beyond on providing its services to key national wireless and broadband providers on a national platform with support from its staffing agencies. The Company believes that this strategy will allow the Company to grow while maintaining cost controls.  As the economic environment improves, the Company believes that its future prospects for the expansion of its services in the wireless Infrastructure segment will remain strong. Management believes that infrastructure build-out, technology introduction, new applications and broadband deployment, integration and support will continue to be outsourced to qualified service providers such as Juniper.

The opportunity for Juniper to exploit the broadband installation and wireless infrastructure services and to take advantage of future wireless opportunities are limited by its ability to:

(i)           Financially support national agreements entered into and to finance continuing growth and fund management recruitment, certifications, training and payroll, as well as the financing of operating cash flow requirements to support staffing costs. This will require additional financing on a timely basis;

(ii)           Maximizing capital availability for potential new services being developed by providers in the wireless market.  The Company evaluates opportunities for services to its customers based on capital investment requirements, the potential profit margin, and the customer’s payment practices; and

(iii)           Focusing on potentially outsourcing its staff requirements and possibly accounts receivable financing which may increase available cash flow. The issues that rank high on evaluating new business opportunities are the customer’s qualification to meet the accounts receivable financing requirements.

Results of Operations

Results of Operations for the Nine Months Ended September 30, 2010 and 2009

Revenue

Gross revenues for the nine months ended September 30, 2010 and 2009 were $2,079,969 and $211,524, respectively. The significant increase in revenues of $1,868,445 is attributable to the growth of the Operating Subsidiaries and expansion into new markets.

Gross Profit (Loss) and Operating Expenses

Juniper recorded gross profit of $608,482 for the nine month period ended September 30, 2010, compared to $20,478 for the comparable period in 2009. The increase in gross profit of $588,004 for the nine months ended September 30, 2010 versus 2009 was a result of the Company growing its wireless infrastructure service business in 2010 versus minimal operations in the comparable period in the prior year. The gross profit percent of 29.3% is slightly below management’s expectations. The lower than expected gross profit percentage is predominately due to the increase in tower hands and the acquisition of tools and equipment in order to augment opportunities that the Company would potentially have in the fourth quarter.  In addition the Company entered into certain contracts in order to establish itself as a wireless infrastructure service provider to the wireless telecommunications industry and developing relationships with certain telecommunications companies.

Net Income

Juniper recorded net loss of $7,166,994 for the nine month period ended September 30, 2010, as compared to net income of $43,791,241 for the comparable period in 2009. This decrease in net income is predominately due to a decrease in the gain on adjustment of derivative and warrant liabilities to fair value of $49,999,180.   (See Other Income (Expense) below for a further explanation of this change.)

 
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Juniper may not operate at a profit through the remainder of 2010.  Juniper's revenues are tied to its ability to obtain additional wireless infrastructure service contracts.  Juniper is entering new markets and expects to obtain additional contracts prior to the end of 2010; however no assurance can be given that such additional contracts will be obtained prior to the end of the year.   Nonetheless, management does not anticipate generating sufficient revenues from new contracts such that Juniper will have operating profits by December 31, 2010. There can be no guarantee that profitability or revenue growth can be realized in the future.
 
Expenses
 
Selling, general and administrative expenses for the nine month periods ended September 30, 2010 and 2009 were $1,708,221 and $807,509, respectively. The increase of $900,712, or 111.5%, in 2010 was due primarily to the building and strengthening of the Company’s internal infrastructure in 2010 in order to support our new business model. This included the addition of three sales and marketing personnel (approximately $207,000 ) and related travel and entertainment expenses (approximately $16,000), the addition of three support staff and a full time controller (approximately $322,000), and an increase in legal fees (approximately $159,000), an increase in director’s compensation (approximately $24,000), an increase in communication expenses (approximately $12,000), an increase in professional services (approximately $130,000)  and insurance (approximately ($18,000).  The commencement of operations in the second quarter of 2009 resulted in minimal selling, general and administrative expenses in 2009.

Impairment of film licenses was $0 for the nine months ended September 30, 2010 versus $13,781 for the same period in 2009.  In late 2009 we decided not to devote the resources of the Company in the area of film licenses and determined that the film licenses remaining at that time should be fully written off.  Although we have not fully discontinued this line of business and will engage in the sale or exploitation of film licenses if and when opportunities are available.

Other Income (Expense)

The loss on the adjustment of derivative and warrant liability was $4,471,064 for the nine months ended September 30, 2010 versus a gain of $45,528,116 for the comparable period in 2009. The decrease of $49,999,180 is a result of the change in the fair market value of the Company’s common stock and the significant increase in the number of shares of common stock that would need to be issued in the event that all of the Company’s Convertible Debentures were converted into common stock. Gains and losses on derivative liabilities and amortization of discounts represent significant components of net income or loss and can swing dramatically from period to period based on factors beyond the Company’s control, most importantly, the fair market value of its common stock.  

The amortization of debt discount increased by $603,600 to $1,174,384 for the nine month period September 30, 2010 versus $570,784 for the nine month period ended September 30, 2009.   The increase in the amortization of debt discount is a result of an increase in amount of debt incurred by the Company from 2009 to 2010.

Interest expense increased by $77,528 to $417,243 for the nine month period ended September 30, 2010 versus $339,715 for the nine month period ended September 30, 2010.  The increase in interest expense is a result of an increase in debt from 2009 to 2010.


 
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Results of Operations for the Three Months Ended September 30, 2010

Revenue
 
Gross revenues for the three months ended September 30, 2010 and 2009 were $381,513 and $102,451, respectively. The increase in revenues of $279,062 is attributable to the growth of the Operating Subsidiaries and expansion into new markets.

Gross Profit (Loss) and Operating Expenses

Juniper recorded gross profit from operations of $79,205 for the three month period ended September 30, 2010, compared to a gross loss from operations of $31,366 for the comparable period in 2009. The increase in the gross profit from operations for the three months ended September 30, 2010 versus the prior year was a direct result of the Company increase in revenues for the three month period ended September 30, 2010 versus the comparable period in the prior year.

Net Loss

Juniper recorded a net loss of $5,720,701 for the three month period ended September 30, 2010, as compared to net income of $6,623,095 for the comparable period in 2009. The decrease in net loss is predominately attributable to a decrease in the loss on the adjustment of derivative and warrant liabilities of $11,500,075 in 2010 versus 2009.

Expenses
 
Selling, general and administrative expenses for the three month periods ended September 30, 2010 and 2009 were $682,549 and $247,425, respectively. The increase of $438,121, or 177.1% in 2010 was due to the continued strengthening of the Company’s internal infrastructure in 2010 in order to support the new business model. This included adding additional sales and marketing personnel (approximately $42,000), the addition of support staff and a full time controller (approximately $108,000), an increase in professional service (approximately $154,000), an increase in director compensation (approximately $24,000), an increase in insurance expenses (approximately $20,000) and an increase in legal fees due to ongoing litigation disclosed elsewhere in the document (approximately $67,000).

Other Income (Expense)

The loss on the adjustment of derivative and warrant liability was $4,399,515 for the three months ended September 30, 2010 as compared to a gain of $7,100,560 for the comparable period in 2009. The increase in the loss on the adjustment of derivative and warrant liability of $11,500,075 is a result of the change in the fair market value of the Company’s common stock as well as the significant increase in the number of shares of common stock that would need to be issued in the event that all of the Company’s Convertible Debentures were converted into common stock. Gains and losses on derivative liabilities and amortization of discounts represent significant components of net income or loss and can swing dramatically from period to period based on factors beyond the Company’s control, most importantly, the fair market value of its common stock.  

The amortization of debt discount increased by $483,483 to $549,107 in the three month period ended September 30, 2010 versus $65,624 for the three months ended September 30, 2009.  The increase in the amortization of debt discount is a result of an a reclassification of approximately $486,000 from the loss on the adjustment of derivative and warrant liability and an increase in discounted debt incurred by the Company from 2009 to 2010.

 
 

 
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Liquidity and Capital Resources
 
On September 30, 2010, Juniper had current assets of $338,408 compared to current assets of $686,845 at December 31, 2009 and a working capital deficit of $6,406,870 at September 30, 2010, as compared to a working capital deficit of $5,298,231 at December 31, 2009. The increase in the working capital deficit of $1,108,639 is due primarily to an increase in the current portion of notes payable of $587,331, an increase in due to officer and shareholders and related parties of $191,070, an increase in bank overdrafts of $61,508, a decrease in cash of $77,012 and a decrease in accounts receivable of $333,038 offset by an increase in the unbilled accounts receivable of $52,389 and a decrease in accounts payable and accrued liabilities of $84,270. These changes are predominately a result of the reduction in business in the quarter ended September 30, 2010.

Net cash used in operating activities for the nine months ended September 30, 2010 was $566,882 compared to $534,305 for the nine months ended September 30, 2009.   The increase of $32,577 in cash used in operating activities was primarily a result of the increase in cash used to fund operations of $167,527 and a decrease in accounts payable of $321,519 offset by a decrease in receivable and unbilled accounts receivable of $419,800. Among the obligations that the Company has not had sufficient cash to pay include: repayment of debt obligations, certain payroll, payroll taxes and the funding of its subsidiary operations. Certain employees, creditors and consultants have agreed, from time to time, to receive the Company’s common stock in lieu of cash. In these instances, the Company determined the number of shares to be issued based upon the unpaid compensation and the current market price of the stock. Additionally, the Company registers these shares so that the shares can immediately be sold in the open market.

With regard to the balance of the past due payroll taxes, the Company has hired tax counsel to negotiate with New York State and with the Internal Revenue Service and has entered into payment plans with both the New York State Department of Finance and Internal Revenue Service.

Net cash provided by financing activities for the nine months ended September 30, 2010 was $541,817 as compared to $557,569 for the comparable period in 2009. The Company issued a total of $188,260 of convertible debentures in exchange for goods and services.

We believe that we will not have sufficient liquidity to meet our operating cash requirements for the current level of operations during the remainder of 2010. In addition, any event of default such as our failure to repay the principal or interest on our Convertible Debentures when due, our failure to issue shares of common stock upon conversion by the holder, or the breach of any covenant, representation or warranty in the Securities Purchase Agreement would have an impact on our ability to meet our operating requirements. We anticipate that the full amount of the Convertible Debentures will be converted into shares of our common stock, in accordance with the terms of the Convertible Debentures. If we are required to repay the Convertible Debentures, we would be required to use our limited working capital and raise additional funds. If we were unable to repay the Convertible Debentures when required, the debenture holders could commence legal action against us and foreclose on all of our assets to recover the amounts due. Any such action would require us to curtail or cease operations. Our ability to continue as a going concern is dependent upon receiving 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. Although we may obtain external financing through the sale of our securities, there can be no assurance that such financing will be available, or if available, that any such financing would be on terms acceptable to us. If we are unable to fund our cash flow needs, we may have to reduce or stop planned expansion or scale back operations and reduce our staff. As discussed more fully in Part II-Item 3 – Legal Proceedings - a complaint has been filed against Juniper which alleges breach of the terms of certain convertible debentures and seeks equitable relief and monetary damages of $7.46 million Juniper has denied the allegations in the complaint and asserted counterclaims.  A motion for preliminary injunctive relief is pending. While no estimate of the outcome can be made, the Company believes it has meritorious defenses and will prevail in this matter.  However, there can be no assurance that we will be successful in defending against these claims.  New Millennium et. al. is the note holder of our Callable Secured
Convertible Notes with outstanding principal at September 30, 2010 of approximately $2.6 million.
 
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Financing

On December 28, 2005, we entered into a financing arrangement involving the sale of an aggregate of $1,000,000 principal amount of Callable Secured Convertible Notes and warrants to purchase 1,000,000 shares of our common stock.  On December 28, 2005 we closed on $500,000 of principal and 500,000 of stock purchase warrants.  The balance of the financing was closed on May 18, 2007.  On March 14, 2006, we entered into a financing arrangement involving the sale of an additional $300,000 principal amount of Callable Secured Convertible Notes and stock purchase warrants to purchase 7,000,000 shares of our common stock, and on September 13, 2007, we entered into a financing arrangement involving the sale of an additional $600,000 principal amount of Callable Secured Convertible Notes and stock purchase warrants to purchase 20,000,000 shares of our common stock.  As part of the September 2007 financing, our Chief Executive Officer was required to personally guarantee the September 2007 note and the discount rate on the market value of our stock used for conversion calculations was reduced from 50% to 35%. The Callable Secured Convertible Notes are due and payable, with 8% interest, unless sooner converted into shares of our common stock. On December 26, 2007, we entered into a financing arrangement involving the sale of an additional $100,000 principal amount of Callable Secured Convertible Notes and warrants to purchase 1,000,000 shares of our common stock.  On March 14, 2008 we entered into a financing agreement involving the sale of an additional $50,000 principal amount of callable Secured Notes and Stock Purchase Warrants to purchase 500,000 shares of common stock. On June 20, 2008, we entered into a financing agreement involving the sale of additional $50,000 principal amount of Callable Secured Notes.  On July 29, 2008, we entered into a financing agreement involving the sale of additional $75,000 principal amount of Callable Secured Notes and the interest rate on all of the Callable Secured Notes increased to 12%.  On September 24, 2008, we entered into a financing agreement involving the sale of additional $70,000 principal amount of Callable Secured Notes.   On November 5, 2008, we entered into a financing agreement involving the sale of additional $61,000 principal amount of Callable Secured Notes and the interest rate on all the Callable Secured Notes increased to 15% and the discount rate on the market value of our stock used for conversion calculations was reduced from 35% to 28%.  On December 3, 2008, we sold $4,000 Stock Purchase Warrants to purchase 180,000 shares of common stock.   On December 5, 2008, we entered into a financing agreement involving the sale of additional $75,000 principal amount of Callable Secured Notes and the interest rate on the Callable Secured Notes at 15% and the discount rate of 28%.  On March 11, 2009, we entered into a financing agreement involving the sale of additional $50,000 principal amount of Callable Secured Notes, and the interest rate on the Callable Secured Notes at 15% and the discount rate of 28%.  Several of the Callable Secured Notes had warrants attached.  Due to the reverse stock splits in 2008 and 2009 the number of shares of common stock that can be purchased pursuant to these warrants had been reduced to approximately 500,000 with exercise prices ranging from $0.25 to $5,000.

We currently have approximately $2,526,000 Callable Secured Convertible Notes outstanding, after giving effect to conversions throughout the year. On January 31, 2008 and November 10, 2008, $147,542 and $191,100 respectively, of accrued interest on these notes was converted into a debenture with similar terms and conditions, bearing interest at 2% per annum. In addition, upon any event of default, such as our failure to repay the principal or interest when due, our failure to issue shares of common stock upon conversion by the holder, our failure to timely file a registration statement or have such registration statement declared effective, or breach of any covenant, representation or warranty in the Securities Purchase Agreement, the full amount of the Callable Secured Convertible Notes would immediately become due,. The registration statement was declared effective on May 11, 2007.  The conversion price of the notes is dependent on the publicly traded market price of the Company’s common stock.  As such, the conversion price may change as the market value of the Company’s commons stock rises and falls.  While we anticipate that the full amount of the Callable Secured Convertible Notes will be converted into shares of our common stock, in accordance with the terms of the Callable Secured Convertible Notes, the full conversion of these notes is dependent on the amount of the Company’s authorized common stock.   The Company filed an Information Statement on Schedule 14C with the SEC on July 23, 2009 in connection with its prior approval of the following actions: an increase in the number of authorized shares of common stock from 5 billion to 10 billion; a change in the par value of the common stock from $0.001 to $0.0001; and a reverse stock split of the common stock of up to 1 for 500. The Company filed a Certificate of Change pursuant to NRS 78.735 and NRS 78.390 with the Secretary of State of Nevada which became effective on August 27, 2009.  The Certificate of Change (a) increased the number of authorized shares of common stock to 10 billion; (b) changed the par value of the common stock to 0.0001; and (c) effectuated a 1 for 500 reverse stock split of the Company’s then outstanding common stock, thereby reducing the number of outstanding shares of common stock.  If we are required to repay the Callable Secured Convertible Notes, we would be required to use our limited working capital and raise additional funds. If we were unable to repay the notes when required, the note holders could commence legal action against us and foreclose on all of our assets to recover the amounts due. Any such action would require us to curtail or cease operations. As discussed more fully in Part II-Item 3 – Legal Proceedings - a complaint has been filed against Juniper which alleges breach of the terms of certain convertible debentures and seeks equitable relief and monetary damages of $7.46 million Juniper has denied the allegations in the complaint and asserted counterclaims.  A motion for preliminary injunctive relief is pending. While no estimate of the outcome can be made, the Company believes it has meritorious defenses and will prevail in this matter.  However, there can be no assurance that we will be successful in defending against these claims. Millennium et. al. is the note holder of our Callable Secured Convertible Notes and a 2009 Convertible Note with an aggregate outstanding principal balance at September 30, 2010 of approximately $2.5 million


 
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On May 11, 2009 the Company entered into a financing agreement for a Convertible Promissory Note in the amount of $825,000 in exchange for the delivery to the Company of a Secured & Collateralized Promissory Note in the amount of $750,000. As of September 30, 2010 the Company has received $145,000 toward satisfaction of this note as of this date.

The Convertible Promissory Note matures three years from the effective date and bears a one-time interest equal to 12% and the obligation is convertible into common stock of the Company at a conversion rate based on 70% of the lowest trade price in the 20 trading days previous to the conversion.  Any conversions by the Holder of these note is limited to the Holder remaining under 4.99% ownership of the outstanding voting common stock of the Company.  By the terms of this note prepayment is not permitted unless approved by the lender.

The Secured & Collateralized Promissory Note matures three years from the effective date and bears a one-time interest charge of 13.2% and is secured by securities in the amount of 750,000.

 In August 2009 and October 2009 the Company entered into convertible notes in the amount of $50,000 and $12,500, respectively, with Redwood Management LLC (“Redwood”).  As amended,  these notes bear interest at 10% and are convertible into common stock at an exercise price equal to 75% and 40%, respectively, of the lowest closing bid price for the 10 trading days prior to conversion. Pursuant to the terms of the note the Company may prepay the note in whole or in part at 125% of the amount prepaid.

In June and July 2010 the Company entered into convertible notes in the amount of $50,000 and $30,000, respectively, with Redwood.  These notes have a three year term, bear interest at 7% and 12%, respectively, and are convertible into common stock at an exercise price equal to 50% and 75%, respectively, of the lowest closing bid price for the 10 trading days prior to conversion. Pursuant to the terms of the notes, the Company may prepay the notes in whole or in part at 125% of the amount to be prepaid upon seven (7) days notice prior to redemption.

During the nine month period ended September 30, 2010, the Company converted approximately $326,500 of loans and advances received from various parities and accrued interest payable into Convertible Notes and issued $188,260 of Convertible Notes in exchange for goods and services. The Convertible Notes mature three years from the effective date with an interest rates ranging from 2% of 14% per annum.

Due to the indeterminate number of shares of common stock which may be issued under the conversion feature of the Callable Notes.  These conversion features pose a significant risk for substantial dilution.

 
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Forward Looking Statements

Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the actual results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements not to occur or be realized.  Statements contained in this document, as well as some statements by the Company in periodic press releases and oral statements of Company officials during presentations about the Company constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act).  The words “expect,”  “estimate,” “anticipate,” “predict,” “believe” and similar expressions and variations thereof are intended to identify forward looking statements. These statements appear in a number of places in this report and include statements regarding the intent, belief or current expectations of the Company, it directors or its officers with respect to, among other things, trends affecting the Company’s financial condition or results of operations. The readers of this report are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially. Such factors include:


·the continued  historical lack of profitable operations;
·the continued working capital deficit;
·the ongoing need to raise additional capital to fund operations and growth on a timely basis;
·the success of the expansion into the wireless infrastructure services and the ability to provide adequate working capital required for this expansion, and dependence thereon;
· the Company’s revenue is mostly derived from a selected number of customers;
· the ability to develop long-lasting relationships with customers and attract new customers;
· the competitive environment within the industries in which the Company operates;
·     the ability to attract and retain qualified personnel, particularly the Company’s CEO;
· the effect on its financial condition resulting from delays in payments received from third parties;
·     the ability to manage a new business with limited management;
· the rapid technological changes in the industry; and
· other factors set forth in our other filings with the Securities and Exchange Commission.

Seasonality

The provision of services for wireless infrastructure deployment is affected by adverse weather conditions and the spending patterns of our customers, exposing us to variable quarterly results. Inclement weather may lower the demand for our services in the winter months, as well as other times of the year. Furthermore, the weather can delay our crew’s ability to perform services.  Natural catastrophes, such as the recent hurricanes in the United States, could also have a negative impact on the economy overall and on our ability to perform outdoor services in affected regions or utilize equipment and crew stationed in those regions, which in turn could significantly impact the results of any one or more reporting periods. However, these natural catastrophes historically have generated additional revenue subsequent to the event.

 
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Inflation
 
We believe that inflation has generally not had a material impact on our operations.

Off Balance Sheet Arrangements
 
We do not have any off-balance sheet financing arrangements.

 
ITEM 4. Controls and Procedures
 

Evaluation of Disclosure Controls and Procedures
 
In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms.

Changes in Internal Control over Financial Reporting
 
There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended September 30, 2010, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 
PART II: OTHER INFORMATION

 
ITEM 1. Legal Proceedings
 

Since the filing of Juniper's Form 10-K for the period ended December 31, 2009, no material changes have occurred to the legal proceedings reported therein. For more information, please see Juniper's Form 10-K for the year ended December 31, 2009 filed May 15, 2010.

The litigation involving Michael and James Calderhead is disclosed below due to the alleged significant damage that their actions have caused the Company.  The Calderheads’ bad acts forced Juniper to close New Wave Communications, Inc. which in turn precipitated the creation of new operating subsidiaries, Tower West and Ryan Pierce, in the wireless and broadband infrastructure construction services business.  These new subsidiaries were formed at great expense and the effects of the Calderhead’s alleged malicious behavior have caused financial reverberations throughout the Company’s operations as noted in the Part I, Item 2.  Management’s Discussion and Analysis of Financial Condition and Result of Operations.

 
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 Juniper Group, Inc. v. Michael and James Calderhead.  On June 15, 2007, the Company, through its subsidiaries, commenced a lawsuit against Michael Calderhead and James Calderhead (the “Calderheads”) former employees, in the United States District Court for the Eastern District of New York (Case No. 07-CV-2413).  The complaint asserts claims against the Calderheads for breaches of a stock exchange agreement, breaches of an employment agreement, and breaches of fiduciary duties owed to Juniper and its wholly-owned subsidiary New Wave Communications, Inc. (“New Wave”).  Juniper alleges the Calderheads committed serious, material breaches of their agreements with Juniper.  Indeed, almost immediately after Juniper’s acquisition of New Wave, and while still employed by Juniper and/or New Wave and bound by their agreements with Juniper, the Calderheads made preparations to form and operate a rival business to compete with Juniper and New Wave.

In February 2006, a mere two months after Juniper’s acquisition of New Wave, the Calderheads met with possible financiers to discuss incorporating a new company that would compete with New Wave and Juniper.  Juniper alleges that the meeting involved at least James Calderhead, a Juniper executive and the President of New Wave; Michael Calderhead, a New Wave Chief Operating Officers; another New Wave executive who had worked with Michael Calderhead prior to the Juniper acquisition; and a local businessman in Franklin, Indiana, and the owner of several businesses.

At the time of the February 2006 meeting, and at all relevant times thereafter, James Calderhead was subject to the Employment Agreement and Michael Calderhead was subject to the Stock Exchange Agreement.  Following the alleged February 2006 meeting, the Calderheads, along with others, continued their efforts to form and operate a new company which came to be called Heartland Solutions Corp. (“HSC”) (formerly Communications Infrastructure, Inc.).  According to the online records of the Indiana Secretary of State, HSC was organized as a for-profit domestic corporation on January 19, 2007.

According to HSC’s advertisements and representations in the marketplace, it is a competitor of Juniper and New Wave.  Specifically, HCS’s website states that “HSC brings the combined experience of its owners in all areas of Cellular Site Construction,” including project management, civil construction, tower erection, and maintenance and troubleshooting.

At no time did the Calderheads inform New Wave or Juniper of the formation of HSC, their intentions or activities regarding HSC, or their intent or design to form a new company that would compete with New Wave or Juniper.  At no time did New Wave or Juniper consent to any activities by the Calderheads with respect to HSC or setting up a rival company.

On or about January 17, 2007, Michael Calderhead announced that he would resign from New Wave.  Michael Calderhead, however, did not formally end his employment relationship with New Wave until on or about March 27, 2007.  Juniper subsequently learned that Michael Calderhead had been working, and was continuing to work, for HSC.

In late 2006 and early 2007, New Wave’s business suddenly, and substantially, declined.  Contracts were lost, customer and vendor relationships were ended, and new business opportunities were not pursued.   New Wave alleged and believes that some former customers of Juniper and New Wave were transferred to HSC during this period, and believes that discovery will establish that the Calderheads were involved in soliciting business for HSC and soliciting New Wave’s customers and employees were essentially stolen from New Wave.

The substantial declines in New Wave’s business continued throughout early 2007.  These declines were not reported to Juniper’s management in a timely manner and, when they were reported, the declines were not explained in a reasonable or clear manner.  It was not until May, 2007 that Juniper became aware of HSC’s growing presence in the marketplace; the involvement of Michael Calderhead in HSC’s business; and that HSC was directly competing with New Wave for customers.

 
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On Friday, May 18, 2007, ten New Wave employees abruptly announced that they were resigning their positions at New Wave.  Most of these former New Wave employees indicated that they would begin work for HSC, joining Michael Calderhead. Indeed, in the course of little more than a year from the date that Juniper purchased New Wave from Michael Calderhead and installed the Calderheads as New Wave executives, New Wave had gone from being a growing, profitable business to a business on the verge of financial collapse.

On Tuesday, May 22, 2007, Juniper terminated James Calderhead for cause.  Some, although not all, of the grounds for James Calderhead’s termination are set forth above and in a termination letter.

Juniper seeks injunctions restraining the Calderheads from, among other things, competing with Juniper and New Wave, as well as compensatory damages in the amount believed to be  $10,000,000, punitive damages in the amount of $5,000,000 and attorneys fees, costs and expenses.  On September 29, 2007, the Court issued a preliminary injunction against Michael Calderhead enjoining him from disclosing Juniper/New Wave’s customer list and from soliciting, directly or indirectly, any of Juniper/New Wave’s existing customers; denied the Calderheads’ motion to dismiss the complaint; and granted Juniper’s motion for expedited discovery.

On October 16, 2007, Michael Calderhead answered the complaint and asserted counterclaims against Juniper for alleged breaches of, and fraud in connection with, the stock exchange agreement and for alleged abuse of process in connection with Juniper’s application for injunctive relief.  Michael Calderhead seeks compensatory and punitive damages.  On October 16, 2007, James Calderhead answered the complaint and asserted counterclaims against Juniper for alleged breaches of the employment agreement and for alleged abuse of process in connection with Juniper’s application for injunctive relief.  James Calderhead seeks compensatory and punitive damages.  The Company believes that none of the counterclaims asserted by the Calderheads have any merit.

The Company is vigorously prosecuting the claims asserted against the Calderheads and is vigorously defending the counterclaims asserted by the Calderheads.  The outcome of this litigation may materially affect the Company.

On July 29, 2010, the motion by Jonathan Stein, counsel for the Calderheads, to be relieved as counsel was granted by the Court.  The Calderheads were ordered by the Court to appear in the action by a certain date, which they have failed to do.  Juniper will now be moving for a default judgment.

Andrus v. Juniper Group, Inc. On May 8, 2008, Alan Andrus filed an action against Juniper Group, Inc. in the United States District Court for the Eastern District of New York Index No. 08 Civ. 1900. The complaint, against us, a subsidiary and Mr. Hreljanovic, asserts claims for fees of $195,000 plus interest for services rendered. Discovery is now complete and the court has indicated that trial will occur during the fall of 2010.  While no estimate of the outcome can be made, the Company believes it has meritorious defenses and will prevail in this matter.

New Wave Communications, Inc. A Chapter 11 Bankruptcy petition was filed by New Wave Communications, Inc. on November 7, 2008 in the U.S. Bankruptcy Court for the Southern District of Indiana (Indianapolis) and assigned case #08-13975-JKC-11.  The petition was voluntarily dismissed at the request of New Wave Communications, Inc. on March 6, 2009.

 
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New Millennium, et. al. versus Juniper Group, Inc. On December 18, 2009, New Millennium Capital Partners III, LLC; ASW Partners, LLC; ASW Offshore II, Ltd.; ASW Qualified Partners II, LLC; ASW Master Fund II, Ltd.; (“NIR Group”) filed an action entitled New Millennium, et. al. versus Juniper Group, Inc. in the Supreme Court of the State of New York County of New York Index No. 603782/09. The complaint alleges breach of the terms of certain convertible debentures and seeks equitable relief and monetary damages of $7.46 million Juniper has denied the allegations in the complaint and asserted counterclaims.  A motion for preliminary injunctive relief is pending. While no estimate of the outcome can be made, the Company believes it has meritorious defenses and will prevail in this matter. However, there can be no assurance that we will be successful in defending against these claims. The NIR Group is the note holder of our Callable Secured Convertible Notes with outstanding principal at December 31, 2009 of approximately $2.6 million.

JMJ Default. On March 19, 2010, the Company received a “Notice of Default and Demand for Payment” from JMJ Financial (“JMJ”). The letter states that as a result of the alleged defaults the holder is accelerating the notes and is demanding full payment of the outstanding balance of principal and interest on the original Note on or before April 2, 2010.  The Company believes it has meritorious defenses and disputes JMJ’s claim.

Ryan Pierce Group v. Michael Brown et. al. On May 10, 2010 Ryan Pierce and Tower West, both indirect wholly owned subsidiaries of Juniper, secured a temporary restraining order prohibiting certain former employees from soliciting current employees of the subsidiaries or using or disclosing the subsidiaries’ proprietary information pending a preliminary injunction hearing.

The court has now extended the order, insofar as it pertains to any use or dissemination of Juniper’s proprietary information, property or software, for the duration of the litigation. The two subsidiaries filed suit in the Supreme Court of the State of New York in the county of Nassau against five former employees and a consultant.  Among other things the complaint against alleges that the former employees acted in concert and conspired to acted to misappropriate the business, good will, employees and proprietary information of the Company and to intentionally and maliciously damage the business of the Company. The complaint seeks injunctive relief and damages arising out of the actions of the former employees and consultant.

 
ITEM 1A.  Risk Factors
 

There have been no material changes with regard to the risk factors previously disclosed in our Annual Report on Form 10-K for the period ended December 31, 2009.

 
ITEM 2. Unregistered Sale of Equity Securities and Use of Proceeds
 

During the nine month period ended September 30, 2010, the Company issued a total of $1,056,309 of Convertible Debentures including the conversion of $362,081 of loans and advances received from various parities and accrued interest payable,  the issuance of $159,096 in exchange for goods and services and cash proceeds of $535,132. The Convertible Notes mature three years from the effective date with interest rates ranging from 2% of 14% per annum.  We relied on exemptions from registration afforded by Section 4(2) of the Securities Act of 1933 for the issuance of the Convertible Notes to investors and the issue of shares upon conversion of convertible notes. We believe that we have complied with the manner of sale, access to information and investor accreditation requirements of such exemptions.

The Company approved the conversion of Callable Notes and the conversion of Series B Preferred Stock, (collectively referred to as the “Convertible Securities”) into unrestricted shares of common stock pursuant to the provisions of Rule 144(b)(1).  The Convertible Securities were originally issued under 4(2) as private transactions exempt from registration and in all recent conversions the provisions of Rule 144(c)(1) were met in that the Company is a reporting issuer, the recipients were non-affiliates of the Company and each had held the Convertible Securities in excess of a full year.  A total of 426,015,445 shares of unrestricted common stock was issued during the nine months ended September 30, 2010 in exchange for the conversion of $452,483 in Convertible Securities. The conversions were made in response to the request of the holders of the Convertible Securities and upon satisfactory compliance with the provisions of Rule 144 and its provisions as set forth above.

 
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ITEM 3. Defaults upon Senior Securities
 

On December 18, 2009, New Millennium Capital Partners III, LLC; ASW Partners, LLC; ASW Offshore II, Ltd.; ASW Qualified Partners II, LLC; ASW Master Fund II, Ltd.; (“NIR Group”) filed an action entitled New Millennium, et. al. versus Juniper Group, Inc. in the Supreme Court of the State of New York County of New York Index No. 603782/09. The complaint alleges breach of the terms of certain convertible debentures and seeks equitable relief and monetary damages of $7.46 million Juniper has denied the allegations in the complaint and asserted counterclaims.  A motion for preliminary injunctive relief is pending. While no estimate of the outcome can be made, the Company believes it has meritorious defenses and will prevail in this matter. However, there can be no assurance that we will be successful in defending against these claims. The NIR Group is the note holder of our Callable Secured Convertible Notes with outstanding principal of approximately $2.4 million at September 30, 2010.

On March 19, 2010, the Company received a “Notice of Default and Demand for Payment” from JMJ Financial (“JMJ”). The letter states that as a result of the alleged defaults the holder is accelerating the notes and is demanding full payment of the outstanding balance of principal and interest on the original Note on or before April 2, 2010.  The Company believes it has meritorious defenses and disputes JMJ’s claim. JMJ is the note holder of our Callable Secured Convertible Notes with outstanding principal of approximately $85,000 at September 30, 2010.

 
ITEM 4. Removed and Reserved
 
 
ITEM 5. Other Information
 

Management has determined that the Forms 10-Q filed with the SEC for the quarterly periods ended March 31, 2010 and June 30, 2010 need to be restated due to a clerical error in the calculation for the derivative liability related to convertible debentures. This matter has been discussed with the Company’s independent public accountants. The Company expects that the Amended Form 10-Q for each of these periods will be filed as soon as the revised financial statements are prepared.


ITEM 6.Exhibits
     

31
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (attached).
32
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached).

 
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SIGNATURES
 


In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed by the undersigned, thereunto duly authorized.

JUNIPER GROUP, INC.


Date: December 21, 2010
 
By: /s/ Vlado P. Hreljanovic
 ---------------------------------------
Vlado P. Hreljanovic
 Chairman of the Board, President,
 Chief Executive Officer and
 Chief Financial Officer

 

 
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Index to Exhibits

Exhibit
Description

31
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (attached).
32
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached).

 
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