Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

Commitments and Contingencies

NOTE 8 - 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, 2011 and provides for his employment as President and Chief Executive Officer at an annual salary of approximately $245,000, as adjusted by the CPI, and for the reimbursement of certain expenses and insurance. 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. 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. Due to a working capital deficit, for the Mr. Hreljanovic received no compensation for the six months ended June 30, 2011. Approximately $122,500 was accrued at June 30, 2011. Mr. Hreljanovic has an aggregate accrued salary of approximately $1,202,000 which is included in Due to Officer at June 30, 2011.

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.

Litigation

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.

On March 1, 2011, the Company moved for a default judgment against the Calderheads pursuant to Federal Rule of Procedure 55(b)(2). On April 13, 2011 the Clerk of the United States District Court for the Eastern District of New York entered a default against Michael Calderhead and James Calderhead, the amount to be determined by United States Magistrate A. Kathleen Tomlinson for an inquest as to damages, including reasonable attorneys’ fees and cost.

New Millennium, et. al. v. Juniper Group, Inc. On June 30, 2009 AJW Partners, LLC, AJW Partners II, LLC, New Millennium Capital Partners II, LLC, AJW Offshore, Ltd., AJW Offshore II, Ltd., AJW Qualified Partners II, LLC, AJW Master Fund, Ltd., AJW Master Fund II, Ltd., and AJW Qualified Partners, LLC,(collectively referred to as “Millennium et. al.”) sent a notice of default to the Company. Further, on November 2, 2009 the Company received a “Default Notice of Callable Secured Convertible Notes” from Millennium et.al. The action by Millennium et.al. alleges a breach of terms and condition of the convertible notes as a result of the alleged failure of the Company to issue Common Stock upon receiving notices of conversion.

On December 18, 2009, Supreme Court of the State of New York, County of New York Index No. 603782/09, 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. 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 Company has taken the position that it will not honor any requests for conversions of the Callable Secured Convertible Notes until this matter is resolved. The NIR Group is the holder of our Callable Secured Convertible Notes with outstanding principal at June 30, 2011of approximately $2.5 million.

JMJ Default. Justin Keener d/b/a JMJ Financial versus Juniper Group, Inc.  and Vlado P. Hreljanovic.   On August 6, 2010 Justin Keener filed an action entitled Justin Keener d/b/a JMJ Financial versus Juniper Group, Inc. in the Circuit Court of the 11th Judicial Circuit - Dade County Florida, Case No. 10-42729-CA31. The complaint alleges breach of the terms of a convertible debenture and seeks damages in the amount of approximately $234,000.   Juniper and Vlado P. Hreljanovic have denied the allegations in the complaint and asserted affirmative defenses. 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.

Andrus v. Juniper Group, Inc. The plaintiff in the case is Alan Andrus, the former president of Juniper Internet Communications, Inc., a subsidiary of the Company that is no longer active Mr. Andrus alleges that he is owed approximately $200,000 in unpaid compensation. He has asserted claims against the Company, Chief Executive Officer Vlado Hreljanovic and Juniper Internet Communications, Inc. The Company disputes the claims against the parent corporation and Mr. Hreljanovic. Mr. Andrus was engaged to organize and manage a subsidiary corporation that ultimately was unsuccessful.

The case was the subject of a bench trial on March 2nd and 3rd, 2011 in the United States District Court for the Eastern District of New York. The Company anticipates the judge will render a judgment shortly. The Company estimates that the amount owed by Juniper Internet is $105,000 and is uncollectible as this subsidiary has no assets or income.

Juniper Group, Inc. v. Michael Brown, Donald Johnson, William Furdock, Shanna Smith, Timothy Downs, and Thomas Nyiri . On May 7, 2010, the Company, through its subsidiaries Ryan Pierce Group, Inc. and Tower West Communications, Inc., (“Plaintiffs”) commenced a lawsuit against Michael Brown, Donald Johnson, William Furdock, Shanna Smith, Timothy Downs, and Thomas Nyiri (“Defendants”), former employees and a consultant, in the Supreme Court of the State of New York County of Nassau. The lawsuit alleges that the defendants solicited the Company’s customer while still in the employ of the Company used fraud as a means to cause a mass defection of work crews from its subsidiaries, intentionally damaged the Company’s reputation with its largest customer, misappropriated equipment and abandoned work in progress.  Defendants moved for partial summary judgment and certain of the claims were dismissed, while the remaining claim of tortuous interference with the Company’s contractual relationship with its principal client will proceed to discovery and trial. The grant of partial summary judgment is being appealed. The lawsuit alleges that the Defendants, acting in concert, conspired to divert business and employees from the Company, misappropriate intellectual property belonging to the plaintiffs and maliciously damaged the business of the Company. The lawsuit further alleges that the result of the alleged wrongful acts of defendants, the Company’s relationship with its principal client was severely damaged and the Company has experienced a severe reduction in its wireless infrastructure services revenue and extensive loss of business from major customers beginning in the second half of 2010.   The complaint seeks compensatory, consequential and punitive damages. 

Going Concern

Due to the actions of Mike Brown et.al., resulting in the near complete loss of revenues, the Company could not generate sufficient cash through operations or financings to pay for the cost of its operations or to pay its current debt obligations. The Company raised approximately $176,000 in 2011, through the sale of convertible securities for working capital. Among the obligations that the Company has not had sufficient cash to pay are its payroll, payroll taxes and the funding of its subsidiary operations. Certain employees and consultants have agreed, from time to time, to receive the Company’s Common Stock in lieu of cash. In these instances, the Company has determined the number of shares to be issued to employees and consultants 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.

The fact that the Company continued to sustain losses in 2011, had negative working capital at June 30, 2011 and still requires additional sources of outside cash to sustain operations, continues to create uncertainty about the Company’s ability to continue as a going concern. We believe that we will not have sufficient liquidity to meet our operating cash requirements for operations during 2011.  In addition, 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 would have an impact on our ability to meet our operating requirements. 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. 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. The Company has developed a plan to reduce its liabilities and improve cash flow through expanding operations by acquisition and raised additional funds either through issuance of debt or equity. 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 rebuild and refocus operations in cost effective areas such as maintenance and repairs and upgrades. 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.

The Company anticipates that it will be able to raise the necessary funds it may require for the remainder of 2011 through public or private sales of securities. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Leases

The Company subleases the New York office from Entertainment Financing Inc. (“EFI), an entity 100% owned by our 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
2011	$	33,600
2012	$	69,200
2013	$	71,300
2014	$	73,400
2015	$	75,600
Thereafter	$	71,400

The Company is currently in default on its lease payments to the landlord and is currently negotiating a settlement.