-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PyCBVnxoJnEu+XvudQCzZoXJPbCAJ+ukOTd9yKVFTfi06928Pdb9BariOpCus5Ne u8ou1FRxdyLGKIfISfkLGQ== 0000950109-99-004170.txt : 19991119 0000950109-99-004170.hdr.sgml : 19991119 ACCESSION NUMBER: 0000950109-99-004170 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991115 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991118 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMARTALK TELESERVICES INC CENTRAL INDEX KEY: 0001018730 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 954502740 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-21579 FILM NUMBER: 99760233 BUSINESS ADDRESS: STREET 1: 6543 COMMERCE PARKWAY STREET 2: STE E CITY: DUBLIN STATE: OH ZIP: 43017 BUSINESS PHONE: 6147609991 MAIL ADDRESS: STREET 1: 6543 COMMERCE PARKWAY STREET 2: STE E CITY: DUBLIN STATE: OH ZIP: 43017 8-K 1 SMTK EXPEDITE, CO. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 __________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) November 15, 1999 -------------------------------- SMARTALK TELESERVICES, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) California 0-21579 95-4502740 -------------- ----------- -------------- (State or Other Jurisdiction (Commission File (IRS Employer of Incorporation) Number) Identification No.) 6543 Commerce Parkway, Suite E, Dublin, Ohio 43017 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) The Company's telephone number, including area code (614) 760-9991 ----------------------------- - -------------------------------------------------------------------------------- (Former Name or Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS As previously disclosed in a Current Report on Form 8-K, on January 19, 1999, SmarTalk TeleServices, Inc. and certain of its non-foreign subsidiaries (collectively, the "Company") filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") (Cases Nos. 99-108 to 99-127). Pursuant to Bankruptcy Rule 2015 and the United States Trustee's Operating Guidelines and Reporting Requirements for Chapter 11 cases, on November 15, 1999 the Company filed its Monthly Operating Report for the period of September 1, 1999 through September 30, 1999 (the "September MOR") with the Office of the United States Trustee - Region 3 and the Bankruptcy Court. A copy of the September MOR is attached hereto as Exhibit 99.1, and incorporated herein by reference./1/ ITEM 7. EXHIBITS Exhibit No. Description - ---------- ----------- 99.1 Monthly Operating Report for the period of September 1, 1999 through September 30, 1999 The Exhibit to this Report contains forward-looking statements. The words, "believe," "expect," and "anticipate" and similar expressions identify such forward-looking statements. These forward-looking statements reflect the Company's views with respect to future events and financial performance. In particular, SmarTalk is in the preliminary stages of evaluating the potential recoveries for creditors based on the assets of the bankruptcy estate, and any formal liquidation analysis would be premature at this time. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise (other than updates that are consistent with the Debtor's obligations to file monthly operating reports). ------------------- /1/ The attachments and exhibits referenced in the September MOR are not attached as part of Exhibit 99.1, but are available at the Office of the United States Trustee and the Bankruptcy Court. In addition, the Company agrees that it will furnish a copy of any omitted schedule or similar attachment to the Commission upon its request. (Page 2 of 4 Pages} SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SMARTALK TELESERVICES, INC. Date: November 15, 1999 By: /s/ Thaddeus Bereday ------------------------------------------- Name: Thaddeus Bereday Title: President and Acting General Counsel (Page 3 of 4 Pages) EXHIBIT INDEX ------------- Exhibit No. Description - ---------- ----------- 99.1 Monthly Operating Report for the period of September 1, 1999 through September 30, 1999 (Page 4 of 4 Pages) EX-99.1 2 MONTHLY OPERATING REPORT - ------------------------------------------------------------ DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS -1 - ------------------------------------------------------------ - ------------------------------------------------------------ CASE NUMBERS: 99-108 to 99-127 (MFW) - ------------------------------------------------------------ - ------------------------------------------------------------ JUDGE: Honorable Mary F. Walrath - ------------------------------------------------------------ OFFICE OF THE UNITED STATES TRUSTEE - REGION 3 CONSOLIDATED MONTHLY OPERATING REPORT FOR THE MONTH ENDING: September 30, 1999 FOR THE PERIOD: September 1, through September 30, 1999 ================================================================================ Document Previously Explanation Required Attachments Attached Submitted Attached 1. Tax Receipts ( ) (X) ( ) 2. Bank Statements (X) ( ) ( ) 3. Most recently filed Income Tax (X) ( ) ( ) Return 4. Most recent Annual Financial ( ) (X) ( ) Statements prepared by accountant NOTE: THIS CONSOLIDATED MONTHLY OPERATING REPORT IS FILED ON A CONSOLIDATED BASIS FOR EACH OF THE 20 ENTITIES THAT IS A DEBTOR-IN-POSSESSION IN THE ABOVE CAPTIONED CASES. INFORMATION, WHERE INDICATED, IS PROVIDED HEREIN WITH RESPECT TO NON-DEBTOR SUBSIDIARIES. THIS INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY ON A BASIS CONSISTENT WITH THE DEBTORS PRIOR PUBLIC FINANCIAL REPORTING. IN ACCORDANCE WITH TITLE 28, SECTION 1746, OF THE UNITED STATES CODE, I DECLARE UNDER PENALTY OF PERJURY THAT I HAVE EXAMINED THE FOLLOWING MONTHLY OPERATING REPORT (ACCRUAL BASIS-1 THROUGH ACCRUAL BASIS-9) AND THE ACCOMPANYING ATTACHMENTS AND, TO THE BEST OF MY KNOWLEDGE, THESE DOCUMENTS ARE TRUE, CORRECT AND COMPLETE. DECLARATION OF PREPARER (OTHER THAN RESPONSIBLE PARTY) IS BASED ON ALL INFORMATION OF WHICH PREPARER HAS ANY KNOWLEDGE. RESPONSIBLE PARTY: President - ------------------------------------------------- --------------------------- ORIGINAL SIGNATURE OF RESPONSIBLE PARTY TITLE Thaddeus Bereday /s/ Thaddeus Bereday 11/15/99 - ------------------------------------------------- --------------------------- PRINTED NAME OF RESPONSIBLE PARTY DATE PREPARER: Chief Accounting Officer - ------------------------------------------------- --------------------------- ORIGINAL SIGNATURE OF PREPARER TITLE Lois Mannon /s/ Lois Mannon 11/15/99 - ------------------------------------------------- --------------------------- PRINTED NAME OF PREPARER DATE Pursuant to an agreement with the office of the United States Trustee, this report is to be filed no later than the 45th day of the month following the end of the month covered by the report. - -------------------------------------------------- DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 2 - -------------------------------------------------- - -------------------------------------------------- CASE NUMBERS: 99-108 to 99-127 (MFW) - --------------------------------------------------
- -------------------------------------------------- THIRD QUARTER COMPARATIVE BALANCE SHEET ----- - -------------------------------------------------- MONTH MONTH MONTH - ---------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ASSETS - ---------------------------------------------------------------------------------------------------------------------------------- UNRESTRICTED CASH - ---------------------------------------------------------------------------------------------------------------------------------- RESTRICTED CASH SEE ATTACHED BALANCE SHEET - ---------------------------------------------------------------------------------------------------------------------------------- 1. TOTAL CASH - ---------------------------------------------------------------------------------------------------------------------------------- 2. ACCOUNTS RECEIVABLE (NET) - ---------------------------------------------------------------------------------------------------------------------------------- 3. INVENTORY - ---------------------------------------------------------------------------------------------------------------------------------- 4. NOTES RECEIVABLE - ---------------------------------------------------------------------------------------------------------------------------------- 5. PREPAID EXPENSES - ---------------------------------------------------------------------------------------------------------------------------------- 6. OTHER (ATTACH LIST) - ---------------------------------------------------------------------------------------------------------------------------------- 7. TOTAL CURRENT ASSETS - ---------------------------------------------------------------------------------------------------------------------------------- 8. PROPERTY, PLANT & EQUIPMENT - ---------------------------------------------------------------------------------------------------------------------------------- 9. LESS: ACCUMULATED DEPRECIATION / DEPLETION - ---------------------------------------------------------------------------------------------------------------------------------- 10. NET PROPERTY, PLANT & EQUIPMENT - ---------------------------------------------------------------------------------------------------------------------------------- 11. DUE FROM AFFILIATES & INSIDERS - ---------------------------------------------------------------------------------------------------------------------------------- 12. AMORTIZATION (ATTACH LIST) - ---------------------------------------------------------------------------------------------------------------------------------- 13. OTHER (ATTACH LIST) - ---------------------------------------------------------------------------------------------------------------------------------- 14. TOTAL ASSETS - ---------------------------------------------------------------------------------------------------------------------------------- POSTPETITION LIABILITIES - ---------------------------------------------------------------------------------------------------------------------------------- 15. ACCOUNTS PAYABLE - ---------------------------------------------------------------------------------------------------------------------------------- 16. TAXES PAYABLE - ---------------------------------------------------------------------------------------------------------------------------------- 17. NOTES PAYABLE - ---------------------------------------------------------------------------------------------------------------------------------- 18. PROFESSIONAL FEES - ---------------------------------------------------------------------------------------------------------------------------------- 19. SECURED DEBT - ---------------------------------------------------------------------------------------------------------------------------------- 20. DUE TO AFFILIATES & INSIDERS - ---------------------------------------------------------------------------------------------------------------------------------- 21. OTHER (ATTACH LIST) - ---------------------------------------------------------------------------------------------------------------------------------- 22. TOTAL POSTPETITION LIABILITIES - ---------------------------------------------------------------------------------------------------------------------------------- PREPETITION LIABILITIES - ---------------------------------------------------------------------------------------------------------------------------------- 23. SECURED DEBT - ---------------------------------------------------------------------------------------------------------------------------------- 24. PRIORITY DEBT - ---------------------------------------------------------------------------------------------------------------------------------- 25. UNSECURED DEBT - ---------------------------------------------------------------------------------------------------------------------------------- 26. OTHER (ATTACH LIST) - ---------------------------------------------------------------------------------------------------------------------------------- 27. TOTAL PREPETITION LIABILITIES - ---------------------------------------------------------------------------------------------------------------------------------- 28. TOTAL LIABILITIES - ---------------------------------------------------------------------------------------------------------------------------------- EQUITY - ---------------------------------------------------------------------------------------------------------------------------------- 29. PREPETITION OWNERS' EQUITY - ---------------------------------------------------------------------------------------------------------------------------------- 30. POSTPETITION CUMULATIVE PROFIT OR (LOSS) - ---------------------------------------------------------------------------------------------------------------------------------- DIRECT CHARGES TO EQUITY (ATTACH EXPLANATION) - ---------------------------------------------------------------------------------------------------------------------------------- 31. TOTAL EQUITY - ---------------------------------------------------------------------------------------------------------------------------------- 32. TOTAL LIABILITIES & OWNERS' EQUITY - ----------------------------------------------------------------------------------------------------------------------------------
SMARTALK TELESERVICES, INC. AND SUBSIDIARIES DEBTORS - IN - POSSESSION CONSOLIDATING BALANCE SHEET AS OF: SEPTEMBER 30, 1999 NOTE: THE FOLLOWING ARE PRELIMINARY FINANCIAL STATEMENTS. A NUMBER OF ESTIMATES ARE USED IN THE PREPARATION OF THESE FINANCIAL STATEMENTS. ACTUAL FINAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PRESENTED. NON-DEBTOR SUBSIDIARIES (Provided for informational purposes only on a basis consistent with the Debtors previous public financial reporting) Total SMTK SMTK Debtors and Debtors Non-debtors Non-debtors ------------- ------------- ------------- Assets Current assets: Cash 77,557,760 -- 77,557,760 Cash held for non-debtors 1,085,864 -- 1,085,864 AT&T holdback note receivable 40,000,000 -- 40,000,000 Interest receivable 1,000,000 -- 1,000,000 Notes receivable, net 1,450,000 -- 1,450,000 Inventory 1,850,000 -- 1,850,000 Prepaid expenses 41,723 -- 41,723 ------------- ------------- ------------- Total current assets 122,985,347 -- 122,985,347 Non current assets: Property and equipment, net 95,817 -- 95,817 ------------- ------------- ------------- Total non current assets 95,817 -- 95,817 Total assets 123,081,164 -- 123,081,164 ============= ============= ============= Liabilities and equity Current liabilities: Postpetition accounts payable 4,041,933 764,839 4,806,772 Excise & sales tax payable -- -- -- Other accrued 4,400,256 49,284 4,449,540 ------------- ------------- ------------- Total current liabilities 8,442,189 814,123 9,256,312 Prepetition liabilities: Accounts payable 46,171,652 -- 46,171,652 Excise & sales tax payable 2,465,777 -- 2,465,777 Other accrued 19,851,593 103,778 19,955,371 Accrued interest 4,171,498 -- 4,171,498 Long term debt 150,867,550 -- 150,867,550 Notes payable-Century/DTR 4,297,998 -- 4,297,998 ------------- ------------- ------------- Total prepetition liabilities 227,826,068 103,778 227,929,846 ------------- ------------- ------------- Total liabilities 236,268,257 917,901 237,186,158 Intercompany (3,360,544) -- 3,360,544 Shareholders' equity (deficit): Common stock 278,227,663 -- 278,227,663 Beginning accumulated deficit (170,658,280) (3,695,301) (174,353,581) Current year profit (loss) (217,395,932) (583,144) (217,979,076) ------------- ------------- ------------- Total shareholders' equity (109,826,549) (4,278,445) (114,104,994) ------------- ------------- ------------- Total liabilities and equity 123,081,164 -- 123,081,164 ============= ============= ============= Readers are cautioned to read the attached addendum to the financial statements. SMARTALK TELESERVICES, INC. AND SUBSIDIARIES DEBTORS-IN-POSSESSION ADDENDUM TO FINANCIAL STATEMENTS For the month ended September 30, 1999 On March 31, 1999 (the "Closing Date"), pursuant to the terms of an Asset Purchase Agreement, dated January 19, 1999 (as amended, the "Purchase Agreement"), among SmarTalk TeleServices, Inc. ("SMTK"), and its Debtor and Non-Debtor subsidiaries (collectively, the "Company") and AT&T Corp. ("AT&T"), AT&T purchased substantially all the assets of the Company for aggregate consideration of approximately $145 million consisting of approximately $96 million in cash and payment of approximately $9 million in indebtedness and transaction costs and a $40 million promissory note issued by AT&T in favor of SMTK. The purchase price is subject to downward adjustments pursuant to a post-closing purchase price adjustment formula and in the event of claims by AT&T. 1. The Company's preliminary financial statements have been prepared based on the Closing Statements (as defined in the Purchase Agreement) delivered to the Company by AT&T on or about May 15, 1999. The Closing Statements are subject to a review period by the Company and its representatives and become final and binding only after any disagreements between the Company, its representatives and AT&T have been resolved pursuant to the procedures set forth in the Purchase Agreement (including the submission of any disagreements to arbitration by a mutually acceptable public accounting firm with nationally recognized auditing experience). The Company and AT&T currently are negotiating several such disagreements. The final Closing Statements and the Purchase Price Adjustment Statement (as defined in the Purchase Agreement) may alter the Company's presentation of its financial results. The Company intends to work closely with the Official Committee of Unsecured Creditors and its legal and financial advisors (collectively, the "Committee") to finalize the Closing Statements and the Purchase Price Adjustment Statement and, if necessary, will adjust its financial results in future consolidated monthly operating reports. 2. In connection with the Purchase Agreement, AT&T delivered a $40,000,000 promissory note (the "Holdback Note") to SMTK as partial consideration for the purchase of substantially all the Company's assets. The Holdback Note is subject to adjustment pending completion of the Company's review of the Closing Statements and the Purchase Price Adjustment Statement as well as in the event of certain claims by AT&T. On September 30, 1999, AT&T withheld the first installment payment due under the Holdback Note by asserting that AT&T is entitled to indemnification under the terms of the Purchase Agreement for alleged losses exceeding $20,000,000. If AT&T's allegations are ultimately upheld, the principal amount of the Holdback Note will be permanently reduced by the amount of AT&T's losses. The Company, the Committee and their advisors deny the claims made by AT&T and intend to dispute vigorously AT&T's alleged entitlement to indemnification under the Purchase Agreement and Holdback Note. Due to the uncertainty surrounding the amount of adjustments, if any, to the Holdback Note, the Company will continue to report the value of the Holdback Note as the stated $40,000,000 face amount until the Closing Statements are finalized and the alleged claims asserted by AT&T are resolved as provided in the Purchase Agreement. 3. In connection with the sale of substantially all of the Company's assets to AT&T, the Company recognized a loss on the impairment and anticipated liquidation values of certain assets that were excluded from the AT&T sale transaction. The Company undertakes no obligation to update its estimate of the loss or impairment of its assets and the related liquidation losses (other than updates that are consistent with the Debtors' obligations to file monthly operating reports). 4. In connection with the claims reconciliation process pursuant to the Company's bankruptcy proceeding, the Bankruptcy Court established a bar date of July 16, 1999 for the filing of proofs of claims. Through the date hereof, numerous claims have been submitted specifying amounts that may differ from the Company's records or that may overstate the actual value of the Company's obligations with respect to such claims. The Company and its professional advisors will perform a claims analysis process that will involve investigating and reconciling the filed proofs of claims to the Company's records. As the actual amounts of claims are established, the Company will make appropriate adjustments in future monthly operating reports to its previously reported pre-petition liabilities and income. The foregoing estimates represent the Company's views with respect to future events and financial performance. These estimates are subject to risks and uncertainties that could cause actual results and performance to differ from such statements (including the process set forth in the Purchase Agreement for finalizing the Closing Statements and the Purchase Price Adjustment Statement). Readers are cautioned not to place reliance on such estimates and the Company undertakes no obligation to update such estimates, whether as a result of new information, future events or otherwise (other than updates that are consistent with the Debtors' obligations to file monthly operating reports). - -------------------------------------------------- DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 3 - -------------------------------------------------- - -------------------------------------------------- CASE NUMBERS: 99-108 to 99-127 (MFW) THIRD QUARTER - -------------------------------------------------- -----
- -------------------------------------------------- INCOME STATEMENT - ------------------------------------------------------------------------------------------------------------------------------------ MONTH MONTH MONTH QUARTER ------------------------------------------------------- REVENUES TOTAL - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 1. GROSS REVENUES - ------------------------------------------------------------------------------------------------------------------------------------ 2. LESS: RETURNS & DISCOUNTS SEE ATTACHED INCOME STATEMENT - ------------------------------------------------------------------------------------------------------------------------------------ 3. NET REVENUE - ------------------------------------------------------------------------------------------------------------------------------------ COST OF GOODS SOLD - ------------------------------------------------------------------------------------------------------------------------------------ 4. BEGINNING INVENTORY - ------------------------------------------------------------------------------------------------------------------------------------ 5. ADD: PURCHASES - ------------------------------------------------------------------------------------------------------------------------------------ 6. LESS: ENDING INVENTORY - ------------------------------------------------------------------------------------------------------------------------------------ 7. TOTAL COST OF GOODS SOLD - ------------------------------------------------------------------------------------------------------------------------------------ 8. GROSS PROFIT - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING EXPENSES - ------------------------------------------------------------------------------------------------------------------------------------ 9. OFFICER / INSIDER COMPENSATION - ------------------------------------------------------------------------------------------------------------------------------------ 10. DIRECT LABOR / SALARIES - ------------------------------------------------------------------------------------------------------------------------------------ 11. PAYROLL TAXES - ------------------------------------------------------------------------------------------------------------------------------------ 12. RENT & LEASE EXPENSE - ------------------------------------------------------------------------------------------------------------------------------------ 13. INSURANCE - ------------------------------------------------------------------------------------------------------------------------------------ 14. DEPRECIATION / DEPLETION / AMORTIZATION - ------------------------------------------------------------------------------------------------------------------------------------ 15. GENERAL & ADMINISTRATIVE - ------------------------------------------------------------------------------------------------------------------------------------ 16. OTHER (ATTACH LIST) - ------------------------------------------------------------------------------------------------------------------------------------ 17. TOTAL OPERATING EXPENSES - ------------------------------------------------------------------------------------------------------------------------------------ 18. INCOME BEFORE NON-OPERATING INCOME & EXPENSE - ------------------------------------------------------------------------------------------------------------------------------------ OTHER INCOME & EXPENSES - ------------------------------------------------------------------------------------------------------------------------------------ 19. NON-OPERATING INCOME (ATT. LIST) - ------------------------------------------------------------------------------------------------------------------------------------ 20. NON-OPERATING EXPENSE (ATT. LIST) - ------------------------------------------------------------------------------------------------------------------------------------ 21. INTEREST EXPENSE - ------------------------------------------------------------------------------------------------------------------------------------ 22. OTHER (ATTACH LIST) - ------------------------------------------------------------------------------------------------------------------------------------ 23. NET OTHER INCOME & EXPENSES - ------------------------------------------------------------------------------------------------------------------------------------ REORGANIZATION EXPENSES - ------------------------------------------------------------------------------------------------------------------------------------ 24. PROFESSIONAL FEES - ------------------------------------------------------------------------------------------------------------------------------------ 25. U.S. TRUSTEE FEES - ------------------------------------------------------------------------------------------------------------------------------------ 26. OTHER (ATTACH LIST) - ------------------------------------------------------------------------------------------------------------------------------------ 27. TOTAL REORGANIZATION EXPENSES - ------------------------------------------------------------------------------------------------------------------------------------ 28. INCOME TAX - ------------------------------------------------------------------------------------------------------------------------------------ 29. NET PROFIT (LOSS) - ------------------------------------------------------------------------------------------------------------------------------------
SMARTALK TELESERVICES, INC. AND SUBSIDIARIES DEBTORS - IN - POSSESSION CONSOLIDATING INCOME STATEMENT For the month ended September 30, 1999 NOTE: THE FOLLOWING ARE PRELIMINARY FINANCIAL STATEMENTS. A NUMBER OF ESTIMATES ARE USED IN THE PREPARATION OF THESE FINANCIAL STATEMENTS. ACTUAL FINAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PRESENTED.
NON-DEBTOR SUBSIDIARIES (Provided for informational purposes only on a basis consistent with the Debtors previous public financial reporting) Total SMTK SMTK Debtors and Debtors Non-debtors Non-debtors ------------ ------------ ------------ Revenue -- -- -- Cost of revenue -- -- -- ------------ ------------ ------------ Gross profit -- -- -- Expenses: General and administrative 110,907 10,381 121,288 Reorganization costs: Professionals cost 1,220,538 -- 1,220,538 Settlements & cures 312,581 -- 312,581 Inventory write down to net realizable value -- -- -- Note receivable write down to settlement value -- -- -- Property & equipment liquidation loss -- -- -- Other 69,147 991 70,138 ------------ ------------ ------------ Operating profit (loss) (1,713,173) (11,372) (1,724,545) Interest expense -- (434) (434) Other income (32,201) 27,251 (4,950) Interest income 410,355 5,843 416,198 ------------ ------------ ------------ Net profit (loss) (1,335,019) 21,288 (1,313,731) ============ ============ ============
Readers are cautioned to read the attached addendum to the financial statements. SMARTALK TELESERVICES, INC. AND SUBSIDIARIES DEBTORS-IN-POSSESSION ADDENDUM TO FINANCIAL STATEMENTS For the month ended September 30, 1999 On March 31, 1999 (the "Closing Date"), pursuant to the terms of an Asset Purchase Agreement, dated January 19, 1999 (as amended, the "Purchase Agreement"), among SmarTalk TeleServices, Inc. ("SMTK"), and its Debtor and Non-Debtor subsidiaries (collectively, the "Company") and AT&T Corp. ("AT&T"), AT&T purchased substantially all the assets of the Company for aggregate consideration of approximately $145 million consisting of approximately $96 million in cash and payment of approximately $9 million in indebtedness and transaction costs and a $40 million promissory note issued by AT&T in favor of SMTK. The purchase price is subject to downward adjustments pursuant to a post-closing purchase price adjustment formula and in the event of claims by AT&T. 1. The Company's preliminary financial statements have been prepared based on the Closing Statements (as defined in the Purchase Agreement) delivered to the Company by AT&T on or about May 15, 1999. The Closing Statements are subject to a review period by the Company and its representatives and become final and binding only after any disagreements between the Company, its representatives and AT&T have been resolved pursuant to the procedures set forth in the Purchase Agreement (including the submission of any disagreements to arbitration by a mutually acceptable public accounting firm with nationally recognized auditing experience). The Company and AT&T currently are negotiating several such disagreements. The final Closing Statements and the Purchase Price Adjustment Statement (as defined in the Purchase Agreement) may alter the Company's presentation of its financial results. The Company intends to work closely with the Official Committee of Unsecured Creditors and its legal and financial advisors (collectively, the "Committee") to finalize the Closing Statements and the Purchase Price Adjustment Statement and, if necessary, will adjust its financial results in future consolidated monthly operating reports. 2. In connection with the Purchase Agreement, AT&T delivered a $40,000,000 promissory note (the "Holdback Note") to SMTK as partial consideration for the purchase of substantially all the Company's assets. The Holdback Note is subject to adjustment pending completion of the Company's review of the Closing Statements and the Purchase Price Adjustment Statement as well as in the event of certain claims by AT&T. On September 30, 1999, AT&T withheld the first installment payment due under the Holdback Note by asserting that AT&T is entitled to indemnification under the terms of the Purchase Agreement for alleged losses exceeding $20,000,000. If AT&T's allegations are ultimately upheld, the principal amount of the Holdback Note will be permanently reduced by the amount of AT&T's losses. The Company, the Committee and their advisors deny the claims made by AT&T and intend to dispute vigorously AT&T's alleged entitlement to indemnification under the Purchase Agreement and Holdback Note. Due to the uncertainty surrounding the amount of adjustments, if any, to the Holdback Note, the Company will continue to report the value of the Holdback Note as the stated $40,000,000 face amount until the Closing Statements are finalized and the alleged claims asserted by AT&T are resolved as provided in the Purchase Agreement. 3. In connection with the sale of substantially all of the Company's assets to AT&T, the Company recognized a loss on the impairment and anticipated liquidation values of certain assets that were excluded from the AT&T sale transaction. The Company undertakes no obligation to update its estimate of the loss or impairment of its assets and the related liquidation losses (other than updates that are consistent with the Debtors' obligations to file monthly operating reports). 4. In connection with the claims reconciliation process pursuant to the Company's bankruptcy proceeding, the Bankruptcy Court established a bar date of July 16, 1999 for the filing of proofs of claims. Through the date hereof, numerous claims have been submitted specifying amounts that may differ from the Company's records or that may overstate the actual value of the Company's obligations with respect to such claims. The Company and its professional advisors will perform a claims analysis process that will involve investigating and reconciling the filed proofs of claims to the Company's records. As the actual amounts of claims are established, the Company will make appropriate adjustments in future monthly operating reports to its previously reported pre-petition liabilities and income. The foregoing estimates represent the Company's views with respect to future events and financial performance. These estimates are subject to risks and uncertainties that could cause actual results and performance to differ from such statements (including the process set forth in the Purchase Agreement for finalizing the Closing Statements and the Purchase Price Adjustment Statement). Readers are cautioned not to place reliance on such estimates and the Company undertakes no obligation to update such estimates, whether as a result of new information, future events or otherwise (other than updates that are consistent with the Debtors' obligations to file monthly operating reports). ACCRUAL BASIS -4 - -------------------------------------------- DEBTORS: WORLDWIDE DIRECT, INC., et al. THIRD QUARTER - -------------------------------------------- ----- Bank: FIRSTAR - -------------------------------------------- ---------- CASE NUMBERS: 99-108 to 99-127 (MFW) Account type: Operating - -------------------------------------------- ---------- NOTE: ALL CASH DISBURSEMENTS, EXCLUDING INTER-ACCOUNT TRANSFERS, ARE DISBURSED OUT OF THE FIRSTAR OPERATING ACCOUNT #4889-40040 FROM SMTK EXPEDITE CO., INC. (f.k.a. SMARTALK TELESERVICES, INC.) CASE NUMBER 99-109.
- ------------------------------------------------------------------------------------------------------------------------------------ CASH RECEIPTS AND MONTH DISBURSEMENTS ---------------------------------- 9/1/99-9/30/99 - ------------------------------------------------------------------------------------------------------------------------------------ 1. CASH - BEGINNING OF MONTH $ 322,675 - ------------------------------------------------------------------------------------------------------------------------------------ RECEIPTS FROM OPERATIONS - ------------------------------------------------------------------------------------------------------------------------------------ 2. CASH SALES (FROM MERCHANT CARD RECHARGES) $ - - ------------------------------------------------------------------------------------------------------------------------------------ 3. COLLECTION OF ACCOUNTS RECEIVABLE $ - - ------------------------------------------------------------------------------------------------------------------------------------ 4. LOANS & ADVANCES $ - - ------------------------------------------------------------------------------------------------------------------------------------ 5. SALE OF ASSETS $ - - ------------------------------------------------------------------------------------------------------------------------------------ 6. OTHER: - ------------------------------------------------------------------------------------------------------------------------------------ TRANSFERS IN FROM MONEY MARKET ACCOUNT $ 910,000 - ------------------------------------------------------------------------------------------------------------------------------------ MISCELLANEOUS RECEIPTS FROM REFUNDS $ 4,827 - ------------------------------------------------------------------------------------------------------------------------------------ MISCELLANEOUS TIMING ADJUSTMENTS $ - - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL OTHER $ 914,827 - ------------------------------------------------------------------------------------------------------------------------------------ 7. TOTAL RECEIPTS $ 914,827 - ------------------------------------------------------------------------------------------------------------------------------------ 8. TOTAL CASH AVAILABLE $ 1,237,502 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING DISBURSEMENTS - ------------------------------------------------------------------------------------------------------------------------------------ 9. CHECKS WRITTEN - (SEE ATTACHED LIST) $ 1,211,049 - ------------------------------------------------------------------------------------------------------------------------------------ 10. WIRE TRANSFERS - (SEE ATTACHED LIST) $ 26,966 - ------------------------------------------------------------------------------------------------------------------------------------ 11. OTHER: - ------------------------------------------------------------------------------------------------------------------------------------ CASH TRANSFERS OUT $ - - ------------------------------------------------------------------------------------------------------------------------------------ BANK CHARGES $ - - ------------------------------------------------------------------------------------------------------------------------------------ VOID CHECK FROM PREVIOUS PERIOD $ (154) - ------------------------------------------------------------------------------------------------------------------------------------ 12. TOTAL OTHER $ (154) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL DISBURSEMENTS FROM BANK ACCOUNT $ 1,237,861 - ------------------------------------------------------------------------------------------------------------------------------------ ENDING ACCOUNT BALANCE $ (359) - ------------------------------------------------------------------------------------------------------------------------------------ ADD: CASH BALANCES FROM NON-OPERATING ACCOUNTS $ 36,645,773 - ------------------------------------------------------------------------------------------------------------------------------------ SEE ACCRUAL BASIS - 6 - ------------------------------------------------------------------------------------------------------------------------------------ ADD: SHORT-TERM TREASURY BILL SECURITIES BALANCES $ 41,998,210 - ------------------------------------------------------------------------------------------------------------------------------------ SEE ACCRUAL BASIS - 6 - ------------------------------------------------------------------------------------------------------------------------------------ END OF MONTH BALANCE (SHOULD EQUAL ACCRUAL BASIS - 6, LINE 14) $ 78,643,624 - ------------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------- DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 5 - ---------------------------------------------- - ---------------------------------------------- CASE NUMBERS: 99-108 to 99-127 (MFW) - ----------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------- MONTH MONTH MONTH --------------------------------------------------------------------- ACCOUNTS RECEIVABLE AGING September 30, 1999 - ------------------------------------------------------------------------------------------------------------------------------- 1. 0 - 30 days old $ - - ------------------------------------------------------------------------------------------------------------------------------- 2. 31 - 60 days old - - ------------------------------------------------------------------------------------------------------------------------------- 3. 61 - 90 days old - - ------------------------------------------------------------------------------------------------------------------------------- 4. 91+ days old - - ------------------------------------------------------------------------------------------------------------------------------- 5. TOTAL ACCOUNTS RECEIVABLE - - ------------------------------------------------------------------------------------------------------------------------------- 6. AMOUNT CONSIDERED UNCOLLECTIBLE - - ------------------------------------------------------------------------------------------------------------------------------- 7. ACCOUNTS RECEIVABLE (NET) $ - - -------------------------------------------------------------------------------------------------------------------------------
MONTH: September 30, 1999 ------------------ AGING OF POSTPETITION ACCOUNTS PAYABLE - ------------------------------------------------------------------------------------------------------------------------------------ 0-30 31-60 61-90 91+ DAYS DAYS DAYS DAYS TOTAL - ------------------------------------------------------------------------------------------------------------------------------------ ACCOUNTS PAYABLE $ 2,733,661 $ 212,518 $ 399,919 $ 695,835 $ 4,041,933 - ------------------------------------------------------------------------------------------------------------------------------------
NOTE: Accounts payable aged over 30 days represent professional fees subject to 20% holdback provision pursuant to bankruptcy court order. - ---------------------------------------------------- STATUS OF POSTPETITION TAXES MONTH: September 30, 1999 --------------------- - ------------------------------------------------------------------------------------------------------------------------------------ BEGINNING AMOUNT ENDING TAX WITHHELD AND / AMOUNT TAX DELINQUENT FEDERAL LIABILITY* 0R ACCRUED PAID LIABILITY TAXES - ------------------------------------------------------------------------------------------------------------------------------------ 1. WITHHOLDING** $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 2. FICA-EMPLOYEE** $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 3. FICA-EMPLOYER** $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 4. UNEMPLOYMENT $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 5. INCOME $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 6. OTHER (ATTACH LIST) $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 7. TOTAL FEDERAL TAXES $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------
STATE AND LOCAL - ------------------------------------------------------------------------------------------------------------------------------------ 8. WITHHOLDING $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 9. SALES $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 10. EXCISE $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 11. UNEMPLOYMENT $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 12. REAL PROPERTY $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 13. PERSONAL PROPERTY $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 14. OTHER - STATE DISABILITY $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 15. TOTAL STATE & LOCAL $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 16. TOTAL TAXES $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------
* The beginning tax liability should represent the liability from the prior month or, if this is the first operating report, the amount should be zero. ** Attach photocopies of IRS Form 6123 or your FTD coupon and payment receipt to verify payment or deposit. NOTE: No employees were employed by the debtors during the month. - -------------------------------------------------- DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 6 - -------------------------------------------------- - -------------------------------------------------- CASE NUMBERS: 99-108 to 99-127 (MFW) - -------------------------------------------------- The debtor in possession must complete the reconciliation below for each bank account, including all general, payroll and tax accounts, as well as all savings and investment accounts, money market accounts, certificates of deposit, government obligations, etc. Accounts with restricted funds should be identified by placing an asterisk next to the account number. Attach additional sheets if necessary.
MONTH: September 30, 1999 ----------------------- - ------------------------------------------ BANK RECONCILIATIONS Account #1 Account #2 Account #3 Account #4 Account #5 - ------------------------------------------------------------------------------------------------------------------------------------ A. BANK: FIRSTAR FIRSTAR FIRSTAR FIRSTAR FIRSTAR - -------------------------------------------------------------------------------------------------------------------------------- B. PURPOSE (TYPE): OPERATING CANADA UNITED KINGDOM FLETCHER MONEY MARKET - -------------------------------------------------------------------------------------------------------------------------------- 1. BALANCE PER BANK STATEMENT $ 420,892 $ 41,463 $ 1,044,401 $ 28,863,541 $ 5,754,440 - ------------------------------------------------------------------------------------------------------------------------------------ 2. ADD: TOTAL DEPOSITS NOT CREDITED $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 3. SUBTRACT: OUTSTANDING CHECKS $ (421,251) $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 4. OTHER RECONCILING ITEMS (ATTACH LIST) $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------------ 5. MONTH END BALANCE PER BOOKS $ (359) $ 41,463 $ 1,044,401 $ 28,863,541 $ 5,754,440 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 6. NUMBER OF LAST CHECK WRITTEN 1473 1036 1027 None None - ------------------------------------------------------------------------------------------------------------------------------------
Account #6 Account #7 - ------------------------------------------------------------------------------------------------- FIRSTAR FIRSTAR - ------------------------------------------------------------------------------------------------- FRAMINGHAM CBCC - ------------------------------------------------------------------------------------------------- A. BANK: - ------------------------------------------------------------------------------------------------- B. PURPOSE (TYPE): - ------------------------------------------------------------------------------------------------- 1. BALANCE PER BANK STATEMENT $ 37,009 $ 904,819 $ 37,066,565 - ------------------------------------------------------------------------------------------------- 2. ADD: TOTAL DEPOSITS NOT CREDITED $ - $ - $ - - ------------------------------------------------------------------------------------------------- 3. SUBTRACT: OUTSTANDING CHECKS $ - $ - $ (421,251) - ------------------------------------------------------------------------------------------------- 4. OTHER RECONCILING ITEMS (ATTACH LIST) $ - $ - $ - - ------------------------------------------------------------------------------------------------- 5. MONTH END BALANCE PER BOOKS $ 37,009 $ 904,819 $ 36,645,314 - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- 6. NUMBER OF LAST CHECK WRITTEN None None - -------------------------------------------------------------------------------------------------
- --------------------------------------- INVESTMENT ACCOUNTS - ------------------------------------------------------------------------------------------------------------------------------------ DATE OF MATURITY PURCHASE CURRENT BANK ACCOUNT NAME & NUMBER PURCHASE DATE TYPE OF INSTRUMENT PRICE VALUE - ------------------------------------------------------------------------------------------------------------------------------------ 7. FIRSTAR TREASURY BILL ACCOUNT August 19, 1999 September 30, 1999 TREASURY BILL $47,499,772 MATURED - ------------------------------------------------------------------------------------------------------------------------------------ 8. FIRSTAR TREASURY BILL ACCOUNT September 30, 1999 November 30,1999 TREASURY BILL $ 9,999,531 $ 9,999,531 - ------------------------------------------------------------------------------------------------------------------------------------ 9. FIRSTAR TREASURY BILL ACCOUNT September 30, 1999 December 31, 1999 TREASURY BILL $ 9,999,179 $ 9,999,179 - ------------------------------------------------------------------------------------------------------------------------------------ 10. FIRSTAR TREASURY BILL ACCOUNT September 30, 1999 March 23, 2000 TREASURY BILL $21,999,500 $21,999,500 - ------------------------------------------------------------------------------------------------------------------------------------ 11. TOTAL INVESTMENTS $41,998,210 - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------- CASH - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 12. PETTY CASH $ 100 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 13. CURRENCY ON HAND $36,645,414 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ 14. TOTAL CASH - END OF MONTH $78,643,624 - ------------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------- DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 7 - ---------------------------------------------------------- - ---------------------------------------------------------- CASE NUMBERS: 99-108 to 99-127 (MFW) - ---------------------------------------------------------- MONTH: September 30, 1999 ----------------------- - -------------------------------------------------------------------------------- PAYMENTS TO INSIDERS AND PROFESSIONALS - -------------------------------------------------------------------------------- OF THE TOTAL DISBURSEMENTS SHOWN FOR THE MONTH, LIST THE AMOUNT PAID TO INSIDERS (AS DEFINED IN SECTION 101 (31) (A)-(F) OF THE U.S. BANKRUPTCY CODE) AND TO PROFESSIONALS. FOR PAYMENTS TO INSIDERS, IDENTIFY THE TYPE OF COMPENSATION PAID (e.g. SALARY, BONUS, COMMISSIONS, INSURANCE, HOUSING ALLOWANCE, TRAVEL, CAR ALLOWANCE, ETC.). ATTACH ADDITIONAL SHEETS IF NECESSARY.
- ----------------------------------------------------------------------------------------------------------------------------------- INSIDERS - ----------------------------------------------------------------------------------------------------------------------------------- CUMULATIVE TYPE OF AMOUNT UNPAID NAME POSITION PAYMENT PAID BALANCE - ----------------------------------------------------------------------------------------------------------------------------------- 1. Lois Mannon Chief Accounting Officer Fees & Expenses $ 10,002 0 - ----------------------------------------------------------------------------------------------------------------------------------- 2. Thaddeus Bereday President Fees & Expenses 21,016 0 - ----------------------------------------------------------------------------------------------------------------------------------- 3. Robert Smith Board Director Expenses 2,436 0 - ----------------------------------------------------------------------------------------------------------------------------------- 4. - ----------------------------------------------------------------------------------------------------------------------------------- 5. - ----------------------------------------------------------------------------------------------------------------------------------- 6. - ----------------------------------------------------------------------------------------------------------------------------------- 7. - ----------------------------------------------------------------------------------------------------------------------------------- 8. - ----------------------------------------------------------------------------------------------------------------------------------- 9. - ----------------------------------------------------------------------------------------------------------------------------------- 10. - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL PAYMENTS TO INSIDERS $ 33,454 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- PROFESSIONALS - ----------------------------------------------------------------------------------------------------------------------------------- TYPE DATE OF COURT OF ORDER AUTHORIZING AMOUNT AMOUNT TOTAL PAID NAME PROFESSIONAL PAYMENT APPROVED PAID TO DATE - ----------------------------------------------------------------------------------------------------------------------------------- 1. Arthur Andersen LLP Consultant January 20, 1999 $ 128,668 $ 128,668 $ 177,597 - ----------------------------------------------------------------------------------------------------------------------------------- 2. Crossroads Capital Partners Consultant January 20, 1999 $ 26,575 $ 26,575 $ 115,023 - ----------------------------------------------------------------------------------------------------------------------------------- 3. Ernst & Young LLP Consultant January 20, 1999 $ 230,661 $ 230,661 $ 997,632 - ----------------------------------------------------------------------------------------------------------------------------------- 4. Executive Sounding Board Consultant January 20, 1999 $ - $ - $ 25,203 - ----------------------------------------------------------------------------------------------------------------------------------- 5. Hennigan, Mercer & Bennett Legal January 20, 1999 $ 37,566 $ 37,566 $ 457,752 - ----------------------------------------------------------------------------------------------------------------------------------- 6. Houlihan, Lokey, Howard & Zukin Capital Investment Banker January 20, 1999 $ - $ - $ 160,000 - ----------------------------------------------------------------------------------------------------------------------------------- 7. Klehr, Harrison, Harvey, Branzburg & Ellers LLP Legal January 20, 1999 $ 8,634 $ 8,634 $ 52,433 - ----------------------------------------------------------------------------------------------------------------------------------- 8. Morgan, Lewis & Bockius Legal January 20, 1999 $ 45,997 $ 45,997 $ 246,810 - ----------------------------------------------------------------------------------------------------------------------------------- 9. Munsch, Hardt, Kopf & Harr Legal January 20, 1999 $ 159,269 $ 159,269 $ 648,837 - ----------------------------------------------------------------------------------------------------------------------------------- 10. Young, Conaway, Stargatt & Taylor Legal January 20, 1999 $ 28,849 $ 28,849 $ 270,892 - ----------------------------------------------------------------------------------------------------------------------------------- 11. Zolpho Cooper, LLC Consultant January 20, 1999 $ 44,220 $ 44,220 $ 323,867 - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL PAYMENTS TO PROFESSIONALS $ 710,439 $ 710,439 $ 3,476,046 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- ADEQUATE PROTECTION PAYMENTS - ----------------------------------------------------------------------------------------------------------------------------------- SCHEDULED AMOUNTS MONTHLY PAID TOTAL PAYMENTS DURING UNPAID NAME OF CREDITOR DUE MONTH POSTPETITION - ----------------------------------------------------------------------------------------------------------------------------------- 1. NOT APPLICABLE DURING THE CURRENT REPORTING PERIOD - ----------------------------------------------------------------------------------------------------------------------------------- 2. - ----------------------------------------------------------------------------------------------------------------------------------- 3. - ----------------------------------------------------------------------------------------------------------------------------------- 4. - ----------------------------------------------------------------------------------------------------------------------------------- 5. - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL - -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------- DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 8 - ------------------------------------------------------- - ------------------------------------------------------- CASE NUMBERS: 99-108 to 99-127 (MFW) - ------------------------------------------------------- MONTH: September 30, 1999 ----------------------------
- ---------------------------------------------------------- QUESTIONNAIRE - ----------------------------------------------------------------------------------------------------------------- YES NO - ----------------------------------------------------------------------------------------------------------------- 1. HAVE ANY ASSETS BEEN SOLD OR TRANSFERRED OUTSIDE THE NORMAL COURSE OF BUSINESS DURING THIS REPORTING PERIOD? X - ----------------------------------------------------------------------------------------------------------------- 2. HAVE ANY FUNDS BEEN DISBURSED FROM ANY ACCOUNT OTHER THAN A DEBTOR IN POSSESSION ACCOUNT? X - ----------------------------------------------------------------------------------------------------------------- 3. ARE ANY POSTPETITION RECEIVABLES (ACCOUNTS, NOTES, OR LOANS) DUE FROM RELATED PARTIES? X - ----------------------------------------------------------------------------------------------------------------- 4. HAVE ANY PAYMENTS BEEN MADE ON PREPETITION LIABILITIES THIS REPORTING PERIOD? X - ----------------------------------------------------------------------------------------------------------------- 5. HAVE ANY POSTPETITION LOANS BEEN RECEIVED BY THE DEBTOR FROM ANY PARTY? X - ----------------------------------------------------------------------------------------------------------------- 6. ARE ANY POSTPETITION PAYROLL TAXES PAST DUE? X - ----------------------------------------------------------------------------------------------------------------- 7. ARE ANY POSTPETITION STATE OR FEDERAL INCOME TAXES PAST DUE? X - ----------------------------------------------------------------------------------------------------------------- 8. ARE ANY POSTPETITION REAL ESTATE TAXES PAST DUE? X - ----------------------------------------------------------------------------------------------------------------- 9. ARE ANY OTHER POSTPETITION TAXES PAST DUE? X - ----------------------------------------------------------------------------------------------------------------- 10. ARE ANY AMOUNTS OWED TO POSTPETITION CREDITORS X - ----------------------------------------------------------------------------------------------------------------- 11. HAVE ANY PREPETITION TAXES BEEN PAID DURING THE REPORTING PERIOD? X - ----------------------------------------------------------------------------------------------------------------- 12. ARE ANY WAGE PAYMENTS PAST DUE? X - ----------------------------------------------------------------------------------------------------------------- IF THE ANSWER TO ANY OF THE ABOVE QUESTIONS IS "YES," PROVIDE A DETAILED EXPLANATION OF EACH ITEM. ATTACH ADDITIONAL SHEETS IF NECESSARY. - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- 10. Pursuant to ordinary course business transactions with creditors in accordance with standard payment terms, certain amounts were outstanding. - ----------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------- INSURANCE - ----------------------------------------------------------------------------------------------------------------- YES NO - ----------------------------------------------------------------------------------------------------------------- 1. ARE WORKER'S COMPENSATION, GENERAL LIABILITY AND OTHER NECESSARY INSURANCE COVERAGES IN EFFECT? X - ----------------------------------------------------------------------------------------------------------------- 2. ARE ALL PREMIUM PAYMENTS PAID CURRENT? X - ----------------------------------------------------------------------------------------------------------------- 3. PLEASE ITEMIZE POLICIES BELOW. - -----------------------------------------------------------------------------------------------------------------
IF THE ANSWER TO ANY OF THE ABOVE QUESTIONS IS "NO," OR IF ANY POLICIES HAVE BEEN CANCELLED OR NOT RENEWED DURING THIS REPORTING PERIOD, PROVIDE AN EXPLANATION BELOW. ATTACH ADDITIONAL SHEETS IF NECESSARY.
- ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- INSURANCE POLICIES - ----------------------------------------------------------------------------------------------------------------------------------- TYPE OF PERIOD PAYMENT AMOUNT POLICY CARRIER COVERED & FREQUENCY - ----------------------------------------------------------------------------------------------------------------------------------- 1. Directors & Officers Liability Genesis 10/22/98-10/22/99 $175,000 & annual - ----------------------------------------------------------------------------------------------------------------------------------- 2. Directors & Officers Liability Agricultural Excess 10/22/98-10/22/99 $87,500 & annual - ----------------------------------------------------------------------------------------------------------------------------------- 3. Directors & Officers Liability Zurich-American 10/22/98-10/22/99 $92,000 & annual - ----------------------------------------------------------------------------------------------------------------------------------- 4. Directors & Officers Liability Genesis 10/22/98-10/22/99 $60,000 & annual - ----------------------------------------------------------------------------------------------------------------------------------- 5. Directors & Officers Liability (A-side) Executive Risk 12/11/98-10/22/99 $150,000 & annual - ----------------------------------------------------------------------------------------------------------------------------------- 6. Directors & Officers Liability (A-side) Reliance Insurance Co. 12/11/98-10/22/99 $105,000 & annual - ----------------------------------------------------------------------------------------------------------------------------------- 7. Crime Travelers Group 8/6/99-8/6/00 $3,587 & annual - ----------------------------------------------------------------------------------------------------------------------------------- 8. Bond Premium Harry Koch 9/25/98-9/25/99 $500 & annual - ----------------------------------------------------------------------------------------------------------------------------------- 9. Business Auto Travelers Group 3/24/99-3/24/00 $8,106 annual - ----------------------------------------------------------------------------------------------------------------------------------- 10. Boiler & Machinery Travelers Group 3/24/99-3/24/00 $1,547 annual - ----------------------------------------------------------------------------------------------------------------------------------- 11. Commercial Umbrella Travelers Group 3/24/99-3/24/00 $12,212 annual - ----------------------------------------------------------------------------------------------------------------------------------- 12. Kidnap & Ransom Travelers Group 3/24/99-3/24/00 $1,133 annual - ----------------------------------------------------------------------------------------------------------------------------------- 13. Fiduciary Liability Travelers Group 3/24/99-3/24/00 $1,002 annual - ----------------------------------------------------------------------------------------------------------------------------------- 14. Worker's Compensation - Illinois* Wausau 3/24/99-3/24/00 $547 annual - ----------------------------------------------------------------------------------------------------------------------------------- 15. Worker's Compensation - All Other States* Wausau 3/24/99-3/24/00 $17,073 annual - ----------------------------------------------------------------------------------------------------------------------------------- 16. Worker's Compensation - Administration Fee* Picton Cavanaugh 3/24/99-3/24/00 $15,000 annual - ----------------------------------------------------------------------------------------------------------------------------------- 17. Commercial Package Policy Travelers Group 3/24/99-3/24/00 $41,532 annual - -----------------------------------------------------------------------------------------------------------------------------------
*Worker's Compensation and General Liability premiums are based on "estimated" payrolls. Premium adjustments may be made as actual payrolls are known. - ---------------------------------------------------- DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 9 - ---------------------------------------------------- - ---------------------------------------------------- CASE NUMBERS: 99-108 to 99-127 (MFW) - ---------------------------------------------------- MONTH: September 30, 1999 ----------------------
- ------------------------------------------------------------------------------------------------------------ PERSONNEL * - ------------------------------------------------------------------------------------------------------------ FULLTIME PART TIME - ------------------------------------------------------------------------------------------------------------ 1. Total number of employees at beginning of month 0 0 - ------------------------------------------------------------------------------------------------------------ 2. Number of employees hired during the month 0 0 - ------------------------------------------------------------------------------------------------------------ 3. Number of employees terminated or resigned during the month 0 0 - ------------------------------------------------------------------------------------------------------------ 4. Total number of employees on payroll at end of month 0 0 - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------
* Effective May 1999, the Debtors no longer have any employees. Rather, the eight representatives responsible for administering the bankruptcy estates have been engaged as independent contractors. - -------------------------------------------------------------------------------- CHANGE OF ADDRESS - -------------------------------------------------------------------------------- If your mailing address has changed and you have not previously notified the United States Trustees of the change, list your new address below: -----END PRIVACY-ENHANCED MESSAGE-----