<PAGE>
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) September 16, 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.)
5080 Tuttle Crossing Boulevard, Dublin, Ohio 43016-3566
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
The Company's telephone number, including area code (614) 789-8600
-----------------------------
No change
- --------------------------------------------------------------------------------
(Former Name or Address, if Changed Since Last Report)
<PAGE>
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 September 16,
1999 the Company filed its Monthly Operating Report for the period of July 1,
1999 through July 31, 1999 (the "July MOR") with the Office of the United States
Trustee - Region 3 and the Bankruptcy Court.
A copy of the June 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 July 1, 1999 through
July 31, 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 July 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}
<PAGE>
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: September 16, 1999 By: /s/ Thaddeus Bereday
-------------------------------------------
Name: Thaddeus Bereday
Title: President and Acting General Counsel
(Page 3 of 4 Pages)
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ---------- -----------
99.1 Monthly Operating Report for the period of July 1, 1999 through
July 31, 1999
(Page 4 of 4 Pages)
<PAGE>
EXHIBIT 99.1
- -----------------------------------------
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: July 31, 1999
FOR THE PERIOD: July 1, 1999 through July 31, 1999
---------------------------------------------------------
<TABLE>
<CAPTION>
Document Previously Explanation
Required Attachments Attached Submitted Attached
<S> <C> <C> <C>
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
</TABLE>
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:
/s/ Thaddeus Bereday President
- ----------------------------------------------- -------------------------------
ORIGINAL SIGNATURE OF RESPONSIBLE PARTY TITLE
Thaddeus Bereday 9/15/99
- ----------------------------------------------- -------------------------------
PRINTED NAME OF RESPONSIBLE PARTY DATE
PREPARER:
/s/ Lois Mannon Chief Accounting Officer
- ----------------------------------------------- -------------------------------
ORIGINAL SIGNATURE OF PREPARER TITLE
Lois Mannon 9/15/99
- ----------------------------------------------- -------------------------------
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.
<PAGE>
- ----------------------------------------------
DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 2
- ----------------------------------------------
- ----------------------------------------------
CASE NUMBERS: 99-108 to 99-127 (MFW)
- ----------------------------------------------
THIRD QUARTER
- ---------------------------------------------- -----
COMPARATIVE BALANCE SHEET
- ----------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
MONTH MONTH MONTH
-----------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
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
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SMARTALK TELESERVICES, INC. AND SUBSIDIARIES
DEBTORS - IN - POSSESSION
CONSOLIDATING BALANCE SHEET
AS OF: JULY 31, 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.
<TABLE>
<CAPTION>
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
------- ----------- -----------
<S> <C> <C> <C>
Assets
Current assets:
Cash 79,568,787 - 79,568,787
Cash held for non-debtors 1,130,753 - 1,130,753
AT&T holdback note receivable 40,000,000 - 40,000,000
Interest receivable 666,667 - 666,667
Notes receivable, net 4,583,112 - 4,583,112
Inventory 2,735,650 - 2,735,650
Prepaid expenses 116,118 - 116,118
----------- -------------- -------------
Total current assets 128,801,087 - 128,801,087
Non current assets:
Property and equipment, net 1,483,395 - 1,483,395
----------- -------------- -------------
Total non current assets 1,483,395 1,483,395
Total assets 130,284,482 - 130,284,482
=========== ============== =============
Liabilities and equity
Current liabilities:
Postpetition accounts payable 3,380,473 764,839 4,145,312
Excise & sales tax payable - - -
Other accrued 4,780,813 49,284 4,830,097
----------- -------------- -------------
Total current liabilities 8,161,286 814,123 8,975,409
Prepetition liabilities:
Accounts payable 46,171,652 - 46,171,652
Excise & sales tax payable 2,465,777 - 2,465,777
Other accrued 20,066,593 103,778 20,170,371
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 228,041,068 103,778 228,144,846
----------- -------------- -------------
Total liabilities 236,202,354 917,901 237,120,255
Intercompany (3,311,005) 3,311,005 -
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) (210,178,250) (533,605) (210,709,855)
----------- -------------- -------------
Total shareholders' equity (102,606,867) (4,228,906) (106,835,773)
----------- -------------- -------------
Total liabilities and equity 130,284,482 - 130,284,482
=========== ============== =============
</TABLE>
Readers are cautioned to read the attached addendum to the financial statements.
<PAGE>
SMARTALK TELESERVICES, INC. AND SUBSIDIARIES
DEBTORS-IN-POSSESSION
ADDENDUM TO FINANCIAL STATEMENTS
For the month ended July 31, 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 have
agreed to extend the review period to, and including, September 13, 1999.
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 million
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. Although the Company and AT&T have not
yet finalized the Closing Statements, AT&T has suggested that the principal
amount of the Holdback Note be reduced by $4,578,072 to $35,421,928. Due to
the uncertainty surrounding the amount of offsets, if any, against the
Holdback Note, the Company will continue to report the value of the Holdback
Note as the stated face amount until the Closing Statements are finalized.
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. During July 1999, the Company has written down the value of its
inventory by $1,964,935 to $2,735,650 based on a range of potential
purchasing bids from outside third parties. The liquidation of such assets
has not yet occurred and thus the actual liquidation value and impairment
loss may differ from the Company's preliminary estimates that have been used
to prepare the financial statements included herein. The Company undertakes
no obligation to update its estimate of the loss or impairment of assets and
the related liquidation losses (other than updates that are consistent with
the Debtors' obligations to file monthly operating reports). The Company
will adjust the carrying amounts of such assets in future reporting periods
when more accurate realizable values are determined.
4. In connection with the claims reconciliation process pursuant to the
Company's bankruptcy proceeding, the Bankruptcy Court has 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 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).
4
<PAGE>
--------------------------------------------
DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 3
--------------------------------------------
--------------------------------------------
CASE NUMBERS: 99-108 to 99-127 (MFW) THIRD QUARTER
-------------------------------------------- -----
<TABLE>
<CAPTION>
---------------------------------------
INCOME STATEMENT
-------------------------------------------------------------------------------
MONTH MONTH MONTH QUARTER
REVENUES TOTAL
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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)
-------------------------------------------------------------------------------
</TABLE>
<PAGE>
SMARTALK TELESERVICES, INC. AND SUBSIDIARIES
DEBTORS - IN - POSSESSION
CONSOLIDATING INCOME STATEMENT
For the month ended July 31, 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.
<TABLE>
<CAPTION>
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
------- ----------- -----------
<S> <C> <C> <C>
Revenue - - -
Cost of revenue - - -
---------- ------- ----------
Gross profit - - -
Expenses:
General and administrative 291,205 36,960 328,185
Reorganization costs:
Professionals cost 1,251,168 31,884 1,283,052
Inventory write down to net realizable value 1,964,355 - 1,964,355
Other 85,953 - 85,953
---------- ------- ----------
Operating profit (loss) (3,628,680) (68,844) (3,697,524)
Interest expense - - -
Other income 308,497 - 308,497
Interest income 379,679 2,883 382,562
---------- ------- ----------
Net profit (loss) (2,940,504) (65,961) (3,006,465)
========== ======= ==========
</TABLE>
Readers are cautioned to read the attached addendum to the financial statements.
<PAGE>
SMARTALK TELESERVICES, INC. AND SUBSIDIARIES
DEBTORS-IN-POSSESSION
ADDENDUM TO FINANCIAL STATEMENTS
For the month ended July 31, 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 have
agreed to extend the review period to, and including, September 13, 1999.
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 million
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. Although the Company and AT&T have not
yet finalized the Closing Statements, AT&T has suggested that the principal
amount of the Holdback Note be reduced by $4,578,072 to $35,421,928. Due to
the uncertainty surrounding the amount of offsets, if any, against the
Holdback Note, the Company will continue to report the value of the Holdback
Note as the stated face amount until the Closing Statements are finalized.
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. During July 1999, the Company has written down the value of its
inventory by $1,964,935 to $2,735,650 based on a range of potential
purchasing bids from outside third parties. The liquidation of such assets
has not yet occurred and thus the actual liquidation value and impairment
loss may differ from the Company's preliminary estimates that have been used
to prepare the financial statements included herein. The Company undertakes
no obligation to update its estimate of the loss or impairment of assets and
the related liquidation losses (other than updates that are consistent with
the Debtors' obligations to file monthly operating reports). The Company
will adjust the carrying amounts of such assets in future reporting periods
when more accurate realizable values are determined.
4. In connection with the claims reconciliation process pursuant to the
Company's bankruptcy proceeding, the Bankruptcy Court has 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 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).
7
<PAGE>
ACCRUAL BASIS - 4
--------------------------------------------
DEBTORS: WORLDWIDE DIRECT, INC., et al. THIRD QUARTER
-------------------------------------------- -----
Bank: FIRSTAR
-------------------------------------------- -------
CASE NUMBERS: 99-108 to 99-127 (MFW)
-------------------------------------------- Account no.: 4889-40040
----------
Account type: Operating
NOTE: ---------
ALL CASH DISBURSEMENTS, EXCLUDING INTER-ACCOUNT TRANSFERS, ARE DISBURSED
OUT OF THE FIRSTAR OPERATING ACCOUNT FROM SMTK EXPEDITE CO., INC. (f.k.a.
SMARTALK TELESERVICES, INC.) CASE NUMBER 99-109.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
CASH RECEIPTS AND MONTH
-------------------------------
DISBURSEMENTS 7/1/99 - 7/31/99
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. CASH - BEGINNING OF MONTH $ 869,793
-----------------------------------------------------------------------------------------------------------------------------
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 $ 1,000,000
-----------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS RECEIPTS FROM REFUNDS $ 246,075
-----------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS TIMING ADJUSTMENTS $ -
-----------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER $ 1,246,075
-----------------------------------------------------------------------------------------------------------------------------
7. TOTAL RECEIPTS $ 1,246,075
-----------------------------------------------------------------------------------------------------------------------------
8. TOTAL CASH AVAILABLE $ 2,115,868
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
OPERATING DISBURSEMENTS
-----------------------------------------------------------------------------------------------------------------------------
9. CHECKS WRITTEN - (SEE ATTACHED LIST) $ 968,792
-----------------------------------------------------------------------------------------------------------------------------
10. WIRE TRANSFERS - (SEE ATTACHED LIST) $ 2,666
-----------------------------------------------------------------------------------------------------------------------------
11. OTHER:
-----------------------------------------------------------------------------------------------------------------------------
CASH TRANSFERS OUT $ -
-----------------------------------------------------------------------------------------------------------------------------
BANK CHARGES $ -
-----------------------------------------------------------------------------------------------------------------------------
12. TOTAL OTHER $ -
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
TOTAL DISBURSEMENTS FROM BANK ACCOUNT $ 971,458
-----------------------------------------------------------------------------------------------------------------------------
ENDING ACCOUNT BALANCE $ 1,144,410
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
ADD: CASH BALANCES FROM NON-OPERATING ACCOUNTS $ 35,284,718
SEE ACCRUAL BASIS - 6
-----------------------------------------------------------------------------------------------------------------------------
ADD: SHORT-TERM TREASURY BILL SECURITIES BALANCES $ 44,270,473
SEE ACCRUAL BASIS - 6
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
END OF MONTH BALANCE (SHOULD EQUAL ACCRUAL BASIS - 6, LINE 14) $ 80,699,541
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------
DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 5
--------------------------------------------
--------------------------------------------
CASE NUMBERS: 99-108 to 99-127 (MFW)
--------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
MONTH MONTH MONTH
-------------------------------------------------------------
ACCOUNTS RECEIVABLE AGING July 31, 1999
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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) $ -
-------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------
MONTH: July 31, 1999
-------------
AGING OF POSTPETITION ACCOUNTS PAYABLE
-------------------------------------------------------------------------------------------------------------------
0-30 31-60 61-90 91+
DAYS DAYS DAYS DAYS TOTAL
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ACCOUNTS PAYABLE $ 1,265,275 $ 695,193 $ 1,075,247 $ 344,758 $ 3,380,473
-------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Accounts payable aged over 30 days represent professional fees
subject to 20% holdback provision pursuant to bankruptcy court order.
<TABLE>
<CAPTION>
---------------------------------------------------
STATUS OF POSTPETITION TAXES MONTH: July 31, 1999
-------------
--------------------------------------------------------------------------------------------------------------------
BEGINNING AMOUNT ENDING
TAX WITHHELD AND/ AMOUNT TAX DELINQUENT
FEDERAL LIABILITY* 0R ACCRUED PAID LIABILITY TAXES
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 $ - $ - $ - $ - $ -
--------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
<PAGE>
---------------------------------------
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.
<TABLE>
<CAPTION>
MONTH: July 31, 1999
----------------------------------- -------------
BANK RECONCILIATIONS
Account #1 Account #2 Account #3 Account #4 Account #5
------------------------------------------------------------------------------------------------------------------------
A. BANK: FIRSTAR FIRSTAR FIRSTAR FIRSTAR FIRSTAR
------------------------------------------------------------------------------------------------------------------------
B. ACCOUNT NUMBER: 4889-40040 4889-40099 4889-40107 4889-40115 4889-40123
------------------------------------------------------------------------------------------------------------------------
C. PURPOSE (TYPE): OPERATING CANADA UNITED KINGDOM FLETCHER MONEY MARKET
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. BALANCE PER BANK STATEMENT $ 1,254,163 $ 50,256 $ 1,080,497 $ 28,709,521 $ 5,444,352
------------------------------------------------------------------------------------------------------------------------
2. ADD: TOTAL DEPOSITS NOT CREDITED $ - $ - $ - $ - $ -
------------------------------------------------------------------------------------------------------------------------
3. SUBTRACT: OUTSTANDING CHECKS $ (109,753) $ - $ - $ - $ -
------------------------------------------------------------------------------------------------------------------------
4. OTHER RECONCILING ITEMS (ATTACH LIST) $ - $ - $ - $ - $ -
------------------------------------------------------------------------------------------------------------------------
5. MONTH END BALANCE PER BOOKS $ 1,144,410 $ 50,256 $ 1,060,497 $ 28,709,521 $ 5,444,352
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
6. NUMBER OF LAST CHECK WRITTEN 1318 1036 1027 None None
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------
INVESTMENT ACCOUNTS
------------------------------------------------------
DATE OF MATURITY TYPE OF PURCHASE
BANK ACCOUNT NAME & NUMBER PURCHASE DATE INSTRUMENT PRICE
------------------------------------------------------------------------------------------------------------------------
7. FIRSTAR TREASURY BILL ACCOUNT #2260-00038 June 3, 1999 July 8, 1999 TREASURY BILL $ 42,499,748
------------------------------------------------------------------------------------------------------------------------
8. FIRSTAR TREASURY BILL ACCOUNT #2260-00038 July 8, 1999 August 19, 1999 TREASURY BILL $ 39,173,106
-------------------------------------------------------------------------------------------------------------------------
9. FIRSTAR TREASURY BILL ACCOUNT #2260-00038 July 14, 1999 August 19, 1999 TREASURY BILL $ 4,978,000
------------------------------------------------------------------------------------------------------------------------
10.
------------------------------------------------------------------------------------------------------------------------
11. TOTAL INVESTMENTS
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------
CASH
------------------------------------------------------------------------------------------------------------------------
12. PETTY CASH
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
13. CURRENCY ON HAND
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
14. TOTAL CASH - END OF MONTH
------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------
BANK RECONCILIATIONS
Account #6
--------------------------------------------------------------------------------
A. BANK: FIRSTAR
-----------------------------------------------------------------
B. ACCOUNT NUMBER: 82160-6514 TOTAL
-----------------------------------------------------------------
C. PURPOSE (TYPE): FRAMINGHAM
--------------------------------------------------------------------------------
<S> <C> <C>
1. BALANCE PER BANK STATEMENT (3) $ 36,538,786
--------------------------------------------------------------------------------
2. ADD: TOTAL DEPOSITS NOT CREDITED - $ -
--------------------------------------------------------------------------------
3. SUBTRACT: OUTSTANDING CHECKS - $ (109,753)
--------------------------------------------------------------------------------
4. OTHER RECONCILING ITEMS (ATTACH LIST) - $ -
--------------------------------------------------------------------------------
5. MONTH END BALANCE PER BOOKS (3) $ 36,429,033
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
6. NUMBER OF LAST CHECK WRITTEN
--------------------------------------------------------------------------------
-------------------------------------------
INVESTMENT ACCOUNTS
--------------------------------------------------------------------------------
CURRENT
BANK ACCOUNT NAME & NUMBER VALUE
--------------------------------------------------------------------------------
7. FIRSTAR TREASURY BILL ACCOUNT #2260-00038 MATURED
--------------------------------------------------------------------------------
8. FIRSTAR TREASURY BILL ACCOUNT #2260-00038 $ 39,282,034
--------------------------------------------------------------------------------
9. FIRSTAR TREASURY BILL ACCOUNT #2260-00038 $ 4,989,389
--------------------------------------------------------------------------------
10.
--------------------------------------------------------------------------------
11. TOTAL INVESTMENTS $ 44,270,413
--------------------------------------------------------------------------------
-------------------------------------------
CASH
--------------------------------------------------------------------------------
12. PETTY CASH $ 95
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
13. CURRENCY ON HAND $ 36,429,128
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14. TOTAL CASH - END OF MONTH $ 80,699,541
--------------------------------------------------------------------------------
</TABLE>
<PAGE>
----------------------------------------------------
DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 7
----------------------------------------------------
----------------------------------------------------
CASE NUMBERS: 99-108 to 99-127 (MFW)
---------------------------------------------------
MONTH: July 31, 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.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
INSIDERS
-----------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
TYPE OF AMOUNT UNPAID
NAME POSITION PAYMENT PAID BALANCE
-----------------------------------------------------------------------------------------------------------------------------
1. Lois Mannon Chief Accounting Officer Fees $ 10,060 0
-----------------------------------------------------------------------------------------------------------------------------
2. Thaddeus Bereday President Fees & Expenses 21,016 0
-----------------------------------------------------------------------------------------------------------------------------
3.
-----------------------------------------------------------------------------------------------------------------------------
4.
-----------------------------------------------------------------------------------------------------------------------------
5.
-----------------------------------------------------------------------------------------------------------------------------
6.
-----------------------------------------------------------------------------------------------------------------------------
7.
-----------------------------------------------------------------------------------------------------------------------------
8.
-----------------------------------------------------------------------------------------------------------------------------
9.
-----------------------------------------------------------------------------------------------------------------------------
10.
-----------------------------------------------------------------------------------------------------------------------------
TOTAL PAYMENTS TO INSIDERS $ 31,076
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
PROFESSIONALS
-----------------------------------------------------------------------------------------------------------------------------
TYPE DATE OF COURT
OF ORDER AUTHORIZING AMOUNT AMOUNT TOTAL PAID
NAME PROFESSIONAL PAYMENT APPROVED PAID TO DATE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Arthur Anderson LLP Consultant January 20, 1999 $ 48,929 $ 48,929 $ 48,929
------------------------------------------------------------------------------------------------------------------------------
2. Crossroads Capital Partners Consultant January 20, 1999 $ 88,448 $ 88,448 $ 88,448
------------------------------------------------------------------------------------------------------------------------------
3. Ernst & Young LLP Consultant January 20, 1999 $109,033 $109,033 $ 494,139
------------------------------------------------------------------------------------------------------------------------------
4. Hennigan, Mercer & Bennelli Legal January 20, 1999 $202,226 $202,226 $ 202,226
------------------------------------------------------------------------------------------------------------------------------
5. Houlihan, Lokey, Howard & Zukin Capital Investment Banker January 20, 1999 $ - $ - $ 160,000
------------------------------------------------------------------------------------------------------------------------------
6. Klehr, Harrison, Harvey, Branzburg & Ellers LLP Legal January 20, 1999 $ 21,032 $ 21,032 $ 43,799
------------------------------------------------------------------------------------------------------------------------------
7. Munsch, Hardt, Kopf & Harr Legal January 20, 1999 $121,314 $121,314 $ 381,558
------------------------------------------------------------------------------------------------------------------------------
8. Young, Conaway, Stargait & Taylor Legal January 20, 1999 $122,298 $122,298 $ 122,298
------------------------------------------------------------------------------------------------------------------------------
9. Zolpho Cooper, LLC Consultant January 20, 1999 $ - $ - $ 143,290
------------------------------------------------------------------------------------------------------------------------------
10.
-----------------------------------------------------------------------------------------------------------------------------
11. TOTAL PAYMENTS TO PROFESSIONALS $713,279 $713,279 $1,684,686
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
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
</TABLE>
<PAGE>
- --------------------------------------
DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 8
- --------------------------------------
- --------------------------------------
CASE NUMBERS: 99-108 to 99-127 (MFW)
- --------------------------------------
MONTH: July 31, 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE POLICIES
- ------------------------------------------------------------------------------------------------------------------------------------
TYPE OF PERIOD PAYMENT AMOUNT
POLICY CARRIER COVERED & FREQUENCY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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 8/6/98-8/6/99 $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
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Worker's Compensation and General Liability premiums are based on "estimated"
payrolls. Premium adjustments may be made as actual payrolls are known.
- --------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------
DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 9
- ------------------------------------------------------
- ------------------------------------------------------
CASE NUMBERS: 99-108 to 99-127 (MFW)
- ------------------------------------------------------
MONTH: July 31, 1999
-------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PERSONNEL *
- ------------------------------------------------------------------------------------------------------------------------------------
FULLTIME PART TIME
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Effective May 1999, the Debtors no longer have any employees. The six
representatives responsible for administering the bankruptcy estates are
engaged as independent contractors.
- --------------------------------------------------------------------------------
CHANGE OF ADDRESS
- --------------------------------------------------------------------------------
If your mailing address has changed and you have not previously notified the
DATE of CHANGE: _______________________________
NEW ADDRESS
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
