<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) 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)
<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 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}
<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: November 15, 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 September 1, 1999
through September 30, 1999
(Page 4 of 4 Pages)
<PAGE>
- ------------------------------------------------------------
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.
<PAGE>
- --------------------------------------------------
DEBTORS: WORLDWIDE DIRECT, INC., et al. ACCRUAL BASIS - 2
- --------------------------------------------------
- --------------------------------------------------
CASE NUMBERS: 99-108 to 99-127 (MFW)
- --------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------
THIRD QUARTER
COMPARATIVE BALANCE SHEET -----
- --------------------------------------------------
MONTH MONTH MONTH
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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.
<PAGE>
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).
<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
-------------------------------------------------------
<S> <C> <C> <C> <C>
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)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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.
<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 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)
============ ============ ============
</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 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).
<PAGE>
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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CASH RECEIPTS AND MONTH
DISBURSEMENTS ----------------------------------
9/1/99-9/30/99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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
- ------------------------------------------------------------------------------------------------------------------------------------
</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 September 30, 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: September 30, 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 $ 2,733,661 $ 212,518 $ 399,919 $ 695,835 $ 4,041,933
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Accounts payable aged over 30 days represent professional fees subject to
20% holdback provision pursuant to bankruptcy court order.
<TABLE>
- ----------------------------------------------------
STATUS OF POSTPETITION TAXES MONTH: September 30, 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 $ - $ - $ - $ - $ -
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STATE AND LOCAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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: September 30, 1999
-----------------------
- ------------------------------------------
BANK RECONCILIATIONS
Account #1 Account #2 Account #3 Account #4 Account #5
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Account #6 Account #7
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------
INVESTMENT ACCOUNTS
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------
CASH
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
12. PETTY CASH $ 100
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
13. CURRENCY ON HAND $36,645,414
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
14. TOTAL CASH - END OF MONTH $78,643,624
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ----------------------------------------------------------
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INSIDERS
- -----------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
TYPE OF AMOUNT UNPAID
NAME POSITION PAYMENT PAID BALANCE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
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 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
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ADEQUATE PROTECTION PAYMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
SCHEDULED AMOUNTS
MONTHLY PAID TOTAL
PAYMENTS DURING UNPAID
NAME OF CREDITOR DUE MONTH POSTPETITION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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: September 30, 1999
----------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------
QUESTIONNAIRE
- -----------------------------------------------------------------------------------------------------------------
YES NO
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
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
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
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 8/6/99-8/6/00 $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
- -----------------------------------------------------------------------------------------------------------------------------------
</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: September 30, 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. 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:
