<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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) October 12, 1998
2CONNECT EXPRESS, INC.
--------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA
-------------------------------------
(State or other jurisdiction of
incorporation or organization)
000-22251 65-0674664
--------- ------------
(Commission (I.R.S. Employer
file number) Identification No.)
3500 Gateway Drive, Suite 101, Pompano Beach, FL 33069
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 797-7960
- -------------------------------------------------------------------------------
NOT APPLICABLE
-------------------------
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE> 2
Item 5. OTHER EVENTS
On October 12, 1998, 2Connect Express, Inc. filed with the United States
Bankruptcy Court the Debtor's Monthly Financial Report (Business) for the period
from August 30, 1998 to October 3, 1998. A copy of this report is filed as
Exhibit 99 hereto.
On October 16, 1998, 2Connect Express, Inc. issued a Press Release announcing
that the Bankruptcy Court, Southern District of Florida, executed an Order
confirming 2Connect's Plan of Reorganization. The Effective Date of the Plan of
Reorganization will be October 26, 1998, 10 days following the confirmation. The
Press Release further stated that, "as previously disclosed, 2Connect entered
into an agreement with Sterne, Agee & Leach, Inc. on August 27, 1998 whereby
Sterne Agee will, as of the Effective Date of the Plan of Reorganization,
acquire out of bankruptcy 100% of the equity interests of 2Connect and 2Connect
will retain the Coral square store lease and certain store fixtures. In
consideration for such acquisition, Sterne Agee will make a new value
contribution to the bankruptcy estate for the benefit of 2Connect's creditors in
the amount of $175,000 which funds are currently in escrow. To effect this
transaction and in accordance with the Plan of Reorganization, as amended, upon
the Effective Date, all of the current and existing Common Stock of 2Connect
will be forever extinguished and canceled and 2Connect will issue new shares of
Common Stock to Sterne Agee which shall constitute 100% of the issued and
outstanding shares. Consequently, the existing shareholders of the Common Stock
of 2Connect will not retain any interest in the post-bankruptcy estate for their
extinguished and cancelled interests. 2Connect filed a voluntary petition for
relief under Chapter 11 of the U.S. Bankruptcy Code on January 12, 1998, and
subsequently closed all of its stores except the store at Coral Square Mall in
Coral Springs, Florida. 2Connect has liquidated most of its assets and has
reduced overhead to skeleton levels. The Coral Square store has operated since
June 16, 1998 under a Management Agreement with Bobby Allison Cellular Systems
of Florida whereby Bobby Allison is responsible for all expenses related to that
store and is entitled to any profits or losses that it generates."
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
Exhibit 99. Debtor's Monthly Financial Report (Business)
For The Period From August 30, 1998 to October 3,
1998, filed with the United States Bankruptcy Court.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
2CONNECT EXPRESS, INC.
-----------------------
(Registrant)
Date: October 26, 1998 /s/ James S. Holbrook, Jr.
------------------- -------------------------------------
James S. Holbrook, Jr., Chairman of
the Board and Chief Executive Officer
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description Sequentially Numbered Page
- -------------- ----------- --------------------------
<S> <C> <C>
99 Debtor's Monthly Financial Report 5
for the period from August 30, 1998
to October 3, 1998
</TABLE>
<PAGE> 1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
FT. LAUDERDALE DIVISION
IN RE: | CASE NUMBER: 98-20169-BKC-RBR
|
DEBTOR. | JUDGE: Raymond B. Ray
| CHAPTER 11
DEBTOR'S MONTHLY FINANCIAL REPORT (BUSINESS)
FOR THE PERIOD
FROM August 30, 1998 TO October 3, 1998 (10-3-98 is fiscal month-end per books)
Comes now the above-named debtor and files its Periodic Financial reports in
accordance with the Guidelines established by the United States Trustee and FRBP
2015.
Paul J. Battista, Esq.
Attorney for Debtor
Debtor's Address and Phone Number: Attorney's Address and Phone Number:
2CONNECT EXPRESS, INC. Kelley, Drye & Warren, LLP
3500 Gateway Drive 201 S. Biscayne Blvd.
Suite 101 2400 Miami Center
Pompano Beach, FL 33069 Miami, FL 33131
(954) 971-3555 (305) 372-2400
1 of 16
<PAGE> 2
MONTHLY FINANCIAL REPORT FOR BUSINESS
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
Date of Petition: January 12, 1998
<TABLE>
<CAPTION>
CUMULATIVE
CURRENT MONTH PETITION TO DATE
-------------- ----------------
<S> <C> <C>
1. Cash at Beginning of Period $ 728,790.65 $ 106,714.48
-------------- --------------
2. Receipts:
A. Cash and Credit Card Sales 509.12 1,026,357.18
Less: Cash and Credit Card Refunds -- (1,333.83)
--------------- -------------
Net Cash and Credit Card Sales 509.12 1,025,023.35
--------------- -------------
B. Collection in Post-petition A/R 15,202.94 336,554.13
C. Collection on Pre-petition A/R -- 317,653.45
D. Other Receipts (Schedule 2A) 8,025.31 104,171.94
E. Deposits From Account Sweeps 357,361.78 4,083,769.31
F. Less Disbursement Sweeps (357,361.78) (4,082,926.72)
G. Auction sales-held in bankurptcy atty trust account 1,193.49 346,725.84
--------------- -------------
3. Total Receipts 24,930.86 2,130,971.30
-------------- -------------
-------------- -------------
4. Total Cash Available for Operations(1+3) 753,721.51 2,237,685.78
-------------- -------------
5. Disbursements:
A. U.S. Trustee Quarterly Fees -- 8,750.00
B. Net Payroll ** 18,399.86 442,456.09
C. Payroll Taxes Paid 4,101.32 157,371.18
D. Sales and Use Taxes 5.27 47,854.97
E. Other Taxes -- --
F. Rent * 23,014.01 181,744.05
G. Other Leases (attachment 3) 256.18 34,327.68
H. Telephone 1,736.92 34,843.77
I Utilities 134.72 19,326.31
J. Travel and Entertainment -- 30,030.99
K. Vehicle Expenses -- --
L. Office Supplies 490.89 6,269.72
M. Advertising -- 22,796.89
N. Insurance (attachment 7) 3,852.21 49,852.57
O. Purchases of Fixed Assets -- --
P. Purchases of Inventory 1,323.70 116,153.42
Q. Manufacturing Supplies -- --
R. Repairs and Maintenance -- 1,604.19
S. Payments to Secured Creditors -- 281,499.96
T. Other Operating Expenses(Schedule 2B) 17,866.96 120,264.52
-------------- -------------
6. Total Cash Disbursements 71,182.04 1,555,146.31
-------------- -------------
-------------- -------------
7. Ending Cash Balance (4-6) $ 682,539.47 $ 682,539.47
============== =============
</TABLE>
I declare under penalty of perjury that this statement and the accompanying
documents and reports are true and correct to the best of my knowledge and
belief.
This 12th day of October, 1998. Signed: /s/ Thomas H. Hicks
---------------------------------------
Thomas H. Hicks
* 2 months (Sept & Oct): Coral Square store, office, Hancock storage and
Stor All record storage.
** 3 pay periods covering six weeks payroll.
Page 2 of 16
<PAGE> 3
Schedule 2A
Monthly Financial Report for Business
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
Other Receipts Detail
<TABLE>
<CAPTION>
Account Date Check # Received From Purpose Deposit
------- ---- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C>
op 9/9/98 Deposit Pacey-Cobra Sept. Cobra Payment $ 210.29
op 9/2/98 Deposit Reliance Insurance Company Insurance Settlement 5,848.68
op 9/8/98 Deposit Vanliner Insurance Settlement 36.00
op 8/31/98 Deposit First Union Interest Interest 141.81
op 9/1/98 Deposit First Union Interest Interest 51.28
op 9/2/98 Deposit First Union Interest Interest 50.45
op 9/3/98 Deposit First Union Interest Interest 48.15
op 9/4/98 Deposit First Union Interest Interest 45.27
op 9/8/98 Deposit First Union Interest Interest 182.12
op 9/9/98 Deposit First Union Interest Interest 45.91
op 9/10/98 Deposit First Union Interest Interest 46.71
op 9/11/98 Deposit First Union Interest Interest 48.75
op 9/14/98 Deposit First Union Interest Interest 134.55
op 9/15/98 Deposit First Union Interest Interest 46.54
op 9/16/98 Deposit First Union Interest Interest 47.44
op 9/17/98 Deposit First Union Interest Interest 45.25
op 9/18/98 Deposit First Union Interest Interest 44.50
op 9/21/98 Deposit First Union Interest Interest 131.28
op 9/22/98 Deposit First Union Interest Interest 43.63
op 9/23/98 Deposit First Union Interest Interest 42.92
op 9/24/98 Deposit First Union Interest Interest 43.60
op 9/25/98 Deposit First Union Interest Interest 43.11
op 9/28/98 Deposit First Union Interest Interest 125.86
op 9/29/98 Deposit First Union Interest Interest 43.69
op 9/30/98 Deposit First Union Interest Interest 43.72
op 10/1/98 Deposit First Union Interest Interest 45.30
op 10/2/98 Deposit First Union Interest Interest 44.76
op 10/2/98 Deposit BellSouth Refund Utility Refund 343.74
----------
$ 8,025.31
==========
</TABLE>
Page 3 of 16
<PAGE> 4
Schedule 2B
Monthly Financial Report for Business
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
Other Operating Expenses Detail
<TABLE>
<CAPTION>
Account Date Check # Payee Purpose Withdrawl
- ------- ---- ------- ----- ------- ---------
<S> <C> <C> <C> <C> <C>
op 8/31/98 013009 Worldwide Express Freight $ 14.90
op 8/31/98 013014 Coll Davidson Carter Legal (approved by court) 15,583.11
op 9/3/98 Debit Merchant Fee Credit Card Processing 39.95
op 9/3/98 Debit Merchant Fee Credit Card Processing 15.00
op 9/4/98 013018 Worldwide Express Freight 58.00
op 9/4/98 Debit Merchant Fee Credit Card Processing 90.00
pay 9/4/98 Debit ADP Fees Payroll Processing 60.00
op 9/11/98 Debit Commercial Bank Fees Bank Fees 449.16
op 9/14/98 013023 Bowne of Atlanta Printing 305.28
op 9/15/98 013027 Broward County Revenue Collector Occupational License 45.00
op 9/14/98 013024 PR Newswire, Inc. Press Releases 135.00
op 9/14/98 013025 Telecheck Check Processing 112.71
op 9/14/98 013026 Worldwide Express Freight 24.90
pay 9/18/98 Debit ADP Fees Payroll Processing 61.50
op 9/28/98 013034 American Stock Transfer Co. Transfer Agent 500.00
op 9/28/98 013036 Honeywell Security 111.30
op 9/28/98 013037 PR Newswire, Inc. Press Releases 70.00
op 9/28/98 013038 Worldwide Express Freight 74.70
op 10/2/98 Debit Merchant Fee Credit Card Processing 39.95
op 10/2/98 Debit Merchant Fee Credit Card Processing 15.00
pay 10/2/98 Debit ADP Fees Payroll Processing 61.50
----------
$17,866.96
==========
</TABLE>
Page 4 of 16
<PAGE> 5
ATTACHMENT #1
MONTHLY ACCOUNTS RECEIVABLE AGING AND RECONCILIATION
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
Accounts Receivable at Petition Date: $ 375,266.67
Accounts Receivable Reconciliation (Include all accounts receivable,
pre-petition and post-petition, including charge card sales which have not been
received):
Beginning of Month Balance: $ 240,160.64
Plus: Current Month New Billings: 21,593.25
Less: Collections During Month (15,145.94)
Accounts Written off
------------
End of Month Balance: $ 246,610.45 *
============
Aging: (show the total amount for each age group of accounts incurred since
filing the petition)
0-30 days 31-60days 61-90days >90 days Total
* Sterne, Agee & Leach, Inc. has deposited $175,000 into an escrow account
which shall be released to The Debtor upon the effectve date of the
bankruptcy, assuming satisfaction of the conditions to that certain
agreement between Stern, Agee & Leach, Inc. and The Debtor, dated
August 27,1998.
SEE ATTACHED DETAIL
Page 5 of 16
<PAGE> 6
Attachment #1
2Connect Express, Inc.
Trade Receivables
As of 08-29-98
<TABLE>
<CAPTION>
Total 1 to 30 31 to 60 61 to 90 over 90
----- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
A/R - Commission
Bell South Local-Commission $ 1,217.50 $ -- $ -- $ -- $ 1,217.50
------------------------------------------------------------------------
Subtotal 1,217.50 -- -- 0.00 1,217.50
------------------------------------------------------------------------
A/R - In-House
Beepers to Go 8,662.00 2,960.00 5,702.00
School Board of Dade County 3,093.43 3,093.43
Ingram Retail Services 1,145.27 1,145.27
------------------------------------------------------------------------
Subtotal 12,900.70 -- -- 2,960.00 9,940.70
------------------------------------------------------------------------
A/R - Activation
Sprint - Activation 17,419.17 17,419.17
------------------------------------------------------------------------
Subtotal 17,419.17 -- -- -- 17,419.17
------------------------------------------------------------------------
A/R - Coop Advertising
Cell Star -Coop 13,127.00 13,127.00
Ericcson-Coop 600.08 600.08
Lucent Tech-Coop 176.00 176.00
Panasonic-Coop 292.00 292.00
Recoton-Coop 281.00 281.00
Smart Talk-Coop 640.00 640.00
Uniden-Coop 417.00 417.00
Vtech Coop Adv 7,255.00 7,255.00
------------------------------------------------------------------------
Subtotal 22,788.08 -- -- 2,406.08 20,382.00
------------------------------------------------------------------------
A/R- Market Development
Psion NSA 2,500.00 2,500.00
------------------------------------------------------------------------
Subtotal 2,500.00 -- -- -- 2,500.00
------------------------------------------------------------------------
A/R - Rebate
Recoton Rebate 144.00 144.00
CellStar Rebate 2,971.00 2,971.00
------------------------------------------------------------------------
Subtotal 3,115.00 -- -- 144.00 2,971.00
------------------------------------------------------------------------
A/R - Bobby Allison Cellular Systems of Florida, Inc.
B Allison Cellular Systems of Florida, Inc. 11,670.00 11,670.00
------------------------------------------------------------------------
Subtotal 11,670.00 11,670.00 -- -- --
------------------------------------------------------------------------
A/R - Sterne, Agee & Leach
* Sterne, Agee & Leach 175,000.00 175,000.00
------------------------------------------------------------------------
Subtotal 175,000.00 175,000.00 -- - --
------------------------------------------------------------------------
Grand Total Accounts Receivable $ 246,610.45 $ 186,670.00 $ -- $ 5,510.08 $ 54,430.37
========================================================================
</TABLE>
Note: Statements and Collection letters sent to all parties.
Kelley Drye & Warren advised to send final collection letters
to all except Bobby Allison Cellular Systems of Florida, Inc..
* Sterne, Agee & Leach, Inc. has deposited $175,000 into an escrow account
which shall be released to The Debtor upon the effectve date of the
bankruptcy, assuming satisfaction of the conditions to that certain
agreement between Stern, Agee & Leach, Inc. and The Debtor, dated
August 27,1998.
Page 6 of 16
<PAGE> 7
ATTACHMENT #2
MONTHLY ACCOUNTS PAYABLE AND SECURED PAYMENTS REPORT
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
In the space below list all invoices or bills incurred and not paid since the
filing of the petition. Do not include amounts owed prior to filing the
petition.
Date Days
Incurred Outstanding Vendor Description Amount
See Attached Schedule: "Period Cutoff Aged AP - Historical Detail Aged by Due
Date"
ACCOUNTS PAYABLE RECONCILIATION (Post Petition Only):
Opening Balance (total from prior report) $ 186,700.23
Plus: New Indebtedness Incurred This Month 23,016.76
Less: Amount Paid on Total Accounts Payable 47,848.80
------------
Ending Month Balance $ 161,868.19
============
SECURED: List status of payments to Secured Creditors and Lessors (Post-Petition
Only):
Secured Date Number of Post Total Amount of
Creditor/ Payment Payment Petition Payments Post-petition
Lessor Due Amount Delinquent Payments Delinquent
------ ------- ------ ----------------- -------------------
None
Page 7 of 16
<PAGE> 8
2Connect Express, Inc.
Period Cutoff Aged AP (03.681. - Historical Detail Aged by Due Date
Period: 08-99 Aging Date: 10/3/98
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Vendor/ Name/ Vendor Status/ Disc Due Pay
Doc Type Ref Nbr Inv Nbr Inv Date Doc Status Date Date Date
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4000RENAIS Renaissance Partners, LC 0
CK 013048 005159 C
VO 005165 100898 10/8/98 A 10/8/98 10/8/98 10/8/98
Vendor Total
4000STORAL Stor All O
CK 013032 005154 C
Vendor Total
4001CORALC Coral CS/Ltd. Associates O
CK 013033 005151 C
Vendor Total
5000BOWNE Bowne of Atlanta O
VO 005139 1-98080510-0 9/15/98 A 9/25/98 10/15/98 9/25/98
VO 005160 1-98090011-0 9/25/98 A 10/5/98 10/25/98 10/5/98
VO 005162 1-98090049-0 9/28/98 A 10/8/98 10/28/98 10/8/98
Vendor Total
5000HONEYW Honeywell O
CK 013036 005152 C
Vendor Total
5000TELECH Telecheck O
VO 005171 j803295305 9/30/98 A 9/30/98 9/30/98 9/30/98
Vendor Total
5000WORLDW Worldwide Express O
VO 005161 426352 9/23/98 A 9/23/98 10/8/98 10/8/98
VO 005164 430475 9/30/98 A 9/30/98 10/15/98 10/15/98
Vendor Total
5500BELLSO BellSouth O
VO 005163 954V134335504 9/20/98 A 9/20/98 10/20/98 10/20/98
Vendor Total
5500FPL Florida Power & Light O
VO 005141 71563-09556 9/17/98 A 9/17/98 10/8/98 10/8/98
Vendor Total
6500EMPLOY Employer's Health Insurance O
CK 013043 005156 C
Vendor Total
6500FORTIS Fortis Life Insurance O
CK 013044 005157 C
Vendor Total
6500HUMANA Humana Health Insurance O
CK 013045 005155 C
Vendor Total
6500KEMPER Kemper Insurance Companies O
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Vendor/ Name/ Days Past Due
Doc Type Ref Nbr Inv Nbr Current 1 To 30 31 To 60 61 To 90 Over 90 Balance
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4000RENAIS Renaissance Partners, LC
CK 013048 005159 (1,023.98) (1,023.98)
VO 005165 100898 169.68 -- -- -- -- 169.68
(854.30) -- -- -- -- (854.30)
4000STORAL Stor All
CK 013032 005154 (118.72) (118.72)
(118.72) -- -- -- -- (118.72)
4001CORALC Coral CS/Ltd. Associates
CK 013033 005151 (7,376.34) (7,376.34)
(7,376.34) -- -- -- -- (7,376.34)
5000BOWNE Bowne of Atlanta
VO 005139 1-98080510-0 480.18 -- -- -- -- 480.18
VO 005160 1-98090011-0 1,221.12 -- -- -- -- 1,221.12
VO 005162 1-98090049-0 465.34 -- -- -- -- 465.34
2,166.64 -- -- -- -- 2,166.64
5000HONEYW Honeywell
CK 013036 005152 (111.30) (111.30)
(111.30) -- -- -- -- (111.30)
5000TELECH Telecheck
VO 005171 j803295305 -- 36.05 -- -- -- 36.05
-- 36.05 -- -- -- 36.05
5000WORLDW Worldwide Express
VO 005161 426352 72.00 -- -- -- -- 72.00
VO 005164 430475 23.90 -- -- -- -- 23.90
95.90 -- -- -- -- 95.90
5500BELLSO BellSouth
VO 005163 954V134335504 458.74 -- -- -- -- 458.74
458.74 -- -- -- -- 458.74
5500FPL Florida Power & Light
VO 005141 71563-09556 624.92 -- -- -- -- 624.92
624.92 -- -- -- -- 624.92
6500EMPLOY Employer's Health Insurance
CK 013043 005156 (52.34) (52.34)
(52.34) -- -- -- -- (52.34)
6500FORTIS Fortis Life Insurance
CK 013044 005157 (13.60) (13.60)
(13.60) -- -- -- -- (13.60)
6500HUMANA Humana Health Insurance
CK 013045 005155 (415.08) (415.08)
(415.08) -- -- -- -- (415.08)
6500KEMPER Kemper Insurance Companies
AD 004970 3BG0159400 -- -- -- -- (2,187.00) (2,187.00)
AD 005028 060198 -- -- -- (2,677.00) 7.00 (2,677.00)
AD 005030 061998 -- -- -- (2,641.00) 1.00 (2,641.00)
AD 005031 062998 -- -- -- (611.00) 1.00 (611.00)
AD 005032 062198 -- -- -- (9,139.00) 9.00 (9,139.00)
AC 005104 082098 -- -- 1,837.00 -- -- 1,837.00
-- -- 1,837.00 (17,250.00) 5.00 (15,418.00)
7000PRIMEC PrimeCo
AD 004995 29838 -- -- -- -- (74.50) (74.50)
-- -- -- (70.00) 4.50 (74.50)
7000SPRINT Sprint PCS
VO 004489 030598 -- -- -- -- 342.00 342.00
VO 004708 WBE-028087 -- -- -- 680.00 4.00 684.00
-- -- -- 1,020.00 6.00 1,026.00
7200ICANEC ICanect
VO 004183 013198 -- -- -- -- 269.34 269.34
-- -- -- 260.00 9.34 269.34
7200WEBSTO Web Store
VO 005147 093098 50.00 -- -- -- -- 50.00
50.00 -- -- -- -- 50.00
90003COM 3Com Credit Corporation
VO 004578 00008985 -- -- -- -- 208.00 208.00
-- -- -- 200.00 8.00 208.00
9000BAKERM Baker & McKenzie
VO 004973 50104273 -- -- -- -- 13,403.85 13,403.85
-- -- -- 13,400.00 3.85 13,403.85
9000CITGRO Sensormatic/CIT Group
CK 013047 005153 (256.18) (256.18)
(256.18) -- -- -- -- (256.18)
9000KELLEY Kelley Drye & Warren, LLP
VO 004858 1302933 -- -- -- -- 101,842.14 101,842.14
VO 005026 1307186 -- -- -- 28,327.44 -- 28,327.44
VO 005040 070198 -- -- -- -- 21,876.39 21,876.39
VO 005105 081098 -- -- 9,418.14 -- -- 9,418.14
-- -- 9,418.14 28,327.44 123,718.53 161,464.11
9000KPMG KPMG Peat Marwick
VO 004357 01821 -- -- -- -- 6,800.00 6,800.00
-- -- -- 6,800.00 -- 6,800.00
9500BROWAR Broward County Rev. Collector
CK 013027 005083 (45.00) (45.00)
(45.00) -- -- -- -- (45.00)
(5,846.66) 36.05 11,255.14 28,327.44 128,096.22 161,868.19
</TABLE>
Note 1 - Negative balances are due to invoices paid in advance of the calendar
month the expense is recorded, except for Kemper Insurance which is an
Insurance refund that is due to 2Connect.
Page 8 of 16
<PAGE> 9
ATTACHMENT #3
INVENTORY AND FIXED ASSETS REPORT
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
<TABLE>
<CAPTION>
INVENTORY REPORT
<S> <C>
Inventory Balance at Petition Date: $ 2,191,354
===========
Inventory Reconciliation:
Inventory Balance at Beginning of Month (Period) $ --
Inventory Purchased During Month (Period) --
Inventory Used or Sold: --
Less Inventory liquidations via court approved auctions --
Less Inventory writedowns to liquidation values --
-----------
Inventory On-Hand at End of Month (Period) $ --
===========
Method of Costing: Last Cost
FIXED ASSET REPORT
Fixed Assets Fair Market Value at Petition Date:
(includes Property, Plant and Equipment) $ 2,038,164 NBV
===========
Fixed Assets Reconciliation:
Fixed Asset Book Value at Beginning of Month (Period): $ 1,250
Less: Adjustment to books recording anticipated sale to BAC --
Depreciation Expense for Period: --
Court Approved Sales (1,250)
Adjustment to estimated remaining asset values --
Plus: New Purchases/Additions: --
-----------
Ending Month (Period) Balance per books: $ --
===========
</TABLE>
Page 9 of 16
<PAGE> 10
ATTACHMENT #4
MONTHLY BANK ACCOUNT RECONCILIATION
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
Separate sheet is required for each bank account, including all savings and
investment accounts (I.e., certificates of deposits, money market accounts,
stocks and bonds, etc.)
NAME OF BANK: First Union National Bank BRANCH: Commercial Banking Broward
ACCOUNT NAME: 2Connect Express, Inc. DIP Operating Account
ACCOUNT NUMBER: 2090002563870
PURPOSE OF ACCOUNT: Post Petition Operating Account
<TABLE>
<S> <C> <C>
Beginning Balance $ 383,258.63
Total of Deposits Made 23,737.37
Amount of Deposits from Account Sweeps (See Note Below) 357,361.78
Amount of Receipts from Account Sweeps (See Note Below) (357,361.78)
Amount of Cash funding Payroll Account (17,361.78)
Total Amount of Checks Written (48,497.86)
------------
Closing Balance $ 341,136.36
============
Number of 1st Check Written This Period: 013006
Number of Last Check Written This Period: 013048
------
Total Number of Checks Written or voided This Period: 42
======
</TABLE>
Note - Daily "Sweep" transfers are made from store depository sub-accounts
(zero balance accounts) to concentration account.
INVESTMENT ACCOUNTS
Type of Negotiable Face Purchase Date of
Instrument Value Price Purchase
None
Page 10 of 16
<PAGE> 11
ATTACHMENT #4
MONTHLY BANK ACCOUNT RECONCILIATION
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
Separate sheet is required for each bank account, including all savings and
investment accounts (I.e., certificates of deposits, money market accounts,
stocks and bonds, etc.)
NAME OF BANK: First Union National Bank BRANCH: Commercial Banking Broward
ACCOUNT NAME: 2Connect Express, Inc. DIP Payroll Account
ACCOUNT NUMBER: 2090002563883
PURPOSE OF ACCOUNT: Post Petition Payroll Account
<TABLE>
<S> <C> <C>
Beginning Balance $ (0.33)
Total of Deposits Made 17,361.78
Total Amount of Checks Written (22,684.18)
Service Charges
-----------
Closing Balance $ (5,322.73) Since this is a Zero Balance account,
=========== ----> negative balances represent
outstanding checks.
Number of 1st Check Written This Period: 1964
Number of Last Check Written This Period: 1974
----
Total Number of Checks Written This Period: 10
====
</TABLE>
INVESTMENT ACCOUNTS
Type of Negotiable Face Purchase Date of
Instrument Value Price Purchase
None
Page 11 of 16
<PAGE> 12
ATTACHMENT #5
CHECK REGISTER
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998 (fiscal
month per books)
Name of Bank: First Union National Bank Branch: Commercial Banking Broward
Account Name: 2Connect Express, Inc. DIP Operating Account
Account Number: 2090002563870
Purpose of Account: Primary Operating Account
Account for all check numbers, including voided, lost, stopped payment, etc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Date Ck # Payee Purpose Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8/31/98 013006 Stor All Rent $ 118.72
8/31/98 013007 Coral CS/Ltd. Associates Rent 7,376.34
8/31/98 013008 Hancock Moving & Storage Rent 1,995.00
8/31/98 013009 Worldwide Express Freight 14.90
8/31/98 013010 Coral Springs Improvement Dist Utilities 21.00
8/31/98 013011 Trescom International Telephone 141.99
8/31/98 013012 Fortis Life Insurance Insurance 18.19
8/31/98 013013 CellStar Void Check --
8/31/98 013014 Coll Davidson Carter Legal (approved by courts) 15,583.11
9/3/98 Debit Merchant Fee Credit Card Processing 39.95
9/3/98 Debit Merchant Fee Credit Card Processing 15.00
9/4/98 013015 Thomas H. Hicks Expenses 238.77
9/4/98 013016 Renaissance Partners, LC Rent 1,014.91
9/4/98 013017 Hancock Moving & Storage Rent 1,995.00
9/4/98 013018 Worldwide Express Freight 58.00
9/4/98 013019 BellSouth Telephone 648.26
9/4/98 013020 Bobby Allison Cellular Product 1,323.70
9/4/98 Debit Merchant Fee Credit Card Processing 90.00
9/11/98 Debit Commercial Bank Fees Bank Fees 449.16
9/14/98 013021 Thomas H. Hicks Expenses 72.31
9/14/98 013022 Renaissance Partners, LC Utilities 92.72
9/14/98 013023 Bowne of Atlanta Printing 305.28
9/14/98 013024 PR Newswire, Inc. Press Releases 135.00
9/14/98 013025 Telecheck Check Processing 112.71
9/14/98 013026 Worldwide Express Freight 24.90
9/14/98 013027 Broward County Rev. Collector Store License 45.00
9/14/98 013028 Florida Department of Revenue Sales Tax 5.27
9/14/98 013029 Topp, Inc. Product --
9/28/98 013030 Thomas H. Hicks Expenses 52.72
9/28/98 013031 Renaissance Partners, LC Telephone 548.40
9/28/98 013032 Stor All Rent 118.72
9/28/98 013033 Coral CS/Ltd. Associates Rent 7,376.34
9/28/98 013034 American Stock Transfer Co. Transfer Agent 500.00
9/28/98 013035 Hancock Moving & Storage Rent 1,995.00
9/28/98 013036 Honeywell Security 111.30
9/28/98 013037 PR Newswire, Inc. Press Releases 70.00
9/28/98 013038 Worldwide Express Freight 74.70
9/28/98 013039 BellSouth Telephone 262.75
9/28/98 013040 Coral Springs Improvement Dist Utilities 21.00
9/28/98 013041 Trescom International Telephone 135.52
9/28/98 013042 Cartridge Crafter, Inc. Supplies 127.09
9/28/98 013043 Employer's Health Insurance Insurance 52.34
9/28/98 013044 Fortis Life Insurance Insurance 13.60
9/28/98 013045 Humana Health Insurance Insurance 415.08
9/28/98 013046 Kahn Carlin Insurance 3,353.00
9/28/98 013047 Sensormatic/CIT Group Equipment Lease 256.18
9/28/98 013048 Renaissance Partners, LC Rent 1,023.98
10/2/98 Debit Merchant Fee Credit Card Processing 39.95
10/2/98 Debit Merchant Fee Credit Card Processing 15.00
-----------
$ 48,497.86
===========
</TABLE>
Page 12 of 16
<PAGE> 13
ATTACHMENT #5
CHECK REGISTER
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998 (fiscal
month per books)
Name of Bank: First Union National Bank Branch:Commercial Banking Broward
Account Name: 2Connect Express, Inc. DIP Payroll Account
Account Number: 2090002563883
Purpose of Account: Payroll Account
Account for all check numbers, including voided, lost, stopped payment, etc.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Date Ck # Payee Purpose Amount
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9/4/98 1964 Hicks, Thomas Net Pay $ 3,554.96
9/4/98 1965 Bolden, Maria Net Pay 937.41
9/4/98 1966 Chalfant, Christopher Net Pay 277.05
9/4/98 1967 Kinsey, Jeanine Net Pay 800.47
9/4/98 Debit ADP Taxes Payroll Taxes 1,078.19
9/4/98 Debit ADP Fees Payroll Processing 60.00
9/18/98 1968 Hicks, Thomas Net Pay 5,369.42
9/18/98 1969 Bolden, Maria Net Pay 937.43
9/18/98 1970 Chalfant, Christopher Net Pay 461.75
9/18/98 1971 Kinsey, Jeanine Net Pay 800.47
9/18/98 Debit ADP Taxes Payroll Taxes 1,957.38
9/18/98 Debit ADP Fees Payroll Processing 61.50
10/2/98 1972 Hicks, Thomas Net Pay 4,080.56
10/2/98 1973 Bolden, Maria Net Pay 325.00
10/2/98 1974 Kinsey, Jeanine Net Pay 855.34
10/2/98 Debit ADP Taxes Payroll Taxes 1,065.75
10/2/98 Debit ADP Fees Payroll Processing 61.50
------------
$ 22,684.18
============
</TABLE>
Page 13 of 16
<PAGE> 14
ATTACHMENT #6
MONTHLY TAX REPORT
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
TAXES PAID DURING THE MONTH (PERIOD)
Report all post-petition taxes paid directly or deposited into the tax account.
<TABLE>
<CAPTION>
Date Bank or Payee Description Amount
---- ------------- ----------- ------
<S> <C> <C> <C>
9/14/98 Florida Department of Revenue Consolidated Sales Tax Return for August, 1998 $ 5.27
9/4/98 IRS and Fla Dept of Rev PR taxes deposited by ADP 1,078.19
9/18/98 IRS and Fla Dept of Rev PR taxes deposited by ADP 1,957.38
10/2/98 IRS and Fla Dept of Rev PR taxes deposited by ADP 1,065.75
---------
$4,106.59
=========
</TABLE>
TAXES OWED AND DUE
Report all unpaid post-petition taxes including Federal and State withholding
FICA, State sales tax, property tax, unemployment tax, and State workmen's
compensation. Date last tax return filed: See Above
<TABLE>
<CAPTION>
Name of Taxing Date Pmt.
Authority Due Description Amount
- --------------- --------- ----------- ------
<S> <C> <C>
Florida Department of Revenue 10/20/98 Consolidated Sales Tax Return for September, 1998 $ 73.12
</TABLE>
Page 14 of 16
<PAGE> 15
ATTACHMENT #7
SUMMARY OF OFFICER OR OWNER COMPENSATION
SUMMARY OF PERSONNEL AND INSURANCE COVERAGES
Name of Debtor: 2Connect Express, Inc. Case Number: 98-20169-BKC-RBR
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
Report all compensation received during the period. Do not include reimbursement
for expenses incurred for which you have receipts.
<TABLE>
<CAPTION>
Officer or Owner Name Title Amount
Paid
<S> <C>
Thomas H. Hicks (Resigned as officer effective 8-27-98) Interim General Manager $ 15,505.00 *
</TABLE>
* Three pay periods in the fiscal month of September (6 weeks).
<TABLE>
<CAPTION>
PERSONNEL REPORT STORE CORPORATE TOTAL
---------------------- ----------------------
FULL TIME PART TIME FULL TIME PART TIME
<S> <C> <C> <C> <C> <C>
Number of Employees at Beginning of Period - - - 3 3
Number Hired during Period - - - - -
Number Terminated or Resigned during Period - - - (1) (1)
------- ------- ------- ------- ------
Number of Employees on payroll at end of Period - - - 2 2
======= ======= ======= ======= ======
</TABLE>
CONFIRMATION OF INSURANCE
List all policies of insurance in effect, including but not limited to worker's
compensation, liability, fire, theft, comprehensive, vehicle, health and life.
<TABLE>
<CAPTION>
Agent & Policy Type of Expiry Premium
Carrier Phone # Number Coverage Date Due Date
------- ------- ------ -------- ---- --------
<S> <C> <C> <C> <C> <C>
Agricultural Excess & Surplus Kahn-Carlin & Company, Inc NSP2108136 Directors & Officers Liability (See Note) Paid
Roy Fabry
Telephone (954) 767-6066
Reliance Insurance Company Kahn-Carlin & Company, Inc QB8615829 Commercial Application, 10/9/98 Monthly
Property, General Liability,
Business Auto, Garage & Dealers,
Crime, Umbrella
Kemper-American Motorists Ins. Kahn-Carlin & Company, Inc 3BG01594400 Workers Compensation 10/9/98 Monthly
CAN Kahn-Carlin & Company, Inc 0000685C Employment Related Prac Liab 9/11/98 Paid
Humana, Inc. Humana, Inc. Group #133739 Employee Health and Life 9/30/98 Monthly
Stacey Granger
Phone (800) 442-5555
</TABLE>
Directors & Officers Liability Insurance is being funded by Directors and
Officers directly, and not being paid for by the Company.
Page 15 of 16
<PAGE> 16
ATTACHMENT #8
SIGNIFICANT DEVELOPMENTS DURING REPORTING PERIOD
For the Period Beginning August 30, 1998 and Ending October 3, 1998
(fiscal month per books)
On September 1, 1998, the Company filed an 8-K report with the Securities and
Exchange Commission, containing the Press Release information from August 28,
1998 and, as an Exhibit, the Agreement by and between the Company and Sterne,
Agee dated August 27, 1998. The contents of this 8-K report are outlined below.
The Company issued a press release on August 28, 1998 announcing that it entered
into an agreement with Sterne, Agee and Leach, Inc., whereby Sterne Agee will,
as of the effective date of the Plan of Reorganization of 2Connect filed with
the U.S. Bankruptcy Court, Southern District of Florida, acquire out of
bankruptcy 100% of the equity interests of 2Connect and 2Connect will retain the
Coral Square store lease and certain store fixtures. In consideration for such
acquisition, Sterne Agee will make a new value contribution to the bankruptcy
estate for the benefit of 2Connect's creditors in the amount of $175,000 which
funds are currently in escrow. To effect this transaction and in accordance with
the Plan of Reorganization, as amended on August 7, 1998, upon the Effective
Date, all of the current and existing Common Stock of 2Connect will be forever
extinguished and canceled and 2Connect will issue new shares of Common Stock to
Sterne Agee which shall constitute 100% of the issued and outstanding shares.
The Bankruptcy Court scheduled a hearing to confirm the Plan of Reorganization
for October 14, 1998. The Effective Date is to occur 10 days after confirmation
of the Plan of Reorganization.
Also pursuant to the terms of the Agreement, and effective August 27, 1998, all
of the members of the Board of Directors, except for Marc D. Fishman, resigned
from the Board of Directors and Mr. Fishman, as sole remaining director, and, in
accordance with the Bylaws of 2Connect, appointed James S. Holbrook, Jr., Craig
R. Heyward and F. Eugene Woodham, each of whom are employees of Sterne, Agee, to
fill three of the vacancies. The Board of Directors has further resolved to
appoint James S. Holbrook, Jr. as the Chairman of the Board and, in accordance
with the Bylaws of 2Connect, to designate that the Chairman of the Board is the
Chief Executive Officer of the Corporation.
The Company filed an 8-K report with the Securities and Exchange Commission on
September 23, 1998 announcing that on September 15, 1998, the Company filed with
the U.S. Bankruptcy Court the Debtor's Monthly Financial Report (Business) for
the period August 2, 1998 to August 29, 1998.
On October 7, 1998, the Company filed an Amendment to the Debtor's Monthly
Financial Report (Business) for the period August 2, 1998 to August 29, 1998
reclassifying the Stern Agee new value payment from cash in escrow to Accounts
Receivable.
Page 16 of 16
