UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF VIRGINIA
____________________ DIVISION
In Re: PATHNET TELECOMMUNICATIONS, INC.) Chapter 11
)
Case Number BK-01-12264
DEBTORS )
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MONTHLY OPERATING REPORT Calendar Month May 1, 2001 to May 31, 2001
FINANCIAL BACKGROUND INFORMATION
1. ACCOUNTING BASIS: Cash Accrual X
2. PREPARER: State the name, address, telephone number and position of
the person(s) who actually compiled the information contained in this report.
See attached
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3. NUMBER OF EMPLOYEES paid during this period: -0-
4. Have there been any CHANGES IN THE NATURE OF YOUR BUSINESS since the
last reporting period? Yes No X
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If yes, explain below:
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5. Are all BUSINESS LICENSES current? Yes X No Not Applicable
6. PRE-PETITION ACCOUNTS RECEIVABLE:
Beginning Balance $ -0-
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Collected this Period
Ending Balance
7. POST-PETITION ACCOUNTS RECEIVABLE:
0-30 Days: $ -0- 31-60 Days: $ -0- Over 60 Days: $ -0-
--------- -------- --------
If there are any POST-PETITION Accounts Receivable over 60 days,
provide schedule AR giving a listing of such accounts and explain the
delinquencies.
8. POST-PETITION ACCOUNTS PAYABLE:
0-30 Days: $ -0- 31-60 Days: $ -0- Over 60 Days: $ -0-
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If there are any POST-PETITION Accounts Payable over 30 days, provide
Schedule AP giving a listing of such accounts and explain the delinquencies.
9. TAXES Are all taxes being paid to the proper taxing authorities when
due? Yes X No , On the attached
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IRS Form 6123 report all tax deposits made with any financial institution for
federal employment taxes. Be sure the form is complete and signed by an
authorized employee of the receiving institution or taxing authority. Attach to
this report a completed Form 6123 for each deposit made during the reporting
period. Also attach copies of the monthly sales tax report, payroll tax report
and unemployment tax report with evidence of payment of BOTH FEDERAL AND STATE
TAXES.
10. ESCROW ACCOUNTS. Are you utilizing your tax account only for deposits
and payment of payroll and sales taxes? Yes No . N/A
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If no, explain:
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11. Are all BOOKS AND RECORDS of the debtor(s) being maintained monthly
and are all current? Yes X No .
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Explain:
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12. INSURANCE EXPIRATION STATEMENT. Policy expiration dates are:
Auto and Truck Liability May 26, 2002
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Fire Workers Comp May 26, 2002
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13. ACTIONS OF THE DEBTOR. During the last month, did the debtor:
(A) Fail to defend or not oppose any action seeking to dispossess
the debtor from control or custody of any asset of the estate?
Yes X No .
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Explain:
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(B) Maintain such stock, inventory, raw materials, insurance,
employees and other resources as are necessary to preserve and maintain
the going-concern value of the assets of the debtor? Yes X No .
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Explain:
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14. TRANSFER OR SALE OF PROPERTY. Did the debtor or any person with
control over any of the debtor's assets transfer, convey or abandon any of the
debtor's assets to another party during the period of this report other than as
set forth herein (including sales by creditors)?
Yes No X . Explain:
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15. PAYMENTS TO SECURED CREDITORS during reporting period:
(Attach additional sheets, if necessary)
- ------------------ ---------------------- --------------- ----------------- ------------------------
Frequency of Payments Amount of Each Next Payment Due
Creditor per Contract (mo, qtr) Payment Post-Petition
Payments Not Made
- ------------------ ---------------------- --------------- ----------------- ------------- ----------
No. Amt.
N/A
- ------------------ ---------------------- --------------- ----------------- ------------- ----------
16. PAYMENTS TO PROFESSIONALS (Attorneys, Accountants, Real Estate Agents,
Auctioneers, Appraisers, etc.) during reporting period:
(Attach additional sheets, if necessary.)
- ------------------------ ------------------------- --------------------------
Professional Service Amount
- ------------------------ ------------------------- --------------------------
$0
- ------------------------ ------------------------- --------------------------
17. QUARTERLY U.S. TRUSTEE FEES paid during reporting period: $-0-
18. VERIFICATION: I declare under penalty of perjury that the
information contained in this monthly operating report (including attached
schedules) is true and correct to the best of my knowledge, information and
belief.
Dated: 6-20-2001 DEBTOR-IN-POSSESSION
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Name/Title James M. Craig By /S/ James M. Craig
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Address: 11720 Sunrise Valley Drive
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Reston, Virginia Phone 703-390-1000
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# 2 PREPARER
Jeff Clincy
Staff Accountant/Fixed asset Accountant
11720 Sunrise Valley Drive
Reston, VA 20191
(703) 390-1000
Najma Khan
Director, Taxation and External Reporting
11720 Sunrise Valley Drive
Reston, VA 20191
(703) 390-1000
Michael Kinsley
Tax Supervisor
11720 Sunrise Valley Drive
Reston, VA 20191
(703) 390-1000
Todd Morgan
Staff Accountant/Inter-Company Analyst
11720 Sunrise Valley Drive
Reston, VA 20191
(703) 390-1000
EASTERN DISTRICT OF VIRGINIA
In re Pathnet Telecommunications, Inc. CASE NO. BK-01-12264
REPORTING PERIOD: MAY 31, 2001
MONTHLY OPERATING REPORT
File with Court and submit copy to United States Trustee within 20 days after end of month
Submit copy of report to any official committee appointed in the case.
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DOCUMENT EXPLANATION
REQUIRED DOCUMENTS FORM NO. ATTACHED ATTACHED
Schedule of Cash Receipts and Disbursements MOR-1 yes
Bank Reconciliation (or copies of debtor's bank reconciliation MOR-1 (CON'T) yes
Copies of bank statements yes
Cash disbursements journals n/a
Statement of Operations MOR-2 yes
Balance Sheet MOR-3 yes
Status of Postpetition Taxes MOR-4 yes
Copies of IRS Form 6123 or payment receipt n/a
Copies of tax returns filed during reporting period n/a
Summary of Unpaid Postpetition Debts MOR-4 yes
Listing of aged accounts payable n/a
Accounts Receivable Reconciliation and Aging MOR-5 yes
Debtor Questionnaire MOR-5 yes
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I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents
are true and correct to the best of my knowledge and belief.
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Signature of Debtor Date
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Signature of Joint Debtor Date
/s/ James M. Craig
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Signature of Authorized Individual* Date June 20, 2001
James M. Craig
- --------------------------------------- Chief Financial Officer
Printed Name of Authorized Individual Title of Authorized Individual
*Authorized individual must be an officer, director or shareholder if debtor is a corporation; a partner if debtor
is a partnership; a manager or member if debtor is a limited liability company.
FORM MOR-1
(9/99)
IN RE PATHNET TELECOMMUNICATIONS, INC CASE NO. BK-01-12264
Debtor REPORTING PERIOD: MAY 31, 2001
SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS
Amounts reported should be per the debtor's books, not the bank statement. The beginning cash should be the ending cash from the prior month or, if this is the
first report, the amount shCase No.tBK-01-12264on the date the petition was filed. The amounts reported in the "CURRENT MONTH - ACTUAL" column must
equal the sum of the four bank account columns. The amounts reported in the "PROJECTED" columns should be taken from the SMALL BUSINESS INITIAL
REPORT (FORM IR-1) . Attach copies of the bank statements and the cash disbursements journal. The total disbursements listed in the disbursements journal
must equal the total disbursements reported on this page. A bank reconciliation must be attached for each account. [See MOR-1 (CON'T)]
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BANK ACCOUNTS CURRENT MONTH CUMULATIVE FILING TO DATE
OPER. PAYROLL TAX OTHER ACTUAL PROJECTED ACTUAL PROJECTED*
CASH BEGINNING OF MONTH 266,988 0.00 0.00 7,062,592 7,329,580 7,290,146 7,290,146 7,290,146
------- ------- ------- --------- ---------- ---------- ---------- ----------
RECEIPTS
CASH SALES
ACCOUNTS RECEIVABLE
LOANS AND ADVANCES
SALE OF ASSETS
OTHER (ATTACH LIST) 26,308 26,308 91,659 66,851 91,659
TRANSFERS (FROM DIP ACCTS)
------- ------- ------- --------- ---------- ---------- ---------- ----------
TOTAL RECEIPTS 0 0 0 26,308 26,308 91,659 66,851 91,659
DISBURSEMENTS
NET PAYROLL
PAYROLL TAXES
SALES, USE, &OTHER TAXES
INVENTORY PURCHASES
SECURED/ RENTAL/ LEASES
INSURANCE
ADMINISTRATIVE
SELLING
OTHER (ATTACH LIST) -603 -603 -1,212
OWNER DRAW **
TRANSFERS (TO DIP ACCTS)
PROFESSIONAL FEES
U.S. TRUSTEE QUARTERLY FEES
COURT COSTS -500
------- ------- ------- --------- ---------- ---------- ---------- ----------
TOTAL DISBURSEMENTS 0 0 0 -603 -603 -1,712 0
NET CASH FLOW 0 0 0 25,705 25,705 91,659 65,139 91,659
(RECEIPTS LESS DISBURSEMENTS)
------- ------- ------- --------- ---------- ---------- ---------- ----------
CASH - END OF MONTH 266,988 0.00 0.00 7,088,297 7,355,285 7,381,805 7,355,285 7,381,805
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* THE BEGINNING PROJECTED CASH BALANCE AT THE FILING DATE IS THE ACTUAL CASH BALANCE AT APRIL 2, 2001. PROJECTED CASH INFLOWS
AND OUTFLOWS ARE BASED ON THE CASH FORECAST PROVIDED TO THE TRUSTEE WITH THE INITIAL MONTHLY OPERATING REPORT.
** COMPENSATION TO SOLE PROPRIETORS FOR SERVICES RENDERED TO BANKRUPTCY ESTATE
THE FOLLOWING SECTION MUST BE COMPLETED
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DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES: (FROM CURRENT MONTH ACTUAL COLUMN)
TOTAL DISBURSEMENTS 0
LESS: TRANSFERS TO DEBTOR IN POSSESSION ACCOUNTS $
PLUS: ESTATE DISBURSEMENTS MADE BY OUTSIDE SOURCES (i.e. from escrow accounts) $
TOTAL DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES 0
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FORM MOR-1
(9/99)
In re Pathnet Telecommunications, Inc. Case No. BK-01-12264
Debtor Reporting Period: MAY 31, 2001
CONTINUATION SHEET FOR MOR-1
A bank reconciliation must be included for each bank account. The debtor's bank reconciliation may be substituted for this page.
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Operating Payroll Tax Other
# # #
BALANCE PER BOOKS See Attachment
BANK BALANCE
(+) DEPOSITS IN TRANSIT (ATTACH LIST)
(-) OUTSTANDING CHECKS (ATTACH LIST)
OTHER (ATTACH EXPLANATION)
ADJUSTED BANK BALANCE *
* Adjusted bank balance must equal
balance per books
DEPOSITS IN TRANSIT Date Amount Date Amount Date Amount Date Amount
CHECKS OUTSTANDING Ck. # Amount Ck. # Amount Ck. # Amount Ck. # Amount
OTHER
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FORM MOR-1 (CONT)
(9/99)
FORM MOR-1 (CON'T)
Pathnet Telecommunication
Crester Checking Account Bank Reconciliation
For thr Month Ending May 2001
Account # 209503513
General Ledger Beginning Balance 266,988.36
Interest Income -
Cash Receipts -
Miscellaneous -
Void checks -
Total 266,988,36
Less Disbursements
Cash Disbursements -
Total Disbursements -
General Ledger Balance 266,988.36
Balance per Bank 266,988.36
Deposit per Bank
Overnight Repo -
Deposit in Transit -
Total 266,988,36
Outstanding Checks MAS 90 -
Book Balance 266,988.36
In re Pathnet Telecommunications, Inc Case No. BK-01-12264
Debtor Reporting Period.: MAY 31, 2001
STATEMENT OF OPERATIONS
(Income Statement)
The Statement of Operations is to be prepared on an accrual basis. The accrual basis of accounting recognizes revenue when it is
realized and expenses when they are incurred, regardless of when cash is actually received or paid.
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CUMULATIVE
REVENUES Month Filing to Date
Gross Revenues $0.00 $0.00
Less: Returns and Allowances 0.00 $0.00
------------ ----------
Net Revenue $0.00 $0.00
COST OF GOODS SOLD
Beginning Inventory
Add: Purchases
Add: Cost of Labor
Add: Other Costs (attach schedule)
Less: Ending Inventory
Cost of Goods Sold 0.00 0.00
Gross Profit 0.00 0.00
OPERATING EXPENSES
Advertising
Auto and Truck Expense
Bad Debts
Contributions
Employee Benefits Programs
Insider Compensation*
Insurance
Management Fees/Bonuses
Office Expense
Pension & Profit-Sharing Plans
Repairs and Maintenance
Rent and Lease Expense
Salaries/Commissions/Fees
Supplies
Taxes - Payroll
Taxes - Real Estate
Taxes - Other
Travel and Entertainment
Utilities
Other (attach schedule) 3,936 8,378
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Total Operating Expenses Before Depreciation 3,936 8,378
Depreciation/Depletion/Amortization 0
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Net Profit (Loss) Before Other Income & Expenses -3,936 -8,378
OTHER INCOME AND EXPENSES
Other Income (attach schedule) 27,204 60,553
Interest Expense - (intercompany) 0 0
Other Expense (attach schedule) 7,660 7,660
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Net Profit (Loss) Before Reorganization Items 23,268 59,835
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REORGANIZATION ITEMS
Professional Fees 0
U. S. Trustee Quarterly Fees
Interest Earned on Accumulated Cash from Chapter 11 (see continuation sheet)
Gain (Loss) from Sale of Equipment
Other Reorganization Expenses (attach schedule)
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Total Reorganization Expenses 0 0
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Income Taxes 0
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Net Profit (Loss) 23,268 59,835
============ ==========
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*"Insider" is defined in 11 U.S.C. Section 101(31).
FORM MOR-2
(9/99)
FORM MOR-1 (CON'T)
(9/99)
In re Pathnet Telecommunications, Inc Case No. BK-01-12264
Debtor Reporting Period: MAY 31, 2001
STATEMENT OF OPERATIONS - CONTINUATION SHEET
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CUMULATIVE
BREAKDOWN OF "OTHER" CATEGORY MONTH FILING TO DATE
OTHER COSTS
Price Water House Services (Audits and Tax Compliance) 3,333 6,667
Investment Fees - Suntrust account 603 1,212
Delaware Division of Revenue 250
Commissioner of Revenue Services 250
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TOTAL 3,936 8,378
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OTHER OPERATIONAL EXPENSES
Interest Income Suntrust Investement account 60,553
- received 26,308
- receivable 896
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TOTAL 27,204 60,553
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Adjust PG&E sale of note 0 7,660
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TOTAL 7,660
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OTHER EXPENSES
OTHER REORGANIZATION EXPENSES
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REORGANIZATION ITEMS - INTEREST EARNED ON ACCUMULATED CASH FROM CHAPTER 11:
Interest earned on cash accumulated during the chapter 11 case, which would not have been earned but for the
bankruptcy proceeding, should be reported as a reorganization item.
FORM MOR-2 (CON'T)
(9/99)
In re Pathnet Telecommunications, Inc. Case No. BK-01-12264
Debtor Reporting Period: MAY 31, 2001
BALANCE SHEET
The Balance Sheet is to be completed on an accrual basis only. Pre-petition liabilities must be classified separately from postpetition obligations.
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BOOK VALUE AT END OF BOOK VALUE ON
ASSETS CURRENT REPORTING MONTH PETITION DATE
CURRENT ASSETS
Unrestricted Cash and Equivalents 7,355,285 7,290,146
Restricted Cash and Cash Equivalents (see continuation sheet) 0 0
Accounts Receivable (Net) 0
Notes Receivable 0 0
Inventories 0 0
Prepaid Expenses 3,334 10,000
Professional Retainers 600,000 600,000
Other Current Assets (attach schedule) -85,577,746 -85,579,108
------------ ------------
TOTAL CURRENT ASSETS -77,619,127 -77,678,962
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PROPERTY AND EQUIPMENT
Real Property and Improvements
Machinery and Equipment
Furniture, Fixtures and Office Equipment
Leasehold Improvements
Vehicles
Less Accumulated Depreciation
------------ ------------
TOTAL PROPERTY & EQUIPMENT 0 0
------------ ------------
OTHER ASSETS
Loans to Insiders* 7,983,195 7,983,195
Other Assets (attach schedule)
------------ ------------
TOTAL OTHER ASSETS 7,983,195 7,983,195
------------ ------------
TOTAL ASSETS -69,635,932 -69,695,768
============ ============
BOOK VALUE AT END OF BOOK VALUE ON
LIABILITIES AND OWNER EQUITY CURRENT REPORTING MONTH PETITION DATE
LIABILITIES NOT SUBJECT TO COMPROMISE (POSTPETITION)
Accounts Payable
Taxes Payable (refer to FORM MOR-4)
Wages Payable
Notes Payable
Rent / Leases - Building/Equipment
Secured Debt / Adequate Protection Payments
Professional Fees
Amounts Due to Insiders*
Other Postpetition Liabilities (attach schedule)
------------ ------------
TOTAL POSTPETITION LIABILITIES $0 $0
------------ ------------
LIABILITIES SUBJECT TO COMPROMISE (PRE-PETITION)
Secured Debt
Priority Debt
Unsecured Debt 138,260,417 138,260,417
------------ ------------
TOTAL PRE-PETITION LIABILITIES $138,260,417 $138,260,417
------------ ------------
TOTAL LIABILITIES $138,260,417 $138,260,417
OWNER EQUITY
Capital Stock and Preferred Stock 280,582 280,582
Mandatorily redemable preferred stock 62,966,307 62,952,830
Partners' Capital Account
Owner's Equity Account
Retained Earnings - Pre-Petition -271,189,596 -271,189,596
Retained Earnings - Postpetition 59,835
Adjustments to Owner Equity (attach schedule) -13,477
Postpetition Contributions (Distributions) (Draws) (attach schedule)
------------ ------------
NET OWNER EQUITY ($207,896,349) ($207,956,184)
------------ ------------
TOTAL LIABILITIES AND OWNERS' EQUITY ($69,635,932) ($69,695,767)
============ ============
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FORM MOR-3
*"Insider" is defined in 11 U.S.C. Section 101(31). (9/99)
Certain reclassifications on 10Q amounts have been made to conform to MOR reporting
In re Pathnet Telecommunications, Inc Case No. BK-01-12264
Debtor Reporting Period: MAY 31, 2001
BALANCE SHEET - CONTINUATION SHEET
- --------------------------------------------------------------------------------------------------------------------------------
BOOK VALUE AT END OF BOOK VALUE ON
ASSETS CURRENT REPORTING MONTH PETITION DATE
Other Current Assets
Investments in Subs -91,322,286 -91,322,286
Intercompany receivables 5,716,390 5,716,390
28,150 26,788
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TOTAL -85,577,746 -85,579,108
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Other Assets
BOOK VALUE AT END OF BOOK VALUE ON
LIABILITIES AND OWNER EQUITY CURRENT REPORTING MONTH PETITION DATE
Other Postpetition Liabilities
Adjustments to Owner Equity
Series E accretion - post-petition 13,477 0
------------ ------------
13,477 0
------------ ------------
Postpetition Contributions (Distributions) (Draws)
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Restricted Cash: cash that is restricted for a specific use and not available to fund operations. Typically, restricted cash
is segregated into a separate account, such as an escrow account.
FORM MOR-3 (CON'T)
(9/99)
In re Pathnet Telecommunications, Inc. Case No. BK-01-12264
Debtor Reporting Period: MAY 31, 2001
STATUS OF POSTPETITION TAXES
Case No. BK-01-12264
The beginning tax liability should be the ending liability from the prior month or, if this is the first report, the amount should be zero.
Attach photocopies of IRS Form 6123 or payment receipt to verify payment or deposit of federal payroll taxes.
Attach photocopies of any tax returns filed during the reporting period.
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BEGINNING AMOUNT ENDING
TAX WITHHELD OR AMOUNT DATE CHECK NO. TAX
LIABILITY ACCRUED PAID PAID OR EFT LIABILITY
Federal N/A
Withholding N/A
FICA-Employee N/A
FICA-Employer N/A
Unemployment N/A
Income N/A
Other:_________________ N/A
Total Federal Taxes
STATE AND LOCAL
Withholding N/A
Sales N/A
Excise N/A
Unemployment N/A
Real Property N/A
Personal Property N/A
Other:_________________ N/A
Total State and Local
TOTAL TAXES
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SUMMARY OF UNPAID POSTPETITION DEBTS
Attach aged listing of accounts payable.
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NUMBER OF DAYS PAST DUE
Current 0-30 31-60 61-90 Over 90 Total
Accounts Payable N/A
Wages Payable N/A
Taxes Payable N/A
Rent/Leases-Building N/A
Rent/Leases-Equipment N/A
Secured Debt/Adequate Protection Payments N/A
Professional Fees N/A
Amounts Due to Insiders* N/A
Other:__________________________ N/A
Other:__________________________ N/A
TOTAL POSTPETITION DEBTS
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EXPLAIN HOW AND WHEN THE DEBTOR INTENDS TO PAY ANY PAST-DUE POSTPETITION DEBTS.
*"Insider" is defined in 11 U.S.C. Section 101(31). FORM MOR-4
(9/99)
In re Pathnet Telecommunications, Inc Case No. BK-01-12264
Debtor Reporting Period: MAY 31, 2001
ACCOUNTS RECEIVABLE RECONCILIATION AND AGING Case No. BK-01-12264
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ACCOUNTS RECEIVABLE RECONCILIATION AMOUNT
Total Accounts Receivable at the beginning of the reporting period -0-
+ Amounts billed during the period
- - Amounts collected during the period
Total Accounts Receivable at the end of the reporting period -0-
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE AGING AMOUNT
0 - 30 days old -0-
31 - 60 days old
61 - 90 days old
91+ days old
Total Accounts Receivable
Amount considered uncollectible (Bad Debt)
Accounts Receivable (Net) -0-
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DEBTOR QUESTIONNAIRE
- --------------------------------------------------------------------------------------------------------------------------------
MUST BE COMPLETED EACH MONTH YES NO
1. Have any assets been sold or transferred outside the normal course of business
this reporting period? If yes, provide an explanation below. X
2. Have any funds been disbursed from any account other than a debtor in possession
account this reporting period? If yes, provide an explanation below. X
3. Have all postpetition tax returns been timely filed? If no, provide an explanation
below. X
4. Are workers compensation, general liability and other necessary insurance
coverages in effect? If no, provide an explanation below. X
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FORM MOR-5
(9/99)
