EXHIBIT 99.1
UNITED STATES BANKRUPTCY
COURT
FOR THE EASTERN DISTRICT OF NEW YORK
-------------------------------------------
IN RE: CHAPTER 11
INTERNATIONAL TOTAL SERVICES, INC., CASE NOS. 01-21812, 01-21818,
CROWN TECHNICAL SYSTEMS, INC., 01-21820, 01-21822, 01-21824,
I.T.S. OF NEW YORK SECURITY, INC., 01-21826, 01-21827 (CD)
SELECTIVE DETECTIVE SERVICES, INC.,
T.I.S., INCORPORATED, JOINTLY ADMINISTERED UNDER
CERTIFIED INVESTIGATIVE SERVICES, INC., AND CASE NO. 101-21812
TEXAS INTERNATIONAL SERVICES CORP.,
INTERNATIONAL TOTAL SERVICES, INC.
DEBTORS AND DEBTORS-IN-POSSESSION. FEDERAL TAX ID #: 34-1264201
-------------------------------------------
MONTHLY OPERATING REPORT
REPORTING PERIOD: JUNE 1, 2002 THROUGH JUNE 30, 2002
FILE WITH THE COURT AND SUBMIT A COPY TO THE UNITED STATES TRUSTEE WITHIN 20
DAYS AFTER THE END OF THE MONTH AND SUBMIT A COPY OF THE REPORT TO ANY OFFICIAL
COMMITTEE APPOINTED IN THE CASE.
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
REQUIRED DOCUMENTS Document Explanation
Form No. Attached Attached
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Schedule of Cash Receipts and Disbursements MOR-1 Yes See Exhibit A
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Bank Reconciliation (or copies of debtor's MOR-1 (CONT) Yes See Exhibit B
bank reconciliations)
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Copies of bank statements Yes See Exhibit C
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Cash disbursement journals Yes See Exhibit A
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Statement of Operations MOR-2 Yes See Exhibit D
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Balance Sheet MOR-3 Yes See Exhibit E
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Status of Post-petition Taxes MOR-4 Yes See Exhibit F
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Copies of ITS Form 6123 or payment N/A
receipt
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Copies of tax returns filed during reporting N/A
period
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Summary of Unpaid Post-petition Debts MOR-4 Yes See Exhibit G
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Listing of aged Accounts Payable Yes See Exhibit G
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Accounts Receivable Reconciliation and Aging MOR-5 Yes See Exhibits H and I
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
Debtor Questionnaire MOR-5 Yes
- ------------------------------------------------------ ------------------------------- ----------------------- --------------------
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.
/s/Ron Koegler 8/02/02
- -------------- -----------------------------------
Ron Koegler, Executive Vice President Date
and Controller
3
CASH RECEIPTS BANK ONE
NON-A/R ACCOUNTS RECEIVABLES Collections
SMS AVIATION ACTUAL
DATE Misc wires Lockbox Checks Wires/ACH TOTAL CUMULATIVE PRIOR MONTH
- -----------------------------------------------------------------------------------------------------------------------------------
06/03/02 $123,145.42 $ - $ 17,960.41 $ 193,101.32 $ - $ 334,207.15 $ 334,207.15
06/04/02 19,464.87 6,139.15 3,843.20 29,447.22 363,654.37
06/05/02 2,481.94 20,431.75 - 22,913.69 386,568.06
06/06/02 43,043.82 8,963.74 375.42 55,623.38 108,006.36 494,574.42
06/07/02 4,734.05 240.00 5,692.65 10,666.70 505,241.12
06/10/02 10,367.47 42,345.23 537.84 53,250.54 558,491.66
06/11/02 3,057.98 4,637.38 554.87 - 8,250.23 566,741.89
06/12/02 4,253.62 9,145.03 44,880.71 58,279.36 625,021.25
06/13/02 15,768.97 13,490.18 29,259.15 654,280.40
06/14/02 1,565.58 19,344.14 - 20,909.72 675,190.12
06/17/02 15,000.00 29,707.87 1,951.12 4,222.80 50,881.79 726,071.91
06/18/02 705.68 358.73 390.00 - 1,454.41 727,526.32
06/19/02 482,555.31 11,189.07 3,747.79 497,492.17 1,225,018.49
06/20/02 2,372.65 4,500.00 23,043.04 171,088.83 201,004.52 1,426,023.01
06/21/02 11,777.77 259.34 - 12,037.11 1,438,060.12
06/24/02 1,622.64 (482,555.31) 32,406.14 2,724.37 760.43 (445,041.73) 993,018.39
06/25/02 8,923.67 164.80 1,401.76 10,490.23 1,003,508.62
06/26/02 244.37 - 244.37 1,003,752.99
06/27/02 33.87 173.40 255.51 193.23 656.01 1,004,409.00
06/28/02 9,225.39 132.51 340.18 9,698.08 1,014,107.08
- -
- -
- -
- -----------------------------------------------------------------------------------------------------------------------------------
Total $145,938.24 $ 64,990.63 $ 203,328.53 $ 294,026.70 $305,822.98 $ 1,014,107.08 $ 1,014,107.08 $ -
- -----------------------------------------------------------------------------------------------------------------------------------
Total Non-A/R: $ 210,928.87 Total A/R: $ 803,178.21 Avg Daily Deposit $ 50,705.35
============ ============
4
CITIBANK
PRE-BOARD SCREENING
CONCENTRATION ACCOUNT
JUNE, 2002
6/3/2002 IMMEDIATE FUNDS DEBIT (2,000,000.00)
6/3/2002 IMMEDIATE FUNDS DEBIT (1,000,000.00)
(3,000,000.00)
6/6/2002 IMMEDIATE FUNDS DEBIT (1,000,000.00)
6/6/2002 WIRE FROM SMS ACUISITION I060602 646,932.87
(353,067.13)
6/10/2002 IMMEDIATE FUNDS DEBIT (3,000,000.00)
(3,000,000.00)
6/17/2002 IMMEDIATE FUNDS DEBIT (3,000,000.00)
(3,000,000.00)
6/19/2002 IMMEDIATE FUNDS DEBIT (2,000,000.00)
6/19/2002 IMMEDIATE FUNDS DEBIT (1,000,000.00)
(3,000,000.00)
6/20/2002 IMMEDIATE FUNDS DEBIT (1,000,000.00)
6/20/2002 WIRE FROM SMS ACUISITION I062002 482,555.31
(517,444.69)
6/24/2002 IMMEDIATE FUNDS DEBIT (3,000,000.00)
(3,000,000.00)
6/27/2002 ACH-FAA TREAS 310 R*1831865 18,318,650.61
18,318,650.61
6/28/2002 INTEREST EARNED 19,861.15
19,861.15
5
SCHEDULE OF CASH DISBURSEMENTS
BANK ONE
June-02
Accounts Payable - 616284915 Payroll - 616284923
Issued Cleared Outstanding Issued
-----------------------------------------------------------------------------------------------------------
5/31/02 196,359.51
6/1/02 - - - 196,359.51 - -
6/2/02 - - - 196,359.51 - -
6/3/02 - - 1,096.83 195,262.68 - -
6/4/02 2,077.88 - 2,744.17 194,596.39 - -
6/5/02 - - 436.78 194,159.61 - -
6/6/02 2,783.25 - 811.38 196,131.48 - -
6/7/02 2,768.00 - 433.41 198,466.07 - -
6/8/02 - - - 198,466.07 - -
6/9/02 - - - 198,466.07 - -
6/10/02 - - 1,370.47 197,095.60 - -
6/11/02 - - 3,227.70 193,867.90 - -
6/12/02 - - 245.90 193,622.00 - -
6/13/02 - - 4,350.96 189,271.04 - -
6/14/02 401.79 - 1,666.74 188,006.09 3,244.36 -
6/15/02 - - - 188,006.09 - -
6/16/02 - - - 188,006.09 - -
6/17/02 616.00 - 870.67 187,751.42 - -
6/18/02 4,264.45 - 693.81 191,322.06 - -
6/19/02 1,222.13 - 513.59 192,030.60 - -
6/20/02 - - 31.12 191,999.48 - -
6/21/02 1,185.20 - 2,794.18 190,390.50 - -
6/22/02 - - - 190,390.50 - -
6/23/02 - - - 190,390.50 - -
6/24/02 138.72 - 1,246.49 189,282.73 - -
6/25/02 - - 1,513.50 187,769.23 - -
6/26/02 2,003.80 - 1,538.74 188,234.29 - -
6/27/02 - - 779.00 187,455.29 - -
6/28/02 250.00 - 302.63 187,402.66 - -
6/29/02 - - - 187,402.66 - -
6/30/02 - - - 187,402.66 - -
Month end 17,711.22 26,668.07 187,402.66 3,244.36
6
0
Cleared Outstanding Tax Wires Hawaii
Payroll Benefits
- ------------------------------------------------------------------------------------------------------------------------
206,105.11
- 206,105.11 37,408.00
- 206,105.11 37,409.00
13,174.92 192,930.19 37,410.00 657.49
14,169.98 178,760.21 37,411.00 1,355.86
1,282.53 177,477.68 6.07 37,412.00 2,457.44
363.95 177,113.73 37,413.00 971.41
1,231.14 175,882.59 37,414.00 971.61
- 175,882.59 37,415.00
- 175,882.59 37,416.00
50.43 175,832.16 854.02 37,417.00 283.06
8.32 175,823.84 37,418.00 939.19
203.67 175,620.17 37,419.00 41.02
8.31 175,611.86 37,420.00 11,146.90
- 178,856.22 458.71 37,421.00 344.11
- 178,856.22 37,422.00
- 178,856.22 37,423.00
91.50 178,764.72 37,424.00 271.00
1,582.46 177,182.26 37,425.00 7,639.81
1,562.20 175,620.06 37,426.00 1,158.15
924.66 174,695.40 37,427.00 2,348.97
250.41 174,444.99 37,428.00 271.90
- 174,444.99 37,429.00
- 174,444.99 37,430.00
771.90 173,673.09 37,431.00 560.50
88.74 173,584.35 37,432.00 1,964.92
281.50 173,302.85 37,433.00 793.47
434.96 172,867.89 37,434.00 1,181.02
862.72 172,005.17 37,435.00 145.47
- 172,005.17 37,436.00
- 172,005.17 37,437.00
37,344.30 172,005.17 1,318.80 - 35,503.30
6a
Interest Bank CS King & Creditors SMS Clearing
401k Expense Fees Gen'l Liability Spalding Counsel Receivables Transfers
- ----------------------------------------------------------------------------------------------------------------------
& fin. adv
-
-
14,271.75
16,914.15
1,719.31
1,181.40
1,664.55
-
-
2,274.92
3,236.02
64,990.63 449.57
4,359.27
2,084.45
-
-
962.17
6,816.75 2,276.27
2,075.79
127,934.13
3,045.06
-
-
106.83
1,643.24
1,868.25
1,214.02
1,151.04
-
-
- - 6,816.75 - - - 64,990.63 190,432.19
6b
CITIBANK
PRE-BOARD SCREENING
ACCOUNTS PAYABLE - 06526783
JUNE, 2002
CHECK CLEARINGS
6/3/2002 Total (156,935.92)
6/4/2002 Total (94,299.10)
6/5/2002 Total (53,551.81)
6/6/2002 Total (35,901.83)
6/7/2002 Total (90,486.13)
6/10/2002 Total (130,032.48)
6/11/2002 Total (197,428.82)
6/12/2002 Total (31,026.82)
6/13/2002 Total (21,311.23)
6/14/2002 Total (48,261.27)
6/17/2002 Total (38,833.08)
6/18/2002 Total (78,844.12)
6/19/2002 Total (113,280.23)
6/20/2002 Total (75,241.42)
6/21/2002 Total (55,587.10)
6/24/2002 Total (187,011.21)
6/25/2002 Total (86,121.61)
6/26/2002 Total (236,201.93)
6/27/2002 Total (115,485.66)
6/28/2002 Total (173,973.94)
Grand Total (2,019,815.71)
06/03/02 Deposit TLR Br#: 920 TID:05 153 EAST 53RD ST, 1,000,000.00
06/05/02 OTHER DEBIT (50,000.00)
06/05/02 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (93,225.10)
06/07/02 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (519,005.94)
06/10/02 Deposit TLR Br#: 920 TID:05 153 EAST 53RD ST, 1,000,000.00
06/12/02 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (2,476.37)
06/17/02 Deposit TLR Br#: 920 TID:05 153 EAST 53RD ST, 1,000,000.00
06/18/02 OTHER DEBIT (951,455.88)
06/18/02 OTHER DEBIT (19,769.27)
06/18/02 OTHER DEBIT (6,791.48)
06/19/02 OTHER DEBIT (537,637.07)
06/19/02 OTHER DEBIT (139,406.05)
06/19/02 OTHER DEBIT (136,290.46)
06/19/02 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (7,130.68)
06/19/02 Deposit TLR Br#: 920 TID:17 153 EAST 53RD ST, 1,000,000.00
06/20/02 OTHER DEBIT (126,978.35)
06/20/02 Deposit TLR Br#: 920 TID:17 153 EAST 53RD ST, 1,000,000.00
06/21/02 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (569,806.77)
06/24/02 Deposit TLR Br#: 920 TID:20 153 EAST 53RD ST, 1,000,000.00
06/26/02 OTHER DEBIT (1,051.17)
7
06/28/02 ACH-WI DEPT REVENUE062802341264 201101 -
06/28/02 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (926,508.40)
7a
CITIBANK
PRE-BOARD SCREENING
PAYROLL ACCOUNT - 06526759
JUNE, 2002
CHECK CLEARINGS
6/3/2002 TOTAL (1,197,340.08)
6/4/2002 TOTAL (458,057.34)
6/5/2002 TOTAL (287,860.51)
6/6/2002 TOTAL (135,052.84)
6/7/2002 TOTAL (298,780.34)
6/10/2002 TOTAL (679,598.92)
6/11/2002 TOTAL (420,888.24)
6/12/2002 TOTAL (145,261.66)
6/13/2002 TOTAL (85,636.02)
6/14/2002 TOTAL (717,855.64)
6/17/2002 TOTAL (1,272,312.88)
6/18/2002 TOTAL (462,303.56)
6/19/2002 TOTAL (247,578.07)
6/20/2002 TOTAL (133,285.69)
6/21/2002 TOTAL (351,027.41)
6/24/2002 TOTAL (710,617.90)
6/25/2002 TOTAL (344,144.30)
6/26/2002 TOTAL (190,417.11)
6/27/2002 TOTAL (86,523.07)
6/28/2002 TOTAL (675,400.98)
GRAND TOTAL (8,899,942.56)
6/3/2002 SERVICE CHARGE (600.00)
6/3/2002 Deposit TLR Br#: 920 TID:05 153 EAST 53RD ST, 2,000,000.00
6/6/2002 Deposit TLR Br#: 920 TID:05 153 EAST 53RD ST, 1,000,000.00
6/6/2002 SERVICE CHARGE (600.00)
6/10/2002 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (115,000.00)
6/10/2002 Deposit TLR Br#: 920 TID:05 153 EAST 53RD ST, 2,000,000.00
6/12/2002 OTHER DEBIT (185,000.00)
6/17/2002 SERVICE CHARGE (600.00)
6/17/2002 Deposit TLR Br#: 920 TID:05 153 EAST 53RD ST, 2,000,000.00
6/18/2002 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (115,000.00)
6/19/2002 Deposit TLR Br#: 920 TID:17 153 EAST 53RD ST, 2,000,000.00
6/24/2002 DOMESTIC FUNDS TRANSFER-CITIBUSINESS O/L (115,000.00)
6/24/2002 Deposit TLR Br#: 920 TID:20 153 EAST 53RD ST, 2,000,000.00
8
INTERNATIONAL TOTAL SERVICES, INC & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the Month of June, Three Months ending June 30, 2002 and the Period from Filing Date to June 30, 2002
(Excluding United Kingdom Subsidiaries)
Debtors Case #'
------------- ----------------------
International Total Services, Inc. 01-21812 CBD
Crown Technical Systems, Inc. 01-21827 CBD
ITS of New York Security Inc. 01-21818 CBD
Selective Detective Services, Inc. 01-21822 CBD
TIS Incorporated 01-21826 CBD
Certified Investigative Services, Inc. 01-21824 CBD 9/13/2001 to
Texas International Services Corp. 01-21820 CBD May 31, 2002
Three Months Ended Cumulative
Current Period June 30, 2002 Filing to Date
---------------------- ----------------------- -------------------------
Revenues
- -------------------------
Aviation Services $ 14,793,358 $ 45,726,852 $ 148,482,610
Security Services - 2,991,921.00 24,758,865
---------------------- ----------------------- -------------------------
14,793,358 48,718,773.00 173,241,475
---------------------- ----------------------- -------------------------
Direct Costs
- -------------------------
Aviation Services 14,601,168 43,714,958.00 135,284,020
Security Services - 2,361,010.00 20,339,896
---------------------- ----------------------- -------------------------
14,601,168 46,075,968.00 155,623,916
---------------------- ----------------------- -------------------------
Gross Margin
- -------------------------
Aviation Services 192,190 2,011,894.00 13,198,590
Security Services - 630,911.00 4,418,969
---------------------- ----------------------- -------------------------
192,190 2,642,805.00 17,617,559
---------------------- ----------------------- -------------------------
General & Administrative
- -------------------------
Salaries 560,374 1,951,584.00 7,319,852
Payroll Taxes & Benefits 38,975 356,591.00 1,118,440
Supplies 27,302 110,118.00 563,375
Insurance 36,766 229,607.00 434,941
Training & Recruiting Costs 19,325 24,672.00 104,425
Rent - Facilities 71,785 247,656.00 997,964
Telephone/Communications 47,158 215,033.00 903,491
Rent - Equipment 19,594 90,341.00 319,524
Maintenance 1,009 11,075.00 36,307
Travel 63,353 236,055.00 1,046,101
Professional Fees 107,223 368,087.00 2,040,874
Bad Debt Expense - - 1,352,000
Federal administrative cost reimbursement (2,000,000) (6,000,000.00) (8,789,041)
Other Expenses 27,337 201,747.00 1,493,542
---------------------- ----------------------- -------------------------
(979,799) (1,957,434.00) 8,941,795
---------------------- ----------------------- -------------------------
---------------------- ----------------------- -------------------------
Income from Operations 1,171,989 4,600,239.00 8,675,764
---------------------- ----------------------- -------------------------
Interest - 207,050.00 1,534,883
Depreciation 150,400 300,800.00 945,164
Gains on Sale of Non Pre-Board and Commercial Security - (2,546,684.00) (2,546,684)
Loss on Sale of UK subsidiary - 1,901,207.00 1,901,207
Reorganization Expenses Related to Ch. 11 251,558 744,057.00 2,483,224
---------------------- ----------------------- -------------------------
Income Before Taxes 770,031 3,993,809.00 4,357,970
---------------------- ----------------------- -------------------------
Provision for Taxes - - (1,349,000)
---------------------- ----------------------- -------------------------
Net Income $ 770,031 3,993,809.00 $ 5,706,970
====================== ======================= =========================
9
INTERNATIONAL TOTAL SERVICES, INC & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
as of Petition Date and June 30, 2002
(Excluding United Kingdom Subsidiaries)
Debtors Case #'
-----------------------------------------------------------------
International Total Services, Inc. 01-21812 CBD
Crown Technical Systems, Inc. 01-21827 CBD
ITS of New York Security Inc. 01-21818 CBD
Selective Detective Services, Inc. 01-21822 CBD
TIS Incorporated 01-21826 CBD
Certified Investigative Services, Inc. 01-21824 CBD
Texas International Services Corp. 01-21820 CBD
Balance Balance
June 30, 2002 on Petition date
-------------------------- ------------------------
CURRENT ASSETS
Cash and Equivalents $ 70,640 $ 59,886
Restricted Customer Deposits 31,412,352 -
Accounts Receivable - Net 18,754,289 26,227,540
Notes Receivable - -
Inventories - 902,137
Prepaid Expenses 718,194 706,982
Professional Retainers - 200,000
Other Current assets
Intercompany receivable - United Kingdom subsidiary - 2,783,921
Workers Compensation - funding in excess of projected losses 1,200,000 1,095,261
-------------------------- ------------------------
1,200,000 3,879,182
-------------------------- ------------------------
Total Current Assets 52,155,475 31,975,727
-------------------------- ------------------------
PROPERTY AND EQUIPMENT
Real Property and Improvements - -
Machinery and other office equipment 2,062,963 3,855,175
Furniture, Fixtures and Office Equipment 3,367,474 4,809,046
Leasehold Improvements 63,454 63,454
Vehicles 24,668 793,320
Less: Accum Depr (4,766,567) (7,283,674)
-------------------------- ------------------------
Total Property and Equipment 751,992 2,237,321
Other Assets - Deposits 117,310 113,192
-------------------------- ------------------------
TOTAL ASSETS $ 53,024,777 $ 34,326,240
========================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES NOT SUBJECT TO COMPROMISE
Accounts Payable 818,916 -
Taxes Payable 3,786,238 1,866,688
Wages Payable 7,986,345 9,432,472
Notes Payable - -
Secured Debt - -
Professional fees - -
Customer Deposits 29,499,820 -
Accrued Interest Payable 1,600,000 -
Other Post Petition Liabilities 3,135,957 1,007,623
-------------------------- ------------------------
Total Post Petition liabilities 46,827,276 12,306,783
LIABILITIES SUBJECT TO COMPROMISE
Secured Debt 4,067,033 25,920,430
Priority 1,148,749 1,151,429
Unsecured 8,494,851 8,385,217
Unsecured reserves for unliquidated claims 5,852,267 5,674,500
-------------------------- ------------------------
Total Pre-Petition Liabilities 19,562,900 41,131,576
-------------------------- ------------------------
Total Liabilities 66,390,176 53,438,359
-------------------------- ------------------------
STOCKHOLDER'S EQUITY
Capital Stock 63,762 63,762
Additional Paid in Capital 31,320,074 31,280,324
Retained Earnings (44,749,235) (50,456,205)
-------------------------- ------------------------
Total Equity (13,365,399) (19,112,119)
-------------------------- ------------------------
-------------------------- ------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 53,024,777 $ 34,326,240
========================== ========================
10
DEBTOR QUESTIONAIRE
- -----------------------------------------------------------------------------------------------------------------------------------
Must be completed each month Yes No
- ------------------------------------------------------------------------------------------------------------ ------------ ---------
1. Have any assets been sold or transferred outside the normal course of business this reporting X
period? If yes, provide an explanation below:
- ------------------------------------------------------------------------------------------------------------ ------------ ---------
2. Have any funds been disbursed from any account other than a debtor in possession account this X
reporting period? If yes, provide an explanation below:
- ------------------------------------------------------------------------------------------------------------ ------------ ---------
3. Have all post-petition tax returns been timely filed ? If no, provide an explanation below: X
- ------------------------------------------------------------------------------------------------------------ ------------ ---------
4. Are worker compensation, general liability and other necessary insurance coverages in effect? If X
no, provide an explanation below:
- -----------------------------------------------------------------------------------------------------------------------------------
#1. Assets related to the Company's Aviation Division, Non Pre-Board Screening
segment were sold with the approval of the Court, effective 4/1/02. Assets
related to the Company's Commercial Security Division were sold with the
approval of the Court effective 4/29/02.
11