EXHIBIT 99.1
Monthly Report to Bankruptcy Trustee for June 1, 2003 to June 30, 2003
FORM 2-A
DEBTOR: IN STORE MEDIA SYSTEMS, INC. MONTHLY FINANCIAL REPORT
CHAPTER 11
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CASE NUMBER: 02-28289 EEB
For Period: June 1 to June 30, 2003
COVER SHEET
Accounting Method Used: [X] Accrual Basis [ ] Cash Basis
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THIS REPORT IS DUE 15 DAYS AFTER THE END OF THE MONTH
Mark One Box for Debtor must attach each of the following reports/documents
Each Required unless the U.S. Trustee has waived the requirement in
Document writing. File the original with the Clerk of Court.
Submit a duplicate, with original signature, to the U.S.
Trustee.
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Report/Document Previously REQUIRED REPORTS/DOCUMENTS
Attached Waived
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[X] [ ] Cash Receipts and Disbursements Statement (Form2-B)
[X] [ ] Supporting Schedules (Form 2-C)
[X] [ ] Balance Sheet (Form 2-D)
[X] [ ] Profit and Loss (Form 2-E)
[X] [ ] Quarterly Fee Summary (Form 2-F)
[X] [ ] Narrative (Form 2-G)
[X] [ ] Bank Statements for All Bank Accounts
[X] [ ] Bank Statement Reconciliations for All Bank Accounts
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I DECLARE UNDER PENALTY OF PERJURY THAT THE FOLLOWING MONTHLY FINANCIAL REPORT,
AND ANY ATTACHMENTS THERETO, ARE TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE
AND BELIEF.
Executed on: July 15, 2003 Debtor(s): In Store Media Systems, Inc.
By: /s/ William P. Stelt
Position: Chief Financial Officer (Acting)
DEBTOR: IN STORE MEDIA SYSTEMS, INC. CASE NO. 02-28289 EEB
CASH RECEIPTS AND DISBURSEMENTS STATEMENT
AS OF JUNE 30, 2003
CASH RECONCILIATION
1. Beginning Cash Balance (Ending Cash Balance $2,022.00
from last month's report)
2. Cash Receipts (From Cash Receipts Journal $1,304.00
on next page)
3. Cash Disbursements (From Cash Disbursements $2,957.88
Journal on next page)
4. Net Cash Flow (Line 2 minus Line 3) ($1,653.88)
5. Ending Cash Balance (To Form 2-D) $368.12
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CASH SUMMARY - ENDING BALANCE
AMOUNT FINANCIAL INSTITUTION
Petty Cash $0.00
Regular Checking - Operating $105.02 Wells Fargo
Regular Checking - Payroll $263.10 Wells Fargo
Short-Term Investments $0.00 Wells Fargo
TOTAL (Must agree with line 5 above) $368.12
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DEBTOR: IN STORE MEDIA SYSTEMS, INC. CASE NO. 02-28289 EEB
SUPPORTING SCHEDULES
FOR PERIOD JUNE 1 TO JUNE 30, 2003
ACCOUNTS RECEIVABLE AND POST PETITION PAYABLE AGING
DUE POST PETITION
ACCOUNTS REC ACCOUNTS PAYABLE
Under 30 Days $0.00 $16,208.72
30 to 60 Days $0.00 $9,531.94
61 to 90 Days $0.00 $823.54
91 to 120 Days $0.00 $2,834.23
Over 120 Days
Total Post Petition $0.00 xxxxxxxxxxxxxxxxx
Pre Petition Amts $0.00 xxxxxxxxxxxxxxxxx
Total Accounts Receivable $0.00 xxxxxxxxxxxxxxxxx
Less: Bad Debt Reserve $0.00 xxxxxxxxxxxxxxxxx
Net Accounts Receivable (To Form 2-D) $0.00 xxxxxxxxxxxxxxxxx
Total Post Petition Accounts Payable $29,398.43
(To Form 2-D)
SCHEDULE OF PAYMENTS TO ATTORNEYS AND OTHER PROFESSIONALS
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DATE OF ESTIMATED
AMT PAID COURT APPROVAL BALANCE DUE*
Debtor's Counsel $25,000.00 Pre-Petition Retainer $16,648.86
Counsel for Unsecured Creditors' Com $0.00
Trustee's Counsel $0.00
Accountant $0.00
Other: Debtor's Corporate Counsel $25,000.00 Pre-Petition Retainer $11,761.30
*Balance due to include fees and expenses incurred but not yet paid.
SCHEDULE OF PAYMENTS AND TRANSFERS TO PRINCIPALS/EXECUTIVES**
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PAYEE NAME POSITION NATURE OF PAYMENT AMOUNT
**List payments and transfers of any kind and in any form made to or for the
benefit of any proprietor, owner, partner, shareholder, officer or director.
DEBTOR: IN STORE MEDIA SYSTEMS, INC. CASE NO. 02-28289
SUPPORTING SCHEDULES
FOR PERIOD JUNE 1 TO JUNE 30, 2003
POST-PETITION TAXES PAYABLE SCHEDULE
THE DEBTOR PAYS ALL TAXES AT THE TIME OF PAYROLL PROCESSING TO ITS PAYROLL SERVICE (WELLS FARGO EXPRESS PAY). PAYMENTS ARE MADE
BY ACH TRANSFER THE DAY BEFORE THE PAYROLL IS DUE. DEBTOR PAYS PAYROLL ON THE 15TH AND END OF MONTH THEREFORE AT THE END OF EACH
MONTH, THE DEBTOR HAS PAID ALL PAYROLL TAXES DUE TO THE PAYROLL SERVICE.
BEG BALANCE* ADDITIONS PMTS/DEPOSITS DATE PAID CHECK NO. END BALANCE
Income Tax Withheld
Federal $0.00 $0.00
State $0.00 $0.00
FICA Tax Withheld (SS & Medicare) $0.00 $0.00
Employer's FICA Tax (SS & Medicare) $0.00 $0.00
Unemployment Tax:
Federal $0.00 $0.00
State $0.00 $0.00
Sales,Use & Excise Taxes $0.00 $0.00
Property Taxes $0.00 $0.00
Accrued Income Tax:
Federal $0.00 $0.00
State $0.00 $0.00
Other: $0.00 $0.00
TOTALS (Post Petition End Bal to Form
2-D) $0.00 $0.00 $0.00 $0.00
* For first report, Beginning Balance will be $0; thereafter, Beginning Balance
will be Ending Balance from prior report.
INSURANCE SCHEDULE
CARRIER/AGENT AMT OF COVERAGE POLICY EXP DATE PREM PAID DATE
Workers' Compensation Hartford Cancelled as of 1/1/03 No Employees
General Liability Accordia Wells Fargo $1,000,000.00 12/31/03
Property Accordia Wells Fargo $20,000.00 12/31/03
Vehicle N/A N/A N/A N/A
Other
DEBTOR: IN STORE MEDIA SYSTEMS, INC. CASE NO. 02-28289 EEB
SUPPORTING SCHEDULES
FOR PERIOD JUNE 1 TO JUNE 30, 2003
ACCOUNTS RECEIVABLE AND POST PETITION PAYABLE AGING
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DUE POST PETITION
ACCOUNTS REC ACCOUNTS PAYABLE
Under 30 Days $0.00 $16,208.72
30 to 60 Days $0.00 $9,531.94
61 to 90 Days $0.00 $823.54
91 to 120 Days $0.00 $2,834.23
Over 120 Days
Total Post Petition $0.00 xxxxxxxxxxxxxxxxx
Pre Petition Amts $0.00 xxxxxxxxxxxxxxxxx
Total Accounts Receivable $0.00 xxxxxxxxxxxxxxxxx
Less: Bad Debt Reserve $0.00 xxxxxxxxxxxxxxxxx
Net Accounts Receivable (To Form 2-D) $0.00 xxxxxxxxxxxxxxxxx
Total Post Petition Accounts Payable $29,398.43
(To Form 2-D)
SCHEDULE OF PAYMENTS TO ATTORNEYS AND OTHER PROFESSIONALS
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DATE OF ESTIMATED
AMT PAID COURT APPROVAL BALANCE DUE*
Debtor's Counsel $25,000.00 Pre-Petition Retainer $16,648.86
Counsel for Unsecured Creditors' Com $0.00
Trustee's Counsel $0.00
Accountant $0.00
Other: Debtor's Corporate Counsel $25,000.00 Pre-Petition Retainer $11,761.30
*Balance due to include fees and expenses incurred but not yet paid.
SCHEDULE OF PAYMENTS AND TRANSFERS TO PRINCIPALS/EXECUTIVES**
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PAYEE NAME POSITION NATURE OF PAYMENT AMOUNT
**List payments and transfers of any kind and in any form made to or for the
benefit of any proprietor, owner, partner, shareholder, officer or director.
DEBTOR: IN STORE MEDIA SYSTEMS, INC. CASE NO. 02-28289 EEB
BALANCE SHEET - AS OF JUNE 30, 2003
ASSETS
Current Assets:
Cash (From Form 2-B, line 5) $ 368.12
Accounts Receivable $ 0.00
Inventory $ 0.00
Other Current Assets: $ 118,032.00
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Total Current Assets $ 118,400.12
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Fixed Assests:
Land $ 0.00
Leasehold Improvements $ 55,228.28
Equipment, Furn & Fixtures $ 256,971.82
Total Fixed Assets $ 312,200.10
Less: Accumulated Depreciation ($ 186,370.00)
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Net Fixed Assets $ 125,830.10
Other Long Term Assets:
Debt Issuance Costs $ 151,666.74
Patents (Net of Amortization) $ 92,547.12
$ 244,213.86
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TOTAL ASSETS $ 488,444.08
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LIABILITIES
Post Petition Liabilities
Accounts Payable (from Form 2E) $ 618,108.33
Less: Pre-Petition $ 588,709.90 $ 29,398.43
Accrued Fees & Expenses ------------------ $ 16,374.33
Accrued Interest Payable $ 12,081.21
Accrued Wages - Officers $ 0.00
Loans & Notes Payable to Directors $ 23,100.00
Total Post Petition Liabilities $ 80,953.97
Pre-Petition Liabilities:
Priority Claims
Secured Debt $ 403,950.22
Unsecured Debt $ 1,751,038.57
Total Pre-Petition Liabilities $ 2,154,988.79
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TOTAL LIABILITIES $ 2,235,942.76
==================
OWNERS' EQUITY
Capital Stock $ 87,826.14
Paid-In Capital $ 21,312,720.30
Preferred Stock $ 500,000.00
Preferred Stock Dividends ($ 86,055.56)
Stock Subscriptions $ 325,000.00
Treasury Stock ($ 563,750.00)
Retained Earnings:
Pre-Petition ($ 21,029,172.61)
Pre- Petition Net Income (1/1-11/11/02) ($ 1,986,496.80)
Post Petition Net Income (11/12/02-06/30/03) ($ 307,570.15)
TOTAL OWNERS' EQUITY ($ 1,747,498.68)
TOTAL LIABILITIES AND OWNERS' EQUITY $ 488,444.08
==================
DEBTOR: IN STORE MEDIA SYSTEMS, INC. CASE NO. 02-28289 EEB
PROFIT AND LOSS STATEMENT
FOR PERIOD JUNE 1 TO JUNE 30, 2003
Gross Operating Revenue $0.00
Less: Discounts, Returns and Allowances $0.00
Net Operating Revenues $0.00
Cost of Goods Sold $0.00
Gross Profit $0.00
Operating Expenses:
Salaries and Wages $0.00
Rents and Leases $500.00
Payroll Taxes $0.00
Advertising & Promotion $0.00
Auto Expense $0.00
Bank Charges $31.39
Contract Labor $2,724.33
Computer Repairs & Maintenance $0.00
Employee Incentives/Med Benefits $0.00
Equipment Rentals $0.00
Insurance Expense $0.00
Licenses & Fees $0.00
Miscellaneous and Other $0.00
Office Funishings & Supplies $28.00
Payroll Service $0.00
Press Releases $0.00
Regulatory Compliance Exp (SEC, etc.) $0.00
Sales and Property Taxes $0.00
Telephone $568.18
Transfer Agent Fees $174.42
Trash Removal & Utilities $607.08
Travel and Entertainment $0.00
Total Operating Expenses $4,633.40
Operating Income (Loss) ($4,633.40)
Legal and Professional Fees $12,412.57
Depreciation, Depletion and Amortization $3,700.00
Interest Expense $12,481.03
Net Operating Income (Loss) ($33,227.00)
Non-Operating Income and Expenses
Other Non-Operating (Expenses) $0.00
Gains (Losses) on Sale of Assets $0.00
Interest Income $0.00
Other Non-Operating Income $0.00
Net Non-Operating Income or
(Expenses) $0.00
Net Income (Loss) Before Income Taxes ($33,227.00)
Federal and State Income Tax Expense (Benefit) $0.00
NET INCOME (LOSS) ($33,227.00)
======================
DEBTOR: IN STORE MEDIA SYSTEMS, INC. CASE NO. 02-28289 EEB
QUARTERLY FEE SUMMARY (1)
MONTH ENDED JUNE 30, 2003
MONTH CASH DISBURSEMENTS (2) QUARTERLY FEE DUE CHECK NO. DATE
January $5,287.50
February $2,346.87
March $11,074.27
Total 1st Qtr $18,708.64 $500.00 18076 4/24/03
April $8,157.65
May $2,289.03
June $2,957.88
Total 2nd Qtr $13,404.56 $250.00
July $0.00
August $0.00
September $0.00
Total 3rd Qtr $0.00 $0.00
October $0.00
November $0.00
December $0.00
Total 4th Qtr $0.00 $0.00
(1) This summary is to reflect the current calendar year's information
cumulative to the end of the reporting period.
(2) Should agree with line 3, Form 2-B. Disbursements are net of transfers to
other debtor in possession bank accounts.
FORM 2-G
DEBTOR: IN STORE MEDIA SYSTEMS, INC. CASE NO: 02-28289 EEB
NARRATIVE
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FOR PERIOD JUNE 1 TO JUNE 30, 2003
1. THE DEBTOR CONTINUED NEGOTIATIONS WITH ACCLAIM FINANCIAL GROUP VENTURE
II, LLC ("AFGII") FOR PROPOSED FINANCING THAT WOULD BE SUBJECT TO
APPROVAL OF THE BANKRUPTCY COURT.
2. THE DEBTOR CONTINUED TO PURSUE ITS LITIGATION AGAINST LET'S GO SHOPPING
("LGS") ET AL.
3. IN THE JUNE, THE DEBTOR RECEIVED A SHORT-TERM LOAN FROM A DIRECTOR TO
SUPPORT COMPANY ACTIVITY.
4. ON JUNE 5. 2003, THE BANKRUPTCY COURT HEARD A MOTION BROUGHT BY LGS
AND/OR CERTAIN OF ITS AFFILIATES TO CONVERT THE DEBTOR'S CASE FROM
CHAPTER 11 TO A CHAPTER 7. THE BANKRUPTCY COURT DISMISSED THIS MOTION.
5. ON JULY 14, 2003, THE BANKRUPTCY COURT HEARD A MOTION BROUGHT BY AN
AFFILIATE OF AIG SEEKING AN ADMINISTRATIVE CLAIM STATUS FOR A
PRE-PETITION FINANCING ARRANGEMENT. THE BANKRUPTCY COURT DENIED THIS
MOTION.
6. ON JULY 15, 2003, THE BANKRUPTCY COURT ENTERED AN ORDER ENTITLED "ORDER
AFTER FINAL HEARING ON MOTION FOR ORDER AUTHORIZING DEBTOR TO OBTAIN
POSTPETITION FINANCING PURSUANT TO SECTION 364(C )(1), (2) AND (3) OF
THE BANKRUPTCY CODE" APPROVING THE FINANCING ARRANGEMENT ENTERED INTO
BY THE DEBTOR AND AFGII. SUBJECT TO SATISFACTION OF CERTAIN CONDITIONS
CONTAINED IN AND THE OTHER TERMS OF THE CREDIT AGREEMENT, THE DEBTOR
ANTICIPATED EXECUTING AND DELIVERING THE CREDIT AGREEMENT AND RECEIVING
FUNDING UNDER THE CREDIT AGREEMENT.
7. ON JULY 15, 2003, THE COMPANY TOOK APPROPRIATE CORPORATE ACTION TO
CAUSE TWO REPRESENTATIVES OF AFGII TO BE APPOINTED TO THE COMPANY'S
BOARD OF DIRECTORS (WHICH NOW CONSISTS OF FOUR MEMBERS) AND AN
INDIVIDUAL DESIGNATED BY AFGII ASSUMED THE ROLE OF CHAIRMAN, CEO,
SECRETARY AND TREASURER OF THE COMPANY.