8:15-bk-13153 SC

#2

7/31/2015

1.

TOTAL RECEIPTS PER ALL PRIOR GENERAL ACCOUNT REPORTS

2.

LESS: TOTAL DISBURSEMENTS PER ALL PRIOR GENERAL ACCOUNT REPORTS

3.

BEGINNING BALANCE:

4.

RECEIPTS DURING CURRENT PERIOD:

Accounts Receivable - Post-filing

Accounts Receivable - Pre-filing

General Sales

Other (Specify)

** Other (Specify)

TOTAL RECEIPTS THIS PERIOD:

5.

BALANCE:

6.

LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD

Transfers to Other DIP Accounts (from page 2)

Disbursements (from page 2)

TOTAL DISBURSEMENTS THIS PERIOD:***

7.

ENDING BALANCE:

8.

General Account Number(s):

Depository Name & Location:

Deposit Date

Deposit Amount

Check Number

Check Date

Check Amount

1.

TOTAL RECEIPTS PER ALL PRIOR MERCHANT ACCOUNT REPORTS

2.

LESS: TOTAL DISBURSEMENTS PER ALL PRIOR MERCHANT ACCOUNT REPORTS

3.

BEGINNING BALANCE:

4.

RECEIPTS DURING CURRENT PERIOD:

(Transferred from General Account)

5.

BALANCE:

6.

LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD TOTAL TRANSFERS THIS PERIOD:

7.

ENDING BALANCE:

8.

MERCHANT Account Number(s):

xxx0049

Depository Name & Location:

Square 1 Merchant Account

Deposit Date

Deposit Amount

Check Number

Check Date

Check Amount

$3,525,487.79

Merchant Account       

$30,280.35

$3,555,768.14

                0.00

Creditor, Lessor, Etc.

TOTAL DUE:

Federal Withholding

State Withholding

FICA- Employer’s Share

FICA- Employee’s Share

Federal Unemployment

Sales and Use

Real Property

Other:                                         

TOTAL:

30 days or less

31 - 60 days

61 - 90 days

91 - 120 days

Over 120 days

TOTAL:

General Liability

Worker’s Compensation

Casualty

Vehicle

Others:                                         

Name of Insider

Ken Cragun

Scott Reinke

Fred Thiel

Name of Insider

Sales/Revenue:

Gross Sales/Revenue

Less: Returns/Discounts

Net Sales/Revenue

Cost of Goods Sold:

Beginning Inventory at cost

TAC

Less: Ending Inventory at cost

Cost of Goods Sold (COGS)

Gross Profit

Other Operating Income (Itemize)

Operating Expenses:

Payroll - Insiders

Payroll - Other Employees

Payroll Taxes

Benefits

Connectivity & Content

Credit Card Fees

Other Taxes (Itemize)

Depreciation and Amortization

Rent Expense - Real Property

Lease Expense - Personal Property

Insurance

Real Property Taxes

Telephone, Utilities, Office Expense

Repairs and Maintenance

Travel and Entertainment (Itemize)

Consulting

Advertising and Marketing

Miscellaneous Operating Expenses (Itemize)

Total Operating Expenses

Net Gain/(Loss) from Operations

Non-Operating Income:

Interest Income

Net Gain on Sale of Assets (Itemize)

Other (Itemize)

Total Non-Operating income

Non-Operating Expenses:

Interest Expense

Legal and Professional (Itemize)

Stock Compensation

Other (Itemize)

Total Non-Operating Expenses

NET INCOME/(LOSS)

ASSETS

Current Assets:

Unrestricted Cash

Restricted Cash

Accounts Receivable

Inventory

Notes Receivable

Prepaid Expenses

Other (Itemize)

Total Current Assets

Property, Plant, and Equipment

Accumulated Depreciation/Depletion

Net Property, Plant, and Equipment

Other Assets (Net of Amortization):

Due from Insiders

Goodwill

Intangible Assets

Deposits

Other (Itemize)

Total Other Assets

TOTAL ASSETS

LIABILITIES

Post-petition Liabilities:

Accounts Payable

Taxes Payable

Notes Payable

Professional fees

Secured Debt

Other (Itemize)

Total Post-petition Liabilities

Pre-petition Liabilities:

Secured Liabilities

Priority Liabilities

Unsecured Liabilities

Deferred Revenue

Total Pre-petition Liabilities

TOTAL LIABILITIES

EQUITY:

Pre-petition Owners’ Equity

Post-petition Profit/(Loss)

Direct Charges to Equity

TOTAL EQUITY

TOTAL LIABILITIES & EQUITY

Has the debtor-in-possession made any payments on its pre-petition unsecured debt, except as have been authorized by the court? If “Yes”, explain below:

Has the debtor-in-possession during this reporting period provided compensation or remuneration to any officers, directors, principals, or other insiders without appropriate authorization? If “Yes”, explain below:

State what progress was made during the reporting period toward filing a plan of reorganization There has been some uncertainly around the strategy to be implemented in this case. While the Debtor has received numerous offers (and asset purchase agreements) for the purchase of a variety of the Debtor’s businesses, the Debtor has been unable to file a sale procedures motion based on requested contingencies related to the Google and Yahoo contracts, which have complicated the sale process. The Debtor has been trying to work with the buyers and as well as Google and Yahoo to remove these contingencies or otherwise develop a process that would allow the Debtor to move forward with an auction. In the meantime, the Debtor has also received expressions of interest from certain parties to potentially sponsor a reorganization around certain of the Debtor’s assets. Based on the foregoing, the Debtor is not in a position to file a plan and disclosure statement until more certainty is achieved relative to the development and implementation of its strategy.

Describe potential future developments which may have a significant impact on the case: Future developments include the possible sale of assets through a Section 363 sales process.

Did you receive any exempt income this month, which is not set forth in the operating report? If “Yes”, please set forth the amounts and sources of the income below.

Kenneth S. Cragun, Chief Financial Officer,

declare under penalty of perjury that I have fully read and understood the foregoing debtor-in- possession operating report and that the information contained herein is true and complete to the best of my knowledge.