EXHIBIT 99.2

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Office of the United States Trustee

In re:

  The Kushner-Locke Company

Chapter 11
Case No. LA 01-44828-SB (Administratively Consolidated with
Case Nos. LA 01-44829-SB through LA 01-44831-SB; LA 01-
44833-SB through LA 01-44836-SB; and LA 01-44841-SB)

DEBTOR IN POSSESSION OPERATING REPORT

Report Number:	57
For the Period FROM:	7/1/2006
TO:	7/31/2006

1 Profit and Loss Statement (Accrual Basis Only)

A. Related to Business Operations
Gross Sales		$	—
Costs Related to Revenues (Film Cost Amortization)
Gross Profit					—
Less: Operating Expenses
Officer Compensation	14,719
Salaries and Wages — Other Employees	7,108
Total Salaries and Wages			21,826
Employee Benefits and Pensions			4,560
Employer Payroll Taxes/Fees	1,269
Other Taxes
Total Taxes			1,269
Rent and Lease Expense (including parking)	4,175
Distribution/Delivery Expenses	1,360
Interest Expense
Insurance
Automobile Expense/Mileage
Utilities (incl. Phone, phone equipment, internet)	779
Depreciation and Amortization
Business Equipment Leases
Business Expense reimbursement	980
Storage Expense	530
Supplies, Office Expenses, Photocopies, etc.	29
Bad Debts
Miscellaneous Operating Expenses	362
Total Operating Expenses			35,870
Net Gain/Loss from Business Operations					(35,870	)
B. Not related to Business Operations
Income
Interest Income
Other Non-Operating Revenues			—
Gross Proceeds on Sale of Assets
Less: Original Cost of Assets plus expenses of sale
Net Gain/Loss on Sale of Assets			—
Total Non-Operating Income					—
Expenses Not Related to Business Operations
Legal and Professional Service Fees
Other Non-Operating Expenses (Board/Trustee fees)			5,750
Total Non-Operating Expenses					5,750
NET INCOME/(LOSS) FOR PERIOD				$	(41,620	)

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DEBTOR IN POSSESSION OPERATING REPORT NO: 57

2 Aging of Accounts Payable and Accounts Receivable (exclude prepetition accounts payable):

	Accounts		Accounts
	Payable		Receivable
Current Under 30 days				—
Overdue 31-60 days		—		—
Overdue 61-90 days		—
Overdue 91-120 days		—
Overdue Over 121 days		—
Due in the Future		8,775		1,586,768
TOTAL		8,775		1,586,768

3	Statement of Status of Payments to Secured Creditors and Lessors:
	No payments to Secured Creditors or Lessors were paid or payable during the reporting period.
4	Tax Liability
	No tax payments were paid or payable during the reporting period other than payroll taxes shown above.
5	Insurance Coverage

	Carrier/	Amount of		Policy		Premium Paid
	Agent Name	Coverage		Expiration Date		Through Date
Worker’s Compensation (RENEWED)	St. Paul		1,000,000		1/14/2007		1/14/2007
Commercial Property (RENEWED)	St. Paul		2,000,000		2/14/2007		2/14/2007
Errors & Omissions — Library (RENEWED)	St. Paul		3,000,000		3/3/2007		3/3/2007

6 Questions:

A.	Has the Debtor in Possession provided compensation to any officers, directors, shareholders, or other principals without the approval of the Office of the United States Trustee? o Yes   Explain: þ No
B.	Has the Debtor in Possession, subsequent to the filing of the petition, made any payments on its prepetition unsecured debt, except as authorized by the Court? o Yes   Explain: þ No

7 Statement on Unpaid Professional Fees (Postpetition Amounts Only)

     Total unpaid post-petition Professional Fees during the reporting period: $ 442,095.03

8	Narrative Report of Significant Events and Events out of the Ordinary Course of Business:
	None.
9	Quarterly Fees:
	Paid

I, Alice Neuhauser, declare under penalty of perjury that the information contained in the above Debtor in Possession Interim Statement is true and correct to the best of my knowledge.

/s/ Alice P. Neuhauser  

Debtor in Possession