EXHIBIT 99.2

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

Page 1 of 2   

Report Number:	35
For the Period FROM:	9/1/2004
TO:	9/30/2004

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	44,281
Salaries and Wages — Other Employees	11,781
Total Salaries and Wages			56,062
Employee Benefits and Pensions			2,655
Employer Payroll Taxes/Fees	1,925
Other Taxes
Total Taxes			1,925
Rent and Lease Expense (including parking)	3,802
Distribution/Delivery Expenses	10,612
Interest Expense
Insurance
Automobile Expense/Mileage
Utilities (incl. Phone, phone equipment, internet)	445
Depreciation and Amortization
Business Equipment Leases
Business Expense reimbursement	2,524
Storage Expense	7,418
Supplies, Office Expenses, Photocopies, etc.	526
Bad Debts
Miscellaneous Operating Expenses
Total Operating Expenses			85,969
Net Gain/Loss from Business Operations					(85,969	)
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			92,874
Other Non-Operating Expenses (Board/Trustee fees)			3,250
Total Non-Operating Expenses					96,124
NET INCOME/(LOSS) FOR PERIOD				$	(182,093	)

   DEBTOR IN POSSESSION OPERATING REPORT NO: 35 Page 2 of 2         

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

	Accounts Payable	Accounts 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	—		1,600,459
TOTAL	—		1,600,459

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/Agent Name	Amount of Coverage	Policy Expiration Date	Premium Paid Through Date
Worker’s Compensation (RENEWED) Commercial Property (RENEWED) Errors & Omissions — Library (RENEWED)	St. Paul St. Paul St. Paul	1,000,000 2,000,000 3,000,000	1/14/2005 2/14/2005 3/3/2005	1/14/2005 2/14/2005 3/3/2005

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:
	x 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:
	x No
7	Statement on Unpaid Professional Fees (Postpetition Amounts Only)
	Total unpaid post-petition Professional Fees during the reporting period:             $172,364.86
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