Office of the United States Trustee

DEBTOR IN POSSESSION OPERATING REPORT

In re:
The Kushner-Locke Company	Page 1 of 2

	Report Number:	22
Chapter 11	For the Period FROM:	8/1/2003
Case No. LA 01-44828-SB (Administratively Consolidated with	TO:	8/31/2003
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)

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			24,075
	Salaries and Wages — Other Employees			11,308
		Total Salaries and Wages				35,383
		Employee Benefits and Pensions				2,504
	Employer Payroll Taxes/Fees			1,672
	Other Taxes
		Total Taxes				1,672
	Rent and Lease Expense (including parking)			2,360
	Distribution/Delivery Expenses
	Interest Expense
	Insurance
	Automobile Expense/Mileage
	Utilities (incl. Phone, phone equipment, internet)			505
	Depreciation and Amortization
	Business Equipment Leases			260
	Business Expense reimbursement
	Storage Expense			6,857
	Supplies, Office Expenses, Photocopies, etc.
	Bad Debts
	Miscellaneous Operating Expenses			976
		Total Operating Expenses				50,516
			Net Gain/Loss from Business Operations					(50,516	)
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				8,959
		Other Non-Operating Expenses (Board/Trustee fees)				5,750
		Total Non-Operating Expenses						14,709
NET INCOME/(LOSS) FOR PERIOD							$	(65,225	)

DEBTOR IN POSSESSION OPERATING REPORT NO: 22 Page 2 of 2

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			11,052		2,256,503
	TOTAL		11,052		2,256,503

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	1/14/2004	1/14/2004
Commercial Property (RENEWED)	St. Paul		2,000,000	2/14/2004	2/14/2004
Errors & Omissions — Library (RENEWED)	St. Paul		3,000,000	3/3/2004	3/3/2004
Employment Practices Liability (RENEWED-run off)	Nat’l Union		5,000,000	10/30/2003	10/30/2003

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?
	[ ] 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?
	[ ] Yes          Explain:
	[x] No

7.	Statement on Unpaid Professional Fees (Postpetition Amounts Only)
	Total unpaid post-petition Professional Fees during the reporting period:          $390,459.62
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 Neuhauser
Debtor in Possession