UNITED STATES DEPARTMENT OF JUSTICE

OFFICE OF THE UNITED STATES TRUSTEE

CENTRAL DISTRICT OF CALIFORNIA

In Re:	CHAPTER 11 (BUSINESS)
USDC PORTSMOUTH, INC.
	Case Number:	8:10-bk-12743-RK
	Operating Report Number:	6
Debtor(s).	For the Month Ending:	8/31/2010

I. CASH RECEIPTS AND DISBURSEMENTS

A. (GENERAL ACCOUNT)

1.	TOTAL RECEIPTS PER ALL PRIOR GENERAL ACCOUNT REPORTS				1,079,998.87
2.	LESS: TOTAL DISBURSEMENTS PER ALL PRIOR GENERAL ACCOUNT REPORTS				1,072,603.20
3.	BEGINNING BALANCE:				7,395.67
4.	RECEIPTS DURING CURRENT PERIOD:
	Accounts Receivable - Post-filing			352,201.88
	Accounts Receivable - Pre-filing			0.00
	General Sales			0.00
	Other (Specify)	Transfer b/w accounts		88,317.49
	Other (Specify)			0.00
	TOTAL RECEIPTS THIS PERIOD:				440,519.37
5.	BALANCE:				447,915.04
6.	LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD
	Transfers to Other DIP Accounts (from page 2)			91,456.86
	Disbursements (from page 2)			326,116.43
	TOTAL DISBURSEMENTS THIS PERIOD:				417,573.29
7.	ENDING BALANCE:				30,341.75
8.	General Account Number(s):		Chase: 870626058, 887481638
			BofA: 11018-66859, 11018-66854
			Wells: 55357869337, 6581125843
	Depository Name & Location:		JPMorgan Chase Bank, PO Box 659754
			San Antonio, TX 78265
			Bank of America, PO Box 37176
			PO Box 37176, San Francisco, CA 94137
			Wells Fargo Bank, PO Box 6995
			Portland, OR 97228

Page 1 of 16

TOTAL DISBURSEMENTS FROM GENERAL ACCOUNT FOR CURRENT PERIOD

Date mm/dd/yyyy	Check  Number	Payee or DIP account	Purpose	Amount  Transferred		Amount  Disbursed		Amount
August 2010		See Exhibit I	August Transfers		91,456.86				91,456.86
August 2010		See Exhibit I	August Disbursements				326,116.43		326,116.43
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
									0.00
		TOTAL DISBURSEMENTS THIS PERIOD:			91,456.86		326,116.43		417,573.29

Page 2 of 16

GENERAL ACCOUNT

BANK RECONCILIATION

	Bank Statement Date:	8/31/2010	Balance on Statement:			21,184.36
Plus deposits in transit (a):
		Deposit Date	Deposit Amount
	Deposits from Chase Acc # 870626058 are set forth on Exhibit II and total $23,690.40		23,690.40		See Exhibit II
	Deposits from Wells Acc # 5357869337 are set forth on Exhibit IV and total $3,638.76			3,638.76	See Exhibit IV
TOTAL DEPOSITS IN TRANSIT						27,329.16
Less Outstanding Checks (a):
	Check Number	Check Date	Check Amount
	Checks from Chase Acc # 870626058 are set forth on Exhibit II and total $16,651.22			16,651.22	See Exhibit II
	Checks from Chase Acc # 887481638 are set forth on Exhibit III and total $1,520.23			1,520.23	See Exhibit III
TOTAL OUTSTANDING CHECKS:						18,171.45
Bank statement Adjustments:
Explanation of Adjustments-
ADJUSTED BANK BALANCE:					$	30,342.07

Page 3 of 16

I. CASH RECEIPTS AND DISBURSEMENTS

B. (PAYROLL ACCOUNT)

1.	TOTAL RECEIPTS PER ALL PRIOR PAYROLL ACCOUNT REPORTS		1,189.83
2.	LESS: TOTAL DISBURSEMENTS PER ALL PRIOR PAYROLL ACCOUNT REPORTS		1,105.01
3.	BEGINNING BALANCE:		84.82
4.	RECEIPTS DURING CURRENT PERIOD:		200.00
	(Transferred from General Account)
5.	BALANCE:		284.82
6.	LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD
	TOTAL DISBURSEMENTS THIS PERIOD:		206.19
7.	ENDING BALANCE:		78.63
8.	PAYROLL Account Number(s):	887481612
	Depository Name & Location:	JPMorgan Chase Bank
		PO Box 959754
		San Antonio, TX 78265

Page 4 of 16

TOTAL DISBURSEMENTS FROM PAYROLL ACCOUNT FOR CURRENT PERIOD

Date mm/dd/yyyy	Check Number	Payee	Purpose	Amount
08/01/2010	64625	Driscoll	Book Adjustment		89.83
08/09/2010	1007	Dawn Warren	Replace payroll Check		104.36
08/31/2010		Chase	Service Charge		12.00
			TOTAL DISBURSEMENTS THIS PERIOD:		206.19

[A] The debtor is in the process of segregating its payroll processing by division/debtor. Until such time payroll will continue to be processed on a consolidated basis.  This change is expected by October 2010.

Page 5 of 16

PAYROLL ACCOUNT

BANK RECONCILIATION

	Bank Statement Date:		8/31/2010	Balance on Statement:		$	168.46
Plus deposits in transit (a):
			Deposit Date	Deposit Amount
TOTAL DEPOSITS IN TRANSIT							0.00
Less Outstanding Checks (a):
	Check Number		Check Date	Check Amount
		64625	8/1/2010		89.83
TOTAL OUTSTANDING CHECKS:							89.83
Bank statement Adjustments:
Explanation of Adjustments-
ADJUSTED BANK BALANCE:						$	78.63

Page 6 of 16

I.  CASH RECEIPTS AND DISBURSEMENTS

C. (TAX ACCOUNT)

1.	TOTAL RECEIPTS PER ALL PRIOR TAX ACCOUNT REPORTS		100.00
2.	LESS: TOTAL DISBURSEMENTS PER ALL PRIOR TAX ACCOUNT REPORTS		0.00
3.	BEGINNING BALANCE:		100.00
4.	RECEIPTS DURING CURRENT PERIOD:		0.00
	(Transferred from General Account)
5.	BALANCE:		100.00
6.	LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD
	TOTAL DISBURSEMENTS THIS PERIOD:		12.00
7.	ENDING BALANCE:		88.00
8.	TAX Account Number(s):	870626058
	Depository Name & Location:	JPMorgan Chase Bank
		PO Box 959754
		San Antonio, TX 78265

Page 7 of 16

TOTAL DISBURSEMENTS FROM TAX ACCOUNT FOR CURRENT PERIOD

Date mm/dd/yyyy	Check Number	Payee	Purpose	Amount
8/31/2010		Chase	Service Charge		12.00
			TOTAL DISBURSEMENTS THIS PERIOD:		12.00

Page 8 of 16

TAX ACCOUNT

BANK RECONCILIATION

	Bank Statement Date:	8/31/2010	Balance on Statement:		88.00
Plus deposits in transit (a):
		Deposit Date	Deposit Amount
TOTAL DEPOSITS IN TRANSIT					0.00
Less Outstanding Checks (a):
	Check Number	Check Date	Check Amount
TOTAL OUTSTANDING CHECKS:					0.00
Bank statement Adjustments:
Explanation of Adjustments-
ADJUSTED BANK BALANCE:				$	88.00

Page 9 of 16

I. D SUMMARY SCHEDULE OF CASH

ENDING BALANCES FOR THE PERIOD:
		General Account:		30,342.07
		Payroll Account:		78.63
		Tax Account:		88.00
*Other Accounts:	NONE			0.00
				0.00
				0.00
*Other Monies:	NONE			0.00
		Petty Cash (from below):		2,000.00
TOTAL CASH AVAILABLE:						32,508.70
Petty Cash Transactions:
Date	Purpose		Amount
3/31/2010	Beginning Balance			185.20
6/30/2010	Increase petty cash			1,814.80
7/31/2010	Office Expense			(6.00	)
8/31/2010	Office Expense			6.00
TOTAL PETTY CASH TRANSACTIONS:						2,000.00

Page 10 of 16

II.  STATUS OF PAYMENTS TO SECURED CREDITORS, LESSORS

AND OTHER PARTIES TO EXECUTORY CONTRACTS

Creditor, Lessor, Etc.	Frequency of Payments (Mo/Qtr)	Amount of Payment		Post-Petition payments not made (Number)		Total Due
Setal and related entities (secured creditors)(FN1)	N/A.  Debt matured pre-petition		N/A		N/A
Merchants - Capital Lease			0.00		0		0.00
Merchants - Capital Lease			0.00		0		0.00
Merchants - Capital Lease			0.00		0		0.00
Fairfax Sixplex, LLC			3,600.00		0		0.00
Taco Bell Corp.			3,522.33		0		0.00
Fairfax Sixplex, LLC			3,900.00		0		0.00
Cypress Improvements, LLC			1,520.30		2		3,040.60
Virginia Beach Affiliates, LLC			5,998.88		0		0.00
Kemp River Corner Associates, LLP			1,200.00		0		0.00
Great Neck Holding, LLC			6,730.00		0		0.00
Government Contract			2,153.40		0		0.00
Government Contract			2,500.00		0		0.00
JLP-Chesapeake, LLC			3,113.33		0		0.00
Commercial Building Associates, LLC			15,800.00		0		0.00
SOJ, LLC - Rejected Lease (FN2)			2,989.35		4		11,957.40
				TOTAL DUE:			14,998.00

(FN1) - All of the Debtors are jointly and severally liable for Setal debt, which for convenience is listed in detail on the Monthly report for U.S. Dry Cleaning Services

(FN2)-This lease was rejected by the Debtor at the end of June 2010.  The Debtor owes lease payments for March, April, May and June.

III. TAX LIABILITIES

FOR THE REPORTING PERIOD:

	Gross Sales Subject to Sales Tax:						0.00
	Total Wages Paid:						144,781.53
		Total Post-Petition Amounts Owing		Amount Delinquent		Date Delinquent Amount Due
(FN2)	Federal Withholding		0.00		0.00
(FN2)	State Withholding		0.00		0.00
(FN2)	FICA- Employer's Share		0.00		0.00
(FN2)	FICA- Employee's Share		0.00		0.00
(FN2)	Federal Unemployment		0.00		0.00
	Sales and Use		0.00		0.00
	Real Property		0.00		0.00
Other:	State Unemployment (FN2)		0.00		0.00
	TOTAL:		0.00		0.00

(FN2) - The Debtor uses a payroll service that makes pre-funded payroll tax payments directly to the taxing authorities
 

Page 11 of 16

IV.  AGING OF ACCOUNTS PAYABLE AND RECEIVABLE

					Accounts Payable		Accounts Receivable
					Post-Petition		Pre-Petition		Post-Petition
			30 days or less			29,340.04				125,074.53
			31 - 60 days			5,517.44				618.25
			61 - 90 days			16,455.84				2,921.17
			91 - 120 days			8,150.31				0.00
			Over 120 days			0.00		0.00		0.00
			TOTAL:			59,463.63		0.00		128,613.95
V. INSURANCE COVERAGE
	(FN1)		Name of Carrier		Amount of Coverage		Policy Expiration Date		Premium Paid Through (Date)
	Workers Compensation		Great Central			1,000,000	5/31/2011		9/1/2010
	Automobile		Great Central		Included		3/24/2011		9/1/2010
	Umbrella		Great Central			5,000,000	3/24/2011		9/1/2010
Others:
VI. UNITED STATES TRUSTEE QUARTERLY FEES
(TOTAL PAYMENTS)
Quarterly Period Ending (Date)	Total Disbursements		Quarterly Fees		Date Paid		Amount Paid		Quarterly Fees Still Owing
3/31/2010		15,706.67		650.00	5/11/10			650.00		0.00
6/30/2010		559,389.46		4,875.00	7/30/10			6,500.00		(1,625.00	)
										0.00
										0.00
										0.00
										0.00
										0.00
										0.00
										0.00
										0.00
										0.00
										0.00
										0.00
										0.00
										0.00
				5,525.00				7,150.00		(1,625.00	)

(FN1) The debtor believes the amount due for insurance, except for health, is $0 based on the amount of credits due from the carrier primarily from work compensation insurance overpayments.

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VII SCHEDULE OF COMPENSATION PAID TO INSIDERS

Name of Insider	Date of Order Authorizing Compensation	Authorized Gross Compensation	Gross Compensation Paid During the Month
NONE
VIII. SCHEDULE OF OTHER AMOUNTS PAID TO INSIDERS
Name of Insider	Date of Order Authorizing Compensation	Description	Amount Paid During the Month
NONE

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IX. PROFIT AND LOSS STATEMENT

(ACCRUAL BASIS ONLY)

	Current Month			Cumulative Post-Petition
Sales/Revenue:
Gross Sales/Revenue		310,367.60			1,980,713.85
Less: Returns/Discounts		(2,126.40	)		5,118.22
Net Sales/Revenue		312,494.00			1,975,595.63
Cost of Goods Sold:
Beginning Inventory at cost		0.00			0.00
Purchases		12,864.29			91,613.61
Less: Ending Inventory at cost		0.00			0.00
Cost of Goods Sold (COGS)		12,864.29			91,613.61
Gross Profit		299,629.71			1,883,982.02
Other Operating Income (Itemize)		0.00			0.00
Operating Expenses:
Payroll - Insiders		0.00			0.00
Payroll - Other Employees		144,781.53			884,004.01
Payroll Taxes		13,161.31			84,149.14
Other Taxes (Itemize)		405.78			11,797.64
Depreciation and Amortization		22,797.00			135,262.20
Rent Expense - Real Property		49,281.44			305,787.59
Lease Expense - Personal Property		1,398.70			10,768.81
Insurance		1,342.58			61,259.65
Real Property Taxes		0.00			2,987.45
Telephone and Utilities		23,202.99			135,644.62
Repairs and Maintenance		8,145.00			53,754.48
Travel and Entertainment (Itemize)		34.83			1,174.69
Miscellaneous Operating Expenses (Itemize)		31,108.84			174,532.62
Total Operating Expenses		295,660.00			1,861,122.90
Net Gain/(Loss) from Operations		3,969.71			22,859.12
Non-Operating Income:
Interest Income		0.00			0.00
Net Gain on Sale of Assets (Itemize)		0.00			0.00
Other (Itemize)		0.00			0.00
Total Non-Operating income		0.00			0.00
Non-Operating Expenses:
Interest Expense		256.16			256.16
Legal and Professional (Itemize)		1,000.00			10,523.49
Other (Itemize)		500.00			116,966.00
Total Non-Operating Expenses		1,756.16			127,745.65
NET INCOME/(LOSS)		2,213.55			(104,886.53	)

Page 14 of 16

X. BALANCE SHEET

(ACCRUAL BASIS ONLY)

	Current Month End
ASSETS
Current Assets:
Unrestricted Cash		32,508.70
Restricted Cash		0.00
Accounts Receivable		128,613.95
Inventory		0.00
Notes Receivable		0.00
Prepaid Expenses		2,224.30
Other (Itemize)		23,112.34
Total Current Assets				186,459.29
Property, Plant, and Equipment		1,823,797.26
Accumulated Depreciation/Depletion		(706,269.15	)
Net Property, Plant, and Equipment				1,117,528.11
Other Assets (Net of Amortization):
Due from Insiders		0.00
Other (Itemize)		642,085.83
Total Other Assets				642,085.83
TOTAL ASSETS				1,946,073.23
LIABILITIES
Post-petition Liabilities:
Accounts Payable		59,463.63
Taxes Payable		0.00
Notes Payable		0.00
Professional fees		0.00
Secured Debt		0.00
Other (Itemize)		203,879.64
Total Post-petition Liabilities				263,343.27
Pre-petition Liabilities:
Secured Liabilities		0.00
Priority Liabilities		342,555.91
Unsecured Liabilities		517,800.12
Other (Itemize)		0.00
Total Pre-petition Liabilities				860,356.03
TOTAL LIABILITIES				1,123,699.30
EQUITY:
Pre-petition Owners’ Equity		927,260.46
Post-petition Profit/(Loss)		(104,886.53	)
Direct Charges to Equity		0.00
TOTAL EQUITY				822,373.93
TOTAL LIABILITIES & EQUITY				1,946,073.23

Page 15 of 16

XI.  QUESTIONNAIRE

		No	Yes
1.	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:	X
	N/A
		No	Yes
2.	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:	X
	N/A
3.	State what progress was made during the reporting period toward filing a plan of reorganization
	The Debtor and its management continue to formulate the Debtor's plan of reorganization.
4.	Describe potential future developments which may have a significant impact on the case:
	There is a pending motion to appoint a chapter 11 trustee.  If that motion is granted, it would significantly impact this case.  The Debtor (and its related debtor entities) have a new financial advisor, C.T. Moffitt & Company, and Chief Restructuring Officer, Charles T. Moffitt, that were employed pursuant to Court order entered on August 27, 2010.  The Debtor (and its related entities) employed National Securities Corp. as their investment banker pursuant to Court order entered on August 26, 2010.  The Debtor (and its related entities) believe that the employment of their new financial advisor, CRO and investment banker will assist the Debtors in reorganizing their bankruptcy cases by, among other things, enabling the Debtors to attempt to obtain exit financing.
5.	Attach copies of all Orders granting relief from the automatic stay that were entered during the reporting period.
	Please see Exhibit V attached hereto, which includes a copy of the order granting Merchant Automotive Group's relief from stay motion (entered on July 30, 2010), as well as a copy of the entered order denying the Debtors' motion for reconsideration re the granting of the relief from stay motion (entered on August 2, 2010).  Both orders involve the same property.
		No	Yes
6.	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.	X
	N/A
I,	Robert Lee, Chief Executive 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.

10/1/10	/s/ Robert Lee
Date	Principal for debtor-in-possession

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