In re:

CMR Mortgage Fund II, LLC

Case No.

09-30788

CHAPTER 11

MONTHLY OPERATING REPORT

(GENERAL BUSINESS CASE)

SUMMARY OF FINANCIAL STATUS

MONTH ENDED:

Sep-09

PETITION DATE:

03/31/09

1.

Debtor in possession (or trustee) hereby submits this Monthly Operating Report on the Accrual Basis of accounting (or if checked here the Office of the U.S. Trustee or the Court has approved the Cash Basis of Accounting for the Debtor).

—

Dollars reported in     $1

2.

Asset and Liability Structure

End of Current
Month

End of Prior
Month

As of Petition
Filing

a.  Current Assets

$44,209  

$45,278  

b.  Total Assets  (see schedule J, Note 1)

$71,423,352  

$74,012,918  

$70,367,249  

c.  Current Liabilities

$14,329,142  

$14,217,512  

d.  Total Liabilities (Note 2)

$36,244,515  

$36,132,885  

$6,295,128  

Cumulative

3.

Statement of Cash Receipts & Disbursements for Month

Current Month

Prior Month

(Case to Date)

a.  Total Receipts

$174,777  

$133,313  

$747,182  

b.  Total Disbursements

$174,110  

$133,296  

$745,728  

c.  Excess (Deficiency) of Receipts Over Disbursements (a - b)

$667  

$17  

$1,454  

d.  Cash Balance Beginning of Month

$787  

$770  

$0  

e.  Cash Balance End of Month (c + d)

$1,454  

$787  

$1,454  

Cumulative

Current Month

Prior Month

(Case to Date)

4.

Profit/(Loss) from the Statement of Operations

($2,701,196)

($66,353)

($3,547,769)

5.

Account Receivables (Pre and Post Petition)

$0  

$0  

6.

Post-Petition Liabilities

$14,329,142  

$14,217,512  

7.

Past Due Post-Petition Account Payables (over 30 days)

$199,096  

$79,426  

At the end of this reporting month:

Yes

No

8.

Have any payments been made on pre-petition debt, other than payments in the normal course to secured creditors or lessors? (if yes, attach listing including date of payment, amount of payment and name of payee)

X

9.

Have any payments been made to professionals? (if yes, attach listing including date of payment, amount of payment and name of payee)

X

10.

If the answer is yes to 8 or 9, were all such payments approved by the court?

N/A

11.

Have any payments been made to officers, insiders, shareholders, relatives?  (if yes, attach listing including date of payment, amount and reason for payment, and name of payee)

X

12.

Is the estate insured for replacement cost of assets and for general liability?

X

13.

Are a plan and disclosure statement on file?

X

14.

Was there any post-petition borrowing during this reporting period?

X

15.

Check if paid: Post-petition taxes    X  ;        U.S. Trustee Quarterly Fees   ___ ;  Check if filing is current for: Post-petition

tax reporting and tax returns:           X  .

(Attach explanation, if post-petition taxes or U.S. Trustee Quarterly Fees are not paid current or if post-petition tax reporting and tax return filings are not current.)

Note 1:

Scheduled Values for Loans and advances secured by DOT are based on the face amounts of the loans, taking into account the most recent available appraisals and internal valuations, and may include adjustment for litigation or foreclosure action risk contingencies.

Note 2:

See Note 5 of Liabilities and Equity

I declare under penalty of perjury I have reviewed the above summary and attached financial statements, and after making reasonable inquiry believe these documents are correct.

Date:

10/21/2009

/s/ Graham Seel

Responsible Individual

STATEMENT OF OPERATIONS

(General Business Case)

For the Month Ended

09/30/09

Current Month

Actual

Forecast

Variance

Cumulative
(Case to Date)

Next Month
Forecast

Revenues:

-     

1

Gross Sales

-     

2

less: Sales Returns & Allowances

$0 

-     

3

Net Sales

$0 

-     

4

less: Cost of Goods Sold

(Schedule ‘B’)

-     

-     

5

Gross Profit

-     

90,178 

85,000 

5,178 

6

Interest

617,004 

85,000 

-     

7

Other Income:

Gain on sale - REO

(13,257)

(13,000)

(257)

8

Less: Servicing Fees

(79,418)

(13,000)

-     

9

$76,921 

72,000 

$4,921 

10

Total Revenues

$537,586 

$72,000 

Expenses:

-     

11

Compensation to Owner(s)/Officer(s)

-     

12

Salaries

-     

13

Commissions

-     

14

Contract Labor

Rent/Lease:

-     

15

Personal Property

-     

16

Real Property

-     

17

Insurance

$32,302 

$33,000 

$698 

18

Management Fees

$196,730 

$33,000 

-     

19

Depreciation

Taxes:

-     

20

Employer Payroll Taxes

-     

21

Real Property Taxes

-     

22

Other Taxes

-     

23

Other Selling

16,718  

11,150 

(5,568)

24

Other Administrative

259,697 

11,150 

$140,842  

135,500 

(5,342)

25

Interest

916,400 

135,500 

$802,176  

(802,176)

26

Other Expenses:

Provision for loan losses

$944,053 

($70,917)

-     

70,917  

27

Impairment for REOs

($216,004)

-     

$1,831,996  

(1,831,996)

28

Expenses Investment in REO (Note 1)

1,831,996 

-     

29

-     

30

-     

31

-     

32

-     

33

-     

34

$2,753,117  

$179,650  

($2,573,467)

35

Total Expenses

$3,932,872 

$179,650 

($2,676,196)

($107,650)

($2,568,546)

36

Subtotal

($3,395,286)

($107,650)

Reorganization Items:

(25,000)

($25,000)

-     

37

Professional Fees

($137,964)

($25,000)

-     

38

Provisions for Rejected Executory Contracts

-     

39

Interest Earned on Accumulated Cash from Resulting Chp 11 Case

-     

40

Gain or (Loss) from Sale of Equipment

-     

-     

41

U.S. Trustee Quarterly Fees

($4,875)

$0 

-     

42

(25,000)

($25,000)

-     

43

Total Reorganization Items

(142,839)

(25,000)

($2,701,196)

($132,650)

($2,568,546)

44

Net Profit (Loss) Before Federal & State Taxes

($3,538,125)

($132,650)

-     

-     

45

Federal & State Income Taxes

9,644 

-     

($2,701,196)

($132,650)

($2,568,546)

46

Net Profit (Loss)

($3,547,769)

($132,650)

  For the Month Ended

09/30/09

Assets

From Schedules

Market Value

Current Assets

1

Cash and cash equivalents - unrestricted

$1,454

2

Cash and cash equivalents - restricted

3

Accounts receivable (net)

A

4

Inventory

B

5

Prepaid expenses

$42,755

6

Professional retainers

-    

7

Other:

8

9

Total Current Assets

44,209

Property and Equipment (Market Value)

10

Real property

C

$460,769

11

Machinery and equipment

D

12

Furniture and fixtures

D

13

Office equipment

D

14

Leasehold improvements

D

15

Vehicles

D

16

Other:

17

18

19

20

21

Total Property and Equipment

$460,769

Other Assets

22

Loans to shareholders

23

Loans to affiliates

I

$3,810,686

24

Loans and advances, secured by DOT, net of allowances (Note 2)

J

25,059,730

25

Investment in Real Estate Owned, net of allowances (Note 3)

K

39,169,626

26

Investment in affiliate

L

-    

27

Accounts Receivable

M

$2,878,332

28

Total Other Assets

$70,918,374

29

Total Assets

$71,423,352

NOTE:

Indicate the method used to estimate the market value of assets (e.g., appraisals; familiarity with comparable market prices, etc.) and the date the value was determined.

Note 2:

Scheduled Values for Loans and advances secured by DOT are based on the face amounts of the loans, taking into account the most recent available appraisals and internal valuations, and may include adjustment for litigation or foreclosure action risk contingencies.

Note 3:

When property is acquired (Real Estate Owned), any excess of the carrying value of loan over the net realizable value of property is charged against the allowance for loan losses.  Following foreclosure, valuations are performed quarterly with any subsequent writedowns recorded as a separate valuation allowance and charged to other operating expenses.  Collateral values are based on results of annual appraisals, further subject to valuations derived by internal analytic model calculations.

Liabilities From Schedules

Post-Petition

Current Liabilities

30

Salaries and wages

31

Payroll taxes

32

Real and personal property taxes

33

Income taxes

34

Sales taxes

35

Notes payable (short term)

$11,096,577 

36

Accounts payable (trade)

A

$2,446,302 

37

Real property lease arrearage

38

Personal property lease arrearage

39

Accrued professional fees

$385,460 

40

Current portion of long-term post-petition debt (due within 12 months)

41

Other:

Service Fee Payable

$75,818 

42

Post-Petition liabilities due to CMR Inc

$324,985 

43

44

Total Current Liabilities

$14,329,142 

45

Long-Term Post-Petition Debt, Net of Current Portion

46

Total Post-Petition Liabilities

$14,329,142 

Pre-Petition Liabilities (allowed amount)

47

Secured claims

F

$20,321,658 

48

Priority unsecured claims

F

49

General unsecured claims

F

$1,593,715 

50

Total Pre-Petition Liabilities

21,915,373 

51

Total Liabilities

$36,244,515 

Equity (Deficit)

52

Retained Earnings/(Deficit) at time of filing

($1,274,838)

53

Capital Stock

54

Additional paid-in capital

55

Cumulative profit/(loss) since filing of case

(3,547,769)

56

Post-petition contributions/(distributions) or (draws)

57

Members’ Capital (Note 5)

40,001,444 

58

Market value adjustment (Note 6)

-     

59

Total Equity (Deficit)

$35,178,837 

60

Total Liabilities and Equity (Deficit)

$71,423,352 

Note 5:

Non-recorded liability

Note 6:

Members’ Capital is recorded net of market value adjustments as described in Notes 1, 2, 3, and 4 as required by GAAP.  The total of fair value adjustments for loans and REO is $27,859,394.

Receivables and Payables Agings

Accounts Receivable
[Pre and Post Petition]

Accounts Payable
[Post Petition]

Past Due
Post Petition Debt

0 -30 Days

$66,985

31-60 Days

$116,711

61-90 Days

$82,385

$199,096

91+ Days

$2,180,221

Total accounts receivable/payable

$0

$2,446,302

Allowance for doubtful accounts

Accounts receivable (net)

$0

Types and Amount of Inventory(ies)

Cost of Goods Sold

Inventory(ies)
Balance at
End of Month

Inventory Beginning of Month

Add -

Retail/Restaurants -

Net purchase

Product for resale

Direct labor

Manufacturing overhead

Distribution -

Freight in

Products for resale

Other:

Manufacturer -

Raw Materials

Work-in-progress

Less -

Finished goods

Inventory End of Month

Shrinkage

Other - Explain

Personal Use

Cost of Goods Sold

$0  

TOTAL

$0

Method of Inventory Control

Inventory Valuation Methods

Do you have a functioning perpetual inventory system?

Indicate by a checkmark method of inventory used.

Yes

No

How often do you take a complete physical inventory?

Valuation methods -

FIFO cost

Weekly

LIFO cost

Monthly

Lower of cost or market

Quarterly

Retail method

Semi-annually

Other

Annually

Explain

Date of last physical inventory was

Date of next physical inventory is

Description

Cost

Market Value

Tres Tigres Storage Facility, Sand City, CA

$460,769

$460,769

(recorded net of Senior Lien $2,146,152)

Total

$460,769

$460,769

Description

Cost

Market Value

Machinery & Equipment -

Total

$0

$0

Furniture & Fixtures -

Total

$0

$0

Office Equipment -

Total

$0

$0

Leasehold Improvements -

Total

$0

$0

Vehicles -

Total

$0

$0