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:

May-10

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). o

Dollars reported in $1

End of Current
Month

End of  Prior
Month

As of Petition
Filing

2.

Asset and Liability Structure

a. Current Assets

$

35,492

$

42,346

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

$

62,804,484

$

62,936,666

$

70,367,249

c. Current Liabilities

$

15,894,924

$

15,726,772

d. Total Liabilities (Note 2)

$

37,802,595

$

37,634,443

$

6,295,128

Current Month

Prior Month

Cumulative
(Case to Date)

3.

Statement of Cash Receipts & Disbursements for Month

a. Total Receipts

$

0

$

56,565

$

1,317,733

b. Total Disbursements

$

5,282

$

135,865

$

1,316,421

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

$

(5,282

)

$

(79,300

)

$

1,312

d. Cash Balance Beginning of Month

$

6,594

$

85,894

$

0

e. Cash Balance End of Month (c + d)

$

1,312

$

6,594

$

1,312

Current Month

Prior Month

Cumulative
(Case to Date)

4.

Profit/(Loss) from the Statement of Operations

$

(300,334

)

$

(577,365

)

$

(13,724,717

)

5.

Account Receivables (Pre and Post Petition)

$

0

$

0

6.

Post-Petition Liabilities

$

15,894,924

$

15,726,772

7.

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

$

3,012,949

$

2,948,219

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)

o

x

9.

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

o

x

10.

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

o

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)

o

x

12.

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

x

o

13.

Are a plan and disclosure statement on file?

o

x

14.

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

o

x

15.

Check if paid: Post-petition taxes

x;

U.S. Trustee Quarterly Fees

o; 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

Date:

6/20/2010

/s/ Graham Seel

Responsible Individual

Current Month

Cumulative

Next Month

Actual

Forecast

Variance

(Case to Date)

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

—

21,895

4,670

17,225

6

Interest (Note 1)

1,019,850

20,000

—

7

Other Income: Gain on sale - REO

(2,447

)

(2,500

)

53

8

Less: Servicing Fees

(182,197

)

(2,500

)

—

9

$

19,448

2,170

$

17,278

10

Total Revenues

$

837,653

$

17,500

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

$

21,821

$

30,000

$

8,179

18

Management Fees

$

399,327

$

30,000

—

19

Depreciation

Taxes:

—

20

Employer Payroll Taxes

—

21

Real Property Taxes

—

22

Other Taxes

—

23

Other Selling

41,240

58,700

17,460

24

Other Administrative (Note 4)

976,040

58,700

$

81,431

90,000

8,569

25

Interest

1,683,493

90,000

$

8,333

9,000

667

26

Other Expenses: Provision for loan losses

$

569,277

9,000

$

0

—

—

27

Impairment for REOs

$

(253,643

)

—

$

151,784

94,000

(57,784

)

28

Expenses Investment in REO (Note 2)

10,568,010

154,000

$

0

—

29

Write-off of Sand City

289,294

—

30

—

31

—

32

—

33

—

34

$

304,609

$

281,700

$

(22,909

)

35

Total Expenses

$

14,231,798

$

341,700

$

(285,161

)

$

(279,530

)

$

(5,631

)

36

Subtotal

$

(13,394,145

)

$

(324,200

)

Reorganization Items:

(25,000

)

$

(25,000

)

—

37

Professional Fees

$

(323,839

)

$

(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

(3,900

)

$

0

3,900

41

U.S. Trustee Quarterly Fees

$

(12,025

)

$

0

—

42

(28,900

)

(25,000

)

(3,900

)

43

Total Reorganization Items

(335,864

)

(25,000

)

$

(314,061

)

$

(304,530

)

$

(9,531

)

44

Net Profit (Loss) Before Federal & State Taxes

$

(13,730,009

)

$

(349,200

)

(13,727

)

—

13,727

45

Federal & State Income Taxes (Note 3)

(5,292

)

—

$

(300,334

)

$

(304,530

)

$

4,196

46

Net Profit (Loss)

$

(13,724,717

)

$

(349,200

)

From Schedules

Market Value

Assets

Current Assets

1

Cash and cash equivalents - unrestricted

$

1,312

2

Cash and cash equivalents - restricted

3

Accounts receivable (net)

A

4

Inventory

B

5

Prepaid expenses

$

34,180

6

Professional retainers

—

7

Other:

8

9

Total Current Assets

35,492

Property and Equipment (Market Value)

10

Real property

C

$

0

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

$

0

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, 4)

J

23,949,907

25

Investment in Real Estate Owned, net of allowances (Note 3, 4)

K

34,589,822

26

Investment in affiliate

L

—

27

Accounts Receivable

M

$

418,577

28

Total Other Assets

$

62,768,992

29

Total Assets

$

62,804,484

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.

Note 4:

Loan 06-032 foreclosed in April and acquired the underlying collateral, which was placed in Laurel Lakes Venice, LLC. Fund II now owns a 29.3% interest in the new REO entity.

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

$

3,083,423

37

Real property lease arrearage

38

Personal property lease arrearage

39

Accrued professional fees

$

1,130,003

40

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

41

Other: Service Fee Payable

$

108,041

42

Post-Petition liabilities due to CMR Inc

$

476,880

43

44

Total Current Liabilities

$

15,894,924

45

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

46

Total Post-Petition Liabilities

$

15,894,924

Pre-Petition Liabilities (allowed amount)

47

Secured claims

F

$

20,321,658

48

Priority unsecured claims

F

49

General unsecured claims

F

$

1,586,013

50

Total Pre-Petition Liabilities

21,907,671

51

Total Liabilities

$

37,802,595

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

(13,724,717

)

56

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

57

Members’ Capital (Note 6)

40,001,444

58

Market value adjustment (Note 7)

—

59

Total Equity (Deficit)

$

25,001,889

60

Total Liabilities and Equity (Deficit)

$

62,804,484

Note 6:

Non-recorded liability

Note 7:

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 $26,599,912.

Receivables and Payables Agings

Accounts Receivable
[Pre and Post Petition]

Accounts Payable
[Post Petition]

Past Due
Post Petition Debt

0 -30 Days

$

70,474

31-60 Days

$

78,457

61-90 Days

$

115,018

$

3,012,949

91+ Days

$

2,819,474

Total accounts receivable/payable

$

0

$

3,083,423

Allowance for doubtful accounts

Accounts receivable (net)

$

0

Types and Amount of Inventory(ies)

Inventory(ies)
Balance at
End of Month

Cost of Goods Sold

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 o   No o

How often do you take a complete physical inventory?

Valuation methods -

FIFO cost

o

Weekly

o

LIFO cost

o

Monthly

o

Lower of cost or market

o

Quarterly

o

Retail method

o

Semi-annually

o

Other

o

Annually

o

Explain

Date of last physical inventory was

Date of next physical inventory is

Description

Cost

Market Value

$

0

$

0

Total

$

0

$

0

Description

Cost

Market Value

Machinery & Equipment -

Total

$

0

$

0

Furniture & Fixtures -

Total

$

0

$

0