OFFICE OF THE UNITED STATES TRUSTEE
EXHIBIT 99.2
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In re: First Alliance Mortgage Company, a California DEBTOR IN POSSESSION OPERATING REPORT
Corporation, Debtor Report Number: 2
For the period FROM: 5/1/00
Chapter 11 case No: SA00-12370-LR TO: 5/31/00
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<S> <C> <C> <C>
1. Profit and loss Statement (Accrual Basis Only)
A. Related to Business operations:
Gross Sales $1,341,212.59
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Less: Sales Returns or Discounts $0.00
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Net Sales $1,341,212.59
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Less: Cost of Goods Sold:
Beginning Inventory at Cost $0.00
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Add: Purchases $0.00
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Less: Ending Inventory at Cost $0.00
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Cost of Goods Sold $0.00
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Gross Profit $1,341,212.59
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Other Operating Revenue $0.00
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Less: Operating Expenses:
Officer Compensation (1) $173,729.68
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Salaries and Wages - Other Employees 150,842.75
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Total Salaries and Wages $324,572.43
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Employee Benefits and Pensions 76,233.57
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Payroll Taxes 19,651.68
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Real Estate Taxes $0.00
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Federal and State Income Taxes $0.00
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Total Taxes $19,651.68
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Rent and Lease Expense $39,101.18
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Interest Expense $607,397.69
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Insurance $43,214.09
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Auto Expense $0.00
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Utilities $13,836.48
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Depreciation and Amortization $32,898.94
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Repairs and Maintenance $1,966.42
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Advertising $0.00
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Supplies, Office Expenses, etc $16,290.60
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(CONTINUED)
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Bad Debt $0.00
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Miscellaneous Operating Expenses 325,247.67
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Total Operating Expenses $1,079,953.07
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Total Expenses $1,500,410.75
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Net Gain/(Loss) from Business Operations ($159,198.16)
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B. Not related to Business Operations
Income
Interest Income $0.00
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Other Non-Operating Revenues $0.00
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Gross Proceeds on Sale of Assets $0.00
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Less: Original Cost of Assets plus
Expenses of Sale $0.00
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Net Gain/Loss on Sale of Asset $0.00
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Total Non-Operating Income $0.00
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Expenses Not Related to Business Operations
Legal and Professional Fees 423,125.00
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Other Non-Operationg Expenses 49,351.10
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Total Non-Operating Expenses $472,476.10
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NET INCOME/(LOSS) FOR PERIOD ($631,674.26)
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2. Aging of accounts payable and accounts receivable (exclude pre-petition AP)
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PAYABLES RECEIVABLES
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Current Under 30 $ 2,016,534.49 $ 3,226,346.83
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Overdue 31-60 days $ 315,450.72 $ 162,349.38
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Overdue 61-90 days $ - $ 68,025.08
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Overdue 91-120 days $ - $ -
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Overdue Over 121 days $ - $ 2,927,470.24
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TOTAL $ 2,331,985.21 $ 6,384,191.53
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OTHER BUSINESS RELATED RECEIVABLES RECEIVABLES
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Loans Held for Sale (1) $81,079,797.89
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Loans Held for Investment (2) $ 831,179.15
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Loan Servicing fees/advances (3) $ 3,864,231.34
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Notes
(1) See attached schedule A of loans held for sale and interest paid to dates
(2) See attached schedule B of loan held for investment and interest paid to
dates
(3) Represents fees/advances receivable on loans serviced. The company does not
currently aged such receivables.
3. Statement of Status of Payments to Secured Creditors and Lessors:
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Post Petition Payments not Made *
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Frequency of Amount of Each
Creditor/Lessor Pymt Payment Next pymt Due Number Amounts
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<S> <C> <C> <C> <C> <C>
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Lehman Commercial Note Varies Varies Varies None NA
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GMAC Commercial Mortgage Monthly $ 28,465.00 6/1/00 None NA
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MJB Associates Monthly $ 47,518.37 6/1/00 None NA
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TIAA Realty (Sacramento) Monthly $ 3,241.42 6/1/00 2 $ 6,482.84
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WRC Properties (Denver) Monthly $ 3,413.47 6/1/00 2 $ 6,826.94
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Unum Life Insurance Co (Phoenix) Monthly $ 3,793.40 6/1/00 2 $ 7,586.80
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CB Richards Ellis (West Covina) Monthly $ 2,331.64 6/1/00 2 $ 4,663.28
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Duke Realty Investments (Mason) Monthly $ 3,260.04 6/1/00 2 $ 6,520.08
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Parkway Center (Pittsburgh) Monthly $ 3,524.29 6/1/00 2 $ 7,048.58
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TrizecHahn Office Properties
(Silver Spring) Monthly $ 3,354.31 6/1/00 2 $ 6,708.62
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IRP Muller Assoc (Placentia) Monthly $ 14,788.20 6/1/00 2 $ 29,576.40
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* Explanation for non-payment: The Company is in the process of negotiation lease buyouts
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4. Tax liability
Gross payroll expenses for the period $ 248,344.87
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Gross sales for period subject to sales tax $ -
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Post Petition
Date Paid Amount Paid Taxes Still Owing
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<S> <C> <C> <C>
Federal payroll and withholding taxes 5/15/00 & 5/31/00 $ 70,639.70 $ -
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State payroll and withholding taxes 5/15/00 & 5/31/00 $ 12,441.95 $ -
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State sales and use taxes $ - $ -
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Real property taxes $ - $ -
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Total $ 83,081.65 $ -
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5. Insurance Coverage
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Insurance Coverage Carrier/Agent Amount of Policy Expiration Premium Paid
Name Coverage Date Thru
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<S> <C> <C> <C> <C>
Worker's Compensation Wasua $ 1,000,000 6/1/01 6/1/01
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Liability Federal Ins. Co $ 1,000,000 6/30/00 6/30/00
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Fire & Extended Coverage Federal Ins. Co $ 1,000,000 6/30/00 6/30/00
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Property Federal Ins. Co $ 23,000,000 6/30/00 6/30/00
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Theft Federal Ins. Co $ 23,000,000 6/30/00 6/30/00
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Life None
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Vehicles Federal Ins. Co $ 1,000,000 6/30/00 6/30/00
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Other: Mortgage Bond Lloys/AIG $ 10,000,000 6/1/01 6/1/01
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Directors and Officers Lloys/AIG $ 10,000,000 7/29/00 7/29/00
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Excess Directors and Officers Reliance Ins. Co $ 5,000,000 7/29/00 7/29/00
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Professional Liability (E&O) Lloys/AIG $ 5,000,000 7/29/00 7/29/00
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6. Questions
A. Has the debtor in possession provided compensation to any officer,
director, shareholders or other principals without the approval of the
Office of the United States Trustee?
Yes Explain
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X No
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B. Has the debtor in possession, subsequent to the filing of the petition,
made payments on its pre-petition unsecured debt, except as have been
authorized by the Court?
Yes Explain
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X No
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7. Statement of Unpaid Professional Fees (Post Petition Amounts Only)
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Name of Professional State Type of Professional Total Post Petition Amount Unpaid
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<S> <C> <C>
Irell & Manella Legal $ 213,759.85
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Lee Tuchin Credit committees counsel $ 100,000.00
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Other Law Firms Legal $ 50,000.00
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Bolar, Hirsch & Jennings Accountant $ 55,000.00
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Heinz & Associates Accountant $ 2,000.00
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Price Waterhouse Accountant $ 50,000.00
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Dan Perl Consultant $ 30,000.00
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Total $ 500,759.85
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8. Narrative Report of Significant Events out of the Ordinary Course of Business
See Schedule Attached
9. Quarterly fees
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Quarterly Total Quarterly Date Amount Check Quarterly
Period Disbursements fee Paid Paid No. Fee still
Ending for the quarter Owing
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<S> <C> <C> <C> <C> <C> <C>
3/31/00 $ 34,019.51 $ 500.00 5/5/00 $ 250.00 1239 $ 250.00
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I, Francisco Nebot, President, declare under penalty of perjury that the
information contained in the above Debtor in Possession Operating Report is true
and complete to the best of my knowledge.
Dated: June 15, 2000 /s/ Francisco Nebot, President and Chief Financial Officer
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Debtor in Possession
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RESPONSE TO QUESTION NO. 8 OF THE OPERATING REPORTS
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On March 23, 2000, First Alliance Mortgage Company, a California corporation,
First Alliance Corporation, a Delaware corporation, First Alliance Mortgage
Company, a Minnesota corporation and First Alliance Portfolio Services, Inc., a
Nevada corporation ("Debtors") filed their respective Chapter 11 petitions.
The Debtors continued to operate their businesses pursuant to 11 U.S.C. 1107 and
1108 of the United States Bankruptcy Court.
During the month of May, the Debtors filed their Schedules and Statement of
Affairs.
The Debtors also filed with the Court the following documents:
1. In excess of 12 separate Applications to Employ Professionals
on behalf of the Debtors;
2. Several Complaints Pursuant to Section 105 of the Bankruptcy
Code with respect to 15 State Court Actions Pending against
employees, former employees, officers and directors and former
officers and directors of the Debtors;
3. Several Motions for Preliminary Injunctions and Temporary
Restraining Orders with respect to 15 State Court Actions
Pending against employees, former employees, officers and
directors and former officers and directors of the Debtors;
and
4. Oppositions to several Motions for Relief from Stay.
