Newsletter

March 15, 2005

Volume VI, Issue 23

Home Page : www.otcjournal.com
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To OTC Journal Members:

Comments in the BLOG

I updated my thoughts on ZAPZ in a BLOG entry earlier this morning. The murky dilution picture has become clearer buy not fully clarified. However, based on what I learned I believe the stock is now likely to trade back up. Check the BLOG for the update, and please feel free to post any comments or questions. Your comments and questions do not post automatically- I moderate each one, so it may take a day or two to show up at that BLOG entry.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets.

Family Room (OTC BB: FMLY): The Rodney Dangerfield of Penny Stocks

Family Room has pulled of another major coup. Early in the year Chairman George Furla promised me the company would produce 8 to 12 movies this year. The films would have much higher budgets than anything they had done in the past, and star some major box office draws. For the first time in three years, he is delivering in a big way.

Today, just after the market closed, FMLY announced it had signed Bruce Willis to star in the upcoming production of 16 Blocks. The film will be directed by box office superstar Richard Donner, famous for directing the Lethal Weapon series and Maverick with Mel Gibson. The film is scheduled to go into production in Toronto and New York in the late summer.

Here's the Family Room projects going into production in 2005 so far:

“LONELY HEARTS” starring John Travolta and James Gandofini, is set to begin principal photography on March 24, 2005;
“MERCENARY,” starring Steven Seagal, is set to begin filming on April 4, 2005
“THE CONTRACT,” starring John Cusack and recent Academy Award winner Morgan Freeman with Academy Award Nominee Bruce Beresford directing, is set to begin production on July 5, 2005.
"Wicker Man", starring Nicolas Cage, is scheduled to go into production on July 15.
"88 Minutes", starring Al Pacino has been postponed. Production will begin at a future time to be announced.

I'm calling Family Room the Rodney Dangerfield of penny stocks because the stock just can't get no respect. When you look at the line up of films they are producing this year, it boggles my mind that the stock cannot get any traction. It just doesn't make much sense.

Here's a quick review of their business model. The company does not risk it's own capital when it produces a film. Outside financiers take the risk, and FMLY collects a producers fee for managing the production. Fees run from $250k on the low end up to $1 million for the higher production budget films.

As part of the arrangement, FMLY also gets of percentage of the producer profits, and in some cases a piece of the box office over a certain threshold of ticket sales.

There will only be two FMLY related productions hitting the box office this year. "Amityville Horror" was a FMLY property. It will be in movie theaters soon. The title was sold to a studio for a flat fee, so FMLY has no further upside unless there are sequels.

Edison is expected to hit the theaters in the Fall. Edison stars Oscar winners Kevin Spacey and Morgan Freeman. The film will be Justin Timberlake's box office debut, and consequently will get a lot of publicity. If the film can exceed over $40 million at the box office, FMLY could enjoy windfall profits.

The films FMLY is producing this year will not be at the movie theaters until 2006 and 2007. However, the current valuation of the stock is only $7.2 million. Pending dilution could take the market cap up into the $10.5 million range, which seems absurd relative to the upside.

I don't know what's holding this one back, but it seems like it should be blowing through the $.09 barrier on its way to $.12 already. Maybe the market is going to wait until these movies are in the box office, or maybe our time has finally come.

Please share your comments or questions at the next BLOG posting.

Here is the complete text of today's release for your review:

Bruce Willis and Family Room Entertainment Go the Distance in ``16 Blocks''

Business Wire via COMTEX

Mar 15, 2005 4:03:02 PM

LOS ANGELES, Mar 15, 2005 (BUSINESS WIRE) --

Emmett/Furla Films, a wholly owned subsidiary of Family Room Entertainment Corporation (OTCBB:FMLY), in conjunction with Millennium Films and Equity Pictures, announced on March 8th that Bruce Willis has signed on to star in "16 BLOCKS" for director Richard Donner ("LEATHAL WEAPON" & "MAVERICK"). The picture is scheduled to begin filming in Toronto and New York in late summer.

This follows Family Room's announcement on February 25, 2005, that it had been diligently developing and packaging new projects to announce in the near future; "16 BLOCKS" is the second of those projects to be announced. The first of these projects was Neil LaBute's ("IN THE COMPANY OF MEN" & "NURSE BETTY") remake of the UK cult-horror pic "THE WICKER MAN" starring Nicolas Cage.

Based on a screenplay written by Richard Wenk, "16 BLOCKS" follows Jack Mosley (BRUCE WILLIS), an aging cop assigned the mundane task of escorting a fast-talking, wise-cracking young witness to the courthouse sixteen city blocks away, and the action-packed thrill-ride that takes place in those "sixteen blocks."

Co-chairmen Randall Emmett and George Furla stated: "We are excited to be working with the strong creative talents of Dick and Bruce. We believe that `16 BLOCKS' is a high-concept picture with commercial appeal and, with the elements assembled, solid potential."

As follow-up to last week's announcement, Family Room Entertainment would also like to re-cap its projects.

The following projects are in active production or are slated to be in active production during fourth quarter of fiscal 2005 and the first quarter of fiscal 2006:

-- "LONELY HEARTS," starring John Travolta and James Gandofini, is set to begin principal photography on March 24, 2005;

-- "MERCENARY," starring Steven Seagal, is set to begin filming on April 4, 2005; and

-- "THE CONTRACT," starring John Cusack and recent Academy Award winner Morgan Freeman with Academy Award Nominee Bruce Beresford directing, is set to begin principal photography on July 5, 2005.

-- "THE WICKER MAN," starring Nicolas Cage for writer/director Neil LaBute, is slated to begin filming in mid-July.

The following projects have completed principal photography and are currently in post-production:

-- "EDISON," starring recent Academy Award winner Morgan Freeman, LL Cool J, Justin Timberlake and Kevin Spacey;

-- "THE TENANTS," starring Dylan McDermott and Snoop Doggy Dogg;

-- "TODAY YOU DIE," starring Steven Seagal;

-- "SUBMERGED," starring Steven Seagal; and

-- "THE WIDOW'S LOVER," starring Willem Dafoe.

The following projects are currently in theaters or have announced release dates from their domestic distributor:

-- "THE AMITYVILLE HORROR" is slated to be released on April 15, 2005; and

-- "LOVE SONG FOR BOBBY LONG," starring John Travolta and three time Golden Globe Nominee, Scarlett Johansson, is currently in theaters.

Family Room, through its various subsidiaries, is in active development in conjunction with third parties on the following projects:

-- "MICRONAUTS," which is based on the 1970s and 80s toy line and featured in almost 200 Marvel Comics issues;

-- "ROOM SERVICE," based on the novel by Beverly Brandt and starring Jessica Simpson; and

The project "88 MINUTES" has been delayed pending a new start date.

About Family Room Entertainment

Family Room Entertainment Corporation, with its subsidiaries, Emmett Furla Films Productions ("EFFP"), Emmett Furla Films Distribution ("EFFD") and EFF Independent (EFFI"), is a publicly held company trading on the NASDAQ Bulletin Board under the symbol "FMLY." Family Room Entertainment develops, produces and performs production related services for the entertainment industry. Family Room Entertainment's goal, through EFFI and EFFP, is to facilitate relationships (and as such, provide production related services) between creative talent (including writers, actors and directors) and companies who produce, finance and distribute motion pictures. FMLY derives its income from producer fees, production consulting and service fees and royalties as well as its participation in the profits of the various pictures it produces.

The FMLY co-founders, Randall Emmett and George Furla, believe that they have the expertise and contacts within the entertainment industry, specifically in the competitive development, production and distribution arenas, to profitably acquire content, package product by adding value to the content with top quality talent and arrange with third parties to produce and finance motion pictures which are in the moderate to higher level budgets, which can be distributed by those with the expertise to effectively do so to a mass worldwide audience. However, there is no assurance that any motion picture, which has not yet been released, will be released, that a change in the scheduled release dates of any such films will not occur or, if such motion picture is released, it will be successful.

For more information on Family Room Entertainment, please visit: www.stockprofit.com

Forward-Looking Statement:

Safe Harbor: Statements contained in this news release that are not historical facts, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause results to differ materially from those projected.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "ACT"). In particular, when used in the preceding discussion, the words "plan," "confident that," "believe," "expect," "intend to" and similar conditional expressions are intended to identify forward-looking statements within the meaning of the ACT and are subject to risks and uncertainties, and actual results could differ materially from those expressed in any forward-looking statements. Such risks and uncertainties include, but are not limited to, market conditions, competitive factors, the ability to successfully complete additional financings and other risks.

SOURCE: Family Room Entertainment Corporation

Family Room Entertainment Corporation, Beverly Hills M. Dal Walton, III, 310-659-9411 x127 dwalton@fmlyroom.com
Copyright Business Wire 2005

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