Newsletter

January 11, 2003

Volume VI, Issue 4

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To OTC Journal Members:

Family Room's (OTC BB: FMLY) Biggest Day Ever- NARC Hits Theaters Nationwide

In our original Trading Alert on Family Room (Nov 1, 2002), we likened their business model to a biotech company without the risk. Family Room develops entertainment products which have new drug like upside, but the company doesn't have to spend hundreds of millions of dollars and ten years in development.

Family Room Entertainment, through its wholly owned subsidiary Emmett/Furla Productions, is a film production company. Over the past five years they have developed a reputation for delivering films on time and on budget, and are now starting to get a steady stream of higher profile projects in their pipeline.

Their first major theatrical release hit theaters November 15th. Half Past Dead, starring Steven Segal, was a breakthrough for the company as it was their first film to hit the screens with the backing of major Hollywood distribution. Emmett/Furla is close to starting production on their second Segal thriller Belly of the Beast which they begin filming in Thailand next month.

Their second major theatrical film, NARC, was widely released in theaters around the country yesterday. This film has the potential to be a major breakthrough for Family Room as there is substantial Oscar buzz surrounding this independent film, and significant profits could be close behind. Stars Ray Liotta and Jason Patric are both garnering a great deal of critical acclaim for their performances. In fact, it is rumored that Jason Patric landed a starring role in the upcoming remake of the The Alamo based on his performance in NARC.

The film cost about $6 million to make, and Emmett/Furla will receive 23.5% of the producer profits. Just how much the film will make is unknown. Smaller independent films like this get momentum if they get prestigious award publicity and positive audience response. A recent low budget parallel is My Big Fat Greek Wedding. After it's production several big Hollywood names fell in love with this movie. It is rumored to have made about $80 million in profits already.

With only 19 million shares issued and outstanding, Family Room's market value based on today's closing price is only a little over $4 million. With luck the company could make profits substantially higher than $4 million just on its ownership of NARC.

The stock has traded to a high of $.51 and a low of $.21 since we began covering the company. Therefore, today's closing level of $.22 makes the stock very attractively priced for both long term investors and short term traders. Moreover, despite being at the low end of its trading range, Family Room's average daily volume has doubled over the past 120 days, signifying investors are finally starting to notice this sleeper.

As a result of its successful efforts, Family Room is gaining momentum with several major new high profile projects in the pipeline. More on this in future editions as new deals are signed and announced.

Ray Liotta Talks About NARC

Yesterday's edition of the San Diego Union Tribune contained an interview with Ray Liotta. You can read it on the Union Tribune's web site by clicking here.

To give you a better feel for the potential of this film, below is a reprint of the article.

For those who want to take advantage of the low price in the stock, a limit order is strongly recommended. Despite average daily volume having doubled over the past three months, the stock is thinly traded and buying surges tend to move it up rapidly. Therefore, a limit order and a little patience should yield the right trade.

For your information, here is the interview with Ray Liotta on NARC:

Liotta shows evidence of greatness in 'Narc'

By David Elliott
MOVIE CRITIC

January 10, 2003

Hey, I can talk and eat!" says Ray Liotta, preparing to wolf down a big burger in his San Diego suite while putting forth the good, grim news about his movie "Narc."

Good, since the film is good. Grim, since the film is very grim.

"Narc," which opens today, casts Liotta, 47, as a Detroit narcotics detective and powder keg named Henry Oak. He bleeds inwardly about a dead partner and makes other people bleed outwardly. In one of the most potently violent yet emotionally conflicted police movies, he tests the wiles and nerves of a new partner, Nick Tellis (Jason Patric).

Even packing in lunch, it's obvious that Liotta is back to trim after loading Oak's weight onto his large frame. His crystal blue gaze, icily suspicious in the movie, now has the friendlier intensity that first made Liotta stand out of the acting pack. His voice makes you think of a hub cap gladly smacking a curb – it's the ear-grab street speech of an adopted Jersey lad (born in Newark, raised in Union).

Told that he is almost not visibly himself in the role, Liotta swallows, smiles, laughs:

"Yeah, people are not recognizing me! The director said to have a goatee and just look 'different,' but that was too arbitrary. So I broke the whole This guy lost his wife; he's obsessed about this case, and I figure that changed his looks. So I put a lot of makeup under my eyes, gained weight, shaved my hairline back, got into the hulking brute thing."

Liotta took a chance on barely known director Joe Carnahan's script and film, not because "I had seen his 'Blood, Guts, Octane and Bullets,' though it was good, a nice first effort shot on weekends, and that's admirable. But this was a lot more. Reminded me of those '70s movies like 'French Connection' and 'Serpico.' The script just hammered me, and that twist at the end I didn't see coming at all.

"I started crying, because now I understood the guy. What he did, though he's corrupt, is out of love. Oh my God, I thought. And when people see it, they are stunned, too. He's a brute but a human being. He was such a good cop and he got so sick about what was going on, it's killing him."

Liotta, despite some fumbling career moves like "Corrina, Corrina," has not lost the appetite that made him special in Martin Scorsese's "GoodFellas." "I have always felt that in acting the one who peels the deepest wins," he says, and "I could take a chance on this because things were looking up for me. I had done some films that weren't getting the play I wanted, then suddenly I got into 'Hannibal' and 'Blow' and 'Heartbreakers,' and because of that, of being seen again, I was sort of 'protected' to do a risky picture like this. Plus it's just a great part. Had to do it."

With Liotta producing, they filmed for 27 days in Toronto, using its meanest junkyard blocks for Detroit. Budget, only $3 million. And then, "two weeks in, the promised budget stopped coming. We weren't getting paid, including me and Joe and Jason. The crew threatened to leave. So we were on the phone every night begging, we couldn't afford to break the momentum of this movie, it's too intense and the camera guy finally had the hand-held thing down. Man, it got rough."

The crisis was so acute that, "We couldn't get dailies, didn't see the film we shot until five months after the shoot. You know, the fact that we weren't getting paid really ticked me off. And being lied to, that was fuel, too, for the energy I needed, like for the last, 25-minute showdown scene where the energy is kept up so damn high."

For the actor, Carnahan "didn't much remind me of Marty (Scorsese, "GoodFellas" director) except in his love of movies, his wanting to make an imprint. Joe has, like Marty, that uncompromising, bleep-'em attitude. And when he shot that incredible first scene with the lady and the baby and it's so fast and raw, I knew he would do the film only his way."

With its sustained hard-press opening and its corrupt cop at the center, "Narc" inevitably stirs buff memories of Orson Welles' "Touch of Evil," and it is startling to hear that practiced hard guy Liotta has "never seen that one. You know, somebody asked if Oak was patterned after that guy Welles played, and Joe said yeah, but I didn't really get that."

He feels protective of Carnahan, soon to make a film with Harrison Ford: "Joe's challenge now is not to get too seduced. The buzz on this was so big after Sundance, and we got calls from Dustin Hoffman and Warren Beatty and others. Joe has to decide if he wants to be a gun-for-hire or do his own thing, like the book he wants to film about (drug lord) Pablo Escobar.

"There's this sorta Bel Air circuit, where they go into their private screening rooms and watch a film with certain friends. And the buzz starts. (Producer) Arnold Koppelson gave our film to Sherry Lansing of Paramount, who's married to William Friedkin, who then said it's the best cop picture he's ever seen – this guy made 'French Connection'! And this serious dude tells that to Joe, and then Paula Wagner sees it and shows it to partner Tom Cruise, then we got a call from Tom saying he'd do anything to help us."

The Cruise-Wagner link flexed the muscle to let the film's makers gain ownership and win a distribution deal: "No strings attached. He just believed in the movie. So we went from not being paid to being the hot toast."

Since he played another Henry, named Hill, in "GoodFellas," Liotta has not quite cashed the fat check of stardom some predicted. He won praise as Sinatra in a Rat Pack TV movie, made the forgettable "Unforgettable," remembers "seven locations in Thailand with an elephant" for "Operation Dumbo Drop," but now with actress wife Michelle Grace – they live in L.A. – seems to have found new momentum.

"I wanted to get more pro-active with my career. I wasn't that crazy about some of the stuff I was getting, so I formed a production company with my wife and our partner Diane Nabatoff. It's called Tiara Blu. Why? I have no idea. My wife came up with it; I said 'Fine.' And I changed agents. Then I got 'Narc.' "

And since his wife was once married to a pro ballplayer "and knows how to be a baseball wife, we are filming this HBO series 'Baseball Wives.' For 13 episodes to come on after 'Sex and the City' ... and I've just done 'Identity' with John Cusack and Alfred Molina, about 10 people at a hotel outside Vegas, and people start dying. And I've found a sweet story about a street guy who plays secretly the violin, it's a romance really."

As for his "Narc" being harshly truthful – that is, violent and visceral – the star checks off the issue as he polishes off his burger: "Well, that is what these guys do. Nothing Hollywood about it. It should be seen by people who like this sort of movie."

Investors should take note of Liotta's mention of the film producers running out of money during filming. It was at this point that Emmett/Furla stepped in with capital, and was able to negotiate 23.5% of the producer profits for providing capital for finishing the film. Hence the opportunity in the stock thanks to management's ability to react.

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