**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-KSB**

| [X] | Annual                report pursuant to section 13 or 15(d) of the Securities Exchange                Act of                1934 for the fiscal year ended June 30, 2006                or |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Family      Room Entertainment Corporation**

----

**PART      I**

**ITEM      1.**
**Description      of Business **

**General      Business Development**

**Restructuring      Transaction**

**Asset      Purchase :**
** **

**Name      and Symbol Change:**
** **

**Family      Room Entertainment Business Overview**

----

**Financing      FMLY’s Motion Pictures**

**Distributing      FMLY’s Motion Pictures**

**The      Home Marketplace for Motion Picture Product**

----

| **Major                Customers**      |   |    | **June                30,** |
|-----------------------------------------|--------|---------|-----------------------------|
|                                    |   |    | **2007**                    | **2006** | **2005** |
| NuImage/Millennium                Films | 98.97% | 96.07%  | 86.78%                      |
| Lions                Gate Films         | 0.00%  | 0.00%   | 0.00%                       |
| Pho                                     | 0.02%  |    |                        |
| Monarch                                 | 0.01%  | 0.00%   | 0.00%                       |
| Regents                Films            |   | 0.00%   | 0.30%                       | 0.00% |
| Platinum                Disc            |   | 0.00%   | 0.19%                       | 1.00% |
| Lantern                Lane             |   | 0.00%   | 0.08%                       | 1.00% |
| Other                                   |   |    | 1.00%                       | 3.36% | 11.22% |
| Total                Revenue            |   | 100.00% | 100.00%                     | 100.00% |

**Technological      Developments**

**Foreign      Markets**

**New      Technologies**

**Motion      Picture Property Acquisition Process**

**FMLY      Feature Film Production**

----

**Film      Project History**

**Profit      Participation**

----

**Royalties**

----

----

| **Picture**                               |                                    |                                         | **Fees                  Received**       |
|-------------------------------------------|-----------------------------------------|----------------------------------------------|------------------------------------------|
| **Initial                  Release Date** |                                    | **Function**                                 | **Year                  ended June 30,** |   | **Year                  Ended** | **Year                  Ended** |
| **and                  Media Type**       |                                    | **Performed                  by FMLY (2)**   |                                     |   |   |   |   |
|                                      |                                    | **Type                  of**                 |                                     |   |   |   |   |
| **Film                  Credit Received** | **Principal                  Talent**   | **Production                  Services**     |                                     | **2004** |   | **2005** |   | **Fiscal                  2006** | **Fiscal                  2007** |
| **Speedway                  Junky**       | Jesse                  Bradford,        | Picture                  originally produced |                                     |   |   |   |   |   |   |
|                                      | Jordan                  Brower,         | by                  a third party financier. |                                     |   |   |   |   |   |   |
| Sep-01                                    | Jonathan                  Taylor        | FMLY                  subsequently           |                                     |   |   |   |   |   |   |
|                                      | Thomas,                  Tiffani        | acquired                  50% ownership      |                                     |   |   |   |   |   |   |
| Theatrical                                | Amber                  Theisssen,       | from                  the financier and      |                                     |   |   |   |   |   |   |
|                                      | Warren                  G, Daryl        | receives                  royalties if any   |                                     |   |   |   |   |   |   |
|                                      | Hannah                                  |                                         |                                     |   |   |   |   |   |   |
|                                      |                                    |                                         |                                     |   |   |   |   |   |   |
| Randall                  Emmett &     |                                    | Production                  services         |                                     |   |   |   |   |   |   |
| George                  Furla             |                                    | provided                  include the        |                                     |   |   |   |   |   |   |
| Producers                                 |                                    | negotiation                  of financing    |                                     |   |   |   |   |   |   |
|                                      |                                    | and                  distribution of the     |                                     |   |   |   |   |   |   |
|                                      |                                    | picture,                  and consulting     |                                     |   |   |   |   |   |   |
|                                      |                                    | services                                     |                                     |   |   |   |   |   |   |
|                                      |                                    |                                         |  $                                  | 76,979 |   | -3 |   |   |   |
| **Held                  For Ransom**      | Dennis                  Hopper,         | Picture                  originally produced |                                     |   |   |   |   |   |   |
|                                      | Zachery                  Ty Bryan,      | by                  a third party financier. |                                     |   |   |   |   |   |   |
| Aug-00                                    | Kam                  Heskin,            | FMLY                  subsequently           |                                     |   |   |   |   |   |   |
|                                      | Jordan                  Brower,         | acquired                  100% ownership     |                                     |   |   |   |   |   |   |
| Video/Cable                               | Randy                  Spelling,        | from                  said third party.      |                                     |   |   |   |   |   |   |
|                                      | Tsianina                  Joelson,      | receives                  royalties, if any. |                                     |   |   |   |   |   |   |
|                                      | &                  Morgan Fairchild |                                         |                                     |   |   |   |   |   |   |
|                                      |                                    |                                         |                                     |  (3-A) | $ | 6,000 |   |   |   |
| **After                  Sex**            | Brooke                  Shields,        | Picture                  originally produced |                                     |   |   |   |   |   |   |
|                                      | Virginia                  Madsen,       | by                  a third party financier. |                                     |   |   |   |   |   |   |
| Aug-00                                    | D.B.                  Sweeney,          | FMLY                  subsequently           |                                     |   |   |   |   |   |   |
|                                      | Dan                  Cortese,           | acquired                  100% ownership     |                                     |   |   |   |   |   |   |
| Video/Cable                               | Maria                  Pitillo, &   | from                  the financier and      |                                     |   |   |   |   |   |   |
|                                      | Johnathon                  Schaech      | receives                  royalties, if any. |                                     |   |   |   |   |   |   |
|                                      |                                    |                                         |                                     |  (3-A) | $ | 6,000 |   |   |   |

----

| **I'm                  Over Here Now** | Andrew                  "Dice"        | Picture                  produced                   |   |   |   |   |   |   |   |
|----------------------------------------|---------------------------------------|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                   | Clay                                  | by                  a third party financier.        |   |   |   |   |   |   |   |
| Mar-00                                 |                                  | FMLY                  retains profit                |   |   |   |   |   |   |   |
|                                   |                                  | participation,                  if any.             |   |   |   |   |   |   |   |
| Pay-per-View/                  Video   |                                  | No                  profit participation            |   |   |   |   |   |   |   |
|                                   |                                  | payments                  received to date.         |   |   |   |   |   |   |   |
|                                   |                                  |                                                |   | -3     |   | -3     |   |   |   |
| **Good                  Advice**       | Charlie                  Sheen,       | Picture                  produced by FMLY           |   |   |   |   |   |   |   |
|                                   | Angie                  Harmon,        | in                  conjunction with a third        |   |   |   |   |   |   |   |
| Dec-01                                 | Denise                  Richards,     | party.                  FMLY retains                |   |   |   |   |   |   |   |
|                                   | Rosanna                  Arquette,    | primary                  ownership and              |   |   |   |   |   |   |   |
| Video/Cable                            | &                  Jon Lovitz     | receives                  royalties, if any.        |   |   |   |   |   |   |   |
|                                   |                                  |                                                |   |   |   |   |   |   |   |
| Randall                  Emmett &  |                                  | Production                  services                |   |   |   |   |   |   |   |
| George                  Furla          |                                  | provided                  include the               |   |   |   |   |   |   |   |
| Producers                              |                                  | negotiation                  of financing           |   |   |   |   |   |   |   |
|                                   |                                  | and                  distribution of the            |   |   |   |   |   |   |   |
|                                   |                                  | picture,                  and consulting            |   |   |   |   |   |   |   |
|                                   |                                  | services                  during                    |   |   |   |   |   |   |   |
|                                   |                                  | development,                  during                |   |   |   |   |   |   |   |
|                                   |                                  | principal                  photography,             |   |   |   |   |   |   |   |
|                                   |                                  | and                  during post                    |   |   |   |   |   |   |   |
|                                   |                                  | production                  (to ensure              |   |   |   |   |   |   |   |
|                                   |                                  | that                  the film was                  |   |   |   |   |   |   |   |
|                                   |                                  | completed                  on time and              |   |   |   |   |   |   |   |
|                                   |                                  |  within                  budget).              | $      | 60,000 |   | -3     |   |   |   |
| **Ticker**                             | Tom                  Sizemore,        | Produced                  by a third party          |   |   |   |   |   |   |   |
|                                   | Steven                  Seagal,       | financier.                  FMLY provided           |   |   |   |   |   |   |   |
| Dec-01                                 | Jamie                  Pressly, & | production                  services and            |   |   |   |   |   |   |   |
|                                   | Dennis                  Hopper        | financing                  and received             |   |   |   |   |   |   |   |
| Video/Cable                            |                                  | a                  fee and profit                   |   |   |   |   |   |   |   |
|                                   |                                  | participation,                  If any. No          |   |   |   |   |   |   |   |
|                                   |                                  | profit                  participation  to |   |   |   |   |   |   |   |
|                                   |                                  | received                  to date                   |   |   |   |   |   |   |   |
|                                   |                                  |                                                |   | -3     |   | -3     |   |   |   |

----

| **The                  Badge**              | Billy                  Bob Thornton, | Produced                  by a third party      |   |   |   |   |   |   |   |
|---------------------------------------------|--------------------------------------|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| **(f/k/a                  Behind the Sun)** | Patricia                  Arquette,  | financier.                  FMLY provided       |   |   |   |   |   |   |   |
|                                        | &                  Seal Ward     | production                  services and        |   |   |   |   |   |   |   |
| Sep-02                                      |                                 | received                  a fee and             |   |   |   |   |   |   |   |
|                                        |                                 | profit                  participation, if any.  |   |   |   |   |   |   |   |
| Video/Cable                                 |                                 | No                  profit participation        |   |   |   |   |   |   |   |
|                                        |                                 | received                  to date.              |   |   |   |   |   |   |   |
|                                        |                                 |                                            |   |   |   |   |   |   |   |
| Randall                  Emmett &       |                                 | Production                  services            |   |   |   |   |   |   |   |
| George                  Furla               |                                 | provided                  include the           |   |   |   |   |   |   |   |
| Executive                  Producers        |                                 | negotiation                  of financing       |   |   |   |   |   |   |   |
|                                        |                                 | and                  distribution of the        |   |   |   |   |   |   |   |
|                                        |                                 | picture,                  and consulting        |   |   |   |   |   |   |   |
|                                        |                                 | services                  during develop-       |   |   |   |   |   |   |   |
|                                        |                                 | ment,                  during principal photo-  |   |   |   |   |   |   |   |
|                                        |                                 | graphy,                  and during post        |   |   |   |   |   |   |   |
|                                        |                                 | production                  (to ensure that,    |   |   |   |   |   |   |   |
|                                        |                                 | On                  behalf of the financier     |   |   |   |   |   |   |   |
|                                        |                                 | and                  distributor, that creative |   |   |   |   |   |   |   |
|                                        |                                 | and                  financial resources        |   |   |   |   |   |   |   |
|                                        |                                 |  were                  fully utilized)     |   | -3     |   | -3     |   |   |   |
| **Run                  for the Money**      | Christian                  Slater,   | Produced                  by a third party      |   |   |   |   |   |   |   |
|                                        | Val                  Kilmer,         | financier.                  FMLY provided       |   |   |   |   |   |   |   |
| Feb-02                                      | Daryl                  Hannah,       | production                  services and        |   |   |   |   |   |   |   |
|                                        | Bokeem                  Woodbine,    | received                  a fee and             |   |   |   |   |   |   |   |
| Video/Cable                                 | &                  Vern Troyer   | profit                  participation, if any.  |   |   |   |   |   |   |   |
|                                        |                                 | No                  profit participation        |   |   |   |   |   |   |   |
|                                        |                                 | received                  to date.              |   |   |   |   |   |   |   |
|                                        |                                 |                                            |   |   |   |   |   |   |   |
| Randall                  Emmett &       |                                 | Production                  services            |   |   |   |   |   |   |   |
| George                  Furla               |                                 | provided                  include following:    |   |   |   |   |   |   |   |
| Producers                                   |                                 | Negotiated                  for the acting      |   |   |   |   |   |   |   |
|                                        |                                 | services                  of Val Kilmer,        |   |   |   |   |   |   |   |
|                                        |                                 | Christian                  Slater and Daryl     |   |   |   |   |   |   |   |
|                                        |                                 | Hannah;                  negotiated for the     |   |   |   |   |   |   |   |
|                                        |                                 | financing                  and distribution     |   |   |   |   |   |   |   |
|                                        |                                 | of                  the film and provided       |   |   |   |   |   |   |   |
|                                        |                                 | consulting                  services during     |   |   |   |   |   |   |   |
|                                        |                                 | development,                  during            |   |   |   |   |   |   |   |

----

|                                  |                                | principal                  photography,           |   |   |   |   |   |   |   |
|---------------------------------------|-------------------------------------|---------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                  |                                | and                  during post production       |   |   |   |   |   |   |   |
|                                  |                                |  (to                  ensure that, on        |   |   |   |   |   |   |   |
|                                  |                                | behalf                  of the financier          |   |   |   |   |   |   |   |
|                                  |                                | and                  distributor, that creative   |   |   |   |   |   |   |   |
|                                  |                                | and                  financial resources          |   |   |   |   |   |   |   |
|                                  |                                | were                  fully utilized)             |   |   |   |   |   |   |   |
|                                  |                                |                                              |   | -3     |   | -3     |   |   |   |
| **Half                  Past Dead**   | Steven                  Seagal,     | Produced                  by a third party        |   |   |   |   |   |   |   |
|                                  | Morris                  Chestnut,   | financier.                  FMLY provided         |   |   |   |   |   |   |   |
| Nov-02                                | &                  Ja Rule      | production                  services and          |   |   |   |   |   |   |   |
|                                  |                                | received                  a fee and profit        |   |   |   |   |   |   |   |
| Theatrical                            |                                | participation,                  if any. No profit |   |   |   |   |   |   |   |
|                                  |                                | participation                  received to date.  |   |   |   |   |   |   |   |
|                                  |                                |                                              |   |   |   |   |   |   |   |
| Randall                  Emmett & |                                | Production                  services prov-        |   |   |   |   |   |   |   |
| George                  Furla         |                                | ided                  included negotiating        |   |   |   |   |   |   |   |
| Executive                  Producers  |                                | for                  the services of Steven       |   |   |   |   |   |   |   |
|                                  |                                |  Segal                  for the picture      |   | -3     |   | -3     |   |   |   |
| **Narc**                              | Ray                  Liotta,        | Produced                  by a third party        |   |   |   |   |   |   |   |
|                                  | Jason                  Patric,      | financier.                  FMLY provided         |   |   |   |   |   |   |   |
| Dec-02                                | &                  Busta Rhymes | production                  services and          |   |   |   |   |   |   |   |
|                                  |                                | financing                  and received           |   |   |   |   |   |   |   |
| Theatrical                            |                                | a                  fee and profit participation,  |   |   |   |   |   |   |   |
|                                  |                                | if                  any. No profit participation  |   |   |   |   |   |   |   |
|                                  |                                | received                  to date.                |   |   |   |   |   |   |   |
|                                  |                                |                                              |   |   |   |   |   |   |   |
|                                  |                                |                                              |   |   |   |   |   |   |   |
| Randall                  Emmett & |                                | Production                  services              |   |   |   |   |   |   |   |
| George                  Furla         |                                | provided                  include consulting      |   |   |   |   |   |   |   |
| Executive                  Producers  |                                | on                  the financing of the          |   |   |   |   |   |   |   |
|                                  |                                | of                  the picture.                  |   |   |   |   |   |   |   |
|                                  |                                |                                              |   | -3     |   | -3     |   |   |   |

----

| **The                  Devil and**         | Alec                  Baldwin,       | Produced                  by a third party                |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|--------------------------------------------|--------------------------------------|-----------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| **Daniel                  Webster**        | Anthony                  Hopkins,    | financier.                  FMLY provided                 |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       | &                  Jennifer Love | production                  services and                  |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Mar-03                                     | Hewitt                               | received                  a fee and                       |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | profit                  participation,  if any. |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Video/Cable                                |                                 | No                  profit participation                  |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| (Foreign                  Release)         |                                 | received                  to date.                        |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      | $      |                        - | $      |                        - |   |   |   |
| **All                  I Want**            | Elijah                  Wood,        | Produced                  by a third party                |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| **(f/k/a                  Try Seventeen)** | Franka                  Potente,     | financier.                  FMLY provided                 |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       | &                  Mandy Moore   | production                  services and                  |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Sep-03                                     |                                 | received                  a fee and                       |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | profit                  participation, if any.            |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Video/Cable                                |                                 | No                  profit participation                  |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | received                  to date.                        |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &      |                                 | Production                  services                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| George                  Furla              |                                 | provided                  include                         |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Producers                                  |                                 | consulting                  on the financing              |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | of                  the picture.                          |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      | $      |                        - | $      | -3                                                                                                                                          |   |   |   |
| **Out                  for a Kill**        | Steven                  Seagal       | Produced                  by a third party                |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | financier.                  FMLY provided                 |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Aug-03                                     |                                 | production                  services and                  |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | received                  a fee and                       |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Video/Cable                                |                                 | profit                  participation, if any.            |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | No                  profit participation                  |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | received                  to date.                        |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 |                                                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &      |                                 | Production                  services                      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| George                  Furla              |                                 | provided                  include                         |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Producers                                  |                                 | negotiating                  for the services             |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                       |                                 | of                  Steven Segal for the                  |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |

----

|                                    |                               | picture                  and providing         |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|-----------------------------------------|------------------------------------|------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                    |                               | consulting                  services during    |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | development,                  on location      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | and                  during principal          |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | photography                                    |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | (to                  ensure that the film      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | was                  completed on time and     |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | within                  budget).               |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                           | $      |                        - | $      |                        - |   |   |   |
| **Belly                  of the Beast** | Steven                  Seagal     | Produced                  by a third party     |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | financier.                  FMLY provided      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Dec-03                                  |                               | production                  services and       |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | received                  a fee and            |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Video/Cable                             |                               | profit                  participation, if any. |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | No                  profit participation       |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | received                  to date.             |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                           |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &   |                               | Production                  services           |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| George                  Furla           |                               | provided                  include              |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Executive                  Producers    |                               | negotiating                  for the services  |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | of                  Steven Segal for the       |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | picture                  and providing         |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | consulting                  services during    |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | development,                  on location      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | and                  during principal          |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | photography                                    |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | (to                  ensure that the film      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | was                  completed on time and     |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | within                  budget).               |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                           | $      |                 -                                           | $      |                        - |   |   |   |
| **Blind                  Horizon**      | Val                  Kilmer,       | Produced                  by a third party     |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    | Neve                  Campbell,    | financier.                  FMLY provided      |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Dec-04                                  | Sam                  Shepard & | production                  services and       |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    | Faye                  Dunaway      | received                  a fee and            |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | profit                  participation, if any. |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
| Video/Cable                             |                               | No                  profit participation       |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |
|                                    |                               | received                  to date.             |   |                                                                                                                                        |   |                                                                                                                                        |   |   |   |

----

|                                  |                               |                                            |   |                                                                                              |   |                                                                                                                                        |   |   |
|---------------------------------------|------------------------------------|-------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| Randall                  Emmett & |                               | Production                  services            |   |                                                                                              |   |                                                                                                                                        |   |   |
| George                  Furla         |                               | provided                  include               |   |                                                                                              |   |                                                                                                                                        |   |   |
| Producers                             |                               | negotiating                  for the acting     |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | services                  of Val Kilmer,        |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | negotiating                  for the financing  |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | and                  distribution of the        |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | picture                  and providing          |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | consulting                  services during     |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | development,                  during            |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | principal                  photography and      |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | during                  post production         |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | (to                  ensure that, on            |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | behalf                  of the financier        |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | and                  distributor, that creative |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | and                  financial resources        |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | were                  fully utilized)           |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               |                                            | $      |                 - | $      |                        - |   |   |
| **Control**                           | Ray                  Liotta, & | Produced                  by a third party      |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  | William                  Dafoe     | financier.                  FMLY provided       |   |                                                                                              |   |                                                                                                                                        |   |   |
| Feb-05                                |                               | production                  services and        |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | received                  a fee and             |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | profit                  participation, if any.  |   |                                                                                              |   |                                                                                                                                        |   |   |
| Video/Cable                           |                               | No                  profit participation        |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | received                  to date.              |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               |                                            |   |                                                                                              |   |                                                                                                                                        |   |   |
| Randall                  Emmett & |                               | Production                  services            |   |                                                                                              |   |                                                                                                                                        |   |   |
| George                  Furla         |                               | provided                  include negotiating   |   |                                                                                              |   |                                                                                                                                        |   |   |
| Producers                             |                               | for                  the acquisition of the     |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | rights                  in and to the screen-   |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | play                  upon which the picture    |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | was                  based and negotiating      |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | the                  acting services            |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | agreement                  with Ray Liotta.     |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | Also                  performed consulting      |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | services                  during principal      |   |                                                                                              |   |                                                                                                                                        |   |   |
|                                  |                               | photography                  and through-       |   |                                                                                              |   |                                                                                                                                        |   |   |

----

|                                  |                               |                                            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|---------------------------------------|------------------------------------|-------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Randall                  Emmett & |                               | Production                  services            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| George                  Furla         |                               | provided                  include               |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Producers                             |                               | negotiating                  for the acting     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | services                  of Val Kilmer,        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | negotiating                  for the financing  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | and                  distribution of the        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | picture                  and providing          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | consulting                  services during     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | development,                  during            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | principal                  photography and      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | during                  post production         |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | (to                  ensure that, on            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | behalf                  of the financier        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | and                  distributor, that creative |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | and                  financial resources        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | were                  fully utilized)           |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               |                                            | $      |                 - | $      |                        - |   |   |   |
| **Control**                           | Ray                  Liotta, & | Produced                  by a third party      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  | William                  Dafoe     | financier.                  FMLY provided       |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Feb-05                                |                               | production                  services and        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | received                  a fee and             |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | profit                  participation, if any.  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Video/Cable                           |                               | No                  profit participation        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | received                  to date.              |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               |                                            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett & |                               | Production                  services            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| George                  Furla         |                               | provided                  include negotiating   |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Producers                             |                               | for                  the acquisition of the     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | rights                  in and to the screen-   |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | play                  upon which the picture    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | was                  based and negotiating      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | the                  acting services            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | agreement                  with Ray Liotta.     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | Also                  performed consulting      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | services                  during principal      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                               | photography                  and through-       |   |                                                                                              |   |                                                                                                                                        |   |   |   |

|                                          |                                  | out                  the post production       |   |    |   |                                                                                                                                        |   |   |   |
|-----------------------------------------------|---------------------------------------|------------------------------------------------|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                          |                                  | process                  to assist in getting  |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | the                  picture completed on      |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | time                  and within budget.       |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  |                                           | $      | 117,500 | $      |                        - |   |   |   |
| **Love                  Song for Bobby Long** | John                  Travolta &  | Produced                  by a third party     |   |    |   |                                                                                                                                        |   |   |   |
|                                          | Scarlett                  Johansson   | financier.                  FMLY provided      |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | production                  services and       |   |    |   |                                                                                                                                        |   |   |   |
| Dec-04                                        |                                  | received                  a fee and            |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | profit                  participation, if any. |   |    |   |                                                                                                                                        |   |   |   |
| Theatrical                                    |                                  | No                  profit participation       |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | received                  to date.             |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  |                                           |   |    |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &         |                                  | Production                  services           |   |    |   |                                                                                                                                        |   |   |   |
| George                  Furla                 |                                  | provided                  include consulting   |   |    |   |                                                                                                                                        |   |   |   |
| Executive                  Producers          |                                  | in                  the negotiations for the   |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | acting                  services of John       |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | Travolta                  for the picture.     |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  |                                           | $      | 25,000  | $      |                        - |   |   |   |
| **The                  Amityville Horror**    | Ryan                  Reynolds, & | Produced                  by a third party     |   |    |   |                                                                                                                                        |   |   |   |
|                                          | Melissa                  George       | financier.                  FMLY provided      |   |    |   |                                                                                                                                        |   |   |   |
| Apr-05                                        |                                  | development                  services and      |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | received                  a fee.               |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  |                                           |   |    |   |                                                                                                                                        |   |   |   |
| Theatrical                                    |                                  |                                           |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  |                                           |   |    |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &         |                                  | Production                  services           |   |    |   |                                                                                                                                        |   |   |   |
| George                  Furla                 |                                  | provided                  include negotiating  |   |    |   |                                                                                                                                        |   |   |   |
| Co-                  Executive Producers      |                                  | for                  the acquisition of the    |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | rights                  in and to the picture  |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | and                  subsequently              |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | negotiated                  for their sale     |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  | to                  NuImage.                   |   |    |   |                                                                                                                                        |   |   |   |
|                                          |                                  |                                           | $      | 110,516 | $      | 500,000                                                                                                                                     |   |   |   |

----

| **Edison**                            | Morgan                  Freeman,    | Produced                  by a third party      |   |    |   |                                                                                                                                        |   |   |   |
|---------------------------------------|-------------------------------------|-------------------------------------------------|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                  | Justin                  Timberlake, | financier.                  FMLY provided       |   |    |   |                                                                                                                                        |   |   |   |
| Aug-06                                | LL                  Cool J, &   | production                  services and        |   |    |   |                                                                                                                                        |   |   |   |
|                                  | Kevin                  Spacey       | received                  a fee and             |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | profit                  participation, if any,  |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | in                  the film.                   |   |    |   |                                                                                                                                        |   |   |   |
| video/cable                           |                                |                                            |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                |                                            |   |    |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett & |                                | Production                  services            |   |    |   |                                                                                                                                        |   |   |   |
| George                  Furla         |                                | provided                  include negotiating   |   |    |   |                                                                                                                                        |   |   |   |
| Producers                             |                                | for                  the acquisition of the     |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | rights                  in and to the screen-   |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | play                  upon which the picture    |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | was                  based as well as           |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | the                  acting services            |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | agreements                  of Morgan           |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | Freeman,                  Justin Timberlake,    |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | LL                  Cool J and Kevin            |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | Spacey.                  Also provided          |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | consulting                  services            |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | during                  principal               |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | photography                  and the post       |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | production                  process.            |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | (to                  ensure that, on            |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | behalf                  of the financier        |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | and                  distributor, that creative |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | and                  financial resources        |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | were                  fully utilized)           |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                |                                            | $      | 250,000 | $      |                        - |   |   |   |
| **Submerged**                         | Steven                  Seagal      | Produced                  by a third party      |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | financier.                  FMLY provided       |   |    |   |                                                                                                                                        |   |   |   |
| Jun-05                                |                                | development                  services and       |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                | received                  a fee.                |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                |                                            |   |    |   |                                                                                                                                        |   |   |   |
| Video/Cable                           |                                |                                            |   |    |   |                                                                                                                                        |   |   |   |
|                                  |                                |                                            |   |    |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett & |                                | Production                  services            |   |    |   |                                                                                                                                        |   |   |   |

----

| George                  Furla           |                               | provided                  include           |   |                                                                                              |   |    |   |      |   |
|-----------------------------------------|------------------------------------|---------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------|--------|-----------|--------|
| Producers                               |                               | negotiating                  an acting      |   |                                                                                              |   |    |   |      |   |
|                                    |                               | services                  agreement with    |   |                                                                                              |   |    |   |      |   |
|                                    |                               | Steven                  Segal for the       |   |                                                                                              |   |    |   |      |   |
|                                    |                               | picture                  and providing      |   |                                                                                              |   |    |   |      |   |
|                                    |                               | consulting                  services during |   |                                                                                              |   |    |   |      |   |
|                                    |                               | development,                  and on        |   |                                                                                              |   |    |   |      |   |
|                                    |                               | location                  during principal  |   |                                                                                              |   |    |   |      |   |
|                                    |                               | photography.                                |   |                                                                                              |   |    |   |      |   |
|                                    |                               |                                        | $      |                 - | $      | 300,000 |   |      |   |
| **The                  Tenants**        | Dylan                  McDermott,  | Produced                  by a third party  |   |                                                                                              |   |    |   |      |   |
|                                    | Snoop                  Doggy Dogg, | financier.                  FMLY provided   |   |                                                                                              |   |    |   |      |   |
| Feb-06                                  | &                  Peter Falk  | production                  services and    |   |                                                                                              |   |    |   |      |   |
|                                    |                               | financing                  and received     |   |                                                                                              |   |    |   |      |   |
|                                    |                               | a                  fee and profit           |   |                                                                                              |   |    |   |      |   |
| Theatrical                              |                               | participation,                  if any, in  |   |                                                                                              |   |    |   |      |   |
| Distribution                  Guarantee |                               | the                  film.                  |   |                                                                                              |   |    |   | 1,300,000 |   |
|                                    |                               |                                        |   |                                                                                              |   |    |   |      |   |
| Randall                  Emmett &   |                               | Production                  services        |   |                                                                                              |   |    |   |      |   |
| George                  Furla           |                               | provided                  include           |   |                                                                                              |   |    |   |      |   |
| Producers                               |                               | negotiating                  the financing  |   |                                                                                              |   |    |   |      |   |
|                                    |                               | of                  the picture and its     |   |                                                                                              |   |    |   |      |   |
|                                    |                               | distribution                  by NuImage.   |   |                                                                                              |   |    |   |      |   |
|                                    |                               |                                        | $      |                 - | $      | 12,000  |   |      |   |
| **Today                  You Die**      | Steven                  Seagal     | Produced                  by a third party  |   |                                                                                              |   |    |   |      |   |
|                                    |                               | financier.                  FMLY provided   |   |                                                                                              |   |    |   |      |   |
| Sep-05                                  |                               | production                  services and    |   |                                                                                              |   |    |   |      |   |
|                                    |                               | received                  a fee and profit  |   |                                                                                              |   |    |   |      |   |
|                                    |                               | participation,                  if any, in  |   |                                                                                              |   |    |   |      |   |
| Video/Cable                             |                               | the                  film                   |   |                                                                                              |   |    |   |      |   |
|                                    |                               |                                        |   |                                                                                              |   |    |   |      |   |
| Randall                  Emmett &   |                               | Production                  services        |   |                                                                                              |   |    |   |      |   |
| George                  Furla           |                               | provided                  include           |   |                                                                                              |   |    |   |      |   |
| Producers                               |                               | negotiating                  an acting      |   |                                                                                              |   |    |   |      |   |
|                                    |                               | services                  agreement with    |   |                                                                                              |   |    |   |      |   |
|                                    |                               | Steven                  Segal for the       |   |                                                                                              |   |    |   |      |   |
|                                    |                               | picture                  and providing      |   |                                                                                              |   |    |   |      |   |
|                                    |                               | consulting                  services during |   |                                                                                              |   |    |   |      |   |
|                                    |                               | development,                  and on        |   |                                                                                              |   |    |   |      |   |
|                                    |                               | location                  during principal  |   |                                                                                              |   |    |   |      |   |
|                                    |                               | photography.                                |   |                                                                                              |   |    |   |      |   |
|                                    |                               |                                        | $      |                 - | $      | 200,000 |   |      |   |

----

| **Wonderland**                           | Val                  Kilmer,        | Produced                  by a third party    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|------------------------------------------|-------------------------------------|-----------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                     | Kate                  Bosworth,     | financier.                  FMLY provided     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Oct-03                                   | Lisa                  Kudrow,       | development                  services and     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     | Josh                  Lucas &   | received                  a fee.              |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Theatrical                               | Dylan                  Mcdermott    |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &    |                                | Production                  services          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| George                  Furla            |                                | provided                  include             |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Executive                  Producers     |                                | obtaining                  financing          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                | and                  negotiating for the      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                | distribution                  of the picture. |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                |                                          | $      |                 - | $      |                        - |   |   |   |
| **Loverboy**                             | Kyra                  Sdgwick,      | Produced                  by a third party    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     | Kevin                  Bacon,       | financier.                  FMLY provided     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| May-05                                   | Sandra                  Bullock,    | development                  services and     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     | Matt                  Dillon,       | received                  a fee.              |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Theatrical                               | Oliver                  Platt & |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     | Marissa                  Tomei      |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &    |                                | Production                  services          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| George                  Furla            |                                | provided                  include             |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Co-                  Executive Producers |                                | consulting                  on the financing  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                | and                  distribution of the      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                | picture.                                      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                |                                          | $      |                 - | $      |                        - |   |   |   |
| **Shottas**                              | Ky-Mani                  Marley,    | Produced                  by a third party    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     | Spragga                  Benz,      | financier.                  FMLY provided     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Dec-05                                   | Wyclef                  Jean,       | post-production                  services     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| (Estimated                  Release)     | &                  Louie Rankin | and                  financing and will       |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                | receive                  a fee and profit     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Video/Cable                              |                                | participation,                  if any, in    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                | the                  film.                    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &    |                                | Production                  services          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| George                  Furla            |                                | provided                  include             |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Co-                  Executive Producers |                                | consulting                  on the financing  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                | and                  distribution of the      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                | picture.                                      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                     |                                |                                          | $      |                 - | $      |                        - |   |   |   |

----

| **Before                  It Had A**    | William                  Dafoe     | Produced                  by a third party    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|-----------------------------------------|------------------------------------|-----------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| **Name                  f/k/a Black**   |                               | financier.                  FMLY provided     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| **Widow                  f/ka The**     |                               | development                  services         |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| **Widow's                  Lover**      |                               | and                  received a fee.          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Aug-07                                  |                               |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Scheduled                  Release)     |                               |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Video/Cable                             |                               |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &   |                               | Production                  services          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| George                  Furla           |                               | provided                  include obtaining   |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Executive                  Producers    |                               | financing,                  negotiating for   |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | distribution                  of the picture, |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | and                  providing consulting     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | services                  during              |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | development,                  and on          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | location                  during principal    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | photography.                                  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                          | $      |                 - | $      |                        - |   |   |   |
| **Lonely                  Hearts**      | John                  Travolta,    | Produced                  by a third party    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    | James                  Gandofini,  | financier.                  FMLY provided     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Apr-07                                  | &                  Salma Hayek | development                  services         |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | and                  received a fee.          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Theatrical                              |                               |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett &   |                               | Production                  services          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| George                  Furla           |                               | provided                  include             |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Co-Executive                  Producers |                               | negotiating                  an acting        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | services                  agreement for this  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | picture                  with John Travolta   |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | and                  providing consulting     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | services                  during              |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | development,                  and on          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | location                  during principal    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               | photography.                                  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                    |                               |                                          | $      |                 - | $      | 100,000                                                                                                                                     |   |   |   |

----

| **Mercenary                  for**           | Steven                  Seagal | Produced                  by a third party             |   |                                                                                              |   |    |   |   |   |
|----------------------------------------------|--------------------------------|--------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|
| **Justice                  f/k/a Mercenary** |                           | financier.                  FMLY provided              |   |                                                                                              |   |    |   |   |   |
| Apr-06                                       |                           | production                  services and               |   |                                                                                              |   |    |   |   |   |
|                                         |                           | and                  received a fee.                   |   |                                                                                              |   |    |   |   |   |
|                                         |                           |                                                   |   |                                                                                              |   |    |   |   |   |
| Video/Cable                                  |                           | 2005                                                   |   |                                                                                              |   |    |   |   |   |
|                                         |                           |                                                   |   |                                                                                              |   |    |   |   |   |
|                                         |                           |                                                   |   |                                                                                              |   |    |   |   |   |
|                                         |                           |                                                   |   |                                                                                              |   |    |   |   |   |
|                                         |                           |                                                   |   |                                                                                              |   |    |   |   |   |
| Randall                  Emmett &        |                           | Production                  services                   |   |                                                                                              |   |    |   |   |   |
| George                  Furla                |                           | provided                  include                      |   |                                                                                              |   |    |   |   |   |
| Producers                                    |                           | negotiating                  an acting                 |   |                                                                                              |   |    |   |   |   |
|                                         |                           | services                  agreement with               |   |                                                                                              |   |    |   |   |   |
|                                         |                           | Steven                  Segal for the                  |   |                                                                                              |   |    |   |   |   |
|                                         |                           | picture                  and providing                 |   |                                                                                              |   |    |   |   |   |
|                                         |                           | consulting                  services during            |   |                                                                                              |   |    |   |   |   |
|                                         |                           | development,                  and on                   |   |                                                                                              |   |    |   |   |   |
|                                         |                           | location                  during principal             |   |                                                                                              |   |    |   |   |   |
|                                         |                           | photography.                                           |   |                                                                                              |   |    |   |   |   |
|                                         |                           | **Note:  We                  do not have a** |   |                                                                                              |   |    |   |   |   |
|                                         |                           | **contract                  on this project;**         |   |                                                                                              |   |    |   |   |   |
|                                         |                           | **and                  are uncertain about**           |   |                                                                                              |   |    |   |   |   |
|                                         |                           | **profit                  participation.**             |   |                                                                                              |   |    |   |   |   |
|                                         |                           |                                                   | $      |                 - | $      | 300,000 |   |   |   |
| **16                  Blocks**               | Bruce                  Willis  | Produced                  by a third party             |   |                                                                                              |   |    |   |   |   |
|                                         | Mos                  Def       | financier.                  FMLY provided              |   |                                                                                              |   |    |   |   |   |
| Mar-06                                       |                           | production                  services and               |   |                                                                                              |   |    |   |   |   |
|                                         |                           | and                  received a fee.                   |   |                                                                                              |   |    |   |   |   |
|                                         |                           | 2005.                  Additionally, we                |   |                                                                                              |   |    |   |   |   |
| Theatrical                                   |                           | will                  receive a profit                 |   |                                                                                              |   |    |   |   |   |
|                                         |                           | participation,                  if any, in the         |   |                                                                                              |   |    |   |   |   |
|                                         |                           | film.                                                  |   |                                                                                              |   |    |   |   |   |
| Randall                  Emmett &        |                           | Production                  services                   |   |                                                                                              |   |    |   |   |   |
| George                  Furla                |                           | provided                  include negotiating          |   |                                                                                              |   |    |   |   |   |
| Producer/                                    |                           | for                  the acquisition of the            |   |                                                                                              |   |    |   |   |   |

----

| Executive                  Producer   |                             | rights                  in and to the screen- |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|---------------------------------------|----------------------------------|-----------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                  |                             | play                  upon which the picture  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | was                  based as well as         |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | the                  acting services          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | agreements                  of Bruce          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | Willis                  and the directing     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | services                  of Richard          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | Donner.                  Also provided        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | consulting                  services          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | during                  principal             |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | photography                  and the post     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | production                  process.          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             |                                          | $      |                 - | $      | 625,000                                                                                                                                     |   |   |   |
| **Borderland**                        | Brian                  Presley   | Picture                  produced by FMLY     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  | Jake                  Muxworthy  | in                  conjunction with a third  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Feb-08                                | Rider                  Strong    | party.                  FMLY retains          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| (Estimated                  Release)  | Sean                  Astin      | 50%                  ownership and            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Video/Cable                           | Beto                  Cuevas     | receives                  royalties, if any.  |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             |                                          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Randall                  Emmett & |                             | Production                  services          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| George                  Furla         |                             | provided                  include the         |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Producers                             |                             | negotiation                  of financing     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | and                  distribution of the      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | picture,                  and consulting      |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | services                  during              |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | development,                  during          |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | principal                  photography,       |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | and                  during post              |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | production                  (to ensure        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | that                  the film was            |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             | completed                  on time and        |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  |                             |  within                  budget).        | $      |                 - | $      |                        - |   |   |   |
| **The                  Wicker Man**   | Nicolas                  Cage    | Produced                  by a third party    |   |                                                                                              |   |                                                                                                                                        |   |   |   |
|                                  | Ellen                  Burstyn   | financier.                  FMLY provided     |   |                                                                                              |   |                                                                                                                                        |   |   |   |
| Sep-06                                | Leelee                  Sobieski | production                  services and      |   |                                                                                              |   |                                                                                                                                        |   |   |   |

----

|                                  |                            | will                  receive a producers             |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|---------------------------------------|---------------------------------|-------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                  |                            | fee                  in the first quarter of          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Theatrical                            |                            | 2006.                  Additionally, we               |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | will                  receive a profit                |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | participation,                  if any, in the        |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | film.                                                 |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            |                                                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            |                                                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            |                                                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            |                                                  | $      |                 - | $      |                        - |   |                                  |   |
| Randall                  Emmett & |                            | Production                  services                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| George                  Furla         |                            | provided                  include negotiating         |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Producer/                             |                            | for                  the acquisition of the           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Executive                  Producer   |                            | rights                  in and to the screen-         |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | play                  upon which the picture          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | was                  based as well as                 |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | the                  acting services                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | agreements                  of Nicolas                |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | Cage                  and the directing               |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | services                  of Neil                     |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | La                  Bute Also provided                |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | consulting                  services                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | during                  principal                     |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | photography                  and the post             |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | production                  process.                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            |                                                  | $      |                 - | $      |                        - |   |      300,000 |   |
| **The                  Contract**     | Morgan                  Freeman | Produced                  by a third party            |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  | John                  Cusack    | financier.                  FMLY provided             |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Aug-07                                |                            | production                  services and              |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | will                  receive a producers             |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | fee                  in the first quarter of          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Video/Cable                           |                            | 2006.                  Additionally, we               |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | will                  receive a profit participation, |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            | if                  any, in the film.                 |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            |                                                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                            |                                                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |

----

|                                  |                       |                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|---------------------------------------|----------------------------|------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                  |                       |                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Randall                  Emmett & |                       | Production                  services           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| George                  Furla         |                       | provided                  include negotiating  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Producer/                             |                       | for                  the acquisition of the    |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Executive                  Producer   |                       | rights                  in and to the screen-  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | play                  upon which the picture   |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | was                  based as well as          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | the                  acting services           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | agreements                  of Morgan          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | Freemand                  and John             |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | Cusack                  and the directing      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | services                  of Bruce             |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | Beresford                  Also provided       |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | consulting                  services           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | during                  principal              |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | photography                  and the post      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | production                  process.           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       |                                           | $      |                 - | $      |                        - |   |      300,000 |   |
| **88                  Minutes**       | Al                  Pacino | Produced                  by a third party     |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | financier.                  FMLY provided      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Apr-08                                |                       | production                  services and       |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| (Estimated                  Release)  |                       | will                  receive a producers      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | fee                  in the first quarter of   |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Theatrical                            |                       | 2006.                  Additionally, we        |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | will                  receive a profit         |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | participation,                  if any, in the |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | film.                                          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       |                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       |                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       |                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       |                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Randall                  Emmett & |                       | Production                  services           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| George                  Furla         |                       | provided                  include negotiating  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Producer/                             |                       | for                  the acquisition of the    |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Executive                  Producer   |                       | rights                  in and to the screen-  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | play                  upon which the picture   |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | was                  based as well as          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | the                  acting services           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                  |                       | agreements                  of Al              |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |

----

|                                   |                              | Pacino                  and the directing                      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|----------------------------------------|-----------------------------------|----------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                   |                              | services                  of Jon                               |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | Avnet.                  Also provided                          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | consulting                  services                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | during                  principal                              |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | photography                  and the post                      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | production                  process.                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              |                                                           | $      |                 - | $      |                        - |   |      400,000 |   |
| **Home                  of the Brave** | Sam                  Jackson      | Produced                  by a third party                     |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   | Jessica                  Biel,    | financier.                  FMLY provided                      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Dec-06                                 | Curtis                  "50 Cent" | production                  services and                       |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| (Initial                  Release)     |  Jackson,                    | will                  receive a profit                         |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| May-07                                 | Christina                  Ricci, | participation,                  if any, in the                 |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   | Brian                  Pressley   | film.                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Theatrical                             |                              |                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              |                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Randall                  Emmett &  |                              |                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| George                  Furla          |                              |                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Producer/                              |                              |                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
| Executive                  Producer    |                              | Production                  services                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | provided                  include (1)  participating |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | in                  the negotiation of the                     |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | acting                  services agreements                    |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | of                  Sam jackson                                |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | Jessica                  Biel                                  |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | Curtis                  "50 cent" Jackson                      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | Christina                  Ricci                               |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | Brian                  Pressley and (2)                        |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | negotaiting                  with                              |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | a                  third party equity                          |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | participant                  for                               |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | said                  party's participation                    |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | in                  the financing of the picture.              |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | production                  process. Also                      |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | Also                  provided                                 |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | consulting                  services                           |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |
|                                   |                              | during                  principal                              |   |                                                                                              |   |                                                                                                                                        |   |                                  |   |

----

|                                    |                                        | photography                  and the post                                      |    |   |   |   |   |   |   |
|-----------------------------------------|---------------------------------------------|--------------------------------------------------------------------------------|---------|--------|--------|--------|--------|--------|--------|
|                                    |                                        | production                  process.                                           |    |   |   |   |   |   |   |
|                                    |                                        |                                                                           |  $ | 0      |   | -3     |   |   |   |
| **King                  of California** | Michael                  Douglas            | Produced                  by a third party                                     |    |   |   |   |   |   |   |
|                                    | Evan                  Rachel Wood           | co-financier.                  FMLY provided                                   |    |   |   |   |   |   |   |
| Sep-07                                  |                                        | production                  services and                                       |    |   |   |   |   |   |   |
| Scheduled                  Release)     |                                        | will                  receive a profit                                         |    |   |   |   |   |   |   |
| Theatrical                              |                                        | participation,                  if any, in the                                 |    |   |   |   |   |   |   |
|                                    |                                        | Film.                                                                          |    |   |   |   |   |   |   |
|                                    |                                        |                                                                           |    |   |   |   |   |   |   |
|                                    |                                        |                                                                           |    |   |   |   |   |   |   |
| Randall                  Emmett &   |                                        |                                                                           |    |   |   |   |   |   |   |
| George                  Furla           |                                        | Production                  services                                           |    |   |   |   |   |   |   |
| Producers                               |                                        | provided                  include (1)  participating                 |    |   |   |   |   |   |   |
|                                    |                                        | in                  the negotiation of the                                     |    |   |   |   |   |   |   |
|                                    |                                        | of                  Michael Douglas                                            |    |   |   |   |   |   |   |
|                                    |                                        | and                  Evan Rachel                                               |    |   |   |   |   |   |   |
|                                    |                                        | Wood                  and (2)                                                  |    |   |   |   |   |   |   |
|                                    |                                        | negotaiting                  with                                              |    |   |   |   |   |   |   |
|                                    |                                        | a                  third party equity                                          |    |   |   |   |   |   |   |
|                                    |                                        | participant                  for                                               |    |   |   |   |   |   |   |
|                                    |                                        | said                  party's participation                                    |    |   |   |   |   |   |   |
|                                    |                                        | in                  the financing of the picture.                              |    |   |   |   |   |   |   |
|                                    |                                        | production                  process. Also                                      |    |   |   |   |   |   |   |
|                                    |                                        | Also                  provided                                                 |    |   |   |   |   |   |   |
|                                    |                                        | consulting                  services                                           |    |   |   |   |   |   |   |
|                                    |                                        | during                  principal                                              |    |   |   |   |   |   |   |
|                                    |                                        | photography                  and the post                                      |    |   |   |   |   |   |   |
|                                    |                                        | production                  process.                                           |    |   |   |   |   |   |   |
|                                    |                                        |                                                                           |  $ | 0      |   | -3     |   |   |   |
| **Rin                  Tin Tin**        | Armande                  Assante, Ben Cross | Produced                  by a third party financier.                          |    |   |   |   |   |   |   |
|                                    |                                        | FMLY                  provided production services.                            |    |   |   |   |   |   |   |
| Feb-08                                  |                                        | FMLY                  will receive profit participation , if any, in the film. |    |   |   |   |   |   |   |
| (Estimated                  Release)    |                                        |                                                                           |    |   |   |   |   |   |   |
|                                    |                                        |                                                                           |    |   |   |   |   |   |   |
| Video/Cable                             |                                        | Production                  services prodived include:                         |    |   |   |   |   |   |   |

----

|                                               |                                                   | (a)                  negotiating for the acquisition of the underlying rights to certain                  intellectual property copyrights and trademarks;                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
|----------------------------------------------------|--------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|-----------------|
| Randall                  Emmett & George Furla |                                                   | (b)                  negotiating for a writer to adapt the underlying rights into a                  feature                  film screenplay upon which the movie will be based; |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
| Producers                                          |                                                   | as                  well as, ('c) providing consulting services during the development,                  principal photography and post-production processes.                     |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
|                                               |                                                   |                                                                                                                                                                              | $      |                 - | $      |                        - |   |                - |            |
| **Day                  of the Dead**               | Mena                  Suvari, Nick Cannon, Ving Rhames | Produced                  by a third party financier.                                                                                                                             |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
|                                               |                                                   | FMLY                  provided production services.                                                                                                                               |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
| Feb-08                                             |                                                   | FMLY                  will receive profit participation , if any, in the film.                                                                                                    |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
| (Estimated                  Release)               |                                                   |                                                                                                                                                                              |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
|                                               |                                                   |                                                                                                                                                                              |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
| Theatrical                                         |                                                   | Production                  services prodived include:                                                                                                                            |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
|                                               |                                                   | (a)                  negotiating for the acquisition of the underlying rights to certain                  intellectual property copyrights and trademarks;                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
| Randall                  Emmett & George Furla |                                                   | (b)                  negotiating for a writer to adapt the underlying rights into a                  feature                  film screenplay upon which the movie will be based; |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
| Producers                                          |                                                   | (c)                  participated in the negotiation of Mena Survai, Nick Cannon and                  Ving                  Rhames' acting contracts;                             |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
|                                               |                                                   | as                  well as, (d) providing consulting services during the development,                  principal photography and post-production processes.                      |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
|                                               |                                                   |                                                                                                                                                                              | $      |                 - | $      |                        - |   |                - |            |
| **Rambo                  IV**                      | Sylvester                  Stallone                    | Produced                  by a third party financier.                                                                                                                             |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |            |
| **aka                  "John Rambo"**              |                                                   | FMLY                  provided production services.                                                                                                                               |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |  1,500,000 |

----

| Jan-08                                             |                                | In                  connection with said services, FMLY will recieved a "producer                  fee"                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|----------------------------------------------------|-------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|
| (Estimated                  Release)               |                                | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                 |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                                |                                                                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Theatrical                                         |                                |                                                                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                                |                                                                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |                                | Production                  services prodived include:                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |                                | providing                  consulting services during the development, principal photography                  and                  post-production processes. |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                                |                                                                                                                                                          | $      |                 - | $      |                        - |   |                - |   |
| **Brilliant**                                      | Scarlett                  Johansson | Produced                  by a third party financier.                                                                                                         |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                                | FMLY                  provided production services.                                                                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Aug-08                                             |                                | In                  connection with said services, FMLY will receive a "producer                  fee"                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| (Estimated                  Release)               |                                | In                  the second quarter of Fiscal 2008.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                                | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                 |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Theatrical                                         |                                | This                  project is "in development" with principal photography scheduled                  to start                  on                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                                | October                  15, 2007.                                                                                                                            |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |                                | Production                  services prodived include:                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |                                | (a)                  negotiating for the acquisition of the screenplay upon which the                  movie                  will be based                   |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                                | (b)                  participated in the negotiation of Scarlett Johansson's acting                  contract;                                                |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                                | as                  well as, (d) providing consulting services during the development,                  principal photography and post-production processes.  |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |

----

|                                               |                            |                                                                                                                                                         | $      |                 - | $      |                        - |   |                - |   |
|----------------------------------------------------|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|
| **The                  Code**                      | Morgan                  Freeman | Produced                  by a third party financier.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            | FMLY                  provided production services.                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Aug-08                                             |                            | In                  connection with said services, FMLY will receive a "producer                  fee"                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| (Estimated                  Release)               |                            | In                  the second quarter of Fiscal 2008.                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Theatrical                                         |                            |  This                  project is "in development" with principal photography scheduled                  to start                  on                   |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            | October                  15, 2007.                                                                                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |                            | Production                  services prodived include:                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |                            | (a)                  negotiating for the acquisition of the screenplay upon which the                  movie                  will be based                  |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            | (b)                  participated in the negotiation of Morgan Freeman's acting                  contract;                                                   |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            | as                  well as, (d) providing consulting services during the development,                  principal photography and post-production processes. |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            |                                                                                                                                                         | $      |                 - | $      |                        - |   |                - |   |
| **Westward**                                       | TBD                             | Produced                  by a third party financier.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            | FMLY                  provided production services.                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Aug-08                                             |                            | In                  connection with said services, FMLY will receive a "producer                  fee"                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| (Estimated                  Release)               |                            | In                  the third quarter of Fiscal 2007.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Theatrical                                         |                            |  This                  project is "in development" with principal photography scheduled                  to start                  on                   |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                            | February                  15, 2008.                                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |                            | Production                  services prodived include:                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |                            | (a)                  negotiating for the acquisition of the screenplay upon which the                  movie                  will be based                  |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |

----

|                                               |                              | (b)                  participated in the negotiation of Joel Schumacher's directing                  contract;                                               |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|----------------------------------------------------|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|
|                                               |                              | as                  well as, (d) providing consulting services during the development,                  principal photography and post-production processes. |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                              |                                                                                                                                                         | $      |                 - | $      |                        - |   |                - |   |
| **Red                  Sonja**                     | TBD                               | Produced                  by a third party financier.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                              | FMLY                  provided production services.                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Jan-09                                             |                              | FMLY                  will receive profit participation , if any, in the film.                                                                               |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| (Estimated                  Release)               |                              | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                              |  This                  project is "in development" with principal photography scheduled                  to start                  on                   |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Theatrical                                         |                              | October                  15, 2007.                                                                                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                              | Production                  services prodived include:                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |                              | (a)                  negotiating for the acquisition of underlying property upon which                  the                  movie will be based             |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |                              | as                  well as, (b) providing consulting services during the development,                  principal photography and post-production processes. |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                              |                                                                                                                                                         | $      |                 - | $      |                        - |   |                - |   |
| **Major                  Movie Star**              | Jessica                  Simpson  | Produced                  by a third party financier.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               | Cheri                  Oteri      | FMLY                  provided production services.                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Jul-08                                             | Vivica                  Fox       | In                  connection with said services, FMLY will receive a "producer                  fee"                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| (Estimated                  Release)               | Steve                  Guttenberg | In                  the second quarter of Fiscal 2008.                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |

----

|                                               |                           | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|----------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|
| Video/Cable                                        |                           |  This                  project is "in production" with principal photography having begun                  on                                           |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                           | July                  17, 2007.                                                                                                                              |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |                           | Production                  services prodived include:                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |                           | (a)                  negotiating for the acquisition of the screenplay upon which the                  movie                  will be based                  |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                           | (b)                  participated in the negotiation of Joel Schumacher's directing                  contract;                                               |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                           | as                  well as, (d) providing consulting services during the development,                  principal photography and post-production processes. |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                           |                                                                                                                                                         | $      |                 - | $      |                        - |   |                - |   |
| **Righteous                  Kill**                | Robert                  DeNiro | Produced                  by a third party financier.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               | Al                  Pacino     | FMLY                  provided production services.                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Jan-10                                             |                           | FMLY                  will receive profit participation , if any, in the film.                                                                               |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| (Estimated                  Release)               |                           | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                           |  This                  project is "in development" with principal photography scheduled                  to start                  on                   |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Theatrical                                         |                           | October                  15, 2007.                                                                                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                           | Production                  services prodived include:                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |                           | (a)                  negotiating for the acquisition of underlying property upon which                  the                  movie will be based             |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |                           | as                  well as, (b) providing consulting services during the development,                  principal photography and post-production processes. |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |                           |                                                                                                                                                         | $      |                 - | $      |                        - |   |                - |   |
| **Higher                  Form of Learning, A**    | Steven                  Seagal | Produced                  by a third party financier.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |

----

|                                               |   | FMLY                  provided production services.                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|----------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|
| Jan-10                                             |   | FMLY                  will receive profit participation , if any, in the film.                                                                               |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| (Estimated                  Release)               |   | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |   |  This                  project is "in development" with principal photography scheduled                  to start                  on                   |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Theatrical                                         |   | October                  15, 2007.                                                                                                                           |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |   | Production                  services prodived include:                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |   | (a)                  negotiating for the acquisition of underlying property upon which                  the                  movie will be based             |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |   | as                  well as, (b) providing consulting services during the development,                  principal photography and post-production processes. |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |   |                                                                                                                                                         | $      |                 - | $      |                        - |   |                - |   |
| **Conan                  the Barbarian**           | TBD    | Produced                  by a third party financier.                                                                                                        |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |   | FMLY                  provided production services.                                                                                                          |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Jan-10                                             |   | FMLY                  will receive profit participation , if any, in the film.                                                                               |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| (Estimated                  Release)               |   | Additionally,                  FMLY will receive profit participation , if any, in the                  film.                                                |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |   |  This                  project is "in development" with principal photography scheduled                  to start                  on                   |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Theatrical                                         |   | April                  15, 2008.                                                                                                                             |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |   | Production                  services prodived include:                                                                                                       |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Randall                  Emmett & George Furla |   | (a)                  negotiating for the acquisition of underlying property upon which                  the                  movie will be based             |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
| Producers                                          |   | as                  well as, (b) providing consulting services during the development,                  principal photography and post-production processes. |   |                                                                                              |   |                                                                                                                                        |   |                                                                                        |   |
|                                               |   |                                                                                                                                                         | $      |                 - | $      |                        - |   |                - |   |

----

|                                                      |                                    |   |    |    |    |                                                                                                                                        |                  |                                                        |                                                                                                          |
|-----------------------------------------------------------|-----------------------------------------|--------|---------|---------|---------|---------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|-------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|
| Royalties                  and other revenue              |                                    |   | 105,440 |    | 281,534 |                                                                                                                                        |   1,134,832 |                                                        |
|                                                      |                                    |   |    |    |    |                                                                                                                                        |                  |                                                        |                                                                                                          |
| Total                                                     |                                    |   | $       | 745,435 | $       | 2,330,534                                                                                                                                   | $                     |   3,834,832                                       |                                                                                                          |
|                                                      |                                    |   |    |    |    |                                                                                                                                        |                  |                                                        |                                                                                                          |
| **Revenue                  by Customer (5)**              |                                    |   |    |    |    |                                                                                                                                        |                  |                                                        |                                                                                                          |
|     Nuimage/Millenium                 | Producer                  Fees          |   | $       | 571,511 | $       | 2,278,000                                                                                                                                   | $                     |   2,300,000                                       |    1,500,000                                                                                   |
| Nuimage/Milleniuem                                        | Distribution                  Guarantee | e)     |    |    |    |                                                                                                                                        |                  |   1,000,000                                       |                                                                                                          |
|     Lions                  Gate Films |                                    |   |    | 60,000  |    |                        - |                  |                                                        |             -                                     |
|     Regent                  Films     |                                    |   |    | 76,979  |    |                        - |                  |          2,771 |             -                                     |
|     Platium/'s                  other |                                    |   |    |    |    |                                                                                                                                        |                  |        22,211            |                   - |
|    Porchlight                  Films       |                                    |   |    |    |    |                                                                                                                                        |                  |                                                        |           46,024                                            |
|    Monarch                  Films          |                                    |   |    |    |    |                                                                                                                                        |                  |                                                        |           46,023                                            |
|     Other                  Misc.      |                                    |   |    | 36,945  |    | 52,534                                                                                                                                      |                  |      110,000                       |           11,298                                            |
|                                                      |                                    |   |    |    |    |                                                                                                                                        |                  |                                                        |                                                                                                          |
|                                                      |                                    |   | $       | 745,435 | $       | 2,330,534                                                                                                                                   | $                     |   3,434,982                                       |      1,603,345                                                                       |
|                                                      |                                    |   |    |    |    |                                                                                                                                        |                  |                                                        |                                                                                                          |

----

| **                                                                                                                                                 (1)                  The following is a chronological history of film projects that                  were                  developed, packaged and/or produced by**                                                                                                                                                   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| **FMLY                  for third party financiers (unless otherwise noted) and for third                  party                  distributors and have been either**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| **                                                                                                                                             produced,                  released or waiting to be released by third parties in fiscal years                  2000                  through 2004, and/or are**                                                                                                                                                                              |   |   |
| **scheduled                  for release in fiscal 2005**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **                                                                                                                                                      (2)                  Substantially all production, financing, and motion picture related                  services provided by FMLY are performed**                                                                                                                                     |   |   |
| **                                                                                                                                                   by                  Randall Emmett and George Furla, officers and significant stockholders                  of                  the Company. The primary**                                                                                                                                                |   |   |
| **                                                                                                                                                                          functions/services                  performed by Messrs. Emmett and Furla are as                  follows:**                                                    |   |   |   |   |
| **                                                                                                                                      a)                  Seek creative material, acquire rights and arrange for writing                  the                  screenplay**                                                                                                                                                                                                                                                   |   |   |   |   |
| **                                                                                                                                                         b)                  N egotiate talent for the project (I.e. development, actors, directors                  and                  writers) and assist with**                                                                                                           |   |   |
| **    pre-production,                  post-production and packaging.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |
| **                                                                                                                     c)                  Negotiate distribution agreements, both domestic and                  foreign.**                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |
| **                                                                          d)                  Arrange for the sale of film rights.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |
| e)  This                  film distribution agreement is a guarantee for                  worldwide                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **                                                                                                                                                          (3)                  This motion picture has been in release for greater than two years                  and                  FMLY does not expect it to yield**                                                                                                |   |   |
| **significant                  additional revenue.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **                                                                                                                                                        (3-A)                  This motion picture has been in release for greater than two years                  and is                  in its second cycle of distribution.**                                                                                                   |   |   |
| **                                                                                                                                         FMLY                  anticipates that additional revenues from new distribution                  agreements.**                                                                                                                                                                                                                                                       |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **                                                                                                                                                          (4)                  There is no assurance that any motion picture that has not yet                  been                  released, will be released, that a change**                                                                                          |   |   |
| **                                                                                                                                                              in                  the scheduled release dates of any such films will not occur, or                  that if such motion picture is released,**                                                                                        |   |   |
| **                                                                                                                                                                 that                  it will be successful. FMLY has various                  additional feature films under development and there can be                  no**                                                      |   |   |
| **                                                                                                                                                assurance                  that any project under development will be produced, or that if                  produced,                  that it will be released**                                                                                                                                                           |   |   |
| **or                  successful.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **                                                                                                                                                                          (5)                  FMLY conducts business with a limited number of customers and loss                  of any                  one of those customers could** |   |   |
| **have                  a negative impact on its results of operations.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |

----

----

**News      Releases**

----

----

----

----

----

----

----

**ITEM      2.                      Properties**

**ITEM      3.                      Legal      Proceedings**

**ITEM      4.                      Submission of Matters to a Vote of Security Holders**

----

**ITEM      5.                      Market      for Common Equity and Related Stockholder Matters**

|                              | HIGH   | LOW    |
|-----------------------------------|--------|--------|
|                              | BID    | BID    |
|                              |   |   |
| **Fiscal                2005**    |   |   |
| September                30, 2004 | $0.09  | $0.06  |
| December                31, 2004  | $0.09  | $0.07  |
| March                31, 2005     | $0.09  | $0.07  |
| June                30, 2005      | $0.08  | $0.04  |
|                              |   |   |
| **Fiscal                2006**    |   |   |
| September                30, 2005 | $.05   | $.03   |
| December                30, 2005  | $.03   | $.01   |
| March                31, 2006     | $.02   | $.01   |
| June                30, 2006      | $.03   | $.01   |
|                              |   |   |
| **Fiscal                2007**    |   |   |
| September                30, 2006 | $.02   | $.01   |
| December                30, 2006  | $.01   | $.00   |
| March                31, 2007     | $.00   | $.00   |
| June                30, 2007      | $.00   | $.00   |

----

----

**ITEM      6.                      Managements      Discussion and Analysis of Financial Condition and Results of      Operations**

**GENERAL**

**Critical      Accounting Policies and Estimates**

| 1.   | Producers                Fees - Producer fees are recognized upon receipt of the fees and                delivery                of the related services.  If upon receipt of the fees all                services have not been provided, the fees are deferred and recognized                as                the services are performed; |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Royalties                - Royalty and profit participation are recognized when the amounts                are                known and the receipt of the royalties is reasonably assured. Accordingly,                recognition generally occurs upon receipt (usually quarterly or                semi-annually); and |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Producer                Development and Production Service Fees** **– As these                services are provided, these fees are invoiced by FMLY to the third                party                financiers and producers and are recognized when the amount has been                determined and receipt is reasonably                assured. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

**Plan      of Operation**

----

**RESULTS      OF OPERATIONS**

----

| The                recurring cash commitments of FMLY at June 30,  2007 are as                follows: |                                                        |
|------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|
|                                                                                                             |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Future                annual debt maturities (including the convertible notes):                                  |                                                        |
|                                                                                                             |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             | Year                Ending                                  |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             | June                30,                                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             | 2008                                                        |   |   |   |   |   |   |   |   | $ |   1,597,204 |   |
|                                                                                                             |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |          Total |   |   |   |   |   |   |   |   | $ |   1,597,204 |   |
|                                                                                                             |                                                        |   |   |   |   |   |   |   |   |   |   |   |

----

| Accounts                payable and accrued liabilities:                                                                       |                                                        |
|--------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Description                                                                                                                    |                                                        |   |   |   |   |   |   |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|            Accounts                payable                              |                                                        |   |   |   |   |   |   |   | $ | 187,715 |   |
|            Accrued                Interest, professional fees and other |                                                        |   |   |   |   |   |   | 51,981 |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                           | Total                                                       |   |   |   |   |   |   |   |   | $ | 239,696 |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|     Future                annual minimum lease payments under operating leases:                            |                                                        |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                           | Period                Ending                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                           | June  30,                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   | $ |   |   |
|                                                                                                                           | 2008                                                        |   |   |   |   |   |   |   |   |   |       63,010 |   |
|                                                                                                                           | 2009                                                        |   |   |   |   |   |   |   |   |   | - |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                           |          Total |   |   |   |   |   |   |   |   | $ |       63,010 |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Estimated                fixed recurring monthly average selling, general and administrative                expenses:          |                                                        |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Description                                                                                                                    |                                                        |   |   |   |   |   |   |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,                consultants and benefits                                                                              |                                                        |   |   |   |   | $ |       48,500 |   |
| Rent                                                                                                                           |                                                        |   |   |   |   |   |           7,040 |   |
| Parking                                                                                                                        |                                                        |   |   |   |   |   |            1,000 |   |
| Equipment                rental                                                                                                |                                                        |   |   |   |   |   |         5,200 |   |
| Telephone                and communications                                                                                    |                                                        |   |   |   |   |   |         2,560 |   |
| Directors,                officers and corporate insurance                                                                     |                                                        |   |   |   |   |   |          5,650 |   |
| Accounting                and auditing                                                                                         |                                                        |   |   |   |   |   |          7,000 |   |
|                                                                                                                           |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                           | Total                                                       |   |   |   |   |   |   |   |   | $ |       76,950 |   |

**Estimated      Future Cash Requirements**

----

----

----

----

**ITEM      7.                      Financial      Statements**

**ITEM      8.                      Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure**

|   | (1) | That                the internal controls necessary for the Company to develop reliable                financial statements do not exist, that information has come to their                attention that has led them to no longer be able to rely on management's                representations, or that has made them unwilling to be associated                with the                financial statements prepared by                management. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | That                the Company needs to expand significantly the scope of its audit,                or that                information has come to their attention that if further investigated                may                materially impact the fairness or reliability of a previously issued                audit                report or the underlying financial statements or any other financial                presentation, or cause them to be unwilling to rely on management's                representations or be associated with the Company's financial statements                for the foregoing reasons or any other reason,                or |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | That                they have advised the Company that information has come to their                attention                that they have concluded materially impacts the fairness or reliability                of                either a previously issued audit report or the underlying financial                statements for the foregoing reasons or any other                reason. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM      8A.                      Controls      and Procedures**

**ITEM      8B.**

----

**PART      III**

| **ITEM                9.** | **Directors,                Executive Officers, Promoters and Control Persons; Compliance with                Section                16(a) of the Exchange Act** |
|----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Committees      of the Board***

----

*** ***

***Code      of Ethics***

***Audit      Committee Financial Expert***

***Section      16(a) Beneficial Ownership Compliance***

----

**ITEM  10.     EXECUTIVE      COMPENSATION**

| **SUMMARY                COMPENSATION TABLE**    |
|--------------------------------------------------|
| Name                and principal position  | Year  | Salary                ($)  | Bonus                ($)  | Stock                Awards ($)  | Option                Awards ($)  | Non-Equity                Incentive Plan Compensation ($)  | Nonqualified                Deferred Compensation Earnings ($)  | All                Other Compensation ($)  | Total                ($)  |
| George                Furla.                     |  2007 |  0 |  0 |  0 |  0 |  0 |  0 |  669,825 |  669,825 |
| Co-Chairman                                      |  2006 |  0 |  0 |  0 |  0 |  0 |  0 |  549,819 |  549,819 |
| CEO                & President               | 2005 |  0 |  0 |  0 |  0 |  0 |  0 |  413,758 |  413,758 |
|                                             |   |   |   |   |   |   |   |   |   |
| Randall                Emmett                    |  2007 |  0 |  0 |  0 |  0 |  0 |  0 | 752,050 | 752,050 |
| Co-Chairman                                      |  2006 |  0 |  0 |  0 |  0 |  0 |  0 | 722,043 | 722,043 |
| COO                & Assistant               | 2005 |  0 |  0 |  0 |  0 |  0 |  0 |  599,609 |  599,609 |
| Secretary                                        |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |   |   |   |
| Stanley                Tepper                    |  2007 |  0 |  0 |  0 |  0 |  0 |  0 | 36,000 | 36,000 |
| Acting                Executive                  |  2006 |  0 |  0 |  0 |  0 |  0 |  0 | 50,000 | 50,000 |
| VP                of Finance %                   | 2005 |  0 |  0 |  0 |  0 |  0 |  0 | 35,000 | 35,000 |
| Acting                CFO                        |   |   |   |   |   |   |   |   |   |

----

**Outstanding      Equity Awards at Fiscal Year-end**

| **OUTSTANDING                EQUITY AWARDS AT FISCAL YEAR-END** |
|-----------------------------------------------------------------|
| OPTION                AWARDS                                    | STOCK                AWARDS |
| Name                                                       | Number                of Securities Underlying Unexercised Options(#)Exercisable  | Number                of Securities Underlying Unexercised Options(#)Unexercisable  | Equity                Incentive Plan Awards: Number of Securities Underlying Unexercised                Unearned Options(#)  | Option                Exercise Price($)  | Option                Expiration Date  | Number                of Shares or Units of Stock That Have Not Vested(#)  | Market                Value of Shares or Units of Stock That Have Not Vested($)  | Equity                Incentive Plan Awards: Number of Unearned Shares, Units or Other                Rights                That Have Not Vested(#)  | Equity                Incentive Plan Awards: Market or Payout Value of Unearned Shares,                Units or                Other Rights That Have Not Vested(#)  |
| George                Furla.                                    |  o |  o |  o |  o |  o |  o |  o |  o |  o |
| RandallEnmmett                                                  |  o |  o |  o |  o |  o |  o |  o |  o |  o |
| StanleyTepper                                                   |  o |  o |  o |  o |  o |  o |  o |  o |  o |

**Compensation      of Directors**

| **DIRECTOR                COMPENSATION** |
|------------------------------------------|
| Name                                | Fees                Earned or Paid in Cash($)  | Stock                Awards ($)  | Option                Awards ($)  | Non-Equity                IncentivePlan                Compensation($)  | Non-Qualified                Deferred Compensation Earnings($)  | AllOther                Compensation ($)  | Total                ($)  |   |   |
| George                Furla              |  0 |  0 |  0 |  0 |  0 |  0 |  0 |   |   |
| Randall                Emmett            |  0 |  0 |  0 |  0 |  0 |  0 |  0 |   |   |

----

**ITEM      11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND      MANAGEMENT**

**ITEM      12.  CERTAIN RELATIONSHIPS AND RELATED      TRANSACTIONS**

----

**ITEM      13.   EXHIBITS AND REPORTS ON FORM 8-K**

| 31.1   | Certification                of the Chief Executive Officer pursuant to Rule                13a-14(a) |
|------------------|-------------------------------------------------------------------------------------------------------|

| 31.2   | Certification                of the Chief Financial Officer pursuant to Rule                13a-14(a) |
|------------------|-------------------------------------------------------------------------------------------------------|

| 32.1   | Certification                of the Chief Executive Officer pursuant to 18                U.S.C.ss.1350 |
|------------------|---------------------------------------------------------------------------------------------------------|

| 32.2   | Certification                of the Chief Financial Officer pursuant to 18                U.S.C.ss.1350 |
|------------------|---------------------------------------------------------------------------------------------------------|

| (b)      | Reports                on Form 8-K                                                                                                     |
|----------|----------------------------------------------------------------------------------------------------------------------------------------|
| **Date** | **Subject**                                                                                                                            |
| 6/27/06  | ITEM                4.02  Restatement of  Financials, due to an accounting                error (EITF 0019 issue). |
| 6/7/07   | ITEM                1.02  FMLY issued a convertible note for                $1,000,000.                                      |

----

**ITEM      14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES**

|                              | **For                the Year Ended June 30,** |
|-----------------------------------|------------------------------------------------|
|                              | PMB                Helin Donovan, LLP          | Ham,                Langston & Brezina, L.L.P. |
|                              | **2007**                                       | **2006** |
| Audit                Fees         | 67,000                                         | $60,500 |
| Audit-Related                Fees | -                                              | $- |
| Tax                Fees           | -                                              | $4,500 |
| All                Other Fees     | -                                              | $- |
| Total                Fees         | 67,000                                         | $65,000 |

**Audit      committee’s pre-approval policies and procedures**

**Percentage      of hours expended**

----

**Signatures**

----

**Family      Room Entertainment Corporation**

**Consolidated      Financial Statements**

**For      the years ended June 30, 2007 and 2006**

----

**Family      Room Entertainment Corporation**

**Consolidated      Financial Statements**

**For      the years ended June 30, 2007 and 2006**

**C   O   N   T   E   N   T   S**

| Report                of Independent Registered Public Accountants          | 66                                 |
|-----------------------------------------------------------------------------|------------------------------------|
|  Report                of Independent Registered Public Accountants    | 67                                 |
|  Consolidated                Balance Sheets                            | 68                                 |
|  Consolidated                Statements of Operations                  | 69                                 |
|  Consolidated                Statements of Shareholders’ Deficit | 70                                 |
|  Consolidated                Statements of Cash Flows                  | 71                                 |
|  Notes                to Consolidated Financial Statements             | 72 –                104 |

----

**Report      of Independent Registered Public Accountants**

*/s/PMB      Helin Donovan LLP*

----

**H**

**L**

**B**

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

----

----

**Family            Room Entertainment            Corporation**

**Consolidated            Balance            Sheets**

**As            of June 30, 2007 and            2006**

|                                                       |                                                  |                                                                          |                                                                                                    |                                                        |                                                             | June                30, 2007 |         | June                30, 2006 |
|------------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|------------------------------------------------------------------|------------------------------|--------------|------------------------------|
| Assets                                                     |                                                  |                                                                          |                                                                                                    |                                                        |                                                             |                         |         |
|                                                       | Cash                and cash equivalents              | $                                                                             | 630,513                                                                                                 |                                                        | $                                                                | 678,695                      |
|                                                       | Restricted                cash                        |                                                                          | 38,260                                                                                                  |                                                        |                                                             | 88,877                       |
|                                                       | Accounts                receivable                    |                                                                          |  -                                                                                                 |                                                        |                                                             | 555,000                      |
|                                                       | Film                costs, net                        |                                                                          | 6,605,205                                                                                               |                                                        |                                                             | 5,801,448                    |
|                                                       | Property                and equipment, net            |                                                                          | 58,168                                                                                                  |                                                        |                                                             | 64,883                       |
|                                                       | Prepaid                and other current assets       |                                                                          | 63,959                                                                                                  |                                                        |                                                             | 63,499                       |
|                                                       | Deposits                and prepaid expenses          |                                                                          | 18,270                                                                                                  |                                                        |                                                             |  -                      |
|                                                       |                                                  |                                                                          |                                                                                                    |                                                        |                                                             |                         |         |                         |   |   |
|                                                       |                                                  |                                                                          |                                                                                                    |                                                        | Total                Assets                                      | $                            | 7,414,375    |                         | $ | 7,252,402 |
|                                                       |                                                  |                                                                          |                                                                                                    |                                                        |                                                             |                         |         |                         |   |   |
|                                                       |                                                  |                                                                          |                                                                                                    |                                                        |                                                             |                         |         |                         |   |   |
| Liabilities                and Shareholders’ Deficit |                                                  |                                                                          |                                                                                                    |                                                        |                                                             |
|                                                       | Liabilities                                           |                                                                          |                                                                                                    |                                                        |                                                             |                         |
|                                                       |                                                  | Notes                payable under film participation agreements              | $                                                                                                       | 7,957,412                                                   |                                                             | $                            | 5,907,411    |
|                                                       |                                                  | Convertible                notes payable, net of discount                     |                                                                                                    | 508,419                                                     |                                                             |                         | 487,693      |
|                                                       |                                                  | Accounts                payable and accrued liabilities                       |                                                                                                    | 239,696                                                     |                                                             |                         | 244,385      |
|                                                       |                                                  | Derivative                liability                                           |                                                                                                    | 1,369,318                                                   |                                                             |                         | 954,756      |
|                                                       |                                                  |                                                                          |                                                                                                    | Total                Liabilities                            |                                                             | 10,074,845                   |         |                         | 7,594,245 |
|                                                       |                                                  |                                                                          |                                                                                                    |                                                        |                                                             |                         |         |                         |   |   |
|                                                       | Equity                and Shareholders’ Deficit |                                                                          |                                                                                                    |                                                        |                                                             |                         |
|                                                       |                                                  | Preferred                stock:$0.01 par value; 5,000,000 shares authorized;  |                                                                                                    |                                                        |                                                             |                         |         |
|                                                       |                                                  |                                                                          | no                shares issued and outstanding                                                         |                                                        |  -                                                          |                         |         |  -                      |
|                                                       |                                                  | Common                stock:$0.01 par value; 2,000,000,000 shares authorized; |                                                                                                    |                                                        |                                                             |                         |         |
|                                                       |                                                  |                                                                          | 1,999,299,994                and 199,824,105 shares issued and outstanding,                respectively |                                                        | 19,992,999                                                       |                         |         | 1,998,241                    |
|                                                       |                                                  | Additional                paid-in capital                                     |                                                                                                    | 709,538                                                     |                                                             |                         | 17,694,028   |
|                                                       |                                                  | Treasury                stock, 35,605,833 shares at cost                      |                                                                                                    | (87,653)                                                    |                                                             |                         |  -      |
|                                                       |                                                  | Accumulated                deficit                                            |                                                                                                    | (23,275,354)                                                |                                                             |                         | (20,034,112) |
|                                                       |                                                  |                                                                          |                                                                                                    | Total                Equity and Shareholders’ Deficit |                                                             |  (2,660,470)            |         |                         |  (341,843) |
|                                                       |                                                  |                                                                          |                                                                                                    |                                                        |                                                             |                         |         |                         |   |   |
|                                                       |                                                  |                                                                          |                                                                                                    |                                                        | Total                Liabilities and Shareholders’ Deficit | $                            | 7,414,375    |                         | $ | 7,252,402 |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements            Operations**

**For            the Years Ended June 30, 2007 and            2006**

|                                                                      |                                          |                                      |                                                 |                          | 2007            |            | 2006        |
|---------------------------------------------------------------------------|-----------------------------------------------|-------------------------------------------|------------------------------------------------------|-------------------------------|-----------------|-----------------|-------------|
| Gross                Margin                                               |                                          |                                      |                                                 |                          |            |
|                                                                      | Revenues                                      | $                                         | 1,603,345                                            |                          | $               | 3,432,532       |
|                                                                      | Operating                costs                |                                      |                                                 |                          |            |            |
|                                                                      |                                          | Amortization                of film costs |                                                 | (2,563,335)                   |            |            | (2,790,266) |
|                                                                      |                                          | Distribution                costs         |                                                 | -                             |            |            | (2,219)     |
|                                                                      |                                          |                                      |  Gross                Margin                    |                          |  (959,990) |            |        | 640,047 |
|  Selling,                general and administrative expenses         |                                          | 1,488,979                                 |                                                 |                          | 2,165,809       |
|                                                                      |                                          |                                      |  Loss                from Operations            |                          | (2,448,969)     |            |        | (1,525,762) |
|                                                                      |                                          |                                      |                                                 |                          |            |            |        |   |   |
| Other                Income and Expenses                                  |                                          |                                      |                                                 |                          |            |
|                                                                      | Interest                income                |                                      | 4,396                                                |                          |            | 4,990           |
|                                                                      | Other                income                   |                                      |  28,848                                         |                          |            | 1,450           |
|                                                                      | Change                in value of derivatives |                                      | 770,386                                              |                          |            | 339,912         |
|                                                                      | Interest                expense               |                                      | (1,595,940)                                          |                          |            |  (122,266) |
|                                                                      |                                          |                                      |  Total                Other Income and Expenses |                          |  (792,310) |            |        | 224,086 |
|                                                                      |                                          |                                      |                                                 |  Net                Loss | $               | (3,241,279)     |        | $ | (1,301,676) |
|  Net                loss per common share, basic and diluted         | $                                             |  (0.01)                              |                                                 | $                             |  (0.01)    |
|  Weighted                average number of shares, basic and diluted |                                          | 470,239,870                               |                                                 |                          | 132,564,534     |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Shareholders’Deficit**

**For            the Years Ended June 30, 2007 and            2006**

|                                                              |                                            |                        |   |             |    |     | Additional       |         |   |     |    |   |         |    |   |            |
|-------------------------------------------------------------------|-------------------------------------------------|-----------------------------|--------|------------------|---------|----------|------------------|--------------|--------|----------|---------|--------|--------------|---------|--------|-----------------|
|                                                              |                                            | Common                Stock |   | Paid-In          |    | Treasury |             | Accumulated  |   |     |    |
|                                                              |                                            | Shares                      |   | Amount           |    | Capital  |             | Stock        |   | Deficit  |    | Total  |
|  Balance                at June 30, 2005                     | 89,537,254                                      |                        | $      | 895,373          |    | $        |  17,609,454 |         | $      |  -  |    | $      | (18,732,436) |    | $      |  (227,609) |
|  Conversion                of convertible debt and accrued   |                                            |                        |   |             |    |     |             |         |   |     |    |   |         |    |   |            |
|                                                              | interest                into common stock       | 83,370,185                  |   |             | 833,702 |     |             | 6,542        |   |     |  - |   |         |  - |   |            | 840,244 |
|  Common                stock issued for consulting services  |                                            |                        |   |             |    |     |             |         |   |     |    |   |         |    |   |            |
|                                                              | and                officers’ compensation | 26,916,666                  |   |             | 269,166 |     |             |  78,032 |   |     |  - |   |         |  - |   |            | 347,198 |
|  Net                loss for period                          | -                                               |                        |   |  -          |    |     |  -          |         |   |  -  |    |   | (1,301,676)  |    |   | (1,301,676)     |
|  Balance                at June 30, 2006                     |  199,824,105                               |                        |   | 1,998,241        |    |     |  17,694,028 |         |   |  -  |    |   | (20,034,112) |    |   |  (341,843) |
|  Re-purchase                of common stock                  | -                                               |                        |   |  -          |    |     |  -          |         |   | (87,653) |    |   |  -      |    |   | (87,653)        |
|  Common                stock issued for convertible interest |  155,881,694                               |                        |   | 1,558,817        |    |     | (1,399,714)      |         |   |  -  |    |   |  -      |    |   | 159,103         |
|  Common                stock issued for note principal       |  1,555,594,195                             |                        |   |  15,555,941 |    |     | (14,880,676)     |         |   |  -  |    |   |  -      |    |   | 675,265         |
|  Common                stock issued for services             | 88,000,000                                      |                        |   | 880,000          |    |     |  (704,100)  |         |   |  -  |    |   |  -      |    |   | 175,900         |
|  Miscellaneous                adjustment                     | -                                               |                        |   |  -          |    |     |  -          |         |   |  -  |    |   |  37     |    |   |  37        |
|  Net                loss                                     | -                                               |                        |   |  -          |    |     |  -          |         |   |  -  |    |   | (3,241,279)  |    |   | (3,241,279)     |
|  Balance                at June 30, 2007                     |  1,999,299,994                             |                        | $      |  19,992,999 |    | $        | 709,538          |         | $      | (87,653) |    | $      | (23,275,354) |    | $      | (2,660,470)     |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

|                                                          |                                                              |                                                                               |                                                                | 2007            |         | 2006        |
|---------------------------------------------------------------|-------------------------------------------------------------------|------------------------------------------------------------------------------------|---------------------------------------------------------------------|-----------------|--------------|-------------|
| Cash                Flows From Operating Activities:          |                                                              |                                                                               |                                                                |            |         |
|                                                          | Net                loss                                           | $                                                                                  | (3,241,279)                                                         |            | $            | (1,301,676) |
|                                                          | Adjustment                to reconcile net loss to net cash used: |                                                                               |                                                                |            |         |        |
|                                                          |                                                              | Depreciation                expense                                                |                                                                |  27,711    |         |        |  18,895 |
|                                                          |                                                              | Amortization                of film costs                                          |                                                                | 2,563,335       |         |        | 2,790,266 |
|                                                          |                                                              | Common                stock issued for accrued interest                            |                                                                | 159,103         |         |        |  - |
|                                                          |                                                              | Common                stock issued for services and compensation                   |                                                                | 175,900         |         |        | 347,198 |
|                                                          |                                                              | Change                in value of warrant and derivative liabilities               |                                                                |  (770,386) |         |        |  (204,142) |
|                                                          |                                                              | Amortization                of debt discount                                       |                                                                | 1,038,469       |         |        |  (139,663) |
|                                                          |                                                              | Interest                recognized in connection with issuance of convertible debt |                                                                | 384,975         |         |        |   |
|                                                          |                                                              | Amortization                of loan costs                                          |                                                                | (47,940)        |         |        |  - |
|                                                          |                                                              | Other                                                                              |                                                                | 12,048          |         |        | - |
|                                                          | Change                in operating assets and liabilities:        |                                                                               |                                                                |            |         |        |
|                                                          |                                                              | Increase                in accounts receivable - new                               |                                                                | (1,500,000)     |         |        |  (188,296) |
|                                                          |                                                              | Decrease                in accounts receivable paid - DOD                          |                                                                | 350,000         |         |        |  - |
|                                                          |                                                              | Decrease                in accounts receivable paid - Rambo IV                     |                                                                | 1,500,000       |         |        |  - |
|                                                          |                                                              | Write-off                of accounts receivable                                    |                                                                | 205,000         |         |        |  - |
|                                                          |                                                              | Increase                in film costs                                              |                                                                | (3,366,632)     |         |        | (5,213,529) |
|                                                          |                                                              | (Increase)                decrease in other assets                                 |                                                                |  34,533    |         |        | (18,563) |
|                                                          |                                                              | Increase                (decrease) in accounts payable and accrued liabilities     |                                                                | (4,689)         |         |        |  45,413 |
|                                                          |                                                              |                                                                               | Net                cash generated by/(used in) operating activities |            | (2,479,852)  |        |   | (3,864,097) |
|  Cash                flows from investing activities:    |                                                              |                                                                               |                                                                |            |         |
|                                                          | Release                of restricted cash for film costs          |                                                                               |  50,617                                                        |            |         | 2,455,468   |
|                                                          | Purchase                of property and equipment                 |                                                                               | (20,995)                                                            |            |         | (27,238)    |
|                                                          |                                                              |                                                                               | Net                cash generated by/(used in) investing activities |            |  29,622 |        |   | 2,428,230 |
|  Cash                flows from financing activities:    |                                                              |                                                                               |                                                                |            |         |
|                                                          | Proceeds                from advance under development agreement  |                                                                               | 2,050,000                                                           |            |         | 3,227,692   |
|                                                          | Purchase                of common stock                           |                                                                               | (87,653)                                                            |            |         |  -     |
|                                                          | Payments                on notes payable                          |                                                                               |  -                                                             |            |         | (2,250,000) |
|                                                          | Payment                of deferred financing costs                |                                                                               | (53,263)                                                            |            |         |  -     |
|                                                          | Proceeds                from convertible notes payable            |                                                                               | 800,000                                                             |            |         | 400,000     |
|                                                          | Payment                on convertible notes payable               |                                                                               |  (307,036)                                                     |            |         |  -     |
|                                                          |                                                              |                                                                               | Net                cash generated by/(used in) financing activities |            | 2,402,048    |        |   | 1,377,692 |
| Decrease                in cash and cash equivalents          |                                                              | (48,182)                                                                           |                                                                |            | (58,175)     |
| Cash                and cash equivalents at beginning of year |                                                              | 678,695                                                                            |                                                                |            | 736,870      |
| Cash                and cash equivalents at end of period     | $                                                                 | 630,513                                                                            |                                                                | $               | 678,695      |

| **Supplementary                disclosures of cash flow information** |                                         |     |   |   |   |
|-----------------------------------------------------------------------|----------------------------------------------|----------|--------|--------|--------|
|                                                                  | Cash                paid during the year for |     |   |   |   |   |
|                                                                  |                                         | Interest | $      | 38,499 |   | $ | - |
|                                                                  |                                         | Taxes    | $      | -      |   | $ | - |

| ·   | Issued                1,711,475,889 shares of common stock for the payment of principal                and                interest on convertible notes, valued at                $834,368 |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Issued                88,000,000 shares of common stock for the payment of consulting services                and officer’s compensation, valued at                $175,900 |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **·  ** | Issued                83,370,185 shares of common stock for the payment of principal and                interest on convertible notes, valued at                $840,244 |
|------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **·  ** | Issued                26,916,666 shares of common stock for the payment of consulting services                and officer’s compensation, valued at                $347,198 |
|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Family            Room Entertainment            Corporation**

**Consolidated            Financial            Statements **

**June            30,            2007 **

**1.           General**

**2.           Summary      of Significant Accounting Policies**

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**2.           Summary      of Significant Accounting Policies (continued)**

| •   | FMLY                has a valid sale or licensing agreement in                place. |
|---------------------|--------------------------------------------------------------------------------------|

| •   | The                motion picture is complete and in accordance with the agreement with                the                customer. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| •   | The                motion picture has been delivered or is                deliverable. |
|---------------------|----------------------------------------------------------------------------------------|

| •   | The                license period has begun. |
|---------------------|----------------------------------------------|

| •   | The                revenue is fixed or determinable and collection is reasonably                assured. |
|---------------------|----------------------------------------------------------------------------------------------------------|

| 1.   | Producers                Fees– Producer fees are recognized upon receipt of the fees and                delivery of the related services.  If upon receipt of the fees                all services have not been provided, the fees are deferred and recognized                as the services are performed; |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Royalties–                Royalty and profit participation are recognized when the amounts                are known                and the receipt of the royalties is reasonably                assured.  Accordingly, recognition generally occurs upon receipt                (usually quarterly or semi-annually);                and |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Producer                Development, Production Service Fees and Film Distribution Fees– As                these services are provided, these fees are invoiced by FMLY to the                third                party financiers and producers and are recognized when the amount                has been                determined and receipt is reasonably                assured. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**2.           Summary      of Significant Accounting Policies (continued)**

**Exploitation      Costs**

**Participation      Costs**

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**2.           Summary      of Significant Accounting Policies (continued)**

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**2.           Summary      of Significant Accounting Policies (continued)**

Business      Segment

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**2.           Summary      of Significant Accounting Policies (continued)**

*Share-Based      Payment*
*Accounting for Stock-Based      Compensation*
*Accounting for Stock      Issued to Employees*

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**2.           Summary      of Significant Accounting Policies (continued)**

**Recently      Issued Accounting Pronouncements**

*Accounting for Transfers and      Servicing of Financial Assets and Extinguishments of Liabilities,*

| 1.   | Requires                an entity to recognize a servicing asset or servicing liability each                time                it undertakes an obligation to service a financial asset by entering                into                a servicing contract. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Requires                all separately recognized servicing assets and servicing liabilities                to be                initially measured at fair value, if                practicable. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**2.           Summary      of Significant Accounting Policies (continued)**

**Recently      Issued Accounting Pronouncements (continued)**

| 3.   | Permits                an entity to choose ‘Amortization method’ or  Fair value                measurement method’ for each class of separately recognized servicing                assets and servicing liabilities: |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | At                its initial adoption, permits a one-time reclassification of                available-for-sale securities to trading securities by entities with                recognized servicing rights, without calling into question the treatment                of other available-for-sale securities under Statement 115, provided                that                the available-for-sale securities are identified in some manner as                offsetting the entity’s exposure to changes in fair value of servicing                assets or servicing liabilities that a servicer elects to subsequently                measure at fair value. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | Requires                separate presentation of servicing assets and servicing liabilities                subsequently measured at fair value in the statement of financial                position                and additional disclosures for all separately recognized servicing                assets                and servicing liabilities. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**2.           Summary      of Significant Accounting Policies (continued)**

**Recently      Issued Accounting Pronouncements (continued)**

*Accounting for Income Tax Benefits of Dividends on Share-Based Payment      Awards.*
*, *
*Accounting for Advance      Payments for Goods or Services to Be Used in Future Research and Development      Activities*

**3.           Restricted      Cash**

**4.           Accounts      Receivable**

|                                                     | June                30,2007 |   | June                30,2006 |
|----------------------------------------------------------|-----------------------------|--------|-----------------------------|
|                                                     |                        |   |                        |   |   |
| Accrued                receivables – producer fees | $                           | -      |                        | $ | 515,000 |
| Accrued                distribution, royalties and other |                        | -      |                        |   | 40,000 |
|                                                     |                        |   |                        |   |   |
| Total                                                    | $                           | -      |                        | $ | 555,000 |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**5.           Film      Costs, Revenues and Amortization of Film Costs**

|                                                                                                                 |  Released |         | In                Production |   | Development                and Pre-Production |   | Total  |
|----------------------------------------------------------------------------------------------------------------------|----------------|--------------|------------------------------|--------|-----------------------------------------------|--------|--------|
|                                                                                                                 |           |         |                         |   |                                          |   |   |   |   |   |   |
| Net                film cost balance at June 30, 2006                                                                | $              |  50,000 |                         | $      | 5,451,125                                     |   | $      | 300,323 |   | $ | 5,801,448 |
|                                                                                                                 |           |         |                         |   |                                          |   |   |   |   |   |   |
| Production                costs incurred during year ending June 30, 2007                                            |           | 2,313        |                         |   |  1,952,464                               |   |   | 1,412,315 |   |   | 3,367,092 |
|                                                                                                                 |           |         |                         |   |                                          |   |   |   |   |   |   |
| Transfers                of film costs between categories for the year ended June 30,                2007            |           |  -      |                         |   | 533,724                                       |   |   | (533,724) |   |   |  - |
|                                                                                                                 |           |         |                         |   |                                          |   |   |   |   |   |   |
| Total                film costs incurred and paid by FMLY during year ended                                          |           | 2,313        |                         |   |    2,486,188                   |   |   | 878,591 |   |   | 3,367,092 |
|                                                                                                                 |           |         |                         |   |                                          |   |   |   |   |   |   |
| Net                film cost balance before the year ended June 30, 2007 amortization&                write offs |           |  52,313 |                         |   | 7,937,313                                     |   |   | 1,178,914 |   |   | 9,168,540 |
|                                                                                                                 |           |         |                         |   |                                          |   |   |   |   |   |   |
| Less                film cost amortization & write offs during the year ended June 30,                2007       |           | (2,313)      |                         |   | (1,553,063)                                   |   |   | (1,007,959) |   |   | (2,563,335) |
|                                                                                                                 |           |         |                         |   |                                          |   |   |   |   |   |   |
| Net                film cost balance at  June 30th,                2007                                    | $              |  50,000 |                         | $      |    6,384,250                   |   | $      | 170,955 |   | $ | 6,605,205 |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**5.           Film      Costs, Revenues and Amortization of Film Costs      (continued)**

|                                                                                                           |  Released |         | In                Production |   | Development                and Pre-Production |   | Total  |
|----------------------------------------------------------------------------------------------------------------|----------------|--------------|------------------------------|--------|-----------------------------------------------|--------|--------|
|                                                                                                           |           |         |                         |   |                                          |   |   |   |   |   |   |
| Net                film cost balance at June 30, 2005                                                          | $              |  60,000 |                         | $      | 2,663,707                                     |   | $      | 654,478 |   | $ | 3,378,185 |
|                                                                                                           |           |         |                         |   |                                          |   |   |   |   |   |   |
| Production                costs incurred during the year ended June 30, 2006                                   |           | 39,819       |                         |   | 4,807,860                                     |   |   | 365,834 |   |   | 5,213,513 |
|                                                                                                           |           |         |                         |   |                                          |   |   |   |   |   |   |
| Transfers                of film costs between categories in the year ended June 30,                2006       |           |  -      |                         |   | 481,164                                       |   |   |  (481,164) |   |   |  - |
|                                                                                                           |           |         |                         |   |                                          |   |   |   |   |   |   |
| Total                film costs incurred and paid by FMLY during the year ended June 30,                2006   |           | 39,819       |                         |   | 5,289,024                                     |   |   | (115,330) |   |   | 5,213,513 |
|                                                                                                           |           |         |                         |   |                                          |   |   |   |   |   |   |
| Net                film cost balance before June 30, 2006 amortization & write                offs         |           | 99,819       |                         |   | 7,952,731                                     |   |   | 539,148 |   |   | 8,591,698 |
|                                                                                                           |           |         |                         |   |                                          |   |   |   |   |   |   |
| Less                film cost amortization & write offs during the year ended June 30,                2006 |           | (49,819)     |                         |   | (2,501,606)                                   |   |   |  (238,841) |   |   | (2,790,266) |
|                                                                                                           |           |         |                         |   |                                          |   |   |   |   |   |   |
| Other                                                                                                          |           | -            |                         |   | -                                             |   |   | 16 |   |   | 16 |
|                                                                                                           |           |         |                         |   |                                          |   |   |   |   |   |   |
| Net                film cost balance at June 30, 2006                                                          | $              |  50,000 |                         | $      | 5,451,125                                     |   | $      | 300,323 |   | $ | 5,801,448 |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**5.           Film      Costs, Revenues and Amortization of Film Costs      (continued)**

|                                                                            |                                          | Year                Ended |
|---------------------------------------------------------------------------------|-----------------------------------------------|---------------------------|
|                                                                            |                                          | 06/30/2007                |   | 06/30/2006 |
| **Released                Projects - Amortization**                             |                                          |                      |   |   |   |
|                                                                            | After                Sex                      | $                         | 990 |   | $ |  5,785 |
|                                                                            | Good                Advice                    |                      |  912 |   |   | 413 |
|                                                                            | Held                for Ransom                |                      |  330 |   |   |  5,819 |
|                                                                            | Speedway                Junkie                |                      |  7 |   |   |  5 |
|                                                                            | Other                                         |                      | - |   |   |  1,068 |
|                                                                            | 16                Blocks                      |                      | - |   |   | 36,729 |
| Total                                                                           |                                          | 2,239                     |   |   | 49,819 |
|                                                                            |                                          |                      |   |   |   |
| **Projects                in Development, In Production or Pre-Production**     |                                          |                      |   |   |   |
|                                                                            | Rambo                IV                       |                      | 896,230 |   |   | - |
|                                                                            | 16                Blocks                      |                      |  626 |   |   |  146,098 |
|                                                                            | Wickerman                                     |                      |  251,256 |   |   |  290,829 |
|                                                                            | The                Contract                   |                      |  401 |   |   |  255,314 |
|                                                                            | 88                Minutes                     |                      |  415 |   |   |  430,079 |
|                                                                            | White                Air                      |                      |  346,675 |   |   | - |
|                                                                            | Code                                          |                      | 32,645 |   |   | - |
|                                                                            | Creepshow                                     |                      | 3,317 |   |   | - |
|                                                                            | Home                of the Brave              |                      | 47,328 |   |   | - |
|                                                                            | Saturday                Night Special         |                      | 59,737 |   |   | 93,942 |
|                                                                            | Micronauts                                    |                      | 16,966 |   |   | - |
|                                                                            | Rin                Tin Tin                    |                      | 180 |   |   | 127,134 |
|                                                                            | FMLY/EFF                Participation Payment |                      | 732,949 |   |   | - |
|                                                                            | The                Tenant                     |                      | 4 |   |   | 1,279,621 |
| Total                of other individuals projects with costs less than $40,000 |                                          | 172,367                   |   |   | 117,420 |
|                                                                            | Total                                         |                      | 2,561,096 |   |   | 2,740,437 |
|                                                                            |                                          |                      |   |   |   |   |
| Total                all projects                                               | $                                             | 2,563,335                 |   | $ | 2,790,256 |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**5.           Film      Costs, Revenues and Amortization of Film Costs      (continued)**

|                                             |                                                       |                                              |                         | Year                Ended |
|--------------------------------------------------|------------------------------------------------------------|---------------------------------------------------|------------------------------|---------------------------|
|                                             |                                                       |                                              |                         | 06/30/2007                |   | 06/30/2006 |
| **Producer                Fees / Film Revenue**  |                                                       |                                              |                         |                      |   |
|                                             | Wickerman                                                  | $                                                 | -                            |                      | $ | 300,000 |
|                                             | The                Contract                                |                                              |  -                      |                      |   | 300,000 |
|                                             | 88                Minutes                                  |                                              |  -                      |                      |   | 400,000 |
|                                             | Rambo                                                      |                                              | 1,500,000                    |                      |   |   |
|                                             |                                                       | Total                Producer Fees / Film Revenue |                         | 1,500,000                 |   |   | 1,000,000 |
| **Royalties                and Other Revenue**   |                                                       |                                              |                         |                      |   |
|                                             | Royalties                                                  |                                              | 11,298                       |                      |   | 16,861 |
|                                             | Distribution                revenue, net                   |                                              | 92,047                       |                      |   | 1,302,771 |
| Net                Income Participation revenues |                                                       | -                                                 |                         |                      | 1,000,000 |
|                                             | Film                production service fees and consulting |                                              | -                            |                      |   | 115,250 |
|                                             |                                                       | Total                Royalties and Other Revenue  |                         | 103,339                   |   |   | 2,434,882 |
|                                             |                                                       |                                              |                         |                      |   |   |   |   |
|                                             |                                                       |                                              | Total                Revenue | $                         |  1,603,345 |   | $ | 3,434,882 |

|                                                           |     | June                30, 2007 |   | June                30, 2006 |
|----------------------------------------------------------------|----------|-----------------------------------|--------|------------------------------|
|                                                           |     |                              |   |                         |   |   |
| Borderland                                                     | 74       | %                                 |   |  82                     | % |
| White                Air                                       | -        | %                                 |   | 6                            | % |
| Wickerman                                                      |  -  | %                                 |   | 4                            | % |
| Day                of the Dead                                 | 1        | %                                 |   | -                            | % |
| King                of California                              |  23 | %                                 |   |  -                      | % |
| Total                of other individual projects less than 5% |  2  | %                                 |   |  8                      | % |
|                                                           |     |                              |   |                         |   |   |
|                                                           | Total    | 100                               | %      |                         | 100 | % |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**6.           Property      and Equipment**

|                                                          |                   |   |      | June                31, |    | June                30,   |
|---------------------------------------------------------------|------------------------|--------|-----------|-------------------------|---------|---------------------------|
|                                                          |                   | Life   |      | 2007                    |    | 2006                      |
|                                                          |                   |   |      |                    |    |                      |   |   |
| Office                furniture and equipment                 | 7                years |   | $         | 54,656                  |    | $                         | 50,284 |
| Computer                equipment                             | 5                years |   |      | 86,873                  |    |                      | 73,313 |
| Software                                                      | 3                years |   |      | 87,642                  |    |                      | 85,472 |
|                                                          |                   |   |      |                    |    |                      |   |   |
|                                                          | Total                  |   |      |                    | 229,171 |                      |   | 209,069 |
|                                                          |                   |   |      |                    |    |                      |   |   |
| Less                accumulated depreciation and amortization |                   |   | (171,004) |                    |    | (144,186                ) |
|                                                          |                   |   |      |                    |    |                      |   |   |
|                                                          |                   |   |      | $                       | 58,167  |                      | $ | 64,883 |

**7.           Notes      Payable under Film Participation Agreements**

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**7.           Notes      Payable under Film Participation Agreements      (continued)**

|                              | **Investor                Loans**  |      |              |   |        |   |                             |
|-----------------------------------|------------------------------------|-----------|-------------------|--------|-------------|--------|----------------------------------|
|                              | **Tau**                            |      | **Scorched**      |   |        |   |                             |   |   |   | **Gary** |   |   |   |
|                              | **Entertainment**                  |      | **Earth**         |   | **Freedom** |   | **EFF**                          |   | **Granstaff** |   |   |   |
| **Specified                Use**  | **(Elisa                Salinas)** |      | **Entertainment** |   | **Films**   |   | **Partners,                LLC** |   | **Participation** |   | **Totals** |
|                              |                               |      |              |   |        |   |                             |   |   |   |   |   |   |   |   |   |   |
| The                Tenant         | $                                  |  -   |              | $      |  -     |   | $                                |  - |   | $ |  68,486 |   | $ |  - |   | $ |  68,486 |
| Borderland                        |                               | 1,799,719 |              |   | 572,500     |   |                             | 2,355,192 |   |   |  - |   |   |  - |   |   | 4,727,411 |
| White                Air          |                               |  -   |              |   |  -     |   |                             |  - |   |   | 346,514 |   |   |  - |   |   | 346,514 |
| Wickerman                         |                               | 250,000   |              |   |  -     |   |                             |  - |   |   |  - |   |   |  - |   |   | 250,000 |
| King                of California |                               | 1,300,000 |              |   |  -     |   |                             |  - |   |   |  - |   |   |  - |   |   | 1,300,000 |
| Room                Service       |                               | 130,000   |              |   |  -     |   |                             |  - |   |   |  - |   |   |  - |   |   | 130,000 |
| Day                of the Dead    |                               |  -   |              |   |  -     |   |                             |  - |   |   | 300,000 |   |   |  - |   |   | 300,000 |
| Rin                Tin Tin        |                               |  -   |              |   |  -     |   |                             |  - |   |   |  85,000 |   |   |  - |   |   |  85,000 |
| Participation                Fee  |                               |  -   |              |   |  -     |   |                             |  - |   |   |  - |   |   | 750,000 |   |   | 750,000 |
|                              | $                                  | 3,479,719 |              | $      | 572,500     |   | $                                | 2,355,192 |   | $ | 800,000 |   | $ | 750,000 |   | $ | 7,957,411 |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**7.           Notes      Payable under Film Participation Agreements      (continued)**

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**8.           Convertible      Notes Payable**

| Date                of Note                  |   | Amount                of Notes                                               |      | Conversion                Price (1) |                        | Term                of Note                                |
|----------------------------------------------|--------|------------------------------------------------------------------------------|-----------|-------------------------------------|-----------------------------|------------------------------------------------------------|
| November                9, 2004              |   | $                                                                            | 2,000,000 |                                | $0.15                or 80% |                                                       | 2                years |
| May                24, 2006                  |   | $                                                                            | 400,000   |                                | 80%                         |                                                       | 1                year |
| June                5, 2007                  |   | $           1,000,000 |      | $0.0005                (2)          |                        |       2                years |
|  Date                of Warrants Issued |   | Number                of Warrants                                            |      | Exercise                Price       |                        | Term                of Warrants                            |
| November                9, 2004              |   | 6,666,667                                                                    |      | $                                   | 0.1200                      |                                                       | 5                years |
| November                9, 2004              |   | 16,666,667                                                                   |      | $                                   | 0.1500                      |                                                       | 5                years |
| June                5, 2007                  |   | 1,000,000,000                                                                |      | $                                   | 0.0005                      |                                                       | 5                years |
| June                5, 2007                  |   | 1,000,000,000                                                                |      | $                                   | 0.0010                      |                                                       | 5                years |

| (1)   | =                the conversion price is the lower of the set price or 80% of market                closing price. |
|-----------------|--------------------------------------------------------------------------------------------------------------------|

| (2)   | =                fixed conversion price |
|-----------------|-----------------------------------------|

| Notes                payable                     |   | June                30, |      | June                30, |
|--------------------------------------------------|--------|-------------------------|-----------|-------------------------|
| Convertible                debt                  |   | 2007                    |      | 2006                    |
|                                             |   |                    |      |                    |   |   |
| Notes                payable Convertible debt    |   | $                       | 1,627,401 |                    | $ | 1,645,144 |
|                                             |   |                    |      |                    |   |   |
| Less                unamortized debt issue costs |   |                    | 1,118,982 |                    |   | 1,157,451 |
|                                             |   |                    |      |                    |   |   |
| Notes                payable Convertible debt    |   | $                       | 508,419   |                    | $ | 487,693 |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**8.           Convertible      Notes Payable (continued)**

| Date                of Warrants |   | Number                of |   |   | Initial                Value at |   | Volatility |
|---------------------------------|--------|--------------------------|--------|--------|---------------------------------|--------|------------|
| Issued                          |   | Warrants                 |   |   | Issuance                        |   | Factor     |
|                            |   |                     |   |   |                            |   |       |
| November                9, 2004 |   | 6,666,667                |   | $      | 104,984                         |   | 39%        |
| November                9, 2004 |   | 16,666,667               |   | $      | 262,460                         |   | 39%        |
| June                5, 2007     |   | 1,000,000,000            |   | $      | 565,376                         |   | 164%       |
| June                5, 2007     |   | 1,000,000,000            |   | $      | 551,018                         |   | 163%       |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**8.           Convertible      Notes Payable (continued)**

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**8.           Convertible      Notes Payable (continued)**

|                            |   |                            |   |   |                             |   | Initial                       |
|---------------------------------|--------|---------------------------------|--------|--------|----------------------------------|--------|-------------------------------|
| Date                of Note     |   | Amounts                of Notes |   |   | Value                at Issuance |   | Carrying                Value |
|                            |   |                            |   |   |                             |   |                          |
| November                9, 2004 | $      | 2,000,000                       |   | $      | 674,158                          | $      | 1,032,899                     |
| May                26, 2006     | $      | 400,000                         |   | $      | 135,770                          | $      | 264,250                       |
| June                5, 2007     | $      | 1,000,000                       |   | $      | 1,000,000                        | $      | 1,000,000                     |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**8.           Convertible      Notes Payable (continued)**

| Future                annual debt maturities (including the convertible                notes): |
|------------------------------------------------------------------------------------------------|
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                           | Year                Ending |   |   |   |   |   |   |   |   |   |   |
|                                                                                           | June                30, |   |   |   |   |   |   |   |   |   |   |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                           | 20082009 |   |   |   |   |   |   |   |   | $ |   1,597,2041,902,796 |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                           |          Total |   |   |   |   |   |   |   |   | $ |   3,400,000 |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |

**Accounts      payable and accrued liabilities at June 30, 2007 and June 30, 2006 consisted      of      the following:**

|                                    | June                30,2007 |    | June                30,2006 |
|-----------------------------------------|-----------------------------|---------|-----------------------------|
|                                    |                        |    |                        |   |   |
| Accounts                payable         | $                           | 187,715 |                        | $ | 200,274 |
| Accrued                film costs       |                        | -       |                        |   |    - |
| Accrued                interest payable |                        | 51,981  |                        |   | 44,111 |
|                                    |                        |    |                        |   |   |
|                                    | $                           | 239,696 |                        | $ | 244,385 |

----

**10.           Income      Taxes**

**FMLY      has incurred significant operating losses since its inception and, therefore,      has not generally incurred federal income taxes.**

|                                    | **2007**     |   | **2006** |
|-----------------------------------------|--------------|--------|----------|
| **Income                tax provision** |         |   |     |   |   |
|                                    | **Current**  | **$**  | **-**    |   | **$** | **-** |
|                                    | **Deferred** |   | **-**    |   |   | **-** |
|                                    | **Total**    | **$**  | **-**    |   | **$** | **-** |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**10.           Income      Taxes (continued)**

|                                                                 | 2007   |        | 2006   |
|----------------------------------------------------------------------|--------|-------------|--------|
| Deferred                tax assets:                                  |   |        |   |   |   |
| Net                operating losses                                  | $      | 4,534,245   |   | $ | 3,602,406 |
| Accounts                receivable - allowance for doubtful accounts |   | -           |   |   | - |
| Valuation                allowance                                   |   | (4,531,245) |   |   | (3,597,906) |
| Total                deferred tax assets                             |   | 3,000       |   |   | 4,500 |
|                                                                 |   |        |   |   |   |
| Deferred                tax liabilities:                             |   |        |   |   |   |
| Basis                of property and equipment                       |   | (3,000)     |   |   | (4,500                ) |
| Net                deferred tax asset                                | $      | -           |   | $ | - |

|                                                                                                                   | 2007   |      | 2006    |
|------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|
|                                                                                                                   | Amount |      | Percent |   | Amount |   | Percent |
|                                                                                                                   |   |      |    |   |   |   |   |   |   |   |   |
| Benefit                for income tax at federal                                                                       |   |      |    |   |   |   |   |   |   |   |   |
| statutory                rate                                                                                          | $      | 1,102,035 |    |   | 34% |   | $ | 442,570 |   |   | 34% |
| State                taxes benefit, net of federal cost                                                                |   | 179,805   |    |   | 6% |   |   | - |   |   | 0% |
| Non-deductible                stock-based                                                                              |   |      |    |   |   |   |   |   |   |   |   |
| compensation                                                                                                           |   | -         |    |   | 0% |   |   | (118,047) |   |   | (10)% |
| Non-deductible                expenses related to convertible debt and derivative financial                instruments |   | (332,294) |    |   | (4)% |   |   |  (62,997) |   |   | (5)% |
| Other,                including non-deductible                                                                         |   |      |    |   |   |   |   |   |   |   |   |
| business                meals and entertainment                                                                        |   | (16,207)  |    |   | (1)% |   |   |  (9,357) |   |   | 0% |
| Change                in valuation allowance                                                                           |   | (933,339) |    |   | (25)% |   |   |  (252,169) |   |   | (19)% |
|                                                                                                                   |   |      |    |   |   |   |   |   |   |   |   |
|                                                                                                                   | $      | -         |    |   | 0% |   | $ | - |   |   | 0% |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**11.           Lease      Agreement**

| **Year                Ending** |   |       |                     |
|--------------------------------|--------|------------|--------------------------|
| **June                30,**    |   | **Amount** |
|                           |   |       |                     |
| 2008                           |   | $          |    63,010 |
| 2009                           |   |       | -63,010-                 |
|                           |   |       |                     |
|                           |   | $          | 63,010                   |

**12.           Stockholders’      Equity**

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**12.           Stockholders’      Equity (Continued)**

*Share-Based      Payment*
*Accounting for Stock-Based      Compensation*
*Accounting for Stock      Issued to Employees*

*Accounting for Stock Issued to Employees*

*Accounting for Stock Appreciation Rights and      Other Variable Stock Option or Award Plans*

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**12.           Stockholders’      Equity (Continued)**

|                                        |   | **   Number                of** |                            | **      Weighted** |   |
|---------------------------------------------|--------|------------------------------------------------|---------------------------------|--------------------------------------------------|--------|
|                                        |   | **Shares**                                     |                            | **Average**                                      |   |
|                                        |   | **Under**                                      |                            | **Exercise**                                     |   |
| **Description**                             |   | **Options**                                    |                            | **Price                ($)**                     |   |
|                                        |   |                                           |                            |                                             |   |   |   |
| Outstanding                at June 30, 2005 |   |                                           | 145,000                         |                                             |   | 0.25 |   |
| Granted                                     |   |                                           | -                               |                                             |   | - |   |
| Exercised                                   |   |                                           | -                               |                                             |   | - |   |
| Forfeited                                   |   |                                           | -                               |                                             |   | - |   |
|                                        |   |                                           |                            |                                             |   |   |   |
| Outstanding                at June 30, 2006 |   |                                           |     145,000 |                                             |   | 0.25 |   |
|                                        |   |                                           |                            |                                             |   |   |   |
| Granted                                     |   |                                           | -                               |                                             |   | - |   |
| Exercised                                   |   |                                           | -                               |                                             |   | - |   |
| Forfeited                                   |   |                                           | (145,000)                       |                                             |   | 0.25 |   |
|                                        |   |                                           |                            |                                             |   |   |   |
| Outstanding                at June 30, 2007 |   |                                           | -                               |                                             |   | - |   |

|   |   |   |                                |   |   |   |   |           |   | ** Remaining** |   |         |   |
|--------|--------|--------|-------------------------------------|--------|--------|--------|--------|----------------|--------|---------------------|--------|--------------|--------|
|   |   |   |                                |   |   |   |   |           |   | **Contractual**     |   |         |   |
|   |   |   |                                |   |   |   |   | **Expiration** |   | **Life**            |   | **Exercise** |   |
|   |   |   | **Number                of Shares** |   |   |   |   | **Date**       |   | **(Years)**         |   | **Price**    |   |
|   |   |   |                                |   |   |   |   |           |   |                |   |         |   |
|   |   |   |                                |   |   |   |   |           |   |                |   |         |   |
|   |   |   |                                |   |   |   |   |           |   |                |   |         |   |
|   |   |   | **none**                            |   |   |   |   |           |   |                |   |         |   |
|   |   |   |                                |   |   |   |   |           |   |                |   |         |   |

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**12.           Stockholders’      Equity (Continued)**

|                     |   |                         |   |    |   |  Remaining              |    |   |   |
|--------------------------|--------|------------------------------|--------|---------|--------|------------------------------|---------|--------|--------|
|                     |   |                         |   |    |   | Contractual                  |    |   |   |
| Number                of |   | Expiration                   |   | Life    |   | Exercise                     |
| Shares                   |   | Date                         |   | (Years) |   | Price                        |
| 1,500,000                |   | January                2008  |   | 1.5     |   | $3.00                        |
| 750,000                  |   | January                2008  |   | 1.5     |   | 65%                of market |
| 5,000,000                |   | January                2008  |   | 1.5     |   | $0.50                        |
| 3,571,428                |   | January                2008  |   | 1.5     |   | $0.13                        |
| 23,333,334               |   | November                2009 |   | 3.4     |   | $0.12                        |
| 1,000,000,000            |   | June                2011     |   | 5.0     |   |                         | $0.0005 |
| 1,000,000,000            |   | June                2011     |   | 5.0     |   |                         | $0.001  |
|                     |   |                         |   |    |   |                         |    |   |   |   |
| 2,034,154,762            |   |                         |   |    |   |                         |    |   |   |

**13.           Claims      and Contingencies**

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**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**14.           Major      Customers and Concentrations**

|                                                                            | 2007   |   | 2006   |
|---------------------------------------------------------------------------------|--------|--------|--------|
| Number                of customers accounting for more than 10% of revenue      | 1      |   |   | 1 |   |
|                                                                            |   |   |   |   |   |
| Percentage                of total revenue derived from largest customer        | 98     | %      |   | 87 | % |
|                                                                            |   |   |   |   |   |
| Percentage                of total revenue derived from second largest customer | 1      | %      |   |   1 | % |

**15.           Related      Party Transactions**

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**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**16.           Non-Cash      Investing and Financing Activities**

----

**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**17.           FMLY      Stock Repurchases**

| Date                                         |       | Shares     |   | Market                Price |   | Cost   |   | Commissions |   | Total  |
|----------------------------------------------|------------|------------|--------|-----------------------------|--------|--------|--------|-------------|--------|--------|
| 8/3/2006                                     |       | 650,000    |   | $                           | 0.01   |   | $      |  7,800 |   | $      | 400 |   | $ |  8,200 |
| 8/4/2006                                     |       | 325,000    |   | $                           | 0.01   |   |   |  3,120 |   |   | 163 |   |   |  3,283 |
| 8/15/2006                                    |       | 274,833    |   | $                           | 0.01   |   |   |  2,556 |   |   | 135 |   |   |  2,691 |
| 8/16/2006                                    |       | 495,000    |   | $                           | 0.01   |   |   |  4,851 |   |   | 247 |   |   |  5,098 |
| 8/17/2006                                    |       | 100,000    |   | $                           | 0.01   |   |   |  1,200 |   |   |  25 |   |   |  1,225 |
| 8/17/2006                                    |       | 890,000    |   | $                           | 0.01   |   |   | 10,502      |   |   | 528 |   |   | 11,030 |
| 8/18/2006                                    |       | 960,000    |   | $                           | 0.01   |   |   | 11,232      |   |   | 557 |   |   | 11,789 |
| 8/21/2006                                    |       | 100,000    |   | $                           | 0.01   |   |   |  1,200 |   |   |  - |   |   |  1,200 |
| 8/21/2006                                    |       | 250,000    |   | $                           | 0.01   |   |   |  3,000 |   |   |  - |   |   |  3,000 |
| 8/21/2006                                    |       | 250,000    |   | $                           | 0.01   |   |   |  3,000 |   |   | 8 |   |   |  3,008 |
| 8/21/2006                                    |       | 100,000    |   | $                           | 0.01   |   |   |  1,360 |   |   |  - |   |   |  1,360 |
| 8/23/2006                                    |       | 50,000     |   | $                           | 0.01   |   |   |  575   |   |   | 7 |   |   |  582 |
| 8/23/2006                                    |       | 100,000    |   | $                           | 0.01   |   |   |  1,250 |   |   |  58 |   |   |  1,308 |
| 8/30/2006                                    |       | 50,000     |   | $                           | 0.01   |   |   |  575   |   |   |  27 |   |   |  602 |
| 8/31/2006                                    |       | 50,000     |   | $                           | 0.01   |   |   |  450   |   |   |  33 |   |   |  483 |
| 9/5/2006                                     |       | 200,000    |   | $                           | 0.01   |   |   |  1,800 |   |   |  97 |   |   |  1,897 |
| 9/7/2006                                     |       | 200,000    |   | $                           | 0.01   |   |   |  1,600 |   |   |  88 |   |   |  1,688 |
| 9/14/2006                                    |       | 20,000     |   | $                           | 0.01   |   |   |  190   |   |   |  27 |   |   |  217 |
| 9/14/2006                                    |       | 100,000    |   | $                           | 0.01   |   |   |  950   |   |   |  32 |   |   |  982 |
| 9/18/2006                                    |       | 200,000    |   | $                           | 0.01   |   |   |  1,600 |   |   |  73 |   |   |  1,673 |
| 9/18/2006                                    |       | 20,000     |   | $                           | 0.01   |   |   |  160   |   |   |  25 |   |   |  185 |
| 9/19/2006                                    |       | 50,000     |   | $                           | 0.01   |   |   |  400   |   |   |  27 |   |   |  427 |
| 9/26/2006                                    |       | 250,000    |   | $                           | 0.01   |   |   |  2,125 |   |   |  72 |   |   |  2,197 |
| 9/27/2006                                    |       | 100,000    |   | $                           | 0.01   |   |   |  900   |   |   |  34 |   |   |  934 |
| 9/27/2006                                    |       | 140,000    |   | $                           | 0.01   |   |   |  1,316 |   |   | 8 |   |   |  1,324 |
| 9/27/2006                                    |       | 10,000     |   | $                           | 0.01   |   |   | 90          |   |   |  - |   |   | 90 |
| 9/28/2006                                    |       | 250,000    |   | $                           | 0.01   |   |   |  2,350 |   |   | 7 |   |   |  2,357 |
| 9/29/2006                                    |       | 250,000    |   | $                           | 0.01   |   |   |  2,350 |   |   | 8 |   |   |  2,358 |
| 10/5/2006                                    |       | 200,000    |   | $                           | 0.01   |   |   |  1,600 |   |   | 106 |   |   |  1,706 |
| 6/29/2007                                    |       | 28,971,000 |   |                        | .0005  |   |   | 14,383      |   |   | 376 |   |   | 14,759 |
| Total                Shares Purchased        | 35,605,833 |       | $      |                        |   | $      | 84,485 |        | $      | 3,168  |   | $ | 87,653 |
| Average                Stock Price Per Share |       | $          | 0.0025 |                        |   |   |   |        |   |   |   |   |

**18.           Subsequent      Events:**

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**Family            Room Entertainment            Corporation**

**Consolidated            Statements of Cash            Flows**

**For            the Years Ended June 30, 2007 and            2006**

**18.           Subsequent      Events:**

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