Family Room Entertainment Corp. (FMYR)

[graspointe48236]

Related Party Transactions

On a majority of the projects FMLY undertakes, FMLY’s chief executive officer and chief operating officer have contractual arrangements with FMLY that provide for their compensation base to be between 20% to 30% - George Furla and between 25% to 33% - Randall Emmett) of the net producers fees earned by the Company. Net producers’ fees are gross fees less approved direct costs incurred by FMLY to provide the underlying services. During the nine months ended March 31, 2007, these executive officers received compensation totaling $370,000 under these contractual arrangements. The compensation is materially reflected in the cost of the related film project and is ultimately recognized as operating cost-amortization of film costs in the statement of operations. During the nine months ended March 31, 2006, these executive officers received compensation totaling $709,895 under these contractual arrangements.

Paragraph 12 page 26

http://www.sec.gov/Archives/edgar/data/49444/000126606807000079/body.htm

$950,000 = 63% of the total earned of the 1.5M 30% to Furla and 33% to Emmett