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Analyst:

Lisa Springer, CFAInitial ReportFebruary 23th, 2009

Empire Film Group Inc. (OTCPK: EFGU)

Analyst:

Lisa Springer, CFAInitial ReportFebruary 23th, 2009

Company Introduction

Empire Film Group Inc.

24568 Piuma RoadMalibu, CA 90265Phone:(310) 317-9176

MARKET DATA

SymbolExchangesCurrent PricePrice TargetRating

Outstanding fully diluted shares

Market Cap. Average 3-m Volume

Source: Pink Sheets and Analyst estimate

EFGUOTC PK$0.18$0.48Speculative Buy102.6 Million$18.5 MillionN/A

Empire Film Group Inc. (EFGU), an independent, integrated lmproduction company that acquires, nances, produces, and dis

tributes feature lms and television programming. The Companyhas identied a lucrative theatre market niche largely ignored bythe major lm studios: modestly budgeted, theatrical-quality lms,which can be distributed in theatres, video and television quicklyand eciently. The number of independent lms released each yearis growing; independent studios have produced some of the mostsuccessful, critically acclaimed independent lms in recent years,including “The Wrestler,” “Juno,” “My Big Fat Greek Wedding,”and “Slumdog Millionaire.” Initially, Empire plans to go to mar

ket with lm titles it has licensed or acquired from third parties.This strategy provides the Company with a source of near-termrevenues. Over the longer term, Empire plans to produce its ownindependent lms. This will enable the Company to retain a greaterpercentage of lm prots.Empire Film Group is led by entertainment industry veterans withmore than 25 years experience in developing, producing, distribut

ing, nancing and marketing feature lms, as well as television pro

gramming. Chairman and co-CEO Dean Hamilton-Bornstein has 20

years of industry experience, and has been an actor, writer, director

and producer on numerous feature lms, television programs, liveconcert events, documentaries, music videos and commercials. Mr.Hamilton has directed some of the industry’s top stars, includingMartin Sheen, Roger Moore, Kris Kristoerson, Graham Greene,Danny Aiello, Pamela Anderson, Denise Richards, Ian McShane,Tyra Banks, Rebecca Romn-Stamos, Corbin Bernsen and MickeyRooney. Mr. Hamilton is currently producing several feature lmand television projects around the world, and recently completed

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EFGU dailyDec 09 Feb

M i l l i o n s

Analyst:

Lisa Springer, CFAInitial ReportFebruary 23th, 2009

Empire Film Group Inc. (OTCPK: EFGU)

Analyst:

Lisa Springer, CFAInitial ReportFebruary 23th, 2009

Empire Film Group Inc. (OTCPK: EFGU)

the feature lm “Blonde and Blonder,” starring Pamela Anderson, Denise Richards and the Farley Brothers.Co-CEO Eric Parkinson formerly served as president and CEO of Hemdale Communications, Inc., a NASDAQlisted independent lm studio that handled many major lms including “Terminator,” “Platoon,” “The LastEmperor,” and “Hoosiers.” From January 2002 until January 2008, Parkinson served as president and CEO ofHannover House, a prominent distributor of books and DVDs.In 2007, Empire acquired a majority stake in Truman Press, the parent company of lm distributor/book pub

lisher Hannover House. As a result of this acquisition, the Company is positioned as one of the independent lmindustry’s few vertically integrated production and distribution companies. In addition, the Company’s Cana

dian operations enable Empire to produce Canadian lm and television content, and thus capitalize on govern

ment subsidies, tax incentives, rebates and nancing that encourage Canadian lm production.At present, Empire owns and/or controls more than 170 titles in its lm library. This lm library is a valuableasset that generates cash ow without requiring signicant associated expense or capital expenditures for releas

ing or repackaging library lms. The Company has about 40 new titles scheduled for 2009 release, the highest-prole of which is “The Imaginarium of Doctor Parnassus,” which stars Johnny Depp, Colin Farrell, Jude Lawand the late Heath Ledger. The acquisition of this lm is pending. Anothermajor Empire lm property, “Hounddog,” was released to theaters last Sep

tember and played for 13 weeks across the United States in key cities such asNew York, Los Angeles, Chicago, Philadelphia, San Francisco and San Diego.The lm received strong support from major critics, including National PublicRadio, New York Magazine and the Hollywood Reporter. Dakota Fanning re

ceived exceptional praise for her performance from the New York Times, LosAngeles Times and the Chicago Tribune.Empire’s rst original productions should be ready for distribution in early2009. Original productions are key to the Company’s long-term growth, sincethese allow Empire to retain a greater share of lm prots (tied to ticket sales)as opposed to xed distribution fees. An agreement with Gravitas Venturesto distribute Empire lm titles via video-on-demand channels, and a strategicalliance with the My Family TV Network to supply 10 hours of weekly pro

gramming, extend the Company’s capabilities and add to the growing revenue

stream.

Company addresses a $ 136 billion U.S. entertainment marketThe U.S. market for lm entertainment and TV distribution is estimated to exceed $136 billion. Demand for lmentertainment is forecast to grow 4.6% annually through 2011, while the TV distribution market is projected togrow 5.9% annually over the same period. Domestic box oce for lms held steady at $9.63 billion in 2008, de

spite recession fears; box oce for independent lms improved 19% to $438.2 million. Consumer spending onDVDs has risen to $16 billion from $1.6 billion in 2003.

Investment Highlights

Analyst:

Lisa Springer, CFAInitial ReportFebruary 23th, 2009

Empire Film Group Inc. (OTCPK: EFGU)

Analyst:

Lisa Springer, CFAInitial ReportFebruary 23th, 2009

Empire Film Group Inc. (OTCPK: EFGU)

Competitive advantage associated with vertically integrated operationsThrough its acquisition of Truman Press, Empire owns and operates a free-standing distribution division for books, DVDs, Blu-Ray HD videos, CDs and television titles. As a result, the Company has a fully integrated, self-contained vehicle for producing and distributing its lms and other entertainment properties. Empire has identi

ed a lucrative niche for modestly budgeted lms of theatre quality for release in a limited number of key mar

kets. Because fewer prints are required (i.e. 1,000 prints versus 2,500 prints for a major studio release), Empire canreach every key U.S. market at about one-third of the cost of a major studio release. Film acquisitions will focus onspecic genres such as dramas, comedies and thrillers that have historically provided above average returns. Bymid-2009, the Company expects to have one or two of its own originally produced lms ready for distribution.

Strategic agreements boost distribution

The Company plans to grow organically and through acquisitions. In late 2007, Empire acquired Hannover House,a distributor of books, DVDs, Blu-Ray HD videos, CDs and television titles, thereby enhancing Company-owneddistribution channels. Key retailers carrying Empire DVD, Blu-Ray, books or audio products include Amazon.com, Best Buy, Blockbuster, Borders Group, Hastings, Hollywood Video, Movie Gallery, Netix, SAMS Clubs andthe Company’s primary account, Wal-Mart Stores, Inc. Empire has also signed an agreement with My Family TVNetwork to supply 10 hours of weekly programming beginning in the third quarter of 2009. In addition, the Com

pany has a video-on-demand agreement with Gravitas Ventures LLC for the digital streaming of EFGU lm titlesvia major cable and satellite outlets, including Time-Warner Cable, Comcast, Direct TV and Cox Communications.The Company plans to expand its production and distribution capabilities by acquiring production operationsand production and post-production facilities in the United States and Canada.Empire Film Group was protable last yearAccording to management, the Company generated revenues of$3.3 million and operating prots of nearly $1.5 million in 2008.We anticipate signicant 2009 revenue gains will result from therelease of 40 new titles this year. Empire targets exponential rev

enue growth over the next ve years. In addition, the Company’soperating margins on its theatrical lm production and distribu

tion business should improve as the revenue mix shis in favor ofan increased percentage of lms produced in-house.

Experienced management team

Empire’s senior executives have more than 25 years experience inthe entertainment industry. Chairman and co-CEO Dean Hamil

ton-Bornstein has 20 years experience as an actor, director, writerand producer for feature lms and television. Co-CEO Eric Par

kinson helped build Hannover House’s lm and DVD catalog tomore than 170 titles in ve years.