Press Release Source: Imperia Entertainment, Inc.

Press Release Source: Imperia Entertainment, Inc.

Imperia Entertainment Issues Letter to Shareholders
Monday December 12, 9:30 am ET


BEVERLY HILLS, Calif.--(BUSINESS WIRE)--Dec. 12, 2005--Imperia Entertainment, Inc. (Pink Sheets:IPRE - News) announced today that it has posted to its web site and mailed to shareholders a letter from its CEO, James Hergott, as follows:
Dear Shareholders,

This is the second of my letters to you. I promised that I would do this on a semi-regular basis. Since "All That I Need" has been released, there is much to be discussed and I felt that this would be a good format from which to get out all of the facts. There seems to be a lot of disinformation out there that I would like to clear up. I would have put this out last week, but with the movie in theatres, obviously I was very busy giving interviews and so forth. As important as communicating with shareholders is, it is even more important to focus on the task at hand, and make full use of that window of opportunity. I believe this letter will answer all of your questions and concerns. I will address each matter in no particular order.

FINANCIAL STATEMENTS

Many shareholders have asked that we start reporting our financial statements. The fact is that, although we do not file financial statements with the SEC, we have already started reporting quarterly in conformance with Pink Sheet Rules and are completely up to date on our statements. You can view them on this website: http://www.stockinformationsystems.com/

HOW "ALL THAT I NEED" DID FINANCIALLY

So far the estimate we have from our first week's Box Office sales is approximately $58,552. This is fantastic, considering we were only in 27 theatres. In many cases we were the second highest opening movie at the locations we were in, next to "Aeon Flux." In fact, "Aeon Flux," which premiered on approximately 3000 screens, brought in only $13 million on its opening weekend. This big studio release cost $55 million to produce and at least another $50 million to market. This means they covered only a little over 10% of their cost opening weekend. Our movie only cost $150,000 to produce. Most of our advertising was on barter in exchange for our TV show "Autograph," with little out of pocket cost. What this means is that in only a week in theatres we recouped almost a third of our expenses. This still leaves DVD, foreign theatrical, TV, Cable, Internet and several other sources of income. Since we are distributing independently, we retain all of these rights. Many of our expenses in terms of advertising of the movie carry over across these other distribution methods. In short, we are on track for a very profitable first movie.

Upon closer review of the numbers, things look even brighter. Our best day was our last showing, which was Thursday the 8th. In fact, the numbers were more than double than the day before, or any of the other days of the week. What this means is that our first numbers were brought in by advertising, which was very limited compared to big studio movies, but as the week went on, our numbers actually grew. This is very significant because these number represent word of mouth. In fact, on Yahoo Movies, which is statistically the website people most often go on to check out movies, we are the highest-rated movie that was released that week, among users. In fact, the movie scored a B+ among users. "Aeon Flux" only scored a C+. "First Descent," a Universal Pictures release, only rated B- among users. Our high positives among moviegoers reflected in our huge upsurge as the week went on. The last day of our release, at our most significant location, we scored number four of all movies playing on 20 screens. In fact, we were only beat out by huge studio releases: "Harry Potter", "Aeon Flux" and "Just Friends." Considering that rated R movies typically do better on DVD than in theatres, and considering that we were up against children's movies such as "Harry Potter" and "Chicken Little," this is a tremendous accomplishment.

Many shareholders who have been burned on investments before questioned right up to the release if we would actually be in theatres. We were released and beat the odds. We are an independent movie, with no big stars, that was able to get into theatres. Not art house theatres, but theatres in large multiplexes. Many movies with name actors go straight to video. Considering how competitive this business is, we should all be very proud of this accomplishment. The theatres were very cooperative and would let us set up booths, put up lots of large posters and engage in very extensive marketing. Because our movie is not visually driven but story driven, we heard a lot of people say that they would rather watch it on DVD. In fact, we have already gotten numerous requests for the DVD. All of our promotions in theatres have gotten the word out and help us with future sales. Even a limited release in theatres is a huge boost for DVD sales over movies that just release straight to DVD. On top of this, our extensive promotions have brought about word of mouth recognition for the project. Not only are we getting high marks with viewers and seeing a large word of mouth upswing in attendance, but our www.allthatineed.net website has received over 126,000 unique visitors since August that have clicked on to watch the trailer. Many of these visitors are from outside North America. This means there is a huge untapped market for the movie. I cannot begin to tell you how many requests we have received from people in other countries anticipating the DVD.

All of this has occurred despite the fact that in many of our theatres, the projection technology encountered a technical problem and was projected as much as 3 F- stops darker than was intended. The theatres displayed the movie using a new digital projecting system and there was a problem with calibration. This same visual problem will not occur with the DVD or future showings.

Also of note, the week of our release turned out to be one of the worst Box Office weeks of the year. This resulted from a combination of a post-Thanksgiving slump, students studying for final exams and horrible weather conditions debilitating much of the country. Once again, despite all of this, we have beat the odds and come out on top.

THE FUTURE OF "ALL THAT I NEED"

We have only scratched the surface on track to have a very profitable release. We are presently in negotiations and will be making announcements as deals are signed with the following:

Theatrical distribution in Eastern Europe
Theatrical distribution in France
TV, HBO distribution in Asia
TV distribution in Italy and UK
DVD distribution through major US DVD rental and sales outlets
Many anticipate that in the future, theatres will just be initial promotion for movies, with the bulk of money being made through DVD, Direct TV and On Demand sales. We are already seeing the effects of this trend. With improved home theatre systems, more and more people are cocooning inside their homes rather than going out to the movies. The recent Box Office slump this past year further reinforces this theory.

Big studios are not able to produce content as cheaply as we are. They are held hostage by unions and stars with escalating salaries. The studios then play hardball with the theatres, demanding a bigger percentage of the Box Office. Theatres are forced to turn to preview ads and concessions in order to make money. The increase in concession costs and ads before the movies irritates consumers and further closes the divide between the theatre experience and home entertainment. I have heard recently that in order to make up for losses, the theatres will now add more ads in before the movies play. This may be a good temporary fix in order to bring in ad revenue, but will only further alienate moviegoers.

Many raise concern about bootlegging in China, especially for major studio movies. For every door that closes, a new door opens. In fact, there are many emerging technologies for content distribution, including On Demand TV, the Internet and iPod streaming. Imperia Entertainment plans to be on the cutting edge of these emerging technologies. In fact, we have been working with moviesdownload.com for several months now. If you type in moviesdownload.com into your browser, you will be taken directly to the "All That I Need" website. Moviesdownload.com received more than 100,000 visitors a month and growing.

FUTURE OF IMPERIA ENTERTAINMENT

I believe our stock, which seems to go through ups and downs based on fear/greed impulses, has not yet settled. I don't think that many investors have yet accepted that I have a long-term strategy for this company, as I stated. I have kept my word. Our first movie opened in theatres and we have many other projects upcoming, such as "Worlds Apart," which will start shooting after the holidays, "Brothers," which we plan to start pre-production on in March, and "Whiskers," which, as we speak, the producers are scouting shooting locations in the Caribbean. As investors see my resolve and ability to adapt, I am sure you will see the stock will find its price in the market.

I have learned much from this project. I have seen what works and what doesn't in terms of marketing. I am much wiser now about which projects will work in the future. By forming relationships, not only with the theatre chains, but also with individual theatres thought the country, I feel that I have acquired a lot of first hand experience. I personally traveled to many of these theatres in the weeks leading up to the release, and I feel I have a much better sense of consumer demand and thus I will be more efficient in the projects I chose to get behind in the future. With our word of mouth upswing, I feel we are just scratching the surface for our first release.

IDENTIFYING OUR MARKET

It seems that critically our first movie was either loved or hated. Most of the public loved the movie. An interesting phenomenon was found in our exit polls for the movie. Republican business men and women seemed to love the movie, while left-leaning movie goers seemed less likely to identify with it. I am assuming that because the movie touches on themes of wealth and money, it inherently appeals to those who have been interested in multi-level marketing or entrepreneurial topics. We have garnered, unintentionally, a large following among Republicans and business-minded individuals. Likewise, and I am assuming, not coincidentally, areas of the country such as Austin, and newspapers considered by conservatives as left wing, such as the St. Petersburgh Times, gave us our worst reviews, while traditional Republican areas such as Ft. Worth, Dallas and San Antonio gave us our best reviews.

Last Monday I did a live radio broadcast in Houston from a Republican business radio call in show, and many of the listeners viewed the movie, giving it very high marks. In fact, the movie is getting quite a following in these communities.

Now that we know the market for our movie, we will target media that deals with Republican topics and business driven media. No matter what your personal or political beliefs, it is always better to identify your market and play to your strengths and to where you get your highest positives.

IDENTIFYING OUR FUTURE MARKETS

Through this experience I intend to turn this entertainment company into a major powerhouse. I wish to continue to produce content cheaply with an eye on high return from a number of distribution sources. Content is one of the few things that once created; you can keep selling, again and again, with very little cost of reproduction. With "All That I Need," we have already expended our production and marketing costs, we have identified our market, we have created word of mouth and name recognition and we will continue to reap the benefits over time, with little or no future costs. As we head into the holiday season, this will be the gift that keeps on giving.

With my newfound experience, I plan to focus on three major markets, which I feel are both very profitable and cost effective:

1) G, PG and PG-13 quality movies aimed at children and teenagers and their parents, such as "Whiskers."
2) PG-13 Thrillers and Horrors aimed at teenagers and young adults.
3) Quality movies that are unique and stand out and are derived from a personal standpoint.
Thanks again for your time and your continued faith in me. I hope you will have a wonderful holiday season.

All the best,

James Hergott

This press release contains statements, which may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of Imperia Entertainment, Inc., and members of its management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully and the ability to complete before-mentioned transactions. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.



Contact:
Imperia Entertainment, Inc.
James Hergott, 310-275-0089