U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB
(Mark One)

   [ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

     For the fiscal year ended December 31, 2002

   [   ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE  ACT OF 1934

   For the transition period from                  to
                                 ------------------  -----------------

      Commission file number     000-49679
                                 ---------

                                 LITFUNDING CORP
                    formerly known as RP ENTERTAINMENT, INC.
                 (Name of small business issuer in its charter)

                                      6611

             NEVADA                                                   95-4834266
   (State or other jurisdiction of                              (I.R.S. Employer
   incorporation or organization)                            Identification No.)

     5757 Wilshire Boulevard, Suite PH10
     LOS ANGELES, CALIFORNIA 90036                                        90067
 (Address of principal executive offices)                             (Zip code)

Issuer's telephone number (323) 857-0448

Securities registered under Section 12(b) of the Exchange Act:

          NONE

Securities registered under Section 12(g) of the Exchange Act:

                 COMMON STOCK, $.001 PAR VALUE PER SHARE

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
 Yes X    No
    ---      ---

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ]

     State issuer's revenues for its most recent fiscal year:  $0

     State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask prices of such stock, as of the close of business on March 31, 2002:
There were shares of $.001 par value, common stock held by non-affiliates;
however, a trading market has not developed for the common stock. There is no
established market for the Class B common stock, $.001 par value.

     State the number of shares outstanding of each of the issuer's class of
common equity: 678,000 shares of common stock, $.001 par value per share were
outstanding as of March 31, 2002.

     Documents incorporated by reference:  Form 8K filed in March 11, 2003, by
RP Entertainment, Inc.



                                        1
<PAGE>



                              RP ENTERTAINMNET, INC.
                                   FORM 10-KSB
                                TABLE OF CONTENTS

PART I                                                                Page
                                                                      ----

     Item 1.     Description of Business............................    3
     Item 2.     Description of Property............................    6
     Item 3.     Legal Proceedings..................................    6
     Item 4.     Submission of Matters to a Vote of Security Holders    6

PART II

     Item 5.     Market for Common Equity and Related
                 Stockholder Matters................................    6
     Item 6.     Management's Discussion and Analysis or Plan
                 of Operation.......................................    6
     Item 7.     Financial Statements...............................    8
     Item 8.     Changes In and Disagreements With Accountants
                 on Accounting and Financial Disclosures............    9

PART III

     Item 9.     Directors, Executive Officers, Promoters and
                 Control Persons; Compliance with Section 16(a)
                 of the Exchange Act................................    9
     Item 10.    Executive Compensation.............................   10
     Item 11.    Security Ownership of Certain Beneficial
                 Owners and Management..............................   10
     Item 12.    Certain Relationships and Related
                 Transactions.......................................   10
     Item 13.    Exhibits and Reports on Form 8-K...................   11

SIGNATURES..........................................................   12

INDEX TO FINANCIAL STATEMENTS ......................................  F-1



                                        2


<PAGE>



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

INTRODUCTION

RP Entertainment, Inc. ("RPE" or the "Company") was organized in the state of
Nevada on July 11, 1996. We are a developmental stage company, with limited
operations to date primarily due to a dispute with the licensors of the rights
to develop and produce the television show, Search for the Hooters Girl. The
dispute resulted in litigation which was resolved by a settlement agreement
entered into on December 23, 1998, from which we were paid $150,000 in cash with
another $100,000 to be paid to RPE should a feature film be made using the
rights. In addition, we would receive 6% of merchandising of any products based
on such a film or any television production involving the rights. See
"Litigation."

BACKGROUND

RPE was formed July 11, 1996 as a diverse entertainment company to carry out
motion picture development, production and finance, to produce television movies
and series and to merchandise thematic products based thereon.

RPE is an independent film company seeking a niche market share and emphasizing
merchandising of products associated with each project.

RPE is working to become a successful niche company in the entertainment
industry initially by developing and producing scripts for theatrical motion
pictures or television movies and series, either for the network, cable or
syndication markets, and further exploiting areas of merchandising that can be
achieved from these productions. To that end the first step is the optioning of
intellectual properties such as screenplays, novels, short stories, true life
stories, plays, personal biographies, headline events, raw ideas, etc., which
can be developed into a successful product for the entertainment industry.
Typical option fees for such rights, other than Pulitzer Prize winners or the
like, are $2,500 to $10,000 per year.


                                        3

<PAGE>


Operations Plan

The optioning process itself demands the experience of the professional knowing
what kinds of material are best suited for success in the motion picture and
television industry. To that end RP Entertainment has as its president, Douglas
Stefen Borghi. During his twenty year career, Mr. Borghi has been the
co-creator, writer and producer of the hit CBS television series Jake and the
Fatman, one of the longest running detective shows in television history. He was
also the writer and producer of numerous television movies such as the Emmy
nominated classic, The Operation, starring Lisa Hartman, Joe Penny and Kathleen
Quinlan, and Element of Truth, starring Donna Mills. Mr. Borghi was also the
producer of the cult crime drama released theatrically in Europe, Who Killed the
Baby Jesus.

RPE will use Mr. Borghi's experience to option material we find to have
potential. When necessary, RPE will raise further money for acquisitions of
option rights and scripts and for the development process, as it has over the
last five years and/or enter into joint venture relationships with established
producers.

BUSINESS OF THE COMPANY

RPE's plan of operations is to acquire and develop rights to produce television
shows and feature films with joint venture partners such as established
producers, distributors and studios. At the same time RPE will be seeking
additional sources of funding in the areas of acquisition of scripts for film
and television production and of rights to merchandise (that is, manufacture and
market) products associated with future film and/or television productions of
third parties. To do this, RPE is seeking seek to establish an aggressive
marketing plan through advertising in trade publications such as Variety and The
Hollywood Reporter. Small ads (2-4 columns for four days at $900 to $1,600 per
ad) would cost not more than $10,000 during the next twelve months, RPE plans to
satisfy its cash requirements by additional equity financing, including this
offering, and possibly, joint ventures. This will be in the form of this
offering of common stock and joint venture relationships with established
producers of television and feature films. There can be no assurance that RPE
will be successful in raising additional equity financing, and, thus, be able to
satisfy its cash requirements, which primarily consist of legal and accounting
fees at the present time. RPE presently has limited cash with which to satisfy
any future cash requirements, approximately $32,000 in readily marketable
securities and cash.

RPE will need a minimum of $70,000 to satisfy its cash requirements for the next
8 months. No money ws raised under the SB-2 Registration Statement of the
Company covering 1,000,000 shares of common stock and the offering was
terminated in March 2002. Primarily, $20,000 would be used to make limited
advertising in trade publications, to make long distance phone calls and to
option two script projects with related legal fees for negotiating and
consummating contracts. RPE will not be able to fully carry out its plans to
option 5 to 20 script projects in the next 24 months if it does not obtain
equity financing through this offering. RPE has no current material commitments
for funding or for development or production of any scripts. RPE depends upon
capital to be derived from this offering. Should we raise at least $62,500 or
25% of the amount sought in this offering then we will have funds sufficient to
option 5 to 10 scripts or rights to develop scripts from published books,
assuming such rights are purchased for $2,500 to $5,000 each. Management
believes that, if this offering is successful, in that it raises $250,000 or at
least $62,500, then RPE will be able to generate revenue from acquiring and
reselling options on books and on screenplays and achieve liquidity within the
next twelve months. Should RPE not raise any capital through this offering, then
we will be able to continue to operate for up to 12 months, but prospects for
revenues and profits will be significantly negatively effected.

If we only conduct normal operations and assuming we raise no capital then we
would expend approximately $50,000 during the next 12 months. Most of the
expenses will be for legal and accounting fees in connection with raising equity
capital. Without such financing we will most likely liquidate our business
activities for lack of funding in approximately 13-15 months from June 30, 2001.
If we pursue limited operations as mentioned above, RPE would most likely run
out of its funds within one year if no additional capital is raised. This is
based on having approximately $60,000 in cash at June 30, 2001 and approximately
#32,000 presently.

RPE does not anticipate research and development costs for any products, nor
does it expect to incur any research and development costs. RPE does not expect
the purchase or sale of plant or any significant equipment, and it does not
anticipate any change in the number of its employees. RPE has no current
material commitments. RPE has generated limited revenue since its inception,
$150,000 as a result of the Settlement Agreement. See "Litigation - Settlement
Agreement".


                                        4
<PAGE>


RPE has not commenced operations as a developer and producer of screenplays,
feature films or television shows or as a merchandiser of products derived
therefrom, principally because of the litigation with BSB, Provident and
Hooters.

RPE has no present plans, preliminary or otherwise, to merge with any other
entity. However, we may in the future seek a merger, joint venture or other
financial association to further its business objectives.

RPE is still considered to be a development stage company, with no significant
revenue, and is dependent upon the raising of capital through placement of its
common stock. There can be no assurance that RPE will be successful in raising
the capital it requires through the sale of its common stock.

The Projects

An example is RPE's maiden venture, "Who Wants to Date a Hooters Girl?" which is
being developed in the Fall 2001 or Spring 2002 by Berk/Schwartz/Bonann, the
creators and producers of the popular hit television series, Baywatch. There can
be no assurance that this pilot will result in a television series. Production
of a series is not within our control.

From the development stage to the production stage for a single project can take
anywhere from two to five years. Success in the development to production stage
demands an acute awareness of long term planning for each project to reach the
production stage.

RPE's aim is to build our business with careful cost effective management and
the knowledge of the creative process gained by management from experience.
RPE's management intends to nurture strategic partnerships throughout the
industry, as it has done in the past. Presently, RPE has no such strategic
partnerships and no assurance can be given that we will be able to attract
partners. Our management intends to create an inventory of valuable projects for
film, television, cable, to engage in the syndication and merchandising
resulting from any successful show or feature film. RPE can revenue share with
strategic successful partners and share in revenue based on our financial
participation at the point in the production at which we entered each project.


COMPETITION

   The industries in which the Company operates are extremely competitive and
include major corporations with substantially greater resources than the
Company, including but not limited to, financial, personnel and established
relationships in the industry.


INTELLECTUAL PROPERTY /COMPETITION

   The Company's success and ability to compete will be dependent in part upon
its ability to obtain and maintain protection for its current and future
literary properties, to defend its intellectual property rights and to operate
without infringing on the proprietary rights of others, See "Item 3 Legal
Proceedings". While the Company relies on a combination of copyrights and
trademarks to establish and protect its intellectual property rights, the
management of the Company believes that factors such as the technical and
creative skills of its personnel are more essential to its success and ability
to compete. There can be no assurance that any intellectual property rights of
the Company will provide competitive advantages or will not be challenged,
invalidated or circumvented by competitors. There can be no assurance that
disputes will not arise concerning the ownership of intellectual property.
Furthermore, there can be no assurance that intellectual properties will not
become known or be independently developed by competitors or that the Company
will be able to maintain the confidentiality of information relating to its
literary properties.

EMPLOYEES

   Mssrs. Smith and Borghi will provide 3-4 hours of time each week in pursuit
of options and book rights without compensation, but with payments for costs of
long distance phone calls. Mr. Borghi and Mr. Smith will, in an effort to locate
projects, contact the persons who they have met over the 20 plus years they have
each been engaged in their respective endeavors in the Los Angeles entertainment
market.


                                        5
<PAGE>


ITEM 2. DESCRIPTION OF PROPERTY

The Company formerly had its headquarters a facility of approximately 500 square
feet located at 1900 Avenue of the Stars, Suite 1450, Los Angeles, California
90067. The Company now has offices at 5757 Wilshire Boulevard, Suite PH10, Los
Angeles, CA 90036 comprised of approximately 3,000 square feet.

ITEM 3. LEGAL PROCEEDINGS

         RP Entertainment, Inc. is not presently subject to any pending
litigation, legal proceedings or claims.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There were no submissions to a vote of security holders during 2001.


                                     PART II

ITEM 5. MARKETS FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   The Company has filed for listing of its common stock with the National
Association of Security Dealers (NASD) for a quotation on the Over-the-Counter
(OTC) Bulletin Board in November 2001. However, the Company is not as of this
date listed and there have been no trades in the Company common stock. As of
March 31, 2002, there were 5,178,000 shares of common stock outstanding and 36
record holders of such shares.

   The Company has not declared or paid any cash dividends on its common stock
since its formation, and the board of directors currently intends to retain all
of its earnings, if any, for its business. The declaration and payment of cash
dividends will be at the discretion of the board of directors.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS FROM INCEPTION TO DECEMBER 31, 2002

Overview

We were incorporated on July 11, 1996. Although, we do not have a written
agreement or formal arrangement with Mr. John Holt Smith in which he has agreed
to give us space for our offices, we anticipate that Mr. Smith will continue to
allow us to have space with no charge. Our belief that Mr. Smith will give us
space is based on the fact that Mr. Smith has a significant equity interest in
us. We believe that Mr. Smith will continue to allow us free space as long as he
maintains a significant equity interest in us. However, in the event that Mr.
Smith sells some or all of his shares, he may not have a continued incentive to
pay our office rent and related expenses. We cannot assure you that Mr. Smith
will not sell some of all of his shares.

Our plan of Operation for the next twelve months is materially dependent on our
ability to generate revenues. If we are able to generate significant revenues,
we anticipate that those revenues will be used to option books or screenplays,
provide us with working capital and pay our legal and accounting fees for the
next twelve months. If we do not generate those revenues, then we expect that
our expenses for the next twelve months will be approximately $50,000. We
anticipate that our expenses for the next twelve months will be limited to the
day-to-day expenditures necessary to conduce business such as administrative
expenses, which include costs to maintain our telephone and to contact agents
and authors. Although it is difficult to quantify the day-to-day expenses, we
believe that such expenses and the acquisition of two scripts will be no more
than $70,000 for the next twelve months in the event we raise no capital through
this offering. Our chief executive officer, director and principal shareholder,
John Holt Smith, has provided office space since our inception. Our belief that
Mr. Smith will pay our expenses is based on the fact that Mr. Smith has a
significant equity interest in us and we believe that Mr. Smith will continue to
provide office space as long as he maintains a significant equity interest in
us. If Mr. Smith does not take any legal fees to raise equity capital, the
Company's expenses can be reduced to approximately $34,000.

Results of Operations

The operating expenses for the year ended December 31, 2002 was $39,891 as
compared to $49,591 for the year ended December 31, 2001. The net loss for year
ended December 31, 2002 was $37,842 as compared to $62,629 for the year ended
December 31, 2001. The decrease was due in part for the professional fees paid
to a related party in 2001.

Liquidity and Capital Resources

In the opinion of management, available funds from cash of approximately $5,000
at December 31, 2002 will satisfy our working capital requirements through next
few months. On February 25, 2003, we entered into an Agreement of Merger with
LitFunding Corp., a California corporation ("LFC"). LFC became a wholly owned
subsidiary. LFC is in the business of providing funding to qualifying plaintiffs
and plaintiffs' attorneys for the payment of costs and expenses of litigation,
principally in the areas of personal injury, medical malpractice, product
liability, toxic torts, and employment.

We do not have any material commitments for capital expenditures, nor do we
expect to expend any material amounts for advertising or promotion of our
business. We intend to use our management's established relationships in the
entertainment industry to promote our business by word of mouth and personal
solicitations.

Our forecast for the period for which our financial resources will be adequate
to support our operations involves risks and uncertainties and actual results
could fail as a result of a number of factors. We anticipate that we may need to
raise additional capital to develop, promote and conduct our operations. Such
additional capital may be raised through public or private financing as well as
borrowing and other sources. There can be no assurance that additional funding
will be available on favorable terms, if at all. We have not contemplated any
plan of liquidation in the event that we do not generate revenues or raise a
substantial amount in a private placement through the sale of our common stock.
We will be forced to terminate our business operations in the event we are
unable to raise additional capital in a private placement offering.

Results of Operations
---------------------

The year ended December 31, 2000 versus the year ended December 31, 2001

         The year ended December 31, 2001 versus the previous year ended
(unaudited) shows an increase in operating expenses of $28,126. The increase was
due in part for professional fees for normal operations such as accounting,
taxes and legal fees. The Company also wrote off $10,000 in legal fees related
to raising equity in an initial public offering. Other expenses in 2001
decreased $3,683 over the prior year for transactions related to the sale of
securities and receiving interest income on money market funds.



                                        6
<PAGE>

Liquidity and Capital Resources
-------------------------------

         In the opinion of management, available funds from cash of
approximately $34,000 will satisfy our working capital requirements through
September 2002. Therefore, based on discussions with agents and authors, we
believe the earliest that we will begin to generate revenues is approximately
June 2002. Our belief is based on the fact that identification of negotiations
for and consummation of an option agreement or developed agreement would require
about 3-4 months time, cost $5,000 - $10,000 and require further development or
rewrites over an additional 60-90 day period. After all of which we would then
have to locate an interested and suitable producer, negotiate a sale or joint
venture production, or further development and production.

         Out plan of operation provides that we will sell acquire rights,
improve or develop the script and then the developed version subject to our
distributors' specifications. Therefore, our profits will be determined on a
case-by-case basis. For example, if we are selling television scripts to a
producer of television shows to be sold with their current productions to CBS,
then we will negotiate a percentage of revenue derived from production based on
the number of episodes.

         We do not have any material commitments for capital expenditures, nor
do we expect to expend any material amounts for advertising or promotion of our
business. We intend to use our management's established relationships in the
entertainment industry to promote our business by word of mouth and personal
solicitations.

         Our forecast for the period for which our financial resources will be
adequate to support our operations involves risks and uncertainties and actual
results could fail as a result of a number of factors. We anticipate that we may
need to raise additional capital to develop, promote and conduct our operations.
Such additional capital may be raised through public or private financing as
well as borrowing and other sources. There can be no assurance that additional
funding will be available on favorable terms, if at all. We have not
contemplated any plan of liquidation in the event that we do not generate
revenues or raise a substantial amount in a private placement through the sale
of our common stock. We will be forced to terminate our business operations in
the event we are unable to raise additional capital in a private placement
offering.

Acquisition of LitFunding Corp/Changes in Control of Registrant

On February 25, 2003, Morton Reed, PhD. and Michael Marcelli, were appointed as
directors of LitFunding Corp., a Nevada corporation ("Registrant"). Dr. Reed and
the other shareholders of LitFunding Corp. received shares of the Registrant's
stock as part of the merger described below. On February 25, 2003, RP
Acquisition Corp., a Nevada corporation and our wholly-owned subsidiary ("RPAC")
entered into a merger agreement with LitFunding Corp., a California corporation
("LFC"). RPAC was formed by the Registrant for the purpose of effectuating a
merger with LFC. The merger transaction between LFC and RPAC was consummated
pursuant to an Agreement and Plan of Merger dated February 21, 2003 (the "Merger
Agreement"). The Merger Agreement is attached to Form 8K described in Exhibit
23.1 (B). Pursuant to the Merger Agreement, Douglas S. Borghi resigned as the
President, Treasurer, and director of the Registrant and John Holt Smith
resigned as the Chief Executive Officer, and Secretary but remains a director of
the Registrant. Two new directors were appointed to fill vacancies on the board
of the Registrant, Morton Reed and Michael Marcelli. Upon the closing of the
merger, Mr. Borghi agreed to have his 2,000,000 shares of the Registrant's
common stock cancelled and Mr. Smith agreed to have his 2,500,000 shares of the
Registrant's common stock cancelled, leaving 678,000 shares outstanding and
7,542,250 shares of the Registrant to be exchanged with existing LitFunding
Corp. shareholders or a total of 8,220,250 after consummation of the
transaction.

RISK FACTORS

   Certain statements in the following discussion of financial condition and the
results of operations, or elsewhere in this report, represent "forward-looking"
statements as defined in the Private Securities Litigation Reform Act of 1996.
Such statements involve matters that are subject to certain risks and
uncertainties, as a result of which actual future results or events many differ
materially depending on a variety of factors.

   The future results of the Company's television specials is, and the planned
production of feature films will be, subject to a substantial degree of risk.
Each project is an individual artistic work, and its commercial success is
primarily determined by the reactions of distributors and the general public,
each of which is unpredictable. Historically, many feature films do not generate
a net profit or a return on investment, and there is a substantial degree of
risk that the production and exploitation of a film by the Company would not
allow a recovery of the costs incurred by the Company in its production.
Additionally, as discussed elsewhere herein, the Company will be required to
raise significant capital to pursue the production of the films it is presently
developing, either through the sale of revenue interests in the films, the
pre-production sale of distribution rights, or the sale of equity or debt
securities by the Company. There can be no assurance that the Company will be
able to raise the necessary funds to pursue the production of these films, which
creates an additional uncertainty.


                                        7
<PAGE>


   RESULTS OF OPERATIONS

ITEM 7.  FINANCIAL STATEMENTS




                             RP ENTERTAINMENT, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                              FINANCIAL STATEMENTS
                                  (Restatement)
                         FROM INCEPTION ON JULY 11, 1996
                              TO DECEMBER 31, 2001

                        WITH INDEPENDENT AUDITORS' REPORT




                                   CONTENTS



                                                                      PAGE

       Independent Auditors' Report                                     9

       Balance Sheet                                                    10

       Statement of Operations and Accumulated Deficit                  11

       Statement of Changes in Stockholder's Equity                     12

       Statement of Cash Flows                                          13

       Notes to Financial Statements                                  14 - 20



                                       8
<PAGE>




                          INDEPENDENT AUDITORS' REPORT


To the Stockholders and Board of Directors
LitFunding Corp. (formerly, RP Entertainment, Inc.)

We have audited the accompanying balance sheet of LitFunding Corp. (formerly, RP
Entertainment, Inc.), a Nevada Corporation (the "Company") as of December 31,
2002 and the related statements of operations, stockholders' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provide a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of LitFunding Corp. (formerly, RP
Entertainment, Inc.) as of December 31, 2002 and the results of its operations
and its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.

The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has accumulated deficit of 328,277 on December 31, 2002
and a net loss of $37,482 and $62,629 for the years ended December 31, 2002 and
2001, respectively. These factors as discussed in Note 3 to the financial
statements, raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS

Fountain Valley, California
March 12, 2003


                                       9
<PAGE>




                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                                  BALANCE SHEET
                                DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                   ASSETS
                                   ------
<S>                                 <C>                                                 <C>
CURRENT ASSETS:
              Cash & cash equivalents                                        $              5,223

EQUIPMENT, net                                                                              1,500

                                                                               -------------------
                                                                             $              6,723
                                                                               ===================

                            LIABILITIES AND STOCKHOLDERS' EQUITY
                            ------------------------------------

CURRENT LIABILITY:
              Accrued expense                                                $              5,000

STOCKHOLDERS' EQUITY:
              Preferred stock, par value $.001 per share; 10,000,000
              shares authorized; no shares issued                                               -
              Common stock, par value $.001 per share; 50,000,000
              shares authorized; issued and outstanding 5,178,000                           5,178
              Additional paid-in capital                                                  324,822
              Deficit accumulated during the development stage                           (328,277)
                                                                               -------------------
                           Total stockholders' equity                                       1,723
                                                                               -------------------
                                                                             $              6,723
                                                                               ===================
</TABLE>



   The accompanying notes are an integral part of these financial statements

                                       10
<PAGE>






                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                            STATEMENTS OF OPERATIONS
            YERAS ENDED DECEMBER 31, 2002 & 2001 AND THE PERIOD FROM
                 JULY 11, 1996 (INCEPTION) TO DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                       YEARS ENDED                    JULY 11, 1996
                                                                       DECEMBER 31                   (INCEPTION) TO
                                                               2002                2001             DECEMBER 31, 2002
                                                                                (Re-stated)            (Re-stated)
                                                        --------------------  -----------------   ----------------------
<S>                                                            <C>                  <C>                    <C>
REVENUE                                                 $                 -   $               -   $                   -

COSTS AND EXPENSES
              General & Administrative Expenses                      39,891              49,591                 413,983
                                                        --------------------  -----------------   ----------------------

OPERATING LOSS                                                      (39,891)            (49,591)               (413,983)

Other income (expenses):
              Litigation                                                  -                   -                 100,000
              Miscellaneous                                           3,209             (12,238)                 (3,633)
                                                        --------------------  -----------------   ----------------------
                                                                      3,209             (12,238)                 96,367
LOSS BEFORE CUMULATIVE EFFECT OF A CHANGE IN
       ACCOUNTING POLICIES                                          (36,682)            (61,829)               (317,616)

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
       PRINCIPLES (NET OF INCOME TAX)                                     -                   -                  (4,261)
                                                        --------------------  -----------------   ----------------------

LOSS BEFORE INCOME TAX                                              (36,682)            (61,829)               (321,877)

              Provision of Income Tax                                   800                 800                   6,400
                                                        --------------------  -----------------   ----------------------

NET LOSS                                                $           (37,482)  $         (62,629)  $            (328,277)
                                                        ====================  =================   ======================


WEIGHTED AVERAGE SHARES OF COMMON STOCK
      OUTSTANDING, BASIC AND DILUTED                              5,178,000           5,178,000
                                                        ====================  =================

BASIC AND DILUTED NET LOSS PER SHARE                    $             (0.01)  $           (0.01)
                                                        ====================  =================
</TABLE>





   The accompanying notes are an integral part of these financial statements

                                       11
<PAGE>



                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
          FOR THE PERIOD JULY 11, 1996 (INCEPTION) TO DECEMBER 31 ,2002

<TABLE>
<CAPTION>

                                                    Common Stock                   Accumulated       Deficit
                                               ----------------------                 other     accumulated during       Total
                                               Number of       Par     Additional comprehansive  the development     Stockholders'
                                                 shares       value      Paid In    gain (loss)      stage          Equity (deficit)
                                                                         Capital    (Re-stated)    (Re-stated)
                                               ----------  ----------  ---------- ------------- ----------------- -----------------
<S>                                                <C>         <C>         <C>          <C>             <C>              <C>
Issuance of common stock for
compensation                                    5,000,000  $    5,000  $        - $           -  $             -  $           5,000

Net loss for the period from inception
(July 11, 1996) thru December 31, 1996                  -           -           -             -           (5,542)            (5,542)

Issuance of common stock                          155,000         155     309,845             -                -            310,000

Issuance of common stock for
compensation                                       23,000          23      14,977             -                -             15,000

Net loss for the year ended December 31, 1997           -           -           -             -         (218,248)          (218,248)

Net loss for the year ended December 31, 1998           -           -           -             -          (53,360)           (53,360)
                                               ----------  ----------  ---------- ------------- ----------------- -----------------
Balance at December 31, 1998                    5,178,000       5,178     324,822             -         (277,150)            52,850

Net income for the year ended December 31, 1999         -           -           -             -           77,435             77,435
                                               ----------  ----------  ---------- ------------- ----------------- -----------------
Balance at December 31, 1999                    5,178,000       5,178     324,822             -         (199,715)           130,285

Net loss for the year ended December 31, 2000           -           -           -             -          (28,451)           (28,451)

Unrealized loss on investments                          -           -            -       (2,746)               -             (2,746)

                                               ----------  ----------  ---------- ------------- ----------------- -----------------

Balance at December 31, 2000                    5,178,000       5,178     324,822        (2,746)        (228,166)            99,088

Net loss for the year ended December 31, 2001           -           -           -             -          (62,629)           (62,629)

Unrealized loss on investments                          -           -           -        (6,989)               -             (6,989)

Adjustment for sale of investments                      -           -           -         9,735                -              9,735

                                               ----------  ----------  ---------- ------------- ----------------- -----------------

Balance at December 31, 2001                    5,178,000       5,178     324,822             -         (290,795)            39,205

Net loss for the year ended December 31, 2002           -                       -             -          (37,482)           (37,482)

                                               ----------  ----------  ---------- ------------- ----------------- -----------------

Balance at December 31, 2002                    5,178,000  $    5,178  $  324,822 $           -  $      (328,277) $           1,723
                                               ==========  ==========  ========== ============= ================= =================
</TABLE>



   The accompanying notes are an integral part of these financial statements

                                       12
<PAGE>



                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                            STATEMENTS OF CASH FLOWS
            YERAS ENDED DECEMBER 31, 2002 & 2001 AND THE PERIOD FROM
                 JULY 11, 1996 (INCEPTION) TO DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                                       YEARS ENDED                  JULY 11, 1996
                                                                                       DECEMBER 31                 (INCEPTION) TO
                                                                                2002               2001           DECEMBER 31, 2002
                                                                                                 (Re-stated)
                                                                         -----------------  -----------------   --------------------
<S>                                                                             <C>                 <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
           Net loss                                                      $        (37,482)  $        (62,629)   $         (328,277)
           Adjustments to reconcile net loss to net cash used in
           operating activities:
                    Depreciation and amortization                                   1,000                317                11,241
                    Stock issued for services                                           -                  -                51,000
                    Write-off, other assets                                             -                  -                 4,864
                    Prepaid expense                                                     -                  -                     -
                    Accrued expense                                                 5,000                  -                 5,000
                                                                         -----------------  -----------------   -------------------
                    Net cash used in operating activities                         (31,482)           (62,312)             (256,172)
                                                                         -----------------  -----------------   -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
                    Investment in marketable securities                                 -                  -              (152,337)
                    Proceeds from sale of marketable securities                         -             59,203               131,168
                    Capital Expenditures                                           (2,500)                 -               (17,605)
                    Loss on sale of marketable securities                               -             12,762                21,169
                                                                         -----------------  -----------------   -------------------
                    Net cash provided by (used in) investing activities            (2,500)            71,965               (17,605)
                                                                         -----------------  -----------------   -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
                    Proceeds from issuance of shares                                    -                  -               279,000
                    Payments of related party loans                                 4,500                  -                     -
                                                                         -----------------  ---------------------------------------
                    Net cash provided by financing activities                    4,500.00                  -               279,000
                                                                         -----------------  -----------------   -------------------

NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS                                (29,482)             9,653                 5,223

CASH & CASH EQUIVALENTS, BEGINNING BALANCE                                         34,705             25,052                     -

                                                                         -----------------  -----------------   -------------------
CASH & CASH EQUIVALENTS, ENDING BALANCE                                  $          5,223   $         34,705    $            5,223
                                                                         =================  =================   ===================
</TABLE>




   The accompanying notes are an integral part of these financial statements

                                       13
<PAGE>




                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS



1.       DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

LitFunding Corp. (formerly, RP Entertainment, Inc.) (the "Company") was
incorporated in the State of California in July 1966 as a C corporation and in
1996 subsequently filed as a Nevada corporation. The Company's objective was to
develop or produce films and be involved in the entertainment industry in
general and in television programming in particular. Through December 31, 2002,
the Company was not working on any programming.

The accounting policies of the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable to development
stage companies.

Pursuant to a merger agreement (note 9), on March 3, 2003, the Company changed
its name from RP Entertainment, Inc. to LitFunding Corp.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents

The Company considers all liquid investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents.

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Equipment

Equipment is stated at cost. Depreciation is computed using the straight-line
method over the estimated useful life of the asset at five years.

Revenue Recognition

The Company's revenue recognition policies are in compliance with Staff
accounting bulletin (SAB) 101. Revenue will be recognized when services are
rendered. Generally, the Company will extend credit to its customers/clients and
would not require collateral. The Company will perform ongoing credit
evaluations of its customers/clients. The company did not earn any revenue
through December 31, 2002.

Income taxes

Deferred income tax assets and liabilities are computed annually for differences
between the financial statements and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted laws
and rates applicable to the periods in which the differences are expected to
affect taxable income (loss). Valuation allowance is established when necessary
to reduce deferred tax assets to the amount expected to be realized.



                                       14
<PAGE>



                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS


Issuance of shares for service

The Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable. During the year ended December 31, 2002, the Company did not issue
any shares for goods or services.

Basic and diluted net loss per share

Net loss per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". Basic net
loss per share is based upon the weighted average number of common shares
outstanding. Diluted net loss per share is based on the assumption that all
dilutive convertible shares and stock options were converted or exercised.
Dilution is computed by applying the treasury stock method. Under this method,
options and warrants are assumed to be exercised at the beginning of the period
(or at the time of issuance, if later), and as if funds obtained thereby were
used to purchase common stock at the average market price during the period.

Fair value of financial instruments

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying, as
financial instruments are a reasonable estimate of fair value.

Development Stage Enterprise

The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company`s planned principal operations
have not commenced, and, accordingly, no revenue has been derived during this
period.

Accounting developments

On July 20, 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." These statements make
significant changes to the accounting for business combinations, goodwill, and
intangible assets.

SFAS No. 141 establishes new standards for accounting and reporting requirements
for business combinations and will require that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001.
Use of the pooling-of-interests method will be prohibited. This statement is
effective for business combinations completed after June 30, 2001.

SFAS No. 142 establishes new standards for goodwill acquired in a business
combination and eliminates amortization of goodwill and instead sets forth
methods to periodically evaluate goodwill for impairment. Intangible assets with
a determinable useful life will continue to be amortized over that period. This
statement becomes effective January 1, 2002.

Adoption of SFAS No. 141 & 142 does not have a material impact on the Company's
financial statements.



                                       15
<PAGE>



                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS


In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations". SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. Management
does not expect this pronouncement will materially impact the Company's
financial position or results of operations.

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
was issued in August 2001. SFAS No. 144 is effective for fiscal years beginning
after December 15, 2001, and addresses financial accounting and reporting for
the impairment or disposal of long-lived assets. This statement supersedes SFAS
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and the accounting and reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," for the disposal of a segment of a business.
Adoption of SFAS No. 144 does not have a material impact on the Company's
financial statements.

In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS
145"). SFAS 145 rescinds the automatic treatment of gains or losses from
extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in APB Opinion No. 30, Reporting the Results of
Operations, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS
145 also requires sale-leaseback accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions and makes
various technical corrections to existing pronouncements. The provisions of SFAS
145 related to the rescission of FASB Statement 4 are effective for fiscal years
beginning after May 15, 2002, with early adoption encouraged. All other
provisions of SFAS 145 are effective for transactions occurring after May 15,
2002, with early adoption encouraged. The Company does not anticipate that
adoption of SFAS 145 will have a material effect on our earnings or financial
position.

In June 2002, the FASB issued SFAS No. 146 " Accounting for Costs Associated
with exit or Disposal Activities." This Statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." This Statement
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. Under Issue 94-3 a
liability for an exit cost as defined, was recognized at the date of an entity's
commitment to an exit plan. The Company does not anticipate that adoption of
SFAS 146 will have a material effect on our earnings or financial position.

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No. 72 and
Interpretation 9 thereto, to recognize and amortize any excess of the fair value
of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset. This statement
requires that those transactions be accounted for in accordance with SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." In addition, this statement amends SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," to include certain financial
institution-related intangible assets. The Company does not expect adoption of
SFAS No. 147 to have a material impact, if any, on its financial position,
results of operations or cash flows.



                                       16
<PAGE>



                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS


In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that upon
issuance of a guarantee, a guarantor must recognize a liability for the fair
value of an obligation assumed under a guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The
recognition provisions of FIN 45 are effective for any guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective for
financial statements of interim or annual periods ending after December 15,
2002. The adoption of FIN45 is not expected to have a material effect on the
Company's financial position, results of operations, or cash flows.

In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock Based
Compensation-Transition and Disclosure". SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock Based Compensation", to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used, on reported
results. The Statement is effective for the Companies' interim reporting period
ending January 31, 2003. The Companies do not expect the adoption of SFAS No.
148 to have a material impact on its financial position or results of operations
or cash flows.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." Interpretation 46 changes the criteria by which one
company includes another entity in its consolidated financial statements.
Previously, the criteria were based on control through voting interest.
Interpretation 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation requirements
apply to older entities in the first fiscal year or interim period beginning
after June 15, 2003. Certain of the disclosure requirements apply in all
financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The Company does not expect the
adoption to have a material impact to the Company's financial position or
results of operations.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current
period presentation.

3.           GOING CONCERN

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
Company as a going concern. However, the Company's has not earned any revenue
from its inception (July 11, 1996) through December 31, 2002 and the Company has
incurred net losses from inception through December 31 2002 of $328,277
including a net loss of $37,482 and $62,629 for the year ended December 31, 2002
and 2001, respectively. The continuing losses have adversely affected the
liquidity of the Company. Losses are expected to continue for the immediate
future.


                                       17
<PAGE>


                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS


The production and distribution of television programming is a highly
competitive business. The competition will affect the Company's ability to
obtain the services of preferred performers and other creative personnel. The
Company's plan of operation is to develop an on going source of referrals to
acquire scripts for film and television production and the rights to merchandise
products associated with future film and/or television productions of third
parties. To do this, the Company will seek to establish an aggressive marketing
plan both on the internet and conventionally. Currently, the Company owns
certain rights to the Hooters property as the result of the settlement of a
lawsuit. The settlement states that the Company will receive $750 an episode for
delivery of each of 196 episodes. The Company will receive $1,000 per episode
for the next 103 episodes over and above the first 196 episodes. There is no
assurance that any episode will ever happen.

In the event the Hooters property is made into a theatrical motion picture, the
Company will receive $250,000 upon the start of principal photography based upon
the Hooters property. All other rights on the final legal settlement goes to the
defendant (another entertainment company) including trademarks, logo and all
other revenue streams. For the settlement in 1999, the Company received $150,000
less $50,000 legal fee resulting in a net amount of $100,000 at the closing to
rescind all rights except as mentioned earlier to the Hooters property.

These factors raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. Management devoted considerable effort
from inception through the period ended December 31, 2002, towards (i) obtaining
additional equity and (ii) management of accrued expenses and accounts payable.
During the next twelve months, the Company plans to satisfy its cash
requirements by additional equity financing. The initial public offering for
$250,000 was withdrawn for lack of market support. If financing raised by a
private placement in compliance with SEC regulations cannot raise sufficient
equity, the Company will seek to be acquired. In that regard, the Company
consummated an acquisition of LitFunding Corp. on February 25, 2003 (note 9).

Management believes that the above actions will allow the Company to continue
operations through the next twelve months.

4.             STOCKHOLDERS EQUITY

On its formation, the Company issued 5,000,000 shares of common stock to its
founders at $.001 for organizing the business. In 1996, the Company issued
155,000 shares of common stock for cash at $2 per share for a total amount of
$310,000. Also in 1996, the Company issued 23,000 shares of common stock for
compensation of $15,000. As of December 31, 2002, there were 5,178,000 shares of
common stock issued and outstanding.

5.             INCOME TAXES

No provision was made for Federal income tax since the Company has significant
net operating loss carryforwards. Through December 31, 2002, the Company
incurred net operating losses for tax purposes of approximately $306,000.
Difference between the financial statement and tax losses consists primarily of
depreciation expense and was immaterial at December 31, 2002. The net operating
loss carryforwards may be used to reduce taxable income through the year 2017.
Net operating loss for carryforwards for the State of California are generally
available to reduce taxable income through the year 2007. The availability of
the Company's net operating loss carryforwards are subject to limitation if
there is a 50% or more positive change in the ownership of the Company's stock.
The provision for income taxes consists of the state minimum tax imposed on
corporations.


                                       18
<PAGE>


                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS


The net deferred tax asset balance, due to net operating loss carryforwards, as
of December 31, 2002 and 2001 were approximately $122,000 and $102,000,
respectively. A 100% valuation allowance has been established against the
deferred tax assets, as the utilization of the loss carrytforwards cannot
reasonably be assured.

6.          RELATED PARTY TRANSACTIONS

The Company had a receivable of $4,500 from an entity owned by a principal
shareholder. The receivable was non-interest bearing, unsecured. During the year
ended December 31, 2002, the amount was adjusted against expenses incurred by
the related entity in finding an acquisition target. Management and legal fees
charged to the Company for the two principal shareholders approximated $106,000
of which $80,000 occurred in 1997 and $11,000 in 1998. The shareholders were
paid approximately $5,000 in 1999, $10,000 in 2000 and $16,500 in 2001 as fees
for legal work performed. The shareholders received $2,000 for legal fees in the
year ended December 31, 2002.

7.           SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard No. 95.

The Company paid $800 for income tax in the year ended December 31, 2002 and
2001. Total amount paid for income taxes from July 11, 1996 (inception) through
December 31, 2002 amounted to $6,400. The Company paid $0 for interest during
the year ended December 31, 2002 and 2001 and from July 11, 1996 (inception)
through December 31, 2002.

8.           COMMITMENT

Operating Lease Commitments -

The Company does not lease office space. It currently operates out of the law
office of a shareholder.

9.           SUBSEQUENT EVENT

On February 25, 2003, the Company entered into an Agreement of Merger with
LitFunding Corp., a California corporation ("LFC"). LFC becomes a subsidiary
when the Articles of Merger between RP Acquisition Corp., the Company's wholly
owned subsidiary that was formed to facilitate the merger, and LFC are filed
with the Nevada Secretary of State. The charter documents of RP Acquisition
Corp. are the charter documents of the surviving corporation. Pursuant to the
Merger Agreement, the Company issued 7,592,250 shares of its common stock to the
LFC shareholders in exchange for all the issued and outstanding shares of LFC
common stock.



                                       19
<PAGE>



                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS


The merger transaction between LFC and RPAC was consummated pursuant to an
Agreement and Plan of Merger dated February 21, 2003 (the "Merger Agreement").
Pursuant to the Merger Agreement, the current officers of the Company resigned
and the officers of LFC were appointed as officers of the Company. Upon the
closing of the merger, the current officers of the Company agreed to have their
4,500,000 shares of the Company's common stock cancelled.

LFC is in the business of providing funding to qualifying plaintiffs and
plaintiffs' attorneys for the payment of costs and expenses of litigation,
principally in the areas of personal injury, medical malpractice, product
liability, toxic torts, and employment.

On March 3, 2003, the Company changed its name from RP Entertainment, Inc. to
LitFunding Corp.

The acquisition of LitFunding Corp. will be accounted for as a reverse
acquisition under the purchase method of accounting since the shareholders of
LitFunding Corp. obtained control of the consolidated entity. Accordingly, the
merger of the two companies will be recorded as a recapitalization of LitFunding
Corp., with LitFunding Corp. being treated as the continuing entity. The
historical financial statements to be presented will be those of LitFunding
Corp. The continuing company has retained December 31 as its fiscal year end.

Unaudited Pro-forma revenue, net income and income per share assuming the
transaction had been completed at the beginning of the periods reported on,
pro-forma financial results would be as follows:

                                               Year ended December 31
                                               ----------------------
                                                    (Unaudited)
                                                    -----------
                                          2002                      2001
                                          ----                      ----
           Revenue                     $ 3,137,480              $    205,424
           Net loss for the period     $ 3,197,589              $  3,079,488
           Loss per share              $      0.39              $       0.37

10.           RESTATMENT

Subsequent to the issuance of the Company's consolidated financial statements
for the year ended December 31, 2001, the Company determined errors in
accounting and presentation of the Company's financial statements.

The cost basis of the marketable securities at December 31, 2001 was $71,965.
Through August 2001, the Company had recorded an accumulated unrealized loss of
$9,735. In August 2001, all of the investments in marketable securities were
sold and the Company recorded a realized loss of $ 3,027. However, the Company
did not adjust the accumulated unrealized loss amount, which resulted in
understatement of loss by $9,735.



                                       20
<PAGE>



                                LITFUNDING CORP.
                       (FORMERLY, RP ENTERTAINMENT, INC.)
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS



The Company's 2001 financial statements have been restated to correct the errors
above-mentioned. The effect of the correction of these errors is as follows:



                                                    As Previously
    Year ended, December 31, 2001                     Reported        Restated
                                                    -------------   ------------

    STATEMENT OF SHAREHOLDERS' EQUITY:

     Accumulated deficit                            $   (281,060)   $  (290,795)
     Accumulated other comprehensive income         $     (9,735)             -


    STATEMENT OF OPERATIONS:

     Other income and expense:
       Loss from sale of securities                 $      3,027    $    12,762
         Net loss                                   $     52,894    $    62,629

         Loss per share                             $       0.01    $      0.01


    STATEMENT OF CASH FLOWS:

    Net cash used by operating activities           $    (52,577)   $   (62,312)
        Net cash provided by investing activities   $     62,230    $    71,965




                                       21
<PAGE>





ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

   None

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

    The executive officers and directors of the Company are as follows:


   NAME                          AGE            POSITION
   ----                          ---            --------

   Douglas S. Borghi             55             Director, President, Treasurer

   John Holt Smith               60             Director, Chief Executive
                                                Officer, Secretary

         Douglas S. Borghi has been president and director of RPE since August
1996. Mr. Borghi has been an independent writer of screen plays and other
literary material such as short stories and novels for the past 5 years.

         John Holt Smith has been engaged in the private practice of law in Los
Angeles as Smith & Associates for the past 5 years, except for the past 8 months
during which he has acted as a partner of Kelly, Lytton and Vann. Mr. Smith is a
graduate of Vanderbilt University with a BA degree in 1963 and a JD degree in
1966.


   Each of the Company's directors is elected at the annual meeting of
stockholders and serves until the next annual meeting or until his successor has
been elected and qualified. Holders of common stock can elect a number of
members of the board of directors proportionate to the percentage of shares held
by each of them constitute of the total outstanding shares. Vacancies in the
board of directors are filled by a majority vote of the remaining members of the
board of directors who were elected by the same class of shareholders.
Currently, there are no standing compensation arrangements for board of director
members. Executive officers of the Company are elected by and serve at the
discretion of the board of directors.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

   Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors, and persons who own more than 10% of the registered class
of the Company's equity securities to file reports of ownership with the
Securities and Exchange Commission. Officers, directors and greater than 10%
stockholders are required by the regulations of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file.


   Based solely on a review of the Forms 3 and 4 furnished to the Company, the
Company believes that all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with, except
that: 1) John Holt Smith, a director, failed to timely file Form 3, 2) Douglas
S. Borghi, a director, failed to timely file Form 3. These Forms 3 were filed
with the Securities and Exchange Commission prior to April 14, 2002.

   The Company, which first became subject to Section 16(a) reporting
requirements in October 2001, has now initiated a reporting compliance program
that will substantially eliminate the possibility of inadvertent reporting
oversights in the future.


                                       22
<PAGE>

   Form 5 is not required to be filed if there are not previously unreported
transactions or holdings to report. Nevertheless, the Company is required to
disclose the name of directors, executive officers and 10% shareholders who did
not file a Form 5, unless the Company has obtained a written statement that no
filing is due. The Company has been advised by those required to file Form 5
that no filings were due.

ITEM 10. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

   The following table furnishes compensation information for the year ended
December 31, 2001, for the chief executive officer; no other executive officers
earned more than $100,000 during the year ended December 31, 2001. During fiscal
2001 none of the Company's officers received, and as of March 31, 2002, did not
hold any stock options or SARs which have been granted in connection with their
service to the Company in any capacity.

                           SUMMARY COMPENSATION TABLE

(a)      Annual Compensation.

                                           ANNUAL COMPENSATION
                              -----------------------------------------
NAME AND                      FISCAL  OTHER ANNUAL
PRINCIPAL POSITION             YEAR      SALARY     BONUS  COMPENSATION
----------------------------  ------  ------------  -----  ------------

Douglas S. Borghi               2001      $ -0-      -0-           -0-
John Holt Smith                 2001        -0-      -0-           -0-

(b)      Option/Stock Appreciation Rights. No Stock options were granted during
         2001 or free standing SARs to executive offices of the Company.

(c)      Aggregated Option/SAR Exercises and Fiscal Year End Option/SAR Value
         Table. There was no exercise during 2001 of stock options or SARs.

(d)      Long Term Incentive Plan ("LTIP") Awards Table. The Company did not
         make any long term incentive plan awards to any executive officer in
         2001.

(e)      Compensation of Directors. No directors of the Company received cash
         compensation for their services as directors during 2001.

(f)      Employment Contracts. The Company has no employment contracts.



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   The following table shows beneficial ownership of capital stock of the
Company at March 31, 2002, for the directors and officers of the Company, and
for each beneficial owner of 5% or more of either class of the Company's common
stock.


                                                    SHARES OF COMMON STOCK
                                                    ----------------------
NAME                                        NUMBER              % OF CLASS
----                                        ------              ----------

Douglas S. Borghi                           2,000,000           39%

John Holt Smith                             2,500,000           48%



   (1) The address for the officers and directors is the corporate office of the
Company located at 1900 Avenue of the Stars, Suite 1450, Los Angeles, California
90067.

   (2) There are no shares of preferred stock outstanding.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None


                                       23
<PAGE>


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(A)  EXHIBIT LIST


EXHIBIT NUMBER                     DESCRIPTION
--------------                     -----------

23.1     Consent of Gil Ostrick of Oppenheim and Ostrick, CPA's



(B)  REPORTS ON FORM 8-K.

   The same Form 8-K filed on March 11, 2003, as is described on the cover.



                                       24
<PAGE>



                                   SIGNATURES

   In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date:  February 15, 2003
                                  RP ENTERTAINMENT, INC.



                                  By:  /s/ Douglas S. Borghi
                                      -----------------------------------
                                      Douglas S. Borghi
                                      President and Chairman of the Board


   In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

/s/ Douglas S. Borghi                 February 15, 2003
---------------------------
Douglas S. Borghi
Director, President and Treasurer

/s/ John Holt Smith                   February 15, 2003
---------------------------
John Holt Smith
Director, Chief Executive Officer
and Secretary



                                       25
<PAGE>



CERTIFICATIONS
--------------

I, Douglas S. Borghi, certify that:

1. I have reviewed this annual report on Form 10-KSB of RP ENTERTAINMENT, INC.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

        a) designed such disclosure controls and procedures to ensure that
        material information relating to the registrant, including its
        consolidated subsidiaries, is made known to us by others within those
        entities, particularly during the period in which this annual report is
        being prepared;

        b) evaluated the effectiveness of the registrant's disclosure controls
        and procedures as of a date within 90 days prior to the filing date of
        this annual report (the "Evaluation Date"); and

        c) presented in this annual report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

        a) all significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have identified
        for the registrant's auditors any material weaknesses in internal
        controls; and

        b) any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 31, 2003



/s/ Douglas S. Borghi
-----------------------
Douglas S. Borghi
President and Treasurer




                                       26
<PAGE>



CERTIFICATIONS
--------------

I, John Holt Smith, certify that:

1. I have reviewed this annual report on Form 10-KSB of RP ENTERTAINMENT, INC.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

        a) designed such disclosure controls and procedures to ensure that
        material information relating to the registrant, including its
        consolidated subsidiaries, is made known to us by others within those
        entities, particularly during the period in which this annual report is
        being prepared;

        b) evaluated the effectiveness of the registrant's disclosure controls
        and procedures as of a date within 90 days prior to the filing date of
        this annual report (the "Evaluation Date"); and

        c) presented in this annual report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

        a) all significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have identified
        for the registrant's auditors any material weaknesses in internal
        controls; and

        b) any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 31, 2003



/s/ John Holt Smith
--------------------------------------
John Holt Smith
Chief Executive Officer and Secretary