U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549


                                 FORM 10-KSB


[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 2001, or

[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
act of 1934 for the transition period from to


                         Commission File No. 0-23015


                     RED HORSE ENTERTAINMENT CORPORATION
         (Name of Small Business Issuer as specified in its charter)


                 Nevada                                 87-0450232
    (State or Other Jurisdiction of                   (IRS Employer
     Incorporation or Organization)                Identification No.)

                11828 La Grange Avenue, Los Angeles, CA 90025
            (Address of Principal Executive Offices and Zip Code)

Issuer's Telephone Number:  (310) 473-0213

Securities registered under Section 12(b) of the Act:  None

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

                        Common Stock, Par Value $0.001

Check whether the issuer (1) filed all reports  required to be filed by sections
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or such  shorter
period  that the issuer 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 in this form, and no disclosure will be contained, to the best of
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. [X]

The issuer's  revenues  (consisting only of interest income) for its most recent
fiscal year: $9,109.

The aggregate  market value of voting stock held by  non-affiliates  computed on
the basis of the bid price (no asked) on February 15, 2002, was $14,929.

As of December 31, 2001, the Registrant had outstanding 455,073 shares of Common
Stock, par value $0.001.

Documents incorporated by reference:  None.



<PAGE>



                              TABLE OF CONTENTS


ITEM NUMBER AND CAPTION                                                   Page

Part I

1.    Description of Business                                             3

2.    Description of Properties                                           6

3.    Legal Proceedings                                                   6

4.    Submission of Matters to a Vote of Security Holders                 6

Part II

5.    Market for Common Equity and Related Stockholder Matters            6

6.    Management's Discussion and Analysis of Financial Condition         7
      and Results of Operations

7.    Financial Statements                                                8

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

Part III

9.    Directors, Executive Officers, Promoters and Control                8
      Persons; Compliance with Section 16(a) of the Exchange Act

10.   Executive Compensation                                              9

11.   Security Ownership of Certain Beneficial Owners and Management      10

12.   Certain Relationships and Related Transactions                      11

13.   Exhibits and Reports on Form 8-K                                    11

Signatures                                                                13



                                      2

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                                    PART I

                       ITEM 1. DESCRIPTION OF BUSINESS

General

For the past six years the Company has had no active  business  operations,  and
has been  seeking to acquire an interest  in a business  with  long-term  growth
potential. The Company currently has no commitment or arrangement to participate
in a business  and cannot now predict what type of business it may enter into or
acquire.  It is emphasized  that the business  objectives  discussed  herein are
extremely  general and are not intended to be  restrictive  on the discretion of
the Company's management.

There  are no plans or  arrangements  proposed  or under  consideration  for the
issuance  or  sale  of  additional  securities  by  the  Company  prior  to  the
identification of an acquisition candidate. Consequently, management anticipates
that it may be able to participate in only one potential  business venture,  due
primarily to the Company's limited capital. This lack of diversification  should
be  considered  a  substantial  risk  because it will not permit the  Company to
offset potential losses from one venture against gains from another.

Selection of a Business

The  Company  anticipates  that  businesses  for  possible  acquisition  will be
referred by various sources, including its officers and directors,  professional
advisors,  securities  broker-dealers,   venture  capitalists,  members  of  the
financial  community,  and others who may  present  unsolicited  proposals.  The
Company  will not  engage  in any  general  solicitation  or  advertising  for a
business  opportunity,  and will rely on personal  contacts of its  officers and
directors and their affiliates,  as well as indirect  associations  between them
and other business and professional  people. By relying on "word of mouth",  the
Company may be limited in the number of potential  acquisitions it can identify.
While it is not presently  anticipated that the Company will engage unaffiliated
professional  firms  specializing in business  acquisitions or  reorganizations,
such firms may be retained if  management  deems it in the best  interest of the
Company.

Compensation  to a finder or business  acquisition  firm may take various forms,
including one-time cash payments,  payments based on a percentage of revenues or
product sales volume, payments involving issuance of securities (including those
of the Company), or any combination of these or other compensation arrangements.
Consequently,  the Company is currently  unable to predict the cost of utilizing
such  services.  Management  of the Company  will not receive a finder's fee for
locating a business opportunity.

The Company will not restrict its search to any particular  business,  industry,
or  geographical  location,  and  management  reserves the right to evaluate and
enter into any type of business in any location.  The Company may participate in
a newly organized business venture or a more established  company entering a new
phase of growth or in need of additional  capital to overcome existing financial
problems. Participation in a new business venture entails greater risks since in
many  instances  management  of such a venture will not have proved its ability,
the eventual  market of such  venture's  product or services  will likely not be
established, and the profitability of the venture will be unproved and cannot be
predicted  accurately.  If the Company  participates in a more  established firm
with  existing  financial  problems,  it may be  subjected  to risk  because the
financial  resources  of the Company may not be adequate to eliminate or reverse
the circumstances leading to such financial problems.

In seeking a business venture, the decision of management will not be controlled
by an attempt to take  advantage of any  anticipated  or  perceived  appeal of a
specific industry,  management group, product, or industry, but will be based on
the business  objective of seeking  long-term  capital  appreciation in the real
value of the  Company.  The Company will not acquire or merge with a business or
corporation in which the Company's officers,  directors,  or promoters, or their
affiliates or associates, have any direct or indirect ownership interest.

The analysis of new businesses will be undertaken by or under the supervision of
the officers and directors. In analyzing prospective businesses, management will
consider,  to the extent applicable,  the available  technical,  financial,  and
managerial  resources;  working capital and other prospects for the future;  the
nature of present  and  expected  competition;  the quality  and  experience  of


                                      3

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management services which may be available and the depth of that management; the
potential for further research,  development, or exploration;  the potential for
growth and expansion; the potential for profit; the perceived public recognition
or  acceptance  of  products,   services,   or  trade  or  service  marks;  name
identification; and other relevant factors.

The decision to participate in a specific  business may be based on management's
analysis  of the  quality of the other  firm's  management  and  personnel,  the
anticipated  acceptability of new products or marketing  concepts,  the merit of
technological changes, and other factors which are difficult, if not impossible,
to analyze through any objective criteria. It is anticipated that the results of
operations of a specific firm may not necessarily be indicative of the potential
for the future  because of the  requirement  to  substantially  shift  marketing
approaches,   expand   significantly,   change  product   emphasis,   change  or
substantially augment management, and other factors.

The Company will analyze all available factors and make a determination based on
a composite of  available  facts,  without  reliance on any single  factor.  The
period  within  which  the  Company  may  participate  in a  business  cannot be
predicted  and will  depend  on  circumstances  beyond  the  Company's  control,
including the  availability of businesses,  the time required for the Company to
complete its  investigation  and analysis of  prospective  businesses,  the time
required to prepare  appropriate  documents  and  agreements  providing  for the
Company's participation, and other circumstances.

Acquisition of a Business

In implementing a structure for a particular business  acquisition,  the Company
may  become a party to a merger,  consolidation,  or other  reorganization  with
another  corporation  or entity;  joint venture;  license;  purchase and sale of
assets;  or purchase and sale of stock,  the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a  business  through  the  purchase  of  minority  stock  positions.  On  the
consummation  of a  transaction,  it is likely that the present  management  and
shareholders of the Company will not be in control of the Company.  In addition,
a majority or all of the  Company's  directors  may, as part of the terms of the
acquisition transaction,  resign and be replaced by new directors without a vote
of the Company's shareholders.

In  connection  with  the  Company's  acquisition  of a  business,  the  present
shareholders  of the  Company,  including  officers  and  directors,  may,  as a
negotiated  element of the  acquisition,  sell a portion or all of the Company's
Common  Stock  held  by  them  at a  significant  premium  over  their  original
investment in the Company.  As a result of such sales,  affiliates of the entity
participating  in the business  reorganization  with the Company would acquire a
higher percentage of equity ownership in the Company. Management does not intend
to  actively  negotiate  for or  otherwise  require  the  purchase of all or any
portion of its stock as a condition to or in connection with any proposed merger
or  acquisition.  Although the Company's  present  shareholders  did not acquire
their  shares  of  Common  Stock  with a view  towards  any  subsequent  sale in
connection with a business  reorganization,  it is not unusual for affiliates of
the entity  participating in the  reorganization to negotiate to purchase shares
held by the present  shareholders  in order to reduce the number of  "restricted
securities"  held by persons no longer  affiliated  with the Company and thereby
reduce the potential adverse impact on the public market in the Company's Common
Stock  that  could  result  from  substantial  sales of such  shares  after  the
restrictions no longer apply.  Public  investors will not receive any portion of
the premium that may be paid in the foregoing  circumstances.  Furthermore,  the
Company's  shareholders may not be afforded an opportunity to approve or consent
to any particular stock buy-out transaction.

In the event sales of shares by present  shareholders of the Company,  including
officers and  directors,  is a  negotiated  element of a future  acquisition,  a
conflict of interest may arise because  directors  will be  negotiating  for the
acquisition  on behalf of the Company and for sale of their shares for their own
respective accounts. Where a business opportunity is well suited for acquisition
by the Company,  but affiliates of the business  opportunity  impose a condition
that  management  sell their  shares at a price which is  unacceptable  to them,
management  may not  sacrifice  their  financial  interest  for the  Company  to
complete the transaction. Where the business opportunity is not well suited, but
the price  offered  management  for their  shares  is high,  Management  will be
tempted to effect the acquisition to realize a substantial  gain on their shares
in the  Company.  Management  has not  adopted  any  policy  for  resolving  the
foregoing potential conflicts,  should they arise, and does not intend to obtain
an independent  appraisal to determine whether any price that may be offered for
their shares is fair.  Stockholders  must rely,  instead,  on the  obligation of
management  to fulfill  its  fiduciary  duty under  state law to act in the best
interests of the Company and its stockholders.

                                      4

<PAGE>



It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration  under applicable federal and
state securities laws. In some  circumstances,  however, as a negotiated element
of the transaction,  the Company may agree to register such securities either at
the time  the  transaction  is  consummated,  under  certain  conditions,  or at
specified times thereafter.  Although the terms of such registration  rights and
the number of securities,  if any, which may be registered  cannot be predicted,
it may be  expected  that  registration  of  securities  by the Company in these
circumstances would entail substantial  expense to the Company.  The issuance of
substantial  additional  securities  and their  potential  sale into any trading
market  which may  develop in the  Company's  securities  may have a  depressive
effect on such market.

While the actual  terms of a  transaction  to which the  Company  may be a party
cannot  be  predicted,  it may be  expected  that the  parties  to the  business
transaction  will find it desirable to structure the  acquisition as a so-called
"tax-free"  event under  sections 351 or 368(a) of the Internal  Revenue Code of
1986, (the "Code").  In order to obtain tax-free  treatment under section 351 of
the Code, it would be necessary  for the owners of the acquired  business to own
80% or more of the voting  stock of the  surviving  entity.  In such event,  the
shareholders  of the  Company  would  retain  less  than 20% of the  issued  and
outstanding  shares  of the  surviving  entity.  Section  368(a)(1)  of the Code
provides for  tax-free  treatment of certain  business  reorganizations  between
corporate  entities  where  one  corporation  is  merged  with or  acquires  the
securities or assets of another corporation.  Generally, the Company will be the
acquiring corporation in such a business reorganization, and the tax-free status
of the transaction will not depend on the issuance of any specific amount of the
Company's voting securities.  It is not uncommon,  however, that as a negotiated
element of a  transaction  completed in reliance on section  368, the  acquiring
corporation  issue  securities  in such an amount that the  shareholders  of the
acquired  corporation will hold 50% or more of the voting stock of the surviving
entity.  Consequently,  there is a substantial possibility that the shareholders
of the Company  immediately  prior to the transaction would retain less than 50%
of the  issued  and  outstanding  shares  of the  surviving  entity.  Therefore,
regardless of the form of the business  acquisition,  it may be anticipated that
stockholders  immediately prior to the transaction will experience a significant
reduction in their percentage of ownership in the Company.

Notwithstanding the fact that the Company is technically the acquiring entity in
the foregoing circumstances, generally accepted accounting principles will
ordinarily require that such transaction be accounted for as if the Company had
been acquired by the other entity owning the business and, therefore, will not
permit a write-up in the carrying value of the assets of the other company.

The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.

The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require specific
representations and warranties by all of the parties thereto, will specify
certain events of default, will detail the terms of closing and the conditions
which must be satisfied by each of the parties prior to such closing, will
outline the manner of bearing costs if the transaction is not closed, will set
forth remedies on default, and will include miscellaneous other terms.

Operation of Business After Acquisition

The  Company's  operation  following  its  acquisition  of a  business  will  be
dependent on the nature of the business and the interest  acquired.  The Company
is unable to predict  whether the Company  will be in control of the business or
whether  present  management  will be in control of the  Company  following  the
acquisition.  It may be expected that the business will present  various  risks,
which cannot be predicted at the present time.

Governmental Regulation

It is  impossible  to predict the  government  regulation,  if any, to which the
Company may be subject until it has acquired an interest in a business.  The use
of assets  and/or  conduct of  businesses  which the Company  may acquire  could
subject it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest,  management  will  endeavor to  ascertain,  to the
extent of the limited  resources of the Company,  the effects of such government


                                      5

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regulation on the prospective business of the Company. In certain circumstances,
however,  such as the  acquisition of an interest in a new or start-up  business
activity,  it may not be  possible to predict  with any degree of  accuracy  the
impact of  government  regulation.  The  inability  to  ascertain  the effect of
government   regulation  on  a  prospective  business  activity  will  make  the
acquisition of an interest in such business a higher risk.

Competition

The  Company  will be  involved  in  intense  competition  with  other  business
entities,  many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no  assurance  that  the  Company  will  be  successful  in  obtaining  suitable
investments.

Employees

The Company is a  development  stage  company and  currently  has no  employees.
Executive  officers,  who are not compensated for their time  contributed to the
Company,  will  devote only such time to the affairs of the Company as they deem
appropriate,  which is  estimated  to be  approximately  20 hours  per month per
person.  Management of the Company expects to use  consultants,  attorneys,  and
accountants as necessary, and does not anticipate a need to engage any full-time
employees  so long as it is  seeking  and  evaluating  businesses.  The need for
employees and their availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business industry.

                      ITEM 2. DESCRIPTION OF PROPERTIES

The Company  utilizes  office space at 11828 La Grange Avenue,  Los Angeles,  CA
90025,  provided  by a private  company  owned by Wayne M.  Rogers,  an officer,
director and principal shareholder of the Company. The Company does not pay rent
for this office space. The Company reimburses Mr. Rogers for clerical and office
expenses,  such as telephone charges,  copy charges,  overnight courier service,
travel expenses, and similar costs incurred on Company matters.

                          ITEM 3. LEGAL PROCEEDINGS

The  Company  is not a party to any  legal  proceedings,  and to the best of its
knowledge, no such proceedings by or against the Company have been threatened.

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

No matter was submitted to a vote of security  holders in the fourth  quarter of
2001.

                                   PART II

       ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Although  quotations  for the Company's  common stock appear on the OTC Bulletin
Board, there is no established trading market for the common stock. For the past
two  calendar  years  transactions  in the common stock can only be described as
sporadic.  Consequently, the Company is of the opinion that any published prices
cannot be attributed to a liquid and active trading market and,  therefore,  are
not indicative of any meaningful market value.

The following table sets forth for the respective  periods  indicated the prices
of the Company's Common Stock in the  over-the-counter  market,  as reported and
summarized by the OTC Bulletin Board. Such prices are based on inter- dealer bid
and asked prices, without markup, markdown,  commissions, or adjustments and may
not represent actual transactions.

                                      6

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Calendar Quarter Ended               High Bid                   Low Bid

March 31, 2000                        $0.625                    $0.625
June 30, 2000                         $0.625                    $0.625
September 30, 2000                    $0.625                    $0.250
December 31, 2000                     $0.625                    $0.625

March 31, 2001                        $0.625                    $0.625
June 30, 2001                         $0.625                    $0.625
September 30, 2001                       *                         *
December 31, 2001                        *                         *

* There were no quotations  for the Company's  common stock  reported on the OTC
Bulletin Board during the last two quarters of 2001.

All shares of common stock  outstanding  may be sold without  restriction  under
Rule 144(k)  promulgated under the Securities Act of 1933, except 138,074 shares
which are held by officers,  directors,  and controlling  stockholders ("Control
Shares").  Control Shares may be sold subject to complying with all of the terms
and conditions of Rule 144, except the one-year  holding period,  which has been
satisfied.

Since its inception,  no dividends have been paid on the Company's common stock.
The Company  intends to retain any earnings for use in its business  activities,
so it is not  expected  that any  dividends on the common stock will be declared
and paid in the foreseeable future.

At February  15,  2002,  there were  approximately  152 holders of record of the
Company's Common Stock.

     ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS

Results of Operations

Years Ended December 31, 2001 and 2000

The  Company  had no revenue  from  continuing  operations  for the years  ended
December 31, 2001 and 2000.

General and  administrative  expenses for the years ended  December 31, 2001 and
2000,  consisted of general  corporate  administration,  legal and  professional
expenses,  and  accounting  and auditing  costs.  These expenses were $9,575 and
$6,579 for 2001 and 2000,  respectively.  General and administrative expenses in
2001  were  greater  than  in  2000  primarily  due to the  number  of  business
opportunities reviewed during the year in which administrative expenditures were
required.

The Company had no interest  expense in 2001 or 2000.  Interest  income resulted
from the investment of funds in short-term,  liquid cash  equivalents.  Interest
income was $9,109 and $11,656 in 2001 and 2000, respectively.

As a result of the foregoing factors, the Company realized a net loss of $466 in
2001, as compared to a net gain of $5,077 for 2000.

Liquidity and Capital Resources

At December  31,  2001,  the Company had working  capital of  $237,205.  Working
capital  consisted  substantially of short-term  investments,  and cash and cash
equivalents.  Management  believes  that the  Company  has  sufficient  cash and
short-term investments to meet the anticipated needs of the Company's operations
through at least the next 12 months. However, there can be no assurances to that
effect,  as the Company has no  significant  revenues and the Company's need for
capital  may  change  dramatically  if it  acquires  an  interest  in a business
opportunity  during that period.  The  Company's  current  operating  plan is to


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handle the  administrative  and reporting  requirements  of a public company and
search for  potential  businesses,  products,  technologies  and  companies  for
acquisition.  At  present,  the Company has no  understandings,  commitments  or
agreements  with respect to the acquisition of any business  venture,  and there
can be no assurance that the Company will identify a business  venture  suitable
for  acquisition  in the future.  Further,  there can be no  assurance  that the
Company would be successful in  consummating  any acquisition on favorable terms
or that it will be able to profitably manage the business venture it acquires.

Forward-Looking Statement Notice

When used in this  report,  the words  "may,"  "will,"  "expect,"  "anticipate,"
"continue,"   "estimate,"  "project,"  "intend,"  and  similar  expressions  are
intended to identify  forward-looking  statements  within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 regarding events,  conditions,  and financial trends that may affect the
Company's future plans of operations,  business strategy, operating results, and
financial  position.  Persons  reviewing  this  report  are  cautioned  that any
forward-looking  statements  are not  guarantees of future  performance  and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors.  Such factors are discussed under the headings "Item 1.  Description of
Business,"  and "Item 6.  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations,"  and also include general economic factors
and conditions  that may directly or indirectly  impact the Company's  financial
condition or results of operations.

                         ITEM 7. FINANCIAL STATEMENTS

The  financial  statements  of the  Company  appear  at the end of  this  report
beginning with the Index to Financial Statements on page 14.

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

There have been no changes in or disagreements with accountants in the past four
years.

                                   PART III

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

Directors and Officers

The following  table sets forth the names,  ages, and positions with the Company
for each of the directors and officers of the Company.


Name                      Age   Positions                                  Since

Wayne M. Rogers           67    President and Director                     1992

Bill Rogers               31    Vice President and Director                1994

Jack M. Gertino           63    Secretary and Director                     1992

All  executive  officers are elected by the Board and hold office until the next
Annual Meeting of  stockholders  or until their  successors are duly elected and
qualified.

The  following is  information  on the business  experience of each director and
officer.

Wayne M.  Rogers is a  well-known  professional  actor who has been  involved in
investment  activities  for over 15 years.  Mr.  Rogers has been a  director  of
several  privately held companies,  including  Almaden Vineyards and the Pantry,
Inc.,  since  1990.  He has also been a director of Global  Intellicom,  P.H.C.,
Inc., Electronic Data Controls, Inc., Extek Micro- Systems, and Wadell Equipment
Global. Currently, Mr. Rogers is the general partner of Balanced Value Fund, LP,

                                      8

<PAGE>



a limited  partnership that advises and invests in middle market companies.  Mr.
Rogers  is also the  general  partner  of The  Insight  Fund,  LP,  and the sole
stockholder  of the  corporate  general  partner of The Pinnacle  Fund,  LP, and
Triangle Bridge Group, LP. The Insight Fund, LP is a stockholder of the Company.
Wayne M. Rogers is the father of Bill Rogers.

Bill Rogers has been a student and music  composer  for the past five years.  He
has composed  the music for a number of  television  shows,  a  commercial,  and
television  movie,  and  is  involved  in  development  of  musical  scores  and
compositions for those uses. Bill Rogers is the son of Wayne M. Rogers.

Jack M Gertino, has been a private investor and business consultant in Salt Lake
City,  Utah, for the past five years.  From June 1995 through  October 1996, Mr.
Gertino was an owner of a Tunex Service Center franchise in Layton,  Utah, which
offers automotive  Tune-up services.  He is currently  pursuing a number of real
estate  projects,  including  the recent  purchase and operation of a commercial
office building in Salt Lake City. From 1986 to the present, he has served as an
officer  and  director  of Comet  Technologies,  Inc.,  a  publicly  held  shell
corporation  seeking a business  acquisition.  Since  February 1997, he has also
served as an officer and director of Lazarus  Industries,  Inc., a publicly held
shell corporation seeking a business acquisition.

Other Shell Company Activities

Mr.  Gertino is currently a director of Comet  Technologies,  Inc.,  and Lazarus
Industries,  Inc.,  both  publicly  held shell  corporations  seeking a business
acquisition.  The  possibility  exists  that  one or  more of the  officers  and
directors of the Company could become officers  and/or  directors of other shell
companies  in the future,  although  they have no  intention  of doing so at the
present time. Certain conflicts of interest are inherent in the participation of
the Company's  officers and  directors as  management in other shell  companies,
which may be difficult,  if not impossible,  to resolve in all cases in the best
interests  of the  Company.  Failure  by  management  to conduct  the  Company's
business in its best  interests  may result in  liability of  management  of the
Company to the shareholders.

                       ITEM 10. EXECUTIVE COMPENSATION

Wayne M. Rogers and Jack M. Gertino, both officers and directors of the Company,
have received no compensation over the past seven years from the Company for the
services  they have  rendered in  evaluating  prospective  acquisitions  for the
Company.  Options  which each of them held to purchase  25,000  shares of common
stock at an  exercise  price of $0.50 per share  expired in  February  2000.  As
incentive to these  officers to continue their efforts on behalf of the Company,
the board of  directors  approved  in May 2000,  the  issuance of new options to
Messrs.  Rogers and Gertino.  Each of them now hold  options to purchase  50,000
shares of common stock at an exercise price of $0.625 per share, which expire in
May 2009.  The exercise price was determined on the basis of the last sale price
for the  Company's  common  stock in the public  market prior to approval of the
options,  which  was also the bid  price  for the  common  stock on the date the
options were granted.

The Company has no  agreement  or  understanding,  express or implied,  with any
officer, director, or principal stockholder,  or their affiliates or associates,
regarding employment with the Company or compensation for services.  The Company
has no plan, agreement, or understanding,  express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
the  issuance  to such  persons of any shares of the  Company's  authorized  and
unissued common stock. There is no understanding  between the Company and any of
its present  stockholders  regarding  the sale of a portion or all of the common
stock currently held by them in connection with any future  participation by the
Company in a business. There are no other plans, understandings, or arrangements
whereby any of the Company's officers,  directors, or principal stockholders, or
any of their  affiliates or  associates,  would receive funds,  stock,  or other
assets in connection with the Company's participation in a business. No advances
have been made or contemplated by the Company to any of its officers, directors,
or principal stockholders, or any of their affiliates or associates.

There is no policy that prevents management from adopting a plan or agreement in
the future that would provide for cash or stock based  compensation for services
rendered to the Company.

On acquisition of a business, it is possible that current management will resign
and be replaced by persons associated with the business  acquired,  particularly
if the Company participates in a business by effecting a stock exchange, merger,

                                      9

<PAGE>



or  consolidation.  In the event that any member of current  management  remains
after  effecting a business  acquisition,  that  member's  time  commitment  and
compensation  will likely be adjusted  based on the nature and  location of such
business and the services required, which cannot now be foreseen.

The following table sets forth certain  information  with respect to unexercised
options  held by the Named  Executive  Officers  as of  December  31,  2001.  No
outstanding options held by the Named Executive Officers were exercised in 2001.
All unexercised options expire in May 2009.


Name and                   Number of Securities         Value of Unexercised
Principal              Underlying Unexercised Options   In-the-Money Options
Position                       at FY End (#)              at FY End ($) (1)

                        Exerciseable/Unexerciseable  Exerciseable/Unexerciseable

Wayne M. Rogers,  President     50,000/ -0-                   -0-/ -0-

Jack M. Gertino,  Secretary     50,000/ -0-                   -0-/ -0-


(1) This value is determined on the basis of the difference between the high bid
price at December 31, 2001,  of the  securities  underlying  the options and the
exercise price.

   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth as of  February  15,  2001,  the  number  and
percentage of the 455,073 shares of outstanding common stock which, according to
the information  supplied to the Company,  were  beneficially  owned by (i) each
person who is currently a director of the Company,  (ii) each executive officer,
(iii) all current directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company,  is the beneficial  owner
of more than 5% of the outstanding common stock. Except as otherwise  indicated,
the  persons  named in the table  have sole  voting and  dispositive  power with
respect to all shares  beneficially  owned,  subject to community  property laws
where applicable.

                                   Common                            Percent of
                                   Shares           Options            Class

Name and Address

Wayne M. Rogers (1)(2)             51,349            50,000            20.1
11828 La Grange Avenue
Los Angeles, CA  90025

Jack M. Gertino (1)                24,485            50,000            14.7
3374 Homestead Road
Park City, UT  84060

Bill Rogers (1)                      -0-              -0-               -0-
11828 La Grange Avenue
Los Angeles, CA  90025

The Insight Fund, LP (3)           62,240             -0-              13.7
C/o Wayne M Rogers & Co.
11828 La Grange Avenue
Los Angeles, CA  90025


                                      10

<PAGE>




Susan Harris Family Trust          51,867             -0-              11.4
C/o Wayne M Rogers & Co.
11828 La Grange Avenue
Los Angeles, CA  90025

Daniel J. Sullivan, III            41,494             -0-               9.1
PO Box 11687
Aspen, CO 81612

C. Anthony Thomas                  41,494             -0-               9.1
   and Glenn Susan Thomas
10100 Santa Monica Blvd., Suite 950
Los Angeles, CA  90067

Paul Junger Witt Family Trust      51,867             -0-              11.4
C/o Wayne M Rogers & Co.
11828 La Grange Avenue
Los Angeles, CA  90025

All Executive officers and         138,074          100,000            42.9
  Directors as a Group (4)

(1) Messrs.  Rogers, Gertino and Rogers are all of the officers and directors of
the Company.

(2) The share figure  includes  44,087 shares held by the Wayne M. Rogers Family
Trust,  in which Mr.  Rogers is the trustee,  and 3,631 shares held of record by
Mr. Rogers' spouse.

(3)  Wayne  M.  Rogers  is the  general  partner  of The  Insight  Fund  LP and,
therefore,  may be deemed to have voting and investment  control over the shares
of stock owned by it.

(4) This figure  includes the shares held by The Insight Fund LP,  because Wayne
M. Rogers may be deemed to have voting and investment control over such shares.

           ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In May of 1999, as incentive to the officers to continue their efforts on behalf
of the Company,  the board of directors  approved the issuance of new options to
Messrs.  Rogers and Gertino.  Each of them now hold  options to purchase  50,000
shares of common stock at an exercise price of $0.625 per share, which expire in
May 2009.

The Company  utilizes  office space at 11828 La Grange Avenue,  Los Angeles,  CA
90025,  provided  by a private  company  owned by Wayne M.  Rogers,  an officer,
director and principal shareholder of the Company. The Company does not pay rent
for this office space. The Company reimburses Mr. Rogers for clerical and office
expenses,  such as telephone charges,  copy charges,  overnight courier service,
travel expenses, and similar costs incurred on Company matters

                                   ITEM 13.
                       EXHIBITS AND REPORTS ON FORM 8-K

Copies of the following documents are included as exhibits pursuant to Item 601,
Regulation S-B.

                                      11

<PAGE>



Exhibits.


 Exhibit   SEC Ref.         Title of Document
   No.     No.

    1      (3)(i)           Articles of Incorporation, as amended *

    2      (3)(ii)          By-Laws *

    3      (10)             Option granted to Wayne M. Rogers **

    4      (10)             Option granted to Jack M. Gertino **


* These  exhibits are  incorporated  herein by this  reference to the  Company's
Registration  Statement  on Form 10-SB filed with the  Securities  and  Exchange
Commission on August 21, 1997.

** These  exhibits are  incorporated  herein by this  reference to the Company's
Quarterly  Report on Form 10-QSB for the quarter ended June 30, 1999, filed with
the Securities and Exchange Commission on August 13, 1999.

FORM 8-K FILINGS

No reports on Form 8-K were filed in the last calendar quarter of 2001.


                                      12

<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.

                       RED HORSE ENTERTAINMENT CORPORATION


Date: March 4, 2002                       By: /s/ Wayne M. Rogers, President

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




Dated:  March 4, 2002                    /s/ Wayne M. Rogers, Director



Dated:  March 4, 2002                    /s/ Bill Rogers, Director



Dated:  March 4, 2002                    /s/ Jack Gertino, Director







                                      13

<PAGE>



                     RED HORSE ENTERTAINMENT CORPORATION
                        (A Development Stage Company)





                               C O N T E N T S


Independent Auditors' Report............................................... 15

Balance Sheet.............................................................. 16

Statements of Operations................................................... 17

Statements of Stockholders' Equity......................................... 18

Statements of Cash Flows................................................... 21

Notes to the Financial Statements.......................................... 23


                                      14

<PAGE>








INDEPENDENT AUDITORS' REPORT


The Board of Directors
Red Horse Entertainment Corporation
(A Development Stage Company)
Salt Lake City, Utah

We have  audited  the  accompanying  balance  sheet of Red  Horse  Entertainment
Corporation  (a  development  stage  company)  as of  December  31, 2001 and the
related statements of operations,  stockholders'  equity, and cash flows for the
years  ended  December  31,  2001 and 2000  and  from the date of  inception  on
December 4, 1987 through December 31, 2001.  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 audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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 audits 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 Red  Horse  Entertainment
Corporation  (a  development  stage  company)  as of  December  31, 2001 and the
results of its  operations  and its cash flows for the years ended  December 31,
2001  and  2000 and from the date of  inception  on  December  4,  1987  through
December 31, 2001 in conformity with generally accepted accounting principles.




HJ & Associates, LLC
Salt Lake City, Utah
February 2, 2002





                                      15

<PAGE>



                     RED HORSE ENTERTAINMENT CORPORATION
                        (A Development Stage Company)
                                Balance Sheet


                                    ASSETS

                                                                 December 31,
                                                                     2001

CURRENT ASSETS

  Cash                                                           $    237,205
                                                                 ------------

   Total Current Assets                                               237,205
                                                                 ------------

PROPERTY AND EQUIPMENT (Note 3)                                             -
                                                                 ------------

   TOTAL ASSETS                                                  $    237,205
                                                                 ============


                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts payable                                               $          -
                                                                 ------------

   Total Current Liabilities                                                -
                                                                 ------------

STOCKHOLDERS' EQUITY

  Common stock; 50,000,000 shares authorized at $0.001 par value;
   455,073 shares issued and outstanding                                  455
  Additional paid-in capital                                          423,353
  Deficit accumulated during the development stage                   (186,603)
                                                                 ------------

   Total Stockholders' Equity                                         237,205
                                                                 ------------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $    237,205
                                                                 ============



   The accompanying notes are an integral part of the financial statements.


                                      16

<PAGE>



                     RED HORSE ENTERTAINMENT CORPORATION
                        (A Development Stage Company)
                           Statements of Operations

                                                                       From
                                                                   Inception on
                                                                   December 4,
                                         For the Years Ended          1987 to
                                            December 31,           December 31,
                                      ------------------------------------------
                                          2001         2000            2001
                                      ------------ ------------  ---------------

REVENUES                              $          - $          -  $          -

EXPENSES

  Bad debt expense                               -            -        35,000
  Outside services                             949          505        10,872
  Professional fees                          6,165        5,239        88,229
  Rent                                           -            -         6,545
  Travel                                         -            -        18,336
  Administrative expenses                    2,461          835        31,323
  Depreciation                                   -            -         1,546
  Amortization                                   -            -           472
  Interest                                       -            -           418
                                      ------------ ------------  ------------

   Total Expenses                            9,575        6,579       192,741
                                      ------------ ------------  ------------

OTHER INCOME

  Interest income                            9,109       11,656       141,262
                                      ------------ ------------  ------------

   Total Other Income                        9,109       11,656       141,262
                                      ------------ ------------  ------------

NET INCOME (LOSS) BEFORE
 DISCONTINUED OPERATIONS                      (466)       5,077       (51,479)

LOSS FROM DISCONTINUED
 OPERATIONS (Note 6)                             -            -      (911,314)

GAIN ON DISPOSAL OF
 DISCONTINUED OPERATIONS
 (Note 6)                                        -            -       776,190
                                      ------------ ------------  ------------

NET INCOME (LOSS)                     $       (466)$      5,077  $   (186,603)
                                      ============ ============  ============

BASIC INCOME PER SHARE                $      (0.00)$       0.01
                                      ============ ============

WEIGHTED AVERAGE
 SHARES OUTSTANDING                        455,073      455,073
                                      ============ ============

   The accompanying notes are an integral part of the financial statements.


                                      17

<PAGE>



                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)
                        Statements of Stockholders' Equity

                                                                      Deficit
                                                                    Accumulated
                                  Common Stock         Additional    During The
                            -----------------------     Paid-in     Development
                             Shares        Amount       Capital        Stage
                            ----------   ----------   -----------   ------------

Balances, December 4, 1987           -   $        -   $         -   $         -

Shares issued to
 incorporators for cash
 $0.60 per share - restated     13,333           13         7,987             -

Net loss for period ended
 December 31, 1987                   -            -             -          (690)
                            ----------   ----------   -----------   ------------

Balances, December 31, 1987     13,333           13         7,987          (690)

Shares issued at public offering
 $7.50 per share restated       38,537           39       289,001             -

Cost of public offering              -            -       (84,056)            -

Sale of warrants                     -            -           100             -

Net loss for year ended
 December 31, 1988                   -            -             -        (4,538)
                            ----------   ----------   -----------   ------------

Balances, December 31, 1988     51,870           52       213,032        (5,228)

Net loss for year ended
 December 31, 1989                   -            -             -        (5,073)
                            ----------   ----------   -----------   ------------

Balances, December 31, 1989     51,870           52       213,032       (10,301)

Net loss for year ended
 December 31, 1990                   -            -             -       (46,921)
                            ----------   ----------   -----------   ------------

Balances, December 31, 1990     51,870           52       213,032       (57,222)

Net loss for year ended
 December 31, 1991                   -            -             -        (8,472)
                            ----------   ----------   -----------   ------------

Balances, December 31, 1991     51,870   $       52   $   213,032   $   (65,694)
                            ----------   ----------   -----------   ------------



   The accompanying notes are an integral part of the financial statements.


                                        18

<PAGE>



                       RED HORSE ENTERTAINMENT CORPORATION
                           (A Development Stage Company)
             Statements of Stockholders' Equity (Deficit) (Continued)


                                                                      Deficit
                                                                    Accumulated
                                  Common Stock         Additional    During The
                            -----------------------     Paid-in     Development
                             Shares        Amount       Capital        Stage
                            ----------   ----------   -----------   ------------

Balances, December 31, 1991     51,870   $       52   $   213,032   $   (65,694)

Shares issued to acquire
 100% of 127 Main
 Street, Inc.                   51,869           52           (52)            -

Net loss for year ended
 December 31, 1992                   -            -             -    (1,877,973)
                            ----------   ----------   -----------   ------------

Balances, December 31, 1992    103,739          104       212,980    (1,943,667)

Adjustment for fractional
 shares in 30-for-1
 reverse split                     122            -             -             -

Exercise of warrants           351,212          351       210,373             -

Net income for year ended
 December 31, 1993                   -            -             -     1,731,675
                            ----------   ----------   -----------   ------------

Balances, December 31, 1993    455,073          455       423,353      (211,992)

Net income for year ended
 December 31, 1994                   -            -             -         2,917
                            ----------   ----------   -----------   ------------

Balances, December 31, 1994    455,073          455       423,353      (209,075)

Net income for year ended
 December 31, 1995                   -            -             -         8,222
                            ----------   ----------   -----------   ------------

Balances, December 31, 1995    455,073          455       423,353      (200,853)

Net income for year ended
 December 31, 1996                   -            -             -         7,486
                            ----------   ----------   -----------   ------------

Balances, December 31, 1996    455,073          455       423,353      (193,367)

Net loss for the year ended
 December 31, 1997                   -            -             -          (683)
                            ----------   ----------   -----------   ------------

Balance, December 31, 1997     455,073   $      455   $   423,353   $  (194,050)
                            ----------   ----------   -----------   ------------

   The accompanying notes are an integral part of the financial statements.


                                        19

<PAGE>



                       RED HORSE ENTERTAINMENT CORPORATION
                           (A Development Stage Company)
             Statements of Stockholders' Equity (Deficit) (Continued)


                                                                      Deficit
                                                                    Accumulated
                                  Common Stock         Additional    During The
                            -----------------------     Paid-in     Development
                             Shares        Amount       Capital        Stage
                            ----------   ----------   -----------   ------------

Balance, December 31, 1997     455,073   $      455   $   423,353   $  (194,050)

Net income for the year ended
 December 31, 1998                   -            -             -         2,753
                            ----------   ----------   -----------   ------------

Balance, December 31, 1998     455,073          455       423,353      (191,297)

Net income for the year ended
 December 31, 1999                   -            -             -            83
                            ----------   ----------   -----------   ------------

Balance, December 31, 1999     455,073          455       423,353      (191,214)

Net income for the year ended
 December 31, 2000                   -            -             -         5,077
                            ----------   ----------   -----------   ------------

Balance, December 31, 2000     455,073          455       423,353      (186,137)

Net loss for the year ended
 December 31, 2001                   -            -             -          (466)
                            ----------   ----------   ------------  ------------

Balance, December 31, 2001     455,073   $      455   $   423,335   $  (186,603)
                            ==========   ==========   ============  ============

   The accompanying notes are an integral part of the financial statements.


                                        20

<PAGE>



                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)
                             Statements of Cash Flows

<TABLE>
<S>                                                 <C>           <C>          <C>
                                                                                  From
                                                                               Inception on
                                                        For the Years Ended    December 4,
                                                           December 31,           1987 to
                                                    -------------------------- December 31,
                                                         2001         2000         2001
                                                    ------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES

  Net income (loss)                                 $       (466) $      5,077 $   (186,603)
  Adjustments to reconcile net loss to net cash
   provided (used) by operating activities:
   Depreciation                                                -             -        1,546
   Amortization                                                -             -          472
   Gain on disposal of discontinued operations                 -             -     (776,190)
  Changes in operating assets and liabilities:
   Increase (decrease) in accounts payable                     -          (189)      -
   Increase in accrued expenses                                -             -      286,334
                                                    ------------  ------------ ------------
     Net Cash Provided (Used) by Operating
      Activities                                            (466)        4,888     (674,441)
                                                    ------------  ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES

  Organization expenses                                        -             -      (10,925)
  Sale of fixed assets                                         -             -        4,000
  Purchase of equipment and leasehold improvements             -             -   (1,255,237)
                                                    ------------  ------------ ------------
   Net Cash (Used) by Investing Activities                     -             -   (1,262,162)
                                                    ------------  ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES

  Proceeds from debentures                                     -             -    1,750,000
  Proceeds from stock issuance                                 -             -      212,984
  Sale warrants                                                -             -          100
  Exercise of warrants                                         -             -      210,724
                                                    ------------  ------------ ------------
   Net Cash Provided by Financing Activities                   -             -    2,173,808
                                                    ------------  ------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS                       (466)        4,888      237,205

CASH AND CASH EQUIVALENTS AT BEGINNING
 OF PERIOD                                               237,671       232,783            -
                                                    ------------  ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF
 PERIOD                                             $    237,205  $    237,671 $    237,205
                                                    ============  ============ ============
</TABLE>

   The accompanying notes are an integral part of the financial statements.


                                        21

<PAGE>



                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)
                       Statements of Cash Flows (Continued)

                                                                       From
                                                                    Inception on
                                             For the Years Ended    December 4,
                                                December 31,           1987 to
                                         -------------------------- December 31,
                                              2001         2000         2001
                                         ------------- ------------ ------------

SUPPLEMENTAL CASH FLOW INFORMATION

  Cash paid for interest                  $        41  $          - $        418
  Cash paid for income taxes              $         -  $          - $          -

NON-CASH INVESTING ACTIVITIES

  Sale of subsidiary (Note 6)             $         -  $          - $  2,023,767




   The accompanying notes are an integral part of the financial statements.


                                        22

<PAGE>



                     RED HORSE ENTERTAINMENT CORPORATION
                        (A Development Stage Company)
                      Notes to the Financial Statements
                              December 31, 2001


NOTE 1 -  ORGANIZATION AND CORPORATE HISTORY

          The  Company  was  incorporated  in the State of Nevada on December 4,
          1987, under the name of Quantus  Capital,  Inc. Since its inception it
          has not engaged in a significant  business  activity and is considered
          to be a development  stage company.  The articles of  incorporation of
          the  Company  state that its  purpose is to engage in the  business of
          making   investments  and   acquisition  of  assets,   properties  and
          businesses and to engage in any an all other lawful business.

          Pursuant to a special meeting of  shareholders  held on March 9, 1992,
          the Company made the following changes:  (1) To issue 1,556,000 shares
          of stock to acquire 100% of the outstanding  shares of 127 Main Street
          Corporation,  (the  former  Subsidiary)  a Delaware  Corporation.  (2)
          Adopted a plan of recapitalization  whereby the issued and outstanding
          shares of the Company were reverse split on a one for five basis.  The
          shares  outstanding were reduced from 7,780,000 to 1,556,000.  (3) The
          articles of incorporation  were amended changing the name to Red Horse
          Entertainment  Corporation.  All  references  to number of shares have
          been retroactively restated to reflect the reverse stock split.

          During September 1992, the former  Subsidiary began operating a casino
          in Central City,  Colorado,  however,  two weeks later operations were
          terminated (Note 6).

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          a.  Recognition of Income

          The Company  recognizes  income and  expenses on the accrual  basis of
          accounting. The fiscal year of the Company ends on December 31.

          b.  Basic Income Per Share

          The  computation of basic income per share of common stock is based on
          the weighted  average number of shares issued and  outstanding  during
          the period of the financial statements as follows:

                                                          December 31,
                                                  ---------------------------
                                                         2001           2000
                                                  ------------   ------------

         Numerator - income (loss)                $       (466)  $      5,077
         Denominator - weighted average number of
           shares outstanding                          455,073        455,073
                                                  ------------   ------------

         Income (loss) per share                  $      (0.00)  $       0.01
                                                  ============   ============



                                      23

<PAGE>



                     RED HORSE ENTERTAINMENT CORPORATION
                        (A Development Stage Company)
                      Notes to the Financial Statements
                              December 31, 2001


NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          c.  Provision for Taxes

          At December 31, 2001, the Company had net operating loss carryforwards
          of  approximately  $187,000 that may be offset  against future taxable
          income through 2021. No tax benefit has been reported in the financial
          statements  because  the  Company  believes  there is a 50% or greater
          change  the  carryforwards  will  expire  unused.   Accordingly,   the
          potential tax benefits of the  carryforwards are offset by a valuation
          allowance of the same amount.

          The income tax  benefit  differs  from the amount  computed at federal
          statutory rates of approximately 38% as follows:

                                                       For the Years Ended
                                                          December 31,
                                                      2001           2000
                                                  -------------  -------------

          Income tax benefit at statutory rate    $         177  $           -
          Change in valuation allowance                    (177)             -
                                                  -------------  -------------

                                                  $           -  $           -
                                                  =============  =============

          Deferred tax assets (liabilities) are comprised of the following:

                                                       For the Years Ended
                                                          December 31,
                                                      2001           2000
                                                  -------------  -------------

          Income tax benefit at statutory rate    $      70,910  $      70,732
          Change in valuation allowance                 (70,910)       (70,732)
                                                  -------------  -------------

                                                  $           -  $           -
                                                  =============  =============


          Due to the  change in  ownership  provisions  of the Tax Reform Act of
          1986,  net  operating  loss   carryforwards  for  Federal  income  tax
          reporting purposes are subject to annual limitations. Should a changed
          in ownership occur, net operating loss carryforwards may be limited as
          to use in future years.

          d.  Cash and Cash Equivalents

          The Company considers all highly liquid investments with a maturity of
          three months or less when purchased to be cash equivalents.


                                      24

<PAGE>



                     RED HORSE ENTERTAINMENT CORPORATION
                        (A Development Stage Company)
                      Notes to the Financial Statements
                              December 31, 2001

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          e.  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.

NOTE 3 -  PROPERTY AND EQUIPMENT

          Property and equipment consists of the following at December 31, 2001:

                                                                  December 31,
                                                                      2001
                                                                 -------------
          Office equipment                                       $       1,071

          Less accumulated depreciation                                 (1,071)
                                                                 -------------

                Total Property and Equipment                     $           -
                                                                 =============

          Equipment   is  being   depreciated   over  eight   years   using  the
          straight-line  method.  Depreciation  expense  for  the  years  ending
          December  31,  2001 and 2000 was $-0- and $- 0-,  respectively.  As of
          December 31, 2001, equipment has been fully depreciated.

NOTE 4 -  PUBLIC OFFERING

          In 1988,  the Company  sold 38,537 units to the general  public.  Each
          unit  consisted  of one share of common stock and one "A" warrant that
          could be used to  purchase  one share of common  stock for  $22.50 per
          share within two years of the effective date of the offering,  and one
          "B" warrant  that could have been used to purchase one share of common
          stock for  $37.50 per  share,  which  expired  November  8, 1993.  The
          Company received cash of $289,040 as a result of this public offering.

NOTE 5 -  WARRANTS OUTSTANDING

          As  a  result  of  the  Company's  public  offering,  the  underwriter
          purchased a warrant  that  entitles  him to purchase  3,853 units at a
          price of  $9.375  per unit in 1994  warrants  were not  exercised  and
          expired.

          In  conjunction  with the  Company's  acquisition  of 127 Main  Street
          Corporation,  the  shareholders  of 127 Main Street  Corporation  were
          granted warrants or options to purchase an aggregate of 453,093 shares
          of common stock of the parent  Company for a period of five years at a
          price of $9.00 per share.  As of December 31, 1996,  351,212  warrants
          have been exercised wherein the Company has received cash of $210,724,
          the remaining warrants expired in 1997.


                                      25

<PAGE>



                     RED HORSE ENTERTAINMENT CORPORATION
                        (A Development Stage Company)
                      Notes to the Financial Statements
                              December 31, 2001


NOTE 6 -  DISCONTINUED OPERATIONS

          On September 17, 1993, the Company decided to terminate the operations
          of its former subsidiary, 127 Main Street Corporation,  and the casino
          operations located at 127 Main Street,  Central City,  Colorado.  Cost
          over  runs  resulting  from  site   conditions  made  it  economically
          unfeasible  to continue  operations.  Consequently,  the  facility was
          abandoned  and all lease  options  and  improvements  were  lost.  The
          following is a summary of income  (loss) from  operations  of 127 Main
          Street Corporation:

                 Revenue - 1992                                  $     40,029
                 Revenue - 1993                                         4,982
                                                                 ------------

                   Total Revenue                                       45,011

                 Operating expenses - 1992                            670,363
                 Operating expenses - 1993                            285,962
                                                                 ------------

                   Total Operating Expenses                           956,325
                                                                 ------------

                     Loss from Discontinued Operations           $   (911,314)
                                                                 ============

                 Write off of assets - 1992                      $ (1,246,097)
                 Gain on assumption of debt - 1993                  2,022,287
                                                                 ------------

                     Gain on Disposal of Discontinued Operations $    776,190
                                                                 ============

NOTE 7 -  DISPOSAL OF SUBSIDIARY - RELATED PARTY TRANSACTION

          On March 19, 1994, the Company entered into a stock purchase agreement
          whereby two officers of the Company  purchased all of the  outstanding
          shares  of  the   Company's   former   subsidiary,   127  Main  Street
          Corporation. The shares were sold for the nominal amount of $500.

NOTE 8 -  REVERSE STOCK SPLIT

          On August 2, 1993, the shareholders of the Company approved a 30-for-1
          reverse stock split.  The financial  statements  have been restated to
          reflect  this change  retroactively  to the  beginning  of the periods
          presented.





                                      26

<PAGE>


                      RED HORSE ENTERTAINMENT CORPORATION
                         (A Development Stage Company)
                       Notes to the Financial Statements
                               December 31, 2001


NOTE 9 -  STOCK OPTIONS

          On  February  1,  1994,  the  Company  issued  options  to  two of its
          officers,  for each one to purchase 25,000 shares of common stock at a
          price of $0.50 per share.The  options  expired in February  1999,  and
          were replaced  with two new options to purchase  50,000 shares each at
          an exercise price of $0.625 per share, which expire in May 2009.

NOTE 10 - CONCENTRATIONS OF RISK

          The Company maintains a money market investment account which accounts
          for  $228,014 of the balance of cash.  The full account is not insured
          by the FDIC,  nor is it  guaranteed  by the bank.  The  investment  is
          subject to investment risk, including potential principle loss.

                                      27