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, 2002, 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: $2,150.

The aggregate  market value of voting stock held by  non-affiliates  computed on
the basis of the high bid price (no asked) on March 5, 2003, was $10,422.

As of December 31, 2002, 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 on Accounting         8
      and Financial Disclosure

Part III

9.    Directors, Executive Officers, Promoters and Control Persons;       8
      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                      12

13.   Exhibits and Reports on Form 8-K                                    12

14.   Controls and Procedures                                             12

Signatures                                                                13

                                       2

<PAGE>


                                     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 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
management services which may be available and the depth of that management; the
potential for further research,  development, or exploration;  the potential for

                                       3

<PAGE>

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.

                                       5

<PAGE>


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
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.  In
2002 two  executive  officers  devoted 120 hours,  or an average of 10 hours per
month per person,  to the  affairs of the  Company and it is expected  they will
make a similar time  commitment in 2003.  These  officers may devote  additional
time in the future as they deem  appropriate  seeking  and  acquiring a business
venture.  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 costs associated with the
use of the office space are deemed insignificant,  as Mr. Rogers uses the office
space almost entirely for other business  purposes.  The Company  reimburses Mr.
Rogers for rent, clerical, and office expenses,  such as telephone charges, copy
charges,  overnight  courier  service,  and  similar  costs  incurred on Company
matters.  In  2002,  the  total  payments  to Mr.  Rogers  for  such  items  was
approximately $1,500.

                            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
2002.

                                     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,  do
not indicate any meaningful market value.

                                       6

<PAGE>

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.

Calendar Quarter Ended               High Bid                   Low Bid

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

March 31, 2002                          *                          *
June 30, 2002                           *                          *
September 30, 2002                      *                          *
December 31, 2002                       *                          *

* There were no quotations  for the Company's  common stock  reported on the OTC
Bulletin Board in 2002 and 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 241,808 shares,
which are held by  officers,  directors,  and holders of more than 10 percent of
the  outstanding  common stock  ("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 March 5,  2003,  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, 2002 and 2001

The  Company  had no revenue  from  continuing  operations  for the years  ended
December 31, 2002 and 2001.

General and  administrative  expenses for the years ended  December 31, 2002 and
2001, consisted of general corporate administration, officer compensation, legal
and  professional  expenses,  and accounting and auditing costs.  These expenses
were  $32,891  and  $9,575  for  2002  and  2001,   respectively.   General  and
administrative  expenses in 2002 were higher than in 2001  primarily  due to the
accrual of  officer  compensation  in 2002  resulting  from the time  devoted by
management to the affairs of the Company as compared to 2001.

The Company had no interest  expense in 2002 or 2001.  Interest  income resulted
from the investment of funds in short-term,  liquid cash  equivalents.  Interest
income was $2,150 and  $9,109 in 2002 and 2001,  respectively.  The  substantial
decline in interest  income is attributable to the fall in interest rates during
2002.

As a result of the foregoing factors, the Company realized a net loss of $30,741
in 2002, as compared to a net loss of $466 for 2001.

                                       7

<PAGE>


Liquidity and Capital Resources

At December  31,  2002,  the Company had working  capital of  $206,464.  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
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 15.

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

There are no reportable changes in or disagreements with accountants.

                                    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           69    President and Director                   1992

Bill Rogers               32    Vice President and Director              1994

Jack M. Gertino           64    Secretary and Director                   1992

                                       8

<PAGE>

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,
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.  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,
received no  compensation  for services to the Company  prior to 2002 due to the
limited amount of time spent on Company matters,  which management  believes was
adequately  compensated through the issuance of options.  The board of directors
approved in May 1999 the issuance of 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.

Based on the time commitment by Messrs.  Rogers and Gertino in 2002, the Company
began to  accrue  compensation  for their  services.  These  executive  officers
devoted  120  hours,  or an  average  of 10 hours per month per  person,  to the
affairs  of the  Company  and it is  expected  they  will  make a  similar  time
commitment in 2003. The Company is compensating  Messrs.  Rogers and Gertino for
their  services at the rate of $100 per hour.  Consequently,  Mr. Rogers and Mr.
Gertino  each accrued  $12,000 of  compensation  from the Company in 2002,  or a
total of  $24,000.  This is all the  executive  compensation  paid in 2002.  The
Company expects that it will continue to accrue compensation for these executive
officers  in 2003 at the rate of $100 per hour,  and it is  estimated  that they
will each devote approximately 10 hours per month to the affairs of the Company.
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.

                                       9

<PAGE>

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,
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,  2002.  No
outstanding options held by the Named Executive Officers were exercised in 2002.
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              50,000/ -0-                      -0-/ -0-
  President

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


(1) This value is determined on the basis of the difference between the high bid
price during the calendar  quarter ended  December 31, 2002,  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 March 5, 2003, 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.

                                       10

<PAGE>





                                   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-
916 N. Beverly Drive
Beverly Hills, CA  90210

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

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
16830 Ventura Blvd., #300
Encino, CA  91436

C. Anthony Thomas                  41,494            -0-              9.1
   and Glenn Susan Thomas
1888 Century Park East, #400
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 (3)

(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.

                                       11

<PAGE>

             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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 costs associated with the
use of the office space are deemed insignificant,  as Mr. Rogers uses the office
space almost entirely for other business  purposes.  The Company  reimburses Mr.
Rogers for rent, clerical, and office expenses,  such as telephone charges, copy
charges,  overnight  courier  service,  and  similar  costs  incurred on Company
matters.  In  2002,  the  total  payments  to Mr.  Rogers  for  such  items  was
approximately $1,500.

                                    ITEM 13.
                        EXHIBITS AND REPORTS ON FORM 8-K

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

Exhibits.

 Exhibit      SEC Ref.     Title of Document
   No.           No.

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

   3.02        (3)(ii)     By-Laws *

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

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

  99.01         (99)       Certification Pursuant to Section 906 of the
                           Sarbanes-Oxley Act

* 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 2002.

                                    ITEM 14.
                             CONTROLS AND PROCEDURES

With the participation of management,  the Company's chief executive officer and
chief  financial  officer  evaluated  the  Company's   disclosure  controls  and
procedures on December 31, 2002. Based on this  evaluation,  the chief executive
officer and the chief financial officer  concluded that the disclosure  controls
and  procedures  are  effective in connection  with the Company's  filing of its
annual report on Form 10-KSB for the year ended December 31, 2002.

Subsequent to December 31, 2002,  through the date of this filing of Form 10-KSB
for the year ended December 31, 2002, there have been no significant  changes in
the Company's  internal  controls or in other  factors that could  significantly
affect  these  controls,  including  any  significant  deficiencies  or material
weaknesses of internal controls that would require corrective action.

                                       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 18, 2003               By:  /s/ Wayne M. Rogers
                                          Chief Executive and Financial Officer

     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 18, 2003              /s/ Wayne M. Rogers, Director



Dated:  March 18, 2003              /s/ Bill Rogers, Director



Dated:  March 6, 2003               /s/ Jack Gertino, Director


                                       13

<PAGE>


              CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Wayne M. Rogers, certify that:

1.  I have reviewed this annual report on Form 10-KSB of Red Horse Entertainment
Corporation;

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 or not 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 18, 2003                  By:  /s/ Wayne M. Rogers
                                           Chief Executive and Financial Officer

                                       14

<PAGE>


                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)

                              Financial Statements

                                December 31, 2002

                                      INDEX


Independent Auditors' Report .............................................. 16

Balance Sheet.............................................................. 17

Statements of Operations .................................................. 18

Statements of Stockholders' Equity ........................................ 19

Statements of Cash Flows .................................................. 22

Notes to the Financial Statements ......................................... 24

                                       15

<PAGE>








                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
Red Horse Entertainment Corporation
(A Development Stage Company)
Los Angeles, California

We have  audited  the  accompanying  balance  sheet of Red  Horse  Entertainment
Corporation  (a  development  stage  company)  as of  December  31, 2002 and the
related statements of operations,  stockholders'  equity, and cash flows for the
years  ended  December  31,  2002 and 2001  and  from the date of  inception  on
December 4, 1987 through December 31, 2002.  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 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  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, 2002 and the
results of its  operations  and its cash flows for the years ended  December 31,
2002  and  2001 and from the date of  inception  on  December  4,  1987  through
December 31, 2002 in conformity with accounting principles generally accepted in
the United States of America.

/s/ HJ Associates & Consultants, LLP

HJ Associates & Consultants, LLP
Salt Lake City, Utah
February 11, 2003

                                       16

<PAGE>


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


                                     ASSETS

                                                                  December 31,
                                                                      2002
                                                                 ------------
CURRENT ASSETS

  Cash                                                           $    230,464
                                                                 ------------

   Total Current Assets                                               230,464
                                                                 ------------

   TOTAL ASSETS                                                  $    230,464
                                                                 ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts payable                                               $          -
  Accrued compensation                                                 24,000
                                                                 ------------

   Total Current Liabilities                                           24,000
                                                                 ------------

STOCKHOLDERS' EQUITY

  Common stock; 50,000,000 shares authorized at $0.001 par
  value; 455,073 shares issued and outstanding Additional                 455
  paid-in capital Deficit accumulated during the                      423,353
  development stage                                                  (217,344)
                                                                 ------------
   Total Stockholders' Equity                                         206,464
                                                                 ------------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $    230,464
                                                                 ============

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

                                       17

<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,
                                        -----------------------
                                              2002         2001           2002
                                        ----------   ----------   ------------

REVENUES                                $        -   $        -   $          -

EXPENSES

  Officer compensation                      24,000            -         24,000
  Bad debt expense                               -            -         35,000
  Outside services                           2,234          949         13,106
  Professional fees                          5,699        6,165         93,928
  Rent                                           -            -          6,545
  Travel                                         -            -         18,336
  Administrative expenses                      958        2,461         32,281
  Depreciation                                   -            -          1,546
  Amortization                                   -            -            472
  Interest                                       -            -            418
                                        ----------   ----------   ------------

   Total Expenses                           32,891        9,575        225,632
                                        ----------   ----------   ------------

OTHER INCOME

  Interest income                            2,150        9,109        143,412
                                        ----------   ----------   ------------

   Total Other Income                        2,150        9,109        143,412
                                        ----------   ----------   ------------

LOSS BEFORE
 DISCONTINUED OPERATIONS                   (30,741)        (466)       (82,220)

LOSS FROM DISCONTINUED
 OPERATIONS (Note 5)                             -            -       (911,314)

GAIN ON DISPOSAL OF
 DISCONTINUED OPERATIONS
 (Note 5)                                        -            -        776,190
                                        ----------   ----------   ------------

NET LOSS                                $  (30,741)  $     (466)  $   (217,344)
                                        ==========   ==========   ============

BASIC LOSS PER SHARE                    $    (0.07)  $    (0.00)
                                        ==========   ==========

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

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

Balance, 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)
                            ----------   ----------   -----------    ----------

Balance, 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)
                            ----------   ----------   -----------    ----------

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

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

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

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

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

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

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

    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, 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)
                            ----------   ----------   -----------    ----------

Balance, 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
                            ----------   ----------   -----------    ----------

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

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

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

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

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

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

Balance, 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.

                                       20

<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       423,353     (186,603)

Net loss for the year ended
 December 31, 2002                   -            -             -      (30,741)
                            ----------   ----------   -----------    ----------

Balance, December 31, 2002     455,073   $      455   $   423,353    $(217,344)
                            ==========   ==========   ===========    ==========

    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
                                                                     From
                                                                  Inception on
                                           For the Years Ended    December 4,
                                               December 31,         1987 to
                                          ----------------------  December 31,
                                              2002       2001         2002
                                          ----------- ----------  ------------

CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                $  (30,741) $    (466)  $  (217,344)
  Adjustments to reconcile net loss to
   net cash used by operating activities:
    Depreciation                                   -          -         1,546
    Amortization                                   -          -           472
    Gain on disposal of discontinued
     operations                                    -          -      (776,190)
  Changes in operating assets and
   liabilities:
    Increase in accrued expenses              24,000          -       310,334
                                          ----------- ----------  ------------

  Net Cash Used by Operating Activities       (6,741)      (466)     (681,182)
                                          ----------- ----------  ------------

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 of warrants                                 -          -           100
  Exercise of warrants                             -          -       210,724
                                          ----------- ----------  ------------

   Net Cash Provided by Financing
    Activities                                      -          -    2,173,808
                                          ----------- ----------  ------------

INCREASE IN CASH                              (6,741)      (466)      230,464

CASH AT BEGINNING OF PERIOD                  237,205    237,671             -
                                          ----------- ----------  ------------

CASH AT END OF PERIOD                     $  230,464  $ 237,205   $   230,464
                                          =========== ==========  ============


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

                                       22

<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,
                                              2002       2001         2002
                                          ----------- ----------  ------------

SUPPLEMENTAL CASH FLOW INFORMATION

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

NON-CASH INVESTING ACTIVITIES

  Sale of subsidiary (Note 5)             $        -  $       -   $  2,022,287


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

                                       23

<PAGE>

                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                           December 31, 2002 and 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.  (3)
          The articles of  incorporation  were amended  changing the name to Red
          Horse Entertainment Corporation.

          During September 1992, the former  Subsidiary began operating a casino
          in Central City,  Colorado,  however,  two weeks later operations were
          terminated.  The  subsidiary  was later  sold  (Note 6). In 1993,  the
          Company  affected a 1 for 30 reverse  split  bringing the  outstanding
          shares down to 103,739.  All  references to number of shares have been
          retroactively restated to reflect the reverse stock split.


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, 2002
                                                      ------------------------
                                                          2002         2001
                                                      -----------  -----------
          Numerator - (loss)                          $  (30,741)  $     (466)
          Denominator - weighted average number of
           shares outstanding                            455,073      455,073
                                                      -----------  -----------

          Loss per share                              $    (0.07)  $    (0.00)
                                                      ===========  ===========



                                       24

<PAGE>


                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          c.  Provision for Taxes

          Deferred taxes are provided on a liability method whereby deferred tax
          assets  are  recognized  for  deductible  temporary   differences  and
          operating  loss  and  tax  credit   carryforwards   and  deferred  tax
          liabilities   are  recognized  for  taxable   temporary   differences.
          Temporary differences are the differences between the reported amounts
          of assets and liabilities and their tax bases. Deferred tax assets are
          reduced by a valuation  allowance  when, in the opinion of management,
          it is more  likely that not that some  portion or all of the  deferred
          tax assets will not be realized.  Deferred tax assets and  liabilities
          are  adjusted  for the effects of changes in tax laws and rates on the
          date of enactment.

          Net  deferred tax asset  consists of the  following  components  as of
          December 31, 2002 and 2001:
                                                        2002          2001
                                                    ------------  ------------
          Deferred tax assets
          NOL Carryover                             $    156,150  $     70,732
                                                    ------------  ------------
                                                         156,150        70,732
          Deferred tax liabilities                             -             -

          Valuation allowance                           (156,150)      (70,732)
                                                    ------------  ------------
          Net deferred tax asset                    $          -  $          -
                                                    ============  ============

          The  income  tax  provision  differs  from the  amount of  income  tax
          determined  by  applying  the U.S.  federal  income tax rate to pretax
          income from  continuing  operations  for the years ended  December 31,
          2002 and 2001 due to the following:

                                                        2002          2001
                                                    ------------  ------------
          Book Income                               $    (11,989) $       (177)
          State Tax Expense                                 (800)            -
          Accrued compensation                             9,360             -
          Other                                                -             -
          Valuation allowance                              3,429           177
                                                    ------------  ------------
                                                    $          -  $          -
                                                    ============  ============

          At December 31, 2002, the Company had net operating loss carryforwards
          of  approximately  $400,300 that may be offset  against future taxable
          income  from the year  2002  through  2022.  No tax  benefit  has been
          reported in the  December  31,  2002  financial  statements  since the
          potential  tax benefit is offset by a valuation  allowance of the same
          amount.

          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 change
          in ownership occur, net operating loss carryforwards may be limited as
          to use in the future.

                                       25

<PAGE>


                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          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.

          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 -  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 4 -  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  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.

                                       26

<PAGE>


                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 5 - 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 6 -  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 7 -  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.

NOTE 8 -  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.

                                       27

<PAGE>


                       RED HORSE ENTERTAINMENT CORPORATION
                          (A Development Stage Company)
                        Notes to the Financial Statements
                           December 31, 2002 and 2001


NOTE 9 -  CONCENTRATIONS OF RISK

          The Company maintains a money market investment account which accounts
          for  $230,329 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.

NOTE 10-  NEWLY ISSUED ACCOUNTING PRONOUNCMENTS

          The  Company  adopted  the  provisions  of  FASB  Statement  No.  143,
          "Accounting for Asset Retirement Obligations," FASB Statement No. 144,
          "Accounting for the Impairment or Disposal of Long-Lived Assets," FASB
          Statement  No.145,  "Rescission of FASB  Statements No. 4, 44, and 62,
          Amendment of FASB Statement No. 13, and Technical  Corrections,"  FASB
          Statement  No.  146,  "Accounting  for Costs  Associated  with Exit or
          Disposal  Activities,"  FIN 44,  "Accounting for Certain  Transactions
          Involving Stock  Compensation  (an  interpretation  of APB Opinion No.
          25)," and FASB Statement No. 147,  "Acquisitions of Certain  Financial
          Institutions - an amendment of FASB Statements No. 72 and 144 and FASB
          Interpretation  No. 9." The effect of these adopted  provisions on the
          Company's financial statements was not significant.

          In December 2002, the FASB issued  Statement No. 148,  "Accounting for
          Stock-Based Compensation - Transition and Disclosure - an amendment of
          FASB  Statement No. 123" (SFAS 148).  SFAS 148 is effective for fiscal
          years  beginning  after  December 15,  2003.  The Company is currently
          reviewing SFAS 148.

                                       28