SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  AMENDMENT NO.1 TO
 
 (Mark
One)
  x
              ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the fiscal year ended August 31, 2008
  o
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
transition period from ___________ to ___________
  Commission
File No. 333-108690
  RED
ROCK PICTURES HOLDINGS, INC.
 (Name of
small business issuer in its charter)
  NEVADA
              98-0441032(State
      or other jurisdiction of
                incorporation
      or organization)
              (IRS
      Employer Identification No.)
  8228
      Sunset Boulevard, 3rdFloor,
                Los
      Angeles, California
              90046(Address
      of principal executive offices)
              (Zip
      Code)
  (323)
790-1813
 (Registrant’s
telephone number, including area code)
  Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class registered:
              Name
      of each exchange on which registered:None
              NoneSecurities
      registered under Section 12(g) of the Exchange Act:Common
      Stock, par value $.001
                (Title
      of class)
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes xNo o
  Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act. Yes xNo o
  Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 
 Large
accelerated
filer                                                    o                                           Accelerated
filer                                         
o
 Non-accelerated
filer                                                      o                                           Smaller
reporting
company                        x
 (Do not
check if a smaller reporting company)
   
  
 Revenues
for year ended August 31, 2008: $776,036
  Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of August 31, 2008, was: $4,453,466
  Number of
shares of the registrant’s common stock outstanding as of December 8, 2008 was:
101,484,335
  Transitional
Small Business Disclosure Format:   Yes x       No
o
    
 
 
  FORM 10-K
   For
the Year Ended August 31, 2008
   INDEX
  
 PART IItem 1.
              
              Business
              
              5Item 1A.
              
              Risk
      Factors
              
              8Item 1B.
              
              Unresolved
      Staff Comments
              
              11Item 2.
              
              Properties
              
              11Item 3.
              
              Legal
      Proceedings
              
              11Item 4.
              
              Submission
      of Matters to a Vote of Security Holders
              
              11PART IIItem 5.
              
              Market
      for the Registrant's Common Stock, Related Stockholder Matters, and Issuer
      Purchases of Equity Securities
              
              12Item 6.
              
              Selected
      Consolidated Financial Data
              
              12Item 7.
              
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
              
              12Item 7A.
              
              Quantitative
      and Qualitative Disclosure about Market Risk
              
              15Item 8.
              
              Financial
      Statements and Supplementary Data
              
              15Item 9.
              
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              
              15Item 9A.
              
              Controls
      and Procedures
              
              16Item 9B.
              
              Other
      Information
              
              16PART IIIItem 10.
              
              Directors
      and Executive Officers and Corporate Governance
              
              17Item 11.
              
              Executive
      Compensation
              
              19Item 12.
              
              Security
      Ownership of Certain Beneficial Owners and Management
              
              20Item 13.
              
              Certain
      Relationships and Related Transactions
              
              21Item 14.
              
              Principal
      Accountant Fees and Services
              
              21PART IVItem 15.
              
              Exhibits,
      Financial Statement Schedules and Reports on Form 8-K
              
              F-1Signatures
              
              F-26
  
  -3-
  
   CAUTIONARY
STATEMENT RELATED TO FORWARD LOOKING STATEMENTS
   This Annual Report on
Form 10-K includes certain forward-looking statements as defined within
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended, relating to revenue, revenue
composition, earnings, projected plans, performance, contract procurement,
demand trends, future expense levels, trends in average headcount and gross
margins, and the level of expected capital expenditures. Such forward-looking
statements are based on the beliefs of, estimates made by, and information
currently available to Red Rock Pictures Holdings Inc. management and are
subject to certain risks, uncertainties and assumptions. Any statements
contained herein (including without limitation statements to the effect that the
Company or management "estimates," "expects," "anticipates," "plans,"
"believes," "projects," "continues," "may," "will," "could," or "would" or
statements concerning "potential" or "opportunity" or variations thereof or
comparable terminology or the negative thereof) that are not statements of
historical fact should be construed as forward-looking statements. The actual
results of Red Rock Pictures Holdings Inc. may vary materially from those
expected or anticipated in these forward-looking statements. The realization of
such forward-looking statements may be impacted by certain important
unanticipated factors including those discussed in "Risk Factors" under
Item 1A, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations," at pages 12-15. Because of these and other
factors that may affect Red Rock Pictures Holdings Inc.’s.  operating
results, past performance should not be considered as an indicator of future
performance, and investors should not use historical results to anticipate
results or trends in future periods. The Company undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. Readers should
carefully review the risk factors described in this and other documents that Red
Rock Pictures Holdings, Inc. files from time to time with the Securities and
Exchange Commission ("SEC"), including subsequent Current Reports on
Form 8-K, Quarterly Reports on Form 10-QSB and Annual Reports on
Form 10-K.
  HOW
TO OBTAIN SEC FILINGS
  All reports filed by Red
Rock Picture Holdings, Inc. filed with the SEC are available free of charge via
EDGAR through the SEC website at www.sec.gov. In addition, the public may read
and copy materials filed by the Company with the SEC at the SEC's public
reference room located at 450 Fifth St., N.W., Washington, D.C.
20549.  Red Rock Pictures Holdings also provides copies of its
Forms 8-K, 10-K, 10-Q, Proxy and Annual Report at no charge to investors
upon request and makes electronic copies of its most recently filed reports
available through its website at www.redrockpics.com as soon as reasonably
practicable after filing such material with the SEC.
  
  -4-
  PART
I
  
 ITEM 1. DESCRIPTION OF
BUSINESS
 
 As used in this report, "Red Rock
Pictures Holdings, Inc.", "the Company", "us”, “we," "our" and similar terms
include Red Rock Pictures Holdings, Inc. and its subsidiaries, unless the
context indicates otherwise.
 
 General
  Red Rock
Pictures, Inc. was incorporated on August 18, 2006 under the laws of the State
of Nevada and was acquired by Red Rock Pictures Holdings Inc. on August 31,
2006.  The Company was a development stage company that plans to
engage in the business of developing, financing, producing and licensing
feature-length motion pictures worldwide.
  Organization
  In August
2006, Red Rock Pictures, Inc. consummated a Share Exchange Agreement, whereby
100% of its shares were acquired by Maneki Mining Inc. ("Maneki"), a Nevada
corporation, in exchange for 1,800,000 shares of Maneki.  As a result
of the transaction, the former shareholders of the Red Rock Pictures, Inc.
received approximately 51% ownership of Maneki.  The merger was
therefore accounted for as a recapitalization of the Red Rock Pictures, Inc.
into a shell company.  Accordingly, the issuance of shares will be
recorded by eliminating Maneki's assets, share capital and
earnings.
  The above
transaction has been accounted for as a reverse merger (recapitalization) with
Red Rock Pictures, Inc. being deemed the accounting acquirer and Maneki Mining
Inc. being deemed the legal acquirer.  Accordingly, the historical
financial information presented in the financial statements is that of Red Rock
Pictures, Inc. (since August 18 , 2006 the date of inception) as
adjusted to give effect to any difference in the par value of the issuer’s and
the accounting acquirer’s stock with an offset to additional paid in
capital.  The basis of the assets and liabilities of Red Rock
Pictures, Inc. , the accounting acquirer, has been carried over in the
recapitalization.  In addition, Maneki agreed to cancel 1,500,000
shares of its common stock.  The terms of the Agreement were
consummated on August 31 , 2006 and Maneki now owns 100% of the equity
interests of Red Rock Pictures, Inc.  On  October 31 , 2006,
Maneki Mining Inc. filed a certificate of amendment, changing the legal name of
the corporation to Red Rock Pictures Holdings Inc.
 
 On June
6, 2008, the Company entered into a Stock for Stock Exchange Agreement (the
“Exchange Agreement”) with Studio Store Direct, Inc. (“SSD”) and all of the
current SSD Shareholders.  Pursuant to the Exchange Agreement,
the Company acquired 100% of the assets of SSD by issuing 11,000,000 restricted
common shares in exchange for all the issued and outstanding shares of
SSD.  Further, SSD became a wholly owned subsidiary of the
Company.  With the addition of SSD, the Company also operates as a
traditional infomercial production and distribution company.  SSD has
developed a patent pending process for embedding direct response programs
directly onto motion picture DVD’s.  Viewers can access virtual
stores, offering related merchandise for purchase with the simple click of a
mouse or by dialing a toll free number.  SSD’s model provides a
turnkey new revenue solution for major Hollywood studios and independent
distributors.
 
 We are
engaged in the finance, production, distribution and marketing of filmed
entertainment products, including theatrical motion pictures, television
programs, home video products, and digitally delivered entertainment and
media.  We were founded in 2006 to leverage the experience and
expertise of its management team and exploit emerging opportunities in
traditional and digital media and entertainment.
  Development
  Development
activities are a fundamental building block to our future financial success. We
will devote significant resources to identifying and developing material to be
produced.
   -5-
  
 Financing
  We will
be involved in the funding of motion pictures and other entertainment and media
properties, both for its own library and development activities as well as in
partnership with outside producers.
  Production
  Once a
project is developed and financing is committed, either through internal sources
or through licensing and pre-selling the project to the exhibition, television,
home entertainment and other markets, we will attempt to produce at the lowest
possible cost consistent with the quality that it seeks to achieve. We avoid the
substantial overhead of major studios by maintaining only a small staff and
engaging production staff only as required.
  Revenue
Sources
  We
currently have revenues from interest income earned on production
advances.  We expect to derive additional revenues from the worldwide
exploitation of our entertainment properties across multiple media and
distribution channels.   We expect to receive revenue from all of the
following sources on a project-by-project basis:
  ·
              Producer
      and production fees for our services in the creation and production of
      motion pictures, television and other
media;
 ·
              Royalties
      and participation in the future earnings of the properties that we
      develop, produce and/or finance;
 ·
              Interest
      and fees associated with our financing
  activities;
 ·
              Royalty
      payments from merchandising of consumer products bearing the logos,
      brands, and other forms of intellectual property from our company’s films,
      television programs and archives; Royalties
      and license payments from exploitation of soundtrack and music publishing
      rights for music from our company’s films, television programs and
      archives
  ·
              Royalties
      and participation in infomercial productions and related services for
      outside clients and
 ·
              Proprietary
      infomercial and multi channel marketing
  campaigns.
 
 The
distribution channels associated with these revenue streams are discussed in
greater detail below:
  Theatrical
Distribution & Exhibition
 
 Once a
picture has been green lighted, the distribution arm of the studio begins
planning where the picture will be slotted in its schedule for theatrical
release.  Numerous negotiations and strategic issues must be managed,
including the film’s release date, distribution pattern and number of screens
(wide release, limited release or platform release) and exhibitor (theater and
theater chain) financial terms.
  Theatrical
revenues are divided between the distributor and the theater owners
(exhibitors). The division of theatrical proceeds is usually determined through
negotiation between the exhibitors and distributors. However, sometimes a bidding process occurs in
which theaters compete against each other for a particular movie with the film
going to the theater that offers the most favorable terms to the distributor.
“Film rentals” are the portion of a film’s theatrical revenues remitted to a
distributor. As a general rule of thumb, a distributor receives 50% of a film’s
gross theatrical revenues. However, the actual division of box-office proceeds
is based upon a formula in which the distributor gets a disproportionate share
of the box-office in the early release of a film. Therefore, theater exhibitors
prefer long-running successful films, as opposed to films that have big opening
weekends and subsequently have substantial drop-offs.
  Whether a
film has been financed by a studio or has been acquired from an outside
financing source for distribution, the studio receives a distribution fee. A
distribution fee is a percentage charge on incoming film rentals from theaters,
video revenues, pay television, etc. The fee is simply a service charge designed
solely to support the existence of the distribution organization; it does not apply toward the
recovery of any expenses related to releasing the film (such as prints and
advertising). Deductions for direct costs of marketing a film are made after the
imposition of the fee. The amount of the distribution fee can vary substantially
depending upon many factors. The most important factor in determining the amount
of the fee is whether the film has been financed internally or
externally.
   -6-
  Home
Video – Video Cassette and DVD
 
 As the
market has matured, video revenues have become the most significant source of
income for producers and distributors. Furthermore, home video provides the most
consistent source of revenue of all of the various windows of exhibition
including theatrical.   We currently d o not operate our own internal
Home Entertainment distribution business, but, rather, we intend to partner with
the major studios and others to ensure that our productions are sold into the
marketplace.
  Pay-Per-View
and Video on Demand
 
 Pay-per-view
refers to films shown on television which subscribers can order through their
local cable operator. Additionally, with the rise of technology and other
digital distribution platforms, Pay-Per-View can also occur via Satellite, and
via Internet delivery. Our projects will be sold into the Pay-Per-View and Video
on Demand markets either directly or as part of a larger distribution agreement
with a studio or other entity.
  Pay
Cable
 
 Pay cable
refers to individual cable stations that have a monthly subscription fee, such
as HBO, Showtime, The Movie Channel, Cinemax, Starz and Encore. Pay cable
programming is comprised primarily of three facets:
 
 ·
              Movies
      licensed from the studios and independent
  distributors
 ·
              Pay
      cable premiere movies that are shown for the first time on the pay cable
      service, these movies are both financed and produced by the cable
      network itself or licensed from independent producers
      and
 ·
              Special
      events, such as sporting events and
concerts.
 
 Our
properties will be sold into the Pay Cable marketplace either directly or as
part of a larger distribution agreement with a studio or other
entity.
 
 Basic
Cable
 
 Basic
cable refers to a group of cable stations that are generally included in a basic
cable package, such as the Sundance Channel, the Independent Film Channel, TNT,
TBS, Lifetime, USA and others.  Basic cable stations, like the pay
cable stations, are now producing a significant number of their own movies. Our
properties will be sold into the basic cable marketplace either directly or as
part of a larger distribution agreement with a studio or other
entity.
 
 Network
Television
 
 In the
United States, broadcast network rights are granted to ABC, CBS, NBC, FOX, UPN,
WB or other entities formed to distribute programming to a large group of
stations. The commercial television networks license motion pictures for a
limited number of exhibitions during a period that usually commences two to
three years after a film’s initial theatrical release. Our properties will be
sold into the Network Television marketplace either directly or as part of a
larger distribution agreement with a studio or other entity.
  Television
Syndication
 
 Distributors
also license the right to broadcast a motion picture on local, commercial
television stations in the United States, usually for a period commencing five
years after initial theatrical release of the motion picture, but earlier if the
producer has not entered into a commercial television network license. These
contracts are usually for between five to eight showings of a film extending
over a period of 3 to 5 years. This activity, known as “syndication,” has become
an important source of revenue as the number of stations has proliferated, and
thus the competition for programming among local television stations has
increased.  Our properties will be sold into the television
syndication marketplace either directly or as part of a larger distribution
agreement with a studio or other entity
   -7-
 
 Other
Ancillary Markets
 
 A
distributor may earn revenues from other ancillary sources, unless the necessary
exploitation rights in the underlying literary property have been retained by
writers, talent, composers or other third parties (i.e. soundtrack and music
publishing rights).  Our properties will be sold into other ancillary
markets either directly or as part of a larger distribution agreement with a
studio or other entity.
  Foreign
Distribution & Exhibition
  All of
the major American distributors (i.e. Warner Brothers, Universal, etc.) have
distribution networks in the major overseas countries.  However, each
foreign country has its own local and independent distribution companies that
not only distribute native product, but also compete against the local branch of
the major studios for independently financed American films. Our properties will
be sold into the foreign marketplace either directly or as part of a larger
distribution agreement with a studio or other entity.
 
 Infomercial
production and distribution
 
 According
to the Electronic Retailing Association (ERA) the infomercial industry accounts
for more than 150 Billion dollars in annual revenue here in the
U.S.  We will leverage our track record and years of combined
expertise in direct response television (DRTV) marketing to provide production
services for independent clients.  These services will yield producer
fees and/or royalties based upon sales revenue generated in response to our
productions.  We will also develop proprietary consumer products
resulting in multi-channel (television, internet, radio, retail, etc.)
campaigns.  These products and related television commercials will be
distributed throughout the world leveraging key contacts and relationships in
various international markets.
 
 Competition
  The sale
and distribution of filmed entertainment is a highly competitive
business.  The entertainment industry now comprises six major film
distributors/studios: Sony Pictures, Paramount, Twentieth Century Fox, Warner
Brothers, The Walt Disney Company, and Universal.  Today, the major
studios are multi-national, multi-media and mass marketing communication
complexes with wholly owned distribution operations throughout the
world.  In addition to these majors, there are numerous independent
production and distribution companies. Many of our competitors are larger and
better capitalized than us and have existing distribution channels. In addition,
the number of films or television products released in any given period may
create an oversupply of product in the market, and that may reduce our share of
potential sales and make it more difficult for the films in our library to
succeed.
  We
believe that the principal competitive factors in our market are:
 
 ·
              Quality
      of filmed entertainment product;
 ·
              Brand
      recognition;
 ·
              Quality
      of assets;
 ·
              Exemplary
      reputation and track record of our Chief Executive Officer;
      and
 ·
              Filmed
      entertainment rights industry
connections.
  Employees
 
 We
currently have two full-time employees, two part-time employees and one
part-time consultant.
  -8-
  ITEM 1A—RISK
FACTORS
  ADDITIONAL
FACTORS THAT MAY AFFECT FUTURE RESULTS
   In addition to the other
information in this Annual Report on Form 10K, the following factors should
be considered carefully in evaluating our business and
prospects.
  We
have a limited operating history in which to evaluate our business.
 
 We were
incorporated in Nevada in August 2006 and we have limited revenues to date and
we have a limited operating history upon which an evaluation of our future
success or failure can be made.  No assurances of any nature can be
made to investors that the company will be profitable.
 
 We
will require additional funds to achieve our current business strategy and our
inability to obtain additional financing could cause us to cease our business
operations.
 
 We will
need to raise additional funds through public or private debt or sale of equity
to achieve our current business strategy. Such financing may not be available
when needed. Even if such financing is available, it may be on terms that are
materially adverse to your interests with respect to dilution of book value,
dividend preferences, liquidation preferences, or other terms. Our capital
requirements to implement our business strategy will be significant. However, at
this time, we can not determine the amount of additional funding necessary to
implement such plan. We intend to assess such amount at the time we will
implement our business plan. Furthermore, we intend to effect future
acquisitions with cash and the issuance of debt and equity securities. The cost
of anticipated acquisitions may require us to seek additional financing. We
anticipate requiring additional funds in order to fully implement our business
plan to significantly expand our operations. We may not be able to obtain
financing if and when it is needed on terms we deem acceptable. Our inability to
obtain financing would have a material negative effect on our ability to
implement our acquisition strategy, and as a result, could require us to
diminish or suspend our acquisition strategy.
 
 If we are
unable to obtain financing on reasonable terms, we could be forced to delay,
scale back or eliminate certain product and service development
programs.  In addition, such inability to obtain financing on
reasonable terms could have a material negative effect on our business,
operating results, or financial condition to such extent that we are forced to
restructure, file for bankruptcy, sell assets or cease operations, any of which
could put your investment dollars at significant risk.
 
 If
we are unable to retain the services of our chief executive officer, Reno Rolle,
or if we are unable to successfully recruit qualified managerial personnel and
employees with experience in business and the entertainment industry, we may not
be able to continue our operations.
 
 Our
success depends solely upon the continued service of Reno Rolle, our chief
executive officer.  Loss of Mr. Rolle’s services will have a material
adverse effect on our growth, revenues, and prospective business.  We
do not maintain key-man insurance on the life of our chief executive officer. In
addition, in order to successfully implement and manage our business plan, we
will be dependent upon, among other things, successfully recruiting qualified
managerial personnel and employees with experience in business and the
entertainment industry. Competition for qualified individuals is intense. There
can be no assurance that we will be able to find, attract and retain existing
employees or that we will be able to find, attract and retain qualified
personnel on acceptable terms.
 
 There
may be potential liabilities associated with the Company that we were not aware
of at the time of the Merger.
 
 We may
have liabilities that we did not discover or may have been unable to discover
during our pre-acquisition investigation. Any indemnities or warranties may not
fully cover such liabilities due to their limited scope, amount or duration, the
financial limitations of the indemnitor or warrantor, or for other reasons.
Therefore, in the event we are held responsible for the foregoing liabilities,
our operations may be materially and adversely affected.
 
 The
Red Rock shareholders currently own a controlling interest in our voting stock
and investors may not have any voice in our management.
 
 In
connection with the acquisition of Red Rock, the Red Rock Shareholders, will
hold an aggregate of 51% of our outstanding shares of common stock, and in the
aggregate, has the right to cast 51% of the votes in any vote by our
stockholders. Thus, these stockholders, acting together, will have the ability
to control substantially all matters submitted to our stockholders for approval,
including:
  -9-
  
 ·
              election
      of our board of directors;
 ·
              removal
      of any of our directors;
 ·
              amendment
      of our certificate of incorporation or bylaws;
  and
 ·
              adoption
      of measures that could delay or prevent a change in control or impede a
      merger, takeover or other business combination involving the
      Company.
 
 As a
result of their ownership and positions, our directors and executive officers
collectively are able to influence all matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions. In addition, sales of significant amounts of shares held by our
directors and executive officers, or the prospect of these sales, could
adversely affect the market price of our common stock. Management's stock
ownership may discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of us, which in turn could reduce our
stock price or prevent our stockholders from realizing a premium over our stock
price.
 
 It
is likely that additional shares of our stock will be issued in the normal
course of our business development, which will result in a dilutive affect on
our existing shareholders.
 
 We will
issue additional stock as required to raise additional working capital in order
to secure intellectual properties, undertake company acquisitions, recruit and
retain an effective management team, compensate our officers and directors,
engage industry consultants and for other business development
activities.
 
 If
we fail to adequately manage our growth, we may not be successful in growing our
business and becoming profitable.
 
 We expect
our business and number of employees to grow over the next year. We expect that
our growth will place significant stress on our operation, management, employee
base and ability to meet capital requirements sufficient to support our growth
over the next 12 months. Any failure to address the needs of our growing
business successfully could have a negative impact on our chance of
success.
 
 If
we acquire or invest in other businesses, we will face certain risks inherent in
such transactions.
 
 We may
acquire, make investments in, or enter into strategic alliances or joint
ventures with, companies engaged in businesses that are similar or complementary
to ours. If we make such acquisitions or investments or enter into strategic
alliances, we will face certain risks inherent in such transactions. For
example, we could face difficulties in managing and integrating newly acquired
operations. Additionally, such transactions would divert management resources
and may result in the loss of artists or songwriters from our rosters. We cannot
assure you that if we make any future acquisitions, investments, strategic
alliances or joint ventures that they will be completed in a timely manner, that
they will be structured or financed in a way that will enhance our
creditworthiness or that they will meet our strategic objectives or otherwise be
successful. Failure to effectively manage any of these transactions could result
in material increases in costs or reductions in expected revenues, or
both.
 
 “Penny
Stock” rules may make buying or selling our common stock difficult.
 
 Trading
in our securities is subject to the “penny stock” rules. The SEC has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to certain exceptions.
These rules require that any broker-dealer who recommends our securities to
persons other than prior customers and accredited investors, must, prior to the
sale, make a special written suitability determination for the purchaser and
receive the purchaser’s written agreement to execute the transaction. Unless an
exception is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated with trading in the penny stock
market. In addition, broker-dealers must disclose commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities they offer. The additional burdens imposed upon broker- dealers
by such requirements may discourage broker-dealers from effecting transactions
in our securities, which could severely limit the market price and liquidity of
our securities. Broker- dealers who sell penny stocks to certain types of
investors are required to comply with the Commission’s regulations concerning
the transfer of penny stocks. These regulations require broker-dealers
to:
   -10-
 
 ·
              Make
      a suitability determination prior to selling a penny stock to the
      purchaser;
 ·
              Receive
      the purchaser’s written consent to the transactions;
  and
 ·
              Provide
      certain written disclosures to the
purchaser.
  Risks Associated with the
Entertainment, Media and Communications Industries
 
 Competition
from providers of similar products and services could materially adversely
affect our revenues and financial condition.
 
 The
industry in which we compete is a rapidly evolving, highly competitive and
fragmented market, which is based on consumer preferences and requires
substantial human and capital resources. We expect competition to intensify in
the future.   There can be no assurance that we will be able to compete
effectively.   We believe that the main competitive factors in
the entertainment, media and communications industries include
effective marketing and sales, brand recognition, product quality, product
placement and availability, niche marketing and segmentation and value
propositions. They also include benefits of one's company, product and
services, features and functionality, and cost. Many of our competitors are
established, profitable and have strong attributes in many, most or all of
these areas.   They may be able to leverage their existing relationships
to offer alternative products or services at more attractive pricing or
with better customer support. Other companies may also enter our markets
with better products or services, greater financial and human resources and/or
greater brand recognition. Competitors may continue to improve or expand current
products and introduce new products. We may be perceived as relatively too small
or untested to be awarded business relative to the competition. To be
competitive, we will have to invest significant resources in business
development, advertising and marketing.   We may also have to rely on
strategic partnerships for critical branding and relationship leverage, which
partnerships may or may not be available or sufficient. We cannot assure that it
will have sufficient resources to make these investments or that we will be able
to make the advances necessary to be competitive. Increased competition
may result in price reductions, reduced gross margin and loss of market
share. Failure to compete successfully against current or future competitors
could have a material adverse effect on the Company’s business, operating
results and financial condition.
 
 The
speculative nature of the entertainment, media and communications industry may
result in our inability to produce products or services that receive sufficient
market acceptance for us to be successful.
 
 Certain
segments of the entertainment, media and communications industry are highly
speculative and historically have involved a substantial degree of risk. For
example, the success of a particular film, video game, program or recreational
attraction depends upon unpredictable and changing factors, including the
success of promotional efforts, the availability of alternative forms of
entertainment and leisure time activities, general economic conditions, public
acceptance and other tangible and intangible factors, many of which are beyond
our control. If we complete a business combination with a target business in
such a segment, we may be unable to produce products or services that receive
sufficient market acceptance for us to be successful.
 
 Changes
in technology may reduce the demand for the products or services we may offer
following a business combination.
 
 The
entertainment, media and communications industries are substantially affected by
rapid and significant changes in technology. These changes may reduce the demand
for certain existing services and technologies used in these industries or
render them obsolete. We cannot assure you that the technologies used by or
relied upon or produced by a target business with which we effect a business
combination will not be subject to such occurrence. While we may attempt to
adapt and apply the services provided by the target business to newer
technologies, we cannot assure you that we will have sufficient resources to
fund these changes or that these changes will ultimately prove
successful.
   -11-
 
 If
our products or services that we market and sell are not accepted by the public,
our profits may decline.
 
 Certain
segments of the entertainment, media and communications industries are dependent
on developing and marketing new products and services that respond to
technological and competitive developments and changing customer needs and
tastes. We cannot assure you that the products and services of a target business
with which we effect a business combination will gain market acceptance. Any
significant delay or failure in developing new or enhanced technology, including
new product and service offerings, could result in a loss of actual or potential
market share and a decrease in revenues.
 
 Management
is fully aware of these risks, and believes that these are manageable risks and
does not post real threats to the Company’s healthy development.
  ITEM 1B.UNRESOLVED
STAFF COMMENTS
  None.
  ITEM
2. DESCRIPTION OF PROPERTY
 
 The
Company's principal offices are located at 8228 Sunset Boulevard, 3 rd Floor,
Los Angeles, California.  The Company leases the premises from
National Lampoon, Inc. pursuant to a sublease for two years which became a
month-to month lease thereafter.  The sublease agreement includes
certain provisions for rent adjustments based upon the lessor's operating costs
and increases in the Consumer Price Index. The monthly lease rate is $2,000 per
month. We believe that these spaces are sufficient and adequate to operate our
current business.
  Our operating subsidiary Stutio Store Direct Inc.’s principal offices are
located at 374 Poli Street, Ventura,
CA  93001 . The Company's leases its office space from an unrelated
third-party under a non-cancelable operating lease expiring in
2009.  Future minimum lease payments are $14,652 for the remainder of
the December 31 , 2008 calander year and $4,884 for the calander
year ended December 31 , 2009.
 
 ITEM
3. LEGAL PROCEEDINGS
  On
October 27, 2008, we and our wholly owned subsidiary Studio Store Direct, Inc.
(“SSD”), was served s summons and complaint related to a contract action brought
against the Company by Livon Laboratory, Inc. (“LivOn”).
 
 The
breach of claim by LivOn is related to contract entered into between SSD, and
LivOn for the production of an infomercial to be used as a direct
response-marketing tool in conjunction with the sale of LivOn’s LypoSpheric
Vitamin C.  LivOn has requested relief in excess of $60,000 for the
alleged material breach of the contract between SSD and LivOn.  We
have retained counsel and are in the process of filing a counterclaim for
damages against LivOn. The Company maintains that the claim is frivolous
and unfounded.
  ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  None.
   -12-
  PART
II
 
 ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
  As of
August 31, 2008 there were approximately 24 holders of record of our common
stock. Our shares of common stock are traded on the OTCBB under the symbol
“RRPH”.
 
 Dividends
  We intend
to retain future earnings to support our growth. Any payment of cash dividends
in the future will be dependent upon: the amount of funds legally available
therefore; our earnings; financial condition; capital requirements; and other
factors which our Board of Directors deems relevant.
 
 Recent
Sales of Unregistered Securities
  As
previously disclosed in the Current Report on Form 8-K filed by the Company
on June 12 , 2008, the Company issued 11,000,000 shares of its common
stock to the stockholders of Studio Store Direct, Inc. as consideration for the
acquisition by the Company of all of the outstanding capital stock of Studio
Store Direct, Inc. stockholders. The issuance of these shares of common stock
was made in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.
  ITEM
6. SELECTED CONSOLIDATED FINANCIAL DATA
  The
following selected consolidated financial data should be read in conjunction
with the consolidated financial statements and notes thereto and the information
contained herein in Item 7 of Part II, "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Historical results
are not necessarily indicative of future results.  Effective January
1, 2006, the Company adopted the provisions of SFAS 123(R).
  ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 Certain
statements contained in this quarterly filing, including, without limitation,
statements containing the words “believes”, “anticipates”, “expects” and words
of similar import, constitute forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
 
 Such
factors include, among others, the following: international, national and local
general economic and market conditions: demographic changes; the ability of the
Company to sustain, manage or forecast its growth; the ability of the Company to
successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous
filings.
 
 Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. The following discussion and analysis should be read
in conjunction with our Financial Statements and notes appearing elsewhere in
this report.
   -13-
  Plan of
Operation
  Overview
 
 We were
originally incorporated in Nevada on November 22 , 2004 as a development
stage company in the business of mineral exploration.  On December
3 , 2004, we entered in a Mineral Lease Agreement whereby we leased from
Ammetco Resources a total of eight (8) unpatented lode mining claims which we
refer to as the Poison Gulch mineral claims.  The Poison Gulch mineral
claims are located in Owyhee County, Idaho.  We leased the mineral claims
from Ammetco Resources of Vancouver B.C., Canada.  The Poison Gulch claims
are 100% owned by Nevada Mine Properties II, Inc. of Reno,
Nevada.
 
 Upon the
effectiveness of the merger in fiscal 2006 with Red Rock, we have succeeded to
the business of Red Rock, which will be continued as our sole line of business.
Based upon the same, we are engaged in the finance, production, distribution and
marketing of filmed entertainment products, including theatrical motion
pictures, television programs, home video products, and digitally delivered
entertainment and media.  We were founded in 2006 to leverage the
experience and expertise of its management team and exploit emerging
opportunities in traditional and digital media and entertainment. Our primary
business model revolves around the control of entertainment properties that we
may develop, acquire, produce and/or finance.  We will also be
involved in the funding of motion pictures and other entertainment and media
properties, both for our own library and development activities as well as in
partnership with outside producers. We currently have interest
revenues of $362,444 for the twelve months ended August 31, 2008 from production
advances, and we expect to derive future revenues from the worldwide
exploitation of our entertainment properties across multiple media and
distribution channels.
 Proposed
Milestones to Implement Business Operations
 
 During
the next twelve months, we expect to take the following steps in connection with
the development of our business and the implementation of our plan of
operations:
 
 The
Company will continue to enter into agreements with strategic partners in the
film development and production industry.  These partners will include
Tapestry Films, our CEO’s film production entity, and National Lampoon, Inc. a
current shareholder of Red Rock.  The Company expects to have at least two
films completed in fiscal 2008. The Company has entered into agreements to fund
and co-fund production of a slate of National Lampoon branded moderately
budgeted films.  As of August 31, 2008, one film was in
post-production and one film was released. These films will be distributed by
and through National Lampoon, focused primarily on the college audience, but
marketed and distributed to the general population.  The Company
intends to fund P&A (Prints and Advertising) on these pictures to promote a
limited release, less than 50 screens on the initial release.  In the event
it is decided to release the picture on additional screens, the Company may
either increase funding or work with a P&A lender to provide the additional
funding required.  The terms of these agreements call for a ten
percent (10%) annual interest rate and twenty-five (25%) percent net profit
participation in the motion pictures after recoupment of all costs and
distribution fees for funds advanced for film
financings.
 
 The
Company has also committed to fund P&A on additional third-party independent
films. Two films were released during the 1st quarter 2008 and two additional
films are scheduled to be released during the 1st quarter of 2009. For funds
advanced for P&A, the terms include a twenty percent (20%) return premium
and a profit participation of up to ten percent (10%) of net profits in the
motion pictures.
  In August 2007 the Company
entered into an agreement with National Lampoon, Inc. whereby the Company agreed
to pay  National Lampoon for distribution and prints and advertising
(P&A) services for certain titles released by National Lampoon for up to
$500,000 per title. According to the terms of the agreement, Red Rock will be
reimbursed by the film, plus a 20% premium, for the funding from the release of
the titles. Also, in most cases, Red Rock negotiates additional profit
participation with the producers of each film. Pursuant to this agreement,
National Lampoon has invoiced Red Rock a total of $943,480 for distribution and
P&A services for two titles, which is included in cost of distribution
revenue in NLI for the twelve months ended August 31, 2008.
  The
Company intends to enter into agreements to fund and co-produce a slate of
National Lampoon mid-budget films. As of August 31, 2008, no agreements yet have
been made and identified to fund or co-produce.  However, it is our
intent to enter into an agreement to release one National Lampoon film per year
in this manner.  The distribution of these films will be controlled by
National Lampoon, but will be for a wide theatrical release (1200+
screens).  The Company will share in all revenue generated from these
pictures, including theatrical, home video (DVD), foreign sales, PPV/VOD, and
television.
   -14-
  The
Company will begin building and formalizing relationship with the talent
community.  The Company intends to use our equity as incentives to build
these relationships.  The Company intends to work with top talent to fund
and produce projects that they bring to the Company.  These are typically
moderately budgeted projects, which fall below the typical studio
interest.
  Another
area that the Company will pursue as part of our plan is the acquisition of
existing film properties and film and media related businesses.  The
Company will work to build a library of films to leverage across all
distribution platforms.  The Company feels that as distribution platforms
continue to expand, there are opportunities to exploit content and generate
revenue in a number of ways.
  Their
compensation is determined as a percentage of the purchase price of the
acquisition.  The company has evaluated a number of strategic
acquisitions and continues to do so.
 
 Subsequent
to quarter end, On June 6, 2008, Red Rock Pictures Holdings, Inc. (the
“Company”) entered into a Stock for Stock Exchange Agreement (the “Agreement”)
with Studio Store Direct, Inc. (“SSD”) and all of the current SSD Shareholders.
Pursuant to the Agreement, the Company issued 11,000,000 restricted common
shares in exchange for all the issued and outstanding shares of
SSD.  Further, SSD became a wholly owned subsidiary of the Company.
Pursuant to the Stock for Stock Exchange Agreement the Company acquired 100% of
the assets of SSD.  The Company issued 11,000,000 restricted common
shares in exchange for all the issued and outstanding shares of
SSD.
 
 These
shares were issued in reliance on the exemption under Section 4(2) of the
Securities Act of 1933, as amended (the ‘Act’). These shares of our Common Stock
qualified for exemption under Section 4(2) of the Securities Act of 1933 since
the issuance shares by us did not involve a public offering. The offering was
not a ‘public offering’ as defined in Section 4(2) due to the insubstantial
number of persons involved in the deal, size of the offering, manner of the
offering and number of shares offered. We did not undertake an offering in which
we sold a high number of shares to a high number of investors. In addition,
these shareholders had the necessary investment intent as required by Section
4(2) since they agreed to and received share certificates bearing a legend
stating that such shares are restricted pursuant to Rule 144 of the 1933
Securities Act.  This restriction ensures that these shares would not
be immediately redistributed into the market and therefore not be part of a
‘public offering.’ Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities Act
of 1933 for this transaction.
 
 On June
6, 2008, Robert Levy resigned as the Company’s President, and Chief Executive
Officer.  Mr. Levy was also appointed as Chairman of the Company’s
Board of Directors.
 
 On June
6, 2008, Reno R. Rolle was appointed as the Company’s President, Chief Executive
Officer, and a member of the Board of Directors and Lorraine Evanoff was
appointed Chief Financial Officer.
  The Company will also hire and train a limited amount of additional staff,
including management, marketing, and administrative personnel. The number of
employees hired will be dependent upon a variety of factors including our
progress in implementing our business plan and available capital. The Company
believes that the hiring of employees will be an ongoing process during the
Company’s existence.
  Comparison
of Fiscal Years Ended August 31, 2008 and 2007
 
 Revenue
  Revenue
was $ 934,067 and $139,154 for the
years ended August 31 , 2008 and 2007, respectively.  Revenues
from interest on production advances increased $ 381,3 21 or 270% to
$520,475 as compared to $ 139,154 for the years ended August
31 , 2008 and 2007, respectively.  The increase is due to the
increase in production advances compared to the prior year.
 Costs
and Expenses
  Cost and expenses was $965,889
compared to $5,051,467 for the years ended August 31 , 2008 and 2007,
respectively.   This decrease of $4,094,578 was due to a
marginal increase in expenses related to SSD acquisition offset by a decrease of
$3,604,650 in stock based compensation expense, $341,185 in advertising
and promotion expenses, $120,963 in salary and wages and a $32,712 in
professional fees.  The remaining nominal difference is due to normal
fluctuations in operating expenses due to business
operations.
  -15-
   Capital Resources and
Liquidity
  As of
August 31, 2008 we had $5,923 in cash and a working capital deficiency of
$705,744 .  A
substantial amount of cash will be required in order to commence operations over
the next twelve months.  Based upon our current cash and working
capital deficiency, we will not be able to meet our current operating expenses
and will require additional capital.
 Additionally,
we intend to seek advice from investment professionals on how to obtain
additional capital and believe that by being a public entity we will be more
attractive to the sources of capital.  In addition, we will need to
raise additional capital to continue our operations past 12 months and there is
no assurance that we will be successful in raising the needed capital. Currently
we have no material commitments for capital expenditures.  Any future
cash flow requirements are unavailable through the Equity Distribution Agreement
entered into during the year ended August 31, 2007 as the agreement was
cancelled on August 31, 2008.  Details of this agreement are as
follows:
  On July
6, 2007, the Company entered into an Equity Distribution Agreement (“Agreement”)
with IFG Opportunity Fund, LLC ("IFG"). Pursuant to this Agreement, IFG has
committed to purchase up to $25,000,000 of common stock over the course of
twenty-four months. The amount that the Company shall be entitled to request
from each purchase (the “Advance”) shall be up to $2,000,000.  The
Advance date shall be the date that IFG receives an advance notice of a draw
down by the Company. The purchase price shall be set at 97% of the market
price of the common stock during the pricing period. The pricing period shall be
the five consecutive trading days immediately after the Advance notice date.
There are advance restrictions applied on days between the Advance date and the
closing date with respect to that particular advance. During this time, the
Company shall not be entitled to deliver another advance notice. On each Advance
date the Company shall pay to the IFG, directly out of the gross proceeds of
each Advance, an amount equal to 3% of the amount of each Advance.
  In September 2007, the Company executed a convertible note payable with
IFG for $400,000 plus interest at the rate of ten percent per
annum.  The Company received $215,000 of the $400,000 during the
period ended May 31 , 2008.
 
 On August 31, 2008, the company entered into a cancellation agreement with IFG.
Pursuant to this agreement the Company shall forever release and discharge IFG
of any and all of its obligations under the original note, including any
obligation to pay principal and interest.  The Company has also agreed
on release of collateral shares to IFG.
 Off-Balance Sheet
Arrangements
  None.
  Critical Accounting
Policies
  Red
Rock’s financial statements and related public financial information are based
on the application of accounting principles generally accepted in the United
States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use if estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
   -16-
  
 Our
significant accounting policies are summarized in Note 3 of our financial
statements. While all these significant accounting policies impact its financial
condition and results of operations, Red Rock views certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on Travel Hunt’s consolidated financial statements and
require management to use a greater degree of judgment and estimates. Actual
results may differ from those estimates. Our management believes that given
current facts and circumstances, it is unlikely that applying any other
reasonable judgments or estimate methodologies would cause effect on our
consolidated results of operations, financial position or liquidity for the
periods presented in this report.
  ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Our primary objective in managing our cash balances is preservation of principal
and maintenance of liquidity to meet our operating needs. Our excess cash
balances are invested in money market accounts and short-term municipal bonds in
which there is minimal interest rate risk.
  ITEM 8.  
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
  Our
Consolidated Financial Statements are annexed to this Report as pages F-2
through F- 23 . An index to such materials appears on
page F-1.
  ITEM
9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
 Our accountant is DNTW  Chartered Accountants, LLP, . We do not
presently intend to change accountants. At no time have there been any
disagreements with such accountants regarding any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
 ITEM
9A .CONTROLS AND PROCEDURES
  Evaluation
of disclosure controls and procedures
  Under
the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as of August 31, 2008. Based on
this evaluation, our principal executive officer and principal financial officer
has concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in the reports we file or
submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms and that our disclosure and controls are designed
to ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our
management, including our principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
  MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Management
of the Company is responsible for establishing and maintaining effective
internal control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act.  The Company’s internal control over financial reporting
is designed to provide reasonable assurance to the Company’s management and
Board of Directors regarding the preparation and fair presentation of published
financial statements in accordance with United State’s generally accepted
accounting principles (US GAAP), including those policies and procedures
that: (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company, (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with US GAAP and that receipts and expenditures are being made only
in accordance with authorizations of management and directors of the company,
and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
 
 -17-
 
 Management
conducted an evaluation of the effectiveness of internal control over financial
reporting based on the framework in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission.
Management’s assessment included an evaluation of the design of our internal
control over financial reporting and testing of the operational effectiveness of
our internal control over financial reporting. Based on this assessment,
Management concluded the Company maintained effective internal control over
financial reporting as of August 31, 2008.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.
  This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only management’s report in this
Annual Report.
  Changes in internal
controls
  We
have not made any significant changes to our internal controls subsequent to the
Evaluation Date. We have not identified any significant deficiencies or material
weaknesses or other factors that could significantly affect these controls, and
therefore, no corrective action was taken.
    -17-
  
 PART
III
  ITEM
10 . DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
  Our directors and officers, as of December 16 , 2008, are set forth below.
The directors hold office for their respective term and until their successors
are duly elected and qualified. Vacancies in the existing Board are filled by a
majority vote of the remaining directors. The officers serve at the will of the
Board of Directors.
 
 Name
              Age
              Current
      Positions and Offices HeldRobert
      Levy
              53
              Director
      and Chairman of the BoardReno
      Rollé
              47
              President,
      Chief Executive Officer and DirectorJohn
      Whitesell
              52
              DirectorLorraine
      Evanoff
              46
              Chief
      Financial Officer
 
 Set forth below is a brief description of the background and business experience
of our executive officers and directors.
 
 Robert L. Levy – Director
and Chairman of the Board
 
 Mr. Levy
became our President and Chief Executive Officer on September 13 ,
2006.  On June 6, 2008, Mr. Levy resigned as the Company’s President
and Chief Executive Officer.  Mr. Levy is the Company’s current
Chairman of the Board.
 
 Mr. Levy
has written and/or produced motion pictures for over 20 years and is a principal
partner in Tapestry Films.  Mr. Levy graduated from the University of
California at Los Angeles and received a producing fellowship from the American
Film Institute.  Mr. Levy has produced the following
films:
  ·
              Wedding
      Crashers, starring Vince Vaughn, Owen Wilson, Rachel McAdams and
      Christopher Walken;
 ·
              Underclassman,
      starring Nick Cannon;
 ·
              Serendipity
      starring John Cusack and Kate
Beckinsale;
 ·
              The
      Wedding Planner with Jennifer Lopez and Matthew
    McConaughey;
 ·
              Van
      Wilder starring Ryan Reynolds;
 ·
              Van
      Wilder 2: The Rise of Taj, starring Kal
Penn;
 ·
              She's
      All That with Freddie Prinze Jr. and Rachael Leigh
  Cook;
 ·
              Employee
      of the Month, starring Dane Cook, Jessica Simpson and Dax
      Shepard.
  His
additional producing credits include Pay It Forward, Point Break, Jane Austin's
Mafia!, The Last Time I Committed Suicide, Enemy of My Enemy, Denial, Full
Eclipse, Warlock - The Armageddon and A Killing Time. Mr. Levy has also
executive produced such films as Swing, Black & White, Payback, The Chain,
The Granny and Dark Tide.  He also executive produced and wrote the story
for the Burt Reynolds classic Smokey and the Bandit.   Mr. Levy has
also directed and produced A Kid in Aladdin's Court, the sequel to Tapestry's A
Kid in King Arthur's Court.
 
 Reno R.Rollé– President, Chief
Executive Officer and Director
  On June 6, 2008, Mr. Rollé was appointed as the Company’s President, Chief
Executive Officer, and a member of the Board of Directors.  Mr. Rollé
previously held the position of Chief Executive Officer for Shop America
USA.  Based in Bradford England and operating in the United States,
Shop America specialized in long- and short-form direct response television
(infomercial) marketing.  During this time Mr. Rollé co-created the
hit book and marketing campaign for "Natural Cures ‘They’ Don’t Want You to Know
About." This book held the #1 spot on the NY Times Best Sellers List for 18
weeks in 2005 and 2006, has sold in excess of 9 million copies.
  -18-
  Prior to his experience at Shop America, Mr. Rollé was a founding principle of
the National Lampoon Acquisition Group, LLC an investment group that
orchestrated the recent acquisition of J2 Communications, Inc. (NASDAQ:JTWO) a
small cap public company that owned the most recognized brand in comedic
entertainment, National Lampoon. Mr. Rollé founded National Lampoon Home
Entertainment in 2002 to produce and distribute National Lampoon branded
DVDs.
  Between 1997 and 2001 Mr. Rollé was the co-founder, Chairman and Chief Executive
Officer of Synergy Worldwide, Inc., a product engineering, design and marketing
company. In 1999 Synergy produced “Mastering the Flow,” a blackjack card
counting program that became the longest running, most successful gaming
infomercial ever. In September 2000, Synergy was honored with the distinguished
“R&D 100 Award” for Mr. Rollé’s invention, The “Spin Fryer”. This award,
referred to as the “Oscars of Inventions,” recognizes the most technologically
significant inventions in history. Past winners include: anti-lock brakes, the
fax machine, the ATM, and polarized film. The Spin Fryer was subsequently
licensed to Salton, Inc. (NYSE:SFP) for marketing and distribution under the
George Forman line of kitchen products.
  From 1994 to 1997 Mr. Rollé was a co-founder of HSN Direct, a direct response
television joint venture with Home Shopping Network, Inc. (NASDAQ: IACI) Mr.
Rollé’s primary responsibility was to negotiate and manage the majority of
HSND’s contracts, including marketing and distribution, production, talent and
joint venture agreements. In addition, Mr. Rollé oversaw all aspects of new
business development including: media, production, regulatory compliance and
operations.
  Highlighting Mr. Rollé’s tenure with HSND was his role in the development and
launch of the Ab Isolator and EZ Crunch abdominal exercise products. These
infomercials both generated in excess of $150 million dollars in worldwide sales
and spawned an entire consumer product segment targeting abdominal exercise.
Estimated sales of this category easily exceed $1 billion dollars
worldwide
  John Whitesell –
Director
  On June
6, 2008 John Whitesell was appointed as a member of the Company’s Board of
Directors.   John Whitesell is an accomplished director and
producer who released his fifth feature film, Deck the Halls, starring Danny
DeVito and Matthew Broderick, nationwide on 22 November, 2006. The film is a
family comedy about clashing neighbors, home decoration, and the true spirit of
the holidays.   In 2006 Mr. Whitesell directed the feature film
Big Momma’s House 2.  In this sequel to the hit comedy Big Momma’s
House, Martin Lawrence reprises his role as FBI agent Malcolm Turner who once
again goes undercover as Big Momma.  In 2003, Mr. Whitesell directed
the film Malibu’s Most Wanted starring Jamie Kennedy, Taye Diggs, Anthony
Anderson, Ryan O’Neal and Blair Underwood for Warner Brothers. Prior to that,
Mr. Whitesell directed See Spot Run also for Warner Brothers, starring David
Arquette and Michael Clark Duncan.  Mr. Whitesell also directed
Calendar Girl starring Jason Priestley and Joe Pantoliano for Sony Pictures. The
story follows three young men on an end of the summer trip to Hollywood, CA on a
quest to fulfill the fantasy of meeting Marilyn Monroe.
  During
this time, Mr. Whitesell was also very active in television directing and
producing. He directed and produced over 200 episodes of primetime television
including Roseanne, Action, and Jack and Jill. He also directed many television
pilots including Grounded for Life, The John Larroquette Show, Damon, Cosby and
Law and Order.
  Mr.
Whitesell started his television career in daytime television. He was a director
and executive producer on the soap operas Search for Tomorrow and Another World,
and he won an Emmy for directing Guiding Light.
  Mr.
Whitesell trained in theatre at Circle Square in New York City and at the
Williamstown Theatre Festival and graduated from Simpson College in
1976.
  Lorraine Evanoff – Chief
Financial Officer
  On
January 4, 2008, Red Rock Pictures Holdings, Inc. (the “Company”) appointed Ms.
Lorraine Evanoff as Chief Financial Officer.  Ms. Evanoff has over
nine years experience in public accounting, specifically in facilitating reverse
mergers and public offerings. Ms. Evanoff has been Interim Chief Financial
Officer of National Lampoon, Inc. since September 2007.  From March
2006 until July 2007, Ms. Evanoff was Director of Finance of Element Films, LLC,
a newly established film production subsidiary of SBE Entertainment, and was
instrumental in setting up all production and film finance
processes.  From April 2005 to March 2006 Ms. Evanoff served as Vice
President of Finance and Chief Accounting Officer of National Lampoon, Inc. and
was a key participant in the 2005 secondary public offering and registration
with the American Stock Exchange.  Ms. Evanoff was Controller of TAG
Entertainment Corp., a public company from February 2004 until April 2005 where
she was essential to the reverse merger that took the company
public.  Prior to working at TAG Entertainment, Ms Evanoff was
Controller of ANTs Software Inc., a public company that develops
high-performance SQL database management systems until February
2004.  From 1999 to 2002, Ms. Evanoff also held senior treasury
analyst and financial analyst posts with Electronic Arts Inc. and Landor
Associates, Inc.
   -19-
  We will
not enter into a business combination, or acquire any assets of any kind for its
securities, in which our management or any affiliates or associates have any
interest, direct or indirect.
  There are
no binding guidelines or procedures for resolving potential conflicts of
interest. Failure by management to resolve conflicts of interest in favor of us
could result in liability of management to us. However, any attempt by
shareholders to enforce a liability of management to us would most likely be
prohibitively expensive and time consuming.
  Term of
Office
  Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
  Audit
Committee
  We
do not have a standing audit committee of the Board of Directors. Management has
determined not to establish an audit committee at present because of our limited
resources and limited operating activities do not warrant the formation of an
audit committee or the expense of doing so. We do not have a financial expert
serving on the Board of Directors or employed as an officer based on
management’s belief that the cost of obtaining the services of a person who
meets the criteria for a financial expert under Item 401(e) of Regulation S-B is
beyond its limited financial resources and the financial skills of such an
expert are simply not required or necessary for us to maintain effective
internal controls and procedures for financial reporting in light of the limited
scope and simplicity of accounting issues raised in its financial statements at
this stage of its development.
  Certain Legal
Proceedings
  No director, nominee for director, or executive officer of the Company has
appeared as a party in any legal proceeding material to an evaluation of his
ability or integrity during the past five years.
  Compliance With Section
16(A) Of The Exchange Act.
  Section 16(a) of the Exchange Act requires the Company’s officers and directors,
and persons who beneficially own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and are required to
furnish copies to the Company. To the best of the Company’s knowledge, any
reports required to be filed were timely filed in fiscal year ended August 31,
2008.
  Code of
Ethics
  The company has adopted a Code of Ethics applicable to its Chief Executive
Officer and Chief Financial Officer. This Code of Ethics is filed herewith as an
exhibit.
 
 ITEM
11. EXECUTIVE COMPENSATION
  Compensation of Executive
Officers
 
 The following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officers paid by us during the fiscal
years ended August 31, 2008 in all capacities for the accounts of our
executives, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO):
   -20-
 
 SUMMARY
COMPENSATION TABLE
 
 Annual
      Compensation
              
              
              Long-Term
      CompensationAwards
              PayoutsName
      And Principal
                Position
              Year
              Salary
                ($)
              Bonus
                ($)
              Other
      Annual Compensation
                ($)
              Restricted
      Stock Award(s)
                ($)
              Securities
      Under-lying Options /SARs
                ($)
              LTIP
                Payouts
                ($)
              All
      Other Compensation
                ($)Reno
      Rolle, President and Chief Executive Officer
              2008
              00
              0
              0
              0
              1,833
              0
              0Lorraine
      Evanoff, Chief Financial Officer
              2008
              7,500
              0
              0
              0
              3,057
              0
              0Jay
      Koh, Vice President of Operations and Production
              2008
              0
              0
              0
              0
              900
              0
              0
 
 Employment
Agreements
  On June 1 , 2008, the Company entered into an employment agreement with
the President and Chief Executive Officer, Reno Rolle.   The
agreement is in effect for two years and shall automatically renew for
successive one year periods unless the Company’s Board of Driectors elects not
to renew the employment agreement.  The employment agreement provides
for compensation of $240,000 per annum of which amount can be paid in cash and
common shares of the Company.  The percentage of cash versus common
shares shall be mutually agreed upon between Mr. Rolle and the Company’s Board
of Directors.  Mr. Rolle is eligible for an annual bonus
program.  The amount of the bonus will be negotiated in good faith and
mutually agreed upon by Mr. Rolle and the Board of Directors of the
Company.  The annual bonus will be paid one-half in stock and one-half
in cash.  Additionally, Mr. Role received options to purchase
2,000,000 shares upon the execution of the employment agreement and will be
entitled to purchase an additional 2,000,000 annually at “no par
value”.   The options vest over a five year period.
 
 On June 1 , 2008, the Company entered into an employment agreement with
the Chief Financial Officer, Lorraine Evanoff.  The employment
agreement provides for compensation of $20,000 per annum and options to purchase
300,000 of the Company’s shares at a strike price of $0.06 per
share.  For each additional year of employment Ms. Evanoff will be
granted an additional option to purchase 200,000 shares of the Company’s common
stock at a strike price equal to market value the date of the grant and will
vest over three years.  The agreement is terminable at
will.
 
 The company entered into an agreement with Jay Koh.  Mr. Koh was
appointed as Vice-President of Operations and Production.  Mr. Koh
will be paid $9,000 per month in a combination of cash and stock, Mr. Koh was
also granted options to purchase 1,000,000 shares of the Company’s common stock
and will vest equally over 5 years.  The agreement is in effect for
one year and shall automatically renew for successive one year periods unless
the Company’s President and Chief Executive Officer elects not to renew the
employment agreement.
 
 Compensation of
Directors
 
 Directors do not receive any compensation for their services as directors. The
Board of Directors has the authority to fix the compensation of directors. No
amounts have been paid to, or accrued to, directors in such
capacity.
  ITEM
12 . SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
  Security
Ownership of Certain Beneficial Owners and Management
 
 The
following table sets forth each person known by us to be the beneficial owner of
five percent or more of the Company's Common Stock, all directors individually
and all directors and officers of the Company as a group. Except as noted, each
person has sole voting and investment power with respect to the shares
shown.
   -21-
 
  Name
      and Address
              Number
      of Common Shares Beneficially Owned (2)
              Percent
      of ClassReno
      Rolle
                8228  Sunset
      Blvd.
                3rd
      Floor
                Los
      Angeles, CA 90046
              10,775,200
              10.61%Lorraine
      Evanoff
                8228
      Sunset Blvd.
                3
      rd
      Floor
                Los
      Angeles, CA 90046Jay
      Koh
                8228
      Sunset Blvd.
                3
      rd
      Floor
                Los
      Angeles, CA 90046All
      directors and executive officers as a group (1 in number)
 
 (1)
The person listed is an officer and/or director of the Company.
 (2)
Based on 101,484,335shares of common stock issued and outstanding as of 14
December, 2008.
  ITEM
13 . CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
  In June 2007, the Company entered into loan agreements with the N. Williams
Family Investments, L.P. and Daniel Laikin (collectively, “Williams-Laikin”) for
$1,000,000 and $900,000 respectively for a total of $1,900,000.  The
proceeds of these loans are to fund the Company’s obligation to advance
production costs to National Lampoon for a motion picture
production.  The loan is secured by the film.  The loans
bear seven percent (7%) interest and are to be repaid out of the proceeds of
equity raised of the Company or sales efforts of the motion picture. In addition
to the interest on these advances, Williams-Laikin are entitled to receive
fifteen percent (15%) of the twenty five percent (25%) of all net profits from
the distribution of the respective picture received by the
Company.  The Company's transactions with related parties were, in the
opinion of the directors, carried out on normal commercial terms and in the
ordinary course of the Company's business.
  In addition, in July 2007 the Company issued to Williams-Laikin 521,866 shares
of the company’s common stock which represents the number of shares computed by
dividing each $1,000,000 loan by $1.92 (the computed lowest volume weighted
average price (“VWAP”) for the five days prior to the execution of the
Williams-Laikin loans).
  In the event that Company’s common stock falls below $1.92 on the six-month
anniversary of the Williams-Laikin loans, than the Company shall issue to
Williams-Laikin an additional number of shares of the Company’s common stock
equal to the difference between the number of Williams-Laikin shares and one
million dollars ($1,000,000) divided by the VWAP of the Company’s common stock,
as quoted by Bloomberg, LP, on the calculation date.  In May 2008 the
Company issued 11,962,528 shares pursuant to this requirement and has been
valued at the market value of the common stock on the date of
issue.
  In fiscal year 2008, the Company repaid $55,000 towards these
advances.
  In
August 2007 the Company entered into an agreement with National Lampoon, Inc.
whereby the Company agreed to pay National Lampoon, Inc. for distribution and
prints and advertising (P&A) services for certain titles released by
National Lampoon, Inc. for up to $500,000 per title. According to the terms of
the agreement, the Company will be reimbursed in the amount of the total P&A
funding advanced plus a one-time 20% premium, from adjusted gross revenues from
the release of the titles. Also, in most cases, the Company negotiates
additional profit participation with the producers of each film.  In
fiscal year 2008 and pursuant to this agreement, National Lampoon, Inc. has
invoiced the Company a total of $943,480 for distribution and P&A services
for two titles, which is included in cost of distribution revenue for the year
ended August 31, 2008.
   -22-
   
 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Audit
Fees
  For the Company’s fiscal years ended August 31, 2008 and 2007, we were billed
approximately $35,000 and $23,881, respectively, for professional services
rendered for the audit and review of our financial statements.
  Audit Related
Fees
 
 There were no fees for audit related services for the years ended August 31,
2008 and 2007.
 
 Tax Fees
  For the Company’s fiscal years ended August 31, 2008 and 2007, we were not
billed for professional services rendered for tax compliance, tax advice, and
tax planning.
  All Other
Fees
  The Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal years ended August 31, 2008 and
2007.
  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
    -23-
   
 PART IV
   ITEM 15. EXHIBITS, FINANCIAL
STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
  (a)           Documents filed as part of this
report:
 
 (a)    
Exhibits:
  Exhibit No.
                
                Title
      of Document
                
                Location3.1
                
                Certificate
      of Incorporation
                
                Incorporated
      by reference to Form 10-SB filed on 14 March,
    20063.2
                
                Bylaws
                
                Incorporated
      by reference to Form 10-SB filed on 14 March,
    200614
                
                Code
      of Ethics
                
                Filed
      herewith31.1
                
                Certification
      of Chief Executive Officer Pursuant to Rule 13a-14(a) of the
      Securities Exchange Act of 1934
                
                Filed
      herewith32.1
                
                Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002
                
                Filed
      herewith
  (b)     Reports
of Form 8-K filed in fourth quarter of the fiscal year and subsequent event
period:
   -24-
  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, there unto duly
authorized.
  RED ROCK PICTURES HOLDINGS,
      INC.RegistrantDate: December 17 ,
      2008
                    By:/s/ Reno
      RolleReno
      RollePresident, Chief Executive
      Officer, and Director
 
  RED ROCK PICTURES HOLDINGS,
      INC.RegistrantDate: December 17,
      2008
                    By:/s/LorraineEvanoffLorraine
      EvanoffChief Financial
      Officer
         -25-
 
 RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
 (A Development Stage
Company)
  CONSOLIDATED FINANCIAL
STATEMENTS
  31 AUGUST 2008
 
 RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
 31 AUGUST 2008
  CONTENTS
  
 PageREPORT OF INDEPENDENT REGISTERED
      PUBLIC ACCOUNTING FIRM
                  F-1CONSOLIDATED FINANCIAL
      STATEMENTSConsolidated Balance
      Sheets
                  F-2Consolidated Statements of Loss
      and Comprehensive Loss
                  F-3Consolidated Statements of
      Stockholders' Equity (Deficit)
                  F-4Consolidated Statements of Cash
      Flows
                  F-5Notes to the Consolidated
      Financial Statements
                  F-6 -
  F-23
 
   
   
  REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
  To the Board of Directors and
Stockholders of
 Red Rock Pictures Holdings, Inc. and
Subsidiaries
 
  We have audited the accompanying
consolidated balance sheets ofRed Rock Pictures
Holdings, Inc. and Subsidiaries, a development stage company, as of 31
August 2008 and 2007 and the related statements of loss and comprehensive loss,
stockholders' equity (deficit) and cash flows for the year ended 31 August 2008
and 2007 and for the period
from 18 August 2006 (date of inception) to 31 August 2008.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our
audits.
  We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States).  Those standards require that we plan and perform the audits
to obtain reasonable assurance whether the consolidated financial statements are free
of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
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 provides a reasonable basis
for our opinion.
  In our opinion, based on our audits,
such consolidated financial
statements present fairly, in all material respects, the financial position of
Red Rock Pictures Holdings, Inc. and Subsidiaries, a development stage company,
as of 31 August 2008 and 2007 and the related statements of loss and
comprehensive loss,stockholders' equity (deficit) and cash
flows for the year ended 31 August 2008 and  the period from 18 August
2006 (date of inception) to 31 August 2008 in accordance with accounting
principles generally accepted in the United States of
America.
  The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going
concern.  As discussed in note 2, the Company has not established a
significant source of revenue, has working capital deficiencies and has
suffered losses from operations since
inception, which raises substantial doubt about its ability to continue as a
going concern.  Management's plans in regard to these matters are
described in note 2.  The consolidated financial statements do not
include anyadjustments that might result from the
outcome of this uncertainty.
  
  /s/ DNTW Chartered Accountants,
LLP
 Licensed Public
Accountants
 Markham, Canada
 12 December 2008
 
   F-1
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
 (A Development Stage
Company)
 CONSOLIDATED BALANCE
SHEETS
 
 31 August
    2008
                  
                  
                  31 August
    2007ASSETSCurrent
    AssetsCash
                  
                  $
                  5,932
                  
                  
                  $
                  9,936Accounts
      receivable
                  
                  
                  216,644
                  
                  
                  
                  -Advances to related
      party
                  
                  
                  76,798
                  
                  
                  
                  -Capitalized production
      costs
                  
                  
                  134,723
                  
                  
                  
                  -Prepaid expenses and
      deposits
                  
                  
                  10,745
                  
                  
                  
                  2,137Production loans and accrued
      interest - current portion
                  
                  
                  1,396,470
                  
                  
                  
                  -Total Current
      Assets
                  
                  
                  1,841,312
                  
                  
                  
                  12,073Long Term
      AssetsProduction loans and accrued
      interest
                  
                  
                  2,923,337
                  
                  
                  
                  3,822,264Property and
      equipment
                  
                  
                  25,707
                  
                  
                  
                  -Intangibles
                  
                  
                  424,280
                  
                  
                  
                  -Goodwill
                  
                  
                  450,338
                  
                  
                  
                  -Total Long Term
      Assets
                  
                  
                  3,823,662
                  
                  
                  
                  3,822,264Total
Assets
                  
                  $
                  5,664,974
                  
                  
                  $
                  3,834,337LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      LiabilitiesAccounts
      payable
                  
                  $
                  127,720
                  
                  
                  $
                  39,468Accrued
      liabilities
                  
                  
                  32,290
                  
                  
                  
                  15,000Advances from
      shareholders
                  
                  
                  63,636
                  
                  
                  
                  68,172Deferred production
      revenue
                  
                  
                  326,000
                  
                  
                  
                  -Advances from related
      parties
                  
                  
                  1,997,410
                  
                  
                  
                  2,030,608Total
      Liabilities
                  
                  
                  2,547,056
                  
                  
                  
                  2,153,248Going Concern, Commitments and
      ContingencyStockholders'
      EquityPreferred stock, $0.001 par value; 5,000,000
      shares authorized, none issued or outstanding
                  
                  
                  -
                  
                  
                  
                  -Common stock, $0.001 par value;
      120,000,000 shares authorized, 95,350,735 shares issued and outstanding
      (2007 - 64,534,361)
                  
                  
                  95,351
                  
                  
                  
                  64,535Additional paid-in capital
                  
                  
                  8,200,769
                  
                  
                  
                  6,641,843Deficit accumulated during the
      development stage
                  
                  
                  (5,178,202
                  )
                  
                  
                  (5,025,289
                  )Total Stockholders'
      Equity
                  
                  
                  3,117,918
                  
                  
                  
                  1,681,089Total Liabilities and
      Stockholders' Equity
                  
                  $
                  5,664,974
                  
                  
                  $
                  3,834,337
 
 The accompanying notes are an integral
part of these financial statements.
   F-2
     RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
 (A Development Stage
Company)
  CONSOLIDATED STATEMENTS OF LOSS AND
COMPREHENSIVE LOSS
   For the Year Ended 31 August
      2008
                    
                    
                    For the Year Ended 31 August
      2007
                    
                    
                    For the Period from Inception (18
      August 2006) to 31 August 2008REVENUEDistribution profit
      participation
                    
                    $
                    23,448
                    
                    
                    $
                    -
                    
                    
                    $
                    23,448Print and advertising premium
      fees
                    
                    
                    188,696
                    
                    
                    
                    -
                    
                    
                    
                    188,696Interest on production
      advances
                    
                    
                    520,475
                    
                    
                    
                    139,154
                    
                    
                    
                    659,629Consulting
                    
                    
                    198,500
                    
                    
                    
                    -
                    
                    
                    
                    198,500Other
                    
                    
                    2,948
                    
                    
                    
                    -
                    
                    
                    
                    2,948934,067
                    
                    
                    
                    139,154
                    
                    
                    
                    1,073,221COSTS AND
      EXPENSESCosts of distribution profit
      participation
                    
                    
                    3,517
                    
                    
                    
                    -
                    
                    
                    
                    3,517Stock based
      compensation
                    
                    
                    714,743
                    
                    
                    
                    4,319,393
                    
                    
                    
                    5,034,135Professional
      fees
                    
                    
                    58,925
                    
                    
                    
                    91,637
                    
                    
                    
                    165,570Salaries and
      wages
                    
                    
                    57,141
                    
                    
                    
                    178,104
                    
                    
                    
                    235,244Office and
      general
                    
                    
                    56,585
                    
                    
                    
                    88,333
                    
                    
                    
                    145,520Rent
                    
                    
                    32,426
                    
                    
                    
                    24,000
                    
                    
                    
                    56,426Advertising and
      promotion
                    
                    
                    8,815
                    
                    
                    
                    350,000
                    
                    
                    
                    358,815Amortization of intangible
      assets
                    
                    
                    22,331
                    
                    
                    
                    -
                    
                    
                    
                    22,331Amortization of tangible
      assets
                    
                    
                    2,406
                    
                    
                    
                    -
                    
                    
                    
                    2,406TOTAL OPERATING
      EXPENSES
                    
                    
                    956,889
                    
                    
                    
                    5,051,467
                    
                    
                    
                    6,023,964LOSS FROM
      OPERATIONS
                    
                    
                    (22,822
                    )
                    
                    
                    (4,912,313
                    )
                    
                    
                    (4,950,743
                    )Financial
                    
                    
                    (130,091
                    )
                    
                    
                    (30,865
                    )
                    
                    
                    (160,957
                    )NET LOSS AND COMPREHENSIVE
      LOSS
                    
                    $
                    (152,913
                    )
                    
                    $
                    (4,943,178
                    )
                    
                    $
                    (5,111,700
                    )LOSS PER WEIGHTED NUMBER OF SHARES
      OUTSTANDING - BASIC AND DILUTED
                    
                    $
                    0.00
                    
                    
                    $
                    (0.08
                    )WEIGHTED AVERAGE NUMBER OF SHARES
      OUTSTANDING - BASIC AND DILUTED
                    
                    
                    81,226,205
                    
                    
                    
                    61,880,348
    The accompanying notes are an integral
part of these financial statements.
     F-3
   RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
 (A Development Stage
Company)
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIT)
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  
 Common
Stock
                  
                  
                  
                  
                  
                  Accumulated
                  
                  
                  
                  
                  
                  TotalShares
                  
                  
                  Amount
                  
                  
                  Additional Paid In
      Capital
                  
                  
                  Other
                    Comprehensive
      Loss
                  
                  
                  Accumulated
      Deficit
                  
                  
                  Stockholders' Equity
      (Deficit)Issuance of common stock at
      inception
                  
                  
                  2,080,000
                  
                  
                  $
                  2,080
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  2,080Acquisition of the net liabilities
      of Red Rock Pictures, Inc.
                  
                  
                  58,270,000
                  
                  
                  
                  58,270
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (66,501
                  )
                  
                  
                  (8,231
                  )Net loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (15,610
                  )
                  
                  
                  (15,610
                  )Balance, 31 August
      2006
                  
                  
                  60,350,000
                  
                  
                  
                  60,350
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (82,111
                  )
                  
                  
                  (21,761
                  )Common shares issued for cash, net
      of financing fees
                  
                  
                  800,000
                  
                  
                  
                  800
                  
                  
                  
                  1,647,089
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,647,889Common shares issued for services
      and accounts payable
                  
                  
                  3,384,361
                  
                  
                  
                  3,385
                  
                  
                  
                  4,682,781
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4,686,166Stock options
      granted
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  311,973
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  311,973Net loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,943,178
                  )
                  
                  
                  (4,943,178
                  )Balance, 31 August
      2007
                  
                  
                  64,534,361
                  
                  
                  $
                  64,535
                  
                  
                  $
                  6,641,843
                  
                  
                  $
                  -
                  
                  
                  $
                  (5,025,289
                  )
                  
                  $
                  1,681,089Common shares issued for
      services
                  
                  
                  40,000
                  
                  
                  
                  40
                  
                  
                  
                  28,245
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  28,285Common shares issued for cash, net
      of financing fees
                  
                  
                  19,776,374
                  
                  
                  
                  19,776
                  
                  
                  
                  195,224
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  215,000Stock options
      granted
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  686,457
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  686,457Acquisition of the net assets of
      Studio Store Direct Inc.
                  
                  
                  11,000,000
                  
                  
                  
                  11,000
                  
                  
                  
                  649,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  660,000Net loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (152,913
                  )
                  
                  
                  (152,913
                  )Balance, 31 August
      2008
                  
                  
                  95,350,735
                  
                  
                  $
                  95,351
                  
                  
                  $
                  8,200,769
                  
                  
                  $
                  -
                  
                  
                  $
                  (5,178,202
                  )
                  
                  $
                  3,117,918
 
 
 
 The accompanying notes are an integral
part of these financial statements.
     F-4
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
 (A Development Stage
Company)
  CONSOLIDATED STATEMENT OF CASH
FLOWS
  Year Ended 31 August
                      2008
                    
                    
                    Year Ended 31 August
      2007
                    
                    
                    Period from Inception (18 August
      2006) to 31 August 2008CASH FLOWS FROM OPERATING
      ACTIVITIESNet loss
                    
                    $
                    (152,913
                    )
                    
                    $
                    (4,943,178
                    )
                    
                    $
                    (5,111,700
                    )Adjustments to reconcile net loss
      to net cash used in operating activities:Common shares issued for
      services
                    
                    
                    28,285
                    
                    
                    
                    4,686,166
                    
                    
                    
                    4,714,451Stock options
      granted
                    
                    
                    686,457
                    
                    
                    
                    311,973
                    
                    
                    
                    998,430Amortization
                    
                    
                    24,737
                    
                    
                    
                    -
                    
                    
                    
                    24,737Changes in operating assets and
      liabilities:Notes
      receivable
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (820
                    )Accounts
      receivable
                    
                    
                    (212,144
                    )
                    
                    
                    -
                    
                    
                    
                    (212,144
                    )Increase in capitalized production
      costs
                    
                    
                    (48,177
                    )
                    
                    
                    -
                    
                    
                    
                    (48,177
                    )Prepaid expenses and
      deposits
                    
                    
                    (5,765
                    )
                    
                    
                    (2,137
                    )
                    
                    
                    (7,003
                    )Accounts
      payable
                    
                    
                    4,520
                    
                    
                    
                    39,468
                    
                    
                    
                    58,523Accrued
      liabilities
                    
                    
                    12,406
                    
                    
                    
                    (4,635
                    )
                    
                    
                    7,771Deferred production
      revenue
                    
                    
                    30,000
                    
                    
                    
                    -
                    
                    
                    
                    30,000NET CASH PROVIDED BY OPERATING
      ACTIVITIES
                    
                    
                    367,406
                    
                    
                    
                    87,657
                    
                    
                    
                    454,068CASH FLOWS FROM INVESTING
      ACTIVITIESProduction loans and accrued
      interest
                    
                    
                    (497,543
                    )
                    
                    
                    (3,821,444
                    )
                    
                    
                    (4,318,987
                    )Cash received in acquisition of
      Studio Store Direct, Inc.
                    
                    
                    47,788
                    
                    
                    
                    -
                    
                    
                    
                    47,788NET CASH USED IN INVESTING
      ACTIVITIES
                    
                    
                    (449,755
                    )
                    
                    
                    (3,821,444
                    )
                    
                    
                    (4,271,199
                    )CASH FLOWS FROM FINANCING
      ACTIVITIESAdvances from
      shareholders
                    
                    
                    (63,457
                    )
                    
                    
                    64,141
                    
                    
                    
                    684Advances from related
      parties
                    
                    
                    (73,198
                    )
                    
                    
                    2,030,608
                    
                    
                    
                    1,957,410Issuance of common stock, net of
      financing fees
                    
                    
                    215,000
                    
                    
                    
                    1,647,889
                    
                    
                    
                    1,864,969NET CASH PROVIDED BY FINANCING
      ACTIVITIES
                    
                    
                    78,345
                    
                    
                    
                    3,742,638
                    
                    
                    
                    3,823,063NET (DECREASE) INCREASE IN
      CASH
                    
                    
                    (4,004
                    )
                    
                    
                    8,851
                    
                    
                    
                    5,932CASH, BEGINNING OF
      PERIOD
                    
                    
                    9,936
                    
                    
                    
                    1,085
                    
                    
                    
                    -CASH, END OF
      PERIOD
                    
                    $
                    5,932
                    
                    
                    $
                    9,936
                    
                    
                    $
                    5,932
  The accompanying notes are an integral
part of these financial statements.
   F-5
 
 RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
   1.
                  ORGANIZATION AND NATURE OF
      BUSINESS
  Nature of Business
  Red Rock Pictures, Inc. was incorporated
on 18 August 2006 under the laws of the State of Nevada and was acquired by Red
Rock Pictures Holdings Inc. (the "Company") on 31 August 2006.  The
Company is a development stage company that is in the business ofdeveloping, financing, producing and
licensing feature-length motion pictures and infomercials and providing
consultancy services for the online marketing of various
products.
  Organization
  In August 2006, Red Rock Pictures, Inc.
consummated a share exchangeagreement, whereby 100% of its shares
were acquired by Maneki Mining Inc. ("Maneki"), a Nevada corporation, in
exchange for 1,800,000 shares of Maneki.  As a result of the
transaction, the former shareholders of the Red Rock Pictures, Inc. received
approximately 51% ownership of
Maneki.  The merger was therefore accounted for as a recapitalization
of the Red Rock Pictures, Inc. into a shell company.  Accordingly, the
issuance of shares were recorded by eliminating Maneki's assets, share capital
and earnings and the historical financial
information presented in the financial statements is that of Red Rock Pictures,
Inc. (since 18 August 2006 the date of inception) as adjusted to give effect to
any difference in the par value of the issuer’s and the accounting acquirer’s stock with an offset to additional
paid in capital.  The basis of the assets and liabilities of Red Rock
Pictures, Inc., the accounting acquirer, has been carried over in the
recapitalization.  In addition, Maneki agreed to cancel 1,500,000
shares of its common stock.  The
terms of the Agreement were consummated on 31 August 2006 giving Maneki a 100%
equity interest in Red Rock Pictures, Inc.
  On 31 October 2006, Maneki Mining Inc.
filed a certificate of amendment, changing the legal name of thecorporation to Red Rock Pictures
Holdings, Inc.
  On 6 June 2008, the Company entered into
a stock for stock exchange agreement (the “Agreement”) with Studio Store Direct, Inc.
(“SSD”) and all of its current
shareholders.  Pursuant to the Agreement, the Company issued 11,000,000 restricted common
shares in exchange for all the issued and outstanding shares of
SSD.  These common shares were issued in reliance on the exemption
available under Section 4(2) of the Securities Act of 1933, as amended and
qualifyfor exemption since the issuance of
shares did not involve a public offering.
  The acquisition was accounted for using
the purchase method of accounting whereby the total purchase price, including
transaction expenses, was allocated to tangible and intangible assets acquired based on estimated
fair market values.
 
   F-6
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  1.
                  ORGANIZATION AND NATURE OF
      BUSINESS (Continued)
  Organization
(Continued)
  Based on the provisions of the Agreement
between the two companies and valuations of the fair market value of the assets
and liabilities of SSD, the allocation of the purchase price was as
follows for the undernoted consideration:
  Net Assets Acquired:
  5 June 2008Cash and cash
      equivalents
                  
                  $
                  47,788Accounts receivable, no
      allowance
                  
                  
                  4,500Loan from related
      party
                  
                  
                  76,798Property andEquipment
                  
                  
                  28,113Capitalized production
      costs
                  
                  
                  86,546Other
assets
                  
                  
                  2,793Goodwill
                  
                  
                  450,388Intangible assets acquired -
      completed process and technology
                  
                  
                  446,610Book value of net liabilities
      acquired
                  
                  
                  (483,536
                  )Net Assets
      Acquired
                  
                  $
                  660,000
  Consideration Given:
  Issuance of 11,000,000 common
      shares at $0.06 per share (valued at the average price two days before and
      after the measurement date)
                  
                  $
                  660,000
  2.
                  GOING
    CONCERN
  The Company's financial statements are
presented on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business.  The
Company has experienced losses from operations since inception,do not have significant sources of
revenue and have working capital deficiencies that raise substantial doubt as to
its ability to continue as a going concern.
  The Company's existence is dependent
upon management's ability to develop profitable operationsand resolve its liquidity problems.
Management anticipates the Company will attain profitable status and improve its
liquidity through continued business development and additional equity
investment in the Company.
  The financial statements do not include
any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going
concern.
 
  F-7
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
   3.
                  SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES
  The accounting policies of the Company
are in accordance with accounting principles generally accepted in the United
States of America.  Presented below are those policies considered
particularly significant:
  Principles of
Consolidation
  The accompanying consolidated financial
statements of the Company include the accounts of Red Rock Pictures Holdings,
Inc. and its wholly owned subsidiaries, Red Rock Pictures Inc. and Studio Store
Direct Inc. The Company has the full and exclusive control of the
management and operation of the business of each subsidiary and participates in
100% of the revenues and losses of its subsidiaries. Inter-company balances and
transactions have been eliminated in consolidation.
  Organizationand Start up Costs
  Costs of start up activities, including
organization costs, are expensed as incurred.
  Use of Estimates
  The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the 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.  Examples include estimates
of the useful life of equipment and intangibles, the impairment of long-lived
assets, intangibles and goodwill, the value of stock compensation and the
estimates of revenue and costs related to
film production.  These estimates are reviewed periodically, and, as
adjustments become necessary, they are reported in earnings in the period in
which they become known.
  Development Stage
Company
  The Company is considered to be in the development stage as
defined in Statement of Financial Accounting Standards ("SFAS") No. 7,Accounting and
Reporting by Development Stage Enterprises.  The Company has devoted
substantially all of its efforts to business planning and development.
   F-8
   RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  3.
                  SUMMARY OF SIGNIFICANTACCOUNTING POLICIES
      (Continued)
  Revenue Recognition
  The Company recognizes revenue from
television and film productions pursuant to American Institute of Certified
Public Accountants Statement of Position 00-2,Accounting by
Producers or Distributors of Films(“SOP 00-2”).  The following conditions
must be met in order to recognize revenue under SOP 00-2: (i) persuasive
evidence of a sale or licensing arrangement exists; (ii) the program is complete
and has been delivered or is available for immediate and unconditional delivery; (iii) the license
period of the arrangement has begun and the customer can begin its exploitation,
exhibition or sale; (iv) the arrangement fee is fixed or determinable; and (v)
collection of the arrangement fee is reasonably assured. Income from film productions is
derived from foreign, home video and television sales of third-party films for
which production and/or prints and advertising have been financed by the
Company. A significant portion of participation income is paid to
theCompany based on the timetable
associated with participation statements generated by third party processors,
and is not typically known by the Company on a timely basis.  This
revenue is consequently not recognized until the amount is either known or
reasonably estimable or until receipt of the
statements from the third parties.   When the Company is entitled
to royalties based on gross receipts, revenue is recognized before deduction of
fees, which are included as a component of cost of revenue. Cash
received in advance of meeting the revenue
recognition criteria described above is recorded as deferred production
revenue.
  The Company recognizes income from
consulting services over the life of the contract as the services are
provided.
  Production Costs
  Production costs are accounted for pursuant
to SOP No. 00-2.  The cost of production for infomercials, including
direct costs, production overhead and interest are capitalized and amortized
using the individual-film-forecast method under which such costs areamortized for each program in the ratio
that revenue earned in the current period for such program bears to
management’s estimate of the ultimate revenues to
be realized from all media and markets for such program.  Management
regularly reviews, and reviseswhen necessary, its ultimate revenue
estimates on a title-by-title basis, which may result in a change in the rate of
amortization applicable to such title and/or a write-down of the value of such
title to estimated fair value.  These revisions can resultin significant quarter-to-quarter and
year-to-year fluctuations in film write-downs and rates of
amortization.  If a total net loss is projected for a particular
title, the associated film and television costs are written down to estimated
fair value.  All exploitation costs, including
advertising and marketing costs are expensed as incurred.
  Cash and Cash
Equivalents
  Cash equivalents consist of all highly
liquid investments with original maturities of ninety days or
less.
    F-9
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  3.
                  SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES (Continued)
  Accounts Receivable
  As of 31 August  2008 and
2007, the Company reported $216,644 and NIL respectively.
  A provision for impairment of trade and
other receivables is established when there is objective evidence that we will
not be able to collectall
amounts due according to the original terms of receivables. The amount of the
provision is the difference between the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the effective interest
rate.  The amountof the provision is recognized in the
statement of income. The provision for trade receivables was assessed for the
year ended 31 August 2008 and management concluded that no provision was
required.
  Fair Value of Financial
Instruments
  The Company measures its financial assets and liabilities in
accordance with the requirements of SFAS Statement of Financial Accounting
Standards ("SFAS") No. 107,Disclosures about
Fair Value of Financial Instruments.  The estimated fair value of
financial instruments has beendetermined by the Company using
available market information and valuation
methodologies.  Considerable judgment is required in estimating fair
value.  Accordingly, the estimates may not be indicative of the
amounts the Company could realize in a currentmarket exchange.  The carrying
value of the Company's accounts receivable, advances from related parties,
accounts payable and accrued liabilities approximates fair value because of the
short-term maturity of these instruments.
  Income Taxes
  The Company accounts for income taxes pursuant to SFAS
No. 109,Accounting for
Income Taxes.  Deferred tax assets and
liabilities are recorded for differences between the financial statement and tax
basis of the assets and liabilities that will result in taxable or
deductible amounts in the
future based on enacted tax laws and rates.  Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.  Income tax expense is recorded for the amount of
income tax payableor refundable for the period increased
or decreased by the change in deferred tax assets and liabilities during the
period.
  Comprehensive Income
  The Company adopted SFAS No. 130,Reporting
Comprehensive Incomethat
establishes standards for reporting and presentation of comprehensive income and
its components in a full set of financial statements.  Comprehensive
income is presented in the statements of changes in stockholders' equity and
consists of net gains (losses) and unrealized gains (losses) on
available for sale marketable
securities;  foreign currency translation adjustments and changes in
market value of future contracts that qualify as a hedge; and negative equity
adjustments recognized in accordance with SFAS 87.  SFAS No. 130
requires only additional disclosures in the financial
statements and does not affect the Company's financial position or results of
operations.
 
  F-10
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
   3.
                  SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES (Continued)
  Earnings or Loss Per
Share
  The Company accounts for earnings per
share pursuant to SFAS No. 128,Earnings
per
Share, which requires
disclosure on the financial statements of "basic" and "diluted" earnings (loss)
per share.  Basic earnings (loss) per share is computed by dividing
net income (loss) by the weighted average number of common shares outstanding
for the
year.  Diluted earnings (loss) per share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding plus
common stock equivalents (if dilutive) related to stock options and warrants for
each year.
  There were nodilutive financial instruments for the
year ended 31 August 2008 or for the period from inception (18 August 2006) to
31 August 2008.
  Valuation of Long-Lived
Assets
  In accordance with SFAS No.
144,Accounting for the Impairment or Disposal of Long-Lived
Assets, long-lived assets
to be held and used are analyzed for impairment whenever events or changes in
circumstances indicate that the related carrying amounts may not be
recoverable.  The Company evaluates at each balance sheet date whether
eventsand circumstances
have occurred that indicate possible impairment.  If there are
indications of impairment, the Company uses future undiscounted cash flows of
the related asset or asset grouping over the remaining life in measuring whether
the assets arerecoverable.  In the event such
cash flows are not expected to be sufficient to recover the recorded asset
values, the assets are written down to their estimated fair
value.  Long-lived assets to be disposed of are reported at the lower
of carrying amountor fair value of asset less cost to
sell.
  Goodwill and Intangible
Assets
  Goodwill is the residual amount that
results when the purchase price of an acquired business exceeds the sum of the
amounts allocated to the tangible and intangible assets acquired, less liabilities assumed, based on fair
values.
  The Company accounts for purchased
goodwill and other intangible assets in accordance with SFAS No. 142,Goodwill and Other
Intangible Assets.  Under SFAS No. 142,
goodwill and any other intangibles deemed to have indefinite lives are not subject to
amortization; however, goodwill and lived intangibles subject to an assessment
for impairment, which must be performed at least annually, or more frequently if
events or circumstances indicate that goodwill or otherindefinite lived intangibles might be
impaired.
  Stock-Based
Compensation
  In December 2004, the Financial
Accounting Standards Board (“FASB”) issued SFAS No. 123R, Share-Based
Payment ("SFAS No. 123R"). SFAS No. 123R establishes standards for the
accountingfor transactions
in which an entity exchanges its equity instruments for goods or
services.  It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity’s equity instruments or that may be settled by the
issuance of those equity instruments.  SFAS No. 123R focuses primarily
on accounting for transactions in which an entity obtains employee services in
share-based payment transactions.  SFAS No. 123R requires that
thecompensation cost relating to
share-based payment transactions be recognized in the consolidated financial
statements.  That cost is measured based on the fair value of the
equity or liability instruments issued.
 
  F-11
   RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
    3.
                  SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES (Continued)
  Property and Equipment
  Property and equipment is stated at
historical cost less accumulated depreciation.  Depreciation, based on
the estimated useful lives of the assets, is provided using the under noted
annual rates and methods:
 
 Furniture and
      fixtures
                  7 years straight lineEquipment
                  5 years straight
      lineLeasehold
      improvements
                  3 years straight
      line
  Recent Accounting
Pronouncements
  In September 2006, the FASB issued SFAS
No. 157,Fair Value
Measurements. SFAS 157
defines fair value, establishes a framework for measuring fair value and expands
disclosure of fair value measurements. SFAS 157 applies under other accounting
pronouncements that require or permit fair value measurements and accordingly,
doesnot require any new fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
years beginning after 15 November 2007.  Management believes the
adoption of this pronouncement will not have a material impact on the Company's
consolidated financial
statements.
  In December 2006, the FASB issued FASB
Staff Position ("FSP") EITF 00-19-2,Accounting for
Registration Payment Arrangementswhich addresses accounting for
registration payment arrangements. FSP 00-19-2 specifies that the contingent obligation to make future
payments or otherwise transfer consideration under a registration payment
arrangement, whether issued as a separate agreement or included as a provision
of a financial instrument or other agreement, should be separatelyrecognized and measured in accordance
with FASB Statement No. 5, Accounting for Contingencies. FSP 00-19-2 further
clarifies that a financial instrument subject to a registration payment
arrangement should be accounted for in accordance with other applicable generally accepted accounting
principles without regard to the contingent obligation to transfer consideration
pursuant to the registration payment arrangement. For registration payment
arrangements and financial instruments subject to those arrangements that were entered into prior to the
issuance of EITF 00-19-2, this guidance is effective for financial statements
issued for fiscal years beginning after 15 December 2006 and interim periods
within those fiscal years. Management has determined that bothof the agreements, as described in note
13, are affected by this pronouncement.  The Company filed a
registration statement for the shares issued and the shares potentially issued
under these agreements, which became effective 31 August 2007.  There
are nofurther contingent payments related to
these registration arrangements.
  In February 2007, the FASB issued SFAS
No. 159,The Fair Value
Option for Financial Assets and Financial Liabilities. SFAS 159 permits entities to choose to
measure many financial instruments, and certain other items, at
fair value. SFAS 159 applies to reporting periods beginning after 15 November
2007. Management believes the adoption of this pronouncement will not have a
material impact on the Company's consolidated financial statements.
 
   F-12
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  3.
                  SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES (Continued)
  Recent Accounting Pronouncements
(Continued)
  In December 2007, the FASB issued SFAS
No. 141 (R)Business
Combinations. SFAS 141R
establishes principles and requirements for how the acquirer of a
business recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree. SFAS 141R
also provides guidance for recognizing and measuring the goodwill acquired in
thebusiness combination and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. The guidance will
become effective as of the beginning of the Company’s fiscal year beginning after 15 December
2008. Management believes the adoption of this pronouncement will not have a
material impact on the Company's consolidated financial
statements.
  In December 2007, the FASB issued SFAS
No. 160Noncontrolling
Interests in Consolidated
Financial Statements—an amendment of ARB
No. 51. SFAS 160
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. The guidance will
become effective as of the
beginning of the Company’s fiscal year beginning after 15
December 2008. Management believes the adoption of this pronouncement will not
have a material impact on the Company's consolidated financial
statements.
  In May 2008, the FASB issued SFAS No.
162,The Hierarchy of
Generally Accepted Accounting Principles.SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of  non-governmental
entities that arepresented
in conformity with generally accepted accounting principles in the United
States.  It is  effective 60 days following the SEC's
approval of the Public Company Accounting Oversight Board amendments to
Statements on Auditing Standards (“AU”) Section 411,The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting
Principles.We
have not yet commenced evaluating the potential impact, if any, of the adoption
of FASB Statement No. 162 on our consolidated financial position,
resultsof operations and
cash flows.
  In April 2008, the FASB issued FSP No.
142-3,Determination of the
Useful Life of Intangible Assets("FSP 142-3").  FSP 142-3
amends the factors an entity should consider in developing renewal or extension
assumptions used indetermining the useful life of recognized intangible assets under FASB Statement
No. 142,Goodwill and Other
Intangible Assets. This new
guidance applies prospectively to intangible assets that are acquired
individually or with a group of other assets inbusiness combinations and asset
acquisitions. FSP 142-3 is effective for financial statements issued for fiscal
years and interim periods beginning after December 15, 2008.  Early
adoption is prohibited.  The Company has adopted this statement and it
hasnot had a material effect on the
Company's financial statements.
   F-13
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  4.
                  CAPITALIZED PRODUCTION
      COSTS
 
 2008Opening unamortized balance, 6
      June 2008
                  
                  $
                  86,546Production costs
      incurred
                  
                  
                  48,177Write down of production
      costs
                  
                  
                  -Amortization of production
      costs
                  
                  
                  -Closing unamortized
      balance
                  
                  $
                  134,723
  All capitalized production costs relate
to projects in development. The Company expects 100% of the balance of
capitalized production costs will be amortized within the next
year.
  5.
                    ADVANCES TO RELATED
      PARTY
 These advances are unsecured, non
interest bearing with no formal terms of repayment. As of 31 August 2008,
advances to related parties amounted to $76,798 (31 August 2007 - $Nil). These
advances were made to a company controlled by the spouse of a director and shareholder of the
Company.
  6.
                  PRODUCTION LOANS AND ACCRUED
      INTEREST
  The Company provides production
financing to National Lampoon, Inc., a corporate shareholder ("NL") that shares
certain directors and officers of Red Rock Pictures Holdings
Inc.  The
production advances bear interest at a rate of 10% per annum, has a security
interest in the film to the extent of the actual amount of the funding as long
as there is an unpaid balance on the loan and are repayable from 100% of any and
all net revenuesfrom each picture.  The
financing agreements allows for the Company to advance up to $2,000,000 per
picture production.  In addition, during the third quarter 2008, the
Company entered into an agreement with NL whereby the Company agreed to advance
funding to NL for distribution and prints and
advertising services for certain titles released by NL for total advances of up
to $2,000,000.   At 31 August 2008 the Company had advanced
$3,813,964 and has recorded $505,843 in accrued interest for a total of
$4,319,807.  In addition to the
interest on these advances, the Company is entitled to receive a net profit
participation of twenty five percent (25%) of all net contingent profits from
the distribution of the respective pictures and five percent (5%) of allnet contingent profits from the
distribution of the films related to the print and adverting financing
agreement.
   F-14
   RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
 
  6.
                  PRODUCTION LOANS AND ACCRUED
      INTEREST (Continued)
  Outstanding production loans to and
accrued interest with NL consist of the following as of 31 August
2008:
 
 2008
                  
                  
                  2007Bag Boy Productions, Inc., a
      wholly-owned subsidiary of NL
                  
                  $
                  1,077,635
                  
                  
                  $
                  1,719,884Ratko Productions, Inc., a
      wholly-owned subsidiary of NL
                  
                  
                  2,163,992
                  
                  
                  
                  1,964,207Natioanl Lampoon, Inc. - print and
      advertising
                  
                  
                  1,078,180
                  
                  
                  
                  -Less current
      portion
                  
                  
                  (1,396,470
                  )
                  
                  
                  -Long term portion of production
      loans and interest
                  
                  $
                  2,923,337
                  
                  
                  $
                  3,684,091
  Bag Boy Productions, Inc. -As a result of a modification on 31
October 2008 to this financing agreement with NL, repayment of this loan will
now be received no later than 14 March 2011.  The payments are to be
made from the proceeds from the release of the film over an estimated
revenue cycle of three years, as follows:
first NL is to receive a 20% distribution fee; thereafter, NL is to receive
recoupment of all prints and advertising expenses incurred in connection with
the distribution of the picture.  The remaining gross
receiptsare to be split equally between the
Company and NL until such time as the Company has recouped its investment
entirely.  As of 31 August 2008, the Company had a loan balance of
$813,756 in principal and $263,879 in interest under this financing
agreementfor a total of
$1,077,635.  Under the terms of the agreement and based on the
expected cash flows of the film, the loan is expected to be repaid as follows:
$356,951 during the 2009 fiscal year, $475,935 during the 2010 fiscal year, and
$237,968 during the2011 fiscal year.
  Ratko Productions, Inc. - As a result of
a modification on 31 October 2008 to this financing agreement with NL, repayment
of this loan will now be received no later than 31 January 2012.  The
payments are to be made from the proceeds from the release of the film over an
estimated revenue cycle of three years, as follows: first NL is to receive a 20%
distribution fee; thereafter, NL is to receive recoupment of all prints and
advertising expenses incurred in connection with the distribution of the picture.  The
remaining gross receipts are to be split equally between the Company and NL
until such time as the Company has recouped its investment
entirely.  As of 31 August 2008, the Company had a loan balance of
$1,922,028 in principal and $241,964 in interest under this financing
agreement for a total of $2,163,992.  Under the terms of the agreement
and based on the expected cash flows of the film, the loan is expected to be
repaid as follows: $715,649 during the 2009 fiscal year, $954,201 during the 2010 fiscal year, and $477,100
during the 2011 fiscal year.
 
  F-15
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  7.
                  ADVANCES FROM RELATED
      PARTIES
  On 8 June 2007, the Company entered into
loan agreements with the N. Williams Family Investments, L.P. and Daniel Laikin
(collectively, “Williams-Laikin”) for $1,000,000 each for a totalof
$2,000.000.  The proceeds of these loans are to fund the
Company’s obligation to advance production costs
to National Lampoon for a motion picture production.  The loans are
secured by the profit participation rights of the films.  The loans
bear sevenpercent (7%) interest and are to be
repaid out of the proceeds of equity raised of the Company or sales efforts of
the motion picture. In addition to the interest on these advances,
Williams-Laikin are entitled to receive five percent (5%) of the twenty
five percent (25%) of all net profits from
the distribution of the respective pictures specified in their agreement
received by Red Rock Pictures Holdings Inc. as described in note
6.
  In addition, on 7 July 2007 the Company
issued to Williams-Laikin 521,866shares of the company’s common stock which represents the
number of shares computed by dividing each $1,000,000 loan by $1.92 (the
computed lowest volume weighted average price (“VWAP”) for the five days prior to the
execution of the Williams-Laikin loans).
  In the event that Company’s common stock falls below $1.92 on the
six-month anniversary of the Williams-Laikin loans, than the Company shall issue
to Williams-Laikin an additional number of shares of the Company’s common stock equal to the difference
between the number of
Williams-Laikin shares and one million dollars ($1,000,000) divided by the VWAP
of the Company’s common stock, as quoted by Bloomberg,
LP, on the calculation date. During the year ended 31 August 2008 the Company
issued 11,440,662 sharespursuant to this requirement and have
been valued at the market value of the common stock on the date of
issue.
  During the year ended 31 August 2008 the
loan agreement with Daniel Laikin was amended from $1,000,000 to
$900,000.
  In addition the Company has received
advances from  a company controlled by the spouse of a director and
shareholder of the Company.  These advances are unsecured, non
interest bearing with no formal terms of repayment.  As of 31 August
2008, advances torelated parties amounted to $47,000 (31
August 2007 - $Nil).
  8.
                    CONSULTING TO RELATED
      PARTY
 The Company's consulting revenue is from
a related party, National Lampoon, Inc., a corporate shareholder (NL) that
shares certain directors and officers of Red RockPictures Holdings
Inc.
    F-16
 RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  9.
                  INTANGIBLE
  ASSETS
  The following sets forth the
      intangible assets, excluding goodwill, by major
      category:
  Cost
                  
                  
                  Accumulated
      Amortization
                  
                  
                  Net Book Value
      2008
                  
                  
                  Net Book Value
      2007Completed
      technology
                  
                  $
                  446,611
                  
                  
                  $
                  (22,331
                  )
                  
                  $
                  424,280
                  
                  
                  $
                  -$
                  446,611
                  
                  
                  $
                  (22,331
                  )
                  
                  $
                  424,280
                  
                  
                  $
                  -
  The completed technology relates to the
intangible assets that were identified by management in the acquisiton of Studio
Store Direct, Inc., as described in note 1. Management identified completed
technolgy and processess for embedding direct response programs directly onto motion picture
digital video disc’s ("DVD's"). It was determined that the
estimated useful life of this technology was five years and accordingly the cost
of this technology is being amortized over five years using the straight line
method.
  10.
                  COMMITMENTS AND
      CONTINGENCY
  The Company's principal offices are
located at 8228 Sunset Boulevard, 3rd Floor, Los Angeles,
California.  The Company leases the premises from National Lampoon,
Inc. pursuant to a sublease for two years which became a month-to month lease
thereafter.  The sublease agreement includes certain provisions for
rent adjustments based upon the lessor's operating costs and increases in the
Consumer Price Index. The monthly lease rate is $2,000 per month.
  The Company's subsidiary, Studio Store Direct Inc., leases
office space from an unrelated third-party under a non-cancelable operating
lease expiring in 2009.  Future minimum lease payments are $17,094 for
fiscal 2009.
  The Company is a defendant in a lawsuit
from a complaint filed in
the Stae of Nevada on 27 October 2008, whereby the plaintiff has requested
relief in excess of $60,000 for an alleged material breach of contract. The
Company maintains that the claim is frivolous and has also filed a counterclaim
for damages.  TheCompany has therefore not accrued any
potential contingency in the financial statements.
   F-17
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  11.
                  COMMON
      STOCK
  On 18 August 2006, 2,080,000 common
stock were issued to the founders of the Company for $0.001.
  On 31 August 2006, the Company issued
1,800,000 common stock in exchange for all of the issued and outstanding shares
of Red Rock Pictures, Inc.
  On 31 August 2006, the Company cancelled
1,500,000 of its common stock at par value.
  On 31 August 2006, the Company effectuated a 17 for 1 forward
stock split of its common stock.
  On 19 February 2007, the Company adopted
the 2006 Equity Incentive Plan (the "Plan"), as discussed in note 12, and as
such issued 1,200,000 shares of common stock to people as
compensation for services
and as incentive to take a position on the board of directors.  In
accordance with SFAS No. 123 (revised 2004),Share-Based
Payment, the fair value of
the shares issued was used to measure the transaction, as this is more reliable
than the fair value of the
services received. The fair value was measured at the value of the Company's
common stock on the date that the commitment for performance by the counterparty
had been reached and the counterparty's performance was complete. This date was19 December 2006 at which time the stock
was valued at $2.48.  The fair value of the equity instrument has been
charged directly to compensation expense and additional paid-in
capital.
  On 19 February 2007, the
Company’s Board of Directors filed a
DefinitiveInformation
Statement (the “Information
Statement”) pursuant to
Section 14(c) of the Securities Exchange Act with the Securities and Exchange
Commission and mailed the statement to the Company’s shareholders. The Information
Statement was filed and mailedin connection with the Board of
Directors approval to amend the Company’s Articles of Incorporation to increase
its authorized capital to 120,000,000 shares of common stock with a par value of
$0.001 per share. The amendment became effective on 17 April2007.
  In April 2007 the Company issued 112,495
common shares to investment groups for services, including 3,750 shares issued
to Newbridge Securities Corporation for acting as the Company’s exclusive placement agent in
connection with the sale of the Company’s common stock to Cornell Capital
Partners, LP ("Cornell") and 108,475 shares to Cornell, pursuant with Standby
Equity Distribution Agreement with Cornell.  This agreement was
cancelled on 6 July 2007.  These shares were valued at their market
value onthe date of issue and have been recorded
as a reduction of equity as the services relate to raising
capital.
  In June 2007, the Company issued 20,000
shares of its common stock pursuant to the Plan.  The shares were
issued for consulting services rendered and have been valued at the market value
of the common stock on the date of issue.
  On 3 July 2007, the Company issued
360,000 shares of its common stock to an employee for services rendered,
pursuant to the Plan.  The shares were issued for consulting
services related to
potential mergers and acquisitions and have been valued at the market value of
the common stock on the date of issue.
 
  F-18
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  11.
                  COMMON STOCK
      (Continued)
  On 7 July 2007 the Company issued to
Williams-Laikin 521,866 shares of it’s common stock as part of loan
agreements entered intoas
discussed in note 7 and have been valued at the market value of the common stock
on the date of issue.
  In August 2007, the Company issued
1,040,000 shares of its common stock pursuant to the Plan.  The shares
were issued for accounts payable related tomarketing services rendered and have
been valued at the market value of the services provided.
  In August 2007, the Company issued
60,000 shares of its common stock pursuant to the Plan.  The shares
were issued for accounts payable related to legal services rendered and have been valued at the
market value of the common stock on the date of issue.
  In August 2007, the Company issued
50,000 shares of its common stock to an employee for services rendered pursuant
to the Plan.  The shares were issued for consulting services and have been valued at
the market value of the common stock on the date of issue.
  In August 2007, the Company issued
20,000 shares of its common stock pursuant to the Plan.  The shares
were issued for financial and accounting services rendered and have been valued at the market
value of the common stock on the date of issue.
  In September 2007 the Company issued
3,000,000 shares pursuant to an agreement as discussed in note 13. These shares
were held as collateral subject to the terms of the original agreement.  The
Company released the 3,000,000 shares, held as a collateral, of its common stock
pursuant to a cancellation agreement, as discussed in note 13.  The
Company also issued an additional 2,100,000 shares in February 2008 pursuant to
this agreement. The total effect of the
transactions with IFG was that the Company issued 5,100,000 shares for total
proceeds of $215,000.
  In December 2007 the Company issued an
additional 12,000,662 shares of it’s common stock in accordance with loan
agreements entered into as
discussed in note 7.
  In January 2008 the Company issued an
additional 153,846 shares of it’s common stock in accordance with loan
agreements entered into as discussed in note 7.
  In February 2008 the Company issued an
additional 2,000,000 shares of it’s common stock in accordance with loan
agreements entered into as discussed in note 7.
 
   F-19
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
   11.
                  COMMON STOCK
      (Continued)
  In March 2008 the Company issued 150,000
shares for film distribution services rendered to the Company, valued at the market value of the
common stock on the date of issue.
  In March 2008 the Company cancelled
110,000 shares originally issued for services in July 2007.
  In March 2008 the Company issued an
additional 521,866 shares of it’s common stock inaccordance with loan agreements entered
into as discussed in note 7.
  In June 2008 the Company issued
11,000,000 shares of its common stock in exchange for 100% the common shares of
Studio Store Direct, Inc., as discussed in note 1.
  12.STOCK OPTION AND EQUITY INCENTIVE
      PLAN
  On 14 February 2007 the Company filed a
Form S-8 Registration Statement‘Securities to be offered to Employees in
Employee Benefit Plans’.  Under the terms of this
filing the Company registered 9,000,000 shares of common stock with a
par value of $.001 per
share.  The purpose of the plan is to provide incentives to attract,
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company by offering them an opportunity to
participate in the Company’s future performance through awards of
options and restricted stock.
  Under the Plan, incentive stock options
may be granted to employees, directors, and officers of the Company and
non-qualified stock options may be granted to consultants, employees, directors, and officers
of the Company.  Options granted under the option plan are for periods
not to exceed ten years, and must be issued at prices not less than 100% of the
fair market value of the stock on the date of grant.  Options
granted to shareholders who own greater than
10% of the outstanding stock are for periods not to exceed five years and must
be issued at prices not less than 110% of the fair market value of the stock on
the date of grant.
 
  F-20
  RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
   12.
                  STOCK OPTION AND EQUITY
      INCENTIVE PLAN (Continued)
  In March 2007 the Company granted 2,400,000 stock
options under the Plan at an exercise price of $2.56 that vest over three years
and with an expiration date of seven years. These options were valued at a price
of $0.85 per share or $2,041,608 amortized over the vestingperiod of three years from the grant date
and have been included in Stock based compensation in the Consolidated statement
of Operations. The options were valued using the Black Scholes Option Pricing
Model with the following input variables and assumptions: exercise price $2.56; stock price on
the date of grant $2.57; calculated volatility amounted to 27%; calculated
average term of maturity of five years; an estimated risk free rate of 4.46%
based on the seven year US Treasury zero-coupon yield curve; amortized over the period of benefit which
is the vesting period of three years, commencing on the grant date of 14 March
2007.
  In March 2008 the Company issued 150,000
shares for film distribution services rendered to the Company, valued at the
market value of the common
stock on the date of issue.
  On 15 June 2008 the Company granted
300,000 stock options under the Plan at an exercise price of $0.06 that vested
immediately.  These options were valued at a price of $0.07 per share
or $3,057 have been expensed immediately and included as stock based
compensation in the consolidated statement of loss. The options were valued
using the Black Scholes Option Pricing Model with the following input variables
and assumptions: exercise price $0.06; stock price on the date of grant $0.07; calculated volatility
amounted to 27%; calculated average term of maturity of five years; an estimated
risk free rate of 1.86% based on the one month US Treasury zero-coupon yield
curve;
  On 26 June 2008 in accordance with the
execution of an employment
agreement the Company granted 2,000,000 stock options under the Plan at an
exercise price of $0.07 that vest over  five years and with an
expiration date of ten years.  These options were valued at a price of
$0.0275 per share or $55,000 amortized over the vesting period of five
years from the grant date and have been included as stock based compensation in
the consolidated statement of loss. The options were valued using the Black
Scholes Option Pricing Model with the following input variables and assumptions: exercise price
$0.07; stock price on the date of grant $0.07; calculated volatility amounted to
27%; calculated average term of maturity of five years; an estimated risk free
rate of 3.46% based on the seven year US Treasury zero-coupon yield curve; amortized over the period
of benefit which is the vesting period of five years, commencing on the grant
date of 26 June 2008.
   
 F-21
   RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
    12.
                  STOCK OPTION AND EQUITY
      INCENTIVE PLAN (Continued)
  On 26 June 2008 in accordance with the
execution of an employment agreement,the Company granted 1,000,000 stock
options under the Plan at an exercise price of $0.07 that vest
over  five years and with an expiration date of ten
years.  These options were valued at a price of $0.0275 per share or
$27,000 amortized over the vestingperiod of five years from the grant date
and have been included in as stock based compensation in the consolidated
statement of loss. The options were valued using the Black Scholes Option
Pricing Model with the following input variables and assumptions:exercise price $0.07; stock price on the
date of grant $0.07; calculated volatility amounted to 27%; calculated average
term of maturity of five years; an estimated risk free rate of 3.46% based on
the seven year US Treasury zero-coupon yield curve; amortized over the period of benefit which is
the vesting period of five years, commencing on the grant date of 26 June
2008.
  During the year ended 31 August 2008 the
Company issued a net amount of 40,000 shares as part of the Plan, for services
rendered, that have been valued at the market value of the common stock on the
dates of issue.
  13.
                  AGREEMENTS
  On 6 July 2007, the Company entered into
an Equity Distribution Agreement (“Agreement”) with IFG Opportunity Fund, LLC
("IFG").  Pursuant to this Agreement, IFG has committed topurchase up to $25,000,000 of common
stock over the course of twenty-four months.  The amount that
the Company shall be entitled to request from each purchase (the “Advance”) shall be up to
$2,000,000.  The Advance date shall be the date that IFG
receivesan advance notice of a draw down by the
Company.  The purchase price shall be set at 97% of the market price
of the common stock during the pricing period. The pricing period shall be the
five consecutive trading days immediately after the Advance noticedate. There are advance restrictions
applied on days between the Advance date and the closing date with respect to
that particular advance.  During this time, the Company shall not be
entitled to deliver another advance notice.  On each Advance date the
Company shall pay to the IFG, directly out
of the gross proceeds of each Advance, an amount equal to 3% of the amount of
each Advance.
  In September 2007, the Company executed
a convertible note payable with IFG for $400,000 plus interest at the rate of
ten percent per
annum.  The Company received $215,000 of the $400,000.  As
collateral for the convertible note payable the Company issued 3,000,000 shares
of the Company's common stock to be held in escrow.  In the event that
the Company defaults, IFG may immediately release the shares in full
satisfaction of the convertible note.  In the event that the
convertible note is paid in full prior to or upon maturity the shares shall be
returned to the Company.  The Company issued an additional 2,100,000
shares to IFGpursuant to the Agreement throughout
the year ended 31 August 2008.
  On 31 August 2008, the company entered
into a cancellation agreement with IFG.  Pursuant to this agreement
the Company shall forever release and discharge IFG of any and all of its
obligations under the
original note, including any obligation to pay principal and
interest.  The Company has also agreed on release of collateral shares
to IFG.  The total effect of the transactions with IFG was that the
Company issued 5,100,000 shares for total proceeds of
$215,000.
    F-22
 RED ROCK PICTURES HOLDINGS, INC. AND
SUBSIDIARIES
  (A Development Stage
Company)
  NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
  FOR THE PERIOD FROM 18 AUGUST 2006 (DATE
OF INCEPTION) TO 31 AUGUST 2008
  14.
                  SUPPLEMENTAL CASH FLOW
      INFORMATION
  During the years ended 31 August 2008
and 2007 and for the period from the date of inception (18 August 2006) to 31
August 2008, there was no interest or taxes paid by the
Company.
  During the year ended 31 August 2008
40,000 (2007 - 3,384,361)
common shares were issued valued at $28,285 for services rendered, as discussed
in note 11.
  In June 2008 the Company issued
11,000,000 shares of its common stock in exchange of 100% the common shares of
Studio Store Direct, Inc.
  15.
                  INCOMETAXES
  The Company accounts for income taxes in
accordance with SFAS No. 109.  SFAS No. 109 prescribes the use of the
liability method whereby deferred tax asset and liability account balances are
determined based on differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates.  The effects
of future changes in tax laws or rates are not anticipated.
  Under SFAS No. 109 income taxes are
recognized for the following: a) amount of tax payable for the current year and b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized differently in the financial statements than for tax
purposes.
  As at 31 August 2008 and
2007, there were no
differences between financial reporting and tax bases of assets and
liabilities.  The Company will have tax losses available to be applied
against future years' income as result of the losses
incurred.  However, due to the losses incurredin the period and expected future
operating results, management determined that it is more likely than not that
the deferred tax asset resulting from the tax losses available for carryforward
will not be realized through the reduction of future income taxpayments.  Accordingly a 100%
valuation allowance has been recorded for deferred income tax
assets.