SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K/A





Amendment
No. 2





(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 ofincorporation
      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 x No o





Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act. Yes x No 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













EXPLANATORY NOTE





For the
year ended August 31, 2008, this Amendment No. 2 on Form
10-K amends the Company’s Annual Report on Form 10-K for the
year  ended August 31, 2009 and 2007, as filed with the Securities and
Exchange Commission on December 15, 2008, for the following:





·
            To amend Part III, Item 10,
      titled “Directors, Executive Officers, Promoters and Control Persons:
      Compliance with Section 16(A) of the Exchange Act” by adding our Director,
      Robert Rosenblatt.





·
            To
      amend Item 12 (Security Ownership of Certain Beneficial Owners and
      Management – Page 21) to list common shares owned in excess of 5%
      outstanding by beneficial owners.





·
            To
      amend Item 13 (Certain Relationships and Related Transactions – Page 22)
      to include additional shares issued related to the Williams-Laikin loans
      discussed in Notes 8 and 12 of the Consolidated Financial Statements for
      the year ended August 31, 2008.





·
            To
      restate Notes 8 and 12 and restate the balances reported for non-cash
      interest expense and additional paid in capital as of August 31,
      2008.  The Company restated the balances reported based on
      guidance provided by the Financial Accounting Standards Board Statement
      Number 133 (Topic 815 of the FASB Accounting Standards
      Codification).   The restated financial statements include
      the recording of non-cash interest expense of $613,752 which increased the
      net loss to $766,895 as compared to an originally reported net loss of
      $152,913.




·
            To
      amend Item 9A. Controls and Procedures to updated management's assessment
      and identification of material weaknesses in its internal control over
      financial reporting.




Except
for the amendment and restatements above, no information has changed from our
filing.












SUMMARY
RESTATEMENT RED ROCK PICTURE HOLDINGS, INC.


FINANCIAL
STATEMENT ITEMS AS ORIGINALLY REPORTED AND RESTATED


FOR THE
YEAR ENDED AUGUST 31, 2008





31
      August 2008
              (As
      Reported)
            
            Note
            Adjustment
            
            31
      August 2008
              (As
      Restated)ASSETSCurrent
      AssetsCash
            
            $
            5,932
            
            
            
            
            $
            5,932Accounts
      receivable from related parties
            
            
            216,644
            
            
            
            
            
            216,644Advances
      to related party
            
            
            76,798
            
            
            
            
            
            76,798Capitalized
      production costs
            
            
            134,723
            
            
            
            
            
            134,723Prepaid
      expenses and deposits
            
            
            10,745
            
            
            
            
            
            10,745Production
      loans and accrued interest to related parties - current
      portion
            
            
            1,396,470
            
            
            
            
            
            1,396,470Total
      Current Assets
            
            
            1,841,312
            
            
            
            
            
            1,841,312Long
      Term AssetsProduction
      loans and accrued interest to related parties
            
            
            2,923,337
            
            
            
            
            
            2,923,337Property
      and equipment
            
            
            25,708
            
            
            
            
            
            25,708Intangibles
            
            
            424,280
            
            
            
            
            
            424,280Goodwill
            
            
            450,338
            
            
            
            
            
            450,338Total
      Long Term Assets
            
            
            3,823,662
            
            
            
            
            
            3,823,662Total
      Assets
            
            $
            5,664,974
            
            
            
            
            $
            5,664,974LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
            
            $
            127,720
            
            
            
            
            $
            127,720Accrued
      liabilities
            
            
            32,290
            
            
            
            
            
            32,290Advances
      from shareholders
            
            
            63,636
            
            
            
            
            
            63,636Deferred
      production revenue
            
            
            326,000
            
            
            
            
            
            326,000Advances
      from related parties
            
            
            1,997,410
            
            
            
            
            
            1,997,410Total
      Liabilities
            
            
            2,547,056
            
            
            
            
            
            2,547,056Going
      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
            
            
            
            
            
            95,351Additional
      paid- in capital
            
            
            8,200,769
            
            a
            613,782
            
            
            8,814,551Deficit
      accumulated during the development stage
            
            
            (5,178,202
            )
            a
            (613,782
            )
            
            (5,791,984
            )Total
      Stockholders' Equity
            
            
            3,117,918
            
            
            
            
            
            3,117,918Total
      Liabilities and Stockholders' Equity
            
            $
            5,664,974
            
            
            
            
            $
            5,664,974













SUMMARY
RESTATEMENT RED ROCK PICTURE HOLDINGS, INC.


FINANCIAL
STATEMENT ITEMS AS ORIGINALLY REPORTED AND RESTATED


FOR THE
YEAR ENDED AUGUST 31, 2008





Originally
      Reported
            Notes
            
            Adjustments
            
            
            RestatedREVENUEDistribution
      profit participation
            $
            23,448
            
            
            $
            -
            
            
            $
            23,448Print
      and advertising premium fees
            
            188,696
            
            
            
            -
            
            
            
            188,696Interest
      on production advances
            
            520,475
            
            
            
            -
            
            
            
            520,475Consulting
            
            198,500
            
            
            
            -
            
            
            
            198,500Other
            
            2,948
            
            
            
            -
            
            
            
            2,948934,067
            
            
            
            -
            
            
            
            934,067COSTS
      AND EXPENSESCosts
      of distribution profit participation
            
            3,517
            
            
            
            -
            
            
            
            3,517Stock
      based compensation
            
            714,743
            
            
            
            -
            
            
            
            714,743Professional
      fees
            
            58,925
            
            
            
            -
            
            
            
            58,925Salaries
      and wages
            
            57,141
            
            
            
            -
            
            
            
            57,141Office
      and general
            
            56,585
            
            
            
            -
            
            
            
            56,585Rent
            
            32,426
            
            
            
            -
            
            
            
            32,426Advertising
      and promotion
            
            8,815
            
            
            
            -
            
            
            
            8,815Amortization
      of intangible assets
            
            22,331
            
            
            
            -
            
            
            
            22,331Amortization
      of tangible assets
            
            2,406
            
            
            
            -
            
            
            
            2,406TOTAL
      OPERATING EXPENSES
            
            956,889
            
            
            
            -
            
            
            
            956,889LOSS
      FROM OPERATIONS
            
            (22,822
            )
            
            
            -
            
            
            
            (22,822
            )Interest
      expense
            
            (130,091
            )    a
            
            
            (613,782
            )
            
            
            (743,873
            )NET
      LOSS AND COMPREHENSIVE LOSS
            $
            (152,913
            )
            
            $
            (613,782
            )
            
            $
            (766,695
            )LOSS
      PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND
    DILUTED
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.02
            )WEIGHTED
      AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
            
            81,226,205
            
            
            
            
            
            
            
            81,226,208














SUMMARY
RESTATEMENT RED ROCK PICTURE HOLDINGS, INC.


FINANCIAL
STATEMENT ITEMS AS ORIGINALLY REPORTED AND RESTATED


FOR THE
YEAR ENDED AUGUST 31, 2008





Common
      Stock
            
            
            
            AccumulatedShares
            
            Amount
            
            Additional
      Paid In Capital
            
            Other
              Comprehensive
      Loss
            
            Accumulated
      Deficit
            
            
            TotalStockholders'
      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 (As Originally Stated)
            
            60,350,000
            
            
            60,350
            
            
            
            
            -
            
            
            -
            
            
            (82,111
            )
            
            
            (21,761
            )Common
      shares issued for cash, net of financing fees
            
            800,000
            
            
            800
            
            
            
            
            1,647,089
            
            
            -
            
            
            -
            
            
            
            1,647,889
            )Common
      shares issued for services and accounts payable
            
            2,862,495
            
            
            2,863
            
            
            
            
            4,370,183
            
            
            -
            
            
            -
            
            
            
            4,373,046Common
      shares issued as additional interest expense related to related party loan
      agreement
            
            521,866
            
            
            522
            
            
            
            
            312,598
            
            
            -
            
            
            
            
            
            
            313,120Stock
      options granted
            
            -
            
            
            -
            
            
            
            
            311,973
            
            
            -
            
            
            -
            
            
            
            311,973Net
      loss
            
            -
            
            
            -
            
            
            
            
            -
            
            
            -
            
            
            (4,943,178
            )
            
            
            (4,943,178
            )Balance,
      31 August 2007 (As Originally Stated)
            
            64,534,361
            
            $
            64,535
            
            
            
            $
            6,641,843
            
            $
            -
            
            $
            (5,025,289
            )
            
            $
            1,681,089Common
      shares issued for services
            
            2,753,846
            
            
            2,753
            
            
            
            
            25,532
            
            
            -
            
            
            -
            
            
            
            28,285Common
      shares issued related to equity distribution agreement
            
            5,100,000
            
            
            5,100
            
            
            
            
            209,900
            
            
            -
            
            
            
            
            
            
            215,000Common
      shares issued as additional interest expense related to related party loan
      agreement
            
            11,962,528
            
            
            11,963
            
            
            a
            
            
            601,819
            
            
            -
            
            
            
            
            
            
            613,782Stock
      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
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -
            
            
            (766,695
            )
            
            
            (766,695
            )Balance,
      31 August 2008 (As Restated)
            
            95,350,735
            
            $
            95,351
            
            
            
            
            $
            8,814,551
            
            $
            -
            
            $
            (5,791,954
            )
            
            $
            3,117,918










SUMMARY
RESTATEMENT RED ROCK PICTURE HOLDINGS, INC.


FINANCIAL
STATEMENT ITEMS AS ORIGINALLY REPORTED AND RESTATED


FOR THE
YEAR ENDED AUGUST 31, 2008




Year
      Ended 31 August
                2008
                (As
      Reported)
              
              Note
              Adjustment
              Year
      Ended 31 August 2008
                (As
      Restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              $
              (152,913
              )
              a
              $
              (613,782
              )
              
              $
              (766,695
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Common
      shares issued for services
              
              28,285
              
              
              
              -
              
              
              
              28,285Stock
      options granted
              
              686,457
              
              
              
              -
              
              
              
              686,457Common
      shares issued for interest expense related to related party
      loans
              
              -
              
              a
              
              613,782
              
              
              
              613,782Amortization
              
              24,737
              
              
              
              -
              
              
              
              24,737Changes
      in operating assets and liabilities:Notes
      receivable
              
              -
              
              
              
              -
              
              
              
              -Accounts
      receivable
              
              (212,144
              )
              
              
              -
              
              
              
              (212,144
              )Increase
      in capitalized production costs
              
              (48,177
              )
              
              
              -
              
              
              
              (48,177
              )Prepaid
      expenses and deposits
              
              (5,765
              )
              
              
              -
              
              
              
              (5,765
              )Accounts
      payable
              
              4,520
              
              
              
              -
              
              
              
              4,520Accrued
      liabilities
              
              12,406
              
              
              
              -
              
              
              
              12,406Deferred
      production revenue
              
              30,000
              
              
              
              -
              
              
              
              30,000NET
      CASH PROVIDED BY OPERATING ACTIVITIES
              
              367,406
              
              
              
              -
              
              
              
              367,406CASH
      FLOWS FROM INVESTING ACTIVITIESProduction
      loans and accrued interest
              
              (497,543
              )
              
              
              -
              
              
              
              (497,543
              )Cash
      received in acquisition of Studio Store Direct, Inc.
              
              47,788
              
              
              
              -
              
              
              
              47,788NET
      CASH USED IN INVESTING ACTIVITIES
              
              (449,755
              )
              
              
              -
              
              
              
              (449,755
              )CASH
      FLOWS FROM FINANCING ACTIVITIESAdvances
      from shareholders
              
              (63,457
              )
              
              
              -
              
              
              
              (63,457
              )Advances
      from related parties
              
              (73,198
              )
              
              
              -
              
              
              
              (73,198
              )Issuance
      of common stock, net of financing fees
              
              215,000
              
              
              
              -
              
              
              
              215,000NET
      CASH PROVIDED BY FINANCING ACTIVITIES
              
              78,345
              
              
              
              -
              
              
              
              78,345NET
      (DECREASE) INCREASE IN CASH
              
              (
      4,004
              )
              
              
              -
              
              
              
              (
      4,004
              )CASH,
      BEGINNING OF PERIOD
              
              9,936
              
              
              
              -
              
              
              
              9,936CASH,
      END OF PERIOD
              $
              5,932
              
              
              $
              -
              
              
              $
              5,932





Notes:





a.            To
restate Notes 8 and 12 and restate the balances reported for non-cash interest
expense and additional paid in capital as of August 31, 2008.  The
Company restated the balances reported based on guidance provided by the
Financial Accounting Standards Board Statement Number 133 (Topic 815 of the FASB
Accounting Standards Codification).   The restated financial
statements include the recording of non-cash interest expense of $613,782 which
increased the net loss to $766,695 as compared to an originally reported net
loss of $152,913.



















FORM 10-K








For
the Year Ended August 31, 2008








INDEX











PART IItem 1.
            
            Business
            
            2Item 1A.
            
            Risk
      Factors
            
            5Item 1B.
            
            Unresolved
      Staff Comments
            
            7Item 2.
            
            Properties
            
            8Item 3.
            
            Legal
      Proceedings
            
            8Item 4.
            
            Submission
      of Matters to a Vote of Security Holders
            
            8PART IIItem 5.
            
            Market
      for the Registrant's Common Stock, Related Stockholder Matters, and Issuer
      Purchases of Equity Securities
            
            9Item 6.
            
            Selected
      Consolidated Financial Data
            
            9Item 7.
            
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
            
            9Item 7A.
            
            Quantitative
      and Qualitative Disclosure about Market Risk
            
            13Item 8.
            
            Financial
      Statements and Supplementary Data
            
            13Item 9.
            
            Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
            
            13Item 9A.
            
            Controls
      and Procedures
            
            13Item 9B.
            
            Other
      Information
            
            13PART IIIItem 10.
            
            Directors
      and Executive Officers and Corporate Governance
            
            15Item 11.
            
            Executive
      Compensation
            
            17Item 12.
            
            Security
      Ownership of Certain Beneficial Owners and Management
            
            19Item 13.
            
            Certain
      Relationships and Related Transactions
            
            19Item 14.
            
            Principal
      Accountant Fees and Services
            
            20PART IVItem 15.
            
            Exhibits,
      Financial Statement Schedules and Reports on Form 8-K
            
            21Signatures
            
            22











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.








1




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.




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.





2




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.





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.




3




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




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.





4




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.




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.




5




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:




·
            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:





·
            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.





6




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.







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.







7


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 Studio 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 calendar year and $4,884 for
the calendar 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.





8





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.




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.





9




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.




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.




10




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.





Amendment No.
2


For the
year ended August 31, 2008, this Amendment No. 2 on Form
10-K amends the Company’s Annual Report on Form 10-K for the
year  ended August 31, 2009 and 2007, as filed with the Securities and
Exchange Commission on December 15, 2008, for the following:





·
            To amend Part III, Item 10,
      titled “Directors, Executive Officers, Promoters and Control Persons:
      Compliance with Section 16(A) of the Exchange Act” by adding our Director,
      Robert Rosenblatt.





·
            To
      amend Item 12 (Security Ownership of Certain Beneficial Owners and
      Management – Page 21) to list common shares owned in excess of 5%
      outstanding by beneficial owners.





·
            To
      amend Item 13 (Certain Relationships and Related Transactions – Page 22)
      to include additional shares issued related to the Williams-Laikin loans
      discussed in Notes 8 and 12 of the Consolidated Financial Statements for
      the year ended August 31, 2008.





·
            To
      restate Notes 8 and 12 and restate the balances reported for non-cash
      interest expense and additional paid in capital as of August 31,
      2008.  The Company restated the balances reported based on
      guidance provided by the Financial Accounting Standards Board Statement
      Number 133 (Topic 815 of the FASB Accounting Standards
      Codification).   The restated financial statements include
      the recording of non-cash interest expense of $613,752 which increased the
      net loss to $766,895 as compared to an originally reported net loss of
      $152,913.




·
            To
      amend Item 9A. Controls and Procedures to updated management's assessment
      and identification of material weaknesses in its internal control over
      financial reporting.




Except
for the amendment and restatements above, no information has changed from our
filing.





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
$ 381,321 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.





11




Costs
and Expenses





Cost and expenses was $965,889 compared to $4,738,347 for the years ended August
31, 2008 and 2007, respectively.   This decrease of $3,772,458
was due to a marginal increase in expenses related to SSD acquisition offset by
a decrease of $3,291,530 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.





Interest
Expense





Interest expense was $743,843 compared to $343,985 for the years ended August
31, 2008 and 2007, respectively.   This increase of $397,858 was
due to shares issued pursuant to the loan agreement discussed in Note 8 of the
attached consolidated financial statements dated August 31, 2008.  The
non cash portion of interest expense was $743,843 and $313,120 for the years
ended August 31, 2008 and 2007, respectively.





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.





The
Company is currently in default on the Williams-Laikin loans discussed in Note 9
of the attached consolidated financial statements for the year ended August 31,
2008 and 2007, respectively.   In an event of default occurs and
is continuing, and in every such case, unless the principal of the note shall
have already become due and payable, the holder by a notice in writing to the
Company may declare all of the principal of this note, together with accrued
interest thereon, to be due and payable immediately.  No such notice
as been received as of the date of this filing.





In
the event the Company or any of its subsidiaries make an assignment for the
benefit of creditors, or put in writing its inability to pay its debts generally
as they become due, or a notice of lien, levy or assessment is filed of record
or given to Company or any of its subsidiaries with respect to all or any of
their respective assets by any federal, state, local department or agency, and
such lien, levy or assessment is not released or paid within a reasonable period
of time but in no event longer than twenty (20) days from the date such lien,
levy, or assessment is filed, or such longer period of time as is appropriate in
the case of any such lien, levy or assessment that is being contested in good
faith and by appropriate proceedings; then all principal and accrued interest
shall become and be immediately due and payable without any declaration or other
act on the part of the note holder.





Off-Balance Sheet
Arrangements





None.





12




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.





Our
significant accounting policies are summarized in Note 4 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
President, Chief Executive Officer, Chief Financial Officer, Principal
Accounting Officer and Director (the “Certifying Officer”) we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of
1934 (the “Exchange Act”)). Based upon that evaluation, the Certifying Officer
concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures were not effective. We and our auditors
identified material weaknesses discussed below in the Report of management on
internal control over financial reporting.





Report
of Management on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) under the
Exchange Act. Our internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles.  Our internal
control over financial reporting includes 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 our assets;





(ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with U.S. generally
accepted accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and directors;
and





(iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of assets that could have a
material effect on the financial statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.




13




Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control – Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission. A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement to the Company's annual or
interim financial statements will not be prevented or detected.





In the
course of management's assessment, we have identified the following material
weaknesses in internal control over financial reporting:





-
            Segregation of Duties–
      As a result of limited resources, we did not maintain proper segregation
      of incompatible duties. Namely the lack of an audit committee, an
      understaffed financial and accounting function, and the need for
      additional personnel to prepare and analyze financial information in a
      timely manner and to allow review and on-going monitoring and enhancement
      of our controls. The effect of the lack of segregation of duties
      potentially affects multiple processes and
  procedures.





-
            Maintenance of Current
      Accounting Records– This weakness specifically affects the
      payments and purchase cycle and therefore we failed to maintain effective
      internal controls over the completeness and cut off of accounts payable,
      expenses and other capital
transactions.





-
            Application of GAAP –
      We did not maintain effective internal controls relating to the
      application of generally accepted accounting principles in accounting for
      transactions for common shares issued for interest
  expense.





We are in the
continuous process of improving our internal control over financial reporting in
an effort to eliminate these material weaknesses through improved supervision
and training of our staff, but additional effort is needed to fully remedy these
deficiencies. Management has engaged a Certified Public Accountant as a
consultant to assist with the financial reporting process in an effort to
mitigate some of the identified weaknesses. The Company intends on hiring the
necessary staff to address the weaknesses once additional capital is obtained
which will allow full operations to commence.





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.





14





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
            DirectorRobert
      Rosenblatt
            53
            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.





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.





15




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.





Robert Rosenblatt–
Director




Mr.
Rosenblatt was formerly the Group President and Chief Operating Officer of Tommy
Hilfiger.  Prior to joining Tommy Hilfiger, Mr. Rosenblatt was
President of the Home Shopping Network United States (HSN).  While at
HSN, Mr. Rosenblatt helped drive impressive sales and profit increases at the
world’s 16th most widely distributed shopping network.  He was
responsible for all aspects of HSN’s domestic business including Broadcasting,
Finance, Fulfillment, Information Technology, Marketing, Merchandising, Sales
and Service and hsn.com.




Mr.
Rosenblatt is credited with creating an entrepreneurial culture at HSN that has
led to the tremendous growth of hsn.com and new business opportunities such as
the acquisition of the Improvements catalog.  During his tenure, HSN
has advanced to become the 4th largest cable television network and he has
helped HSN grow its revenue to $2 billion in worldwide sales. Previous to HSN,
Mr. Rosenblatt was senior vice president and chief financial officer of
Bloomingdale’s, a division of Federated Department Stores. Mr. Rosenblatt is
also board member of the Electronic Retail Association (ERA), the Florida
Council on Economic Education, the Pinellas Education Foundation and the Junior
League of Tampa.




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.





16




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):







17


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
      Rollé, 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 Rollé.   The agreement is in effect
for two years and shall automatically renew for successive one year periods
unless the Company’s Board of Directors 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. Rollé and the Company’s Board of
Directors.  Mr. Rollé is eligible for an annual bonus
program.  The amount of the bonus will be negotiated in good faith and
mutually agreed upon by Mr. Rollé 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.





18





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.








Name
      and Address
            Number
      of Common Shares Beneficially Owned (2)
            Percent
      of ClassReno
      Rolle(1)
              8228 Sunset
      Blvd.
              3rd
      Floor
              Los
      Angeles, CA 90046
            14,380,773
            13.9%National
      Lampoon(3)
              8228 Sunset
      Blvd.
              Los
      Angeles, CA 90046
            11,769,236
            11.3%Dan
      Laikin
              9920
      Towne Road
              Carmel,
      IN 46032
            12,769,905
            12.3%N.
      Williams Family Investments(4)
              114
      East Market Street
              Warsaw,
      IN 46580
            6,242,197
            6.0%John
      Whitesell(1)
            700,000
            Less
      than 1%Lake
      City Bank
            6,242,257
            6%All
      directors and executive officers as a group (2 in number)
            15,080,773
            14.5%





(1)
The person listed is an officer and/or director of the Company.


(2)
Based on 103,650,335 shares of common stock issued and outstanding as of April
17, 2009.


(3)
Timothy Durham has dispositive control of these shares


(4)
The Lake City Bank Trust Dept, PO Box 1387, Warsaw IN 46580-1387, has
dispositive control of these shares





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 fiscal year 2008, the
Company repaid $55,000 towards these advances.





As part of
and in consideration for proving the loan above, 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 December 2007, the Company
issued 11,440,662 shares pursuant to this requirement and has been valued at the
market value of the common stock on the date of issue.  Lastly, in
March 2008 the Company issued to Williams-Laikin an additional 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).  All of these common shares were valued at
market at the date of issuance and recorded as interest expense in the
accompanying consolidated financial statements for the years ended August 31,
2008 and 2007.





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.





19




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.







20





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:








21





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 14 , 2009
            By:
      /s/ Reno
      RolléReno
      RolléPresident,
      Chief Executive Officer, and Director








22





RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 
 RESTATED
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-1RESTATED
      CONSOLIDATED FINANCIAL STATEMENTSRestated
      Consolidated Balance Sheets
              F-2Restated
      Consolidated Statements of Loss and Comprehensive Loss
              F-3Restated
      Consolidated Statements of Stockholders' Equity (Deficit)
              F-4Restated
      Consolidated Statements of Cash Flows
              F-5Notes
      to Restated Consolidated Financial Statements
              F-6
      - F-31








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 restated consolidated balance sheets of Red Rock
Pictures Holdings, Inc. and Subsidiaries, a development stage company, as of 31
August 2008 and 2007 and the related restated 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.
 
 As
discussed in Note 2 to the consolidated financial statements, the 31 August 2008
consolidated financial statements have been restated for the year ended 31
August 2008 to record additional interest expense related to the issuance of
common shares. For the year ended 31 August 2007, stock based compensation was
reclassified to interest expense to be consistent with the restatement made for
the year ended 31 August 2008.
 
 The
accompanying restated consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in note
3, 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 3. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
  /s/
DNTW Chartered Accountants, LLP
 Licensed
Public Accountants
 Markham,
Canada
 12
December 2008
 Except
Notes 2 and 17 and Restated Notes 8 and 12 which are dated 14 December
2009
   F-1





RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 
 
 RESTATED
CONSOLIDATED BALANCE SHEETS
 
 31
      August 2008
                (As
      Restated)
              
              
              31
      August 2007ASSETSCurrent
      AssetsCash
              
              $
              5,932
              
              
              $
              9,936Accounts
      receivable from related parties
              
              
              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 to related parties - current
      portion
              
              
              1,396,470
              
              
              
              -Total
      Current Assets
              
              
              1,841,312
              
              
              
              12,073Long
      Term AssetsProduction
      loans and accrued interest to related parties
              
              
              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
              
              
              8,814,551
              
              
              
              6,641,843Deficit
      accumulated during the development stage
              
              
              (5,791,984
              )
              
              
              (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)
 
 RESTATED
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
 
 For
      the Year Ended 31 August 2008
                (As
      Restated)
              
              
              For
      the Year Ended 31 August 2007
              
              
              For
      the Period from Inception (18 August 2006) to 31 August 2008
                (As
      Restated)REVENUEDistribution
      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
              
              
              
              4,006,273
              
              
              
              4,721,015Professional
      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
              
              
              
              4,738,347
              
              
              
              5,710,844LOSS
      FROM OPERATIONS
              
              
              (22,822
              )
              
              
              (4,599,193
              )
              
              
              (4,637,623
              )Interest
      expense
              
              
              (743,873
              )
              
              
              (343,985
              )
              
              
              (1,087,859
              )NET
      LOSS AND COMPREHENSIVE LOSS
              
              $
              (766,695
              )
              
              $
              (4,943,178
              )
              
              $
              (5,725,482
              )LOSS
      PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND
    DILUTED
              
              $
              (0.01)
              
              
              $
              (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)
 
 RESTATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 Common
      Stock
              
              
              
              
              
              Accumulated
                Other
              
              
              
              
              
              Total
                Stockholders'Shares
              
              
              Amount
              
              
              Additional
      Paid In Capital
              
              
              Comprehensive
      Loss
              
              
              Accumulated
      Deficit
              
              
              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 (As Originally Stated)
              
              
              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
              
              
              2,862,495
              
              
              
              2,863
              
              
              
              4,370,183
              
              
              
              -
              
              
              
              -
              
              
              
              4,373,046Common
      shares issued as additional interest expense related to related party loan
      agreement
              
              
              521,866
              
              
              
              522
              
              
              
              312,598
              
              
              
              -
              
              
              
              
              
              
              
              313,120Stock
      options granted
              
              
              -
              
              
              
              -
              
              
              
              311,973
              
              
              
              -
              
              
              
              -
              
              
              
              311,973Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (4,943,178
              )
              
              
              (4,943,178
              )Balance,
      31 August 2007 (As Originally Stated)
              
              
              64,534,361
              
              
              $
              64,535
              
              
              $
              6,641,843
              
              
              $
              -
              
              
              $
              (5,025,289
              )
              
              $
              1,681,089Common
      shares issued for services
              
              
              2,753,846
              
              
              
              2,753
              
              
              
              25,532
              
              
              
              -
              
              
              
              -
              
              
              
              28,285Common
      shares issued related to equity distribution agreement
              
              
              5,100,000
              
              
              
              5,100
              
              
              
              209,900
              
              
              
              -
              
              
              
              
              
              
              
              215,000Common
      shares issued as additional interest expense related to related party loan
      agreement
              
              
              11,962,528
              
              
              
              11,963
              
              
              
              601,819
              
              
              
              -
              
              
              
              
              
              
              
              613,782Stock
      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
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (766,695
              )
              
              
              (766,695
              )Balance,
      31 August 2008 (As Restated)
              
              
              95,350,735
              
              
              $
              95,351
              
              
              $
              8,814,551
              
              
              $
              -
              
              
              $
              (5,791,984
              )
              
              $
              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)
 
 RESTATED
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 Year
      Ended 31 August
                2008
                (As
      Restated)
              
              
              Year
      Ended 31 August 2007
              
              
              Period
      from Inception (18 August 2006) to 31 August 2008
                (As
      Restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (766,695
              )
              
              $
              (4,943,178
              )
              
              $
              (5,725,482
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Common
      shares issued for services
              
              
              28,285
              
              
              
              4,373,046
              
              
              
              4,401,331Stock
      options granted
              
              
              686,457
              
              
              
              311,973
              
              
              
              998,430Common
      shares issued for interest expense related to related party
      loans
              
              
              613,782
              
              
              
              313,120
              
              
              
              926,902Amortization
              
              
              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 RESTATED 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 of developing, 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 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 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 the corporation 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 qualify f or 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 RESTATED 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
      and Equipment
              
              
              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.
              RESTATEMENT
      OF CONSOLIDATED FINANCIAL
STATEMENTS
 
 The
Company has restated its financial statements for the year ended August 31, 2008
to reflect, as described below in the summary restatement, the recognition of
costs associated with the issuance of common shares which are classified as
interest expense and disclosed in Note 8.
 
 For the
year ended August 31, 2007, the Company reclassified interest expense from an
operating expense to a non-operating expense to conform to the 2008
presentation.  The change did not have an impact on the Balance Sheet
or the Statement of Cash Flows for the year ended August 31,
2007.
  F-7
 
 SUMMARY
RESTATEMENT RED ROCK PICTURE HOLDINGS, INC.
 FINANCIAL
STATEMENT ITEMS AS ORIGINALLY REPORTED AND RESTATED
 FOR THE
YEAR ENDED AUGUST 31, 2008
   31
      August 2008
                  (As
      Reported)
                
                Note
                
                Adjustment
                
                31
      August 2008
                  (As
      Restated)ASSETSCurrent
      AssetsCash
                
                $
                5,932
                
                
                
                
                
                $
                5,932Accounts
      receivable from related parties
                
                
                216,644
                
                
                
                
                
                
                216,644Advances
      to related party
                
                
                76,798
                
                
                
                
                
                
                76,798Capitalized
      production costs
                
                
                134,723
                
                
                
                
                
                
                134,723Prepaid
      expenses and deposits
                
                
                10,745
                
                
                
                
                
                
                10,745Production
      loans and accrued interest to related parties - current
      portion
                
                
                1,396,470
                
                
                
                
                
                
                1,396,470Total
      Current Assets
                
                
                1,841,312
                
                
                
                
                
                
                1,841,312Long
      Term AssetsProduction
      loans and accrued interest to related parties
                
                
                2,923,337
                
                
                
                
                
                
                2,923,337Property
      and equipment
                
                
                25,707
                
                
                
                
                
                
                25,707Intangibles
                
                
                424,280
                
                
                
                
                
                
                424,280Goodwill
                
                
                450,338
                
                
                
                
                
                
                450,338Total
      Long Term Assets
                
                
                3,823,662
                
                
                
                
                
                
                3,823,662Total
      Assets
                
                $
                5,664,974
                
                
                
                
                
                $
                5,664,974LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                
                $
                127,720
                
                
                
                
                
                $
                127,720Accrued
      liabilities
                
                
                32,290
                
                
                
                
                
                
                32,290Advances
      from shareholders
                
                
                63,636
                
                
                
                
                
                
                63,636Deferred
      production revenue
                
                
                326,000
                
                
                
                
                
                
                326,000Advances
      from related parties
                
                
                1,997,410
                
                
                
                
                
                
                1,997,410Total
      Liabilities
                
                
                2,547,056
                
                
                
                
                
                
                2,547,056Going
      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
                
                
                
                
                
                
                95,351Additional
      paid- in capital
                
                
                8,200,769
                
                a
                
                613,752
                
                
                8,814,551Deficit
      accumulated during the development stage
                
                
                (5,178,202)
                
                a
                
                (613,752)
                
                
                (5,791,984
                )Total
      Stockholders' Equity
                
                
                3,117,918
                
                
                
                
                
                
                3,117,918Total
      Liabilities and Stockholders' Equity
                
                $
                5,664,974
                
                
                
                
                
                $
                5,664,974
 
  F-8
 
 
 SUMMARY
RESTATEMENT RED ROCK PICTURE HOLDINGS, INC.
 FINANCIAL
STATEMENT ITEMS AS ORIGINALLY REPORTED AND RESTATED
 FOR THE
YEAR ENDED AUGUST 31, 2008
 
 Originally
      Reported
              
              Notes
              
              Adjustments
              
              
              RestatedREVENUEDistribution
      profit participation
              
              $
              23,448
              
              
              
              $
              -
              
              
              $
              23,448Print
      and advertising premium fees
              
              
              188,696
              
              
              
              
              -
              
              
              
              188,696Interest
      on production advances
              
              
              520,475
              
              
              
              
              -
              
              
              
              520,475Consulting
              
              
              198,500
              
              
              
              
              -
              
              
              
              198,500Other
              
              
              2,948
              
              
              
              
              -
              
              
              
              2,948934,067
              
              
              
              
              -
              
              
              
              934,067COSTS
      AND EXPENSESCosts
      of distribution profit participation
              
              
              3,517
              
              
              
              
              -
              
              
              
              3,517Stock
      based compensation
              
              
              714,743
              
              
              
              
              -
              
              
              
              714,743Professional
      fees
              
              
              58,925
              
              
              
              
              -
              
              
              
              58,925Salaries
      and wages
              
              
              57,141
              
              
              
              
              -
              
              
              
              57,141Office
      and general
              
              
              56,585
              
              
              
              
              -
              
              
              
              56,585Rent
              
              
              32,426
              
              
              
              
              -
              
              
              
              32,426Advertising
      and promotion
              
              
              8,815
              
              
              
              
              -
              
              
              
              8,815Amortization
      of intangible assets
              
              
              22,331
              
              
              
              
              -
              
              
              
              22,331Amortization
      of tangible assets
              
              
              2,406
              
              
              
              
              -
              
              
              
              2,406TOTAL
      OPERATING EXPENSES
              
              
              956,889
              
              
              
              
              -
              
              
              
              956,889LOSS
      FROM OPERATIONS
              
              
              (22,822
              )
              
              
              
              -
              
              
              
              (22,822
              )Interest
      expense
              
              
              (130,121
              )
              a
              
              
              (613,752
              )
              
              
              (743,873
              )NET
      LOSS AND COMPREHENSIVE LOSS
              
              $
              (152,943
              )
              
              
              $
              (613,752
              )
              
              $
              (766,695
              )LOSS
      PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND
    DILUTED
              
              $
              (0.01)
              
              
              
              $
              (0.08
              )
              
              $
              (0.08
              )WEIGHTED
      AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
              
              
              81,226,205
              
              
              
              
              61,880,348
              
              
              
              61,880,348
 
  F-9
  
 SUMMARY
RESTATEMENT RED ROCK PICTURE HOLDINGS, INC.
 FINANCIAL
STATEMENT ITEMS AS ORIGINALLY REPORTED AND RESTATED
 FOR THE
YEAR ENDED AUGUST 31, 2008
 
 Common
      Stock
              
              
              
              
              
              Accumulated
                Other
              
              
              
              
              
              Total
                Stockholders'Shares
              
              
              Amount
              
              
              Additional
      Paid In Capital
              
              
              Comprehensive
      Loss
              
              
              Accumulated
      Deficit
              
              
              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 (As Originally Stated)
              
              
              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
              
              
              2,862,495
              
              
              
              2,863
              
              
              
              4,370,183
              
              
              
              -
              
              
              
              -
              
              
              
              4,373,046Common
      shares issued as additional interest expense related to related party loan
      agreement
              
              
              521,866
              
              
              
              522
              
              
              
              312,598
              
              
              
              -
              
              
              
              
              
              
              
              313,120Stock
      options granted
              
              
              -
              
              
              
              -
              
              
              
              311,973
              
              
              
              -
              
              
              
              -
              
              
              
              311,973Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (4,943,178
              )
              
              
              (4,943,178
              )Balance,
      31 August 2007 (As Originally Stated)
              
              
              64,534,361
              
              
              $
              64,535
              
              
              $
              6,641,843
              
              
              $
              -
              
              
              $
              (5,025,289
              )
              
              $
              1,681,089Common
      shares issued for services
              
              
              2,753,846
              
              
              
              2,753
              
              
              
              25,532
              
              
              
              -
              
              
              
              -
              
              
              
              28,285Common
      shares issued related to equity distribution agreement
              
              
              5,100,000
              
              
              
              5,100
              
              
              
              209,900
              
              
              
              -
              
              
              
              
              
              
              
              215,000Common
      shares issued as additional interest expense related to related party loan
      agreement
              
              
              11,962,528
              
              
              
              11,963
              
              
              a
              601,819
              
              
              
              -
              
              
              
              
              
              
              
              613,782Stock
      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
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (766,695
              )
              
              
              (766,695
              )Balance,
      31 August 2008 (As Restated)
              
              
              95,350,735
              
              
              $
              95,351
              
              
              $
              8,814,551
              
              
              $
              -
              
              
              $
              (5,791,984
              )
              
              $
              3,117,918
   F-10
 
 
 SUMMARY
RESTATEMENT RED ROCK PICTURE HOLDINGS, INC.
 FINANCIAL
STATEMENT ITEMS AS ORIGINALLY REPORTED AND RESTATED
 FOR THE
YEAR ENDED AUGUST 31, 2008
 
  Year
      Ended 31 August
                  2008
                  (As
      Reported
                
                Note
                
                
                Adjustment
                
                Year
      Ended 31 August 2008
                  (As
      Restated)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                
                $
                (152,913
                )
                a
                
                
                $
                (613,782
                )
                
                $
                (766,695
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Common
      shares issued for services
                
                
                28,285
                
                
                
                
                
                -
                
                
                
                28,285Stock
      options granted
                
                
                686,457
                
                
                
                
                
                -
                
                
                
                686,457Common
      shares issued for interest expense related to related party
      loans
                
                
                -
                
                a
                
                
                
                613,782
                
                
                
                613,782Amortization
                
                
                24,737
                
                
                
                
                
                -
                
                
                
                24,737Changes
      in operating assets and liabilities:Notes
      receivable
                
                
                -
                
                
                
                
                
                -
                
                
                
                -Accounts
      receivable
                
                
                (212,144
                )
                
                
                
                
                -
                
                
                
                (212,144
                )Increase
      in capitalized production costs
                
                
                (48,177
                )
                
                
                
                
                -
                
                
                
                (48,177
                )Prepaid
      expenses and deposits
                
                
                (5,765
                )
                
                
                
                
                -
                
                
                
                (5,765
                )Accounts
      payable
                
                
                4,520
                
                
                
                
                
                -
                
                
                
                4,520Accrued
      liabilities
                
                
                12,406
                
                
                
                
                
                -
                
                
                
                12,406Deferred
      production revenue
                
                
                30,000
                
                
                
                
                
                -
                
                
                
                30,000NET
      CASH PROVIDED BY OPERATING ACTIVITIES
                
                
                367,406
                
                
                
                
                
                -
                
                
                
                367,406CASH
      FLOWS FROM INVESTING ACTIVITIESProduction
      loans and accrued interest
                
                
                (497,543
                )
                
                
                
                
                -
                
                
                
                (497,543
                )Cash
      received in acquisition of Studio Store Direct, Inc.
                
                
                47,788
                
                
                
                
                
                -
                
                
                
                47,788NET
      CASH USED IN INVESTING ACTIVITIES
                
                
                (449,755
                )
                
                
                
                
                -
                
                
                
                (449,755
                )CASH
      FLOWS FROM FINANCING ACTIVITIESAdvances
      from shareholders
                
                
                (63,457
                )
                
                
                
                
                -
                
                
                
                (63,457
                )Advances
      from related parties
                
                
                (73,198
                )
                
                
                
                
                -
                
                
                
                (73,198
                )Issuance
      of common stock, net of financing fees
                
                
                215,000
                
                
                
                
                
                -
                
                
                
                215,000NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                
                
                78,345
                
                
                
                
                
                -
                
                
                
                78,345NET
      (DECREASE) INCREASE IN CASH
                
                
                (
      4,004
                )
                
                
                
                
                -
                
                
                
                (
      4,004
                )CASH,
      BEGINNING OF PERIOD
                
                
                9,936
                
                
                
                
                
                -
                
                
                
                9,936CASH,
      END OF PERIOD
                
                $
                5,932
                
                
                
                
                $
                -
                
                
                $
                5,932
   F-11
  RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 Notes:
 
 a.            To
restate
Notes 8 and 12 and restate the balances reported for non-cash interest expense
and additional paid in capital as of August 31, 2008.  The Company
restated the balances reported based on guidance provided by the Financial
Accounting Standards Board Statement Number 133 (Topic 815 of the FASB
Accounting Standards Codification).   The restated financial
statements include the recording of non-cash interest expense of $613,752 which
increased the net loss to $766,895 as compared to an originally reported net
loss of $152,913.
 
 3.
              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
operations and 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-12
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 4.
              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.
 
 Organization
and 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 man agreement 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 t h e
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-13
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 4.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING 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 the   Company 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 are amortized 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 revise s when 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 result in 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-14
 
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 4.
              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 collect all 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 amount o f 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 been determined 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 current  
market 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 payable or 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
Income that 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-15
 
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 4.
              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 t he 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 no dilutive 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 events and 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 are recoverable.  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 amount o r 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 other   indefinite 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 accounting for 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 the   compensation 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-16
 
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 
 4.
              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, does not 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
Arrangements which 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 separately  
recognized 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 both of the
agreements, as described in note 14, 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 n o further 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-17
 
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 4.
              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 the business 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. 160 Noncontrolling 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 are
presented 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, results of
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 in
determining 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 in
business 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 has not had a material effect on the
Company's financial statements.
  F-18
 
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 5.
              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.
 
 6.
              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.
 
 7.
              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.  T he 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 revenue s from 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 all n et contingent profits from the
distribution of the films related to the print and adverting financing
agreement.
 
 
 
 F-19
 
 
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 
 7.
              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
              
              
              
              1,964,207National
      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 r e venue 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 $813,756 in principal and $263,879 in
interest under this financing agreement for 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 the 2011 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 $2 4 1,964
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-20
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 8.
              ADVANCES
      FROM RELATED PARTIES (As Restated)
 
 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 total of $2,000.000.  During the year ended 31
August 2008 the loan agreement with Daniel Laikin was amended from $1,000,000 to
$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 loans are secured by the profit participation rights
of the films.  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 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 7.  In fiscal year 2008, the Company repaid
$55,000 towards these advances.
 
 As part
of and in consideration for proving the loan above, 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
December 2007 and in March 2008, the Company issued 11,440,662 and 521,866
common shares, respectively, for a total of  11,962,528 common shares
pursuant to this requirement and has been valued at the market value of the
common stock on the date of issue.  These common shares represent 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).
 
 The
Company is currently in default on the Williams-Laikin loans discussed in Note 9
of the attached consolidated financial statements for the year ended August 31,
2008 and 2007, respectively.   In an event of default occurs and
is continuing, and in every such case, unless the principal of the note shall
have already become due and payable, the holder by a notice in writing to the
Company may declare all of the principal of this note, together with accrued
interest thereon, to be due and payable immediately.  No such notice
as been received as of the date of this filing.
 
 In the
event the Company or any of its subsidiaries make an assignment for the benefit
of creditors, or put in writing its inability to pay its debts generally as they
become due, or a notice of lien, levy or assessment is filed of record or given
to Company or any of its subsidiaries with respect to all or any of their
respective assets by any federal, state, local department or agency, and such
lien, levy or assessment is not released or paid within a reasonable period of
time but in no event longer than twenty (20) days from the date such lien, levy,
or assessment is filed, or such longer period of time as is appropriate in the
case of any such lien, levy or assessment that is being contested in good faith
and by appropriate proceedings; then all principal and accrued interest shall
become and be immediately due and payable without any declaration or other act
on the part of the note holder.
 
 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 August 31, 2008 and 2007,  advances to
related parties amounted to $47,000 and $Nil, respectively.
 
 9.
              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
Rock Pictures Holdings Inc.
 
 F-21
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 10.
              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 acquisition of Studio Store Direct, Inc., as described in note
1. Management identified completed technology and processes for embedding direct
response pro g rams 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.
 
 11.
              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 State 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.  The Company has therefore not accrued any potential
contingency in the financial statements.
 
 F-22
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 12.
              COMMON
      STOCK (As Restated)
 
 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 13, 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 f air 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 was 19 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 Definitive Information
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 mailed in 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 April 2007.
 
 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 on t he 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-23
 
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 12.
              COMMON
      STOCK (As Restated, 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 into as discussed in note 8 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 to
marketing 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
service s 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
consul ting 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 14. These shares were held as collateral subject to the terms
of the original agreement.  The Company released the 3,000,000 shares,
held as collateral, of its common stock pursuant to a cancellation agreement, as
discussed in note 14.  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 and in March 2008, the Company issued an additional 11,440,662 and
521,866 shares, respectively, of its common stock in accordance with loan
agreements entered into as discussed in note 8.
 
  F-24
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 12.
              COMMON
      STOCK (As Restated, Continued)
 
 
 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.
 
 Throughout
fiscal year 2008, the Company issued a total of 2,753,846 of its common shares
in exchange for services provided to the Company by various third party service
providers.
 
 13
              STOCK
      OPTION AND E QUITY INCENTIVE PLAN
 
 On 14
February 2007 the Company filed a Form S-8 Registration Statement for 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-25
 
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 13.
              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 vesting period 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 assumption s : 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 o f 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
has 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-coup o n 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-26
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 
 13.
              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 vesting   period of five years from the grant
date and has 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.
 
 14.
              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 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 receive s 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.  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 IF G
pursuant 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-27
  RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 15.
              SUPPLE
      MENTAL 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
12.
 
 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.
 
 16.
              INCOME
      TAXES
 
 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 incurred in 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 tax
payments.  Accordingly a 100% valuation allowance has been recorded
for deferred income tax assets.
 
 F-28
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
  17.
              RESTATED
      QUARTERLY FINANCIAL DATA
(UNAUDITED)
 
 The
following tables illustrate selected unaudited consolidated statement of
operations data for each restated quarter of fiscal 2008 as described in Note
2.
 
 For
      the second quarter ended February 29, 2008
              As
      reported
              Note
              Adjustment
              As
      restatedASSETSCurrent
      AssetsCash
              $
              27,497
              
              
              $
              5,932Accounts
      receivable from related parties
              
              185,000
              
              
              
              185,000Advances
      to related party
              
              64,598
              
              
              
              64,598Prepaid
      expenses and deposits
              
              2,137
              
              
              
              2,137Total
      Current Assets
              
              279,232
              
              
              
              279,232Long
      Term AssetsProduction
      loans and accrued interest to related parties
              
              4,005,029
              
              
              
              4,005,029Total
      Assets
              $
              4,284,261
              
              
              $
              4,284,261LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable and accrued liabilities
              $
              101,259
              
              
              $
              101,259Convertible
      note payable
              
              391,550
              
              
              
              391,550Advances
      from related parties
              
              2,100,416
              
              
              
              2,100,416Total
      Liabilities
              
              2,593,225
              
              
              
              2,593,225Going
      Concern, Commitments and ContingencyStockholders'
      EquityPreferred
      stock
              
              -
              
              
              
              -Common
      stock
              
              83,789
              
              
              
              83,789Additional
      paid- in capital
              
              7,988,740
              a
              572,033
              
              8,560,773Deficit
      accumulated during the development stage
              
              (6,381,493
              )       a
              (572,033
              )
              (6,953,526
              )Total
      Stockholders' Equity
              
              1,691,036
              
              
              
              1,691,036Total
      Liabilities and Stockholders' Equity
              $
              4,284,261
              
              
              $
              4,284,261
 
 For
      the second quarter ended February 29, 2008
              As
      reported
              Notes
              Adjustments
              
              As
      restatedREVENUEInterest
      income
              $
              89,332
              
              $
              
              
              $
              89,332COSTS
      AND EXPENSESStock
      based compensation
              
              1,147,984
              
              
              
              
              
              1,147,984Office
      and general
              
              23,067
              
              
              
              
              
              23,067Professional
      fees
              
              18,219
              
              
              
              
              
              18,219Salaries
      and wages
              
              11,058
              
              
              
              
              
              11,058Rent
              
              6,000
              
              
              
              
              
              6,000TOTAL
      OPERATING EXPENSES
              
              1,206,328
              
              
              
              
              
              1,623,214LOSS
      FROM OPERATIONS
              
              (1,116,996
              )
              
              
              
              
              (1,173,882
              )Interest
      expense
              
              (56,866
              )    a
              
              (572,033
              )
              
              (628,889
              )NET
      LOSS AND COMPREHENSIVE LOSS
              $
              (1,173,862
              )
              $
              (572,033
              )
              $
              (1,745,895
              )LOSS
      PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND
    DILUTED
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.02
              )WEIGHTED
      AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
              
              78,477,512
              
              
              
              
              
              78,477,512
 
 F-29
 RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
   For
      the third quarter ended May 31, 2008
              As
      reported
              Note
              Adjustment
              As
      restatedASSETSCurrent
      AssetsCash
              $
              -
              
              
              $
              -Accounts
      receivable from related parties
              
              105,826
              
              
              
              105,826Other
      receivables
              
              185,000
              
              
              
              185,000Prepaid
      expenses and deposits
              
              2,137
              
              
              
              2,137Total
      Current Assets
              
              292,963
              
              
              
              292,963Long
      Term AssetsProduction
      loans and accrued interest to related parties
              
              4,304,632
              
              
              
              4,304,632Total
      Assets
              $
              4,597,595
              
              
              $
              4,597,595LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesBank
      indebtedness
              $
              4,350
              
              
              $
              4,350Accounts
      payable and accrued liabilities
              
              577,080
              
              
              
              577,080Convertible
      note payable
              
              402,225
              
              
              
              402,225Advances
      from shareholder
              
              87,731
              
              
              
              87,731Advances
      from related parties and accrued interest payable
              
              1,923,862
              
              
              
              1,923,862Total
      Liabilities
              
              2,995,248
              
              
              
              2,995,248Going
      Concern, Commitments and ContingencyStockholders'
      EquityPreferred
      stock
              
              -
              
              
              
              -Common
      stock
              
              84,351
              
              
              
              84,351Additional
      paid- in capital
              
              7,814,094
              a
              613,752
              
              8,427,846Deficit
      accumulated during the development stage
              
              (6,296,098
              )        
      a
              (613,752
              )
              (6,909,850
              )Total
      Stockholders' Equity
              
              1,602,347
              
              
              
              1,602,347Total
      Liabilities and Stockholders' Equity
              $
              4,597,595
              
              
              $
              4,597,595
  F-30
  RED
ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES
 
 (A
Development Stage Company)
 
 NOTES
TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
 
 FOR
THE PERIOD FROM 18 AUGUST 2006 (DATE OF INCEPTION) TO 31 AUGUST
2008
 
 For
      the third quarter ended May 31, 2008
              As
      reported
              
              Notes
              Adjustments
              
              As
      restatedREVENUEDistribution
      financing fees
              $
              105,826
              
              
              $
              
              $
              105,826INTEREST
      INCOME
              
              90,476
              
              
              
              
              
              90,476COSTS
      AND EXPENSESStock
      based compensation
              
              24,417
              
              
              
              
              
              24,417General
      and administrative
              
              13,464
              
              
              
              
              
              13,464Salaries
      and wages
              
              12,601
              
              
              
              
              
              12,601Professional
      fees
              
              10,304
              
              
              
              
              
              10,304Rent
              
              6,000
              
              
              
              
              
              6,000TOTAL
      OPERATING EXPENSE
              $
              66,786
              
              
              
              
              
              66,786INCOME
      FROM OPERATIONS
              
              129,516
              
              
              
              
              
              129,516Interest
      expense
              
              (44,121
              )
              a
              
              (41,749
              )
              
              (85,870
              )NET
      LOSS AND COMPREHENSIVE LOSS
              $
              85,395
              
              
              $
              (41,749
              )
              $
              43,646LOSS
      PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND
    DILUTED
              $
              0.00
              
              
              $
              
              
              $
              0.00WEIGHTED
      AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
              
              79,021,539
              
              
              
              
              
              
              79,021,539
 Notes:
 
 a.            To
restate Notes 8 and 12 and restate the balances reported for non-cash interest
expense and additional paid in capital as of August 31, 2008.  The
Company restated the balances reported based on guidance provided by the
Financial Accounting Standards Board Statement Number 133 (Topic 815 of the FASB
Accounting Standards Codification).   The restated financial
statements include the recording of non-cash interest expense of $613,752
recorded in both the second and third quarters of fiscal year
2008.
  For the
year ended August 31, 2007, the Company reclassified interest expense from an
operating expense to a non-operating expense.  The change did not have
an impact on our net income or loss and it did not impact the Balance Sheet or
the Statement of Cash Flows for the year ended August 31, 2007.