UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)





S
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarter ended:  November 30, 2010





o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from ___________ to ___________





Commission file number: 333-108690





RED ROCK PICTURES HOLDINGS INC.


(Exact name of registrant as specified in its charter)





Nevada
98-0441032(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)6019 Olivas Park Drive, Suite C

Ventura, California
93003(Address of principal executive offices)
(Zip Code)





(323) 790-1813


(Registrant’s telephone number, including area code)





Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  xNo o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes o     Noo





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):





Large Accelerated Filer o
Accelerated Filer o
Non-Accelerated Filer o
Smaller Reporting Company x





Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.    Yes  oNo x





State the number of shares outstanding of each of the issuer’s classes of common equity, as of January 19, 2011: 119,816,335 shares of common stock.














RED ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES





FORM 10-Q





THREE MONTHS ENDED NOVEMBER 30, 2010 AND 2009





___________________





TABLE OF CONTENTS


___________________





PagePART I - FINANCIAL INFORMATIONItem 1.
Consolidated Financial StatementsConsolidated Balance Sheets
4Consolidated Statements of Loss and Comprehensive Loss
5Consolidated Statements of Cash Flows
6Notes to Consolidated Financial Statements
7Item 2.
Management’s Discussion & Analysis or Plan of Operation
10Item 3.
Quantitative and Qualitative Disclosures About Market Risk
12Item 4.
Controls and Procedures
12PART II -- OTHER INFORMATIONItem 1.
Legal Proceedings
14Item 1A.
Rick Factors
14Item 2.
Unregistered Sales of Equity securities and Use of Proceeds
14Item 3.
Defaults Upon Senior Securities
14Item 4.
(Removed & Reserved)
14Item 5
Other Information
14Item 6.
Exhibits
14





Signatures
15




2




CAUTIONARY STATEMENT RELATED TO FORWARD LOOKING STATEMENTS





This Quarterly Report on Form 10-Q 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, 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," within. 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-Q and Annual Reports on Form 10-K.





HOW TO OBTAIN SEC FILINGS





All reports filed by Red Rock Pictures 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.





3





RED ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


AS OF NOVEMBER 30, 2010 AND AUGUST 31, 2010





November 30, 2010


August 31, 2010(Unaudited)ASSETSCurrent AssetsCash

$
108,224


$
94,676Capitalized production costs


278,415



155,665Total Current Assets


386,639



250,341Long Term AssetsEquipment, net


8,069



9,838Total Long Term Assets


8,069



9,838Total Assets

$
394,708


$
260,179LIABILITIES AND STOCKHOLDERS' DEFICITCurrent LiabilitiesAccounts payable

$
263,018


$
277,540Advances from stockholder


63,636



63,636Deferred licensing revenue


100,000



100,000Senior secured convertible note, including accrued interest of $23,700 and $19,700 at November 30, 2010 and August 31, 2010, respectively


223,700



219,700Total Current Liabilities


650,354



660,876Going Concern, Commitments and ContingencyStockholders' DeficitPreferred 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, 119,816,335 shares issued and outstanding at both November 30, 2010 and August 31, 2010, respectively


119,816



119,816Additional paid-in-capital


10,978,884



10,976,134Common stock issuable


479,000



426,000Subscription receivable


--



(200,000
)Deficit


(11,833,346
)


(11,722,647
)Total Stockholders' Deficit


(255,646
)


(400,697
)Total Liabilities and Stockholders' Deficit

$
394,708


$
260,179





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





4




RED ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS


FOR THE THREE MONTHS ENDED NOVEMBER 30, 2010 AND 2009





Three Months Ended November 30, 2010

(Unaudited)


Three Months Ended November 30, 2009

(Unaudited)REVENUEProduction revenue

$
-


$
-TOTAL REVENUE


-



-COSTS AND EXPENSESStock based compensation


55,750



210,000Professional fees


27,794



-Salaries and wages


16,703



-Office and general


6,452



1,770TOTAL COSTS AND EXPENSES


106,699



211,770LOSS FROM OPERATIONS


(106,699
)


(211,770
)Interest expense


4,000



36,500NET LOSS AND COMPREHENSIVE LOSS

$
(110,699
)

$
(248,270
)LOSS PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED

$
(0.00
)

$
(0.00
)WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED


119,816,335



106,816,335




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




5




RED ROCK PICTURES HOLDINGS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE THREE MONTHS ENDED NOVEMBER 30, 2010 AND 2009





Three Months Ended

November 30, 2010


Three Months Ended

November 30, 2009(Unaudited)


(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(110,699)


$
(248,270
)Adjustments to reconcile net loss to net cash (used in) provided by operating activities:Stock-based compensation expense


55,750



210,000Interest accrued on senior secured convertible notes


4,000



36,500Depreciation


1,769



1,770Changes in operating assets and liabilities:Capitalized production costs


(122,750
)


-Accounts payable and accrued liabilities


(14,522)



-NET CASH USED IN OPERATING ACTIVITIES


(186,452)



-CASH FLOWS FROM INVESTING ACTIVITIESCASH FLOWS FROM FINANCING ACTIVITIESIssuance of common stock


200,000



-NET CASH PROVIDED BY FINANCING ACTIVITIES


200,000



-NET INCREASE IN CASH


13,548



-CASH, BEGINNING OF YEAR


94,676



-CASH, END OF YEAR

$
108,224


$
-




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





6





RED ROCK PICTURES HOLDINGS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE MONTHS ENDED NOVEMBER 30, 2010 AND 2009


(UNAUDITED)








Note 1 – Nature of Business and Basis of Presentation





Nature of Business





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 engages in the business of developing, financing, producing and licensing feature-length motion pictures and direct response infomercials.





On August 20, 2010, the Company and Reno Rolle, the Company’s Chief Executive Officer, entered into a letter of intent with Crisnic Fund, S.A., a Costa Rican investment company (“Crisnic”) whereby Crisnic has agreed to provide funding to the Company.  Pursuant to the letter of intent, Reno Rolle has agreed to pledge a total of 14,380,773 of his shares of the Company’s common stock as security for an initial funding of $300,000 payable in three tranches as set forth in the letter of intent.  In exchange for the $300,000 which was received from Crisnic, the Company issued 13,000,000 restricted common shares in August 2010 and agreed to complete a 1 for 100 reverse stock split as soon as possible.  Subsequent to the reverse stock split, the Company also agreed to issue Crisnic 3,000,000 shares of the Company’s common stock.  Also subsequent to the reverse stock split, the Company will sell up to $1,500,000 in common stock and file a Form S-1 Registration Statement with the U.S. Securities and Exchange Commission to register the shares.  The number of shares and the purchase price of the shares in the primary offering shall be determined subsequent to a planned reverse split.   Lastly, and as a condition of funding, it was agreed that Reno Rolle will convert all outstanding past due salary into 5,000,000 newly issued shares of common stock.





The Company agreed to use the funds received from Crisnic to fund a proposed direct response marketing campaign and will share all adjusted gross receipts from the Campaign with Crisnic.





Basis of Presentation





The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Securities and Exchange Commission, or SEC, Form 10Q and Article 8 of SEC Regulation S-X. They do not include all of the information and footnotes required by generally accepted accounting principles, or GAAP, for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary for a fair and comparable presentation have been included and are of a normal recurring nature.  The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended August 31, 2010.  Operating results for the three months ended November 30, 2010 are not necessarily indicative of the results that may be expected for future quarters or the year ending August 31, 2011.





Note 2 – Going Concern





The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company has experienced losses from operations since inception, does not have significant sources of revenue and has 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 the successful execution of the Company’s current primary business activity, namely, the retail roll-out of the book currently entitled “ANTI-AGING CURES LIFE CHANGING SECRETS TO REVERSE THE EFFECTS OF AGING”by Dr. James William Forsythe M.D., H.M.D as supported by the direct response television commercial which is currently in post-production.  The Company expects to test market the Infomercial in the second quarter of 2011 with the expected retail release date of the Book to occur in the third quarter of 2011.





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.





7




Note 3 – New Accounting Pronouncements





In June 2009, the FASB issued guidance on transfers and servicing of financial assets to eliminate the concept of a qualifying special-purpose entity, change the requirements for off balance sheet accounting for financial assets including limiting the circumstances where off balance sheet treatment for a portion of a financial asset is allowable, and require additional disclosures. The guidance is effective for the Company’s 2011 fiscal year. The Company does not expect that the adoption of this guidance will have a material impact on its financial statements.





Other recent accounting pronouncements issued by the FASB and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.





Note 4 – Capitalized Production Costs





All capitalized production costs relate to projects in development.  The Company expects 100% of the balance of capitalized production costs will be amortized or expensed within the next year.  The table below displays the activity during the three months ended November 30, 2010:





Fiscal Year 2011Opening balance, August 31, 2010

$
155,655Production costs incurred and capitalized


122,760Expense related to delivered projects and reclassified to cost of sales


-Closing unamortized balance, November 30, 2010

$
278,415





Note 5 – Equipment





The table below displays our equipment balance as of November 30, 2010 and August 31, 2010, respectively.





November 30, 2010


August 31, 2010Furniture and fixtures

$
25,459


$
25,459Equipment


16,468



16,468Equipment


41,927



41,927Less accumulated depreciation


(34,858
)


(32,089
)Total equipment, net

$
8,069


$
9,838





Depreciation expense was $1,769 and $1,770 for the three months ended November 30, 2010 and 2009, respectively.





Note 6 – Senior Secured Convertible Debenture





On December 28, 2008, the Company entered into a twelve month $100,000 senior secured convertible debenture agreement with Emerald Asset Advisors, LLC (“Note Holder”).  The one year term loan bears interest at 10% per annum and interest accrues and is payable in cash upon maturity provided that the elected conversion to common shares does not occur.  At any time or times on or after December 28, 2008, the Note Holder shall be entitled to convert any portion of the outstanding and unpaid amount into fully paid and nonassessable shares of Common Stock at a conversion price of $0.06 per common share.





The Company is currently in default as the Company was unable, due to its financial wherewithal, to repay the balance owed at the maturity date.  As an event of default, the interest rate is increased to twenty percent (20.0%) until the date of such cure.  The Company is currently in negotiation with the Note Holder.





During the year ended August 31, 2010, the Note Holder advanced the Company an additional $100,000 in the form of a short term loan.  The terms of the loan are in discussion and dependent on our current efforts to successfully obtain additional financing.   Proceeds from this loan was used to complete the fiscal year 2009 Annual Report on Form 10-K, which included auditor, legal, printing, and other professional fees and to fund operating capital.  The remaining funds are being used to fund our operations.





Note 7 – Commitments and Contingency





We are involved in routine litigation incidental to the conduct of our business. There are currently no pending litigation proceedings to which we are a party or to which any of our property is subject.




8




Note 8 – Common Stock





Our Chief Executive Officer’s employment agreement stipulates that Mr. Rollé can receive common shares in lieu of cash compensation.  The Company recorded $53,000 and $60,000 for the three months ended November 30, 2010 and 2009, respectively.  The balance is included in common shares issuable which are a component of additional paid-in-capital in our Consolidated Balance Sheet and expensed in Stock based compensation on our Consolidated Statement of Loss.





The Company issued 13,000,000 restricted common shares for $300,000 in August 2010. The Company received the first tranche of $100,000 from Crisnic in August 2010, and the remaining $200,000 was received during the three months ended November 30, 2010.   The Company agreed to use the funds received from Crisnic to fund a proposed direct response marketing campaign and will share all adjusted gross receipts from the Campaign with Crisnic.





Note 9 – Stock Options and Equity Incentive Plan





On February 14, 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.





Summary of stock option activity is as follows:





Number

of

shares


Weighted

average

exercise

price


Weighted

average

remaining

contractual term

(in years)Outstanding at August 31, 2010


5,000,000


$
0.03



1.8Granted


-



-Expired or forfeited


-



-Outstanding at November 30, 2010


5,000,000


$
0.03



1.8Vested and expected to vest at November 30, 2010


1,533,333


$
0.03



1.8Exercisable at November 30, 2010


1,533,333


$
0.03



1.8





During the three months ended November 30, 2010 and 2009, the Company recognized total compensation expense related to stock options of $2,750 and $150,000, respectively, and is disclosed separately in the accompanying consolidated statements of income or loss and comprehensive income or loss.





Note 10 – Supplemental Cash Flow Information





During the three months ended November 30, 2010 and 2009, there was no interest or taxes paid by the Company.





Note 11 – Income Taxes





As at November 30, 2010 and August 31, 2010, 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.




9




ITEM 2.  MANAGEMENT’S DISCUSSION 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 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 centers 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.





Current Update on Operations





Starting in fiscal year 2010 we modified our strategic plan to focus on the development and distribution of direct response marketing campaign also commonly known as infomercials.   Our ability to implement our revised strategy is highly dependent on our ability to successfully raise additional capital.





On August 20, 2010, the Company and Reno Rolle, the Company’s Chief Executive Officer, entered into a letter of intent with Crisnic Fund, S.A., a Costa Rican investment company (“Crisnic”) whereby Crisnic has agreed to provide funding to the Company to fund a proposed direct response marketing campaign and will share all adjusted gross receipts from the campaign.  Pursuant to the letter of intent, Reno Rolle has agreed to pledge a total of 14,380,773 of his shares of the Company’s common stock as security for an initial funding of $300,000 payable in three tranches as set forth in the letter of intent.  In exchange for the $300,000 which has been received from Crisnic (“Crisnic Investment”), the Company issued 13,000,000 restricted common shares in August 2010 and agreed to complete a 1 for 100 reverse stock split as soon as possible.  Subsequent to the reverse stock split, the Company also agreed to issue Crisnic 3,000,000 shares of the Company’s common stock.  Also subsequent to the reverse stock split, the Company will sell up to $1,500,000 in common stock and file a Form S-1 Registration Statement with the U.S. Securities and Exchange Commission to register the shares.  The number of shares and the purchase price of the shares in the primary offering shall be determined subsequent to a planned reverse split.   Lastly, and as a condition of funding, it was agreed that Reno Rolle will convert all outstanding past due salary into 5,000,000 newly issued shares of common stock.





The Company has utilized the proceeds from the Crisnic Investment to produce and exploit a direct response television commercial (“Infomercial”) to support the retail roll-out of the book currently entitled “ANTI-AGING CURES LIFE CHANGING SECRETS TO REVERSE THE EFFECTS OF AGING” by Dr. James William Forsythe M.D., H.M.D (the “Book”). Currently, Company is in post-production on the Infomercial and expects to test market the infomercial in the first quarter of 2011 with the expected retail release date of the Book to occur in the third quarter of 2011.





10





Results of Operations





Comparison of the Three Months Ended November 30, 2010 and 2009





Revenue





The Company had no revenues for the three months ended November 30, 2010 and 2009, respectively.




Costs and Expenses





Cost and expenses was $106,699 compared to $211,770 for the three months ended November 30, 2010 and 2009, respectively.  Stock options granted in 2007 had fully vested and were expensed by the end of the August 31, 2010 fiscal year.  Therefore the main reason for the decrease in costs and expenses was from the decrease in stock based compensation expense of $154,000. The remaining difference was due to normal fluctuations in operating expenses based on business operations.





Interest Expense





Interest expense was $4,000 compared to $36,500 for the three months ended November 30, 2010 and 2009, respectively.   The reduction in interest expense was due to the reduction in debt outstanding.   On August 13, 2010, the Company entered into an agreement with National Lampoon, Inc. (“NL”) in which NL agreed to assume the Company’s outstanding balance owed to Williams-Laikin of $1,941,928 and in exchange, the Company agreed to forgive National Lampoon, Inc. for its balance owed the Company of $1,024,468.





Liquidity and Capital Resources





As of November 30, 2010 we had $108,224 in cash and a working capital deficiency of $263,714.  A substantial amount of cash will be required in order to continue 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.





The Company has experienced losses from operations since inception, does not have significant sources of revenue and has 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 the successful execution of the Company’s current primary business activity, namely, the retail roll-out of the book currently entitled “ANTI-AGING CURES LIFE CHANGING SECRETS TO REVERSE THE EFFECTS OF AGING” by Dr. James William Forsythe M.D., H.M.D as supported by the direct response television commercial which is currently in post-production.  The Company expects to test market the Infomercial in the first quarter of 2011 with the expected retail release date of the Book to occur in the third quarter of 2011.





Cash used in operating activities were $186,452 for the three months ended November 30, 2010 compared to Nil for the three months ended November 30, 2009.   Production costs of $122,750 were incurred to produce the Infomercial discussed above during the three months ended November 30, 2010.  Other uses of cash from operating activities was due to repayment of our accounts payable and accrued expenses and the funding of costs and expenses.





Cash received from financing activities of $200,000 was received from an investor as discussed below.  On August 20, 2010, the Company and Reno Rolle, the Company’s Chief Executive Officer, entered into a letter of intent with Crisnic Fund, S.A., a Costa Rican investment company (“Crisnic”) whereby Crisnic has agreed to provide funding to the Company.  Pursuant to the letter of intent, Reno Rolle has agreed to pledge a total of 14,380,773 of his shares of the Company’s common stock as security for an initial funding of $300,000 payable in three tranches as set forth in the letter of intent.  In exchange for the $300,000 to be received from Crisnic, the Company issued 13,000,000 restricted common shares in August 2010 and agreed to complete a 1 for 100 reverse stock split as soon as possible.  Subsequent to the reverse stock split, the Company also agreed to issue Crisnic 3,000,000 shares of the Company’s common stock.  Also subsequent to the reverse stock split, the Company will sell up to $1,500,000 in common stock and file a Form S-1 Registration Statement with the U.S. Securities and Exchange Commission to register the shares.  The number of shares and the purchase price of the shares in the primary offering shall be determined subsequent to a planned reverse split.   Lastly, and as a condition of funding, it was agreed that Reno Rolle will convert all outstanding past due salary into 5,000,000 newly issued shares of common stock.  The Company received the first tranche of $100,000 from Crisnic in August 2010 and the remaining $200,000 during the three months ended November 30, 2010.  The Company agreed to use the funds received from Crisnic to fund a proposed direct response marketing campaign and will share all adjusted gross receipts from the Campaign with Crisnic.





The Company is currently in default on its Senior Secured Convertible Debenture discussed in Note 6 of the attached consolidated financial statements at November 30, 2010.  As an event of default, the interest rate is increased to twenty percent (20.0%) until the date of such cure.  The Company is currently in negotiation with the Note Holder.




11




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, revenues 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 3 of our annual financial statements filed on Form 10-K and dated December 14, 2010.  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 the Company’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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS





The Company is not subject to certain market risks, including changes in interest rates and currency exchange rates.





ITEM 4. CONTROLS AND PROCEDURES





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.





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.




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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.




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.





Changes in internal controls





There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the first quarter of our fiscal year ended August 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




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PART II - OTHER INFORMATION





ITEM 1.  LEGAL PROCEEDINGS





We are involved in routine litigation incidental to the conduct of our business. There are currently no material pending litigation proceedings to which we are a party or to which any of our property is subject.





ITEM 1A. RISK FACTORS.





There are no material changes to the risk factors disclosed in our annual report filed on Form 10-K dated December 14, 2010.








ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





The Company issued 13,000,000 restricted common shares for $300,000 in August 2010 to Crisnic Fund, S.A., a Costa Rican investment company (“Crisnic”). The Company received the first tranche of $100,000 from Crisnic in August 2010, and the remaining $200,000 was received during the three months ended November 30, 2010. The Company agreed to use the funds received from Crisnic to fund a proposed direct response marketing campaign and will share all adjusted gross receipts from the Campaign with Crisnic.





ITEM 3.  DEFAULTS UPON SENIOR SECURITIES





The Company is currently in default on its Senior Secured Convertible Debenture discussed in Note 6 of the attached consolidated financial statements at November 30, 2010.  As an event of default, the interest rate is increased to twenty percent (20.0%) until the date of such cure.  The Company is currently in negotiation with the Note Holder.





ITEM 4.  (REMOVED & RESERVED)




None





ITEM 5.  OTHER INFORMATION





None





ITEM 6.  EXHIBITS





(a)
Exhibits





Exhibit Number

Description of Exhibit31.1

Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended32.1

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





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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:  January 19, 2011
By: /s/ Reno RolléReno RolléPresident, Chief Executive Officer, and Director