**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 **FORM
        10-KSB**
 
 **x
        ANNUAL REPORT PURSUANT
        TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For
        the
        fiscal year ended December
        31, 2006
 
 **o
        TRANSITION REPORT
        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For
        the
        transition period from  to
  Commission
        File Number: 000-52450
 
 Red
        Carpet Entertainment, Inc.
 (Exact
        name of registrant as specified in its charter)
 Nevada
              
              01-0670370State
                  or other jurisdiction of incorporation or organization)
              
              (I.R.S.
                  Employer Identification No.)400
                  Corporate Pointe, Suite 300, Culver City, California,
                  90230
              90230(Address
                  of principal executive offices)
              (Zip
                  Code)(310)
                  590-4589(Registrant's
                  Telephone Number, Including Area
                  Code)
  Securities
                registered under Section 12(b) of the Act:Title
                  of each class registered:
              Name
                  of each exchange on which registered:None
              NoneSecurities
                registered under Section 12(g) of the 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. [X]Yes [ ] No
  Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not contained in this form, and no disclosure will be
        contained, to the best of registrant's knowledge, in definitive proxy or
        information statements incorporated by reference in Part III of this Form
        10-KSB
        or any amendment to this Form 10-KSB. [X]
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes [X] No [ ]
  State
        issuer's revenues for its most recent fiscal year. $0.
  State
        the
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates computed by reference to the price at which the common equity
        was
        sold, or the average bid and asked price of such common equity, as of a
        specified date within the past 60 days. (See definition of affiliate in Rule
        12b-2 of the Exchange Act.) As of March 30, 2007, approximately
        $316,250.
 
 State
        the
        number of shares outstanding of each of the issuer’s classes of common equity,
        as of the latest practicable date. As of March 30, 2007, there were 3,842,500
        shares of the issuer's $.001 par value common stock issued and outstanding.
 
 Documents
        incorporated by reference. There are no annual reports to security holders,
        proxy information statements, or any prospectus filed pursuant to Rule 424
        of
        the Securities Act of 1933 incorporated herein by reference.
 
 Transitional
        Small Business Disclosure format (check one):  [ 
        ] Yes  [
        x
        ] No
  1
  **PART
        I**
 
 **Item
        1. Description of Business.**
 
 **Background.** We were
        incorporated under the laws of the State of Nevada on April 8, 2002, under
        the
        name Red Carpet Entertainment, Inc. From our inception on April 8, 2002,
        until
        our acquisition of Landes Daily, Inc., on June 30, 2005, we were engaged
        in
        event planning, especially for weddings and other family events, all types
        of
        corporate events, and special access to nightclubs, restaurants and other
        VIP
        entertainment or sporting venues and events. On June 30, 2005, we entered
        into a
        stock purchase agreement pursuant to which we issued 3,800,000 shares of
        our
        common stock to Rich Landes and Renee Raimondi in exchange for the majority
        interest of Landes Daily, Inc., which manufactured and sold an apparel line.
        On
        June 6, 2006, all of the parties agreed to rescind the stock purchase agreement
        and those 3,800,000 shares of our common stock were returned to us and
        cancelled. We are no longer operating the event planning business or the
        apparel
        business.
  **Business.** We
        are an
        independent film production company that plans to develop, produce, market,
        and
        distribute low budget film and video productions. We are currently seeking
        to
        acquire properties from independent writers, directors, and producers. We
        plan
        to produce the projects and maintain ownership of the films with the intent
        of
        building a library and licensing the rights to those films. If we are unable
        to
        license the rights to third parties, we may distribute our films directly
        to the
        international and domestic markets on DVDs or via the internet.
 
 We
        also
        intend to build our library of film and video content by acquiring film rights
        at prices that we believe are significantly discounted through foreclosure
        sales
        held by the Screen Actors Guild, Inc. In December 2006, we purchased from
        the
        Screen Actors Guild, Inc. all ownership rights to a short film titled “Swallow,”
which premiered at the Sundance Film Festival in 2003 and was directed and
        written by Frank Flowers who was awarded the HBO “Director to Watch” Award in
        2006. In addition, HBO awarded the 2003 HBO Short Film Award to Frank Flowers
        for “Swallow.” The film has aired periodically on HBO from the fall of 2003 to
        the fall of 2006. The plot revolves around a Florida high school senior,
        who
        takes assignment as a cocaine mule because he is lacking the grades and money
        for college. We intend to begin researching opportunities to license that
        film
        to third parties.
  **Industry.** The
        major studios dominate the motion picture industry in the United States by
        controlling the distribution of films that they produce as well as films
        that
        are produced by independent studios. These major studios include the
        following:
  ·
              The
                  Walt Disney Company;
 ·
              Sony
                  Pictures Entertainment;
 ·
              Paramount
                  Pictures;
 ·
              Twentieth
                  Century Fox Film Corporation; and
 ·
              Universal
                  Studios.
 
 Historically,
        the major studios have produced and distributed the majority of high grossing
        theatrical motion pictures released annually in the United States. In addition,
        most of the studios have created or accumulated substantial and valuable
        motion
        picture libraries that generate significant revenues. These revenues can provide
        the major studios with a stable source of earnings that partially offset
        the
        variations in the financial performance of their current motion picture releases
        and other aspects of their motion picture operations.
 
 As
        the
        major studios have begun producing a smaller number of films each year, many
        smaller, independent film production companies have emerged and have had
        success
        in producing low budget motion pictures. We believe that increasing commercial
        success of independent films illustrates the increasing demand for low-budget,
        independent films in both the international and domestic markets.
 
 We
        also
        believe that the digital video and the internet have created the possibility
        for
        low-budget motion picture production as films can be inexpensively produced
        and
        distributed through DVD as well broadcast via the internet.
  2
  **Suppliers.** We
        intend
        to continue to acquire film rights at prices that we believe are significantly
        discounted through auctions through foreclosure sales held by the Screen
        Actors
        Guild, Inc. The Screen Actors Guild, Inc. holds auctions where they sell
        the
        rights to certain films that the Screen Actors Guild, Inc. has foreclosed
        on as
        a secured party. We believe that we will be able to continue to acquire film
        rights at prices that we believe are significantly discounted through those
        auctions.
  We
        have
        also identified a pool of independent or freelance screenwriters for our
        film
        projects. We do not anticipate paying more than the minimum payments set
        by the
        Writers Guild of America, for the development of any script or treatment
        and for
        any specific project that reaches production. The Writers Guild of America
        minimum pay varies according to each project’s budget and various other factors
        determined by the Writers Guild of America.
  **Growth
        Strategy.** We plan
        to grow our operations through the funding of projects from proceeds of previous
        productions, and through the growth of our library of films. We believe that
        we
        will be able to generate additional revenues by increasing the size of our
        library, thereby increasing the number of films that we can license to thirds
        parties. We intend to look for opportunities to acquire libraries of films
        from
        other companies. We also believe that there may be opportunities to enter
        into
        joint venture agreements with companies that hold libraries of films that
        are
        currently not licensed. In addition to continually seeking out and evaluating
        new projects of merit, we may consider the acquisition of other production
        companies operating in a similar space.
 
 **Competition.** We
        compete with the major studios that dominate the motion picture industry
        in the
        United States, such as The Walt Disney Company, Sony Pictures Entertainment,
        Paramount Pictures, Twentieth Century Fox Film Corporation and Universal
        Studios. In addition to competing with the major film studios that dominate
        the
        motion picture industry, we will also compete with numerous independent motion
        picture production companies. Many of these companies have access to vast
        financial resources. Additionally, they have established long standing
        relationships with talent in all areas of motion picture production. We cannot
        and do not intend to compete with either the large or mid-sized companies.
        We
        are also at a significant competitive disadvantage within the movie industry
        because we have not previously produced and distributed any films and have
        limited capital resources.
  Our
        ability to compete will depend on our ability to obtain a library of films
        at
        prices that we believe are significantly discounted through auctions through
        foreclosure sales held by the Screen Actors Guild, Inc. We believe we will
        be
        able to compete effectively in that area.
 
 **Website.** Our
        website is located at www.rcefilms.com .
        Our
        current website provides a description of our business together with our
        contact
        information including our address, telephone number and e-mail address.
 
 **Government
        Regulation.** Distribution
        rights to motion pictures are granted legal protection under the copyright
        laws
        of the United States and most foreign countries. These laws provide substantial
        civil and criminal sanctions for unauthorized duplication and exhibition
        of
        motion pictures. Motion pictures, musical works, sound recordings, art work,
        still photography and motion picture properties are separate works subject
        to
        copyright under most copyright laws, including the United States Copyright
        Act
        of 1976, as amended. The Motion Picture Association of America, an industry
        trade association, operates a piracy hotline and investigates all reports
        of
        such piracy. Depending upon the results of investigations, appropriate legal
        action may be brought by the owner of the rights. Depending upon the extent
        of
        the piracy, the federal government may assist in these investigations and
        related criminal prosecutions. The Code and Ratings Administration of the
        Motion
        Picture Association also assigns ratings indicating age-group suitability
        for
        theatrical distribution of motion pictures.
  In
        addition, we are subject to federal, state and local laws and regulations
        applied to businesses generally. We believe that we are in conformity with
        all
        applicable laws in all relevant jurisdictions. We do not believe that we
        have
        not been affected by any of the rules and regulations specified in this section.
 
 **Intellectual
        Property.** We
        recently purchased and currently own all copyrights and copyrightable interests
        in the short film titled “Swallow” which was produced by Frank Flowers and New
        Gold Dream Pictures, Inc. The plot revolves around a Florida high school
        senior,
        who takes assignment as a cocaine mule because he lacks the grades and money
        for
        college.
  3
  We
        intend
        to copyright all screenplays, project treatments, and other original material
        that we produce. We also intend to use copyrights issued and maintained by
        the
        Copyright Office of the Library of Congress as the primary form of protection
        for all original works of authorship, including literary, dramatic, musical,
        artistic, and certain other intellectual works, both published and unpublished.
        The 1976 Copyright Act allows us the exclusive right to reproduce the
        copyrighted work, to prepare derivative works, to distribute the copyrighted
        work, to perform the copyrighted work, and to display the copyrighted work
        publicly. We will also register applicable screenplays and scripts with the
        Writers Guild of America. ****
 
 We
        also
        currently own the web domain www.rcefilms.com ,
        which
        provides information regarding our business as well as contact information
        including our address, telephone number and e-mail address. Under current
        domain
        name registration practices, no one else can obtain an identical domain name,
        but someone might obtain a similar name, or the identical name with a different
        suffix, such as “.org”, or with a country designation. The regulation of domain
        names in the United States and in foreign countries is subject to change,
        and we
        could be unable to prevent third parties from acquiring domain names that
        infringe or otherwise decrease the value of our domain names.
  We
        may
        also protect various other words, names, symbols, and devices that are used
        with
        goods produced by us to distinguish them from those produced by others through
        the use of trademarks, and will identify and distinguish the source of several
        of our services through the use of service marks. These would include “rce
        films” and our logo. We have not filed applications to protect any other trade
        or service marks. We cannot guaranty we will receive such trade or service
        mark
        protection if we make an application.
 
 **Research
        and Development.** We
        are
        not currently conducting any research and development activities other than
        the
        development of our website. We believe that the total cost for the development
        of our website will be no more than $1,500. We do not anticipate conducting
        such
        activities in the near future.
 
 **Employees.** As
        of
        March 29, 2007, we have no employees other than our officers. We will utilize
        independent contractors, consultants, and other creative personnel from time
        to
        time to assist in developing, producing and promoting any motion pictures
        that
        we produce. We are not a party to any employment agreements. Films produced
        by
        the major studios and independent production companies in the United States
        generally employ actors, writers and directors who are members of the Screen
        Actors Guild, Writers Guild of America and Directors Guild of America,
        respectively, pursuant to industry-wide collective bargaining
        agreements.
  **Our
        Facilities.** Our
        offices are located at 400 Corporate Pointe, Suite 300, Culver City, California
        90230. We pay $300 per month on a month to month basis. We believe that our
        facilities are adequate for our needs. We do not own any real estate.
 
 Investing
        in our common stock involves a high degree of risk. Any potential investor
        should carefully consider the risks and uncertainties described below before
        purchasing any shares of our common stock. The risks described below are
        those
        we currently believe may materially affect us.
 
 **Risks
        Related to our Business:**
 
 **We
        have a limited operating history upon which an evaluation of our prospects
        can
        be made.**
 
 We
        were
        formed on April 8, 2002. Our lack of operating history in the film industry
        makes an evaluation of our business and prospects very difficult. Our prospects
        must be considered speculative, considering the risks, expenses, and
        difficulties frequently encountered in the establishment of a new business.
        We
        cannot be certain that our business will be successful or that we will generate
        significant revenues and become profitable.
 
 **We
        will need to raise additional capital to fund our operations. Our failure
        to
        raise additional capital will significantly affect our ability to fund our
        proposed activities.**
  4
  To
        develop, produce, market, and distribute a low budget film, we will be required
        to raise additional funds. We do not know if we will be able to acquire
        additional financing. We anticipate that we will need to spend significant
        funds
        on producing a low budget film and acquiring titles at auction. Our failure
        to
        obtain additional funds would significantly limit or eliminate our ability
        to
        fund our operations.
 
 **We
        have incurred a net loss since inception and expect to incur net losses for
        the
        foreseeable future.**
 
 As
        of
        December 31, 2006, our net loss since inception was $307,653. We expect to
        incur
        operating and capital expenditures of up to $50,000 for the next year and,
        as a
        result, we expect significant net losses in the future. We will need to generate
        significant revenues to achieve and maintain profitability. We may not be
        able
        to generate sufficient revenues to achieve profitable operations.
 
 **Because
        we are a development stage company, we have no revenues to sustain our
        operations.**
 
 We
        are a
        development stage company that is currently developing our business. To date,
        we
        have not developed or licensed any films, and we cannot guaranty that any
        will
        be completed or licensed. The success of our business operations will depend
        upon our ability to obtain additional film rights and market and license
        those
        rights to third parties. We are not able to predict whether we will be able
        to
        develop our business and generate revenues. If we are not able to complete
        the
        successful development of our business plan, generate significant revenues
        and
        attain sustainable profitable operations, then our business will fail.
 
 **Our
        business may suffer due to illegal replication of films that we produce or
        our
        own unintentional infringement upon other’s proprietary interests.**
 
 We
        plan
        to copyright and trademark all of our film properties and projects. Despite
        these precautions, existing copyright and trademark laws afford only limited
        practical protection in certain countries. We may also distribute our products
        in other countries in which there is only limited copyright or trademark
        protection. As a result, it may be possible for unauthorized third parties
        to
        copy and distribute our productions or certain portions or applications of
        our
        intended productions. Litigation may be necessary in the future to enforce
        our
        intellectual property rights, to determine the validity and scope of the
        proprietary rights of others, or to defend against claims of infringement
        or
        invalidity. Any such litigation could result in substantial costs and diversion
        of resources. We do not have the financial resources to protect our rights
        to
        the same extent as major studios and our efforts to protect our intellectual
        property may not be adequate.
  One
        of
        the risks of the film production
        business is the possibility of claims that our productions infringe on the
        intellectual property rights of third parties with respect to previously
        developed films, stories, characters or other entertainment. We cannot guaranty
        that infringement claims will not be asserted or prosecuted against us.
        Irrespective of the validity or the successful assertion of such claims,
        we
        would incur significant costs and diversion of resources with respect to
        the
        defense thereof. If any claims or actions are asserted against us, we may
        seek
        to obtain a license under a third party’s intellectual property rights. We
        cannot provide any assurances, however, that under such circumstances a license
        would be available on reasonable terms or at all.
 
 **Our
        company is susceptible to industry trends and general economic conditions,
        which
        may hinder our ability to successfully produce and market our films.**
 
 The film production
        business is capital intensive and affected by changes in the general economy,
        interest rates, availability of capital, and the film/entertainment industry.
        We
        may not be able to actually develop, produce, market and distribute a
        film.
 
 **Because
        the film making industry is inherently risky, our films may fail under a
        number
        of different scenarios.**
  We
        believe that all of our operating revenue will be derived from the production
        and licensing of films. The film and television industries are highly
        speculative and involve a substantial degree of risk. Each film is an individual
        artistic work, and its commercial success is primarily determined by audience
        reaction, which is unpredictable. We cannot guaranty the financial success
        of
        any film. Even if a production is a critical or artistic success, it may
        not be
        profitable.
  5
  Relatively
        few films return a profit to investors, and we cannot guaranty that a film
        will
        recoup its production or acquisition costs. There is a high degree of risk
        that
        any motion picture we produce will not return all or any portion of our
        investment.
 
 **If
        we are unable to compete effectively in the film industry, our business will
        fail.**
 
 The
        motion picture and film industry is extremely competitive. The competition
        comes
        from both companies within the same business and companies in other
        entertainment media which create alternative forms of leisure entertainment.
        We
        compete with several “major” film studios which are dominant in the motion
        picture industry, as well as with numerous independent motion picture and
        television production companies, television networks, and pay television
        systems
        for the acquisition of literary properties, the services of performing artists,
        directors, producers, and other creative and technical personnel, and production
        financing. Many of the organizations with which we compete have significantly
        greater financial and other resources than we do. The majors are typically
        large, diversified entertainment concerns or subsidiaries of diversified
        corporations which have strong relationships with creative talent, exhibitors,
        and others involved in the entertainment industry, and whose non-motion picture
        operations provide stable sources of earnings that offset variations in the
        financial performance of their motion picture operations.
  **Our
        auditors have questioned our ability to continue operations as a “going
        concern.” Investors may lose all of their investment if we are unable to
        continue operations.**
  We
        hope
        to begin generating revenues. In the absence of significant revenues and
        profits, we may seek to raise additional funds to meet our working capital
        needs
        principally through the additional sales of our securities or debt financings.
        However, we cannot guaranty that we will be able to obtain sufficient additional
        funds when needed, or that such funds, if available, will be obtainable on
        terms
        satisfactory to us. As a result, our auditors believe that substantial doubt
        exists about our ability to continue operations.
  **The
        costs to meet our reporting requirements as a public company subject to the
        Exchange Act of ’34 will be substantial and may result in us having insufficient
        funds to operate our business.**
 
 We
        will
        incur ongoing expenses associated with professional fees for accounting and
        legal expenses associated with being a public company. We estimate that these
        costs will range up to $50,000 per year for the next few years. Those fees
        will
        be higher if our business volume and activity increases. Those obligations
        will
        reduce and possibly eliminate our ability and resources to fund our operations
        and may prevent us from meeting our normal business obligations.
 
 **Risks
        Related to Owning Our Common Stock:**
 
 **Our
        board of directors has the authority, without stockholder approval, to issue
        preferred stock with terms that may not be beneficial to common stockholders
        and
        may grant voting powers, rights and preference that differ from or may be
        superior to those of the registered shares.**
  Our
        articles of incorporation allow us to issue 5,000,000 shares of preferred
        stock
        without any vote or further action by our stockholders. Our board of directors
        has the authority to fix and determine the relative rights and preferences
        of
        preferred stock. Our board of directors also has the authority to issue
        preferred stock without further stockholder approval, including large blocks
        of
        preferred stock. As a result, our board of directors could authorize the
        issuance of a series of preferred stock that would grant to holders the
        preferred right to our assets upon liquidation, the right to receive dividend
        payments before dividends are distributed to the holders of common stock
        and the
        right to the redemption of the shares, together with a premium, prior to
        the
        redemption of our common stock.
  **One
        of our officers and our sole director owns approximately 65.3% of our
        outstanding shares of common stock, allowing him to control matters requiring
        approval of our shareholders.**
 
 One
        of
        our officers and our sole director beneficially owns, in the aggregate,
        approximately 65.3% of our outstanding shares of common stock. Such concentrated
        control of the company may negatively affect the price of our common stock.
        This
        individual can control matters requiring approval by our security holders,
        including the election of directors.
  6
  **We
        lack a public market for shares of our common stock, which may make it difficult
        for investors to sell their shares.**
 
 There
        is
        no public market for shares of our common stock. We cannot guaranty that
        an
        active public market will develop or be sustained. Therefore, investors may
        not
        be able to find purchasers for their shares of our common stock. Should there
        develop a significant market for our shares, the market price for those shares
        may be significantly affected by such factors as our financial results and
        introduction of new products and services.
 
 **Our
        common stock is subject to penny stock regulations which may make it difficult
        for investors to sell their stock.**
 
 The
        Securities and Exchange Commission has adopted rules that regulate broker-dealer
        practices in connection with transactions in “penny stocks”. Penny stocks
        generally are equity securities with a price of less than $5.00 (other than
        securities registered on certain national securities exchanges or quoted
        on the
        NASDAQ system, provided that current price and volume information with respect
        to transactions in such securities is provided by the exchange or system).
        The
        penny stock rules require a broker-dealer, prior to a transaction in a penny
        stock not otherwise exempt from those rules, deliver a standardized risk
        disclosure document prepared by the Commission, which specifies information
        about penny stocks and the nature and significance of risks of the penny
        stock
        market. The broker-dealer also must provide the customer with bid and offer
        quotations for the penny stock, the compensation of the broker-dealer and
        salesperson in the transaction, and monthly account statements indicating
        the
        market value of each penny stock held in the customer's account. In addition,
        the penny stock rules require that, prior to a transaction in a penny stock
        not
        otherwise exempt from those rules, the broker-dealer must make a special
        written
        determination that the penny stock is a suitable investment for the purchaser
        and receive the purchaser's written agreement to the transaction. These
        disclosure requirements may have the effect of reducing the trading activity
        in
        the secondary market for a stock that becomes subject to the penny stock
        rules.
        If our common stock becomes subject to the penny stock rules, holders of
        our
        shares may have difficulty selling those shares.
 
 **Item
        2. Description of Property.**
 
 **Property
        held by us.** As
        of
        December 31, 2006 and 2005, we held no real property and do not presently
        own
        any interests in real estate.
  We
        define
        cash equivalents as all highly liquid investments with a maturity of 3 months
        or
        less when purchased. We do not presently own any interests in real estate.
 
 **Our
        Facilities.** Our
        offices are located at 400 Corporate Pointe, Suite 300, Culver City, California
        90230. We pay $300 per month on a month to month basis. We believe that our
        facilities are adequate for our needs. We do not own any real estate.
  **Item
        3. Legal Proceedings.**
 
 There
        are
        no legal actions pending against us nor are any legal actions contemplated
        by us
        at this time.
 
 **Item
        4. Submission of Matters to Vote of Security Holders.**
 
 Not
        applicable.
 
 7
 **PART
          II**
 
 **Item
        5. Market Price for Common Equity and Related Stockholder
        Matters.**
 
 **Reports
        to Security Holders.** We
        became
        a reporting company pursuant to the Securities and Exchange Act of 1934 on
        February 6, 2007, when our registration statement on Form SB-2, as amended,
        was
        declared effective. As a reporting company with the Securities and Exchange
        Commission, the public may read and copy any materials filed with the Securities
        and Exchange Commission at the Security and Exchange Commission’s Public
        Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public
        may
        also obtain information on the operation of the Public Reference Room by
        calling
        the Securities and Exchange Commission at 1-800-SEC-0330. The Securities
        and
        Exchange Commission maintains an Internet site that contains reports, proxy
        and
        information statements, and other information regarding issuers that file
        electronically with the Securities and Exchange Commission. The address of
        that
        site is http://www.sec.gov.
 
 **Market
        Information.** Our
        securities are not listed for trading on any exchange or quotation service.
        We
        are not required to comply with the timely disclosure policies of any exchange
        or quotation service. The requirements to which we would be subject if our
        securities were so listed typically include the timely disclosure of a material
        change or fact with respect to our affairs and the making of required filings.
        As a reporting company, we will file an annual report on Form 10-KSB, which
        will
        include audited financial statements.
 
 As
        of
        March 29, 2007, there were 35 record holders of our common stock.
  There
        are
        632,500 outstanding shares of our common stock which can be sold pursuant
        to
        Rule 144. There are no outstanding options or warrants to purchase, or
        securities convertible into, shares of our common stock. We
        have
        agreed to register for sale 700,000 shares of common stock held by two of
        our
        shareholders. We registered 100,000 shares for each of those shareholders
        in our
        registration statement on Form SB-2, which became effective on February 6,
        2007.
 **Dividend
        Policy.** There
        have been no cash dividends declared on our common stock. Dividends are declared
        at the sole discretion of our Board of Directors.
 
 **No
        Equity Compensation Plan.** We
        do not
        have any securities authorized for issuance under any equity compensation
        plan.
        We also do not have an equity compensation plan.
 
 **Recent
        Sales of Unregistered Securities.** There
        have been no sales of unregistered securities within the last three years,
        which
        would be required to be disclosed pursuant to Item 701 of Regulation S-B,
        except
        for the following:
 
 On
        June
        30, 2005, we sold 350,000 shares of our common stock to one investor at $0.50
        per share or gross proceeds of $175,000. The shares were issued in a transaction
        which we believe satisfies the requirements of that certain exemption from
        the
        registration and prospectus delivery requirements of the Securities Act of
        1933,
        which exemption is specified by the provisions of Section 5 of that act and
        Regulation S.
 
 On
        June
        30, 2005, we sold 350,000 shares of our common stock to one investor at $0.50
        per share, or gross proceeds of $175,000. The shares were issued in a
        transaction which we believe satisfies the requirements of that exemption
        from
        the registration and prospectus delivery requirements of the Securities Act
        of
        1933, which exemption is specified by the provisions of Section 4(2) of that
        act
        and Rule 506 of Regulation D promulgated pursuant to that act by the Securities
        and Exchange Commission.
  **Use
        of Proceeds of Registered Securities.** There
        were no sales or proceeds during the calendar year ended December
        31, 2006,
        for the sale of registered securities.
 8
  **Penny
          stock regulation.** Shares
          of our common stock will probably be subject to rules adopted by the Securities
          and Exchange Commission that regulate broker-dealer practices in connection
          with
          transactions in “penny stocks.” Penny stocks are generally equity securities
          with a price of less than $5.00, except for securities registered on certain
          national securities exchanges or quoted on the NASDAQ system, provided
          that
          current price and volume information with respect to transactions in those
          securities is provided by the exchange or system. The penny stock rules
          require
          a broker dealer,
          prior to a transaction in a penny stock not otherwise exempt from those
          rules,
          deliver a standardized risk disclosure document prepared by the Securities
          and
          Exchange Commission, which contains the following:
 
 ·
              a
                  description of the nature and level of risk in the market for penny
                  stocks
                  in both public offerings and secondary trading;
 ·
              a
                  description of the broker’s or dealer’s duties to the customer and of the
                  rights and remedies available to the customer with respect to violation
                  to
                  such duties or other requirements of securities’ laws;
 ·
              a
                  brief, clear, narrative description of a dealer market, including
“bid”
                  and “ask” prices for penny stocks and the significance of the spread
                  between the “bid” and “ask” price;
 ·
              a
                  toll-free telephone number for inquiries on disciplinary actions;
 ·
              definitions
                  of significant terms in the disclosure document or in the conduct
                  of
                  trading in penny stocks; and
 ·
              such
                  other information and is in such form, including language, type,
                  size and
                  format, as the Securities and Exchange Commission shall require
                  by rule or
                  regulation.
 
 Prior
        to
        effecting any transaction in penny stock, the broker-dealer also must provide
        the customer the following:
 
 ·
              the
                  bid and offer quotations for the penny stock;
 ·
              the
                  compensation of the broker-dealer and its salesperson in the transaction;
 ·
              the
                  number of shares to which such bid and ask prices apply, or other
                  comparable information relating to the depth and liquidity of the
                  market
                  for such stock; and
 ·
              monthly
                  account statements showing the market value of each penny stock
                  held in
                  the customer’s account.
  In
        addition, the penny stock rules require that prior to a transaction in a
        penny
        stock not otherwise exempt from those rules, the broker-dealer must make
        a
        special written determination that the penny stock is a suitable investment
        for
        the purchaser and receive the purchaser’s written acknowledgment of the receipt
        of a risk disclosure statement, a written agreement to transactions involving
        penny stocks, and a signed and dated copy of a written suitably statement.
        These
        disclosure requirements may have the effect of reducing the trading activity
        in
        the secondary market for a stock that becomes subject to the penny stock
        rules.
        Holders of shares of our common stock may have difficulty selling those shares
        because our common stock will probably be subject to the penny stock
        rules.
 
 **Equity
        Compensation Plans.** We have
        no securities authorized for issuance under any equity compensation
        plans.
 
 **Item
        6. Management’s Discussion and Analysis of Financial Condition or Plan of
        Operation.**
 
 **This
        following information specifies certain forward-looking statements of management
        of the company. Forward-looking statements are statements that estimate the
        happening of future events and are not based on historical fact. Forward-looking
        statements may be identified by the use of forward-looking terminology, such
        as
“may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”,
“probable”, “possible”, “should”, “continue”, or similar terms, variations of
        those terms or the negative of those terms. The forward-looking statements
        specified in the following information have been compiled by our management
        on
        the basis of assumptions made by management and considered by management
        to be
        reasonable. Our future operating results, however, are impossible to predict
        and
        no representation, guaranty, or warranty is to be inferred from those
        forward-looking statements.**
 
 **The
        assumptions used for purposes of the forward-looking statements specified
        in the
        following information represent estimates of future events and are subject
        to
        uncertainty as to possible changes in economic, legislative, industry, and
        other
        circumstances. As a result, the identification and interpretation of data
        and
        other information and their use in developing and selecting assumptions from
        and
        among reasonable alternatives require the exercise of judgment. To the extent
        that the assumed events do not occur, the outcome may vary substantially
        from
        anticipated or projected results, and, accordingly, no opinion is expressed
        on
        the achievability of those forward-looking statements. We cannot guaranty
        that
        any of the assumptions relating to the forward-looking statements specified
        in
        the following information are accurate, and we assume no obligation to update
        any such forward-looking statements.**
  9
  **Critical
        Accounting Policies and Estimates.** Our
        Management’s Discussion and Analysis of Financial Condition and Results of
        Operations section discusses our financial statements, which have been prepared
        in accordance with accounting principles generally accepted in the United
        States
        of America. The preparation of these financial statements requires management
        to
        make estimates and assumptions that affect the reported amounts of assets
        and
        liabilities at the date of the financial statements and the reported amounts
        of
        revenues and expenses during the reporting period. On an on-going basis,
        management evaluates its estimates and judgments, including those related
        to
        revenue recognition, accrued expenses, financing operations, and contingencies
        and litigation. Management bases its estimates and judgments on historical
        experience and on various other factors that are believed to be reasonable
        under
        the circumstances, the results of which form the basis for making judgments
        about the carrying value of assets and liabilities that are not readily apparent
        from other sources. Actual results may differ from these estimates under
        different assumptions or conditions. The most significant accounting estimates
        inherent in the preparation of our financial statements include estimates
        as to
        the appropriate carrying value of certain assets and liabilities which are
        not
        readily apparent from other sources.
 
 The
        following discussion of our financial condition and results of operations
        should
        be read in conjunction with our audited financial statements for the years
        ended
        December 31, 2006 and 2005, together with notes thereto included in this
        report.
 
 **For
        the year ended December 31, 2006 as compared to the same period ended December
        31, 2005.**
 
 **Results
        of Operations.**
 
 **Revenues.**  We
        no
        revenues for the year ended December 31, 2006, nor did we generate revenues
        for
        the year ended December 31, 2005. We hope to generate revenues as we implement
        our business plan adopted in June 2006.
 
 **Operating
        Expenses.** For
        the
        year ended December 31, 2006, our total operating expenses were $44,571,
        as
        compared to $0 total operating expenses for the year ended December 31,
        2005. The increase in total operating expenses is primarily due to the increase
        in professional fees, which is attributed to the increased legal expenses
        and
        accounting expenses related to the audit of our financial statements and
        in
        preparing our Registration Statement on Form SB-2. We
        expect
        that we will continue to incur significant legal and accounting expenses
        related
        to being a public company. For the
        year ended December 31, 2006, we had legal and professional expenses of $41,573,
        rent expenses of $2,175, and general and administrative expenses of $832.
        We
        incurred legal and profession expenses in preparing our Registration Statement
        on Form SB-2 which was filed in December 2006. We had no expenditures in
        these
        categories for the year ended December 31, 2005.
 
 **Other
        Income.** For
        the
        year ended December 31, 2006, we also had other income of $790, which was
        interest income from cash we deposited in a money market account. We had
        no
        other income for the year ended December 31, 2005.
 
 **Net
        Income or Loss.** For
        the
        year ended December 31, 2006, our net loss from operations before provision
        for
        income taxes of $800 was $43,781, making our net loss $44,581. We also had
        $193,343 in discontinued operations which was due to a note
        from
        Landes Daily, Inc. that was deemed uncollectible and written-off .
        This is
        in comparison to the year ended December 31, 2005, where our net loss of
        $30,294. The increase in our net loss for the year ended December 31, 2006,
        was
        due an increase in operating expense between the two periods, and discontinued
        operations related to Landes Daily, Inc. as
        discussed above.
 
 **Liquidity
        and Capital Resources.** In
        June
        2005, we raised $350,000 in a private placement in exchange for 700,000 shares
        of our common stock. We used a significant portion of those proceeds to pay
        for
        certain expenses related to the apparel business of Landes Daily, Inc. During
        2005 and 2006, we loaned a total of approximately $193,343 to Landes Daily,
        Inc.
        in conjunction with operating the apparel business of Landes Daily, Inc.
        Landes
        Daily, Inc. executed a promissory note with us for the funds that we had
        loaned.
        The note bore annual interest of five percent (5%) and was due and payable
        on
        demand. We have previously attempted collection on the loan receivable to
        help
        improve our liquidity position. We do not expect that Landes Daily, Inc.
        will be
        able to repay the loan in the near future, if ever.  Accordingly, in
        September 2006, the note was deemed uncollectible and written-off as bad
        debt
        expense. We do not anticipate that we will expend any significant amount
        of
        funds and resources in attempting further collection of the note as we do
        not
        believe we will be able to collect on the note
  10
  During
        2006, we incurred significant accounting costs associated with the audit
        of our
        financial statements. We expect that the legal and accounting costs of becoming
        a public company will continue to impact our liquidity and we may need to
        obtain
        funds to pay those expenses. Other than the anticipated increases in legal
        and
        accounting costs due to the reporting requirements of becoming a reporting
        company, we are not aware of any other known trends, events or uncertainties,
        which may affect our future liquidity.
 
 **Our
        Plan of Operation for the Next Twelve Months.** To
        effectuate our business plan during the next twelve months, we must continue
        to
        acquire films at prices that we believe are significantly discounted and
        begin
        researching market opportunities for licensing the film rights. With our
        recent
        purchase of the short film titled “Swallow”, we believe we can begin researching
        opportunities to license that film to third parties. We also intend to look
        for
        opportunities to acquire libraries of films from other companies. We have
        had
        informal discussions with a company that owns a library of films that may
        be
        interested in entering into a joint venture agreement, whereby we would endeavor
        to license their films rights to third parties. In addition, we are also
        continually seeking out and evaluating new projects that we may be able to
        produce.
  During
        the next three to six months, our primary objective is to acquire additional
        films at prices that we believe are significantly discounted and begin
        researching market opportunities for licensing the film rights. During the
        next
        six to twelve months, we hope to own a library of at least ten films so that
        we
        can actively market and license those films and begin generating revenues.
        We
        believe that we will need to spend approximately $25,000 to $50,000 to acquire
        at least ten films. In order to acquire more than ten films, we will need
        to
        raise additional capital. Our officers are responsible for acquiring the
        films
        that we hope to acquire and for researching potential opportunities to license
        those films to third parties. We may also work with independent sales agents
        who
        will look for opportunities to license the films that we acquire.
  We
        had
        cash of $125,267 as of December 31, 2006. In the opinion of management,
        available funds will satisfy our working capital requirements for the next
        twelve months. Our forecast for the period for which our financial resources
        will be adequate to support our operations involves risks and uncertainties
        and
        actual results could fail as a result of a number of factors. In the event
        that
        we experience a shortfall in our capital, we intend to pursue capital through
        public or private financing as well as borrowings and other sources, such
        as our
        officers, director and principal shareholders. We cannot guaranty that
        additional funding will be available on favorable terms, if at all. If adequate
        funds are not available, we hope that our officers, director and principal
        shareholders will contribute funds to pay for our expenses to achieve our
        objectives over the next twelve months. However, our officers, director and
        principal shareholders are not committed to contribute funds to pay for our
        expenses.
 
 We
        are
        not currently conducting any research and development activities other than
        the
        development of our website which we expect the total cost to be approximately
        $1,500. We do not anticipate that we will purchase or sell any significant
        equipment. In the event that we generate significant revenues and expand
        our
        operations, then we may need to hire additional employees or independent
        contractors as well as purchase or lease additional equipment.
 
 **Off-Balance
        Sheet Arrangements.** We
        have
        no off-balance sheet arrangements.
 
 **Item
        7. Financial Statements**
 
 The
        financial statements required by Item 7 are presented in the following
        order:
  11
     **RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 
 **REPORT
        AND FINANCIAL STATEMENTS**
 
 **FOR
        THE YEARS ENDED** **DECEMBER
        31, 2006** **AND 2005**
 **AND
        FOR THE PERIOD FROM INCEPTION (APRIL 8, 2002)**
 **THROUGH**  **DECEMBER
        31, 2006**
     12
  **TABLE
        OF** **CONTENTS**
  Report
                    of Independent Registered Public Accounting Firm
                F-1Financial
                    StatementsBalance
                    Sheets
                F-2Statements
                    of Operations
                F-3Statements
                    of Changes in Stockholders’ Equity (Deficit)
                F-4Statements
                    of Cash Flows
                F-6Notes
                    to Financial Statements
                F-7
  13
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Board of Directors and Stockholders
 Red
        Carpet Entertainment, Inc.
 Culver
        City, California
 
 We
        have
        audited the accompanying balance sheets of Red Carpet Entertainment, Inc.
        (a
        development stage company) as of December 31, 2006 and 2005, and the related
        statements of operations, stockholders’ equity (deficit), and cash flows for the
        years then ended and for the period from inception (April 8, 2002) through
        December 31, 2006. These financial statements are the responsibility of the
        Company’s management. Our responsibility is to express an opinion on these
        financial statements based on our audits.
 
 We
        conducted our audits in accordance with 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 about whether the
        financial statements are free of material misstatement. The Company is not
        required to have, nor were we engaged to perform, an audit of its internal
        control over financial reporting. Our audits included consideration of internal
        control over financial reporting as a basis for designing audit procedures
        that
        are appropriate in the circumstances, but not for the purpose of expressing
        an
        opinion on the effectiveness of the Company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit includes examining,
        on a test basis, evidence supporting the amounts and disclosures in the
        financial statements. An audit also includes assessing the accounting principles
        used and significant estimates made by management, as well as evaluating
        the
        overall financial statement presentation. We believe that our audits provide
        a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of Red Carpet Entertainment, Inc.
        as
        of December 31, 2006 and 2005, and the results of its operations and its
        cash
        flows for the years then ended and for the period from inception (April 8,
        2002)
        through December 31, 2006 in conformity with accounting principles generally
        accepted in the United States of America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As more fully described in Note 2, the
        Company
        has incurred recurring operating losses and has an accumulated deficit. These
        conditions raise substantial doubt about the Company’s ability to continue as a
        going concern. Management’s plans in regard to these matters are also described
        in Note 2. 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
        outcome of this uncertainty.
  **Mendoza
        Berger & Company, LLP**
  Irvine,
        California
 February
        23, 2007
  F-1
  **RED
          CARPET ENTERTAINMENT, INC.**
 **(A
          Development Stage Company)**
 **BALANCE
          SHEETS**
 **DECEMBER
          31, 2006 AND 2005**
 **ASSETS**
 **2006**
              
              **2005**Current
                  assetsCash
              
              $
              125,267
              
              $
              210,872Total
                  current assets
              
              
              125,267
              
              
              210,872Other
                  assetsInvestment
              
              
              -
              
              
              128,245Film
                  costs
              
              
              5,500
              
              
              -Deposits
              
              
              300
              
              
              -Total
                  assets
              
              $
              131,067
              
              $
              339,117**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**
 Current
                  liabilitiesAccounts
                  payable and accrued expenses
              
              $
              66,490
              
              $
              38,221Income
                  taxes payable
              
              
              3,305
              
              
              3,350Total
                  current liabilities
              
              
              69,795
              
              
              41,571Stockholders’
                  equityPreferred
                  stock, $.001 par value; 5,000,000 sharesauthorized,
                  0 shares issued and outstanding
              
              
              -
              
              
              -Common
                  stock, $.001 par value; 50,000,000 sharesauthorized,
                  3,842,500 shares issued and outstanding
              
              
              3,842
              
              
              3,842Additional
                  paid-in capital
              
              
              365,083
              
              
              363,433Deficit
                  accumulated during the development stage
              
              
              (307,653
              )
              
              (69,729
              )Total
                  stockholders’ equity
              
              
              61,272
              
              
              297,546Total
                  liabilities and stockholders’ equity
              
              $
              131,067
              
              $
              339,117
 
 See
        accompanying notes to financial statements.
  F-2
  **RED
          CARPET ENTERTAINMENT, INC.**
 **(A
          Development Stage Company)**
 **STATEMENTS
          OF OPERATIONS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2006 AND 2005 AND**
 **FOR
          THE PERIOD FROM INCEPTION (APRIL 8, 2002) THROUGH**
 **DECEMBER
          31, 2006**
 
 **Inception****(April
                  8, 2002)****Year
                  Ended December 31,**
              
              **to
                  December 31,****2006**
              
              **2005**
              
              **2006**Net
                  revenue
              
              $
              -
              
              $
              -
              
              $
              -Operating
                  expensesLegal
                  and professional
              
              
              41,573
              
              
              -
              
              
              41,573Rent
              
              
              2,175
              
              
              -
              
              
              2,175General
                  and administrative
              
              
              823
              
              
              -
              
              
              823Total
                  operating expenses
              
              
              44,571
              
              
              -
              
              
              44,571Other
                  income (expense)Interest
                  income
              
              
              790
              
              
              -
              
              
              790Loss
                from continuing
                operationsbefore
                  income taxes
              
              
              (43,781
              )
              
              -
              
              
              (43,781
              )Provision
                  for income taxes
              
              
              800
              
              
              -
              
              
              800Loss
                  from continuing operations
              
              
              (44,581
              )
              
              -
              
              
              (44,581
              )Discontinued
                  operations
              
              
              (193,343
              )
              
              (30,294
              )
              
              (263,072
              )Net
                  loss
              
              $
              (237,924
              )
              $
              (30,294
              )
              $
              (307,653
              )Net loss
                per common
                share fromcontinuing
                  operations - basic and diluted
              
              $
              (.01
              )
              $
              -
              
              $
              (.01
              )Net loss
                per common
                share fromdiscontinued
                  operations - basic and diluted
              
              $
              (.05
              )
              $
              (.01
              )
              $
              (.08
              )Weighted
                  average of common shares - basic and diluted
              
              
              3,842,500
              
              
              3,492,500
              
              
              3,338,722
   See
        accompanying notes to financial
        statements.
 F-3
 **RED
          CARPET ENTERTAINMENT, INC.**
 **(A
          Development Stage Company)**
 **STATEMENTS
          OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIT)**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2006 AND 2005 AND**
 **FOR
          THE PERIOD FROM INCEPTION (APRIL 8, 2002) THROUGH**
 **DECEMBER
          31, 2006**
 
 **Deficit****Common
                  Stock**
              
              **Additional**
              
              **Accumulated**
                **During**
              
              **Total****Number
                  of Shares**
              
              **Amount**
              
              **Paid-In**
                **Capital**
              
              **Development
                  Stage**
              
              **Stockholders’
                  Equity (Deficit)**Balance,
                  April 8, 2002
              
              
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Issuance
                  of common stock, April 9, 2002
              
              
              2,500,000
              
              
              2,500
              
              
              2,500
              
              
              -
              
              
              5,000Issuance
                  of common stock, May 25, 2002
              
              
              130,000
              
              
              130
              
              
              1,170
              
              
              -
              
              
              1,300Issuance
                  of common stock, June 7 - 30, 2002
              
              
              512,500
              
              
              512
              
              
              4,613
              
              
              -
              
              
              5,125Additional
                paid-in
                capital in exchange forfacilities
                  provided by related party
              
              
              -
              
              
              -
              
              
              1,350
              
              
              -
              
              
              1,350Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (12,982
              )
              
              (12,982
              )Balance,
                  December 31, 2002
              
              
              3,142,500
              
              
              3,142
              
              
              9,633
              
              
              (12,982
              )
              
              (207
              )Additional
                paid-in
                capital in exchange forfacilities
                  provided by related party
              
              
              -
              
              
              -
              
              
              1,800
              
              
              -
              
              
              1,800Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (14,808
              )
              
              (14,808
              )Balance,
                  December 31, 2003
              
              
              3,142,500
              
              
              3,142
              
              
              11,433
              
              
              (27,790
              )
              
              (13,215
              )






See
      accompanying notes to financial
      statements.


F-4


**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **STATEMENTS
        OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIT)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006 AND 2005 AND**
 **FOR
        THE PERIOD FROM INCEPTION (APRIL 8, 2002) THROUGH**
 **DECEMBER
        31, 2006**





**Common
                Stock**
            
            **Additional**
            
            **Accumulated**
              **During**
            
            **Total****Number
                of Shares**
            
            **Amount**
            
            **Paid-In**
              **Capital**
            
            **Development
                Stage**
            
            **Stockholders’
                Equity (Deficit)**Additional
                paid-in capital in exchange for facilities provided by related
                party
            
            
            -
            
            
            -
            
            
            1,800
            
            
            -
            
            
            1,800Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (11,645
            )
            
            (11,645
            )Balance,
                December 31, 2004
            
            
            3,142,500
            
            
            3,142
            
            
            13,233
            
            
            (39,435
            )
            
            (23,060
            )Issuance
                of common stock, June 30, 2005
            
            
            700,000
            
            
            700
            
            
            349,300
            
            
            -
            
            
            350,000Additional
              paid-in
              capital in exchange forfacilities
                provided by related party
            
            
            -
            
            
            -
            
            
            900
            
            
            -
            
            
            900Net
                loss
            
            
            -
            
            
            -
            
            
            
            
            
            (30,294
            )
            
            (30,294
            )Balance,
                December 31, 2005
            
            
            3,842,500
            
            
            3,842
            
            
            363,433
            
            
            (69,729
            )
            
            297,546Additional
              paid-in
              capital in exchange forfacilities
                provided by related party
            
            
            -
            
            
            -
            
            
            1,650
            
            
            -
            
            
            1,650Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (237,924
            )
            
            (237,924
            )Balance,
                December 31, 2006
            
            
            3,842,500
            
            $
            3,842
            
            $
            365,083
            
            $
            (307,653
            )
            $
            61,272






See
      accompanying notes to financial
      statements.


F-5




**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **STATEMENTS
        OF CASH FLOWS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006 AND 2005 AND**
 **FOR
        THE PERIOD FROM INCEPTION (APRIL 8, 2002) THROUGH**
 **DECEMBER
        31, 2006**





**Inception****Years
                Ended December 31,**
            
            **(April
                8, 2002)**
              **to
                December 31,****2006**
            
            **2005**
            
            **2006**Cash
                flows from operating activitiesNet
                loss
            
            $
            (237,924
            )
            $
            (30,294
            )
            $
            (307,653
            )Adjustments
                to reconcile net loss to net cashprovided
                by (used in) operating activitiesCost
                of services paid for with common stock
            
            
            -
            
            
            -
            
            
            1,300Additional
                paid-in capital in exchange forfacilities
                provided by related party
            
            
            1,650
            
            
            900
            
            
            7,500Loss
                on discontinued operations
            
            
            193,343
            
            
            -
            
            
            263,072Changes
                in operating assets and liabilitiesIncrease
                in film costs
            
            
            (5,500
            )
            
            -
            
            
            (5,500
            )Increase
                in deposits
            
            
            (300
            )
            
            -
            
            
            (300
            )Increase
                in accounts payable and accrued expenses
            
            
            28,269
            
            
            17,561
            
            
            66,490(Decrease)
                increase in income taxes payable
            
            
            (45
            )
            
            950
            
            
            3,305Net
                cash used in operating activities
            
            
            (20,507
            )
            
            (10,883
            )
            
            28,214Cash
                flows from investing activitiesInvestments
                in discontinued operations
            
            
            (65,098
            )
            
            (128,245
            )
            
            (263,072
            )Net
                cash used in investing activities
            
            
            (65,098
            )
            
            (128,245
            )
            
            (263,072
            )Cash
                flows from financing activitiesProceeds
                from issuance of common stock
            
            
            -
            
            
            350,000
            
            
            360,125Net
                cash provided by financing activities
            
            
            -
            
            
            350,000
            
            
            360,125Net
                increase (decrease) in cash
            
            
            (85,605
            )
            
            210,872
            
            
            125,267Cash,
                beginning of period
            
            
            210,872
            
            
            -
            
            
            -Cash,
                end of period
            
            $
            125,267
            
            $
            210,872
            
            $
            125,267**Supplemental
                disclosure of cash flow information**Income
                taxes paid
            
            $
            -
            
            $
            -
            
            $
            -Interest
                paid
            
            $
            -
            
            $
            -
            
            $
            -






See
      accompanying notes to financial
      statements.


F-6


**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006 AND 2005**





**1.**
            **NATURE
                OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES**





**Nature
      of Operations**





Red
      Carpet Entertainment, Inc. (the Company) is currently a development stage
      company under the provisions of Statement of Financial Accounting Standards
      (SFAS) No. 7 and was incorporated under the laws of the State of Nevada on
      April
      8, 2002. For the years ended December 31, 2006 and 2005, the Company has
      produced no revenues and will continue to report as a development stage company
      until significant revenues are produced.





The
      Company is an independent film production company headquartered in Culver City,
      California, that plans to develop, produce, market and distribute low budget
      film and video productions. The Company is currently seeking to acquire
      properties from independent writers, directors and producers with plans to
      produce these projects and maintain ownership of the films with the intent
      of
      building a library and licensing the rights to those films. If the Company
      is
      unable to license the rights to third parties, the films may be distributed
      directly to the international and domestic markets on DVDs or via the
      internet.





Prior
      to
      the commencement of its current operations, in 2005, the Company was developing
      an organization as a specialty apparel manufacturer. The Company disposed of
      this line of business in 2006. From inception (April 8, 2002) through 2004,
      the
      Company was developing an organization as a full service special event planning
      and management company specializing in weddings and special occasions. The
      Company disposed of this line of business in 2005.





**Use
      of Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements, and the reported amounts of revenues and expenses
      during the reported periods. Actual results could materially differ from those
      estimates.





**Cash
      and Cash Equivalents**





For
      purposes of the balance sheet and statement of cash flows, the Company considers
      all highly liquid debt instruments purchased with maturity of three months
      or
      less to be cash equivalents.





F-7




**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006 AND 2005**






**1.**
            **NATURE
                OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES**(Continued)





**Fair
      Value of Financial Instruments**





Pursuant
      to SFAS No. 107, “ *Disclosures
      About Fair Value of Financial Instruments* ”,
      the
      Company is required to estimate the fair value of all financial instruments
      included on its balance sheet. The carrying value of cash, accounts payable
      and
      accrued expenses approximate their fair value due to the short period to
      maturity of these instruments.





**Film
      Costs**





Pursuant
      to AICPA Statements of Position (SOP) No. 00-2, “ *Accounting
      by Producers or Distributors of Films* ”,
      f ilm
      costs
      are capitalized and carried as an asset. Such costs are amortized using the
      individual-film-forecast method, whereby periodic amortization is determined
      by
      multiplying the balance in unamortized film costs by the ratio that current
      period revenue bears to estimated remaining total revenue. Participation costs
      are accrued using the same method. Publicity, promotion, and marketing costs
      are
      charged against income as incurred.





**Property
      and Equipment**





Property
      and equipment are stated at cost. Depreciation of property and equipment is
      provided using the straight-line method over the estimated useful lives of
      the
      assets. Expenditures for major renewals and betterments that extend the useful
      lives of property and equipment are capitalized. Expenditures for maintenance
      and repairs are changed to expense as incurred.





**Revenue
      Recognition**





The
      Company recognizes revenue in accordance with AICPA Statements of Position
      (SOP)
      No. 00-2, “ *Accounting
      by Producers or Distributors of Films”* .
      Revenue
      is recognized from
      a
      sale or licensing arrangement of a film when (a) persuasive evidence of a sale
      or licensing arrangement with a customer exists, (b) the film is complete and,
      in accordance with the terms of the arrangement, has been delivered or is
      available for immediate and unconditional delivery, (c) the license period
      of
      the arrangement has begun and the customer can begin its exploitation,
      exhibition, or sale, (d) the arrangement fee is fixed or determinable, and
      (e)
      collection of the arrangement fee is reasonably assured.




F-8


**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006 AND 2005**


**1.**
            **NATURE
                OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES**(Continued)





A
      flat
      fee for licensing a film is recognized as revenue when the film is delivered
      and
      the licensing period begins. Revenue from a variable fee arrangement, for which
      the Company receives a percentage of the licensee’s gross receipts, is
      recognized as the customer exhibits the film. Revenue from licensing
      arrangements to market film-related products is recognized when the film itself
      is released.





**Provision
      for Income Taxes**





The
      Company accounts for income taxes under SFAS 109, “ *Accounting
      for Income Taxes* ”.
      Under
      the asset and liability method of SFAS 109, deferred tax assets and liabilities
      are recognized for the future tax consequences attributable to differences
      between the financial statements carrying amounts of existing assets and
      liabilities and their respective tax bases. Deferred tax assets and liabilities
      are measured using enacted tax rates expected to apply to taxable income in
      the
      years in which those temporary differences are expected to be recovered or
      settled. Under SFAS 109, the effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized in income in the period the enactment occurs.
      A valuation allowance is provided for certain deferred tax assets if it is
      more
      likely than not that the Company will not realize tax assets through future
      operations.





**Comprehensive
      Income**





The
      Company applies Statement of Financial Accounting Standards No. 130,
“ *Reporting
      Comprehensive Income* ”
(SFAS
      130). SFAS 130 establishes standards for the reporting and display of
      comprehensive income or loss, requiring its components to be reported in a
      financial statement that is displayed with the same prominence as other
      financial statements. From inception (April 18, 2002) through December 31,
      2006,
      the Company had no other components of comprehensive loss other than net loss
      as
      reported on the statement of operations.




F-9


**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006 AND 2005**


**1.**
            **NATURE
                OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                POLICIES**(Continued)





**Basic
      and Diluted Income (Loss) Per Share**





In
      accordance with SFAS No. 128, “ *Earnings
      Per Share* ”,
      basic
      income (loss) per common share is computed by dividing net income (loss)
      available to common stockholders by the weighted average number of common shares
      outstanding. Diluted income (loss) per common share is computed similar to
      basic
      income per common share except that the denominator is increased to include
      the
      number of additional common shares that would have been outstanding if the
      potential common shares had been issued and if the additional common shares
      were
      dilutive. As of December 31, 2006, the Company did not have any equity or debt
      instruments outstanding that could be converted into common stock.





**Recent
      Accounting Pronouncements**





SFAS
      No. 153 - In
      December 2004, the FASB issued Statement of Financial Accounting Standards
      No.
      153, “ *Exchanges
      of Nonmonetary Assets, an amendment of APB Opinion 29* ”
(SFAS
      153). SFAS 153 requires that exchanges of nonmonetary assets be measured based
      on the fair values of the assets exchanged, and eliminates the exception to
      this
      principle under APB Opinion 29 for exchanges of similar productive assets.
      The
      Company adopted the new standard in the first interim period beginning after
      June 15, 2005. The impact of the adoption of SFAS 153 is not material to the
      Company’s overall results of operations or financial position.




FASB
      Interpretation No. 47 - In
      March 2005, the FASB issued FASB Interpretation No. 47, “ *Accounting
      for Conditional Asset Retirement Obligations* ” (FIN
      47). This Interpretation clarifies that the term *conditional asset retirement obligation* as used
      in FASB Statement No. 143, ** “ *Accounting
      for Asset Retirement Obligations* ” *,* refers
      to a legal obligation to perform an asset retirement activity in which the
      timing and (or) method of settlement are conditional on a future event that
      may
      or may not be within the control of the entity. The obligation to perform the
      asset retirement activity is unconditional even though uncertainty exists about
      the timing and (or) method of settlement. Thus, the timing and (or) method
      of
      settlement may be conditional on a future event. Accordingly, an entity is
      required to recognize a liability for the fair value of a conditional asset
      retirement obligation if the fair value of the liability can be reasonably
      estimated. The fair value of a liability for the conditional asset retirement
      obligation should be recognized when incurred, generally upon acquisition,
      construction, or development and (or) through the normal operation of the asset.
      Uncertainty about the timing and (or) method of settlement of a conditional
      asset retirement obligation should be factored into the measurement of the
      liability when sufficient information exists. Statement 143




F-10


**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006 AND 2005**
 
 **1.**
              **NATURE
                  OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                  POLICIES**(Continued)


acknowledges
      that in some cases, sufficient information may not be available to reasonably
      estimate the fair value of an asset retirement obligation. This Interpretation
      also clarifies when an entity would have sufficient information to reasonably
      estimate the fair value of an asset retirement obligation. FIN 47 is effective
      no later than the end of fiscal years ending after December 15, 2005.
      Retrospective application for interim financial information is permitted but
      is
      not required. The Company adopted the new standard for the year ended December
      31, 2006. The impact of the adoption of FIN 47 is not material to the Company’s
      overall results of operations or financial position.





SFAS
      No. 154 - In May
      2005, the FASB issued SFAS No. 154, “ *Accounting
      Changes and Error Corrections* ” .
      This
      Statement replaces APB Opinion No. 20, “ *Accounting
      Changes* ” *,* and SFAS
      No. 3, “ *Reporting
      Accounting Changes in Interim Financial Statements* ”, and
      changes the requirements for the accounting for and reporting of a change in
      accounting principle. Opinion 20 previously required that most voluntary changes
      in accounting principle be recognized by including in net income of the period
      of the change the cumulative effect of changing to the new accounting principle.
      This Statement requires retrospective application to prior periods’ financial
      statements of changes in accounting principle, unless it is impracticable to
      determine either the period-specific effects or the cumulative effect of the
      change. The provisions in SFAS 154 are effective for accounting changes and
      corrections of errors made in fiscal years beginning after December 15, 2005.
      The Company adopted the new standard for the year ended December 31, 2006.
      The
      impact of the adoption of SFAS 154 is not material to the Company’s overall
      results of operations or financial position.





SFAS
      No. 155 - In
      February 2006, FASB issued Statement 155, “ *Accounting
      for Certain Hybrid Financial Instruments* ” .
      This
      Statement amends FASB Statement 133, “ *Accounting
      for Derivative Instruments and Hedging Activities* ” ,
      and
      FASB Statement 140, “ *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities* ” .
      Statement 155 permits fair value remeasurement for any hybrid financial
      instrument that contains an embedded derivative that otherwise would require
      bifurcation, clarifies which interest-only strips and principal-only strips
      are
      not subject to the requirements of Statement 133, establishes a requirement
      to
      evaluate interest in securitized financial assets to identify interests that
      are
      freestanding derivatives or that are hybrid financial instruments that contain
      an embedded derivative requiring bifurcation, clarifies that concentrations
      of
      credit risk in the form of subordination are not embedded derivatives, and
      amends Statement 140 to eliminate the prohibition on the qualifying
      special-purpose entity from holding a derivative financial instrument that
      pertains to a beneficial interest other than another derivative financial


F-11
  **RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006 AND 2005**
 
 **1.**
              **NATURE
                  OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                  POLICIES**(Continued)
  instrument.
          This statement is effective for all financial instruments acquired or issued
          after the beginning of the Company’s first fiscal year that begins after
          September 15, 2006. The Company believes that the adoption of this standard
          will
          not a have a material impact on its financial statements.


SFAS
      No. 156 - In
      March 2006, the FASB issued Statement 156, “ *Accounting
      for Servicing of Financial Assets - an amendment of FASB Statement No.
      140* ” .
      This
      Statement amends FASB Statement No. 140, “ *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities* ” ,
      with
      respect to the accounting for separately recognized servicing assets and
      servicing liabilities. This statement requires an entity to recognize a
      servicing asset or servicing liability each time it undertakes an obligation
      to
      service a financial asset by entering into a servicing contract in certain
      situations, and also requires all separately recognized servicing assets and
      servicing liabilities to be initially measured at fair value, if practicable.
      This statement is effective at the beginning of its first fiscal year that
      begins after September 15, 2006. Earlier adoption is permitted as of the
      beginning of an entity’s fiscal year, provided the entity has not yet issued
      financial statements, including interim financial statements, for any period
      of
      that fiscal year. The effective date of this Statement is the date an entity
      adopts the requirements of this Statement. The Company believes that the
      adoption of this standard will not a have a material impact on its financial
      statements.





FASB
      Interpretation No. 48 - In
      July 2006, the FASB issued Interpretation No. 48, “ *Accounting
      for Uncertainty in Income Taxes* ” (FIN
      48), which supplements SFAS No. 109, “ *Accounting
      for Income Taxes* ” ,
      by
      defining the confidence level that a tax position must meet in order to be
      recognized in the financial statements. The Interpretation requires that the
      tax
      effects of a position be recognized only if it is “more-likely-than-not” to be
      sustained based solely on its technical merits as of the reporting date. The
      more-likely-than-not threshold represents a positive assertion by management
      that a company is entitled to the economic benefits of a tax position. If a
      tax
      position is not considered more-likely-than-not to be sustained based solely
      on
      its technical merits, no benefits of the position are to be recognized. This
      Interpretation is effective for fiscal years beginning after December 15, 2006.
      The Company is currently assessing the potential effect of FIN 48 on its
      financial statements.








F-12


**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006 AND 2005**
 
 **1.**
              **NATURE
                  OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
                  POLICIES**(Continued)


SFAS
      No. 157 - In
      September 2006, the FASB issued Statement 157, “ *Fair
      Value Measurements* ”. This
      Statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles (GAAP), and expands disclosures
      about fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. This Statement is effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. Earlier application is
      encouraged, provided that the reporting entity has not yet issued financial
      statements for that fiscal year, including financial statements for an interim
      period within that fiscal year. The Company is currently assessing the potential
      effect of SFAS 157 on its financials statements.





SFAS
      No. 158 - In
      September 2006, the FASB issued Statement No. 158 “ *Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans - an
      amendment of FASB Statements No. 87, 88, 106, and 132(R* )” .
      This
      Statement improves financial reporting by requiring an employer to recognize
      the
      overfunded or underfunded status of a defined benefit postretirement plan (other
      than a multiemployer plan) as an asset or liability in its statement of
      financial position and to recognize changes in that funded status in the year
      in
      which the changes occur through comprehensive income of a business entity or
      changes in unrestricted net assets of a not-for-profit organization. This
      Statement also improves financial reporting by requiring an employer to measure
      the funded status of a plan as of the date of its year-end statement of
      financial position, with limited exceptions. An employer with publicly traded
      equity securities is required to initially recognize the funded status of a
      defined benefit postretirement plan and to provide the required disclosures
      as
      of the end of the fiscal year ending after December 15, 2006. An employer
      without publicly traded equity securities is required to recognize the funded
      status of a defined benefit postretirement plan and to provide the required
      disclosures as of the end of the fiscal year ending after June 15, 2007. The
      Company believes that the adoption of this standard will not a have a material
      impact on its financial statements.




F-13


**RED
        CARPET ENTERTAINMENT, INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2006 AND 2005**


**2.**
              **GOING
                  CONCERN**


As
      shown
      in the accompanying financial statements, the Company has incurred a net
      operating loss of $307,653 from inception (April 8, 2002) through December
      31,
      2006.





The
      Company is subject to those risks associated with development stage companies.
      The Company has sustained losses since inception and additional debt or equity
      financing may be required by the Company to fund its development activities
      and
      to support operations. However, there is no assurance that the Company will
      be
      able to obtain additional financing. Furthermore, there is no assurance that
      rapid technological changes, changing customer needs and evolving industry
      standards will enable the Company to introduce new products on a continual
      and
      timely basis so that profitable operations can be attained.




**3.**
                  **CONCENTRATION
                      OF CREDIT
                      RISK**




The
      Company maintains all of its cash deposits in a single bank account, which
      at
      times has exceeded federally insured limits. Bank balances totaling
      approximately $21,000 at December 31, 2006 were not insured. The Company has
      not
      experienced any losses with respect to its cash balances.




**4.**
              **PROPERTY
                  AND EQUIPMENT**


At
      December 31, 2006, property and equipment consists of website development costs.
      These costs are being depreciated on a straight-line basis over its estimated
      useful life of three years. There was no depreciation expense incurred during
      the years ended December 31, 2006 and 2005.




**5.**
              **FILM
                  COSTS**




Film
      costs are recorded at their cost to the Company. In December 2006, the Company
      acquired the ownership rights of a short film in exchange for cash consideration
      of $5,500. The Company will amortize film costs when the films are released
      and
      the entity begins to recognize revenue from the film.




**6.**
              **ACCRUED
                  EXPENSES**


**Accrued
      Wages and Compensated Absences**





The
      Company currently does not have any employees. The majority of development
      costs
      and services have been provided to the Company by the founders and outside,
      third-party vendors. As such, there is no accrual for wages or compensated
      absences as of December 31, 2006.





F-14


**RED
          CARPET ENTERTAINMENT, INC.**
 **(A
          Development Stage Company)**
 **NOTES
          TO FINANCIAL STATEMENTS**
 **DECEMBER
          31, 2006 AND 2005**
 **7.**
                  **COMMON
                      STOCK**


On
      April
      9, 2002, the Company issued 2,500,000 shares of its common stock to its officers
      for cash of $5,000 which was considered a reasonable estimate of fair
      value.





On
      May
      25, 2002, the Company issued 130,000 shares of its common stock to various
      individuals for legal services in connection with the initial start-up costs
      incurred for $1,300.





On
      July
      28, 2002, the Company completed a “best efforts” offering of its common stock
      pursuant to the provisions of Section 4(2) of the Securities Act of 1933 and
      Rule 506 of Regulation D promulgated by the Securities and Exchange Commission.
      In accordance with the Private Placement Memorandum Offering, which was
      initiated on May 28, 2002, the Company issued 512,500 shares of its common
      stock
      at $.01 per share for a total of $5,125.





On
      July
      30, 2005, the Company performed a private placement and issued 700,000 shares
      of
      its common stock at $0.50 per share for a total of $350,000.




**8.**
              **PROVISION
                  FOR INCOME TAXES**


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





As
      of
      December 31, 2006, the Company had federal and state net operating loss
      carryforwards of approximately $300,000, which can be used to offset future
      federal income tax. The federal and state net operating loss carryforwards
      expire at various dates through 2026. Deferred tax assets resulting from the
      net
      operating losses are reduced by a valuation allowance, when, in the opinion
      of
      management, utilization is not reasonably assured.




F-15


**RED
          CARPET ENTERTAINMENT, INC.**
 **(A
          Development Stage Company)**
 **NOTES
          TO FINANCIAL STATEMENTS**
 **DECEMBER
          31, 2006 AND 2005**
  **9.**
              **DISCONTINUED
                  OPERATIONS**





During
      2006, the Company abandoned its apparel business. A loss on operating results
      for this business in the aggregate amount of approximately ($267,000) had been
      reclassified and presented as a single line item in the statement of
      operations.





During
      2004, the Company abandoned its special event planning and management business.
      A gain on operating results for this business in the amount of approximately
      $4,000 has been reclassified and presented as a single line item in the
      statements of operations.




**10.**
              **SUBSEQUENT
                  EVENT**


In
      December 2006, the Company submitted its Registration Statement on Form SB-2
      for
      the registration of 842,500 shares of its outstanding common stock. On February
      6, 2007, the Company’s registration statement was declared effective by the
      Securities and Exchange Commission.







F-16




**Item
      8. Changes in and Disagreements with Accountants.**





There
      have been no changes in or disagreements with our accountants since our
      formation required to be disclosed pursuant to Item 304 of Regulation S-B,
      except for the following:





Effective
      March  1, 2006, we dismissed Hall and Company CPAs, Inc., which audited our
      financial statements for the fiscal years ended December 30, 2004 and 2003,
      and
      appointed Mendoza Berger & Company as our new independent registered public
      accounting firm. The reports of Hall and Company CPAs, Inc. for these fiscal
      years did not contain an adverse
      opinion or disclaimer of opinion but did contain an uncertainty about our
      ability to continue as a going concern. During our two most recent fiscal years
      and the period from the end of the most recently completed fiscal year through
      March  1, 2006, the date of dismissal, there were no disagreements with
      Hall and Company CPAs, Inc. on any matter of accounting principles or practices,
      financial statement disclosure or auditing scope or procedures, which
      disagreements, if not resolved to the satisfaction of Hall and Company CPAs,
      Inc. would have caused it to make reference to such disagreements in its
      reports.





Our
      audited financial statements for the years ended December 31, 2006 and 2005
      have
      been audited by Mendoza Berger & Company. Our unaudited financial statements
      for the nine months ended September 30, 2006, have been reviewed by Mendoza
      Berger & Company. Hall and Company CPAs, Inc. was not involved in any way
      with the review of the unaudited financial statements for the nine months ended
      September 30, 2006, or the audit by Mendoza Berger & Company of the
      financial statements for the years ended December 31, 2005 and 2004. We have
      authorized Hall and Company CPAs, Inc. to discuss any matter relating to us
      and
      our operations with Mendoza Berger & Company.





The
      change in our independent registered public accounting firm was recommended
      and
      approved by our board of directors since we do not have an audit committee.





During
      the two most recent fiscal years and subsequent interim period, we did not
      consult with Mendoza Berger & Company regarding the application of
      accounting principles to a specified transaction, either completed or proposed,
      or the type of audit opinion that might be rendered on our financial statements,
      or any matter that was the subject of a disagreement or a reportable event
      as
      defined in the regulations of the Securities and Exchange Commission.





**Item
      8A. Controls and Procedures.**





(a)
      Evaluation of disclosure controls and procedures. We maintain controls and
      procedures designed to ensure that information required to be disclosed in
      the
      reports that we file or submit under the Securities Exchange Act of 1934 is
      recorded, processed, summarized and reported within the time periods specified
      in the rules and forms of the Securities and Exchange Commission. Based upon
      their evaluation of those controls and procedures performed as of December
      31,
      2005, the date of this report, our chief executive officer and the principal
      financial officer concluded that our disclosure controls and procedures were
      effective.





(b)
      Changes in internal controls. There were no significant changes in our internal
      controls or in other factors that could significantly affect these controls
      subsequent to the date of the evaluation of those controls by the chief
      executive officer and principal financial officer.




**Item
      8B. Other Information.**





None.


**PART
      III**





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





The
      following table sets forth information regarding our executive officers and
      director.





**Name**
            **Age**
            **Position**Chris
                Johnson
            33
            President,
                Secretary and DirectorUrsula
                Sherwood
            27
            Chief
                Financial Officer




14





**Chris
      Johnson.**Mr.
      Chris
      Johnson has been our President and Secretary since June 2006 and one of our
      directors since our inception. From 2002 to June 2005, Mr. Johnson also served
      our President and Secretary. From 2004 to the present, Mr. Johnson has been
      the
      senior account manager at Smart Modular Technologies, which is a manufacturer
      of
      flash media and computer memory products. Mr. Johnson is responsible for
      marketing and sales to large corporation accounts. From 2000 to 2004, Mr. Chris
      Johnson was employed by ADP as a Major Accounts District
      Managerresponsible for covering Greater Los Angeles area.  Prior to
      that, from 1997 to 2000, Mr. Johnson worked at SimpleTech, Inc., as a Territory
      Sales Manager, where his promotional work was performed in several different
      vertical markets, such as government, aerospace, e-commerce and retail. From
      1996 to 1997, Mr. Johnson was a Sales Field Manager for Miller Brewing Company,
      and from 1994 to 1996, he was employed by Inter Play Productions in Marketing.
      Mr. Johnson studied business at Rancho Santiago College, focusing on marketing
      and advertising. Mr. Johnson is not an officer or director of any reporting
      company.




**Ursula
      Sherwood.** Ms.
      Sherwood has been our Chief Financial Officer since December 2006. From July
      2005 to 2006, Ms. Sherwood was our principal accountant as well as the principal
      accountant for Landes Daily, Inc., the fashion apparel line that we had
      operated. From 2001 to 2006, Ms. Sherwood attended the University of California,
      Los Angeles, and graduated in 2006 with Bachelor of Science in history and
      a
      minor in political science. Ms. Sherwood is not an officer or director of any
      reporting company. ****




All
      directors hold office until the completion of their term of office, which is
      not
      longer than one year, or until their successors have been elected.  Chris
      Johnson’s term of office expires on April 9, 2007. All officers are appointed
      annually by the board of directors and, subject to employment agreements (which
      do not currently exist) serve at the discretion of the board. Currently,
      directors receive no compensation.





There
      is
      no family relationship between any of our officers or directors. There are
      no
      orders, judgments, or decrees of any governmental agency or administrator,
      or of
      any court of competent jurisdiction, revoking or suspending for cause any
      license, permit or other authority to engage in the securities business or
      in
      the sale of a particular security or temporarily or permanently restraining
      any
      of our officers or directors from engaging in or continuing any conduct,
      practice or employment in connection with the purchase or sale of securities,
      or
      convicting such person of any felony or misdemeanor involving a security, or
      any
      aspect of the securities business or of theft or of any felony. Nor are any
      of
      the officers or directors of any corporation or entity affiliated with us so
      enjoined.





**Section
      16(a) Beneficial Ownership Reporting Compliance** .
      We
      believe that our officers, directors, and principal shareholders have filed
      all
      reports required to be filed on, respectively, a Form 3 ( Initial
      Statement of Beneficial Ownership of Securities ),
      a Form
      4 ( Statement
      of Changes of Beneficial Ownership of Securities ),
      or a
      Form 5 ( Annual
      Statement of Beneficial Ownership of Securities ).





**Audit
      Committee and Audit Committee Financial Expert.** Presently,
      the board of directors acts as the audit committee. The board of directors
      does
      not have an audit committee financial expert. The board of directors has not
      yet
      recruited an audit committee financial expert to join the board of directors
      because we have only recently commenced a significant level of financial
      operations.





**Code** **of
      Ethics.**We
      do not
      currently have a Code of Ethics
      that applies to all employees, including our principal executive officer,
      principal financial officer, principal accounting officer or controller, or
      persons performing similar functions. We plan to adopt a Code of Ethics.





**Nominating
      Committee.**We
      have
      not adopted any procedures by which security holders may recommend nominees
      to
      our Board of Directors.





**Item
      10. Executive Compensation**





Any
      compensation received by our officers, directors, and management personnel
      will
      be determined from time to time by our Board of Directors. As of March 29,
      2007,
      Ursula Sherwood, our chief financial officer, is paid approximately $350 per
      month for the three months of 2007. Our officers, directors, and management
      personnel will be reimbursed for any out-of-pocket expenses incurred on our
      behalf.




**Summary
      Compensation Table.** The
      table set forth below summarizes the annual and long-term compensation for
      services in all capacities to us payable to our chief executive officer and
      our
      other executive officers during the years ending December 31, 2005 and 2006.
      Our
      Board of Directors may adopt an incentive stock option plan for our executive
      officers which would result in additional compensation.





15







**Name
                and Principal**
              **Position**
            **Year
                Ended**
            **Salary**
              **$**
            **Bonus**
              **$**
            **Stock**
              **Awards**
              **$**
            **Option**
              **Awards**
              **$**
            **Non-Equity**
              **Incentive
                Plan Compensation**
              **$**
            **Nonqualified****Deferred**
              **Compensation
                Earnings**
              **$**
            **All
                Other Compensation**
              **$**
            **Total**
              **$**Chris
                Johnson president, secretary
            2006
            None
            None
            None
            None
            None
            None
            None
            None2005
            None
            None
            None
            None
            None
            None
            None
            NoneUrsula
                Sherwood, chief financial officer
            2006
            None
            None
            None
            None
            None
            None
            None
            NoneRenee
                Raimondi,
              former
                officer
            2005
            None
            None
            None
            None
            None
            None
            None
            NoneRich
                Landes,
              former
                officer
            2005
            None
            None
            None
            None
            None
            None
            None
            NoneStephen
                Johnson,
              former
                officer
            2005
            None
            None
            None
            None
            None
            None
            None
            None





**Employment
      Contracts and Termination of Employment.** We
      do not
      anticipate that we will enter into any employment contracts with any of our
      employees. We have no plans or arrangements in respect of remuneration received
      or that may be received by our executive officers to compensate such officers
      in
      the event of termination of employment (as a result of resignation or
      retirement).




**Outstanding
      Equity Awards at Fiscal Year-end.** As
      of the
      year ended December 31, 2006, the following named executive officers had the
      following unexercised options, stock that has not vested, and equity incentive
      plan awards:





**Option
                Awards**
            **Stock
                Awards****Name**
            **Number
                of Securities Underlying Unexercised Options**
              **#
                Exercisable**
            **#
                Un-exercisable**
            **Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Options**
            **Option
                Exercise Price**
            **Option
                Expiration Date**
            **Number
                of**
              **Shares
                or**
              **Units
                of****Stock**
              **Not****Vested**
            **Market**
              **V****alue
                of**
              **Shares
                or****Units**
              **Not****Vested**
            **Equity
                Incentive Plan Awards: Number of Unearned**
              **Shares,
                Units****or****Other****Rights**
              **Not
                Vested**
            **Value
                of Unearned Shares, Units or Other Rights**
              **Not
                Vested**Chris
                Johnson president, secretary
            0
            0
            0
            0
            0
            0
            0
            0
            0Ursula
                Sherwood, chief financial officer
            0
            0
            0
            0
            0
            0
            0
            0
            0





**No
      Equity Compensation Plan.** We
      do not
      have any securities authorized for issuance under any equity compensation plan.





**Stock
      Options/SAR Grants** .
      No
      grants of stock options or stock appreciation rights were made since our date
      of
      incorporation on April 8, 2002.





16





**Long-Term Incentive
      Plans** .
      There
      are no arrangements or plans in which we provide pension, retirement or similar
      benefits for directors or executive officers. We do not have any material bonus
      or profit sharing plans pursuant to which cash or non-cash compensation is
      or
      may be paid to our directors or executive officers.





**Director
      Compensation.**Our
      directors received the following compensation for their service as directors
      during the fiscal year ended December 31, 2006:





**Name**
            **Fees
                Earned**
              **or
                Paid**
              **in****Cash**
            **Stock**
              **Awards**
              **$**
            **Option**
              **Awards**
              **$**
            **Non-Equity**
              **Incentive
                Plan Compensation**
              **$**
            **Non-Qualified**
              **Deferred
                Compensation Earnings**
              **$**
            **All
                Other Compensation**
              **$**
            **Total**
              **$**Chris
                Johnson
            0
            0
            0
            0
            0
            0
            0Ursula
                Sherwood
            0
            0
            0
            0
            0
            0
            0




**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.**





The
      following table sets forth certain information regarding the beneficial
      ownership of our common stock as of March 29, 2007, by each person or entity
      known by us to be the beneficial owner of more than 5% of the outstanding shares
      of common stock, each of our directors and named executive officers, and all
      of
      our directors and executive officers as a group.





**Title
                of**
              **Class**
            **Name
                and Address of**
              **Beneficial
                Owner**
            **Amount
                and Nature of**
              **Beneficial
                Owner**
            **Percent
                of**
              **Class**Common
                Stock
            Chris
                Johnson
              Red
                Carpet Entertainment, Inc.
              400
                Corporate Pointe, Suite 300
              Culver
                City, California 90230
            2,510,000
                shares(1),
                president, secretary, director
            65.3%Common
                Stock
            Ursula
                Sherwood
              Red
                Carpet Entertainment, Inc.
              400
                Corporate Pointe, Suite 300
              Culver
                City, California 90230
            no
                shares, chief financial officer
            0%Common
                Stock
            Anderson
                Hinsch
              c/o
                Red Carpet Entertainment, Inc.
              400
                Corporate Pointe, Suite 300
              Culver
                City, California 90230
            350,000
                shares
            9.1%Common
                Stock
            Elite
                Media Assets Limited(2)
              c/o
                Red Carpet Entertainment, Inc.
              400
                Corporate Pointe, Suite 300
              Culver
                City, California 90230
            350,000
                shares
            9.1%Common
                Stock
            All
                directors and named executive
              officers
                as a group
            2,510,000
                shares
            65.3%


(1) Includes
      20,000 shares of common stock held by Lissa Johnson, who is the spouse of Chris
      Johnson, our President, Secretary and one of our directors. Chris Johnson is
      deemed to beneficially own those shares.


(2) Clifford
      Ng has sole voting and investment control over the securities held by Elite
      Media Assets Limited.




Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities. In accordance with Securities and Exchange Commission
      rules, shares of our common stock which may be acquired upon exercise of stock
      options or warrants which are currently exercisable or which become exercisable
      within 60 days of the date of the table are deemed beneficially owned by the
      optionees. Subject to community property laws, where applicable, the persons
      or
      entities named in the table above have sole voting and investment power with
      respect to all shares of our common stock indicated as beneficially owned by
      them.





17





**Changes
      in Control.** Our **** management
      is not aware of any arrangements which may result in “changes in control” as
      that term is defined by the provisions of Item 403(c) of Regulation S-B.





**No
      Equity Compensation Plan.** We
      do not
      have any securities authorized for issuance under any equity compensation plan.
      We also do not have an equity compensation plan.




**Item
      12. Certain Relationships and Related Transactions, and Director
      Independence.**





**Related
      party transactions.**





In
      April
      2002, we issued 1,250,000 shares of our common stock to Chris Johnson and
      1,250,000 shares of our common stock to Stephen Johnson, who were our founders
      and were our officers and directors at inception and through 2005. These shares
      were issued in exchange for expenses of $2,500 related to our incorporation,
      or
      $0.002 per share, which represented the fair market value on the date of
      issuance.





From
      our
      inception through June 2005, Chris Johnson, one of our directors, provided
      approximately 150 square feet of office space to us at no charge. Our financial
      statements reflect, as occupancy costs, the fair market value of that space,
      which is approximately $150 per month. Total rent expense incurred to this
      related party amounted to $1,800 and $800 for the years ended December 31,
      2005
      and 2004, respectively.




There
      are
      no written agreements for the transactions disclosed in this
      section.





We
      believe that each report transaction and relationship is on terms that are
      at
      least as fair to us as would be expected if those transactions were negotiated
      with third parties.





There
      have been no other related party transactions, or any other transactions or
      relationships required to be disclosed pursuant to Item 404 of Regulation
      S-B.





With
      regard to any future related party transaction, we plan to fully disclose any
      and all related party transactions, including, but not limited to, the
      following:





·
            disclose
                such transactions in prospectuses where
                required;


·
            disclose
                in any and all filings with the Securities and Exchange Commission,
                where
                required;


·
            obtain
                disinterested directors consent; and


·
            obtain
                shareholder consent where required.




**Director
      Independence.** Members
      of our Board of Directors are not independent as that term is defined by defined
      in Rule 4200(a)(15) of the Nasdaq Marketplace Rules.





**Item
      13. Exhibits**





3.1
            Articles of
              Incorporation*3.2
            Bylaws*31
            Rule 13a-14(a)/15d-14(a)
              Certification of Chief Executive Officer and Chief Financial
              Officer32
            Section
              906 Certification by Chief Executive Officer and Chief Financial
              Officer


*  Included
      in Registration Statement on Form SB-2 filed on December 28, 2006.





**Item
      14. Principal Accountant Fees and Services.**





**Audit
      Fees.** The
      aggregate fees billed in each of the fiscal years ended December 31, 2006 and
      2005 for professional services rendered by the principal accountant for the
      audit of our annual financial statements and review of the financial statements
      included in our Form 10-KSB or services that are normally provided by the
      accountant in connection with statutory and regulatory filings or engagements
      for those fiscal years were $21,159
      and $10,687,respectively.


18





**Audit-Related
      Fees.** For the fiscal year ended December 31, 2005, there were no fees
      billed for services reasonably related to the performance of the audit or review
      of the financial statements outside of those fees disclosed above under "Audit
      Fees." For the fiscal year ended December 31, 2006, we were billed a total
      of
      $2,827  by a separate accountant for consulting services relating to the
      preparation of the annual audit and quarterly reviews of the financial
      statements.


**Tax
      Fees.**For the fiscal years ended December 31, 2006 and December 31,
      2005, our principal accountants rendered services for tax compliance, tax
      advice, and tax planning work for which we paid the following amounts: $0 and
      $3,277, respectively.




**All
      Other Fees.** None.





**Pre-Approval
      Policies and Procedures.** Prior
      to
      engaging its accountants to perform a particular service, our board of directors
      obtains an estimate for the service to be performed. All of the services
      described above were approved by the board of directors in accordance with
      its
      procedures.





19





**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned in Culver
      City, California, on March 30, 2007.




**Red
                Carpet
                Entertainment, Inc.,**
              a Nevada corporationBy:
            /s/ Chris
              JohnsonName:
              Chris JohnsonIts:
              Principal Executive Officer, President,
              Director




By:
            /s/ Ursula
              SherwoodName:
              Ursula SherwoodIts:
              Principal Accounting Officer, Chief Financial
              Officer






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




By:
              /s/ Chris
              Johnson
            March
                30,
                2007Name: Chris Johnson
              Its:director









20