UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549
                     __________________________________

                                FORM 10-KSB
                     __________________________________

(X)  Annual report pursuant to sections 13 or 15(d) of the Securities
     Exchange Act of 1934 for the fiscal year ended December 31, 2002.

( )  Transition report pursuant to section 13 or 15(d) of the Securities
     Exchange Act of 1934.

                       Commission File Number 0-27727

                     Redwood Entertainment Group, Inc.
               (Name of small business issuer in its charter)

     Nevada                                                 91-1766174
(State of jurisdiction of                               (I.R.S. Employer
incorporation or organization)                       Identification Number)

     1201 W. 5th Street, Suite F-80,
     Los Angeles, CA 77095                         Telephone:(213) 534-3409
(Address and telephone number of principal
  executive offices)

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act: None
Common Stock $.001 par value
(Title of Class)

Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports,) and (2) has been subject to such filing requirements for the past
90 days.YES (X) NO ( )

Check if there is no disclosure of delinquent filers in response to item
405 of Regulation S-B is not contained herein and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III for this Form 10-KSB or
any amendment to this Form 10-KSB.

The issuer's revenue for its most recent fiscal year was: $-0-.

The aggregate market value of the issuer's voting stock held as of May 15,
2003, by non-affiliates of the issuer was approximately $93,850

Transitional Small Business Disclosure Format.    Yes [  ]  No [X]

Documents incorporated by reference: None




                             TABLE OF CONTENTS


PART I

ITEM 1.   DESCRIPTION OF BUSINESS                                         3

ITEM 2.   DESCRIPTION OF PROPERTY                                        11

ITEM 3.   LEGAL PROCEEDINGS                                              11

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            11

                                  PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS                                                        12

ITEM 6.   PLAN OF OPERATION                                              13

ITEM 7.   FINANCIAL STATEMENTS                                           17

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE                            35

                                  PART III

ITEM 9.     DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS,
            AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
            OF THE EXCHANGE ACT                                          35

ITEM 10.  EXECUTIVE COMPENSATION                                         38

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT                                                 38

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                 40

                                  PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K                               40

ITEM 14.  CONTROLS AND PROCEDURES                                        40

SIGNATURES AND CERTIFICATIONS                                            41


                                   PART I

ITEM 1.  DESCRIPTION OF BUSINESS

History of the Company
----------------------

The Company was organized and authorized on November 3, 1986, to pursue any
lawful purpose or purposes. The Company amended its Articles of
Incorporation on September 30, 1987, changing its name to Tzaar Corporation
and authorizing common stock of 100,000,000 shares at par value of $0.001.
From 1989 to 1996, the Company did not engage in any business activity.
During this time the Company had no significant revenues and was considered
to be a "development stage company."

On December 28, 1996, the Company entered into a Plan of Reorganization
with Genesystems, Inc. ("Genesystems"), a corporation organized in the
state of Nevada on December 12,1996.  In connection with the Plan of
Reorganization, the Company made a one for ten reverse split of its
outstanding shares; issued an additional 7,500,000 post-split restricted
shares to effect a share exchange with Genesystems; and authorized and
issued an additional 3,500,000 common shares in a limited offering.  As a
result of the reverse acquisition, control of the Company was acquired by
Genesystem shareholders.  The acquisition of the public shell (Tzaar
Corporation) was accounted for as a recapitalization.  The previous
business of the Company at that time was that of Genesystems, Inc.

In December 1996, the Company changed its name to Gencell, Inc. and
appointed new officers and directors to the Company.  On September 29, 1997
the Company changed its name to Gene-Cell, Inc.  From December 1996 to
December 2002, the Company focused its plan of operations on the business
of developing therapies that can treat major diseases and disorders of the
human blood system.

On August 26, 2002, Gene-Cell, Inc. entered into an Agreement and Plan of
Reorganization (the "Agreement") whereby the Company acquired all of the
issued and outstanding shares of Energy Resource Management, Inc., ("ERMI")
in exchange for 4,000,000 restricted common shares.  The Agreement
represented a recapitalization of ERMI with accounting treatment similar to
that used in a reverse acquisition.  In the Reorganization, ERMI assumed
the accounts payable and accrued liabilities of the Company.  The 4,000,000
shares of common stock issued by the Company is currently held in escrow
and will not be delivered to ERMI until certain debts of the Company
totaling approximately $65,000 have been satisfied by ERMI.

The Company continues to be considered as a development stage enterprise
because it has not yet generated revenue from sale of its products and/or
services. Since its inception, the Company has devoted substantially all of
its efforts to development of its products and services and the search for
sources of capital to fund its efforts.  Since the first quarter 2003, the
Company has been organized under its current structure and management team.


                                     3



Business of the Company
-----------------------

The Company intends to conduct business in two primary areas
entertainment and energy marketing.  The Company has discontinued its
biotechnology activities.

Entertainment
-------------

Implementing the Company's Business Model
-----------------------------------------

The Company intends to develop into one of the premier independent
multimedia companies in entertainment.  The Company will be a multiple
platform production company with an ultimate goal of comprehensive brand
exploitation, from feature film development to toys.  To accomplish these
goals, the Company will seek to:

-    Capitalize on the emergent needs and demands of the market with
     principle-themed,
-    multicultural content;  and
     Present a framework for new business and product decision-making that
     ensures strategic consistency.

To this end, during the first quarter 2003, the Company entered into an
agreement to acquire DreamCity Entertainment.   While the Company has been
unable to fulfill all of its obligations under the agreement to date, the
Company is working to renegotiate the terms of the agreement to allow it to
go forward.  The Company believes the acquisition of DreamCity will enhance
the Company's reputation in the industry.

The Company believes that recent trends in the entertainment industry
signal a shift in the way entertainment companies conduct business.  These
trends include:

1.   The deconstruction of the studio system in the film and television
     industry has led to challenges in capturing economies of scale.  Those
     that have been able to develop a cooperative model have demonstrated
     profitability that outperforms the sector.  The keys appear to be
     ownership of high quality content and multiple profit centers due to
     thoroughly exploiting these quality properties across multiple
     platforms.
2.   Honoring the craftsman, in other words providing the creators of high-
     quality intellectual properties creative authority and profit-sharing
     incentives.
3.   Entertainment companies that relied on non-creative executives to
     oversee intellectual property development have over the past three
     years demonstrated profitability declines.

The Company will structure its business and operational focus to try and
take advantage of these trends.    To this end it is the Company's primary
goal to provide high quality content in a number of key segments of the
entertainment industry.  Specifically, at this time the Company intends to
focus on the following markets:


                                     4


-    The children's inspirational market.  The Company believes this market
     will see significant growth in near future.  There was a 42% increase
     in inspirational video sales last year, and sales in this segment are
     forecasted to double by 2005.
-    The family-themed inspirational market.  This segment appears to be
     dramatically underserved.  One company currently owns 67% of the $750
     million gross sales market with one series of 14 direct-to-video
     titles.  This product line has realized 28.5 million units of sales
     since 1994. These impressive sales figures were accomplished through
     grassroots and specialty distribution.  Only recently did a mainstream
     distributor pick up this line.
-    The urban multicultural market.  The Company hopes to capitalize on
     the established credibility of Michael Davis, the President of
     DreamCity to become a significant influence in the urban multicultural
     market.
-    The family entertainment market.  This market has experienced
     exponential growth every year over the last ten years due to the
     growth of this demographic audience and an associated increase in
     discretionary funds that they have available to them.

In implementing its business model, the Company intends to rely on the
skills and expertise of the creative personnel it will collaborate with.
The Company believes that by putting in place the necessary elements and
then allowing the creative experts to have input into and guide product
development, combined with the ability to participate financially in the
success of the project, the Company will be able to attract and retain high
quality creative talent.  Moreover, by involving the creative personnel in
certain matters, the Company believes it can reduce what is known in the
industry as "development hell."   Development hell is an industry  dynamic
wherein significant capital is spent on the front end of projects with no
assurances of returns.

At this time, the Company envisions implementing its business plan in
several phases.  In Phase One, which should occur from January 30, 2003
through September 30, 2003, the Company will engage in multiple
negotiations that seek to combine emerging powers in the industry into a
loose collaboration of complimentary projects that have the opportunity to
capture economies of scale and develop synergistic relationships.  For
example, the Company  may seek the services of a graphic novel publisher
to create content for a film or TV producer, or a graphics studio securing
accounts that could be developed into commercials through a collaboration
with Company management and the film/TV arm of the Company.  The Company
expects these negotiations to include acquisitions, joint ventures, co-
productions, and consulting agreements that have the potential to expand in
to more extensive agreements.

Another primary responsibility of the Company during Phase One will be to
recruit resources to support projects and establish operations.    The
operational framework for all negotiations can be defined as follows:

1.   All ventures will be encouraged to work cooperatively to secure
     necessary services, whenever prudent, from each other.  An example
     would be a film production working with DreamCity for print and
     advertising development for distribution..

2.   Each sponsored venture will provide a negotiated fee to Redwood
     Entertainment Group to offset minimal operating costs and expenses for
     the venture.

                                     5


3.   In exchange for the negotiated fee, Redwood will be responsible for
     executing Phase Two funding which can provide additional
     operational/project specific funding for the ventures.

4.   Redwood will conduct activities specifically negotiated with the
     individual ventures such as additional capital recruitment for
     projects and securing institutional lines of credit and/or necessary
     partnerships.

5.   Ancillary profit centers linked to licensing and merchandising
     opportunities will be developed upon mutual consultation.

6.   Redwood will be responsible for establishing business entities that
     will optimize opportunities.

7.   Selected individual will be offered additional contracts to consult on
     the creation of Phase Two and Three strategies.  This will establish
     internal loyalty as well as provide us with recommendations from
     exceptional industry professionals.

In Phase Two, projects will be fully launched.  The Company anticipates
Phase two will begin in October 2003.  The initial alliances created in
Phase One will be configured as either joint ventures or as full
acquisitions.  The principals of each alliance will concomitantly be
subject to project-specific profitability requirements linked to Phase One
funding as well as operational accountability that will make them eligible
for participation in potential Phase Two funding.  Some of the Company's
activities may be positioned for divesting or for creation as a semi-
autonomous division within the Company structure.  An example would be
creating a separate division for the inspirational market to facilitate
multiple platform launches.  Sources of funds to support operations and
projects are expected to come from short-range revenues from operations,
production-specific funding such as debt financing, producer fees, or
product placement sponsorships, and investor recruitment.

Phase Three activities will begin January 2004 and is expected to focus on
pre-production of film and television projects that have been developed.
During Phase Three, the Company's primary goals will be to assure the
creation of principle-themed content that can be franchised into multiple
markets; to develop a replicable process for incubating promising media
ventures and bringing them to market; and to create and enhance brand and
image awareness for all contributing entities.
Throughout all phases of implementation and thereafter, the Company
believes it will have to be successful in the following areas if it wishes
to compete in this highly competitive industry:

-    developing original content that can lead to intellectual property
     creation;
-    acquiring ownership interest in externally-developed intellectual
     property that is compatible with the vision of this endeavor;
-    evaluating the market on a constant basis;
-    producing sufficient critical mass for brand establishment.
-    matrix-like strategic planning that will allow the Company to prepare
     for maximum bland exploitation from inception;
-    recruiting resources, including cash investments, that will initially
     support operations.  After short-range revenues begin to be realized,
     investments will generally be recruited that will be used for
     project-specific support and/or operational expansion through
     acquisitions.

                                     6


Sources of Revenue
------------------

With the implementation of the Company's business model, the Company
expects to derive revenue from the following sources:


-    Film production and related revenue streams, including participation
     and producer fees;
-    Television production and related revenue streams, which may also
     include participation and producer fees;
-    Graphic design related revenue;
-    Publishing related revenue;
-    Product distribution;
-    Talent management; and
-    Licensing and Merchandising.

Marketing
---------

The overall strategy for branding and release of Company products will
incorporate both traditional, mature, and sophisticated marketing
activities which are standard in the mainstream market with the addition of
niche strategies.  Awareness will be established through the following
methods:

-    developing a major distribution campaign to coordinate release through
     all major retailers of this type of type of family-themed content;
-    launching a public relations campaign which will include press
     releases, TV and radio talk show appearances, grassroots mailings to
     compatible organizations, pre-release screenings, and personal
     appearances at venues, trade shows and conferences;
-    establishing a web presence that will include both project launches
     and operation of an  Redwood Entertainment Group site as well as links
     to compatible sites;
-    developing video and music loops;
-    developing point of purchase items such as standups, etc.;
-    providing co-operative advertising opportunities for local retailers;
-    conducting comprehensive advertising in all mediums: TV, magazine,
     radio, etc.

Sales channels will include the following:

-    mainstream retail;
-    family  niche retail;
-    direct shopping such as HSN;
-    niche wholesale networks such as Christian Booksellers Association;
-    Internet sales.

Competition
-----------

Competition in the entertainment industry is intense.  Many of the
Company's competitors have substantially greater experience, financial
resources and marketing capabilities than the Company.  Most of the
Company's competitors have significantly greater financial resources and
can afford to spend more than the Company can to develop and market
products.  Moreover, most of the Company's competitors have been in the
market longer than it has and have established relationships that could
preclude the Company from successfully participating in the market.


                                     7


Energy Marketing
----------------
The Company is also exploring business opportunities in energy marketing
and providing energy-related products and services to commercial,
industrial and manufacturing customers, as well as, wholesale entities such
as municipalities, rural electric co-ops and local distribution companies.
The natural gas marketing industry arose as a result of the deregulation of
the natural gas industry by the federal government. Around the same time,
California also deregulated the natural gas industry in the State of
California.

Prior to deregulation, the interstate natural gas pipelines and public
utilities primarily controlled the pipelines and other infrastructure
necessary to deliver natural gas energy to end consumers. Following
deregulation, the pipeline companies and public utilities were required to
allow gas producers and energy marketing companies to deliver natural gas
to end-use consumers via the pipelines and infrastructure of the pipeline
companies and the public utilities. This promoted competitive pricing and
allowed independent producers of natural gas to deliver supply directly to
end consumers without having to make the significant capital expenditures
required to develop their own delivery infrastructure. As a result, a new
market became available to independent energy producers seeking to market
their energy products.

The Company has yet to commence operations.  The Company believes it will
need funding of approximately $3,300,000 to commence operations,
$300,000.00 will go towards operations over the next 12 months.  Most of
those funds will be used for establishing a Letter of Credit (LOC) facility
with a banking institution to satisfy the creditworthiness requirements of
gas suppliers and for transportation by pipeline and utility companies.
The Company hopes to have funding in place and be able to commence active
operations by no later than the third quarter of 2003.  The Company intends
to obtain the funding through private funding sources and is in
negotiations with a number of such sources. At this time, however, the
Company has not received a firm commitment for funding from any source, and
there is no guarantee the Company will be able to obtain sufficient funding
to commence operations.  Upon receipt of funding, the Company's  initial
primary focus will be on procurement of natural gas supplies for small and
medium-sized industrial, commercial and manufacturing companies in
California who purchase their energy supply directly from energy suppliers
rather than from the public utilities.  The Company will seek to expand its
customer base in two ways: it will seek to provide natural gas to other
markets; and it will increase the services it offers to include
administrative and consulting services.  The Company has chosen these
specific markets because the Company believes the market segments it is
targeting are currently under serviced;  and the Company's controlling
shareholder has pre-existing relationships within these market segments
which it believes will enable it to be successful.


                                     8


Market Segmentation
-------------------

The energy market is segmented primarily by customer size and load usage.
The largest individual consumers are large industrial and manufacturing
companies.  The next largest consumers are smaller industrial and
manufacturing companies, followed by large commercial consumers such as
hospitals and universities.  On an individual basis, small commercial
customers such as restaurants and dry cleaners and residential consumers
are the smallest consumers.  The market is also segmented based on the
length of term for which gas is purchased, with contracts varying in
duration from one to thirty days, known in the industry as spot gas, to
monthly or seasonal contracts, such as purchases by food processors or as
winter supply; purchases under a one-year contract term; and purchases for
multiple years, ranging in length from two to five years.

The Company initially intends to pursue small to medium-sized industrial
and commercial consumers, who primarily purchase energy under spot or
seasonal contracts because it believes these consumers, due to the relative
size and duration of their consumption, are being under serviced in the
current market.  Over the past five years, due to mergers, acquisitions and
attrition in the energy services industry, there are fewer companies
participating in the energy marketing industry.  Many of the small and
medium-sized energy marketing firms were acquired by larger energy
conglomerates.  The primary competitors in the energy marketing industry
currently are utility companies, large energy companies, such as Shell, BP
Energy,  Duke Energy, TXU and the Williams Companies, with their affiliated
marketing companies and interstate pipeline companies, some independent
medium-sized marketing companies.

Because the administrative costs of delivering gas to consumers is about
the same regardless of the size or duration of the contract, energy
marketing companies can increase their profitability by selling larger
quantities of gas to fewer clients under longer term contracts.  Therefore,
most of the large energy conglomerates tend to focus their services toward
the largest industrial and manufacturing clients to assure the greatest
possible rate of return for their services.  This leaves many small and
medium-sized industrial and commercial consumers under serviced.

Unlike the large energy conglomerates and utilities, the Company intends to
operate solely as an energy marketing firm, thus minimizing its fixed
costs.  By maintaining low fixed costs, the Company believes it will be
able to profitably market its services to small and medium-sized industrial
and commercial consumers who, because of their size and demand are not the
primary target of the utility companies and large energy conglomerates.

Pre-existing Relationships
--------------------------
Robert Gower, the controlling shareholder of the Company, has over 20 years
experience in the energy marketing industry.  In 1989, Mr. Gower founded
his own energy marketing firm, Redwood Resources Inc., to provide energy
procurement, management and consulting services to a broad base of
businesses in California, including manufacturers, food processors, oil
refineries, cogeneration facilities, universities, prisons and various
California State facilities and municipalities.  The daily sales volume of
Redwood Resources grew to more than 150 million cubic feet of gas per day.
In January 1997, Redwood Resources was acquired by Coral Energy, a
subsidiary of Shell Oil Company.   Mr. Gower left Redwood in October 1997
to pursue other interests.  The Company believes it can capitalize on the
prior experience and business relationships of Mr. Gower to quickly
establish a client base.

                                     9


California Energy Market
------------------------

In addition to Mr. Gower's contacts, the Company has chosen to target the
California market because of the large amount of energy consumed in
California. According to information published by the California Energy
Commission, California consumed about 6,123 million cubic feet of natural
gas per day in 1999.  In 1999, California produced 16% of its own natural
gas, 46% came from the southwestern United States, 28% from Canada and 10%
from the Rocky Mountain producing basins.  In 2000, consumption increased
to 6,584 million cubic feet of gas per day.  During 2000, 1,381 million
cubic feet per day or 21% was consumed by residential consumers, 505
million cubic feet per day or 7.7% was consumed by small commercial
businesses, 1,327 million cubic feet per day or 20% was consumed by the
Industrial-Utility sector and the Industrial-Nonutility sector consumed
1,044 million cubic feet per day or 15.9%.  The Electric Generation-Utility
sector consumed 2,281 million cubic feet per day or 36.6% and the Electric
Generation-Nonutility sector consumer 45 million cubic feet per day, or
0.7%.

Products
--------
Initially, the Company will primarily focus its efforts in the area of
procurement of energy supplies for small and medium-sized consumers who
purchase their energy supplies directly from suppliers rather than from
public utilities.  Based on Mr. Gower's experience, the Company believes
these smaller customers require more service, particularly consulting
services in the areas of price, supply portfolio, regulatory matters and
energy conservation.  As it establishes a client base, the Company will
offer expertise in these areas to assist its customers in managing their
energy resources and to help them reduce their energy costs.  These
services should help the Company's customers to reduce fuel costs, increase
profitability and reduce the complexity associated with energy supply and
management.  The Company's  services will include:

-   Energy supply procurement and management;
-   Energy price, supply and tariff consulting;
-   Utility rate and billing analysis;
-   Engineering analysis and facility energy audits;
-   Strategic energy planning and consulting; and
-   Power quality and reliability solutions.

The Company's staff will partner with its clients to create an energy
strategy that will enhance their bottom line and allow them to focus their
time and attention on growing their core business.  In exchange for these
services, the Company will be paid a fee.

The Company will not act as a brokerage for energy contracts and will not
be paid a brokerage commission.  Rather, it will acquire energy supply from
producers and sell it directly to its customers.  The Company does not
have, nor does it intend to acquire an inventory of energy supply.  The
Company will only acquire energy supply for which it has a firm purchase
commitment from its clients.  This way,  the Company lessens its price
volatility risk and correspondingly the fees it will charge to its clients.


                                     10


Competition
-----------
Competition in the energy marketing industry is intense.  As discussed
above, the Company's competitors have substantially greater experience,
financial resources and marketing capabilities than the Company.  Most of
the Company's competitors have significantly greater financial resources
and can afford to spend more than the Company can to market their products.
Moreover, the Company's competitors have been in the market longer than it
has and have established relationships with their customers which may
preclude the Company from successfully participating in the market.

While the Company believes the small to medium-sized commercial and
industrial consumers are currently being under serviced, if market forces
change, or should the Company's competition decide to expand their
marketing focus, because of their size and financial resources, they could
easily dominate the markets in which the Company intends to compete which
could have a severe impact on the Company's ability to operate profitably.

Number of Employees
-------------------

The Company currently has 3 full-time employees and 2 part-time employees.
The Company will not consider increasing the part-time employees to a full-
time status and/or hiring additional employees in 2003 unless the Company
is successful in securing additional funding.  Since October 2001, the
Company has had insufficient funds to pay salaries or other cash
compensation to its employees.   If the Company is unable to raise
significant additional funds it will not be able to continue to retain the
services of its employees.

Reports to Security Holders
---------------------------

The public may read and copy any materials filed by the Company with the
SEC at the SEC's Public Reference Room at 150 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
Company is an electronic filer and the SEC maintains an Internet site that
contains reports and other information regarding the Company which may be
viewed at http://www.sec.gov.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company

ITEM 3.  LEGAL PROCEEDINGS

To the knowledge of the Company, it is not a party to any pending material
legal proceedings.  To the knowledge of management, no federal, state, or
local governmental agency is presently contemplating or proceeding against
the Company.  To the knowledge of the management, no director, officer or
affiliate of the Company or owner of record or beneficiary of more than 5%
of the Company's common stock is a party adverse to the Company or has a
material interest adverse to the Company in any proceeding.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


                                     11


                                  PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER   MATTERS

The Company's common stock is currently listed on the Over the Counter
Bulletin Board ("OTCBB"), under the symbol "RDWEE".  As of May 15, 2003,
the Company had 101 shareholders holding 16,053,684 shares of (post forward
split)common stock.  Of the issued and outstanding common stock
approximately 3,288,157 are free trading, the balance are restricted stock
as that term is used in Rule 144.  The Company has never declared a
dividend on its common stock other than a special dividend issued to one
investor in 1998.

<Table>
<Caption>

                                CLOSING BID            CLOSING ASK
                          ------------------------ -----------------------
                              HIGH         LOW         HIGH         LOW
                          -----------  ----------- -----------  -----------
<S>                       <C>         <C>          <C>         <C>
2001
First Quarter       0.59375        0.4375         0.6875         0.5625
Second Quarter      0.46           0.33           0.5625         0.35
Third Quarter       0.40           0.13           0.50           0.16
Fourth Quarter      0.29           0.13           0.37           0.16

2002
First Quarter       4.77           2.38           0.23           0.11
Second Quarter      3.25           0.65           0.10           0.03
Third Quarter       1.39           0.17           4.15           0.01
Fourth Quarter      2.00           0.17           6.00           0.15
</Table>

The above quotations, as provided by the Pink Sheets, LLC, represent prices
between dealers and do not include retail markup, markdown or commission.
In addition, these quotations do not represent actual transactions.

Recent Sales of Unregistered Securities

No instruments defining the rights of the holders of any class of
registered securities have been materially modified, limited or qualified.

During the quarter ended December 31, 2002, the Company issued no
securities, which were not registered under the Securities Act of 1933.

Subsequent to December 31, 2002, in March, 2003, the Company forward-split
its issued and outstanding common stock on a 3-for-1 basis.  All
shareholders of record on the record date received an additional two common
shares for every one share of common stock they owned on the record date.


                                     12



ITEM 6.  PLAN OF OPERATIONS

Forward Looking Information and Cautionary Statement

In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company notes that certain statements
set forth in Item 7 and elsewhere in this report, which provide other than
historical information and which are forward looking, involve risks and
uncertainties that may impact the company's actual results of operations.
The Company faces many risks and uncertainties, many of which are beyond
the control of the company, including: fluctuations in oil and gas prices;
level of fleet additions by competitors; changes in capital spending by
customers in the energy industry for exploration, development and
production; unsettled political conditions, civil unrest and governmental
actions, especially in higher risk countries of operations; foreign
currency fluctuations; and environmental and labor laws.  Other risk
factors are discussed elsewhere in this Form 10-KSB.

Forward-looking statements, which can generally be identified by the use of
such terminology as "may," "expect," "anticipate," "estimate," "forecast,"
"believe," "think," "could," "will," "continue," "intend," "seek," "plan,"
"should," "would" and similar expressions contained in this report, are
predictions and not guarantees of future performance or events.  The
forward-looking statements are based on current industry, financial and
economic information, which the company has assessed but which by its
nature is dynamic and subject to rapid and possibly abrupt changes.  The
Company's actual results could differ materially from those stated or
implied by such forward-looking statements due to risks and uncertainties
associated with our business.  The forward-looking statements should be
considered in the context of the risk factors listed above and discussed
elsewhere in this Form 10-KSB.  Investors and prospective investors are
cautioned not to place undue reliance on such forward-looking statements.
Management disclaims any obligation to update or revise the forward-looking
statements contained herein to reflect new information, future events or
developments.

For a complete understanding, this Plan of Operations should be read in
conjunction with Part I, Item 1- Description of Business and Item 7 -
Financial Statements of this Form 10-KSB.

Critical Accounting Policies and Estimates

The Company's discussion and analysis of its financial condition and
results of operations are based upon its consolidated financial statements,
which have been prepared in accordance with generally accepted accounting
principles in the United States. The preparation of these financial
statements requires the Company to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. On an ongoing
basis, the Company evaluates its estimates. The Company bases its estimates
on historical experience and on various other assumptions that are believed
to be reasonable under the circumstances. These estimates and assumptions
provide a basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions, and these differences may be material.

The Company believes the following critical accounting policies affect its
more significant judgments and estimates used in the preparation of its
consolidated financial statements.

                                     13


Principles of Consolidation

The Company's consolidated financial statements include the accounts of the
Company and its majority owned or controlled subsidiaries after elimination
of all significant intercompany accounts and transactions.

Source of Funds

The Company has financed its operations mainly through the sale of its
common stock and through loans from related parties.  The Company is and
has been entirely dependent on outside sources of financing for
continuation of operations and there is no assurance that the Company will
be successful in obtaining additional funding on acceptable terms or at
all.  The Company's independent auditors have note in their Report of
Independent Auditors and in the Notes to the Financial Statements that the
Company has incurred significant recurring losses from operations since
inception and is dependent on outside sources of financing for continuation
of its operations.  These factors raise substantial doubt about the
Company's ability to continue as a going concern.

Although the Company is actively seeking bridge financing and additional
funding, it has been unsuccessful in securing such financing and/or
funding.  As of now, the Company is in immediate need of additional capital
to continue operations.  At the present time, there is no way to predict
when, or if, any contributions may be made.  There is no assurance that the
Company will be successful in obtaining additional funding on attractive
terms or at all.

The Company anticipates it will need approximately $750,000.00 (seven
hundred fifty thousand dollars and zero cents)  to implement its
entertainment business model, fund pending acquisitions and negotiations,
launch operations and support those operations for the next twelve months.
Capital recruitment will be for either operational support which is
expected to include stock-related transactions or project specific funding
which can include project specific revenue sharing, stock-related
transactions, or a combination of these.   The Company believes it will
need approximately $300,000.00 (three hundred thousand dollars and zero
cents) to support its energy marketing operations for the next twelve
months.  Until the Company is successful in securing full funding to
implement its business plan and meet its operational needs, the Company is
implementing the following strategies:

1)   Project-specific funding recruitment that includes a 10% overhead
allocation  is being emphasized as this creates a shorter horizon for the
Company realizing revenues;

2)   Negotiation extensions are being recruited by the Company to allow us
secure opportunites on timelines that have shifted since discussions
originally began;

3)   Vender concessions such as deferred payments or exchanges for
restricted stock are being recuited to allow essential operations to
continue;

4)   Agreements that can be appropriately secured using restricted stock in
lieu of cash are being pursued.  These include but will not be limited to
co-production agreements as well as operational support such as sublet
office space from Ragtime at Los Angeles Center Studios;

5)   While not part of the Company's long-term strategy, sale of assets
such as intellectual property yet to be created will be pursued if
necessary.

                                     14


6)   Consultants will be used for necessary activities until such a time as
operational funding can allow for adding new hires.  Contracts will be
secured using either restricted or s-8 stock, depending on the nature of
the services provided.

7)   Capital recruitment between the entertainment and energy divisions is
nearly autonomous and differentiated.  Unless specified, funds that are
recruited will be earmarked for specific support and may not translate
equally across both divisions.  This will be determined by investor
requirement and will be subject to Board of Director approval.

Currently the Company has no commitment from any party to provide or make
funds available to it to meet these capital needs.  The Company is seeking
infusions of capital to help commence its operations.  At this point, the
Company will consider raising such capital through both equity and debt
financing.

Results of Operations

As of December 31, 2002, the Company had not generated any revenue, had
current assets of  $35, total current liabilities of $350,873, and an
accumulated deficit of $350,838.  Subsequent to year end, a significant
portion of the Company's resources have expended in investigating and
determining appropriate remedial actions necessary to address the failure
of specific members of the business development consulting team to fulfill
specific contractual obligations to the Company.  To date, the Company has
taken the following actions to address the problems created by these
breaches:

1.   Demanded return of 350,000 common shares (1,050,000 post forward 2003
     split) as a result of nonperformance of services;
2.   Terminated specific contracts;
3.   Elected not to renew certain expiring contracts;
4.   Negotiated extensions of critical contracts (such as the DreamCity
     acquisition);
5.   Established new essential business relationships;  and
6.   Launched a new investor relations campaign.

Recently Issued Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible Assets".  SFAS
No. 141 requires all business combinations initiated after June 30, 2001 be
accounted for using the purchase method.  In addition, companies are
required to review goodwill and intangible assets reported in connection
with prior acquisitions, possibly disaggregate and report separately
previously identified intangible assets, and in certain cases reclassify
certain intangible assets into goodwill.  SFAS No. 142 eliminates the
amortization of goodwill and requires that goodwill be reviewed annually
for impairment.  SFAS No. 142 also requires that the useful lives of
previously recognized intangible assets be reassessed and the remaining
amortization periods be adjusted accordingly.  SFAS No. 142 is effective
for fiscal years beginning after December 15, 2001 and affects all goodwill
and other intangible assets recorded on the Company's balance sheet at that
date, regardless of when the assets were initially recorded. The
implementation of SFAS No. 142 is not expected to have any impact on the
Company's results of operations or financial position.

                                     15


In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations".  SFAS No. 143 addresses accounting and reporting
for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs.  This statement is
effective for fiscal years beginning after June 15, 2002.  The
implementation of SFAS No. 143 is not expected to have any impact on the
Company's results of operations or financial position.

In August 2001, the FASB issued SFAS No. 144, which supercedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," and certain provisions of APB Opinion
No. 30, "Reporting the Results of Operations   Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." SFAS No. 144 retains the
fundamental provisions of SFAS No. 121 related to: (i) the recognition and
measurement of the impairment of long-lived assets to be held and used, and
(ii) the measurement of long-lived assets to be disposed by sale. It
provides more guidance on estimating cash flows when performing
recoverability tests, requires long-lived assets to be disposed of other
than by sale to be classified as held and used until disposal, and
establishes more restrictive criteria to classify long-lived assets as held
for sale. In addition, SFAS No. 144 supersedes the accounting and reporting
provisions of APB Opinion No. 30 for the disposal of a segment of a
business. However, it retains the basic provisions of APB Opinion No. 30 to
report discontinued operations separately from continuing operations and
extends the reporting of a discontinued operation to a component of an
entity. The implementation of SFAS No. 144 is not expected to have any
impact on the Company's results of operations or financial position.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses financial
accounting and reporting for costs associated with exit or disposal
activities and supersedes Emerging Issues Task Force ("EITF") Issue No. 94-
3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. In addition,
SFAS No. 146 establishes that fair value is the objective for initial
measurement of the liability. SFAS No. 146 is effective for exit or
disposal activities initiated after December 31, 2002, but early adoption
is permitted. The implementation of SFAS No. 146 is not expected to have
any impact on the Company's results of operations or financial position.

In October 2002, the FASB issued Statement of Financial Accounting
Standards No. 147 ("SFAS No. 147"), "Acquisitions of Certain Financial
Institutions - an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9." The provisions of this statement relate to the
application of the purchase method of accounting for all acquisitions of
financial institutions, except transactions between two or more mutual
enterprises. The provisions of this statement also relate to certain long-
term customer-relationship intangible assets recognized in an acquisition
of a financial institution, including those acquired in transactions
between mutual enterprises. The provisions of this statement are effective
on or after October 1, 2002. The implementation of SFAS No. 146 is not
expected to have any impact on the Company's results of operations or
financial position.

                                     16


In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based
Compensation", which amends SFAS No. 123 to provide alternative methods of
transaction for an entity that voluntarily changes to the fair value method
of accounting for stock based employee compensation.  It also amends the
disclosure provisions of SFAS No. 123 to require prominent disclosure about
the effects on reported net income of an entity's accounting policy
decisions with respect to stock based employee compensation.  Finally, SFAS
No. 148 amends APB Opinion No. 28, "Interim Financial Reporting", to
require disclosure of those effects in interim consolidated financial
statements.  SFAS No. 148 is effective for fiscal years ended after
December 15, 2002, but early adoption is permitted.  The Company will
continue to follow the provisions of APB Opinion No. 25 in recognizing
employee stock-based compensation; however, the Company will begin
following the disclosure requirements of SFAS No. 148 beginning in January
2003.

In November 2002, the FASB issued Interpretation No. 45 ("FIN No. 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others." FIN No. 45
expands on the accounting guidance of Statements No. 5, 57, and 107 and
incorporates without change the provisions of FASB Interpretation No. 34,
which is being superseded. FIN No. 45 will affect leasing transactions
involving residual guarantees, vendor and manufacturer guarantees, and tax
and environmental indemnities. All such guarantees will need to be
disclosed in the notes to the financial statements starting with the period
ending after December 15, 2002. For guarantees issued after December 31,
2002, the fair value of the obligation must be reported on the balance
sheet. Existing guarantees will be grandfathered and will not be recognized
on the balance sheet. The implementation of FIN No. 45 is not expected to
have any impact on the Company's results of operations or financial
position.

In January 2003, the FASB issued Interpretation No. 46 ("FIN No. 46"),
"Consolidation of Variable Interest Entities." FIN No. 46 expands upon and
strengthens existing accounting guidance that addresses when a company
should include in its financial statements the assets, liabilities and
activities of another entity. A variable interest entity is a corporation,
partnership, trust, or any other legal structure used for business purposes
that either (a) does not have equity investors with voting rights or (b)
has equity investors that do not provide sufficient financial resources for
the entity to support its activities. FIN No. 46 requires a variable
interest entity to be consolidated by a company if that company is subject
to a majority of the risk of loss from the variable interest entity's
activities or is entitled to receive a majority of the entity's residual
returns or both. The consolidation requirements of FIN No. 46 apply
immediately to variable interest entities created after January 31, 2003.
The consolidation requirements apply to older entities in the first fiscal
year or interim period beginning after June 15, 2003. Disclosure
requirements apply to any financial statements issued after January 31,
2003. The implementation of FIN No. 46 is not expected to have any impact
on the Company's results of operations or financial position.

ITEM 7.  FINANCIAL STATEMENTS

The information required hereunder is included in this report as set forth
in the "Table of Contents" on Page F-1.



                                     17











                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                                 __________




                     CONSOLIDATED FINANCIAL STATEMENTS
                   WITH REPORT OF INDEPENDENT ACCOUNTANTS
        as of December 31, 2002, and for the period from inception,
                   August 13, 2002, to December 31, 2002

























                                    F-1


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                             TABLE OF CONTENTS
                                 __________
                                                                       Page
                                                                       ----

  Report of Independent Accountants                                     F-3

  Consolidated Financial Statements:

     Consolidated Balance Sheet as of December 31, 2002                 F-4

     Consolidated Statement of Operations for the period from
     inception, August 13, 2002, to December 31, 2002                   F-5

     Consolidated Statement of Stockholders' Deficit for the period
     from inception, August 13, 2002, to December 31, 2002              F-6

     Consolidated Statement of Cash Flows for the period from
     inception, August 13, 2002, to December 31, 2002                   F-7

  Notes to Consolidated Financial Statements                            F-8


































                                    F-2


/Letterhead/

                     Report of Independent Accountants
                     ----------------------------------


To the Stockholders and Directors
Redwood Entertainment Group, Inc.


We have audited the accompanying consolidated balance sheet of Redwood
Entertainment Group, Inc. (a corporation in the development stage) as of
December 31, 2002, and the related consolidated statements of operations,
stockholders' equity and cash flows for the period from inception, August
13, 2002, to December 31, 2002.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based upon our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Redwood Entertainment Group, Inc. as of December 31, 2002, and
the consolidated results of its operations and its cash flows for the
period from inception, August 13 2002, to December 31, 2002, in conformity
with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.  As shown in
the financial statements and discussed in Note 2, the Company has incurred
significant recurring losses from operations since inception and is
dependent on outside sources of financing for continuation of its
operations.  These factors raise substantial doubt about the Company's
ability to continue as a going concern.  Management's plans with regard to
this matter are also discussed in Note 2.  These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.


                                     /s/ Ham, Langston & Brezina, L.L.P.



May 21, 2003
Houston, Texas







                                    F-3


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                         CONSOLIDATED BALANCE SHEET
                             December 31, 2002
                                 __________
<Table>
<Caption>
     ASSETS
     ------
<S>                                                           <C>
Current assets:
  Cash and cash equivalents                                   $          35
                                                               ------------
     Total current assets                                     $          35
                                                               ============


LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------

Current liabilities:
  Note payable to a bank                                      $      63,000
  Note payable to stockholder                                        49,672
  Accounts payable and accrued liabilities                           28,961
  Accounts payable assumed in recapitalization                      210,987
                                                               ------------
     Total current liabilities                                      352,620
                                                               ------------
Commitment and contingencies

Stockholders' deficit:
  Common stock, $.001 par value, 100,000,000 shares
     shares authorized, 5,351,228 shares issued and
     outstanding at December 31, 2002                                 5,351
  Additional paid-in capital                                      2,228,819
  Deferred compensation                                         (1,030,917)
  Losses accumulated during the development stage               (1,555,838)
                                                               ------------
     Total stockholders' deficit                                  (352,585)
                                                               ------------
     Total liabilities and stockholders' deficit              $          35
                                                               ============

</Table>














                The accompanying notes are an integral part
                 of the consolidated financial statements.
                                    F-4


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                    CONSOLIDATED STATEMENT OF OPERATIONS
    for the period from inception, August 13, 2002, to December 31, 2002
                                 __________

<Table>

  <S>                                                         <C>

  Operating, general and administrative expenses,
    except consulting expense                                 $      76,968
  Consulting expense                                              1,202,233
  Cost of recapitalization                                          273,987
  Interest expense                                                    2,650
                                                               ------------
     Net loss                                                 $ (1,555,838)
                                                               ============


Weighted average shares outstanding                               4,665,291
                                                               ============
Net loss per common share                                     $     (0.33)































</Table>






                The accompanying notes are an integral part
                 of the consolidated financial statements.
                                    F-5


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
              CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
    for the period from inception, August 13, 2002, to December 31, 2002
                                 __________

<Table>
<Caption>

                                                               Losses
                                                             Accumulated
                                    Additional               During the
                     Common Stock     Paid-In     Deferred   Development
                 Shares     Amount    Capital   Compensation   Stage        Total
               ---------------------------------------------------------------------
<S>            <C>         <C>      <C>         <C>          <C>         <C>
Balance at
 inception,
 August 13,
 2002                      $   -    $     -     $      -     $     -     $     -

Initial
 contribution
 to establish
 Energy
 Resource
 Management,
 Inc.                100       -         1,020         -           -          1,020

Recapitalization
 on August 26,
 2002
 (See Note 3)  4,446,128      4,446     (4,446)        -           -
                     -

Common stock
 issued in
 exchange for
 consulting
 services        905,000        905  2,232,245  (1,030,917)        -      1,202,233

Net loss            -          -          -            -      (1,555,838)(1,555,838)
               ---------------------------------------------------------------------
Balance at
 December
 31, 2002      5,351,228   $  5,351 $2,228,819 $(1,030,917) $(1,555,838) $ (352,585)
               =====================================================================

</Table>











                The accompanying notes are an integral part
                 of the consolidated financial statements.
                                    F-6


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                    CONSOLIDATED STATEMENT OF CASH FLOWS
    for the period from inception, August 13, 2002, to December 30, 2002
                                 __________

<Table>
<Caption>
  <S>                                                          <C>
Cash flows from operating activities:
  Net loss                                                     $(1,555,838)
  Adjustments to reconcile net loss to net
    cash used by operating activities
  Cost of recapitalization                                          273,987
  Amortization of deferred compensation                           1,202,233
  Changes in operating assets and liabilities:
    Accounts payable and accrued liabilities                         28,961
                                                               ------------
     Net cash provided (used) by operating activities              (50,657)
                                                               ------------
Cash flows from financing activities:
  Proceeds from stockholder advances                                 49,672
  Proceeds from sale of common stock                                  1,020
                                                               ------------
     Net cash provided by financing activities                       50,692
                                                               ------------
Net increase in cash and cash equivalents                                35

Cash and cash equivalents at beginning of period                       -
                                                               ------------
Cash and cash equivalents at end of period                     $         35
                                                               ============
</Table>

























                The accompanying notes are an integral part
                of these consolidated financial statements.
                                    F-7

                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

1.   Organization and Summary of Significant Accounting Policies
     -----------------------------------------------------------
     Redwood Entertainment Group Inc. (the "Company") is a Nevada
Corporation that intends to acquire companies operating in the
entertainment industry. The Company originally intended to engage in energy
marketing and providing energy related products and services to commercial,
industrial and manufacturing customers, as well as wholesale entities such
as municipalities, rural electric co-ops and local distribution companies;
however, a change in the Company's business plan was adopted (See Note 3).
The Company is considered a development stage enterprise because it
currently has no significant operations, has not yet generated revenue from
new business activities and is devoting substantially all of its efforts to
business planning and the search for sources of capital to fund its
efforts.

     The Company was originally incorporated as Energy Resource Management,
Inc. on August 13, 2002 and subsequently adopted a name change to Redwood
Energy Group, Inc. upon completion of a recapitalization on August 26,
2002.  The re-capitalization occurred when the Company acquired the non-
operating public shell of Gene-Cell, Inc.  Gene-Cell had no significant
assets or operations at the date of acquisition and the Company assumed all
liabilities that remained from its prior discontinued operation as a
biopharmaceutical research company.  The historical financial statements
presented herein are those of Redwood Entertainment Group, Inc. and its
predecessors, Redwood Energy Group, Inc. and Energy Resource Management,
Inc.

     The non-operating public shell used to recapitalize the Company was
originally incorporated as Becniel and subsequently adopted name changes to
Tzaar Corporation, Gene-Cell, Inc., Redwood Energy Group, Inc. and finally
its current name, Redwood Entertainment Group, Inc.

Following is a summary of the Company's significant accounting policies:

Significant Estimates
---------------------

     The preparation of consolidated 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 dates of the consolidated financial
statements and the reported amounts of revenues and expenses during the
periods.  Actual results could differ from estimates making it reasonably
possible that a change in the estimates could occur in the near term.

Principles of Consolidation
---------------------------
     The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries after elimination of all
significant intercompany accounts and transactions.

Cash and Cash Equivalents
-------------------------
     The Company considers all highly liquid short-term investments with an
original maturity of three months or less when purchased, to be cash
equivalents.

                                 Continued
                                    F-8


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

1.   Organization and Summary of Significant Accounting Policies, continued
     -----------------------------------------------------------

     Income Taxes
     ------------
     The Company uses the liability method of accounting for income taxes.
Under this method, deferred income taxes are recorded to reflect the tax
consequences on future years of temporary differences between the tax basis
of assets and liabilities and their financial amounts at year-end.  The
Company provides a valuation allowance to reduce deferred tax assets to
their net realizable value.

     Stock-Based Compensation
     ------------------------
     Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123") established financial accounting and
reporting standards for stock-based employee compensation plans.  It
defined a fair value based method of accounting for an employee stock
option or similar equity instrument and encouraged all entities to adopt
that method of accounting for all of their employee stock compensation
plans and include the cost in the income statement as compensation expense.
However, it also allows an entity to continue to measure compensation cost
for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees".  The Company accounts for
compensation cost for stock option plans in accordance with APB Opinion No.
25.

     Loss Per Share
     --------------
     Basic and diluted net loss per share is computed on the basis of the
weighted average number of shares of common stock outstanding during each
period.  Potentially dilutive options that were outstanding during 2002
were not considered in the calculation of diluted earnings per share
because the Company's net loss rendered their impact anti-dilutive.
Accordingly, basic and diluted loss per share were identical for the period
from inception, August 13, 2002, to December 31, 2002.

     Fair Value of Financial Instruments
     -----------------------------------
     The Company includes fair value information in the notes to
consolidated financial statements when the fair value of its financial
instruments is different from the book value.  When the book value
approximates fair value, no additional disclosure is made.

     Comprehensive Income
     --------------------
     The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income, which requires a company
to display an amount representing comprehensive income as part of the
Company's basic consolidated financial statements.  Comprehensive income
includes such items as unrealized gains or losses on certain investment
securities and certain foreign currency translation adjustments.  The
Company's consolidated financial statements include none of the additional
elements that affect comprehensive income.  Accordingly, comprehensive
income and net income are identical.

                                 Continued
                                    F-9


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

1.   Organization and Summary of Significant Accounting Policies, continued
     ------------------------------------------------------------
     Recently Issued Accounting Pronouncements
     -----------------------------------------

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible Assets".  SFAS
No. 141 requires all business combinations initiated after June 30, 2001 to
be accounted for using the purchase method.  In addition, companies are
required to review goodwill and intangible assets reported in connection
with prior acquisitions, possibly disaggregate and report separately
previously identified intangible assets, and in certain cases reclassify
certain intangible assets into goodwill.  SFAS No. 142 eliminates the
amortization of goodwill and requires that goodwill be reviewed annually
for impairment.  SFAS No. 142 also requires that the useful lives of
previously recognized intangible assets be reassessed and the remaining
amortization periods be adjusted accordingly.  SFAS No. 142 is effective
for fiscal years beginning after December 15, 2001 and affects all goodwill
and other intangible assets recorded on the Company's balance sheet at that
date, regardless of when the assets were initially recorded. The
implementation of SFAS No. 142 did not have any impact on the Company's
results of operations or financial position.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations".  SFAS No. 143 addresses accounting and reporting
for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs.  This statement is
effective for fiscal years beginning after June 15, 2002.  The
implementation of SFAS No. 143 is not expected to have any impact on the
Company's results of operations or financial position.

In August 2001, the FASB issued SFAS No. 144, which supercedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," and certain provisions of APB Opinion
No. 30, "Reporting the Results of Operations   Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." SFAS No. 144 retains the
fundamental provisions of SFAS No. 121 related to: (i) the recognition and
measurement of the impairment of long-lived assets to be held and used, and
(ii) the measurement of long-lived assets to be disposed by sale. It
provides more guidance on estimating cash flows when performing
recoverability tests, requires long-lived assets to be disposed of other
than by sale to be classified as held and used until disposal, and
establishes more restrictive criteria to classify long-lived assets as held
for sale. In addition, SFAS No. 144 supersedes the accounting and reporting
provisions of APB Opinion No. 30 for the disposal of a segment of a
business. However, it retains the basic provisions of APB Opinion No. 30 to
report discontinued operations separately from continuing operations and
extends the reporting of a discontinued operation to a component of an
entity. The implementation of SFAS No. 144 is not expected to have any
impact on the Company's results of operations or financial position.



                                 Continued
                                    F-10



                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

1.   Organization and Summary of Significant Accounting Policies, continued
     ----------------------------------------------------------------------
     Recently Issued Accounting Pronouncements continued
     ---------------------------------------------------

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses financial
accounting and reporting for costs associated with exit or disposal
activities and supersedes Emerging Issues Task Force ("EITF") Issue No. 94-
3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. In addition,
SFAS No. 146 establishes that fair value is the objective for initial
measurement of the liability. SFAS No. 146 is effective for exit or
disposal activities initiated after December 31, 2002, but early adoption
is permitted. The implementation of SFAS No. 146 is not expected to have
any impact on the Company's results of operations or financial position.

     In October 2002, the FASB issued Statement of Financial Accounting
Standards No. 147 ("SFAS No. 147"), "Acquisitions of Certain Financial
Institutions - an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9." The provisions of this statement relate to the
application of the purchase method of accounting for all acquisitions of
financial institutions, except transactions between two or more mutual
enterprises. The provisions of this statement also relate to certain long-
term customer-relationship intangible assets recognized in an acquisition
of a financial institution, including those acquired in transactions
between mutual enterprises. The provisions of this statement are effective
on or after October 1, 2002. The implementation of SFAS No. 146 is not
expected to have any impact on the Company's results of operations or
financial position.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock
Based Compensation", which amends SFAS No. 123 to provide alternative
methods of transaction for an entity that voluntarily changes to the fair
value method of accounting for stock based employee compensation.  It also
amends the disclosure provisions of SFAS No. 123 to require prominent
disclosure about the effects on reported net income of an entity's
accounting policy decisions with respect to stock based employee
compensation.  Finally, SFAS No. 148 amends APB Opinion No. 28, "Interim
Financial Reporting", to require disclosure of those effects in interim
consolidated financial statements.  SFAS No. 148 is effective for fiscal
years ended after December 15, 2002, but early adoption is permitted.  The
Company will continue to follow the provisions of APB Opinion No. 25 in
recognizing employee stock-based compensation; however, the Company will
begin following the disclosure requirements of SFAS No. 148 beginning in
January 2003.



                                 Continued
                                    F-11


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

1.   Organization and Summary of Significant Accounting Policies, continued
     ----------------------------------------------------------------------
     Recently Issued Accounting Pronouncements continued
     ---------------------------------------------------
     In November 2002, the FASB issued Interpretation No. 45 ("FIN No.
45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others." FIN No. 45
expands on the accounting guidance of Statements No. 5, 57, and 107 and
incorporates without change the provisions of FASB Interpretation No. 34,
which is being superseded. FIN No. 45 will affect leasing transactions
involving residual guarantees, vendor and manufacturer guarantees, and tax
and environmental indemnities. All such guarantees will need to be
disclosed in the notes to the financial statements starting with the period
ending after December 15, 2002. For guarantees issued after December 31,
2002, the fair value of the obligation must be reported on the balance
sheet. Existing guarantees will be grandfathered and will not be recognized
on the balance sheet. The implementation of FIN No. 45 is not expected to
have any impact on the Company's results of operations or financial
position.

     In January 2003, the FASB issued Interpretation No. 46 ("FIN No. 46"),
"Consolidation of Variable Interest Entities." FIN No. 46 expands upon and
strengthens existing accounting guidance that addresses when a company
should include in its financial statements the assets, liabilities and
activities of another entity. A variable interest entity is a corporation,
partnership, trust, or any other legal structure used for business purposes
that either (a) does not have equity investors with voting rights or (b)
has equity investors that do not provide sufficient financial resources for
the entity to support its activities. FIN No. 46 requires a variable
interest entity to be consolidated by a company if that company is subject
to a majority of the risk of loss from the variable interest entity's
activities or is entitled to receive a majority of the entity's residual
returns or both. The consolidation requirements of FIN No. 46 apply
immediately to variable interest entities created after January 31, 2003.
The consolidation requirements apply to older entities in the first fiscal
year or interim period beginning after June 15, 2003. Disclosure
requirements apply to any financial statements issued after January 31,
2003. The implementation of FIN No. 46 is not expected to have any impact
on the Company's results of operations or financial position.

2.   Going Concern Considerations
     ----------------------------

     The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern.  The Company is presently a
shell company and has limited operations and resources.  The Company has a
net loss of $1,555,838 for the period from inception, August 13, 2002, to
December 31, 2002. Additionally, at December 31, 2002, the Company is in a
negative working capital and stockholders' deficit position of $352,585.
Such matters raise substantial doubt about the Company's ability to
continue as a going concern.  These financial statements do not include any
adjustment that might result from the outcome of this uncertainty.


                                 Continued
                                    F-12


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

2.   Going Concern Considerations, continued
     ---------------------------------------

     The Company plans to develop into a premier independent multimedia
entertainment company.  To this end, during the first quarter 2003, the
Company entered into an agreement to acquire DreamCity Entertainment.
While the Company has, to date, been unable to fulfill all of its
obligations under the agreement, the Company is working to renegotiate the
terms of the agreement to allow it to go forward.  The Company believes the
acquisition of DreamCity Entertainment would provide the Company a solid
operation on which to implement its business plan. However, The Company's
plan may require substantial amounts of capital.

     There can be no assurances that the Company will be able to raise
adequate short-term capital to sustain its current operations as a
development stage company, that the Company can raise adequate long-term
capital from private placement of its common stock or private debt to
complete a strategic acquisition of an entertainment company such as the
DreamCity Entertainment, nor that the Company can implement its business
plan after an acquisition in the entertainment industry.  There can also be
no assurances that the Company will ever attain profitability.  The
Company's long-term viability as a going concern is dependent upon certain
key factors, as follows:

     -    The Company's ability to obtain adequate sources of funding to
          sustain it during the development stage.  Sources of funding may
          not be available on terms that are acceptable to the Company and
          existing stockholders, or may include terms that will result in
          substantial dilution to existing stockholders.

     -    The ability of the Company to implement its business plan and
          become a viable entertainment company.

     -    The ability of the Company to ultimately achieve adequate
          profitability and positive cash flows to sustain its operations.


3.   Recapitalization
     ----------------
     On August 26, 2002, Gene-Cell, Inc. entered into an agreement and Plan
of Reorganization (the "Agreement") whereby the Company agreed to acquire
all of the issued and outstanding shares of Energy Resource Management,
Inc. ("ERM") in exchange for 4,000,000 restricted common shares.  The
Agreement represented a re-capitalization of ERM with accounting treatment
similar to that used in a reverse acquisition, except that no goodwill or
intangible is recorded. A re-capitalization is characterized by the merger
of a private operating company into a non-operating public shell
corporation with nominal net assets and typically results in the owners and
managers of the private company having effective or operating control after
the transaction.  ERM, the private operating company, emerged as the
surviving financial reporting entity under the Agreement, but Gene-Cell,
Inc. remained as the legal reporting entity. The accompanying financial
statements present the historical financial results of ERM.

     Subsequent to the recapitalization, the name of Gene-Cell, Inc. was
changed to Redwood Energy Group, Inc. and then its current name, Redwood
Entertainment Group, Inc.
                                 Continued
                                    F-13


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________


3.   Recapitalization, continued
     ---------------------------

     The consideration given by the Company in the recapitalization was
approximately $274,000 and was to be achieved through the assumption of a
note payable, accounts payable and accrued liabilities of the public shell.
The 4,000,000 shares of common stock issued by the Company is currently
held in escrow and will not be issued to the stockholder of ERM until
certain debts assumed in the re-capitalization, totaling approximately
$65,000, have been satisfied by ERM.

4.   Note Payable to a Bank
     ----------------------
     Note payable to a bank at December 31, 2002 consists of amounts due
under a $60,000 revolving line of credit, bearing interest at 11.75% per
year and due on demand.  This line of credit is collateralized by the
guarantees of certain primary stockholders. This note was assumed in
connection with the recapitalization of the Company.

5.   Note Payable to Stockholder
     ---------------------------

     Note payable to a stockholder represents advances made by a Robert
Gower to allow the Company to meet certain obligations in the ordinary
course of business. The note is on informal terms and bears no stated rate
of interest.

6.   Accounts Payable and Accrued Liabilities
     ----------------------------------------

     Accounts payable and accrued liabilities at December 31, 2002 consists
of the following:

     Accounts payable                                       $   23,961
     Accrued interest and other liabilities                      5,000
                                                            ----------
          Total                                             $   28,961
                                                            ==========

     Accounts payable assumed in the recapitalization of the Company
represent trade payables of the public shell company that were assumed as a
condition of the recapitalization. Such payables were incurred by Gene-
Cell, Inc. prior to August 26, 2002.

7.   Income Taxes
     ------------

     The composition of deferred tax assets and the related tax effects at
December 31, 2002 are as follows:

     Benefit from carryforward of net operating loss         $ 947,920

     Less valuation allowance                                 (947,920)
                                                             ----------
          Net deferred tax asset                             $    -
                                                             ==========
                                 Continued
                                     14


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

7.   Income Taxes, continued
     -----------------------

     The difference between the income tax benefit in the accompanying
statement of operations and the amount that would result if the U.S.
Federal statutory rate of 34% were applied to pre-tax loss for the period
from inception, August 13, 2002, to December 31, 2002 is as follows:

                                                                 Percentage
                                                                 of Pre-Tax
                                                       Amount       Loss
                                                     ----------  ----------
     Benefit for income tax at federal statutory rate$ 528,985      34.0%
     Non-deductible compensation                      (408,759)     26.3
     Non-deductible recapitalization costs            ( 93,155)      6.0
     Increase in valuation allowance                  ( 27,071)    ( 1.7)
                                                     ----------  ----------
       Total                                         $    -          -    %
                                                     ==========  ==========

     At December 31, 2002, for federal income tax and alternative minimum
tax reporting purposes, the Company has approximately $2,788,000 of unused
net operating losses available for carryforward to future years.  The
benefit from carryforward of such net operating losses will expire in
various years between 2011 and 2022.  The benefit from utilization of net
operating loss carryforwards incurred prior to August 26, 2002 was
significantly limited in connection with a recapitalization (See Note 3).
Such benefit could be subject to further limitations if significant future
ownership changes occur in the Company.  The Company currently believes
that a significant portion of its unused net operating loss carryforwards
will never be utilized due to expiration or limitations on use due to
ownership changes.

8.   Lease Commitments
     -----------------

     During the period from October 1, 2002 to December 31, 2002, the
Company leased office space under a short-term operating sub-lease
agreement. The lease expired on December 31, 2002 and has not been renewed.
The Company is currently considering its facilities requirements and has
not yet determined when an office space lease will be initiated. Rental
expense for operating leases was $4,500 during the period from inception,
August 13, 2002, to December 31, 2002.

9.   Stockholders' Equity
     --------------------
     During the period from inception, August 13, 2002, to December 31,
2002, the Company issued shares of its common stock to compensate
consultants as follows:

     -    On August 26, 2002 the Company entered into the recapitalization
          transaction under which the Company agreed to acquire all of the
          issued and outstanding common stock of Energy Resource
          Management, Inc. ("ERM") in exchange for 4,000,000 shares of the
          Company's common stock (See Note 3).

                                 Continued
                                    F-15


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

9.   Stockholders' Equity, continued
     -------------------------------

     -    On August 26, 2002 and September 30, 2002 the Company entered
          into consulting agreements with five consultants for services
          related to business strategy and business development.  The
          consulting agreements have a term of two to three months and
          required the Company to issue 905,000 shares of common stock
          valued at $2,232,150 based on the quoted market price on the
          dates of the transactions.  The transactions resulted in a charge
          to consulting expense of $1,202,233 for the period from
          inception, August 13, 2002, to December 31, 2002 and deferred
          compensation, presented as an increase in stockholders' deficit
          of $1,030,917, at December 31, 2002.

     Subsequent to December 31, 2002, the Company demanded return of
350,000 shares of common stock issued under the consulting agreements as a
result of nonperformance of services and failure by specific members of the
Company's business development consulting team to fulfill specific
contractual obligations to the Company.  The response to the Company's
demand is not yet known.

     Effective March 3, 3003 the Company adopted a 3 to 1 forward stock
split.  This stock split has not been reflected in the accompanying
financial statements because it was not effective at the balance sheet
date.


10.  Stock Options and Warrants
     --------------------------

     Gene-Cell, Inc., the public shell Company, used in the
recapitalization of ERM periodically issued incentive stock options to key
employees, officers, and directors to provide additional incentives to
promote the success of the Company's business and to enhance the ability to
attract and retain the services of qualified persons.  The issuance of such
options were approved by the Board of Directors.  The exercise price of an
option granted was determined by the fair market value of the stock on the
date of grant.

     The Company elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in its accounting for employee stock options because, as
discussed below, the alternative fair value accounting provided for under
FASB Statement No. 123, "Accounting for Stock-Based Compensation", requires
use of option valuation models that were not developed for use in valuing
employee stock options.  Under APB 25, because the exercise price of the
Company's employee stock options was greater than or equals the market
price of the underlying stock on the date of grant, no compensation expense
was recognized.

     At the time of the recapitalization, all stock options were fully
vested and exercisable. Following is a summary of outstanding stock options
at December 31, 2002:


                                 Continued
                                    F-16


                     REDWOOD ENTERTAINMENT GROUP, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 __________

10.  Stock Options and Warrants, continued
     ------------------------------------

                                            Remaining
                                            Contractual
							  Number of
 Shares      Expiration Date    Life (Years)Exercise Price
       231   July 2007             4.5      $32.50
     1,361   July 2007             4.5      $13.00
     1,154   March 2008            5.3      $65.00
       125   June 2008             5.5      $65.00
       125   June 2009             6.5      $65.00
       129   June 2010             7.5      $65.00
       391   April 2011            8.3      $65.00
       340   June 2011             8.5      $65.00
    24,302   August 2011           8.6      $22.75
    32,769   February 2012         9.2      $13.00
     5,769   February 2012         9.2      $13.00
    31,538   July 2012             9.5      $ 3.25
             ------
    98,234   Weighted average exercise price          $13.53
             ======

     Gene-Cell, the public company used in the recapitalization of ERM, had
also issued stock warrants to investors prior to the recapitalization,
which remain outstanding at December 31, 2002.  Based upon such issuances,
at December 31, 2002 the Company has outstanding, warrants to acquire
30,077 shares of the Company's common stock at $130 per share.  These
outstanding warrants are exercisable through November 2005.









                                    F-17



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

None.

                                  PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

<Table>
<Caption>

Name                Age       Position                   Director or Officer Since
----------------    ------    -------------------        -------------------------
<S>                 <C>       <C>                        <C>
Brian R. Davis      47        Chairman of the Board of   January 1997
                              Directors, Secretary,
                              Treasurer,

Kathy Procopio      48        Director                   January 2003

Whitney Farmer      38        Director, President,       January 2003
                              CEO, CFO

Michael Davis       39        Director, President of     May 2003
                              DreamCity Entertainment


</Table>
The Company currently has a vacant seat on the Board of Directors.

The following sets forth certain biographical information relating to the
Company's Officers and Directors:

Brian R. Davis, Ph.D., Chairman of the Board,  Secretary, Treasurer .
Dr. Davis is a co-founder of Gene-Cell. Dr. Davis currently holds the
position of Adjunct Associate Professor, Department of Microbiology &
Immunology Department of Internal Medicine at the University of Texas
Medical Branch ("UTMB"). From 1995 to 2000, Dr. Davis held the position of
Associate Professor, Department of Microbiology & Immunology Department of
Internal Medicine  and Senior Scientist, Sealy Center for Oncology &
Hematology also at UTMB. Prior to joining UTMB, Galveston in 1995, Dr.
Davis was a Visiting Scholar at the Department of Molecular Microbiology &
Immunology at the Johns Hopkins School of Public Health in Baltimore
Maryland (1994-1995) and spent nine years as Scientist at the Institute of
Cancer Research/ Geraldine Brush Cancer Research Institute in San
Francisco, holding the positions of Acting Director and Associate
Director(1986-1995). Dr. Davis received his A.B. summa cum laude from
Harvard University in 1976, received his Ph.D. from California Institute of
Technology in 1980, and conducted his postdoctoral training at the
University of California, Irvine from 1982-1986. Dr. Davis has an extensive
list of publications in the fields of hematopoiesis and retrovirology.

                                     35


Kathy Procopio,  Ph.D, Director. Dr. Procopio has extensive experience in
financial services with 22 years in the marketplace.  Her background
includes working for Drexel Burnham Lambert stock brokerage in Mike
Milken's office as administrative supervisor and managing 60 sales support
staff.  Dr. Procopio provided executive oversight for a billionaire heiress
who provides financial services for high profile clients.  Asset management
for these portfolios was in excess of $250,000,000.00 from approximately 50
different accounts.  For the past 12 years, Dr. Procopio has been the owner
of a branch of Primerica, an asset management/financial services company.
She recruited and trained a sales force that grew to over 60 licensed
agents representing nearly 1000 clients with approximately $10,000,000.00
in assets under administration.

Whitney Farmer, Director, President and Chief Executive Officer.  Ms.
Farmer received her B.S. with Honors and M.B.A. from Western Washington
University in Bellingham, Washington.  Originally a mortgage banker with
Lynnwood Mortgage Corporation (now Golf Savings Bank), her client base
included a range from builder/developer packaging to high risk first time
homebuyers.  She has served in executive volunteer/Board of Director
capacities for the American Heart Association, American Cancer Society, and
Washington State Omnibus Bill AIDS Task Force, and has launched three
different private sector internship programs in Washington State.  As a
consultant for ACT, Incorporated, she authored a Strategic Plan for
California State specifically addressing Los Angeles Unified School
District.  Her further consulting work in the greater Los Angeles area has
concentrated on integrating non-profit/educational/charitable objectives
with entertainment sector companies and foundations.  Immediately prior to
beginning with Redwood Entertainment Group, Inc., Ms. Farmer was Vice
President of Internal Development for Duke Media.  In this endeavor, she
recruited capital and other resources for both live action and animated
projects, and developed public/private partnerships domestically and
internationally.

Michael Davis, Director, President of DreamCity Entertainment. Mr. Davis is
an artist, entrepreneur, educator, and mentor.  Originally an illustrator,
Mr. Davis graduated from the High School of Art and Design and subsequently
Pratt University.  His clients have included CBS, NBC, Nike, Smirnoff,
Marvel, and DC Comics.  He was the Artistic Director of the Art Carnival at
the Museum of Modern Art in New York City.  Through that program and his
mentor program, his students are representative of who would become the
most highly regarded professionals in animation, comics, and illustration.
He was selected as the first to illustrate ETC, the first project of
Piranha Press of DC Comics.  In cooperation with three other partners, Mr.
Davis co-founded Milestone Media.  Milestone was sold in a distribution
deal to Time-Warner in what was at the time the first ever done by Time-
Warner with a Black-owned company.  Since its debut in 1993, Milestone has
sold over 10 million copies worldwide of its publications featuring a
universe of multicultural characters and making it the biggest Black comic
book publisher in the world.  One of the Milestone properties, "Static
Shock!", became the hit WBKids television show which for the last three
years has usually captured a #1 viewership ranking and was nominated for
two 2002 Emmys.   After selling Milestone, Mr. Davis was recruited as
President/CEO of Motown Film and Animation, a new venture of Motown Records
wherein Mr. Davis reported directly to Jeryl Busby, President of Motown,
and Clarence Avant, Chair of Motown.  As CEO, Michael created and placed
into development shows at Disney, ABC, Fox, and Nickelodeon.  As an
educator, Mr. Davis created Action Files for Simon & Schuster, at the time
the only comics-based curriculum reading program taught in any school
system.  His mentor program was recognized with proclamations from the
cities of Los Angeles, New York, and East Orange.  Mr. Davis created the

                                     36


Magic Media reading program, a joint venture with Magic Johnson Enterprises
and RKO Magic, a joint venture with of Magic Johnson Entertainment and RKO
Pictures that reinterprets the historic catalog of RKO intellectual
properties for the modern urban multicultural market.   As a speaker, Mr.
Davis has been the keynote speaker for the New York United Federation of
Art Teachers and the Federal Bureau of Investigation.  In 1997, Mr. Davis
was named Mentor of the Year by  Mentor magazine.  He has been profiled in
Black Enterprise magazine, the New York Daily News, the New York Times, and
by CNN, The Today Show, MTV, and BET.  In 1997, the Stockton School in East
Orange, New Jersey (a k-6 magnet school for film, television, animation,
and radio, renamed the Gordon Parks School), renamed their auditorium The
Michael Davis Auditorium.

Dependence Upon Key Personnel
-----------------------------

Company's ability to achieve success will depend, in part, upon its ability
to attract and retain highly qualified people in the various areas of
management while maintaining relationships with leading sector identities.
Michael Davis, President of DreamCity, and Robert Gower, are essential in
achieving the revenue generating goals of the firm.  Mr. Davis has made a
contractual three year commitment to the Company.  President and CEO
Whitney Farmer is essential in her role of creating and executing a
sustainable capital structure strategy that will sufficiently support
operations and provide for revenue to be generated through implementing
the Company's entertainment and energy marketing business plans.  The loss
of these key individuals may adversely affect the Company's business and
prospects. Moreover, none of these key personnel has been received cash
compensation for services rendered to the Company.  It is unclear how much
longer the Company will be able to continue to retain the services of these
key individuals without an infusion of additional capital.  The Company
carries no key man life insurance binder until such a time that sufficient
operational capital is secured to provide for this coverage.

Family Relationships
--------------------

None.  As a clarification, the Michael Davis currently on record as a Board
member and President of DreamCity Entertainment is a different individual
from former Gene-Cell Board member Michael R. Davis, brother to current
Board Chair Dr. Brian R. Davis.

Compliance with Section 16(a) of the Exchange Act

Directors and executive officers are required to comply with Section 16(a)
of the Securities Exchange Act of 1934, which requires generally that such
persons file reports regarding ownership of and transactions in securities
of the Company on Forms 3, 4, and 5.  A Form 3 is an initial statement of
ownership of securities, which is to be filed by the officers and directors
owning shares in the Company within 10 days after the effective date of the
Company's filing on Form 10-SB.    Form 4 is to report changes in
beneficial ownership and is due on or before the tenth day of the month
following any month in which they engage in any transaction in the
Company's common stock.  Form 5 covers annual statement of changes in
beneficial ownership, which is due 45 days after the fiscal year end of the
Company.

                                     37



ITEM 10.  EXECUTIVE COMPENSATION

<Table>
<Caption>
                              SUMMARY COMPENSATION TABLE

                  Annual Compensation                       Long Term Compensation
                  -------------------                       ----------------------
                                                    Awards                  Payouts
                                                    ------                  -------
Name                                       Other    Restr                   All
and                                        Annual   icted                   Other
Principal                           Bonus  Compen   Stock   Options LTIP    Compen
Position          Year   Salary     $      sation   Awards  /SARs   Payout  sation
------------------------------------------------------------------------------------
<S>               <C>    <C>        <C>    <C>      <C>     <C>     <C>     <C>
Robert Gower      2002   $14,000    $-0-   $-0-     -0-     -0-     $-0-    $-0-
Former CEO

Brian R. Davis    2002   -0-        -0-    -0-      -0-     86,498* -0-     -0-
Director,
  Former CEO      2001   178,000    -0-    -0-      -0-     8,569   -0-     -0-
                  2000    77,329    -0-    -0-      -0-     -0-     -0-     -0-

</Table>
* These options were granted as reimbursement for expenses accrued on
behalf of the Company by Dr. Davis. The value of these shares upon is
estimated as 26,615 at a value of $3.25 per share.

Compensation of Directors

There are no compensation plans in place for directors of the Company.

Employment Contracts and Termination of Employment and Change in Control
Arrangement

None.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of December 31, 2002, the name and the
number of shares of the Company's Common Stock, par value $.001 per share,
held of record or beneficially by each person who held of record, or was
known by the Company to own beneficially, more than 5% of the 5,351,288
issued and outstanding shares of the Company's Common Stock, and the name
and shareholdings of each director and of all officers and directors as a
group.


                                     38


<Table>
<Caption>

Title of       Name and Address of      Amount and Nature of
Class          Beneficial Owner         Beneficial Ownership(2)Percentage of Class
------------------------------------------------------------------------------------
<S>            <C>                      <C>                   <C>
Common         Brian R. Davis (1)(3)     93,931               1.7%
               8606 Arranmore Lane
               Houston, TX 77095

Common         Michael Davis(1)         -0-                   -0-
               172-32 133rd Avenue
               Queens, New York 11434

Common         Whitney Farmer(1)             -0-              -0-
               18630 Burbank Blvd.,
               Suite 115
               Tarzana, CA 91356

Common         Robert Gower             4,000,000             74.75%
               1709 Meadowbrook Road
               Altadena, CA 91001

Common         Dr. Kathy Procopio(1)         -0-              -0-
               9778 Katella Ave.,
               Suite 114
               Anaheim, CA 92804
------------------------------------------------------------------------------------
Common         Officers, Directors and                        76.45%
               Nominees as a Group:
               4persons
------------------------------------------------------------------------------------
</Table>

(1) Officer and/or Director of the Company

(2) The term "beneficial owner" refers to both the power of investment (the
right to buy and sell) and rights of ownership (the right to received
distributions from the company and proceeds from sales of the shares).
Inasmuch as these rights or shares may be held by more than one person,
each person who has a beneficial ownership interest in shares is deemed the
beneficial owners of the same shares because there is shared power of
investment or shared rights of ownership.

                                     39


(3) This number reflects shares held by B.R. Davis Investment Ltd. which
holds approximately 55,985 shares and B.R. Davis IRA c/o Trust Co. of
America which holds approximately 2,754 shares.  This number also includes
stock options, that have or will vest in the next 60 days, to purchase up
to 35,192 shares.

To the Company's knowledge, there are no arrangements which would result in
a change in control of the Company.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.

PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Reports on Form 8-K
On October 25, 2002, the Company filed an amendment to a Current Report it
initially filed on August 27, 2002 disclosing the acquisition of Energy
Resource Management, Inc. ("ERMI").  The purpose of this amended Current
Report was to  provide additional disclosure regarding the business of
ERMI, and to provide relevant financial information including audited
financial information for both the Company and ERMI and pro-forma financial
statements.
(b)  Exhibits:
Exhibit 99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.


ITEM 14.  CONTROLS AND PROCEDURES

(a)  Evaluation of Disclosure Controls and Procedures.  The Company's Chief
Executive Officer and Chief Financial Officer has conducted an evaluation
of the Company's disclosure controls and procedures as of a date (the
"Evaluation Date") within 90 days before the filing of this annual report.
Based on their evaluation, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the applicable Securities and
Exchange Commission rules and forms.

(b)  Changes in Internal Controls and Procedures.  Subsequent to the
Evaluation Date, there were no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls, nor were any corrective actions required with regard to
significant deficiencies and material weaknesses.

                                     40


                       SIGNATURES AND CERTIFICATIONS

In accordance with the Exchange Act, the Registrant has caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.


                                   REDWOOD ENTERTAINMENT GROUP, INC.


May 22, 2003                       By: /s/ Whitney Farmer
                                   ----------------------------------
                                   Whitney Farmer,
                                   President, Chief Executive Officer,
                                   and Chief Financial Officer
















































                                     41


                CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Whitney
Farmer, certify that:

(1) I have reviewed this annual  report on Form 10-KSB of Redwood
Entertainment Group, Inc., (the "Company");

(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual  report;

(3) Based on my knowledge, the financial statements, and other financial
information included in this annual  report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the Company as of, and for, the periods presented in this annual  report;

(4) I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
Company and have:

     (a) designed such disclosure controls and procedures to ensure that
material information relating to the Company is made known to us by others
within those entities, particularly during the period in which this annual
report is being prepared;
     (b) evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
     (c) presented in this annual  report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

(5) I have disclosed, based on my most recent evaluation, to the Company's
auditors and the audit committee of the Company's board of directors (or
persons fulfilling the equivalent function):

     (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's ability to
record, process, summarize and report financial data and have identified
for the Company's auditors any material weaknesses in internal controls;
and
     (b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal
controls; and

(6) I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


Date: May 22, 2003            By: /s/Whitney Farmer
                              ---------------------------
                              Whitney Farmer, Principal Executive Officer



                                     42


                CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Whitney
Farmer, certify that:

(1) I have reviewed this annual  report on Form 10-KSB of Redwood
Entertainment Group, Inc., (the "Company");

(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual  report;

(3) Based on my knowledge, the financial statements, and other financial
information included in this annual  report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the Company as of, and for, the periods presented in this annual  report;

(4) I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
Company and have:

     (a) designed such disclosure controls and procedures to ensure that
material information relating to the Company is made known to us by others
within those entities, particularly during the period in which this annual
report is being prepared;
     (b) evaluated the effectiveness of the Company's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
     (c) presented in this annual  report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

(5) I have disclosed, based on my most recent evaluation, to the Company's
auditors and the audit committee of the Company's board of directors (or
persons fulfilling the equivalent function):

     (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's ability to
record, process, summarize and report financial data and have identified
for the Company's auditors any material weaknesses in internal controls;
and
     (b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal
controls; and

(6) I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


Date: May 22, 2003            By: /s/ Whitney Farmer
                              ---------------------------------------
                              Whitney Farmer, Principal Financial Officer