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RED GIANT ENTERTAINMENT, INC.
0001411179
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<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Management
has evaluated subsequent events through December 27, 2012. There was no event of which management was aware that occurred after
the balance sheet date that would require any adjustment to, or disclosure in, the accompanying consolidated financial statements.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Benny
Powell was an officer and director of both parties to the merger. See Note 1. Mr. Powell continues as the Company’s sole
officer and director post merger. Mr. Powell also provides rent and other services to the Company through his other ventures.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company has 100,000,000 shares of preferred stock authorized and none have been issued.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company has 900,000,000 shares of common stock authorized, of which 434,922,000 shares are issued and outstanding. All shares
of common stock are non-assessable and non-cumulative, with no preemptive rights.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">During
the eight months ended, August 31, 2012, $10,869 of contributed capital was added to additional paid in capital.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">In
June, 2012, Castmor Resources Ltd., entered into Share Exchange Agreement (the “Share Exchange Agreement”) with Red
Giant Entertainment Inc., (“RGE”), and Benny Powell, who had owned 100% of the issued and outstanding shares in RGE.
Pursuant to the terms and conditions of the Share Exchange Agreement, RGE exchanged 100% of the outstanding shares in RGE for
forty million (240,000,000 post split) newly-issued restricted shares of the Company’s common stock. Due to the recapitalization
and reverse merger of Castmor Resources Ltd, an additional 32,487,000 (194,922,000 post split) shares were issued. The Company
approved a 6 to 1 stock split of all shares issued in June of 2012. <font style="color: windowtext">All share information has
been restated for both the reverse merger and the forward stock split for all periods presented. </font></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Income
taxes are provided based upon the liability method. Under this approach, deferred income taxes are recorded to reflect the tax
consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts
at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has
met the “more likely than not” standard imposed by accounting standards to allow recognition of such an asset.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">At
August 31, 2012, the Company had net deferred tax assets calculated at an expected rate of 34%, noted in the table below, of approximately
$2,400. <i> </i>As management of the Company cannot determine that it is more likely than not that the Company will realize the
benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset was recorded at August 31, 2012.</font></p>
<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
significant components of the net deferred tax asset calculated with the estimated effective income tax rate at August 31, 2012
and December 31, 2011 were as follows:</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"></font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
<tr>
<td style="vertical-align: top"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: top; font: italic 10pt Times New Roman, Times, Serif"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: top"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="vertical-align: top"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 12pt Calibri, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top">
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 10pt Arial, Helvetica, Sans-Serif; text-align: center"><font style="font-family: Times New Roman, Times, Serif">2012</font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top">
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Deferred tax
assets</font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td colspan="2"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top">
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="background-color: #E6EFFF; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Net
operating loss carry forward</font></td>
<td style="font: italic 10pt Times New Roman, Times, Serif; background-color: #E6EFFF"><font style="font-family: Times New Roman, Times, Serif">$</font></td>
<td colspan="2" style="font: 10pt Arial, Helvetica, Sans-Serif; background-color: #E6EFFF; text-align: right"><font style="font-family: Times New Roman, Times, Serif">7,300</font></td>
<td style="font: italic 10pt Times New Roman, Times, Serif; background-color: #E6EFFF"><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top">
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Net deferred
income tax asset</font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right"><font style="font-family: Times New Roman, Times, Serif">2,400</font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top">
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="background-color: #E6EFFF; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Deferred
tax asset valuation allowance</font></td>
<td style="border-bottom: black 1pt solid; background-color: #E6EFFF"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 10pt Arial, Helvetica, Sans-Serif; background-color: #E6EFFF; text-align: right"><font style="font-family: Times New Roman, Times, Serif">(2,400</font></td>
<td style="font: italic 10pt Times New Roman, Times, Serif; background-color: #E6EFFF"><font style="font-family: Times New Roman, Times, Serif">)</font></td></tr>
<tr>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td colspan="2"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top">
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="background-color: #E6EFFF; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Net
deferred tax asset</font></td>
<td style="border-bottom: black 1.5pt double; font: italic 10pt Times New Roman, Times, Serif; background-color: #E6EFFF"><font style="font-family: Times New Roman, Times, Serif">$</font></td>
<td colspan="2" style="border-bottom: black 1.5pt double; font: 10pt Arial, Helvetica, Sans-Serif; background-color: #E6EFFF; text-align: center"><font style="font-family: Times New Roman, Times, Serif">                   
-</font></td>
<td style="background-color: #E6EFFF"><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
<tr>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="width: 411px"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="width: 112px"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">At
August 31, 2012, the Company had net income tax operating loss carry forwards of approximately $7,300<i>, </i>which expire in
the years 2022 through 2032. The change in the allowance account from December 31, 2011 August 31, 2012 to was $2,400.</font></p>
<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> 
</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">For
the tax year ended December 31, 2011, the predecessor entity to Red Giant Entertainment, Inc. was a limited liability company,
and as such, all tax benefits and obligations passed through the entity to its members. No provisions have been made at December
31, 2011, nor does management believe that any tax modifications would have a material effect on the financials.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Although
Management believes that its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will
not be different than that which is reflected in our tax provisions. Ultimately, the actual tax benefits to be realized will be
based upon future taxable earnings levels, which are very difficult to predict.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><u>Accounting
for Income Tax Uncertainties and Related Matters</u></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company may be assessed penalties and interest related to the underpayment of income taxes. Such assessments would be treated
as a provision of income tax expense on the financial statements. For the years ended August 31, 2012 and December 31, 2011, no
income tax expense has been realized as a result of operations and no income tax penalties and interest have been accrued related
to uncertain tax positions. The Company has not filed a tax return for the new entity. These filings will be subject to a three
year statute of limitations. No adjustments have been made to reduce the estimated income tax benefit at fiscal year end. Any
valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company's intellectual property consists of graphic novel artwork and was contributed by a shareholder to the Company and valued
at $29,250, which was determined based on the historical costs for artists and printing. The intangible is being amortized over
its life of five years. Amortization cost for the year periods ended August 31, 2012 and December 31 2011 $3,900 and $5,850, respectively.
The Company expects to amortize the remaining $19,500 over the remaining life of approximately four years at $5,850 per year<b><u>.</u></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">As
of August 31, 2012 and December 31, 2011, inventory consisted of physical copies of published books, as well as artwork that’s
used for digitally distributed works for advertising revenue and future publications. The inventory is valued at the cost to produce.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; color: windowtext">The
Company is currently generating revenues from operations sufficient to meet its operating expenses. </font>However as the <font style="font-family: Times New Roman, Times, Serif">Company
completed the first year of operation in 2011</font>, <font style="font-family: Times New Roman, Times, Serif">m<font style="color: windowtext">anagement
believes that given the current economic environment and the continuing need to strengthen our cash position, there is
still doubt about the Company's ability to continue as a going concern. Management is currently pursuing various funding
options, including seeking debt or equity financing, licensing opportunities, as well as a strategic or other transaction, to
obtain additional funding to continue the development of, and successfully commercialize, its products. There can be no
assurance that the Company will be successful in</font></font> <font style="font-family: Times New Roman, Times, Serif">its
efforts and this raises substantial doubt about the Company’s future. Should the Company be unable to obtain adequate
financing or generate sufficient revenue in the future, the Company’s business, results of operations, liquidity and
financial condition would be materially and adversely harmed, and the Company will be unable to continue as a going
concern.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company believes that its ability to execute its business plan, and therefore continue as a going concern, is dependent upon its
ability to do the following:</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Arial, Helvetica, Sans-Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 3%"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="width: 3%"><font style="font-family: Times New Roman, Times, Serif">·</font></td>
<td style="width: 94%"><font style="font-family: Times New Roman, Times, Serif">obtain adequate sources of funding to fund
long-term business operations;</font></td></tr>
<tr style="vertical-align: top">
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top">
<td><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td><font style="font-family: Times New Roman, Times, Serif">·</font></td>
<td><font style="font-family: Times New Roman, Times, Serif">enter into a licensing or other relationship that allows the
Company to commercialize its products;</font></td></tr>
</table>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Arial, Helvetica, Sans-Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 3%"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="width: 3%"><font style="font-family: Times New Roman, Times, Serif">·</font></td>
<td style="width: 94%"><font style="font-family: Times New Roman, Times, Serif">manage or control working capital requirements;
and</font></td></tr>
</table>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Arial, Helvetica, Sans-Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 3%"><font style="font-family: Times New Roman, Times, Serif"> </font></td>
<td style="width: 3%"><font style="font-family: Times New Roman, Times, Serif">·</font></td>
<td style="width: 94%"><font style="font-family: Times New Roman, Times, Serif">develop new and enhance existing relationships
with product distributors and other points of distribution for the Company’s products.</font></td></tr>
</table>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">There
can be no assurance that the Company will be successful in achieving its short- or long-term plans as set forth above, or that
such plans, if consummated, will enable the Company to obtain profitable operations or continue in the long-term as a going concern.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in the
United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily involves the use of estimates that have been made using careful judgment.
The financial statements have, in management’s opinion been properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies summarized below:</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Accounting
Method</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Advertising</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Advertising
costs are expensed as incurred. The Company expensed advertising costs of $962 and $109 for the periods ending August 31, 2012
and December 31, 2011, respectively.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b>Asset
Retirement Obligations</b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company has adopted ASC 410, <i>Asset Retirement and Environmental Obligations</i>, which requires that the fair value of a liability
for an asset retirement obligation be recognized in the period in which it is incurred. ASC 410 requires the Company to record
a liability for the present value of the estimated site restoration costs with corresponding increase to the carrying amount of
the related long-lived assets. The liability will be accreted and the asset will be depreciated over the life of the related assets.
Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present
value estimate underlying the obligation will be made. As at August 31, 2012 and December 31, 2011, the Company does not have
any asset retirement obligations.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i> </i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Cash
and Cash Equivalents</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">For
purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with
original maturities of three months or less to be cash equivalents. As at August 31, 2012 and December 31, 2011, there were $269
and $97 of cash equivalents, respectively.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Cost
of Goods Sold</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Cost
of goods sold includes the cost of creating services or artwork, advertising and books.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Earnings
(Loss) Per Share</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company follows financial accounting standards, which provides for calculation of "basic" and "diluted" earnings
per share. Basic earnings per share includes no dilution and is computed by dividing net income available to common shareholders
by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of
securities that could share in the earnings of an entity similar to fully diluted earnings per share. There were no common stock
equivalents outstanding at August 31, 2012 and December 31, 2011.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Fair
Value Measurements </i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Topic
820 in the Accounting Standards Codification (ASC 820) defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 applies whenever other
standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in
any new circumstances. In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market
participants would use when pricing the asset or liability. In support of this principle, ASC 820 establishes a fair value hierarchy
that prioritizes the information used to develop those assumptions. The fair value hierarchy is as follows:</font></p>
<p style="font: 12pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Arial, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">·</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
1 inputs — Unadjusted
quoted process in active
markets for identical
assets or liabilities
that the entity has
the ability to access
at the measurement date.
</font></td></tr></table>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: 3pt"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Arial, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">·</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
2 inputs — Inputs
other than quoted prices
included in Level 1
that are observable
for the asset or liability,
either directly or indirectly.
These might include
quoted prices for similar
assets and liabilities
in active markets, and
inputs other than quoted
prices that are observable
for the asset or liability,
such as interest rates
and yield curves that
are observable at commonly
quoted intervals. </font></td></tr></table>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify; text-indent: 3pt"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Arial, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">·</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
3 inputs — Unobservable
inputs for determining
the fair values of assets
or liabilities that
reflect an entity’s
own assumptions about
the assumptions that
market participants
would use in pricing
the assets or liabilities.
</font></td></tr></table>
<p style="font: 12pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company currently does not have any assets that are measured at fair value on a recurring or non-recurring basis, consequently,
the Company did not have any fair value adjustments for assets and liabilities measured at fair value at August 31, 2012 and December
31, 2011, nor gains or losses reported in the statement of operations that are attributable to the change in unrealized gains
or losses relating to those assets and liabilities still held at the reporting date for the periods ended August 31, 2012 and
December 31, 2011.</font></p>
<p style="font: 12pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Income
Taxes </i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company was a limited liability company until May 9, 2012. As an LLC, no income tax provision was made at the Company level and
all taxable income and deductions were passed directly to the equity owner. The Company will be evaluating the tax ramifications
of the change in entity status and the organizational changes to determine future tax issues. Currently the Company expects to
recognize losses in 2012. The Company further expects the losses to be reserved against for deferred tax purposes.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"></font> </p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
Company has adopted ASC 740, <i>Income Taxes</i>, which requires the Company to recognize deferred tax liabilities and assets
for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax
returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary
differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years
in which the differences are expected to reverse.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b>Long-lived
Assets Impairment</b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Long-lived
assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets
may not be recoverable, pursuant to guidance established in ASC 360, <i>Property, Plant and Equipment. </i>Management considers
assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and
without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally
determined using a discounted cash flow analysis.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Property,
Plant and Equipment</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Property,
plant and equipment are recorded at historical cost and capitalized. Depreciation is calculated on a straight-line basis over
the estimated useful life of the asset. The Company currently has equipment being depreciated for estimated lives of three to
five years. Depreciation for the periods ended August 31, 2012 and December 31, 2011 was $56 and zero, respectively.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i> </i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Recent
Accounting Pronouncements</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0.05in 0 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">In
July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2012-02, <i>“Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment”
</i>(the “Update”). The Update simplifies the guidance for testing the decline in the realizable value (impairment)
of indefinite-lived intangible assets other than goodwill. Examples of intangible assets subject to the guidance include indefinite-lived
trademarks, licenses and distribution rights. The new standard is effective for fiscal years beginning after September 15, 2012.
As of August 31, 2012, none of the Company’s intangible assets are amortized as indefinite-lived intangible assets. Therefore,
the adoption of this amendment is not expected to have a material impact on the Company’s financial position or results
of operations.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0.1in 0 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">In
September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350): <i>Testing Goodwill for
Impairment.” </i>This amendment permits, but does not require, an entity to first assess qualitative factors to determine
whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining
whether it is necessary to perform the two-step goodwill impairment test. The amendment is required to be adopted by the Company
beginning October 1, 2012, although early adoption is permitted. The Company will consider assessing qualitative factors to determine
whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining
whether it is necessary to perform the two-step goodwill impairment test in future periods. The adoption of this amendment is
not expected to have a material impact on the Company’s financial position or results of operations.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0.1in 0 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"></font> </p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">In
May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): <i>Amendments to Achieve Common Fair Value Measurements
and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRS)</i>. Among other things, the guidance
expands the disclosure requirements around fair value measurements categorized in Level 3 of the fair value hierarchy and requires
disclosure of the level in the fair value hierarchy of items that are not measured at fair value in the statement of financial
position but whose fair value must be disclosed. It also clarifies and expands upon existing requirements for measurement of the
fair value of financial assets and liabilities as well as instruments classified in shareholders’ equity. The guidance is
effective for interim and annual periods beginning after December 15, 2011. We are currently evaluating the impact this update
will have on our financial statements.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><font style="font-family: Times New Roman, Times, Serif"><b><i>Revenue
Recognition</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Revenue
for the Company is recognized from three primary sources: Advertising Revenue, Publishing Sales and Creative Services. Revenue
was processed through our Paypal Account and Project Wonderful accounts where applicable.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Advertising
Revenue comes from the following sources and is stated at net after commissions:</font></p>
<ul style="list-style-type: circle; margin-top: 0in">
<li style="text-align: justify; margin: 0; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Keenspot:
Revenue is earned on a net 90 basis and is based upon traffic to Red Giant property Web sites. It is calculated on a Cost Per
Thousand (CPM) of verified impressions and varies based upon bids by advertisers and other customary factors. In exchange for
advertising, hosting, IT, and sales management, Keenspot takes 50% commission of ad revenue for their services.</font></li>
<li style="text-align: justify; margin: 0; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Project
Wonderful: Revenue is paid immediately and based upon bids by advertisers for a set amount of time at the prevailing highest winning
rate. Project Wonderful takes a 25% commission of ad revenue for their services.</font></li>
</ul>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0 0 0 0.5in; text-align: justify"></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Publishing
Revenue comes from the following sources:</font></p>
<ul style="list-style-type: circle; margin-top: 0in">
<li style="text-align: justify; margin: 0; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Kickstarter
Campaigns: These are presales for books and revenue is recognized only once the books arrive and are shipped to the buyers.</font></li>
<li style="text-align: justify; margin: 0; font: 10pt Arial, Helvetica, Sans-Serif"><font style="font-family: Times New Roman, Times, Serif">Direct
Sales: Through our online store, we sell directly to clients and the transactions process through our Paypal account. All orders
are shipped immediately and revenue is recognized immediately.</font></li>
</ul>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0 0 0 0.5in; text-align: justify"></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Creative
Services are artwork, writing, advertising, and other creative endeavors we handle for outside clients. Revenue is recognized
upon completion of the services and payment has been tendered.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Shipping
and Handling for purchases are paid directly by the consumer through Paypal. The Company has not established an allowance for
doubtful accounts, as all transactions are handled through Paypal directly by the consumer.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"><b><i>Use
of Estimates</i></b></font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. The Company
reviews its estimates on an ongoing basis. The estimates were based on historical experience and on various other assumptions
that the Company believes to be reasonable under the circumstances. Actual results could differ from these estimates. The Company
believes the judgments and estimates required in its accounting policies to be critical in the preparation of the Company’s
financial statements.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">Red
Giant Entertainment LLC, (hereinafter “the Company”) was formed in the State of Florida, U.S.A., on January 1, 2011.
The Company’s fiscal year end is December 31. On May 9, 2012, the Company incorporated and changed its name to Red Giant
Entertainment, Inc. (“RGE”) All income and expenses in these financial statements have been recharacterized for reporting
purposes to be all inclusive for the corporate entity. The Company was originally a publishing company, but has expanded its operations
to include mass media and graphic novel artwork development.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">On
June 11, 2012, Castmor Resources Ltd., a Nevada corporation  entered into a Share Exchange Agreement (the “Share Exchange
Agreement”) with Red Giant Entertainment Inc., and Benny Powell, who had owned 100% of the issued and outstanding shares
in RGE. Pursuant to the terms and conditions of the Share Exchange Agreement, RGE exchanged 100% of the outstanding shares in
RGE for forty million (40,000,000; 240,000,000 post split) newly-issued restricted shares of the Company’s common stock.
Due to the recapitalization and reverse merger with Castmor Resources Ltd, 32,487,000 shares (194,922,000 post split) were issued
in the entity. The Company subsequently approved a 6 to 1 forward stock split of all shares of record in June, 2012.</font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The
exchange resulted in RGE becoming a wholly-owned subsidiary of the Company.   As a result of the Share Exchange Agreement,
the Company will now conduct all current operations through Red Giant Entertainment, and our principal business became the business
of RGE. All share information has been restated for both the reverse merger and the forward stock split for all periods presented.</font></p>
962
109
56
0
3900
5850
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s financial statements are
prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America and have been consistently applied in the preparation of the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Advertising costs are expensed as incurred.
The Company expensed advertising costs of $962 and $109 for the periods ending August 31, 2012 and December 31, 2011, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has adopted ASC 410, <i>Asset Retirement
and Environmental Obligations</i>, which requires that the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred. ASC 410 requires the Company to record a liability for the present value of the estimated
site restoration costs with corresponding increase to the carrying amount of the related long-lived assets. The liability will
be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage
of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made.
As at August 31, 2012 and December 31, 2011, the Company does not have any asset retirement obligations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For purposes of the statement of cash flows,
the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or
less to be cash equivalents. As at August 31, 2012 and December 31, 2011, there were $269 and $97 of cash equivalents, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Cost of goods sold includes the cost of creating
services or artwork, advertising and books.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company follows financial accounting standards,
which provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes
no dilution and is computed by dividing net income available to common shareholders by the weighted average common shares outstanding
for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an
entity similar to fully diluted earnings per share. There were no common stock equivalents outstanding at August 31, 2012 and December
31, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Topic 820 in the Accounting Standards Codification
(ASC 820) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and
expands disclosures about fair value measurements. ASC 820 applies whenever other standards require (or permit) assets or liabilities
to be measured at fair value but does not expand the use of fair value in any new circumstances. In this standard, the FASB clarifies
the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability.
In support of this principle, ASC 820 establishes a fair value hierarchy that prioritizes the information used to develop those
assumptions. The fair value hierarchy is as follows:</p>
<p style="font: 12pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Arial, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 36pt"></td><td style="width: 18pt"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 1 inputs — Unadjusted quoted
process in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.
</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 36pt; text-align: justify; text-indent: 3pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Arial, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 36pt"></td><td style="width: 18pt"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 2 inputs — Inputs other than
quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include
quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for
the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. </font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 3pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 12pt Arial, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 36pt"></td><td style="width: 18pt"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level 3 inputs — Unobservable inputs
for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that
market participants would use in pricing the assets or liabilities. </font></td></tr></table>
<p style="font: 12pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company currently does not have any assets
that are measured at fair value on a recurring or non-recurring basis, consequently, the Company did not have any fair value adjustments
for assets and liabilities measured at fair value at August 31, 2012 and December 31, 2011, nor gains or losses reported in the
statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities
still held at the reporting date for the periods ended August 31, 2012 and December 31, 2011.</p>
<p style="font: 12pt Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company was a limited liability company
until May 9, 2012. As an LLC, no income tax provision was made at the Company level and all taxable income and deductions were
passed directly to the equity owner. The Company will be evaluating the tax ramifications of the change in entity status and the
organizational changes to determine future tax issues. Currently the Company expects to recognize losses in 2012. The Company further
expects the losses to be reserved against for deferred tax purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has adopted ASC 740, <i>Income
Taxes</i>, which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences
of events that have been recognized in the Company’s financial statements or tax returns using the liability method. Under
this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to
reverse.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Long-lived assets of the Company are reviewed
for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to
guidance established in ASC 360, <i>Property, Plant and Equipment. </i>Management considers assets to be impaired if the carrying
value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment
is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow
analysis.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property, plant and equipment are recorded
at historical cost and capitalized. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset.
The Company currently has equipment being depreciated for estimated lives of three to five years. Depreciation for the periods
ended August 31, 2012 and December 31, 2011 was $56 and zero, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 3.6pt 0 0; text-align: justify">In July 2012, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-02, <i>“Intangibles—Goodwill
and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment”</i> (the “Update”). The Update
simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other
than goodwill. Examples of intangible assets subject to the guidance include indefinite-lived trademarks, licenses and distribution
rights. The new standard is effective for fiscal years beginning after September 15, 2012. As of August 31, 2012, none of the Company’s
intangible assets are amortized as indefinite-lived intangible assets. Therefore, the adoption of this amendment is not expected
to have a material impact on the Company’s financial position or results of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 7.2pt 0 0; text-align: justify">In September 2011, the FASB issued
ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350): <i>Testing Goodwill for Impairment.” </i>This amendment
permits, but does not require, an entity to first assess qualitative factors to determine whether it is more likely than not that
the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform
the two-step goodwill impairment test. The amendment is required to be adopted by the Company beginning October 1, 2012, although
early adoption is permitted. The Company will consider assessing qualitative factors to determine whether it is more likely than
not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary
to perform the two-step goodwill impairment test in future periods. The adoption of this amendment is not expected to have a material
impact on the Company’s financial position or results of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 7.2pt 0 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In May 2011, the FASB issued ASU No. 2011-04,
Fair Value Measurement (Topic 820): <i>Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S.
GAAP and International Financial Reporting Standards (IFRS)</i>. Among other things, the guidance expands the disclosure requirements
around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair
value hierarchy of items that are not measured at fair value in the statement of financial position but whose fair value must be
disclosed. It also clarifies and expands upon existing requirements for measurement of the fair value of financial assets and liabilities
as well as instruments classified in shareholders’ equity. The guidance is effective for interim and annual periods beginning
after December 15, 2011. We are currently evaluating the impact this update will have on our financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue for the Company is recognized from
three primary sources: Advertising Revenue, Publishing Sales and Creative Services. Revenue was processed through our Paypal Account
and Project Wonderful accounts where applicable.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Advertising Revenue comes from the following
sources and is stated at net after commissions:</p>
<ul style="list-style-type: circle; margin-top: 0cm">
<li style="text-align: justify; margin: 0; font: 10pt Times New Roman, Times, Serif">Keenspot: Revenue is earned on a net 90 basis
and is based upon traffic to Red Giant property Web sites. It is calculated on a Cost Per Thousand (CPM) of verified impressions
and varies based upon bids by advertisers and other customary factors. In exchange for advertising, hosting, IT, and sales management,
Keenspot takes 50% commission of ad revenue for their services.</li>
<li style="text-align: justify; margin: 0; font: 10pt Times New Roman, Times, Serif">Project Wonderful: Revenue is paid immediately
and based upon bids by advertisers for a set amount of time at the prevailing highest winning rate. Project Wonderful takes a 25%
commission of ad revenue for their services.</li>
</ul>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 36pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Publishing Revenue comes from the following
sources:</p>
<ul style="list-style-type: circle; margin-top: 0cm">
<li style="text-align: justify; margin: 0; font: 10pt Times New Roman, Times, Serif">Kickstarter Campaigns: These are presales
for books and revenue is recognized only once the books arrive and are shipped to the buyers.</li>
<li style="text-align: justify; margin: 0; font: 10pt Times New Roman, Times, Serif">Direct Sales: Through our online store, we
sell directly to clients and the transactions process through our Paypal account. All orders are shipped immediately and revenue
is recognized immediately.</li>
</ul>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 36pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Creative Services are artwork, writing, advertising,
and other creative endeavors we handle for outside clients. Revenue is recognized upon completion of the services and payment has
been tendered.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Shipping and Handling for purchases are paid
directly by the consumer through Paypal. The Company has not established an allowance for doubtful accounts, as all transactions
are handled through Paypal directly by the consumer.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses for the reporting period. The Company reviews its estimates on an ongoing basis.
The estimates were based on historical experience and on various other assumptions that the Company believes to be reasonable under
the circumstances. Actual results could differ from these estimates. The Company believes the judgments and estimates required
in its accounting policies to be critical in the preparation of the Company’s financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The significant components of the net deferred
tax asset calculated with the estimated effective income tax rate at August 31, 2012 and December 31, 2011 were as follows:</p>
<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
<tr>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top; font: italic 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="vertical-align: top"> </td>
<td style="vertical-align: top"> </td>
<td colspan="2" style="font: 12pt Calibri, Helvetica, Sans-Serif"> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center">2012</td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Deferred tax assets</td>
<td> </td>
<td colspan="2"> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font: 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: justify">Net operating loss carry forward</td>
<td style="font: italic 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: justify">$</td>
<td colspan="2" style="font: 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: right">7,300</td>
<td style="font: italic 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">Net deferred income tax asset</td>
<td> </td>
<td colspan="2" style="font: 10pt Times New Roman, Times, Serif; text-align: right">2,400</td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font: 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: justify">Deferred tax asset valuation allowance</td>
<td style="border-bottom: black 1pt solid; background-color: #E6EFFF"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: right">(2,400</td>
<td style="font: italic 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: justify">)</td></tr>
<tr>
<td> </td>
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td style="font: 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: justify">Net deferred tax asset</td>
<td style="border-bottom: black 1.5pt double; font: italic 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: justify">$</td>
<td colspan="2" style="border-bottom: black 1.5pt double; font: 10pt Times New Roman, Times, Serif; background-color: #E6EFFF; text-align: justify">                    -</td>
<td style="background-color: #E6EFFF"> </td></tr>
<tr>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="width: 112px"> </td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
7300
2400
-2400
Expire in the years 2022 through 2032.