UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





**Form
      10-KSB/A**


Amendment
        No. 2




x   
      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




**For
      the fiscal year ended May 31, 2007**




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




For
      the
      transition period from ________________ to ________________




Commission
      File No.: **000-52054**




**FUEGO
      ENTERTAINMENT, INC.**


(Name
      of
      small business issuer in its charter)







**Nevada**
            **20-2078925**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)





**8010
                NW 156 St**
              **Miami
                Lakes, FL 33016**(Address,
                including zip code, of principal executive
                offices)




Issuer’s
      telephone number: (305) 823-9999





Securities
      registered under Section 12(b) of the Exchange Act:
**None**




Securities
      registered under Section 12(g) of the Exchange Act:




Common
      Stock, Par Value $.001 Per Share


(Title
      of
      class)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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.     xYes    
oNo





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB.     x





State
      issuer’s revenues for its most recent fiscal year.    
**$184,243**




On
      May
      31, 2007 the registrant had 36,639,353sharesof Common Stock,
      (0.001par value per share) issued and outstanding.  As of May 31, 2007
      the aggregate market value of the voting common equity held by non-affiliates
      of
      the registrant was approximately $5,229,781based
      on
      the closing trade reported on the OTC Bulletin Board. Shares of common stock
      held by each officer and director and by each person who owns five percent
      or
      more of the outstanding common stock have been excluded from this calculation
      as
      such persons may be considered to be affiliated with the Company.




Documents
      incorporated by reference: None




Transitional
      Small Business Disclosure Format: Yes  ̈
      No
x













**FUEGO
      ENTERTAINMENT, INC.**




Index
      to




Annual
      Report of Form 10-KSB




For
      the
      Period Ended May 31, 2007




**Part
                I**
            
            PageItem
                1
            Description
                of Business
            3Item
                2
            Description
                of Property
            5Item
                3
            Legal
                Proceedings
            5Item
                4
            Submission
                of Matters to a Vote of Security Holders
            5**Part
                II**Item
                5
            Market
                for Common Equity and Related Stockholder Matters
            5Item
                6
            Management's
                Discussion and Analysis of Financial Condition or Plan of
                Operation
            6Item
                7
            Financial
                Statements
            11Item
                8
            Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure
            12Item
                8A
            Controls
                and Procedures
            12Item
                8B
            Other
                  Information**Part
                III**Item
                9
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance With
                Section
                16(a) of the Exchange Act
            13Item
              9B
            Compliance
              With Section 16(a) Of The Exchange Act
            13Item
                10
            Executive
                Compensation
            13Item
                11
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            14Item
                12
            Certain
                Relationships and Related Transactions
            14Item
                13
            Exhibits
            15Item
                14
            Principal
                Accountants Fees and Services
            19Signatures
            20Certifications





2







**PART
      I**





**ITEM
      1.   DESCRIPTIONOF
      BUSINESS.**





**Corporate
      Background**





Fuego
      Entertainment, Inc. ("Fuego", "the Company", "we", "our", or "us") was
      originally incorporated under the laws of the State of Nevada on December 30,
      2004 as "Durango Entertainment, Inc." On March 15, 2005, we filed a Certificate
      of Amendment with the Nevada Secretary of State changing our name to "Fuego
      Entertainment, Inc."





**Current
      Business Operations**





We
      are
      engaged in the directing, production, marketing, and distribution of
      entertainment products, including feature and short films, documentaries,
      television shows, music, and tour productions. We produce CD, DVD, filmed and
      television content. We have launched a music division, Fuego Entertainment
      Music
      International (FEMI). that produces, markets and distributes music content
      through traditional distribution channels and also through digital
      downloads.  This  division remains in the development stage.
      We have created a publishing division, Fuego Entertainment Publishing Group
      (FMP), to manage, market, promote, and commercially exploit music compositions.
      This business segment remains in the development stage.




We
      also
      provide a limited amount of such management, marketing, and public relations
      services to the entertainment industry and the amount of such services provided
      is increasing.





We
      were
      founded by our President, Hugo M. Cancio, who had spent the previous five years
      successfully owning and operating Ciocan Entertainment & Music Group,
      (Ciocan) our affiliate and a record label a film production company that
      produces Cuban and world entertainment and is well-known throughout the Latin
      Market - both in Latin America and the U.S. Fuego was formed in order to cross
      over into mainstream America with some of Ciocan's Latin music and film products
      as well as to produce music, films, and television programs geared toward the
      English speaking markets.  It is our intention to reach both markets
      at the same time as well as further European markets where Latin music is
      very popular. We have entered into an agreement with Ciocan to
      license, produce and distribute certain Ciocan products. Ciocan has not,
      does not now, nor does it intend to, conduct any business operations of any
      kind
      in Cuba.





**Distribution
      and Publishing**





Fuego
      at
      the present time has two feature film products in distribution and several
      additional products that are in pre-production stages. Once these additional
      products are completed we intend to make contact with several distributors
      around the world with whom Mr. Cancio has conducted business via Ciocan. 
Ciocan and Hugo Cancio have contacts with distributors in Spain, France, Italy,
      Germany, England, Portugal, Japan, China and the U.S.  Ciocan's largest
      distribution products are music CD's.  Fuego has also engaged in the fast
      growing market of digital distribution of entertainment product.





The
      method Fuego uses to select clients is by traveling to the shows and conventions
      related to music product distributions such as MIDEM, BILLBOARDS film and
      television shows and conventions such as MIPCOM NATPE as well as the already
      established film festivals around the world such as: Cannes, Berlin, Miami,
      and
      Sundance.





Out-sourcing
      process: We send products to established distributors (distributors that
      are well established in the market with whom Ciocan and our President have
      done
      business with) on payment credit terms for established credit-approved accounts,
      and cash on delivery to those we consider new clients. We have a no return
      policy.


3





We
      have
      acquired publishing rights to music compositions managed by Sun Flower
      Publishing from which we may receive royalties for products sold as well as
      for
      songs played on radio and television which are licensed for soundtracks. We
      have executed a licensing agreement with Ciocan whereby Fuego has
      licensed the Ciocan music library for the payment of a 25% royalty based on
      net
      sales.





**Advertising
      and Promotional
      Services**





In
      terms
      of advertising and promoting our products, we currently use freelance
      individuals and marketing firms to assist with this function. However, we are
      investigating the possibility of bringing this function in-house in the near
      future as revenues permit. We have used and will continue to use on a
      project-to-project basis the services of F&F Media Corp. This corporation
      distributes information to the local and international media pertaining to
      our
      artists' new releases or events, organizes the interviews for various
      markets, and promotes our concert shows in order to enhance ticket
      sales.





Our
      future plan is to hire an intern and provide training in the art of advertising
      and marketing. For the past seven (7) years, Mr. Cancio has developed
      relationships with the local and international media and media outlets. This
      will help us in bringing our advertising and marketing functions in-house.
      Our
      goal is to bring these services in-house within the near term if our revenues
      permit. It is management's belief that this will have a positive effect in
      our
      business operation as it will allow us to advertise, market and promote our
      artists, projects and services from within. We estimate that $60,000 a year
      in
      extra revenue will permit us to accomplish this goal. Management believes that
      our likelihood of earning this additional revenue in the near term is favorable,
      though there can be no assurance that we will earn such revenues within this
      stated time frame. Our failure to earn this additional revenue could negatively
      impact our ability to bring advertising and marketing functions
      in-house.





Target
      Markets





It
      is our
      intent to offer entertainment products that appeal to both the Hispanic/Latin
      and English-speaking markets. We intend to offer a wide selection of hip-hop,
      rap, pop, and contemporary music as well as films encompassing the documentary
      and reality television genre - thereby crossing all age groups, sexes, income
      levels, and races.





Advertising
      and Marketing Strategy





In
      terms
      of marketing the end products to the consumer, we intend to utilize a variety
      of
      methods, including radio, television, print advertising, public relations
      efforts, and press mention, depending on the project. By bringing the marketing
      functions in-house, we will be able to further penetrate the marketplace and
      increase its brand awareness as well as generate incremental revenues.
      Currently, we are not conducting any specific sales and marketing
      campaigns.




Sales
      Strategy





We
        have
        already developed strong relationships with the channels of distribution
        for the
        products as well as works with reputable distributors to place the products
        within retail and various music stores. We are now also engaged in the digital
        distribution of music and video content and have executed distribution
        agreements with Digital Music Group, Inc and Vidzone. We also keep in close
        contact with various radio stations, television producers, newspaper editors
        to
        inform them as to our progress.





**Employees**





We
      do not
      employ any persons on a full-time or on a part-time basis, we do, however,
      have
      several people working on behalf of the company as independent contractors.
      Hugo
      M. Cancio is our President, Chief Executive Officer, Chief Financial Officer
      and
      Secretary. Mr. Cancio is responsible for all of our day-to-day operations.
      Other
      services are provided by outsourcing and consulting and special purpose
      contracts.


4





We
      intend
      to increase the number of our employees over the next year by one to two
      employees: one who will be responsible for internal bookkeeping and accounting
      issues, and another who will serve as an executive assistant to Mr. Cancio.
      Our
      current strategy is to outsource where possible because it is management's
      belief that this strategy, at our current level of development, gives us access
      to the best services available, leads to lower overall costs, and provides
      us
      the most flexibility for our business operations. For the time being Fuego
      will
      outsource the following services: Cameraman, assistant producer or producers,
      editors, sound technicians, advertising and marketing services.








**ITEM
      2.   DESCRIPTIONOF
      PROPERTY.**





We
      lease
      our principal office space located at 8010 NW 156 St., Miami Lakes, Florida,
      33016 on a month to month basis from a related party. Total rent expense for
      the
      year ended May 31, 2007 and 2006 was $15,083 and $8,500, respectively. On
      September 30, 2006, the Company terminated its shared lease of office facilities
      and office equipment for $750 a month, on a month to month basis, including
      utilities and insurance. Fuego’s President/CEO contributed the fair value of an
      office in home at $1,600 a month, on a month to month basis, including utilities
      and insurance.








**ITEM
      3.   LEGAL PROCEEDINGS.**





We
      were
      not a party to any legal proceedings during the reporting period, and we know
      of
      no legal proceedings pending or threatened or judgments entered against any
      director or officer of the Company in their capacity as such.








**ITEM
      4.   SUBMISSIONOF MATTERS TO A VOTE OF SECURITY
      HOLDERS.**





None





**PART
      II**








**ITEM
      5.   MARKETFOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS.**





**Principal
      Market or Markets**




Our
      common stock is listed on the Over-the-Counter Electronic Bulletin Board. Our
      trading symbol is “FUGO.OB.”





The
      following table sets forth the high and low bid prices of the Company's common
      stock for each quarter shown, as provided by the NASDAQ Trading and Market
      Services Research Unit. Quotations reflect inter-dealer prices, without retail
      mark-up, markdown or commission and may not represent actual
      transactions.





FISCAL
                YEAR  2007
            HIGH
            LOWQuarter
                Ended August 31, 2006
            $1.55
            $0.13Quarter
                Ended November 30, 2006
            $0.40
            $0.19Quarter
                Ended February 28, 2007
            $0.35
            $0.10Quarter
                Ended May 31, 2007
            $0.30
            $0.09





**Approximate
      Number of Common Stock Holders**





As
      of May
      31, 2007, we had 36,639,353 shares of common stock outstanding, held by
      approximately 52 shareholders.


5





**Dividend
      Policy**





We
      have
      never declared or paid cash dividends on our common stock and anticipate that
      future earnings, if any, will be retained for development of our
      business.





**Recent
      Sales of Unregistered Securities**





From
      June
      1, 2005 through May 31, 2007, we issued a total of 23,336,683 shares of our
      common stock to our stockholders for a total value of $333,358.  All
      common shares issued in this fiscal year relate to stock-based compensation
      for
      services rendered on behalf of the Company.





**Fiscal
      year 2007**


Proceeds
      from the sales of securities were $18,500 for the sale of 102,778 common shares
      at $0.18 per share.





The
      company recorded $120,312 for share-based compensation for services rendered
      in
      the current fiscal year.  The company issued 662,013 common shares at
      a price ranging from $0.12 to $0.23 per share.





The
      Company issued 40,000 common shares in order to reduce debt of
      $7,200.  The price per share was $0.18.





The
      Company issued 875,000 common shares at $0.15 for compensation for services
      to
      be rendered over a one year period from the date of issuance
      thereof.





**ITEM
      6.   MANAGEMENT’SDISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.**





The
      following discussion is intended to provide an analysis of the Company’s
      financial condition and Plan of Operation and should be read in conjunction
      with
      the Company’s financial statements and the notes thereto set forth herein. The
      matters discussed in this section that are not historical or current facts
      deal
      with potential future circumstances and developments. The Company’s actual
      results could differ materially from the results discussed in the
      forward-looking statements. Factors that could cause or contribute to such
      differences include those discussed below.





**Plan
      of Operation**





We
      have
      been in operation for twenty-nine months as of May 31, 2007. Our efforts during
      that period have largely been to generate cash flows from operations and
      cash flow from the sales of our common shares. The majority of these cash flows
      were applied towards, production costs, and the investment in a series of shows,
      including Havana Nights.





Since
      inception, we have sold music CD’s  representing the majority of our
      music revenue. In the current fiscal year we created a music business segment
      named Fuego Entertainment Music International (FEMI) the purpose of which is
      to
      sell our music content under this name.




Since
      launching FEMI, we expanded our music and video catalog, by signing new
      artists, and acquiring music masters containing over 890 music tracks. We have
      also expanded our marketing and distribution capabilities and enhanced sales
      in
      the process.  We executed an agreement  with Digital Music
      Group, Inc, one of the leaders in the digital distribution of entertainment
      product, We also executed an agreement with UK digital distributor Vidzone.
       Most recently we executed a publishing agreement with Ediciones Musicales
      Clippers. On March 1, 2007 we retained the services of Adolfo Fernandez, a
      prestigious publicist from F&F Media Group. Mr. Fernandez's firm represents
      companies such as WEA Music, Sony BMG, Televisa Group, Univision Music Group,
      EMI US Latin, EMI Music Colombia, Venemusic, Fonosound, Grupo Origin, Warner
      Music Latina, and others. Mr. Fernandez has worked with many artists such as
      Andrea Bocelli, Ricky Martin, Alejandro Sanz, Mark Anthony, Shakira, Gilberto
      Santarosa, Jennifer Lopez, and others.




Secondly,
      we have focused on the creation and development of our four filming projects.
      Three of the four projects are documentaries titled One Million Millionaires,
      Gold in Ecuador and Counterfeit Conspiracy. The fourth project is a reality
      television series titled The Trader. Our four filming projects, all in the
      development stage, cost $95,941 as of May 31, 2007.  The work in
      progress includes script development, principal photography, sound engineering,
      personnel, such as a cameraman, producer and assistant producer, location
      permits, filming insurance, equipment rental travel and hotel accommodations
      and
      crew meals. No general and administrative costs were capitalized. Lastly, we
      initially incurred stock registration costs of $63,382, consisting largely
      of
      professional fees, to enable us to pursue a registration statement on Form
      SB-2
      with the Securities and Exchange Commission.





6




Operating
      expenses for the year ended May 31, 2007 were principally for selling,
      general and administrative expenses, the major components of which were stock
      based compensation costs of $120,312, development costs of $97,146, and audit
      and accounting fees of $74,162.





We
      do not
      anticipate incurring more than $10,000 in additional costs with respect to
      our
      four filming projects prior to their completion. In general, our filming
      projects are in final stages of development. We have no plans to engage in
      any
      more in house productions until we have completed the four current projects
      that
      we have undertaken to complete, thereby reducing the possibility of incurring
      further significant costs. Until our in process production filming projects
      are
      completed, we believe we can sustain our cash flows through sales of our music,
      television and film content, publishing revenues and work for hire such as
      the
      sale of corporate videos, from consulting services, and from the sale of our
      common stock should our expected cash flows in the next 12 months require
      it.  However, there is no guarantee that our cash flow requirements
      will exceed the amount of funds received from the sale of securities or the
      cash
      flow generated from our current operation activities.





Our
      minimum expected cash flows to continue our current level of operations during
      the next 12 months is approximately $225,000, however up to $450,000 would
      be
      needed to pursue our goals during that period. These additional funds would
      be
      needed to license products from other parties and properly market, promote
      and
      distribute them, including our own projects presently in process. To date our
      revenues have been largely generated from sales of our music content. If the
      additional $225,000 is not raised, we may be unable to continue
      operations.





We
      recently entered into a 10 year licensing agreement with Ciocan for
      their music library catalogue. This library consists of 33 finished albums
      (over
      300 tracks) by 8 different artists who are exclusively recording with Ciocan
      for
      the release of other future projects. Ciocan has marketed the catalogue to
      the
      Latin market, but we plan to penetrate the non-Hispanic markets and develop
      the
      current marketing efforts within the Latin base. We plan to develop live
      productions for artists we intend to sign. The agreement to license Ciocan's
      music requires us to pay a royalty of 25% of the net sales proceeds quarterly
      from sales.




The
      President and CEO of the Company owns 100% of the rights to a popular film
      he
      owns and produced in Cuba called Zafiros Lucura Azul (Sapphire Blue
      Maddness).  This film has never been distributed or commercialized. We
      acquired from Mr. Hugo Cancio the right to market, promote, and distribute
      the
      film in all formats: Theatrical release, Television, cable, DVD. This is part
      of
      a 10 year licensing agreement in which Fuego Entertainment will keep 75% of
      the
      net revenues generated. There was no payment of any kind involved in the
      transaction.  We will account for all sales and costs on a gross
      basis****for the above agreements in accordance with the
      criteria set forth in Emerging Issues Task Force Abstract  Issue No.
      99-19, since we will be responsible for all production and distribution costs
      and expenses, and have full discretion in selecting suppliers and product
      specifications. If there are no net proceeds after one year, all rights revert
      to the producer.


7




Additional
      sources of income may include projects where we will also act as an agent and
      contract organization for certain entertainment projects that are
      fully-developed by others. These services may include marketing, distribution,
      principal photography, development, pre- and post-production, introductory
      services, and many others that are within our realm of expertise. To date,
      we
      currently do not have any agreements or projects whereby we act as an
      agent.





For
      the
      past twelve months, we have continued to generate revenues by engaging in work
      for hire projects and though the sales of our music CD’s.  Although we
      continued to work on our television projects, our main focus was shifted to
      our
      music business divisions FEMI and FPG.





Fuego
      executed a letter of intent with Tota Productions, a music and video
      production company located in Torino, Italy, that produces Spanish Hip Hop
      and
      Pop artists from Europe.  Upon completion of this arrangement we will
      obtain the ownership of over 300 CD masters and supporting data with which
      to
      market the library.  Subsequent to May 31, 2007, we did in-fact
      acquire ownership of over 300 CD masters and supporting data.




We
      have
      generated revenues from sales of our music, television and film content,
      publishing revenues and work for hire such as the production of corporate videos
      and consulting services. It is our intention to continue offering
      these services as they incur no material costs or expenses by the
      Company, as they are mostly borne by the clients.  Our efforts
      are provided by Mr. Cancio whose compensation has been and will continue to
      be
      contributed to the Company until we reach profitable ongoing operations. We
      have
      also generated revenues by providing consulting services to companies that
      are
      in need of reaching the US Hispanic/ Latino Markets with their products or
      services. Consulting services do not incur material costs or expenses since
      such
      services are provided solely by Mr. Cancio. We will continue seeking these
      consulting activities in order to generate revenues.





**Results
      of Operations for the Fiscal Year ended May 31, 2007 compared to Fiscal Year
      ended May 31, 2006**




Revenues




In
      fiscal
      2006, our revenues were $202,292 and did not include revenues from music
      sales.  Our revenues for fiscal 2007 were $184,243, of which
      $146,793 consisted of revenue from music sales.  Although we operated
      for a full 12 months this year, we were unable to maintain the same level of
      revenues that we achieved in the prior year. Last year the company was involved
      in several revenue producing activities, work for hire such as filming music
      and
      corporate videos. We were also in the process of launching several television
      projects, filming TV shows and  licensing other entertainment related
      content. However, since we were unable to secure suitable financing to continue
      with the television endeavors, we had to postpone indefinitely the development
      of all of our television projects and focus and depend on the creation of our
      music division in order to generate revenues.




Although
      the company had several financing offers, our ability to close the financing
      opportunities depended on our stock price. The results of not securing suitable
      financing was the cancellation of the management and development agreement
      with
      our affiliate Fuego Entertainment Media Group, the loss of prospective
      programming revenues and profitability, and the incurrence of additional
      expenses to regroup our efforts in order to continue business operations. The
      monthly average for revenues last year was approximately $16,800 and in the
      current year the average monthly revenues were $15,300, the majority of which
      were generated from music sales. This reduction in average monthly revenues
      was
      a direct result of the president’s efforts being directed in a significant
      revenue generating area; his direct involvement in acquiring the exclusive
      rights to distribute musical tracks which accounted for $146,793 of revenue
      in
      the year ended May 31, 2007. The
      company, from inception, has engaged in a series of diverse
      entertainment  projects and will continue to seek
      them.


8





**Cost
      of Production  - Filming and Music**





Of
      the
      filming and music revenues generated for the current year, our President/CEO
      was
      able to perform the majority of effort necessary to generate such revenues
      as in
      the past years. His compensation and expense for such efforts was
      contributed each year by him and categorized in other selling, general and
      administrative expense and therefore was not included as a
      cost revenues.  Filming production costs, presently capitalized
      are recorded based on the amounts billed to by outside vendors
      and other out of pocket costs we directly incur.




Our
      music
      production costs are recognized using an allocation per album based on the
      going
      rate producing CDs.  The reproduction costs of the albums are incurred
      by our customers and passed along to us in the form of a reduction to their
      account receivable balance.





**Operating
      Expenses**




The
      current year's operating expenses increased dramatically. Our total expenses
      for
      the years ending May 31, 2007 and 2006 were 711,633 and 318,979, respectively.
      Selling, general and  administrative expenses for 2007 and 2006 were
      464,201 and 194,041, respectively.  The Company recorded a provision
      for bad debt in the amount of $89,975 and $0 for the periods ended 2007 and
      2006, respectively.  The current year provision was necessary as our two
      largest music distributors had not paid their invoices in accordance with their
      credit terms.





**Results
      of Operations for the Fiscal Year ended May 31, 2006, Compared to prior Fiscal
      Year ended May 31, 2005**




Revenues and Cost of Filming




The Company's major revenue source, the filming of corporate
      videos, was $57,000 more than the preceding year of only 5 months, but was
      curtailed in the current year for the reasons previously mentioned. 
Related costs of filming, as a percentage of revenue, was 14% for both and
      would
      be much higher if the costs and associated with the President/CEO's efforts
      in
      producing all of these films were included.




Operating Expenses




The current year's operating activities were more involved
      since they included the registration costs of going public of $63,382, the
      development expenses incurred towards the effort to determine the viability
      of a
      Puerto Rico station of $39,474, and the impairment of the investment in Havana
      nights of $57,400.  In the prior year, no similar amounts were
      incurred.  Other selling, general and administrative expenses of the
      current year were in line with the level of expenses incurred in the previous
      period of 5 months.





**Liquidity
      and Capital Resources**





The
      Company has a deficit in working capital at year end, is delinquent in the
      filing of its income tax returns, and is past due on the majority of its
      accounts payable. It has no line of credit or other outside financing sources
      presently to enable it to finance exist operations, and is dependent on its
      music sales and the private placement of its common stock for current cash
      flows.  Accordingly, it is presently seeking financing to continue in
      existence. The Company is dependent solely on its President/CEO for all revenue
      generating and cash flow opportunities.





**Material
      Commitments**





We
      have
      no material commitments as at the date of this registration
      statement.


9





**Purchase
      of Significant Equipment**





We
      do not
      intend to purchase any significant equipment during the next twelve (12)
      months.





**Recent
      Accounting Pronouncements**





In
      December 2004, the FASB issued SFAS 123R, Share Based Payments. SFAS 123R is
      applicable to transactions in which an entity exchanges its equity instruments
      for goods and services. It focuses primarily on transactions in which an entity
      obtains employee services in share-based payment transactions. SFAS No. 123R
      supersedes the intrinsic value method prescribed by APB No. 25, requiring that
      the fair value of such equity instruments be recorded as an expense as services
      are performed. Prior to SFAS 123R, only certain pro forma disclosures of
      accounting for these transactions at fair value were required. SFAS 123R will
      be
      effective for the first quarter 2006 financial statements, and permits varying
      transition methods including retroactive adjustment of prior periods or
      prospective application beginning in 2006. The Company adopted SFAS 123R using
      the modified prospective method effective January 1, 2006. Under this transition
      method the Company will begin recording stock option expense prospectively,
      beginning with that date.


10




**ITEM
      7.FINANCIAL STATEMENTS**





**FUEGO
                ENTERTAINMENT, INC.**TABLE
                OF CONTENTSPagePart
                IItem
                1.
            Financial
                Statements:Report
                of Independent Registered Public Accounting Firm
            
            
            F-1Balance
                Sheet as of May 31, 2007
            F-2Statements
                of Operations for the Years Ended May 31, 2007 and 2006
            F-3Cash
                Flows for the Years Ended May 31, 2007 and 2006
            F-4Statements
                of Stockholders' Equity (Deficit) for the two years ended May 31,
                2007
            F-5Notes
                to Financial Statements
            F-6




11




REPORT
        OFINDEPENDENT
        REGISTERED PUBLIC ACCOUNTING FIRM
 
 **To
                  the Board of Directors and
                  Stockholders**
 **FUEGO
                  ENTERTAINMENT, INC.**
 **Miami,
                  Florida**
 
 We
        have
        audited the accompanying balance sheet of FUEGO ENTERTAINMENT,
        INC.****(a Nevada corporation) as of May 31, 2007, and the
        related statements of operations, stockholders’ equity, and cash flows
        for the years ended May 31, 2007 and 2006. These financial statements
        are the responsibility of the Company’s management.  Our
        responsibility is to express an opinion on these financial statements based
        on
        our audit.
 
 We
        conducted our audit in
        accordance with the standards of the Public Company Accounting Oversight
        Board
        (United States).  Those standards require that we plan and perform the
        audit to obtain reasonable assurance about whether the financial statements
        are
        free of material misstatement.  The Company has determined that it is
        not required to have, nor were we engaged to perform, an audit of its internal
        control over financial reporting. Our audit included consideration of internal
        control over financial reporting as a basis for designing audit procedures
        that
        are appropriate in the circumstances, but not for the purpose of expressing
        an
        opinion on the effectiveness of the Company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, 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 financial statements referred to above present fairly, in all
        material respects, the financial position of FUEGO ENTERTAINMENT, INC.as of May 31, 2007,
        and
        the results of its operations and cash flows
        for the years ended May 31, 2007 and 2006, in comformity with
        accounting principles generally accepted in the United States of
        America.
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern.  As discussed in Note 2 of the Notes to
        financial statements, the Company has incurred significant losses during
        the two
        year period ended May 31, 2007, has a significant deficit in working capital
        and
        in Stockholders’ equity.  Its ability to continue as a going concern
        is dependent upon its ability to develop additional sources of capital, and/or
        achieve profitable operations.  These conditions raise substantial
        doubt about its ability to continue as a going concern.  Management’s
        plans in regard to these matters are also described in Note 2. The financial
        statements do not include any adjustments that might result from the outcome
        of
        this uncertainty.
 /s/
        Braverman International, P.C.
 Braverman International,
                  P.C.
 Prescott,
        Arizona
 August
                  17, 2007





F
            -
            1







**FUEGO
                  ENTERTAINMENT, INC.****BALANCE
                  SHEET****May
                  31, 2007****ASSETS**CURRENT
                  ASSETSCash
              
              $
              -Account
                  receivable-trade, less allowancefor
                  doubtful accounts of $90,000
              
              
              29,308Federal
                  Income tax refund receivable
              
              
              12,115Total
                  Current Assets
              
              
              41,423EQUIPMENT,
                  less accumulated depreciationof
                  $14,272
              
              
              39,145OTHER
                  ASSETSProduction
                  costs
              
              
              95,941Deposit
                  on music library
              
              
              14,500Logo,
                  less accumulated amortizationof
                  $1,170
              
              
              1,530Total
                  Other Assets
              
              
              111,971$
              192,540**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)**CURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              24,092Accounts
                  payable - related parties
              
              
              83,518Other
                  liabilities
              
              
              3,906Income
                  taxes payable
              
              
              15,985Accrued
                  interest - related parties
              
              
              17,646Deferred
                  revenue
              
              
              6,659Total
                  Current Liabilities
              
              
              151,806Long-Term
                  DebtNotes
                  payable - related parties
              
              
              263,893Total
                  Liabilities
              
              
              415,699COMMITMENTS
                  AND CONTINGENCIESSTOCKHOLDERS'
                  EQUITY (DEFICIT)Common
                  stock, par value $.001, 75,000,000shares
                  authorized, 36,639,353 issued and outstanding
              
              
              36,640Paid
                  in capital
              
              
              454,905Deferred
                  charge
              
              
              (122,979
              )Retained
                  earnings(deficit)
              
              
              (591,724
              )Total
                  Stockholders' Equity (Deficit)
              
              
              (223,158
              )$
              192,540**SEE
                  ACCOMPANYING NOTES TO FINANCIAL STATEMENTS**





F
            -
            2







**FUEGO
                  ENTERTAINMENT, INC****STATEMENTS
                  OF OPERATIONS****For
                  the Years Ended****May
                  31, 2007**
              
              
              **May
                  31, 2006**REVENUESMusicMusic
                  sales, net
              
              $
              146,793
              
              
              $
              -Filming
              
              
              30,550
              
              
              
              178,701Consulting
              
              
              6,900
              
              
              
              23,591Total
                  Revenues
              
              
              184,243
              
              
              
              202,292COSTS
                  AND EXPENSESCost
                  of musicRoyalties
                  - related party
              
              
              38,857
              
              
              
              -Production
                  costs
              
              
              24,819Cost
                  of filming
              
              
              5,000
              
              
              
              24,631Affiliation
                  agreements
              
              
              50,000
              
              
              
              -Selling,
                  general and administrative:Provision
                  for bad debts
              
              
              89,975Compensation
                - stock based and contributed
              
              
              160,812
              
              
              
              36,000Other
              
              
              205,143
              
              
              
              158,041TV
                  development
              
              
              97,146
              
              
              
              39,474Impairment
                  of investmest
              
              
              -
              
              
              
              57,400Interest
                expense - related parties
              
              
              17,646Interest
                  expense - other
              
              
              1,342
              
              
              
              1,024Depreciation
                  and amortization
              
              
              12,622
              
              
              
              2,409Total
                  costs and expenses
              
              
              711,633
              
              
              
              318,979(Loss)
                  before income taxes
              
              
              (527,390
              )
              
              
              (116,687
              )Income
                  tax expense (benefit)
              
              
              (21,832
              )
              
              
              8,968NET
                  (LOSS)
              
              $
              (505,558
              )
              
              $
              (125,655
              )EARNINGS
                  (LOSS) PER SHARE - BASIC
              
              $
              (0.01
              )
              
              
              *WEIGHTED
                  AVERAGE NUMBER OFCOMMON
                  SHARES OUTSTANDING - BASIC
              
              
              35,625,161
              
              
              
              30,647,092*  less
                  than $.01 per share**SEE
                  ACCOMPANYING NOTES TO FINANCIAL STATEMENTS**







F
            -
            3




**FUEGO
                    ENTERTAINMENT, INC.****STATEMENTS
                    OF CASH FLOWS****For
                    the Years Ended****May
                    31, 2007**
                
                
                **May
                    31, 2006****OPERATING
                    ACTIVITIES**Net
                    income (loss)
                
                $
                (505,558
                )
                
                $
                (125,655
                )Adjustments
                    to reconcile net income to net cash used byoperating
                    activitiesContributed
                    services
                
                
                60,925
                
                
                
                37,931Impairment
                    loss on investment
                
                
                -
                
                
                
                57,400Depreciation
                    and amortization
                
                
                12,622
                
                
                
                2,409Stock
                    based compensation
                
                
                128,583
                
                
                
                -Changes
                    in operating assets and liabilitiesAccounts
                    receivable
                
                
                (24,308
                )
                
                
                11,833Accrued
                    federal Income tax refund receivable
                
                
                (12,115
                )
                
                
                -Deferred
                    tax asset
                
                
                -
                
                
                
                3,375Other
                    current asset
                
                
                -
                
                
                
                1,552Accounts
                    payable
                
                
                81,809
                
                
                
                14,793Income
                    taxes payable
                
                
                (9,717
                )
                
                
                5,593Accrued
                    interest - related parties
                
                
                17,646Other
                    current liabilities
                
                
                2,276
                
                
                
                1,630Deferred
                    revenue
                
                
                -
                
                
                
                1,968Production
                    costs
                
                
                (2,510
                )
                
                
                (42,999
                )**NET
                    CASH (USED BY) OPERATING ACTIVITIES**
                
                
                (250,347
                )
                
                
                (30,170
                )**INVESTING
                    ACTIVITIES******Deposit
                    on music library
                
                
                (14,500
                )Purchase
                    of equipment
                
                
                (17,697
                )
                
                
                (32,951
                )**NET
                    CASH (USED BY) INVESTING ACTIVITIES**
                
                
                (32,197
                )
                
                
                (32,951
                )**FINANCING
                    ACTIVITIES**Proceeds
                    from sale of common stock
                
                
                18,500
                
                
                
                56,096Proceeds
                    from notes payable - related parties
                
                
                278,675
                
                
                
                (302
                )Repayments
                    of notes payable - related parties
                
                
                (14,783
                )**NET
                    CASH PROVIDED BY FINANCING ACTIVITIES**
                
                
                282,392
                
                
                
                55,794**NET
                    (DECREASE) IN CASH**
                
                
                (152
                )
                
                
                (7,327
                )**CASH,
                    BEGINNING OF PERIOD**
                
                
                152
                
                
                
                7,479**CASH,
                    END OF PERIOD**
                
                $
                -
                
                
                $
                152-
                
                
                
                -**SUPPLEMENTAL
                    SCHEDULE OF NON-CASH INVESTING AND FINANCING
                    ACTIVITIES**Common
                    Stock Issued for Future Consulting Services (875,000
                    shares)
                
                $
                131,250Common
                    Stock Issued for Debt Reduction (40,000 shares)
                
                $
                7,200**SEE
                    ACCOMPANYING NOTES TO FINANCIAL STATEMENTS**





F
            -
            4





**FUEGO
                  ENTERTAINMENT, INC.****STATEMENTS
                  OF STOCKHOLDERS' EQUITY (DEFICIT)****For
                  the Two Years Ended May 31, 2007****Subscriptions**
              
              
              
              **Retained****Common
                  Stock**
              
              **Paid-in**
              
              **Common**
              
              **Amount**
              
              **Deferred**
              
              **Earnings****Shares**
              
              **Amount**
              
              **Capital**
              
              **Stock**
              
              **Receivable**
              **Charge**
              
              **(Deficit)**
              
              **Total****Balance,
                  May 31, 2005**
              13,272,670
              
              $         13,273
              
              $      46,058
              
              $       43,274
              
              $      (43,274)
              
              $                      -
              
              $        39,489
              
              $          98,820Proceeds
                  received from subscribed shares
              21,658,977
              
              21,659
              
              29,412
              
              (51,072)
              
              51,072
              
              
              
              
              
              51,071Proceeds
                  from sale of common stock for$.18
                  per share
              27,915
              
              28
              
              4,997
              
              
              
              
              
              
              
              
              
              5,025Common
                  stock subscribed
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -53,111
                  shares @.179 per share
              
              
              
              
              
              9,561
              
              (9,561)Common
                  stock subscriptions canceled10,000
                  shares @ .001 per share
              
              
              
              
              
              (10)
              
              1040,500
                  shares @ .009 per share
              
              
              
              
              
              (405)
              
              4057,488
                  shares @ .179 per share
              
              
              
              
              
              (1,348)
              
              1,348Contributed
                  services
              
              
              
              
              37,931
              
              
              
              
              
              
              
              
              
              37,931Net
                  (loss) for the year
              
              
              
              
              
              
              
              
              
              
              
              
              (125,655)
              
              (125,655)**Balance,
                  May 31,  2006**
              34,959,562
              
              34,960
              
              118,398
              
              -
              
              -
              
              -
              
              (86,166)
              
              67,192Proceeds
                  from sale of common stock for$.18
                  per share
              102,778
              
              103
              
              18,397
              
              
              
              
              
              
              
              
              
              18,500Stock
                  based compensation$.12
                  per share
              25,000
              
              25
              
              2,975
              
              
              
              
              
              
              
              
              
              3,000$.15
                  per share
              60,000
              
              60
              
              8,940
              
              
              
              
              
              
              
              
              
              9,000$.18
                  per share
              488,013
              
              488
              
              87,354
              
              
              
              
              
              
              
              
              
              87,842$.23
                  per share
              89,000
              
              89
              
              20,381
              
              
              
              
              
              
              
              
              
              20,470Stock
                  Issued for debt reduction$.18
                  per share
              40,000
              
              40
              
              7,160
              
              
              
              
              
              
              
              
              
              7,200Stock
                  Issued for Future Services$.15
                  per share
              875,000
              
              875
              
              130,375
              
              
              
              
              
              (122,979)
              
              
              
              8,271Contributed
                  services
              
              
              
              
              60,925
              
              
              
              
              
              
              
              
              
              60,925Net
                  (loss) for the year
              
              
              
              
              
              
              
              
              
              
              
              
              (505,558)
              
              (505,558)**Balance,
                  May 31,  2007**
              36,639,353
              
              $         36,640
              
              $    454,905
              
              -
              
              $                   -
              
              $       (122,979)
              
              $    (591,724)
              
              $      (223,158)**SEE
                  ACCOMPANYING NOTES TO FINANCIAL STATEMENTS**






F
            -
            5
  FUEGO
        ENTERTAINMENT,
        INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 **1.**
              **NATURE
                  OF BUSINESS**
  Fuego
        Entertainment, Inc. (the “Company”,”Fuego”.”we”,”our” or “us”) was formed on
        December 30, 2004 as a Florida corporation and is primarily engaged in the
        directing, production, marketing, and distribution of entertainment products,
        including feature and short films, documentaries, television shows, music,
        and
        tour productions. We also provide management, marketing, and public relations
        services to the entertainment industry. During the year ended May 31, 2007
        the
        majority of revenues earned were earned from the sale of musical
        tracks.
  **2.**
              **SIGNIFICANT
                  ACCOUNTING POLICIES**
  ***GOING
        CONCERN***
 Our
        financial statements have been presented on the basis that it is a going
        concern, which contemplates the realization of assets and the satisfaction
        of
        liabilities in the normal course of business. Our ability to continue in
        existence is dependent on its ability to develop additional sources of capital,
        or achieve profitable operations. We sustained significant losses in the
        last
        two years, and we have deficits in working capital and stockholder’s equity as
        of May 31, 2007. Our financial position at that date and presently is of
        great
        concern to us and our investors, however, management’s plan is to obtain
        additional capital and to develop, market and distribute musical tracks,
        and to
        pursue the multi-media releases of a popular film produced in Cuba. Additionally
        we are pursuing the opportunities as further described under the caption
        ***MUSIC ARRANGEMENTS*** found in the SUBSEQUENT EVENTS
        footnote below.  The accompanying financial statements do not include
        any adjustments that might result from the outcome of this
        uncertainty.
  ***BASIS
        OF PRESENTATION***
  These
        financial statements reflect the use of significant accounting policies,
        as
        described below and elsewhere in the notes to the financial statements, and
        are
        prepared in accordance with accounting principles generally accepted in the
        United States of America. The fiscal year end of the Company is May
        31.
 
 ***REVENUE
        RECOGNITION***
 
 ***Music
        Revenue***
 Revenue
        from the sale of music is recognized when our distributors notify us that
        they
        have shipped to their wholesale and retail outlets, the CDs (compact disks)
        we
        approved for their manufacture from  master copies we provided to
        their manufacturing sources.
 
 ***Cost
        of Music Revenue***
 In
        the
        past our president, through his ownership of Ciocan Entertainment and Music
        Group, LLC, “Ciocan”, has had extensive experience selling CDs to a number of
        domestic and foreign music distributors, some of whom we now sell
        to.  We do not manufacture our own CDs.  Instead, we provide
        master copies to approved manufacturers for their release of the CDs to their
        customers who are our distributors and who incur and are responsible to pay
        for
        all reproduction costs and eventally bill us for such costs  Our
        initial shipment of CDs sold by our US distributor in Miami in August 2006,
        was
        provided by Ciocan at no cost to us as part of our license/royalty
        arrangement.
  F
            -
            6
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 The
        CD
        costs incurred by our distributors relating to the CD sales recognized are
        initially estimated by us based on the production costs documented by them,
        and
        are charged to cost of music revenue and credited to a temporary liability
        account (for unearned distributor credits) until such time as the distributor’s
        credit is approved by us. Upon approval, the credit to their account is applied
        and the temporary liability account is reduced for only CDs sold, and any
        difference between actual cost and estimated cost is adjusted out at that
        time.
        For financial presentation purposes, the temporary liability account balance
        has
        been treated as an offset (a contra account) to accounts receivable as if
        the
        unearned credits by the distributor had been applied or recognized by
        us.
 
 ***Other***
  Revenue
        from the sale of film,  television programming rights and license
        arrangements is or will be recognized only when persuasive evidence of a
        sale or
        arrangement with a customer exists, the project or sale is complete, the
        contractual delivery arrangements have been satisfied, the license period
        has
        commenced if applicable, the arrangement fee is fixed or determinable,
        collection of the arrangement fee is reasonably assured, and other conditions
        as
        specified in the respective agreements have been met.
 
 Revenue
        from production services for third parties is recognized when the production
        is
        completed and delivered. All associated production costs are deferred and
        charged against income when the film is delivered and the related revenue
        is
        recognized.
  Fees
        for
        other services, such as consulting provided to third parties, are recognized
        as
        revenues when the services are performed and there is reasonable assurance
        of
        collection.
  Cash
        received in advance of meeting the revenue recognition criteria described
        above
        is recorded as deferred revenue.
  ***ALLOWANCE
        FOR DOUBTFUL ACCOUNTS***
  We
        estimate the collectibility of its trade accounts receivable. In order to
        assess
        the collectibility of these receivables, the Company monitors the current
        creditworthiness of each customer and analyzes the balances aged beyond the
        customer's credit terms. Theses evaluations may indicate a situation in which
        a
        certain customer cannot meet its financial obligations due to deterioration
        of
        its financial viability, credit ratings or bankruptcy. The allowance
        requirements are based on currents facts and are reevaluated and adjusted
        as
        additional information is received. Trade accounts receivable are subject
        to an
        allowance for collection when it is probable that the balance will not be
        collected. As of May 31, 2007, allowances totaled $90,000, the majority of
        which
        relates to the Italian music distributor. This was necessary as the original
        terms of payment by the two largest distributors had been exceeded. This
        amount
        could be adjusted in the near term based on eventual collections, if received.
        Accounts are written off when collection efforts have been exhausted and
        there
        is no likelihood of collection.
  ***ADVERTISING
        EXPENSES***
  Advertising
        costs are expensed as incurred, except for costs related to the development
        of a
        property and/or live-action television program commercial or media campaign
        which are expensed in the period in which the commercial or campaign is first
        presented. Advertising expenses are included in selling, general and
        administrative expense in the accompanying statement of
        operations.
  F
            -
            7
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 ***USE
        OF ESTIMATES***
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting period. Actual results could differ materially from
        those
        estimates.
 
 ***CASH
        AND CASH EQUIVALENTS***
  Cash
        and
        cash equivalents consist of all liquid investments with original maturities
        of
        three months or less are classified as cash and cash equivalents. The fair
        value
        of cash and cash equivalents approximate the amounts shown on the financial
        statements. Cash and cash equivalents consist of unrestricted cash and
        short-term investments. As of May 31, 2007 there were no cash equivalents
        and
        the $207 overdaft balance was included as an account payable.
 
 ***INCOME,
        LOSS PER COMMON SHARE***
  Basic
        income, loss per common share is calculated on the weighted average number
        of
        common shares outstanding during each period. Diluted income per common share
        is
        based on the weighted average number of common shares outstanding during
        each
        period, adjusted for the effect of outstanding stock equivalents. Outstanding
        stock equivalents were not used in the computation of basic loss per share,
        as
        their effect would be antidilutive.
 
 ***FILM
        AND TELEVISION COSTS***
  We
        account for our film and television costs pursuant to AICPA Statement of
        Position (“SOP”) No. 00-2, *Accounting by Producers or Distributors of
        Films*. The cost of production for film and television production costs,
        including direct costs, production overhead and interest are capitalized
        and
        amortized using the individual-film-forecast method under which such costs
        are
        amortized for each program in the ratio that revenue earned in the current
        period for such program bears to management’s estimate of the ultimate revenues
        to be realized from all media and markets for such program. Management regularly
        reviews, and revises when necessary, its ultimate revenue estimates on a
        title-by-title basis, which may result in a change in the rate of amortization
        applicable to such title and/or a write-down of the value of such title to
        estimated fair value. These revisions can result in significant
        quarter-to-quarter and year-to-year fluctuations in film write-downs and
        rates
        of amortization. If a total net loss is projected for a particular title,
        the
        associated film and television costs are written down to estimated fair value.
        All exploitation costs, including advertising and marketing costs are expensed
        as incurred. Television adaptation and production costs that are adapted
        and/or
        produced are stated at the lower of cost, less accumulated amortization,
        or fair
        value. As of May 31, 2007, all production costs capitalized represent films
        which have not been completed, released or sold, and impairment criteria
        developed has not indicated such costs should be impaired.
 
 ***DEPOSIT
        ON MUSIC LIBRARY***
  We
        advanced a total of $14,500 as of May 31, 2007 with a commitment for an
        additional $42,000 towards the acquisition of a media library, a conglomeration
        of individual master music tracks.. The acquisition of this library, when
        completed, will give us the exclusive right to 100% of the sales generated
        from
        these tracks as well as the authority to infinitely reproduce and/or grant
        the
        reproduction of albums from these musical tracks. With 100% control over
        the
        master copies, Fuego reserves the right to enter into digital distribution
        agreements to make these tracks available for download as a means of penetrating
        an additional revenue source. As of May 31, 2007 the delivery of all assets
        was
        not completed and therefore the balance indicated was considered a commitment
        until completion occurs.
  F
            -
            8
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 During
        fiscal 2007, we entered into a contract with Vision Sports Entertainment
        ( VSEN)
        to use their content in the launch of VSEN sports and entertainment programming
        on our LPTV ( low power television station) KVPS, channel 28  in Las
        Vegas Nevada. In order to launch the station we paid $50,000 on behalf of
        our affiliate, which allowed us to broadcast our sports and entertainment
        programming for a period of approximately three (3) months. We had a sales
        team
        in place and received verbal advertising dollar commitments from certain
        large
        advertising agencies in Puerto Rico. However, we still required sufficient
        capital to continue operating for a minimum of 6 months until the advertising
        revenues were received. Although the company had several financing offers,
        our
        ability to close our financing opportunities depended on our stock price.
         Shortly thereafter, due to the fraudulent manipulation of our stock by a
        fraudster, our stock price dropped significantly. Therefore, we declined
        these
        offers, as they would have represented a significant dilution of investors’
holdings.  The results of not securing suitable financing was the
        cancellation of the management and development agreement with our affiliate
        Fuego Entertainment Media Group, the loss of prospective programming revenues
        and profitability, and the incurrence of additional expenses to regroup our
        efforts in order to continue business operations.
 
 ***EQUIPMENT***
  Equipment
        is carried at cost, net of accumulated depreciation. Depreciation is provided
        on
        the straight-line method based on the estimated useful lives of the assets,
        which range from 2.5 years to 7 years.
 
 ***INTANGIBLE
        ASSETS***
  We
        capitalized the cost of the creation of our logo. Amortization of logo costs
        is
        being recognized ratably over a 5-year useful life, commencing with April
        1,
        2005, the date on which the logo was acquired by purchase.
 
 ***INCOME
        TAXES***
  Deferred
        income taxes will be recorded for the temporary differences between the
        financial statement and tax bases of assets and liabilities using current
        tax
        rates pursuant to FAS No. 109. Valuation allowances will be established against
        deferred tax assets whenever circumstances indicate that it is more likely
        than
        not, that such assets will not be realized in future periods.
 
 ***FAIR
        VALUE OF FINANCIAL INSTRUMENTS***
  The
        carrying amounts of cash and cash equivalents, accounts receivable, and other
        current assets, unearned revenue, accounts payable and accrued liabilities,
        and
        other liabilities approximate their fair values  principally because
        of the short-term maturities of these instruments. The value of long-term
        debt
        approximates its stated value due to the current rate of interest charged
        by the
        holder thereof.
 
 ***NEW
        ACCOUNTING PRONOUNCEMENTS***
  In
        March
        2006, the FASB issued SFAS 156, *Accounting for Servicing of Financial
        Assets* (“SFAS 156”), amending SFAS 140, *Accounting for Transfers and
        Servicing of Financial Assets and Extinguishments of Liabilities* . SFAS 156
        permits entities the choice between either the amortization method or the
        fair
        value measurement method for valuing separately recognized servicing assets
        and
        liabilities. SFAS 156 is effective for fiscal years beginning after September
        15, 2006; early adoption is permitted as of the beginning of an entity’s fiscal
        year, provided the entity has not yet issued financial statements for any
        interim period of that fiscal year. We believe the adoption of SFAS 156 will
        not
        have an impact on our financial statements.
  F
            -
            9
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 
 In
        September 2006, the FASB issued SFAS 157, *Fair Value Measurements*
        (“SFAS 157”). SFAS 157 provides guidance on the application of fair value
        measurement objectives required in existing GAAP literature to ensure
        consistency and comparability. Additionally, SFAS 157 requires additional
        disclosures on the fair value measurements used. SFAS 157 is effective for
        fiscal years beginning after November 15, 2007. We believe the adoption of
        SFAS
        157 will not have a material impact on its financial statements
  Also
        in
        September 2006, the FASB issued SFAS 158, *Employers’ Accounting for Defined
        Benefit Pension and Other Postretirement Plans, an Amendment of FASB Statements
        No. 87, 88, 106, and 132(R)* (“SFAS 158”). SFAS 158 requires companies to
        recognize the overfunded or underfunded status of a defined benefit
        post-retirement plan as an asset or liability in their balance sheet and
        to
        recognize changes in that funded status in the year in which the changes
        occur
        through comprehensive income. The statement’s provisions related to the
        recognition of the funded status of a defined benefit postretirement plan
        and
        required disclosures are effective for fiscal years ending after December
        15,
        2006. The requirement to measure plan assets and the benefit obligation as
        of
        the date of the employer’s fiscal year-end statement of financial position is
        effective for fiscal years ending after December 15, 2008. The provisions
        of
        SFAS 158 do not have a material effect on our financial statements as we
        currently have no defined benefit plan.
  In
        February 2007, the FASB issued SFAS 159, *The Fair Value Option for Financial
        Assets and Financial Liabilities Fair Value Measurements* (“SFAS 159”). SFAS
        No. 159 permits entities to choose to measure many financial instruments
        and
        certain other items at fair value that are not currently required to be measured
        at fair value. Unrealized gains and losses on items for which the fair value
        option has been elected are reported in earnings. SFAS No. 159 does not affect
        any existing accounting literature that requires certain assets and liabilities
        to be carried at fair value. SFAS No. 159 is effective for fiscal years
        beginning after November 15, 2007. The Company is currently evaluating the
        impact of adopting SFAS No. 159 on our financial statements.
  In
        June
        2006, the FASB issued FIN 48, *Accounting for Uncertainty in Income Taxes-an
        interpretation of FASB Statement No. 109, Accounting for Income Taxes* (“FIN
        48”), which clarifies the accounting for uncertainty in income taxes. FIN 48
        prescribes a recognition threshold and measurement attribute for the financial
        statement recognition and measurement of a tax position taken or expected
        to be
        taken in a tax return. The interpretation requires the Company to recognize,
        in
        its financial statements, the impact of a tax position if that position is
        more
        likely than not of being sustained on audit, based on the technical merits
        of
        the position. FIN 48 also provides guidance on derecognition, classification,
        interest and penalties, accounting in interim periods and disclosure.
        The
  F
            -
            10
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
  
  provisions
        of FIN 48 are effective beginning January 1, 2007 with the cumulative effect
        of
        the change in accounting principle recorded as an adjustment to opening retained
        earnings. We are currently evaluating the impact of adopting FIN 48 on our
        financial statements.
 
 ***STOCK
        BASED COMPENSATION***
  We
        have
        issued restricted shares of common stock to compensate non-employees who
        were
        principally key personnel.  Effective January 1, 2006, we adopted the
        fair value recognition provisions of SFAS 123R, *Share-Based Payments*
        ("SFAS No. 123(R)"), which is a revision of SFAS No. 123 which requires
        that stock awards granted to directors, consultants and other non-employees
        be
        recorded at the fair value of the award at grant date .
 
 ***CHANGES
        IN FINANCIAL PRESENTATION***
  In
        preparing the accompanying financial statements, certain comparative amounts
        for
        the prior year have been changed to conform to the current year’s
        presentation.
 
 **3.**
              **SIGNIFICANT
                  CUSTOMERS AND CONCENTRATION OF CREDIT
                  RISK**
  Financial
        instruments, which potentially subject the Company to concentration of credit
        risk, consist primarily of temporary cash investments and accounts receivable.
        The majority of the cash and cash equivalents are maintained with major
        financial institutions in the United States of America. Credit risk on accounts
        receivable is minimized by the Company by performing ongoing credit evaluations
        of its customers’ financial condition and monitoring its exposure for credit
        losses and maintaining allowances for anticipated losses. For the year ended
        May
        31, 2006 three different corporate video customers accounted for 53%, 24%,
        and
        11% of total operating revenues. For the year ended May 31, 2007 the most
        significant customers, (two music distributors) accounted for 21% and 59%,
        respectively.
 
 The
        latter distributor is located in Italy and represents the only foreign
        distributor we have at this time and there are no assets of ours located
        in any
        foreign country except for the Italian distributor’s accounts receivable of
        $107,542 as of May 31, 2007, against which an allowance for doubtful accounts
        has been provided for the majority of that balance.
 
   F
            -
            11
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 **4.**
              **CAPITALIZED
                  PRODUCTION COSTS**
 
 Capitalized
        production costs represent development costs incurred on projects in
        process.
 A
        summary
        of these costs as of May 31, 2007 follows:
 ***The
                  Trader Show*****is a reality television show based
                  on the real life activities of amateur and professional stock traders.
                  The
                  Trader Show places an emphasis on the activities of day
                  traders.
              $
              34,784***Gold
                  in Ecuador*** is the story of a
                  small mining town of Portobello. In 1916
                  Mellick Tweedy traveled on a mule through the jungle of a
                  small mining town in Ecuador, this small town became one of
                  the largest gold exporters in South America. 
                  Fifty years ago the American company SADCO, abandoned the American
                  shaft, one of the oldest gold mines in the world, leaving the town
                  of Portobello and its people in ruins.  Today, the
                  people of Portobello have a new hope, or do they? The Americans
                  are back in Portobello searching for Gold.
              
              14,866***One
                  Million Millionaires,***This is a documentary that will
                  capture the life of a controversial individual, Mr. Urban Casavant
                  and his dream of making 1 million millionaires. For some he is
                  the hope of their life, for others he is a dreamer, however, thousands
                  follow him and wait patiently.  The film will cover his life
                  from the time he was a low-income earning prison guard to a
                  multimillion-dollar businessman.
              
              
              16,594***Counterfeit
                  Conspiracy*** is a documentary on stock market scandals
                  from the 1980’s to present, covering court
                  documents, testimony, and interviews with participants to
                  fashion an authoritative account of what happened. For example
                  it covers
                  the highly publicized account of, Michael Milliken, the Drexel
                  Burnham Lambert junk bond king who convinced many savings
                  institutions and insurance companies to
                  buy such bonds in large quantities.  It will also
                  document the illegal practice of Naked Short Selling perpetrated
                  by some
                  offshore organizations and self-inflicted by some
                  companies.
              
              
              29,697Total
                  capitalized production costs
              
              $
              95,941
 
 All
        of
        the above films are in production and none have been acquired from other
        parties. None have been released into the market or are generating revenues
        except for incidental advance sales of DVD’s for Counterfeit Conspiracy totaling
        $6,659 as of May 31, 2007.. Advance sales have been classified as deferred
        revenue in the accompanying balance sheet. No amortization has commenced
        on any
        film products in production, and there are no other films owned by the
        Company.
 
 Amortization
        of all of the above costs is estimated to commence within the next fiscal
        year,
        based upon their anticipated completion dates, with the possible exception
        of
        the costs incurred in the Trader Show, which the Company will not be able
        to
        begin marketing to television companies until completion thereof, expected
        by
        the end of calendar 2007. The Trader Show costs represent the only costs
        in
        production to be considered a direct-to-television product.
  F
            -
            12
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 **5.**
              **COMMITMENTS:**
  ***OPERATING
        LEASE***
  On
        September 30, 2006, The Company terminated its shared lease of office facilities
        and office equipment for $750 a month, on a month to month basis, including
        utilities and insurance. Fuego’s President/CEO contributed the fair value of an
        office in home at $1,600 a month, on a month to month basis, including utilities
        and insurance. Total rent expense for the years ended May 31, 2007 and
        2006  was $15,083 and$8,550 respectively.
 
 ***DELINQUENT
        INCOME TAXES***
  Neither
        the federal nor state income tax liabilities, as revised, of $15,985 for
        the
        year ended May 31, 2005, have been paid as of May 31, 2007,. Accordingly,
        estimated accrued interest and penalties of $3,906 have been provided as
        of May
        31, 2007 as “other liabilities” on the accompanying balance sheet.
 
 ***ACCOUNTS
        PAYABLE***
  The
        majority of the accounts payable as of May 31, 2007, are past due on the
        basis
        of their terms.
 
 **6.**
              **RELATED
                  PARTY TRANSACTIONS**
  ·
              Ciocan
                  is an entertainment company owned by our President/CEO, that creates
                  products for the Latino Market worldwide and anticipates using us to
                  market, promote and commercialize some of its products (music,
                  films,
                  documentaries, artist, etc) for the Anglo and international
                  markets.
                During
                  the year ended May 31, 2007, Ciocan advanced us a total of $33,050
                  for
                  accounting, legal and other expenses, and was repaid a total of
                  $8,250,
                  leaving a balance owing as of May 31, 2007, of $24,800, and accrued
                  interest of $2,223. In addition Ciocan was owed a total of $37,954
                  for
                  music royalties earned during the current
                  year.
 
  F
            -
            13
  FUEGO
        ENTERTAINMENT,
        INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 
 
 ·
              During
                  the current year we entered into a management agreement with an
                  affiliate,
                  Fuego Entertainment Media, LLC, (FEML)  to manage and operate a
                  television network. Previously, FEML entered into a lease/purchase
                  option
                  arrangement with the antenna’s owner to enable FEML to broadcast its
                  programming content until such time as we could exercise the two-year
                  underlying option purchase agreement.
                
                Under
                  this management agreement we acquired the aforementioned lease/purchase
                  option.  In the event we were able to earn substantial
                  management fees from the programming content over a sustained period
                  of
                  time and our common stock value was at a certain level, the Company
                  would
                  have been able to arrange suitable financing to acquire the antenna
                  outright, at a cost of approximately $3.2 million dollars for the
                  Las
                  Vegas television station and $3.8 million for the three television
                  stations in Puerto Rico.
                
                As
                  previously reported on December 11, 2006 in a Form 8K filing, we
                  will be
                  required to hire qualified programming and technical personnel
                  to
                  facilitate the management agreement with FEML and will incur substantial
                  related costs and expenses to enable us to initiate and carry out
                  our
                  obligations under the agreement with FEML. We are actively seeking
                  financing for these projects and have no financial ownership interest
                  in
                  FEML under the existing agreement with FEML.
                
                Although
                  we received several financing opportunities in the form of convertible
                  debentures, management has not accepted any of these financing
                  opportunities due to what we consider to be “unacceptable terms,” such as
                  high interest rates, excessive dilution, and the other risks this
                  could represent.To date we have spent almost $250,000 in direct
                  costs
                  since we started this project, to facilitate the management of
                  a Puerto
                  Rico TV station, to sustain 3 months of TV programming, to purchase
                  equipment, and create several TV pilots and sales presentation
                  DVDs in
                  anticipation of managing our television projects. We still require
                  substantial additional funds to make this project operational.
                  Without
                  adequate financing, we are not in a position to be able to carry out
                  our intent to manage and operate these stations. Therefore,we terminated
                  our agreement with FEML along with our management and operation
                  of the
                  television stations and purchase options. We have also postponed
                  our plans
                  to launch our own television network, Fuego TV, until adequate
                  financing
                  becomes available and can secure it.
 
 ·
              Our
                  President/CEO is owed$239,093 as of May 31, 2007 for cash advances
                  to the
                  company for a variety of general and administrative expenses and
                  the
                  development of TV station programming.During the current year he
                  advanced
                  $245,625 and was repaid $6,533. No interest was paid on this date
                  which
                  accrues at 15 percent per annum and is payable on June 1, 2008.
                  Accrued
                  interest totaled $15,424 as of May 31,
                  2007.
  ·
              The
                  accounting firm contracted for accounting, tax and financial statement
                  preparation services has two employees who had purchased 23,000
                  shares of
                  common stock of the Company in August 2005 at $.18 per share. Prior
                  to the
                  completion of the public offering, 40,000 shares of restricted
                  common
                  stock were approved for issuance to the owner of the firm in exchange
                  for
                  accounting services valued at $.18 per share. Fees incurred during
                  the
                  fiscal year ended May 31, 2007 by this related party accounting
                  firm
                  totaled $39,723, of which $38,664 remained unpaid as of that date
                  and
                  appears as accounts payable-related party in the accompanying balance
                  sheet at May 31, 2007
 
  F
            -
            14
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
   **7.**
              **INCOME
                  TAXES**
  The
        following is an analysis of income
        taxes for the two years ended May 31, 2007.
 
 The
        provision for current income taxes is as follows:
 **For**
                **the
                  year ended May 31, 2007**
              
              
              **For**
                **the
                  year ended May 31,2006**Current
                  tax expense (benefit):Federal
                  tax at 34% statutory rate
              
              $
              (179,313
              )
              
              $
              (39,674
              )Benefit
                  of surtax exemptions
              
              
              
              
              
              
              2,792Valuation
                  allowance
              
              
              136,674
              
              
              
              11,172Permanent
                  differences
              
              
              20,807
              
              
              
              34,678Income
                  tax expense
              
              $
              (21,832
              )
              
              $
              8,968
 
 The
        analysis of income tax expense is as follows:
 **For**
                **the
                  year ended May 31,
                  2007**
              
              
              **For**
                **the
                  year ended May 31,2006**Current
              
              $
              (21,832
              )
              
              $
              8,968Deferred
              
              
              -
                  0-
              
              
              
              -0-Income
                  tax expense
              
              $
              (21,832
              )
              
              $
              8,968
 
 A
        deferred tax asset was recognized of approximately$147,000 for the $114,000
        of
        net operating loss carry forward  which expires in 2027 if unused, and
        $33,000 of temporary timing differences during the year ended May 31, 2007,
        as
        follows: A valuation allowance for $147,000 was recorded as of May 31, 2007,
        as
        the Company believes it is more likely than not that this future tax benefit
        of
        this deferred tax asset will not be realized at this time.
  F
            -
            15
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 The
        following is an analysis of the change in the deferred tax asset during the
        years ended May 31, 2007, and 2006:
  **May
                  31, 2007**
              
              
              **May
                  31, 2006**Deferred
                  tax asset, beginning of year
              
              $
              11,172
              
              
              $
              -0-Prior
                  year tax adjustment
              
              
              (9,717
              )Net
                  operating loss carryforward
              
              
              114,037Allowance
                  for doubtful accounts
              
              
              26,577
              
              
              
              1,775Interest
                  Expense related party
              
              
              6000
              
              
              
              7,861Depreciation
              
              
              (223
              )
              
              
              (870
              )State
                  income taxes
              
              
              0
              
              
              
              2,406Valuation
                  allowance
              
              
              (147,846
              )
              
              
              (11,172
              )Deferred
                  tax asset, end of year
              
              
              -0-
              
              
              
              -0-
   **8.**
              **CONTRIBUTED
                  CAPITAL**
 
 The
        President of the Company contributed the value of his services totaling $37,931
        in the year ended May 31, 2006. These services consisted of  the value
        of his services of $36,000, and other expenses totaling $1,931. In the year
        ended May 31, 2007, the President contributed a total of $60,925 consisting
        of
        $40,500 for the value of services, $7,625 for the prorata share of auto
        expenses, and $12,800 for the rent of corporate office facilities.
 
 ***9.***
              ***DEFERRED
                  CHARGE***
  On
        May 9,
        2007, we entered into a contract with Var Growth Corporation (D.B.A. Ice
        Cold
        Stocks) and issued 875,000 shares of restricted common stock at $.15 in exchange
        for consulting services to be performed over 12 months from the date the
        contract. For the year ended May 31, 2007, $8,271 of this cost was expensed.
        The
        remaining balance is treated as a deferred charge, a contra equity account,
        as
        all of the shares were issued for services but not yet fully
        rendered.
 
   F
            -
            16
  FUEGO
        ENTERTAINMENT, INC.
 NOTES
        TO
        FINANCIAL STATEMENTS
 
 **10.**
              **SUBSEQUENT
                  EVENTS**
 
 ***REPRODUCTION
        AND DISTRIBUTION AGREEMENTS***
 
 As
        of
        June 2007, we have begun and expect to continue the conversion of our fully
        owned and licensed musical tracks into digital distribution.
 
 ***CONTRACTS
        AND AGREEMENTS***
 
 On
        July
        20, 2007, we entered into an exclusive contract with Frontier Nutritional
        Research, Inc. to distribute their product “Fit-a-Rita” a zero calories, zero,
        sugar Margarita Mix in the Latin American market and non-exclusive rights
        for
        certain US Latino distributors. Under the terms and conditions of the
        contract,we will be given
        the title of distributor and are granted the right to purchase the product
        in
        bulk at a distributors price. The terms of the payment for the product is
        net 30
        days. If payment is not received by the vedor 60 days after the date the
        product
        is delivered to the distributor, then 12% interest is accrues on the amount
        due
        to them.
 
 ***MUSIC
        ARRANGEMENTS***
 
 Since
        launching FEMI, we expanded our expanded our music and video catalog,
        by signing new artists, and acquiring music masters containing over 890 music
        tracks. We have also expanded our marketing and distribution capabilities
        and
        enhanced sales in the process.  We executed an agreement with Digital
        Music Group, Inc, one of the leaders in the digital distribution of
        entertainment products, We also executed an agreement with UK digital
        distributor Vidzone. Must recently we executed a publishing agreement with
        Ediciones Musicales Clippers. We hired on March 1, 2007, the services of
        Adolfo
        Fernandez, a prestigious publicist from F&F Media Group. Mr. Fernandez's
        firm represents companies such as WEA Music, Sony BMG, Televisa Group, Univision
        Music Group, EMI US Latin, EMI Music Colombia, Venemusic, Fonosound, Grupo
        Origin, Warner Music Latina, and others. Mr. Fernandez has worked with many
        artists such as Andrea Bocelli, Ricky Martin, Alejandro Sanz, Mark Anthony,
        Shakira, Gilberto Santarosa, Jennifer Lopez, and others. We have yet to realize
        the potential of these recent agreements and opportunities.
  F
            -
            17






**ITEM
      8.   CHANGESIN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE**




None.


**ITEM
      8A. CONTROLSAND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**





Disclosure
      controls and procedures are designed to ensure that information required to
      be
      disclosed in the reports filed or submitted under the Exchange Act of 1934
      is
      recorded, processed, summarized and reported, within the time periods specified
      in the rules and forms of the Securities and Exchange Commission. Disclosure
      controls and procedures include, without limitation, controls and procedures
      designed to ensure that information required to be disclosed in the reports
      filed under the Securities Exchange Act of 1934 is accumulated and communicated
      to management, including our Chief Executive Officer and Chief Financial
      Officer, as appropriate, to allow timely decisions regarding required
      disclosure.





As
      of the
      end of the period covered by this report, we carried out an evaluation of the
      effectiveness of the design and operation of our disclosure controls and
      procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under
      the supervision and with the participation of our Principal Executive Officer
      and Principal Financial Officer. Based upon that evaluation, he concluded that
      our disclosure controls and procedures were ineffective in gathering, analyzing
      and disclosing information needed to satisfy our disclosure obligations under
      the Exchange Act.





There
      were no changes in internal controls over financial reporting that occurred
      during the last fiscal quarter that has materially affected, or is reasonably
      likely to materially affect, the internal control over financial
      reporting.  We also note the incorrect characterization of production costs
      in our statement of cash flows that resulted in a material change to cash flows
      from operating and investing activities.





In
      connection with the development of a leased TV channel in Puerto Rico, the
      Company shared in paying for certain expenses including travel, lodging and
      meals for its President, in connection with the pursuit of available TV
      programming in that area. There was inadequate documentation to support the
      allocation of such expenses between the Company and the TV station owned by
      the
      Company’s president. In addition there were no signed agreements between the
      Company and the personnel retained to perform services in connection with
      obtaining TV programming which should disclose as a minimum, the nature of
      the
      services to be rendered, the amount of periodic compensation being paid and
      the
      term of the services.




The
      lack
      of support concerning the above matters was considered to be a material
      weaknesses in internal control, which weakness commenced during the entire
      period from inception of the Company as to the first matter and the last quarter
      of the fiscal year ended May 31, 2007, as to the second matter.





The
      President of the Company has since required documentation for all disbursements,
      has recorded in a journal the information necessary to allocate amounts among
      entities, and will obtain written agreements for all services to be provided
      to
      the Company.




**ITEM 8B. OTHER
      INFORMATION**




None.


12





**PART
      III**





**ITEM
      9.   DIRECTORS, EXECUTIVE OFFICERS. PROMOTERS AND
      CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)**





The
      following table sets forth the names and ages of the directors and executive
      officers of the Company through the date of this Report, as well as the current
      officers and directors; the principal officers and positions with the Company
      held by each person and the date such person became a director or executive
      officer of the Company. Each serves until the next annual meeting of the
      stockholders.




Names
      of
      Current Executive


Officers
                and Directors
            Age
            Position
            Date
                of AppointmentHugo
                M. Cancio
            41
            Director/President
              Treasurer/secretary
            December
                29, 2005





HUGO
      M.
      CANCIO, President, Treasurer, Secretary and Director, Age 41, is our sole
      officer and director. Since 2003, Mr. Cancio has served as the president of
      Ciocan Entertainment and Music Group, L.L.C., an independent film and music
      company. Prior to 2003, Mr. Cancio was self-employed as an independent film
      and
      music producer since 1990. Mr. Cancio attended Miami-Dade Community College
      where he studied Business Administration. Mr. Cancio is not an officer or
      director of any other publicly traded company.





**ITEM
      9B: COMPLIANCEWITH SECTION 16(a) OF THE EXCHANGE
      ACT**





Section
      16(a) of the Securities Exchange Act of 1934 requires our officers, directors
      and person who own more than 10% of our Common Stock to file reports of
      ownership and changes in ownership with the Securities and Exchange Commission.
      All of the aforesaid persons are required by SEC regulation to furnish us with
      copies of all Section 16(a) forms they file. No changes in the holdings of
      any
      officer, director or other person took place and therefore, no other reports
      were required to be filed.





**ITEM
      10.  EXECUTIVECOMPENSATION**





The
      following table sets forth certain information concerning the compensation
      paid
      by the Company for services rendered in all capacities to the Company from
      for
      the period ended May 31, 2007 and 2006 of all officers and directors of the
      Company.




Long
                – Term Compensation AwardsName
                and Principal
            
            
            Stock-Based
            UnderlyingPositions
                at 5/31/07
            Salary
                2007 and 2006
            Bonus
                2007 and 2006
            Compensation
                2007 and 2006
            Options
                2007 and 2006Hugo
                M. Cancio
              Director/President
              Treasurer
            $40,500
                (2007) *
            -0-
                (2007)
            -0-
                (2007)
            -0-Hugo
                M. Cancio
              Director/President
              Treasurer
            $36,000  (2006)
            -0-
                (2006)
            -0-
                (2006)
            -0-
                (2006)





*
      All
      compensation noted above ws contributed to the Company.




13





**ITEM
      11.  SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT.**





The
      following table sets forth, as of May 31, 2007, certain information with respect
      to the beneficial ownership of our 36,639,353 shares of common stock by (i)
      each
      director and officer of the Company, (ii) each person known to the Company
      to be
      the beneficial owner of 5% or more of the outstanding shares of common stock,
      with such person’s address, and (iii) all of the directors and officers as a
      group. Unless otherwise indicated, the person or entity listed in the table
      is
      the beneficial owner of the shares and has sole voting and investment power
      with
      respect to the shares indicated.




**Name
                of Beneficial Owner**
            **Shares
                Beneficially****or
                Name of Officer or Director**
            **Owned**
            **Percent**Hugo
                M. Cancio
              Director/President
              Treasurer/Secretary
            19,272,738
            52.60%Ciocan
                Entertainment Film & Music Group, LLC
            5,500,000
            15.01%Total
                Director/Officer/
              5%
                Owners
            24,774,738
            67.61%




*
      Hugo M.
      Cancio is the controlling shareholder of Ciocan Entertainment Film and Music
      Group, L.L.C. which owns 5,500,000 shares of our common stock.




**ITEM
      12.  CERTAINRELATIONSHIPS AND RELATED PARTY
      TRANSACTIONS.**





Ciocan
      Entertainment and Music Group, LLC, "Ciocan" is an entertainment company owned
      by Hugo M. Cancio, our sole officer, director and principal shareholder. Ciocan
      creates products for the Latino Market in and out of the United States borders
      and will use our company to market, promote and commercialize some its products
      (music, films, documentaries, artist, etc) for the Anglo and international
      markets. During the year ended May 31, 2007, **Ciocan** advanced to
      the Company a total of $33,050 of which, $24,800 was remaining at year
      end.





We
      lease
      our principal office space located at 8010 NW 156 Street, Miami Lakes, Florida
      33016 on a month to month basis from a related  party. Total rent
      expense for the year ended May 31, 2007 and 2006 was $15,083, and $8,500,
      respectively.





No
      additional shares have been issued to our President/CEO.





Our
      President/CEO is owed $239,093 for the period from inception through May 31,
      2007 for cash advances to the company for a variety of general and
      administrative expenses and the development of TV station programming. During
      the current year he advanced $245,625 and was repaid $6,533. No interest was
      paid on this date which accrues at 15 percent per annum and is payable on June
      1, 2008. Accrued interest totaled $15,424 as of May 31, 2007.




**Audit
      Committee Financial Expert**




Our
      Board
      of Directors has determined that the sole member of our Audit Committee, Mr.
      Felix Danciu qualifies as an audit committee financial expert under the
      applicable rules of the SEC.  Mr. Danciu’s qualifications include, among
      other things, his practice as a financial consultant and investment banker.
      Mr.
      Danciu does not meet the audit committee independence criteria prescribed by
      the
      NASDAQ as he is also a member of our Board of Directors.  Our company is
      not required to have an audit committee under the FINRA guidelines for OTC
      traded companies, and therefore is not required to have an independent audit
      committee member.


14







**ITEM
      13.  EXHIBITSAND REPORTS ON FORM
      8-K**.




(a) Exhibits




**Exhibit
                No.**
            **Description
                and Method of Filing**10.1
            Zafiros
                Locura Azul Agreement*10.2
            Promissory
              Note*10.3
            Promissory
              Note*10.4
            Letter
              of Agreement*31.1
            Certificate
                of Principal Executive Officer as
                Required by Rule 13a-14(a)/15d-1431.2
            Certificate
                of Principal Accounting Officer as
                Required by Rule 13a-14(a)/15d-1432.1
            Certification
                  Of Chief Executive Officer And Chief Financial Officer Pursuant
                  To18
                  U.S.C. Section 1350,As
                  Adopted Pursuant To Section906
                  Of The Sarbanes-Oxley Act Of 200299.1
            Press
              Releases*




* 
      Referenced by incorporation to the Form 10KSB filed on September 17, 2007,
      accession number 0001140361-07-018259.




**(b) Reports
      on Form 8-K**





**July
      3, 2007**





On
      August
      25, 2006, the Company issued a press release and filed an 8K where it announced
      that we had issued a letter of intent to acquire 14 television stations for
      a
      total consideration of $11 million in cash and stock, including the assumption
      of liabilities. As part of its commitment to acquire these assets, we were
      going
      to place 1 million shares of the Company’s Rule 144 common stock in a
      third-party escrow. The transaction was subject to a 60-day due diligence period
      and approval by the FCC.





At
      the
      time, the Company’s stock was trading at $0.88 per share. The Letter of Intent
      (LOI) called for a portion of the $11 million to be paid in Fuego stock at
      a
      20-day average trading price prior to executing the definitive agreement. The
      terms were later verbally modified to a cash only arrangement, thereby excluding
      the issuance of Fuego stock as consideration. Fuego’s management decided against
      issuing Fuego stock for this acquisition after the Company’s stock decreased
      dramatically and management considered the dilution too significant to the
      Company’s shareholders.





In
      the
      subsequent months we continued pursuing the possibility of raising capital
      in
      moving forward with this acquisition. At the present time, the Company has
      been
      unable find adequate financing to complete this arrangement. Therefore, we
      are
      no longer pursuing the acquisition of the 14 television stations.





1.02
      Termination of a Material Definitive Agreement




Fuego
      Entertainment, Inc. entered into a management agreement with an affiliate,
      Fuego
      Entertainment Media, LLC, (FEML) to manage and operate a television network.
      Previously, FEML entered into a lease/purchase option arrangement with the
      antenna’s owner to enable FEML to broadcast its programming content based on
      monthly lease payments until such time as we could exercise the two-year
      underlying option purchase agreement.


15





We
      also
      acquired from FEML an option to acquire FEML’s purchase option on the same terms
      and conditions FEML had agreed to purchase it. In the event we were able to
      earn
      substantial management fees from the programming content over a sustained period
      of time, the Company would have been able to arrange suitable financing to
      acquire the antenna outright, at a cost of approximately $3.2 million dollars
      for the Las Vegas television station and $3.8 million for the three television
      stations in Puerto Rico.





We
      previously reported as part of an 8K filing on December 11, 2006, that we will
      be required to hire qualified programming and technical personnel to facilitate
      the management agreement with FEML and that we will incur substantial related
      costs and expenses to enable us to initiate and carry out our obligations under
      the agreement with FEML. Also, we reported that we were actively seeking
      financing for these projects. We also noted that Fuego Entertainment has no
      financial ownership interest in FEML and none is contemplated under the existing
      agreement with FEML.





Although
      we have  received several financing opportunities in the form of
      convertible debentures, management has not accepted these financing
      opportunities due to what we consider to be “unacceptable terms,” such as high
      interest rates, excessive dilution, and the other risks this could
      represent. Although we have spent considerable funds in anticipation of managing
      our television projects, we would need additional funds. Without adequate
      financing, at this time, we are not in a position to be able to carry out
      our intent to manage and operate these stations. Therefore, effective
      immediately we are terminating our agreement with FEML relating to the
      management and operation of the television stations and purchase options. We
      are
      also putting on hold, indefinitely, our plans to launch our own television
      network, Fuego TV until adequate financing becomes available and can secure
      it.





**May
      9, 2007**


Fuego
      Entertainment, Inc. (FEI), entered into a management agreement with an
      affiliate, Fuego Entertainment Media, LLC, (FEML) to manage and operate the
      network of the affiliate. Previously, FEML entered into a lease/purchase option
      arrangement with the antenna’s owner to enable FEML to broadcast its programming
      content based on monthly lease payments until such time as FEML could determine
      that the two year underlying option agreement should be exercised.





FEI
      also
      acquired from FEML, an option to acquire the FEML antenna purchase option on
      the
      same terms and conditions that FEML had agreed to purchase it, in the event
      FEI
      was able to earn substantial management fees from the programming content over
      a
      sustained period of time, and FEI was able to arrange suitable financing to
      acquire the antenna outright which was a cost of approximately 3.2 million
      dollars for the Las Vegas Television Station and 3.8 million for the three
      televison stations in Puerto Rico





FEI
      will
      be required to hire qualified programming and tecnichal personnel to facilitate
      the management agreement with FEML, and will incur substantial related costs
      and
      expenses to enable it to initiate and carry out its obligations under the
      agreement with FEML. FEI is activily seeking financing for these
      projects.





FEI
      has
      no financial ownership interest in FEML and none is contemplated under the
      existing agreement with FEML.





**March
      3, 2007**


Parnell
      Francois Delcham Joins Fuego Entertainment's Board of
      Directors.  Fuego Entertainment, Inc. announced that Parnell Francois
      Delcham has been added to the board of directors. It is anticipated that Mr.
      Delcham will be nominated for election to Fuego's Board of Directors at the
      Company's 2007 Annual Meeting of Shareholders.


16





**December
      18, 2006**


Fuego
      Entertainment Announces the Launch of Fuego Television Network in Puerto Rico
      and Soon, Las Vegas.  Fuego Entertainment, Inc. today announces the
      launch of Fuego Television Network (FuegoTV) in Puerto Rico under a Lease
      Management Agreement and Purchase Option. Fuego Entertainment also announces
      a
      Lease Management Agreement and Purchase Option for LPTV station KVPX-LP in
      Las
      Vegas, Nevada.





**November
      22, 2006**


Fuego
      Entertainment Announces the Acquisition of Vision Sports Entertainment Network
      with 24 Affiliate Stations Reaching 14 Million US Households. Fuego
      Entertainment, Inc. today announces that it has acquired Vision Sports
      Entertainment Network (VSEN-TV), broadcasting on 24 affiliate stations and
      reaching over 14 million US households. Based in Burbank, VSEN-TV will relocate
      to Las Vegas NV, and its founder, Rod Myers, will remain President of this
      wholly-owned subsidiary of Fuego Entertainment under a three-year employment
      agreement.





**September
      28, 2006**


Fuego
      Entertainment Announces the Launch of Fuego Television Network in Puerto Rico
      and Soon, Las Vegas. Fuego Entertainment, Inc. today announces the launch of
      Fuego Television Network (FuegoTV) in Puerto Rico under a Lease Management
      Agreement and Purchase Option. Fuego Entertainment also announces a Lease
      Management Agreement and Purchase Option for LPTV station KVPX-LP in Las Vegas,
      Nevada.





**September
      9, 2006**


On
      August
      29, 2006, Victor Rodriguez  resigned his position as a Director of Fuego
      Entertainment, Inc. No replacement has yet been named to fill the vacancy
      created by Mr. Rodriguez's resignation.





**August
      25, 2006**


On
      August
      15, 2006, Juan Pablo Santos resigned his position as a Director of Fuego
      Entertainment, Inc. No replacement has yet been named to fill the vacancy
      created by Mr. Santos’ resignation.





**August
      24, 2006**


Fuego
      Entertainment, Inc. (OTC Bulletin Board: FUGO) announced that it has issued
      a
      letter of intent to acquire 14 television stations for a total consideration
      of
      $11 million in cash and stock, including the assumption of liabilities. As
      part
      of its commitment to acquire these assets, Fuego will place 1 million shares
      of
      the Company’s Rule 144 common stock in third-party escrow. The transaction is
      subject to a 60-day due diligence period and approval by the FCC.





**Press
      Release as to matters associated with the Form 8-K filed on August 24,
      2006**


Fuego
        Entertainment discusses August 24, 2006 security breach at various online
        brokerages and the effect on Fuego’s share price


As
        Fuego
        continues to receive calls from existing shareholders and potential investors
        regarding the unusual trading activities on August 24, 2006, and TD Ameritrade’s
        refusal to allow online trading of our Company stock, management has decided
        to
        temporarily post this bulletin on our website to provide a better understanding
        of these issues. It is important to let everyone know the Company has moved
        beyond this incident and continues to forge ahead.


At
        2:53
        PM on July 11, 2006, Fuego Entertainment began trading on the Over the Counter
        Bulletin Board under the ticker symbol FUGO. In the few weeks prior to August
        24, 2006, the price per share of FUGO averaged around 80 to 90 cents on very
        low
        average daily volume of a few thousand shares.
  17


To
        the
        surprise of Fuego management, and shareholders alike, on August 24, 2006,
        Fuego
        stock rose from $.88 per share to an inter-day high of $1.28 per share. Fuego
        daily trading volume reached a staggering 1,118,070 shares. Ordinarily, an
        increase in share price would be viewed as a positive event but in this case
        many online brokerages stopped the trading in Fuego stock the next trading
        day,
        citing “suspicious trading activity.” A few days later, all online brokerages,
        except for TD Ameritrade, resumed trading in Fuego stock.  Once online
        trading resumed, the share price plummeted and for the past few months, it
        has
        floated around 20 to 30 cents per share.


The
        cause
        of this unexpected rise in price and extraordinarily high trading volume,
        followed by an equally unexpected plunge in price, remained a mystery until
        recently. Federal authorities brought securities fraud charges against Aleksey
        Kamardin, a US citizen with ties to Latvia, whom they allege made more than
        $82,000 in a six-week scheme that used compromised trading accounts to drive
        up
        the price of stock in 14 publicly traded companies.


On
        August
        24, 2006, Kamardin purchased 55,000 shares of Fuego stock. That same day,
        Kamardin allegedly accessed accounts at E*Trade, TD Ameritrade, Schwab, and
        Scottrade, liquidated their positions, and purchased a total of 458,600 shares
        of FUGO. Kamardin then sold all of his Fuego shares at prices ranging from
        $1.20
        to $1.28 per share, making a profit of $9,164.28 in approximately three
        hours.


When
        regulators took an interest, Kamardin fled to Russia to hide, according to
        the
        SEC. On August 28 and 29, 2006, he wired his fraudulent gains from his online
        brokerage account to a domestic bank account, and then transferred the funds
        to
        a second account owned by his Russian-born roommate. The roommate then
        immediately wired the funds to a bank account located in Riga, Latvia, according
        to the Commission.


Kamardin,
        allegedly part of an East European criminal organization, defrauded investors
        of
        $82,960, according to a civil complaint filed by the Securities and Exchange
        Commission on January 22, 2007. (See SEC complaint:
http://www.sec.gov/litigation/complaints/2007/comp19981.pdf ) 
According to the SEC, no one was safe. Kamardin broke into at least
        27 online
        accounts at E*Trade, Scottrade, TD Ameritrade, J.P. Morgan Chase, and Charles
        Schwab, and illegally manipulated the share price of 14 publicly traded
        companies. For a thorough review of the events surrounding Kamardin’s activities
        refer to this article in The Washington Post: 
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/25/AR2007012501763.html?nav=hcmodule


Shortly
        after charges were filed against Kamardin, Fuego management became aware
        of the
        situation and most, but not all, of the mystery was solved. What remains
        to be
        determined is why TD Ameritrade continues to disallow any online trading
        in
        Fuego stock?


Management
        is also investigating what happened to the 458,650 shares of Fuego stock
        that
        allegedly Kamardin purchased via hacked accounts. All investors whose accounts
        were hacked have been reimbursed by their respective brokers but the disposition
        of the 458,600 shares of Fuego stock remains a mystery. It is possible these
        shares were sold back into the market by the brokerages.


It
        is
        clear Kamardin’s alleged actions on August 24, 2006, caused the share price of
        Fuego Entertainment to dramatically decline in the days following and triggered
        the cessation of online trading that continues to this day at TD
        Ameritrade.


Management
        has contacted TD Ameritrade regarding this issue and is expecting a resolution
        soon.
 18
  Fuego’s
        CEO, Hugo Cancio, owns in excess of 60% of all outstanding shares in the
        Company
        and much of the remaining stock is closely held by loyal Fuego
        shareholders.




**July
      10, 2006**


Fuego
      Entertainment to Launch New Broadcast Television Station "Citytv Puerto Rico"
      on
      August 25, 2006 under a Licensing Agreement with CHUM International





Fuego
      Entertainment, Inc. (OTC Bulletin Board: FUGO) today announced that it will
      launch a full-service television station in San Juan, Puerto Rico, through
      and
      exclusive agreement with Eastern Television Corporation.  "Citytv Puerto
      Rico" will replace Encuentro Vision, WRUA TV, Channel 34. Fuego Entertainment
      will implement the Citytv format in Puerto Rico under a licensing agreement
      with
      CHUM International.  “Citytv Puerto Rico” will deliver locally-focused
      programming, celebrating and reflecting the local culture of the
      community.





**Subsequent
      Events**





On
      July
      20, 2007, we entered into an exclusive contract with Frontier Nutritional
      Research, Inc. to distribute their product “Fit-a-Rita” a zero calories, zero,
      sugar Margarita Mix in the Latin American market and non-exclusive rights for
      certain US Latino distributors. Under the terms and conditions of the contract,
      we will be given the title of distributor and are granted the right to purchase
      the product in bulk at a distributors price. The terms of the payment for the
      product is net 30 days. If payment is not received by the vendor 60 days after
      the date the product is delivered to the distributor, then 12% interest is
      accrues on the amount due to them.







**ITEM
      14.  PRINCIPALACCOUNTANT FEES AND
      SERVICES**





Our
      Board
      of Directors reviews and approves audit and permissible non-audit services
      performed by its independent accountants, as well as the fees charged for such
      services. In our review of non-audit service fees and its appointment of
      Braverman International, P.C., as our independent accountants, our Board of
      Directors considered whether the provision of such services is compatible with
      maintaining independence. All of the services provided and fees charged by
      Braverman International, P.C., in fiscal year ended May 31, 2007, were approved
      by our board of directors.





Audit
      Fees





We
      paid
      Braverman International P.C. a total of $59,702 for audits and interim filings
      including SB-2 registration reviews since inception. The SB-2 was $15,628,
      the
      interim filings were $7,789 and the rest were for two audits of
      $36,285.




Audit-Related
      Fees





Audit
      related fees billed by Braverman International, P.C. was $17,500 for the year
      ended May 31, 2007.





Tax
      Fees





None
      paid
      to Braverman International, P.C.


19




**SIGNATURES**





In
      accordance with Section 13 and 15(d) of the Exchange Act, the Company caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





**FUEGO
                  ENTERTAINMENT, INC.**Date:
                  September 27, 2007
              By:
              /s/
                  Hugo M.
                  CancioHugo
                  M. Cancio , Principal Executive officerDate:
                  September 27, 2007
              By:
              /s/
                  Hugo M.
                  CancioHugo
                  M. Cancio, Principal Accounting Officer





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.


Date: September
                  27, 2007
              By:
              /s/
                  Hugo M.
                  CancioHugo
                  M. Cancio, Director




20