----

----

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

| 8010      NW 156 Terrace  Miami,      FL | 33018           |
|-----------------------------------------------|-----------------|
| (Address      of pricipal executive offices)  | (Zip      Code) |

----

----

| Large accelerated      filer | o      |                                               | Accelerated      filer         | o      |
|------------------------------|--------|----------------------------------------------------|--------------------------------|--------|
|                         |   |                                               |                           |   |
| Non-accelerated      filer   | o      | (Do not check if a      smaller reporting company) | Smaller reporting      company | x      |

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|       |                                                                                                                                               | Page   |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|       |                                                                                                                                               |   |
| PART I:    | FINANCIAL      INFORMATION                                                                                                                         | 3      |
|       |                                                                                                                                               |   |
| Item 1.    | Financial      Statements                                                                                                                          | 3      |
|       |                                                                                                                                               |   |
|       | Balance Sheet as of      August 31, 2008 (unaudited) and May 31, 2008                                                                              | 3      |
|       |                                                                                                                                               |   |
|       | Statements of      Operations (unaudited) for the three months ended August 31, 2008 and      for the three months ended August 31, 2007 | 4      |
|       |                                                                                                                                               |   |
|       | Statements of Cash      Flows (unaudited) for the three months ended August 31, 2008 and for the      three months ended August 31, 2007           | 5      |
|       |                                                                                                                                               |   |
|       | Statements of      Stockholders' Equity (Deficit) for the period from May 31, 2006 to August      31, 2008 (unaudited)                             | 6      |
|       |                                                                                                                                               |   |
|       | Notes to Financial      Statements                                                                                                                 | 8      |
|       |                                                                                                                                               |   |
| Item 2.    | Management's      Discussion and Analysis of Financial Condition and Results of      Operations                                                    | 12     |
|       |                                                                                                                                               |   |
| Item 3.    | Quantitative and      Qualitative Disclosures About Market Risk                                                                               | 15     |
|       |                                                                                                                                               |   |
| Item 4T.   | Controls and      Procedures                                                                                                                       | 15     |
|       |                                                                                                                                               |   |
|       |                                                                                                                                               |   |
| PART II:   | OTHER      INFORMATION                                                                                                                        | 16     |
|       |                                                                                                                                               |   |
| Item 1.    | Legal      Proceedings                                                                                                                        | 16     |
|       |                                                                                                                                               |   |
| Item 1A.   | Risk      Factors                                                                                                                             | 16     |
|       |                                                                                                                                               |   |
| Item 2.    | Unregistered Sales      of Equity Securities and Use of Proceeds                                                                              | 16     |
|       |                                                                                                                                               |   |
| Item 3.    | Defaults Upon Senior      Securities                                                                                                          | 16     |
|       |                                                                                                                                               |   |
| Item 4.    | Submission of      Matters to a Vote of Security Holders                                                                                      | 17     |
|       |                                                                                                                                               |   |
| Item 5.1   | Other      Information                                                                                                                        | 17     |
|       |                                                                                                                                               |   |
| Item 6.    | Exhibits                                                                                                                                      | 17     |
|       |                                                                                                                                               |   |
| Signatures | 17                                                                                                                                                 |

----

| FUEGO      ENTERTAINMENT, INC. AND AFFILIATE             |   |
|----------------------------------------------------------|--------|
| CONSOLIDATED      BALANCE SHEETS                         |   |
| August      31, 2008                                     |   |
|                                                     |   |   |   |   |   |   |
|                                                     |   | August      31, |   |   | May      31, |   |
|                                                     |   | 2008 |   |   | 2008 |   |
|                                                     |   | (Unaudited) |   |   |   |   |
| ASSETS                                                   |
|                                                     |   |   |   |   |   |   |
| CURRENT      ASSETS                                      |   |   |   |   |   |   |
| Cash                                                     |   | $ | - |   |   |   | 7,754 |   |
| Account      receivable-trade, less allowance            |   |   |   |   |   |   |   |   |
| for      doubtful accounts of $90,000                    |   |   | 64,925 |   |   |   | 100,323 |   |
|                                                     |   |   |   |   |   |   |   |   |
| Total      Current Assets                                |   |   | 64,925 |   |   |   | 108,077 |   |
|                                                     |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |
| EQUIPMENT,      less accumulated depreciation            |   |   |   |   |   |   |   |   |
| of      $29,815 and $27,172 respectively                 |   |   | 27,859 |   |   |   | 31,666 |   |
|                                                     |   |   |   |   |   |   |   |   |
| OTHER      ASSETS                                        |   |   |   |   |   |   |   |   |
| Music      Albums (Echo-Fuego)                           |   |   | 480,000 |   |   |   | 480,000 |   |
| Beverage      Plus AG                                    |   |   | 425,000 |   |   |   | 425,000 |   |
| Production      costs-Video                              |   |   | 45,509 |   |   |   | 45,509 |   |
| Production      costs-Music                              |   |   | 55,747 |   |   |   | 50,047 |   |
| Deposit      on music library                            |   |   | 14,500 |   |   |   | 14,500 |   |
| Web      portal                                          |   |   | 11,329 |   |   |   | 11,329 |   |
| Logo,      less accumulated amortization                 |   |   |   |   |   |   |   |   |
| of      $1,845                                           |   |   | 855 |   |   |   | 990 |   |
|                                                     |   |   |   |   |   |   |   |   |
| Total      Other Assets                                  |   |   | 1,032,940 |   |   |   | 1,027,375 |   |
|                                                     |   |   |   |   |   |   |   |   |
| TOTAL      ASSETS                                        |   | $ | 1,125,724 |   |   | $ | 1,167,118 |   |
|                                                     |   |   |   |   |   |   |   |   |
| LIABILITIES AND      STOCKHOLDERS' EQUITY                |
|                                                     |   |   |   |   |   |   |   |   |
| CURRENT      LIABILITIES                                 |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |
| Accounts      payable                                    |   | $ | 123,026 |   |   | $ | 38,222 |   |
| Accounts      payable - related parties                  |   |   | 99,586 |   |   |   | 99,586 |   |
| Accrued      interest - related parties                  |   |   | 75,298 |   |   |   | 63,953 |   |
| Income      taxes payable                                |   |   | 3,870 |   |   |   | 3,870 |   |
| Payroll      tax liabilities                             |   |   | 5,538 |   |   |   | 5,193 |   |
| Other      liabilities                                   |   |   | 18,626 |   |   |   | 6,347 |   |
|                                                     |   |   |   |   |   |   |   |   |
| Total      Current Liabilities                           |   |   | 325,944 |   |   |   | 217,171 |   |
|                                                     |   |   |   |   |   |   |   |   |
| Long-Term      Debt                                      |   |   |   |   |   |   |   |   |
| Notes      payable - related parties                     |   |   | 268,212 |   |   |   | 281,549 |   |
|                                                     |   |   |   |   |   |   |   |   |
| Total      Liabilities                                   |   | $ | 594,156 |   |   | $ | 498,720 |   |
|                                                     |   |   |   |   |   |   |   |   |
| COMMITMENTS      AND CONTINGENCIES                       |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |
| STOCKHOLDERS'      EQUITY (DEFICIT)                      |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |
| Common      stock, par value $.001, 75,000,000           |   |   |   |   |   |   |   |   |
| shares      authorized, 39,638,045 and 39,476,020 shares |   |   | 39,079 |   |   |   | 39,477 |   |
| issued      and outstanding, respectively                |   |   |   |   |   |   |   |   |
| Additional      Paid in capital                          |   |   | 1,005,666 |   |   |   | 1,032,968 |   |
| Paid      in capital-stock options                       |   |   | 112,527 |   |   |   | 233,027 |   |
| Subscriptions      payable                               |   |   | 45,000 |   |   |   | 45,000 |   |
| Noncontrolling      interest in affiliate                |   |   | 296,583 |   |   |   | 354,243 |   |
| Accumulated      deficit                                 |   |   | (967,287 | ) |   |   | (1,036,317 | ) |
|                                                     |   |   |   |   |   |   |   |   |
| Total      Stockholders' Equity                          |   |   | 531,568 |   |   |   | 668,398 |   |
|                                                     |   |   |   |   |   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY          |   | $ | 1,125,724 |   |   | $ | 1,167,118 |   |
|                                                     |   |   |   |   |   |   |   |   |
| SEE      ACCOMPANYING NOTES TO FINANCIALSTATEMENTS       |

----

| FUEGO      ENTERTAINMENT, INC AND AFFILIATE                 |   |
|-------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENT OF OPERATIONS                   |   |
| (Unaudited)                                                 |   |
|                                                        |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |
|                                                        |   | For      the Three Months Ended |   |
|                                                        |   | August      31, 2008 |   |   | August      31, 2007 |   |
|                                                        |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |
| REVENUES                                                    |   |   |   |   |   |   |
| Music      sales, net                                       |   | $ | (10,810 | ) |   | $ | 11,376 |   |
| Advertising,      web site                                  |   |   | - |   |   |   |   |   |
| Filming                                                     |   |   | - |   |   |   |   |   |
| Consulting                                                  |   |   | - |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |
| Total      Revenues                                         |   |   | (10,810 | ) |   |   | 11,376 |   |
|                                                        |   |   |   |   |   |   |   |   |
| COSTS      AND EXPENSES                                     |   |   |   |   |   |   |   |   |
| Cost      of music                                          |   |   |   |   |   |   |   |   |
| Royalties      - related party                              |   |   | - |   |   |   | 2,844 |   |
| Production      costs                                       |   |   | 12,958 |   |   |   | 300 |   |
| Cost      of filming                                        |   |   | - |   |   |   |   |   |
| Affiliation      agreements                                 |   |   | - |   |   |   |   |   |
| Selling,      general and administrative:                   |   |   |   |   |   |   |   |   |
| Provision      for bad debts                                |   |   | - |   |   |   |   |   |
| Compensation      - stock based and contributed             |   |   | 28,550 |   |   |   | 63,812 |   |
| Other                                                       |   |   | 130,941 |   |   |   | 51,543 |   |
| TV      development                                         |   |   | - |   |   |   |   |   |
| Web      site Cost                                          |   |   |   |   |   |   |   |   |
| Impairment      of investment                               |   |   | - |   |   |   |   |   |
| Interest      expense - related parties                     |   |   | 11,344 |   |   |   | 10,784 |   |
| Interest      expense - other                               |   |   | - |   |   |   | 393 |   |
| Depreciation      and amortization                          |   |   | 2,824 |   |   |   | 3,329 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Total      costs and expenses                               |   |   | 186,617 |   |   |   | 133,005 |   |
|                                                        |   |   |   |   |   |   |   |   |
| Other      Income                                           |   |   | 47 |   |   |   |   |   |
| Gain      on Cancellation of Compensation Options           |   |   | 137,500 |   |   |   |   |   |
| Gain      on Cancellation of Shares for Services-Settlement |   |   | 71,250 |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |
| Income      (Loss) before income taxes                      |   |   | 11,370 |   |   |   | (121,629 | ) |
|                                                        |   |   |   |   |   |   |   |   |
| Income      tax expense (benefit)                           |   |   | - |   |   |   | - |   |
|                                                        |   |   |   |   |   |   |   |   |
| Income      (Loss) Before Minority Interest                 |   |   | 11,370 |   |   |   | (121,629 | ) |
|                                                        |   |   |   |   |   |   |   |   |
| Less      Minority Interest in Affiliates' losses           |   |   | 57,660 |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS)                                      |   | $ | 69,030 |   |   | $ | (121,629 | ) |
|                                                        |   |   |   |   |   |   |   |   |
| EARNINGS      (LOSS) PER SHARE - BASIC *               |   |   | - |   |   |   | - |   |
|                                                        |   |   |   |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF                             |   |   |   |   |   |   |   |   |
| COMMON      SHARES OUTSTANDING - BASIC                      |   |   | 39,617,528 |   |   |   | 35,625,161 |   |
|                                                        |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |
| *  less      than $.01 per share                  |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |
| SEE      ACCOMPANYING NOTES TO FINANCIALSTATEMENTS          |

----

| FUEGO      ENTERTAINMENT, INC. AND AFFILIATE                                                                        |
|---------------------------------------------------------------------------------------------------------------------|
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                                                          |
| (Unaudited)                                                                                                         |
|                                                                                                                |   |
|                                                                                                                |   |
|                                                                                                                |   | For      the Three Months Ended |   |
|                                                                                                                |   | August      31, 2008 |   |   | August      31, 2007 |   |
|                                                                                                                |   |   |   |   |   |   |
| OPERATING      ACTIVITIES                                                                                           |   |   |   |   |   |   |
|     Net      income (loss)                                                                      |   | $ | 69,030 |   |   | $ | (121,629 | ) |
|     Adjustments      to reconcile net income (loss) to net cash used by                         |   |   |   |   |   |   |   |   |
|        operating      activities                                                 |   |   |   |   |   |   |   |   |
|            Contributed      services                         |   |   | 19,800 |   |   |   | 20,675 |   |
|            Impairment      loss on investment                |   |   | - |   |   |   |   |   |
|            Depreciation      and amortization                |   |   | 2,777 |   |   |   | 3,329 |   |
|            Stock      based compensation                     |   |   | 8,750 |   |   |   | 50,312 |   |
|     Changes      in operating assets and liabilities                                            |   |   |   |   |   |   |   |   |
|            Accounts      receivable                          |   |   | 35,398 |   |   |   | 5,596 |   |
|            Accrued      federal Income tax refund receivable |   |   | - |   |   |   |   |   |
|            Deferred      tax asset                           |   |   | - |   |   |   |   |   |
|            Other      current asset                          |   |   | - |   |   |   |   |   |
|            Accounts      payable                             |   |   | 84,804 |   |   |   | 1,941 |   |
|            Accrued      interest - related parties           |   |   | 11,345 |   |   |   | 10,784 |   |
|            Income      taxes payable                         |   |   | - |   |   |   |   |   |
|            Payroll      tax liabilities                      |   |   | 345 |   |   |   |   |   |
|            Other      current liabilities                    |   |   | 12,279 |   |   |   | 302 |   |
|            Production      costs-music                       |   |   | (5,700 | ) |   |   |   |   |
|            Deferred      revenue                             |   |   | - |   |   |   |   |   |
| NET      CASH (USED BY) OPERATING ACTIVITIES                                                                        |   |   | 238,828 |   |   |   | (28,690 | ) |
|                                                                                                                |   |   |   |   |   |   |   |   |
| INVESTING      ACTIVITIES                                                                                           |   |   |   |   |   |   |   |   |
|            Investment      in Echo-Fuego Music Group, LLC    |   |   | - |   |   |   |   |   |
|            Investment      in Beverage Plus AG               |   |   | - |   |   |   |   |   |
|            Investment      in Music Albums (Echo-Fuego)      |   |   | - |   |   |   |   |   |
|            Noncontrolling      interest in affiliate         |   |   | (57,660 | ) |   |   |   |   |
|            Web      portal                                   |   |   | - |   |   |   |   |   |
|            Deposit      on music library                     |   |   | - |   |   |   |   |   |
|            Purchase      of equipment                        |   |   | 1,164 |   |   |   |   |   |
| NET      CASH (USED BY) INVESTING ACTIVITIES                                                                        |   |   | (56,496 | ) |   |   | - |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITIES                                                                                           |   |   |   |   |   |   |   |   |
|           Proceeds      from sale of common stock                 |   |   | - |   |   |   |   |   |
|           Stock      options issued for debt reduction            |   |   | 17,000 |   |   |   |   |   |
|           Cancellation      of compensation options               |   |   | (137,500 | ) |   |   |   |   |
|           Cancellation      of shares for services-settlement     |   |   | (71,250 | ) |   |   |   |   |
|           Common      stock subscription payable                  |   |   | - |   |   |   |   |   |
|           Common      stock issued for debt reduction             |   |   | 15,000 |   |   |   |   |   |
|           Proceeds      from notes payable - related parties      |   |   | 11,549 |   |   |   | 32,912 |   |
|           Repayments      of notes payable - related parties      |   |   | (24,885 | ) |   |   | (3,164 | ) |
| NET      CASH PROVIDED BY FINANCING ACTIVITIES                                                                      |   |   | (190,086 | ) |   |   | 29,748 |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| NET      INCREASE (DECREASE) IN CASH                                                                                |   |   | (7,754 | ) |   |   | 1,058 |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| CASH,      BEGINNING OF YEAR                                                                                        |   |   | 7,754 |   |   |   | - |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| CASH,      END OF YEAR                                                                                              |   | $ | - |   |   | $ | 1,058 |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| SEE      ACCOMPANYING NOTES TO FINANCIALSTATEMENTS                                                                  |

----

| FUEGO      ENTERTAINMENT, INC. AND AFFILIATE                   |
|----------------------------------------------------------------|
| CONSOLIDATED      STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) |
|                                                           |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   | Paid-in      capital |   |   |   |   |   | Noncontrolling |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | Common      Stock |   |   | Paid-in |   |   | Stock |   |   | Subscriptions |   |   | Interest      in |   |   | Deferred |   |   | Accumulated |   |   |   |   |
|                                                           |   | Shares |   |   | Amount |   |   | Capital |   |   | Options |   |   | Payable |   |   | Affiliate |   |   | Charge |   |   | (Deficit) |   |   | Total |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      May 31,  2006                          |   |   | 34,959,562 |   |   |   | 34,960 |   |   |   | 118,398 |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | (86,166 | ) |   |   | 67,192 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of common stock for                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $.18      per share                                            |   |   | 102,778 |   |   |   | 103 |   |   |   | 18,397 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 18,500 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      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 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 20,470 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      Issued for debt reduction                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $.18      per share                                            |   |   | 40,000 |   |   |   | 40 |   |   |   | 7,160 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7,200 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      Issued for future services                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $.15      per share                                            |   |   | 875,000 |   |   |   | 875 |   |   |   | 130,375 |   |   |   |   |   |   |   |   |   |   |   |   | (122,979 | ) |   |   |   |   |   |   | 8,271 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contributed      services                                      |   |   |   |   |   |   |   |   |   |   | 60,925 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 60,925 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (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 | ) |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale of common stock for                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $.15      per share                                            |   |   | 83,000 |   |   |   | 83 |   |   |   | 12,367 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 12,450 |   |
| $.12      per share                                            |   |   | 541,667 |   |   |   | 542 |   |   |   | 64,458 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 65,000 |   |
| $.212      per share                                           |   |   | 1,300,000 |   |   |   | 1,300 |   |   |   | 274,300 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 275,600 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      based compensation                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $.28      per share                                            |   |   | 100,000 |   |   |   | 100 |   |   |   | 27,900 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 28,000 |   |
| $.15      per share                                            |   |   | 207,000 |   |   |   | 207 |   |   |   | 30,843 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 31,050 |   |
| $.17      per share                                            |   |   | 5,000 |   |   |   | 5 |   |   |   | 845 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 850 |   |
| $.12      per share                                            |   |   | 100,000 |   |   |   | 100 |   |   |   | 11,900 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 12,000 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      Issued for debt reduction                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $.15      per share                                            |   |   | 525,000 |   |   |   | 525 |   |   |   | 78,225 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 78,750 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      based compensation canceled                         |   |   | (25,000 | ) |   |   | (25 | ) |   |   | (3,725 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (3,750 | ) |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      options                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 233,027 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 233,027 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of deferred charges                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 122,979 |   |   |   |   |   |   |   | 122,979 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contributed      services                                      |   |   |   |   |   |   |   |   |   |   | 80,950 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 80,950 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subscriptions      payable                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 45,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 45,000 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncontrolling      interest in affiliate                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 354,243 |   |   |   |   |   |   |   |   |   |   |   | 354,243 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) for the year                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (444,593 | ) |   |   | (444,593 | ) |

----

| Balance,      May 31,  2008               |   |   | 39,476,020 |   |   | $      | 39,477 |   |   | $      | 1,032,968 |   |   | $      | 233,027  |   |   | $      | 45,000 |   |   | $      | 354,243 |   |   | $      | -      |   |   | $      | (1,036,317 | )      |   | $      | 668,398  |   |
|-----------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|----------|--------|
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| (Unaudited)                                         |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Proceeds      from sale of common stock for         |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   | -        |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Stock      based compensation                       |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| $.14      per share                                 |   |   | 62,500     |   |   |   | 62     |   |   |   | 8,688     |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   | 8,750    |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Stock      Issued for debt reduction                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| $.15      per share                                 |   |   | 100,000    |   |   |   | 15     |   |   |   | 14,985    |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   | 15,000   |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Amortization      of deferred charges               |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   | -        |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Stock      options issued for debt reduction        |   |   |       |   |   |   |   |   |   |   |      |   |   |   | 17,000   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   | 17,000   |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Cancellation      of shares for services-settlement |   |   | (475       | )      |   |   | (475   | )      |   |   | (70,775   | )      |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   | (71,250  | )      |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Cancellation      of compensation options           |   |   |       |   |   |   |   |   |   |   |      |   |   |   | (137,500 | )      |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   | (137,500 | )      |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Contributed      services                           |   |   |       |   |   |   |   |   |   |   | 19,800    |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   | 19,800   |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Noncontrolling      interest in affiliate           |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   | (57,660 | )      |   |   |   |   |   |   |       |   |   |   | (57,660  | )      |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Net      income for the period                      |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   | 69,030     |   |   |   | 69,030   |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| Balance,      Aug 31,  2008 (Unaudited)   |   |   | 39,638,045 |   |   | $      | 39,079 |   |   | $      | 1,005,666 |   |   | $      | 112,527  |   |   | $      | 45,000 |   |   | $      | 296,583 |   |   | $      | -      |   |   | $      | (967,287   | )      |   | $      | 531,568  |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
|                                                |   |   |       |   |   |   |   |   |   |   |      |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |       |   |   |   |     |   |
| SEE      ACCOMPANYING NOTES TO FINANCIALSTATEMENTS  |

----

| 1. | BASIS      OF PRESENTATION |
|----|----------------------------|

| 2. | NATURE      OF BUSINESS |
|----|-------------------------|

| 3. | SIGNIFICANT      ACCOUNTING POLICIES |
|----|--------------------------------------|

----

| 4. | 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 current period, Ciocan did not advance any funds. In addition,      Ciocan did not earn any music royalties in the current period. The amount      owed for royalties to Ciocan as of August 31, 2008 was      $40,798. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our      President/CEO is owed $240,093 on a net consolidated basis as of August      31, 2008 for cash advances to the company for a variety of general and      administrative expenses and the development of TV station programming.      During the current quarter he advanced $29,549 and was repaid $24,885. No      interest was paid on this date which accrues at 15 percent per annum and      is payable on June 1, 2009. Accrued interest totaled $11,344 as of August      31, 2008. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | · | Fees      incurred in the three month period ended August 31, 2008 for a related      party accounting firm totaled $15,204. The accounting firm received      100,000 options in payment of certain outstanding invoices for accounting,      tax and financial statement preparation services.  The amount      owed to the firm as of August 31, 2008 was $34,145.                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | · | As      part of the Echo-Fuego Music Group, LLC joint venture with music producer      and promoter Jeffrey Collins, there was an initial amount owed in January      2008 was $100,000. Jeffrey Collins received 100,000 shares as a partial      payment on the outstanding balance.  The amount owed to the      Jeffrey Collins as of August 31, 2008 was  $28,119.                                                                                                                   |

| 5. | INCOME      TAXES |
|----|-------------------|

|                                   |   | For      the three months ended August 31, 2008 |    |   | For the      three months ended August 31, 2007 |   |
|----------------------------------------|--------|-------------------------------------------------|---------|--------|----------------------------------------------------------------|--------|
|                                   |   |                                            |    |   |                                                           |   |
| Current      tax expense (benefit):    |   |                                            |    |   |                                                           |   |
| Federal      tax at 34% statutory rate |   | $                                               | 24,470  |   |                                                           | $      | (41,354 | ) |
| Benefit      of surtax exemptions      |   |                                            | -0-     |   |                                                           |   | -0- |   |
| Valuation      allowance               |   |                                            | (30,606 | )      |                                                           |   | 34,525 |   |
| Permanent      differences             |   |                                            | 7,136   |   |                                                           |   | 6,829 |   |
| Income      tax expense                |   | $                                               | -0-     |   |                                                           | $      | -0- |   |

|                    |   | For      the three months      ended August 31, 2008 |   |   | For the      threemonths      ended August 31, 2007 |   |
|-------------------------|--------|-----------------------------------------------------------|--------|--------|---------------------------------------------------------------|--------|
|                    |   |                                                      |   |   |                                                          |   |
| Current                 |   | $                                                         | -0-    |   |                                                          | $      | -0- |   |
| Deferred                |   |                                                      | - 0-   |   |                                                          |   | -0- |   |
| Income      tax expense |   | $                                                         | -0-    |   |                                                          | $      | -0- |   |

----

| 5. | INCOME TAXES -      continued |
|----|------------------------------------|

|                                       |   | For      the three months      ended August 31, 2008 |    |   | For the      threemonths      ended August 31, 2007 |   |
|--------------------------------------------|--------|-----------------------------------------------------------|---------|--------|----------------------------------------------------------|--------|
| Deferred      tax asset, beginning of year |   | $                                                         | -0-     |   |                                                     | $      | -0- |   |
|                                       |   |                                                      |    |   |                                                     |   |   |   |
| Net      operating loss carryforward       |   |                                                      | 11,947  |   |                                                     |   | 31,028 |   |
|                                       |   |                                                      |    |   |                                                     |   |   |   |
|  Allowance      for doubtful accounts |   |                                                      | -0-     |   |                                                     |   | -0- |   |
|                                       |   |                                                      |    |   |                                                     |   |   |   |
| Interest      Expense related party        |   |                                                      | 3,857   |   |                                                     |   | 3,667 |   |
|                                       |   |                                                      |    |   |                                                     |   |   |   |
|  Depreciation                         |   |                                                      | 340     |   |                                                     |   | (170 | ) |
|                                       |   |                                                      |    |   |                                                     |   |   |   |
| Cancellation      of Compensation Options  |   |                                                      | (46,750 | )      |                                                     |   | -0- |   |
|                                       |   |                                                      |    |   |                                                     |   |   |   |
|  Valuation      allowance             |   |                                                      | 30,606  |   |                                                     |   | (34,525 | ) |
|                                       |   |                                                      |    |   |                                                     |   |   |   |
|  Deferred      tax asset, end of year |   | $                                                         | -0-     |   |                                                     | $      | -0- |   |

| 6. | CONTRIBUTED      CAPITAL |
|----|--------------------------|

| 7. | ISSUANCE      OF RESTRICTED COMMON STOCK |
|----|------------------------------------------|

| 8. | OTHER |
|----|-------|

----

| 8. | OTHER -      continued |
|----|-----------------------------|

| 9. | SUBSEQUENT      EVENTS |
|----|------------------------|

----

----

----

----

----

----

| Exhibit    Number | Description                                                                                                                                                                      |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1              | Certification of Chief Executive Officer pursuant      to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant      to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2              | Certification of Chief Financial Officer pursuant      to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant      to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1              | Certification of Chief Executive Officer pursuant      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002                           |
| 32.2              | Certification of Chief Financial Officer pursuant      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002                           |

|                        | Fuego Entertainment,      Inc. |                                    |
|-----------------------------|--------------------------------|-----------------------------------------|
|                        |                           |                                    |   |
| Date:      October 20, 2008 | By:                            | /s/       Hugo M. Cancio           |   |
|                        |                           | Hugo      M. Cancio                     |   |
|                        |                           | Title:      Principal Executive Officer |   |
|                        |                           |                                    |   |

| Date:      October 20, 2008 | By:    | /s/       Hugo M. Cancio            |   |
|-----------------------------|--------|------------------------------------------|--------|
|                        |   | Hugo      M. Cancio                      |   |
|                        |   | Title:      Principal Accounting Officer |   |
|                        |   |                                     |   |

| Date:      October 20, 2008 | By:    | /s/       Hugo M. Cancio |   |
|-----------------------------|--------|-------------------------------|--------|
|                        |   | Hugo      M. Cancio           |   |
|                        |   | Title:      Director          |   |
|                        |   |                          |   |

----