SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549






FORM 10-QSB







x Quarterly report under
Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly
period ended February 29, 2008





oTransition report under
Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition
period from ______________ to ______________





Commission
file number: 000-52054








FUEGO ENTERTAINMENT,
INC.


(Exact
name of small business issuer as specified in its charter)








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









8010
      NW 156 TerraceMiami,
      FL 33018(Address,
      including zip code, of principal executive offices)Issuer’s
      telephone number : (305) 829-9999




















SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE





SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR VALUE $.001
PER SHARE




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).




Yes  oNo  x




Check
whether the Registrant: (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.





Yes xNo  o




The
number of outstanding shares of the Registrant's common stock, $0.001 par value,
as of February 29, 2008 was 39,396,020.












1





TABLE OF
CONTENTS








PART
      I:
            FINANCIAL
      INFORMATION
            PageItem
      1.
            Financial
      Statements:
            3Balance
      Sheets as of February 29, 2008 (unaudited) and May 31,
2007
            3Statements
      of Operations for the three and nine months ended February 29,
      2008 and 2007 (unaudited)
            5Statements
      of Cash Flows for the nine months ended February 29,
      2008 and 2007 (unaudited)
            6Notes
      to Financial Statements
            7Item
      2.
            Management's
      Discussion and Analysis of Financial Condition and Plan of
      Operations
            12Item
      3.
            Controls
      and Procedures
            17PART
      II:
            OTHER
      INFORMATION
            17Item
      1.
            Legal
      Proceedings
            17Item
      2.
            Changes
      in Securities
            17Item
      3.
            Defaults
      upon Senior Securities
            18Item
      4.
            Submission
      of Matters for a Vote of Security Holders
            18Item
      5.
            Other
      Information
            18Item
      6.
            Exhibits
      and Reports on Form 8-K
            18SIGNATURES
            19
















2




PART I: FINANCIAL
INFORMATION




Item 1. Financial
Statements


FUEGO
      ENTERTAINMENT, INC. AND AFFILIATECONSOLIDATED
      BALANCE SHEETSFebruary
      29,
              
              
              May
      31,2008
              
              
              2007(Unaudited)ASSETSCURRENT
      ASSETSCash
              
              
              $
              23,874
              
              
              $
              -Account
      receivable-trade, less allowancefor
      doubtful accounts of $90,000
              
              
              88,297
              
              
              
              29,308Federal
      Income tax refund receivable
              
              
              12,115
              
              
              
              12,115Total
      Current Assets
              
              
              124,286
              
              
              
              41,423EQUIPMENT,
      less accumulated depreciationof
      $56,430 and $23,580, respectively
              
              
              32,850
              
              
              
              39,145OTHER
      ASSETSEcho-Fuego
      Music Group, LLC
              
              
              -
              
              
              
              -Music
      Albums (Echo-Fuego)
              
              
              480,000Europaisches
      Getrank AG
              
              
              375,000
              
              
              
              -Production
      costs-Video
              
              
              95,941
              
              
              
              95,941Production
      costs-Music
              
              
              48,844
              
              
              
              -Deposit
      on music library
              
              
              14,500
              
              
              
              14,500Deposit
      on web portal
              
              
              11,329
              
              
              
              -Logo,
      less accumulated amortizationof
      $ 2,700 and $1,575, respectively
              
              
              1,125
              
              
              
              1,530Total
      Other Assets
              
              
              1,026,739
              
              
              
              111,971$
              1,183,875
              
              
              $
              192,540LIABILITIES AND
      STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
      LIABILITIESAccounts
      payable
              
              $
              60,420
              
              
              $
              24,092Accounts
      payable - related parties
              
              
              48,543
              
              
              
              83,518Accrued
      interest - related parties
              
              
              51,672
              
              
              
              17,646Accrued
      expenses Echo-Fuego Music Group, LLC
              
              
              -Deposit
      for common stock
              
              
              -
              
              
              
              -Deferred
      revenue
              
              
              223,659
              
              
              
              6,659Income
      taxes payable
              
              
              3,870
              
              
              
              15,985Other
      liabilities
              
              
              884
              
              
              
              3,906Payroll
      Tax Liabilities
              
              
              -
              
              
              
              -Total Current Liabilities
              
              
              389,048
              
              
              
              151,806Long-Term DebtNotes
      payable - related parties
              
              
              219,489
              
              
              
              263,893Notes
      payable - Jeffrey Collins
              
              
              50,000
              
              
              
              -Total
      Liabilities
              
              $
              658,537
              
              
              $
              415,699
   3
  CONSOLIDATED
BALANCE SHEETS - continued
  COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      EQUITY (DEFICIT)Common stock, par value $.001, 75,000,000shares authorized, 39,396,020 and 36,639,353issued
      and outstanding, respectively
              
              
              39,397
              
              
              
              36,640Paid in capital
              
              
              1,004,148
              
              
              
              454,905Deferred charge
              
              
              -
              
              
              
              (122,979
              )Subscriptions Payable
              
              
              45,000
              
              
              
              -Noncontrolling Interest
              
              
              360,100Retained earnings(deficit)
              
              
              (923,307
              )
              
              
              (591,724
              )Total
      Stockholders' Equity (Deficit)
              
              
              525,338
              
              
              
              (223,158
              )$
              1,183,875
              
              
              $
              192,540SEE
      ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


4




FUEGO
      ENTERTAINMENT, INC AND AFFILIATECONSOLIDATED
      STATEMENTS OF OPERATIONS(Unaudited)For
      the Three Months Ended
                
                
                For
      the Nine Months EndedFebruary
      29,
                
                
                February
      28,
                
                
                February
      29,
                
                
                February
      28,2008
                
                
                2007
                
                
                2008
                
                
                2007REVENUESMusic
      sales, net
                
                $
                100,927
                
                
                $
                95,466
                
                
                $
                112,878
                
                
                $
                135,254Advertising,
      web site
                
                
                158,000
                
                
                $
                -
                
                
                
                158,000
                
                
                $
                -Filming
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                30,550Consulting
                
                
                840
                
                
                
                -
                
                
                
                840
                
                
                
                6,800Total
      Revenues
                
                
                259,767
                
                
                
                95,466
                
                
                
                271,718
                
                
                
                172,604COSTS
      AND EXPENSESCost
      of musicRoyalties
      - related party
                
                
                -
                
                
                
                25,123
                
                
                
                2,844
                
                
                
                35,972Production
      costs
                
                
                48,216
                
                
                
                -
                
                
                
                48,852
                
                
                
                -Cost
      of filming
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,000Affiliation
      agreements
                
                
                -
                
                
                
                50,000
                
                
                
                -
                
                
                
                50,000Selling,
      general and administrative:Provision
      for bad debts
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Stock
      based and contributed compensation
                
                
                63,854
                
                
                
                20,470
                
                
                
                221,529
                
                
                
                95,728Paid
      Compensation & Payroll Taxes
                
                
                -
                
                
                
                -
                
                
                
                16,393
                
                
                
                -Other
                
                
                79,400
                
                
                
                45,031
                
                
                
                234,184
                
                
                
                178,036TV
      development
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                97,146Web
      site cost
                
                
                4,800
                
                
                
                -
                
                
                
                4,800
                
                
                
                -Impairment
      of investmest
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Interest
      expense - related parties
                
                
                10,554
                
                
                
                -
                
                
                
                39,162
                
                
                
                9,494Interest
      expense - other
                
                
                -
                
                
                
                8,603
                
                
                
                723
                
                
                
                -Depreciation
      and amortization
                
                
                3,192
                
                
                
                3,397
                
                
                
                9,713
                
                
                
                9,225Total
      costs and expenses
                
                
                210,016
                
                
                
                152,624
                
                
                
                578,200
                
                
                
                480,601Income
      (loss) before income taxes
                
                
                49,751
                
                
                
                (57,158
                )
                
                
                (306,482
                )
                
                
                (307,997
                )Income
      tax expense (benefit)
                
                
                -
                
                
                
                (2,406
                )
                
                
                -
                
                
                
                (21,832
                )Income
      (loss) Before Minority Interest
                
                $
                49,751
                
                
                $
                (54,752
                )
                
                $
                (306,482
                )
                
                $
                (286,165
                )Minority
      Interest in Affiliate's Earnings
                
                
                (25,100
                )
                
                
                -
                
                
                
                (25,100
                )
                
                
                -NET
      INCOME (LOSS)
                
                $
                24,651
                
                
                $
                (54,752
                )
                
                $
                (331,582
                )
                
                $
                (286,165
                )INCOME
      (LOSS) PER SHARE - BASIC
                
                
                *
                
                
                
                *
                
                
                
                *
                
                
                $
                (0.01
                )WEIGHTED
      AVERAGE NUMBER OFCOMMON
      SHARES OUTSTANDING - BASIC
                
                
                39,296,020
                
                
                
                37,732,686
                
                
                
                37,732,686
                
                
                
                35,493,763*  less
      than $.01 per shareSEE
      ACCOMPANYING NOTES TO FINANCIAL
STATEMENTS


5




FUEGO
      ENTERTAINMENT, INC. & AFFILIATECONSOLIDATED
      STATEMENTS OF CASH FLOWS(Unaudited)For
      the Nine Months EndedFebruary
      29,
                
                
                February
      28,2008
                
                
                2007OPERATING
      ACTIVITIESNet
      income (loss)
                
                $
                (331,582
                )
                
                $
                (286,165
                )Adjustments
      to reconcile net income to net cash used byoperating
      activitiesContributed
      services
                
                
                61,150
                
                
                
                40,339Impairment
      loss on investment
                
                
                -
                
                
                
                -Depreciation
      and amortization
                
                
                9,713
                
                
                
                9,225Stock
      based compensation
                
                
                182,029
                
                
                
                95,639Changes
      in operating assets and liabilities
                
                
                
                
                
                
                -Accounts
      receivable
                
                
                (58,988
                )
                
                
                (131,154
                )Accrued
      federal Income tax refund receivable
                
                
                -
                
                
                
                (12,115
                )Deferred
      tax asset
                
                
                -
                
                
                
                -Other
      current asset
                
                
                -
                
                
                
                -Accounts
      payable
                
                
                1,353
                
                
                
                22,417Accrued
      interest - related parties
                
                
                34,026
                
                
                
                8,480Accrued
      expenses Echo-Fuego Music Group, LLC
                
                
                -
                
                
                
                -Income
      taxes payable
                
                
                (12,115
                )
                
                
                (9,717
                )Other
      current liabilities
                
                
                (3,022
                )
                
                
                1,586Payroll
      tax liabilities
                
                
                -
                
                
                
                -Deferred
      revenue
                
                
                217,000
                
                
                
                -NET
      CASH (USED BY) OPERATING ACTIVITIES
                
                
                99,564
                
                
                
                (261,465
                )INVESTING
      ACTIVITIESInvestment
      in Echo-Fuego Music Group, LLC
                
                
                -
                
                
                
                -Investment
      in Europaisches Getrank AG
                
                
                (375,000
                )
                
                
                -Investment
      in Music Albums (Echo-Fuego)
                
                
                (480,000
                )
                
                
                -Noncontrolling
      interest in affiliate
                
                
                360,100Production
      costs-Video
                
                
                -
                
                
                
                (7,308
                )Production
      costs-Music
                
                
                (48,844
                )
                
                
                -Deposit
      on web portal
                
                
                (11,329
                )
                
                
                -Deposit
      on music library
                
                
                -Investments-Affiliation
      Agreements
                
                
                
                
                
                
                -Purchase
      of equipment
                
                
                (3,013
                )
                
                
                (17,696
                )NET
      CASH (USED BY) INVESTING ACTIVITIES
                
                
                (558,086
                )
                
                
                (25,004
                )FINANCING
      ACTIVITIESProceeds
      from sale of common stock
                
                
                12,450
                
                
                
                25,700Common
      stock subscriptions payable
                
                
                45,000
                
                
                
                -Common
      stock issued for debt reduction
                
                
                419,350
                
                
                
                -Proceeds
      from notes payable - related parties
                
                
                176,382
                
                
                
                260,617Repayments
      of notes payable - related parties
                
                
                (170,786
                )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                
                
                482,396
                
                
                
                286,317NET
      (DECREASE) IN CASH
                
                
                23,874
                
                
                
                (152
                )CASH,
      BEGINNING OF PERIOD
                
                
                -
                
                
                
                152CASH,
      END OF PERIOD
                
                $
                23,874
                
                
                $
                -SEE
      ACCOMPANYING NOTES TO FINANCIAL
STATEMENTS





6
 FUEGO ENTERTAINMENT,
INC.
 NOTES TO FINANCIAL
STATEMENTS




1.
              BASIS
      OF PRESENTATION
 
 Our  consolidated
financial statements include the accounts of Fuego Entertainment, Inc. and its
majority-owned limited liability company, Echo-Fuego Music Group,
LLC.  All significant intercompany accounts and transactions have
been  eliminated in the consolidation.
 
 Minority
interest represents the minority partner’s, Jeffrey Collins (Echo-Vista,
Inc.)  49% ownership interest in  Echo-Fuego Music Group,
LLC.
 
 In the
opinion of management, the accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the Company’s financial position as of February 29, 2008 and the results of its
operations and cash flows for the nine months ended February 29, 2008 and 2007
have been made.  Operating results for the nine months ended February
29, 2008 are not necessarily indicative of the results that may be expected for
the year ended May 31, 2008.
 
 These
condensed financial statements should be read in conjunction with the financial
statements and notes thereto contained in the Company’s Form 10-KSB for the year
ended May 31, 2007.
   2.
              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 nine months ended February
29, 2008 the majority of revenues were earned from the sale of musical tracks
and advertising revenue on our website www.fuegoentertainment.net.
 
 
 3.
              ADVERTISING
      REVENUE
 
 In
January 2008, Fuego entered into a Stock Subscription Agreement with Beverage
Plus, Inc. relating to an equity investment of 400,000 common shares for an
amount of $300,000 in Beverage Plus, Inc., a Nevada Corporation. Subsequently,
Beverage Plus, Inc. exchanged all of its issued and outstanding shares to
Europäisches Getränk AG, a Swiss corporation holding company and Beverage Plus
is now owned by the Europäisches.  Europäisches is completing its
registration with the Frankfurt Stock Exchange (“FSE”) to be listed with a
trading symbol to be assigned by the FSE for trading on the open market in May
2008.
 
 The purchase price of $300,000 is equal
to the fair market value of in-kind consideration in the form of marketing
assistance and the placement of a marketing banner and link to the Beverage
Plus  web site onwww.fuegoentertainment.netwebsite for a period of no less than
90 days.  During the current three month period we reported revenues
of $150,000 for 45 days of advertising and deferred revenues of $150,000 for the
remaining 45 days.
 
 Another
Stock Subscription Agreement with Europäisches relating to an equity investment
of 108,516 common shares for an amount of $75,000 was executed on February 22,
2008 for additional advertisement exposure on www.fuegoentertainment.net
website for a period of 75 days.  During the current three month
period we reported revenues of $8,000 for 8 days of advertising and deferred
revenues of $67,000 for the remaining 67 days.




Another
Stock Subscription Agreement with Europäisches relating to an equity investment
of 72,343 common shares for an amount of $50,000 was executed on March 1, 2008
for additional advertisement exposure on www.fuegoentertainment.net
website for a period of 66 days.  This advertising revenue will be
reported in the next quarter.
  7
 FUEGO ENTERTAINMENT,
INC.
 NOTES TO FINANCIAL
STATEMENTS
  4.
              SIGNIFICANT
      ACCOUNTING POLICIES
  GOING
CONCERN
 
 The
Company's financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business.  The Company has an accumulated deficit,
continued losses and a working capital deficit.  The ability of the
Company to continue as a going concern is dependent on the Company obtaining
adequate capital to fund operating losses until it becomes
profitable.  If the Company is unable to obtain adequate capital, it
could be forced to cease operations.
 
 Our
financial position 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, increase our advertising revenue on our website and
to pursue the multi-media releases of a popular film produced in Cuba.
Additionally, 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. The accompanying financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
 
 
 5.
              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 nine months ended February 29, 2008, Ciocan did not advance any funds
      and we paid the outstanding principal balance, leaving a balance owing as
      of February 29, 2008, of $0, and accrued interest of $5,328. In addition
      Ciocan was owed a total of $40,798 for music royalties as of February 29,
      2008.  There were no music royalties accrued to Ciocan during
      the current three month period, and there were $2,844 of music royalties
      accrued for the nine months ended February 29,
  2008.
  ·
              Our
      President/CEO is owed $219,489 as of February 29, 2008 for cash advances
      to the company for a variety of general and administrative expenses and
      the development of TV station programming. During the nine months ended
      February 29, 2008 he advanced $76,382 and was repaid $95,986. No interest
      was paid on this date which accrues at 15 percent per annum and is payable
      on June 1, 2008. Accrued interest totaled $46,344 as of February 29,
      2008.
  ·
              Fees
      incurred in the nine month period ended February 29, 2008 for a related
      party accounting firm totaled $59,138. The accounting firm received
      525,000 shares in  payment of certain outstanding invoices for
      accounting, tax and financial statement preparation services since
      September, 2006.  The amount owed to the firm as of February 29,
      2008 was $20,188.
  
  
 8
 FUEGO ENTERTAINMENT,
INC.
 NOTES TO FINANCIAL
STATEMENTS
  6.
              INCOME
      TAXES
  The
following is an analysis of income taxes.
 
 The
provision for current income taxes is as follows:
  For
      the nine months ended February 29, 2008
              
              
              
              For the
      nine months ended February 28, 2007Current
      tax expense (benefit):Federal
      tax at 34% statutory rate
              $
              (104,204)
              
              
              $
              (104,719)Benefit
      of surtax exemptions
              
              -0-
              
              
              
              73,879Valuation
      allowance
              
              82,673
              
              
              
              4,335Adjustment
      to 5/31/06 tax liability
              
              
              
              
              
              9,717Permanent
      differences
              
              21,531
              
              
              
              14,382Income
      tax expense
              $
              -0-
              
              
              $
              (2,406)
 
  The
analysis of income tax expense is as follows:
  For
      the nine
                months
      ended February 29, 2008
              
              
              For the
      nine
                months
      ended February 28, 2007Current
              
              $
              -0-
              
              
              $
              (2,406
              )Deferred
              
              
              -0-
              
              
              
              -0-Income
      tax expense
              
              $
              -0-
              
              
              $
              (2,406
              )
 
 
 A
deferred tax asset was recognized of $104,204 for the $70,831 deferred tax
benefit related to the   net operating loss carry forward which
expires in 2028 if unused, and $11,843 deferred tax benefit related to temporary
timing differences during the nine months ended February 29, 2008.  A
valuation allowance for $82,674 was recorded as of February 29, 2008,
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.
 9
 FUEGO ENTERTAINMENT,
INC.
 NOTES TO FINANCIAL
STATEMENTS
  6.
                INCOME
      TAXES - continued
  The
following is an analysis of the change in the deferred tax asset:
 
 For
      the nine
                months
      ended February 29,
                2008
              
              
              For the
      nine
                months
      ended February 28, 2007Deferred
      tax asset, beginning of year
              
              $
              -0-
              
              
              $
              -0-Net
      operating loss carryforward
              
              
              70,831Allowance
      for doubtful accounts
              
              
              -0-
              
              
              
              (1,705
              )Interest
      Expense related party
              
              
              11,569
              
              
              
              (2,877
              )Depreciation
              
              
              (274
              )
              
              
              248State
      income taxes
              
              
              -0-
              
              
              
              -0-Valuation
      allowance
              
              
              (82,674
              )
              
              
              4.334Deferred
      tax asset, end of year
              
              $
              -0-
              
              
              $
              -0-
   7.
              CONTRIBUTED
      CAPITAL
 
 For the
nine months ended February 29, 2008, the President contributed a total of
$61,150 consisting of $40,500 for the value of services, $6,250 for the prorata
share of auto expenses, and $14,400 for the rent of corporate office
facilities.
 
 
 8.
              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 the current fiscal year. For the
nine months ended February 29, 2008, $122,979 of this cost was expensed. There
is no remaining balance as a deferred charge.
   9.
              CONTINGENCIES
  In
January 2008 Fuego and Jeffrey Collins (Echo Vista, Inc.) through Echo-Fuego
Music Group, LLC announced plans to sell the eight “lost” Beatles’ club
recordings. Apple Corps Limited, representing the Beatles, is seeking to have
Fuego remove any information about the planned release from Fuego’s website, is
requiring Fuego to cease any use of the trademark, The Beatles, for commercial
purposes, and is also seeking $15 million in the lawsuit filed against Fuego,
Echo-Fuego Music Group, LLC, Hugo Cancio and Jeffrey Collins. On April 4, 2008,
Apple Corps Limited and Fuego struck an injunction agreement approved by a Miami
U.S. District Judge that requires Fuego to halt plans to release the eight song
recordings. No trial date has been set for the case. Fuego is vigorously
defending the lawsuit and does not expect to incur a loss. The case and the
ultimate outcome are presently uncertain. The accompanying financial statements
do not include any adjustments that might be necessary should the case result in
an unfavorable outcome.
  On April
8, 2008 Fuego filed a lawsuit in the Miami-Dade Circuit Court against Var Growth
Corporation (D.B.A. Ice Cold Stocks)  and Barry Davis for
non-performance regarding a consulting agreement executed May 9, 2007. The
consulting agreement required Var Growth Corporation (D.B.A. Ice Cold
Stocks)  and Barry Davis advise and consult Fuego in
conjunction  with the development of Fuego’s marketing plan and
business goals, scheduling and arranging meetings and conferences with strategic
third party media representatives and investors. Fuego is requesting possession
and return of its 875,000 shares of restricted common stock issued in exchange
for consulting services. The case and the ultimate outcome are presently
uncertain. The accompanying financial statements do not include any adjustments
that might be necessary should the case result in a favorable
outcome.
  
 10
 FUEGO ENTERTAINMENT,
INC.
 NOTES TO FINANCIAL
STATEMENTS
 
 10.
              ISSUANCE
      OF RESTRICTED COMMON STOCK
  We
authorized the issuance of 157,000 shares of restricted common stock at $.15 per
share on September 18, 2007,  83,000 shares of restricted common stock
at $.15 per share on September 30, 2007,  and  575,000
shares of restricted common stock at $.15 per share on October 15,
2007.
 
 On
December 7, 2007 we issued 1,841,667 restricted shares of stock to AES Capital
Partners, LP regarding two separate Private Placement Memorandums. The first one
was signed on October 15, 2007 for 541,667 restricted shares at $.12 for a total
subscription amount of $65,000 and the funds deposited on October 17,
2007.  The second one was signed on December 5, 2007 for 1,300,000
restricted shares at $.212 for a total subscription amount of $275,600, half the
funds were deposited on December  10, 2007 and the other deposited on
January  11,  2008.
 
 Principally
in connection with our efforts to obtain additional capital to sustain our
business, the following restricted stock was issued. Restricted shares of stock
consisted of 525,000 issued to the accounting firm in payment for outstanding
invoices regarding their accounting, tax and financial statement preparation
services, 175,000 shares issued to several board members, the sale of 1,924,667
shares for cash, and132,000 shares were issued to various individuals for
services rendered
 
 
 
 
 
  
 
 11




Item 2. Management's Discussion and
Analysis or Plan of Operation




MANAGEMENT'S DISCUSSION &
ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATION
  The
following discussion is intended to provide an analysis of the Company’s
consolidated 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. For the first time, Fuego Entertainment, Inc. (Fuego) and its 51%
majority-owned limited liability company, Echo-Fuego Music Group, LLC, will be
presenting their financial statements on a consolidated basis.  All
significant intercompany accounts and transactions have been eliminated in the
consolidation.
 
 The
matters discussed in these sections 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 thirty-eight months as of February 29, 2008. 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, productions of the Luny Tunes new
CD soon to be release, the acquisition of over 2,000 music tracks, the formation
of  Echo-Fuego Music Group joint venture in which we owned 51
%  and the development of our new website.
 
 Since
inception, we have sold music CD’s representing the majority of our music
revenue. Although the company will continue to sell music CD’s we have made a
full transition into the digital sales and distribution of music and video
content. In the prior 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.
 
 In
December 2007, Fuego announced it had formed a new music division, Echo-Fuego
Music Group, LLC, (Echo Fuego) in a joint venture with legendary music producer
and promoter Jeffrey Collins. His music catalog of more than 2,000 tracks and 15
artists will be merged into the new joint venture, with a 51% majority stake
owned by Fuego Entertainment, Inc. Mr. Collins will manage the joint venture
which plans to release at least two albums per month over the next five years
featuring artists such as KRS-One, Father MC, Ahmir, Marcus Allen, Eriq J'Mar,
Don Connor, NoXcuse, Ram Squad, Euricka, Papa San, Jeff Maddox, DJ No-Rap,
Culture, Meekie Renee, C.W., World Carnival, Colonel Abrams, La Velle and The
L.C.D.'s. The joint venture Echo-Fuego is actively seeking to sign exciting new
artists under the new label.
 
 Recently
four members of our Board of directors resigned from our in order to pursue
other opportunities. We are currently conversation with two individual that have
express interest in joining our Board of Directors. Because of their experience
and knowledge of our industry their contribution will be a key component to the
overall development of our Company.  we hired two corporate executive
to our team, Ernesto Hernandez  as sales manager and marketing and
promotion coordinator and legendary music producer Jeffrey Collins as Head of
our music divisions.
  We expanded
our music and video catalog, by signing new artists, and acquiring music masters
containing over 890 music tracks. We recently acquired over 2,000 music tacks
creating a diverse catalog of music and videos. We executed a production deal
with the award-winning producing duo Luny Tunes: Francisco Saldaña (Luny) and
Victor Cabrera (Tunes).Under this five-year agreement, the popular and
successful Latin urban music producers will co-produce two albums per year that
will be released under Fuego Entertainment's music division FEMI (Fuego
Entertainment Music International). Over the past three and a half years, Luny
Tunes have produced several albums generating over $16.5 million dollars in
sales for
  
 12
  Item 2. Management's
Discussion and Analysis or Plan of Operation - continued
  Universal
Music Group. Luny Tunes have produced albums, music tracks, and remixes for top
Latin Reggaeton, Pop and R&B recording artists such as Janet Jackson, Paris
Hilton, The Black Eye Peas, Lenny Kravitz, R Kelly, Ricky Martin, Shakira,
Alejandro Sanz, Fat Joe, Daddy Yankee's "Gasolina," Wisin y Yandel's "Rakata,"
Don Omar's "Dale Don Dale," Tego Calderon's "Métele Sazón," Ivy Queen, Hector y
Tito, and many others. The Luny Tunes have a successful track record as the
architects of the most significant crossover in Latin music in the last few
years. This co-production agreement comes at a time where our music division is
rapidly growing and expanding. This collaboration should generate substantial
financial benefits to our company. The new Luny Tunes Fuego production has been
completed and it is expected to be released on or before June 2008.
  As
successful music producers in the Reggaeton genre, the Luny Tunes have managed
to earn an abundance of fans and awards while on the road to international
stardom. Some awards include:
  -- Latin
Billboard Awards 2004: Más Flow -- "Tropical Album of the Year
/ Duo or
Group;"
 -- Latin
Billboard Awards 2004: Más Flow -- "Tropical Album of the Year
/ New
Generation;"
 --
Reggaeton People's Choice Awards 2004: Luny Tunes -- "Producer of
the Year";
 -- Latin
Grammy Awards 2005: Barrio Fino -- "Best Album of the Year / Urban"
(as producers);
 --
Reggaeton People's Choice Awards 2005: Luny Tunes -- "Producer of
the Year;"
 --
Reggaeton People's Choice Awards 2005: Mayor Que Yo -- "Best Song of
the Year;"
 --
Reggaeton People's Choice Awards 2005: Mas Flow 2 -- Best Album of
the Year;"
 -- Latin
Billboard Awards 2006: Luny Tunes -- "Producer of the Year;"
 --
Premios Lo Nuestro Awards 2006: Mas Flow 2 -- "Best Album of the Year
/ Urban
Category;" and,
 -- Musica
Furia 2007: Luny Tunes -- "Reggaeton Producers of the Year
 
 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.
Digital Music Group, Inc. has now merged with the leading online music and video
distributor, The Orchard. We also executed an agreement with UK digital
distributor Vidzone. Our music and video content is now available in more than
100 retailers. 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.
 
  QUARTER
ENDED FEBRUARY 29, 2008
 
 There was
a net income for the current quarter of $24,651. There was  $259,767
of consolidated revenues this quarter resulting in a gross profit of
approximately $211,551. There were $161,800 of expenses this quarter; there were
three major expenses which contributed to the loss for the quarter. First there
was $63,854 stock based compensation to board member for their services, to
various other individuals for services rendered and the amortization of the Var
Growth Corporation consulting agreement.  Second, there were audit,
accounting, bookkeeping and consulting fees of $28,989 relating to the
preparation of financial statements for the second quarter of the current fiscal
year. Third,  there was  $10,553 interest paid to a related
party. The minority interest in Echo-Fuego’s earnings was $25,100.
 
 Revenues
for the current quarter-
 
 Revenues
in the current quarter were minimum due to the transition from the regular
distribution of CDs to digital downloads sales and distribution of our
entertainment content. However, there was advertising revenue for the first time
this quarter.  In January 2008, Fuego entered into a Stock
Subscription Agreement with
Beverage Plus, Inc. relating to an equity investment of 400,000 common shares
for an amount of $300,000 in Beverage Plus, Inc., a Nevada Corporation.
Subsequently, Beverage Plus, Inc. exchanged all of its issued and outstanding
shares to Beverage Plus AG, a Swiss corporation holding company and Beverage
Plus is now owned by Beverage Plus AG.  The Swiss Corporation has been
assigned an international securities identification number ofCH0038503253 and the Swiss
regulatory authories issued a securities idenficiation number also known as
Valorennummer (VAL) of 3850325.Beverage Plus is
completing its application for registration with the Frankfurt Stock Exchange
(“FSE”) to be listed with a trading symbol to be assigned by the FSE for trading
on the open market in May 2008. The German regulatory authority has issued its
securities registration number or Wertpapierkennnummer (WKN) as follows:
A0NJNV
  
 13
  Item
2. Management's Discussion and Analysis or Plan of Operation -
continued
  Beverage
Plus’ stock is expected to open at approximately one Euro per
share.  Beverage Plus provides no assurances to its investors as to
the liquidity of its share capital or it’s ability to maintain such share price
in the market place.
 
 The purchase price of $300,000 is equal
to the fair market value of in-kind consideration in the form of marketing
assistance and the placement of a marketing banner and link to the Beverage
Plus  web site onwww.fuegoentertainment.netwebsite for a period of no less than
90 days.  During the current three month period we reported revenues
of $150,000 for 45 days of advertising and deferred revenues of $150,000 for the
remaining 45 days.
 
 Another Stock Subscription Agreement
with Beverage Plus relating to an equity investment of 108,516 common shares for
an amount of $75,000 was executed on February 22, 2008 for additional
advertisement exposure onwww.fuegoentertainment.netwebsite for a period of 75
days.  During the current three month period we reported revenues of
$8,000 for 8 days of advertising and deferred revenues of $67,000 for the
remaining 67 days.
 
 Furthermore,
we reported and consolidated 100% of the net music sales of $100,642 from
Echo-Fuego. A net adjustment for the Minority Interest in Affiliate’s Earnings
was made on the consolidated statements of operations.
 
 In
October of 2007, we released  70 CD’s, approximately 900 music tracks
to major online retailers such as ITunes, Yahoo Music, Wal-Mart Music, Virgen
Mobile, Vodaphone, Movistar, YouTube, MySpace, CD Baby and others.
 
 Selling,
General and Administrative Expenses-
 
 This
category has routinely consisted of all of the recurring and/or normal corporate
overhead expenses not separately identified such as depreciation and
amortization. This category did not increase, as in the current quarter, for
such items as Stock Based Compensation, Bonus to Officer and Accounting &
Auditing Fees. If it were not for these large items, selling, general and
administrative expense for the quarter would be indicative of the level of such
expenses for this time period of approximately $80,257.
 
 Income
Tax Liability / Benefit-
  There was
no income tax liability or benefit earned in this quarter.
 
 
 QUARTER
ENDED FEBRUARY 29, 2008 COMPARED TO THE QUARTER ENDED FEBRUARY 28,
2007
 
 The
income for the current quarter increased compared to the loss for
the  same quarter a year ago by approximately $79,402 due to an
increase in revenue.
 
 Revenues-
  Revenues
in comparison to a year ago on a quarterly basis increased due to the transition
from the regular distribution of CDs to digital downloads sales and distribution
of our entertainment content, and advertising revenue.
   14
 
 Item 2. Management's Discussion and
Analysis or Plan of Operation - continued
  As
discussed above in detail we generated $ 158,000 of advertising revenue from our
Stock Subscription Agreement with Beverage Plus, Inc.
 
 In
October of 2007, we released  70 CD’s, approximately 900 music tracks
to major online retailers such as ITunes, Yahoo Music, Wal-Mart Music,
Virgen  Mobile, Vodaphone, Movistar, YouTube, MySpace, CD Baby and
others.
 
 As a
result of the recent joint venture with Jeffrey Collins, Echo-Fuego Music Group,
LLC, we reported and consolidated 100% of the net music sales of $100,642 from
Echo-Fuego. A net adjustment for the Minority Interest in Affiliate’s Earnings
was made on the consolidated statements of operations.
 
 Echo-Fuego
Music Group, LLC acquired over 2,000 music tracks and the company plans to
release 2 CD’s per months for the next 5 years. The first CD’s scheduled to be
released  in the coming months have contributed to 37,983 advance
sales of (preorders) of CD’s which translates into approximately $322,000 in
revenues This does not includes the anticipated release of the first Luny Tunes
production soon to be released. Management expects music revenues to increase
significantly as more music titles will be released in the coming months and our
valuable and diverse library of music and video continues to be distributed to
all major online music downloads retailers. As of the day of this filling the
company has not received a sales report from our digital distributors. The
launching of our new website has given us a new revenue stream opportunity, from
music and video downloads, membership subscriptions and now advertising. We are
aggressively pursuing other corporate advertisers who recognize the impact their
ad dollars can have via advertising on our website. We are currently negotiating
several advertising deals.
 
 Cost of
Revenues-
 
 Revenues
in the current quarter were not the type which required music royalties to be
paid to any related or third party.
 
 Selling,
General and Administrative Expenses-
 
 The
current quarter’s selling, general and administrative expenses exceeded the
comparable quarter’s expenses by approximately $81,000 due largely to an
increase in stock based compensation of $43,000. The balance of the increase was
due mainly to the increase in legal, auditing and accounting expenses which
together were approximately $24,000 for the current quarter..
 
 Income
Tax Liability / Benefit-
 
 There was
no income tax liability or benefit earned in this quarter.
 
 
 NINE
MONTHS ENDED FEBRUARY 29, 2008 COMPARED TO THE NINE MONTHS ENDED FEBRUARY 28,
2007
 
 Compared
to the previous nine month period a year ago, the current nine month’s loss was
approximately $45,000 higher due to various expense items. There was an increase
in overall expenses of approximately $50,000.
 
 Revenues-
  Please
refer to the three months ended February 29, 2008 comparison for a detail
explanation for the increase in revenue.
 
 In
addition, no Filming revenues or work for hire occurred as a result of the
president of the company spending considerable time developing the music
division of Fuego.  There was a significant increase in advertising
revenue.
   15
 
 Item 2. Management's Discussion and
Analysis or Plan of Operation - continued
  Selling,
General and Administrative Expenses-
 
 This
category resulted in approximately $202,000 more in expenses than last year’s
nine month period. Though there was a significant decrease of $97,000 in
Radio/TV Development Start-up Costs, the most influential of expense increases
were related to Stock Based Compensation of $85,000, Interest Expense-Related
Party of $30,000, Consulting and Auditing & Accounting Fees of $52,000,
Marketing & Corporate Expenses of $16,000 and paid Compensation of
Officers-Bonus of $15,000. Though Compensation to Officers increased by
$13,500,  Hugo has contributed his services to the company
and  has never been paid.
 
 Income
Tax Liability / Benefit-
 
 There was
no income tax liability or tax benefit in the current nine month period. There
was an income tax benefit in the prior nine month period of approximately
$21,800 as a result of carrying back losses to prior periods in which the
company reported income.
 
 
 OFF-BALANCE
SHEET ARRANGEMENTS
 
 We have
no off-balance sheet arrangements.
 
 
 MATERIAL
COMMITMENTS
 
 We have
no material commitments as at the date of this registration
statement.
 
 
 PURCHASE
OF SIGNIFICANT EQUIPMENT
 
 We do not
intend to purchase any significant equipment during the next twelve (12)
months.
 
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 The
Company has working capital of approximately $24,000 at the end of the nine
months ended February 29, 2008.
   16
 Item
3. Controls and 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 are
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 Principal Executive Officer and Principal
Accounting Officer, as appropriate, to allow timely decisions regarding required
disclosure.
  Within
the 90 days prior to the filing date of 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/Principal Accounting Officer. Based upon that evaluation, we
have concluded that our disclosure controls and procedures are effective in
gathering, analyzing and disclosing information needed to satisfy our disclosure
obligations under the Exchange Act.
 
 Changes
in Internal Controls
 
 There
were no significant changes in our internal controls or in other factors that
could significantly affect those controls since the most recent evaluation of
such controls.
 
 PART
II OTHER INFORMATION
 
 Item
1. Legal Proceedings
 
 In
January 2008 Fuego and Jeffrey Collins (Echo Vista, Inc.) through Echo-Fuego
Music Group, LLC announced plans to sell the eight “lost” Beatles’ club
recordings. Apple Corps Limited, representing the Beatles, is seeking to have
Fuego remove any information about the planned release from Fuego’s website, is
requiring Fuego to cease any use of the trademark, The Beatles, for commercial
purposes, and is also seeking $15 million in the lawsuit filed against Fuego,
Echo-Fuego Music Group, LLC, Hugo Cancio and Jeffrey Collins. On April 4, 2008,
Apple Corps Limited and Fuego reached an injunction agreement approved by a
Miami U.S. District Judge that requires Fuego to halt plans to release the eight
song recordings. No trial date has been set for the case. Fuego is vigorously
defending the lawsuit and does not expect to incur a loss. The case and the
ultimate outcome are presently uncertain. The accompanying financial statements
do not include any adjustments that might be necessary should the case result in
an unfavorable outcome.
 
 Subsequent
Event
 On April
8, 2008 Fuego filed a lawsuit in the Miami-Dade Circuit Court against Var Growth
Corporation (D.B.A. Ice Cold Stocks)  and Barry Davis for
non-performance regarding a consulting agreement executed May 9, 2007. The
consulting agreement required Var Growth Corporation (D.B.A. Ice Cold
Stocks)  and Barry Davis advise and consult Fuego in
conjunction  with the development of Fuego’s marketing plan and
business goals, scheduling and arranging meetings and conferences with strategic
third party media representatives and investors. Fuego is requesting possession
and return of its 875,000 shares of restricted common stock issued in exchange
for consulting services. The case and the ultimate outcome are presently
uncertain. The accompanying financial statements do not include any adjustments
that might be necessary should the case result in a favorable
outcome.
 
 Item
2. Changes in Securities and Use of Proceeds
 
 On
December 7, 2007 we issued 1,841,667 restricted shares of stock to AES Capital
Partners, LP regarding two separate Private Placement Memorandums. The first one
was signed on October 15, 2007 for 541,667 restricted shares at $.12 for a total
subscription amount of $65,000 and the funds deposited on October 17,
2007.  The second one was signed on December 5, 2007 for 1,300,000
restricted shares at $.212 for a total subscription amount of $275,600, half the
funds were deposited on December  10, 2007 and the other deposited on
January  11,  2008.
 
 Principally
in connection with our efforts to obtain additional capital to sustain our
business, the following restricted stock was issued in the current quarter:
100,000 shares issued to several board members at $0.28 per share for services
rendered and the sale of 1,841,667 common shares for cash as discussed
above.
 
 17
 
 Item
3. Defaults Upon Senior Securities
  None.
  Item
4. Submission of Matters to a Vote of Security Holders
  None.
  Item
5. Other Information
  None.
  Item
6. Exhibits and Reports on Form 8-K
  The
following documents are included or incorporated by reference as exhibits to this
report:
 
 
 Exhibit
      Number
              Description31.1
              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 200231.2
              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 200232.1
              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
  200232.1
              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
 
 
 (b)   REPORTS
ON FORM 8-K
 
 Form 8-K
filed with the U.S. SEC on December 12, 2007 announcing the sale of $340,000 in
private placements.
 
 Form 8-K
filed with the U.S. SEC on March 13, 2008 announcing the resignation of Parnell
F. Delcham, Director.
 
 Form 8-K
filed with the U.S. SEC on March 28, 2008 announcing the resignation of Marc
Bodin, director, and announcing the notice of a lawsuit filed by Apple Corp.
Ltd. and Apple Records Inc.
 
 Form 8-K
filed with the U.S. SEC on April 7, 2008 announcing the resignation of Barnardo
Maurovich and Rene Lavandera as Directors.
 
 Form 8-K
filed with the U.S. SEC on April 21, 2008 announcing the Agreed Order for
Preliminary Injunction of Apple Corp. Ltd. and Apple Records, Inc., and Fuego
Entertainment, Inc.
 
 Form 8-K
filed with the U.S. SEC on April 21, 2008 announcing the lawsuit filed by the
Company against Barry Davis, Ice Cold Stocks and Var Growth Corporation to
prevent the block the transfer of 875,000 common shares of the
Company.
   18
 SIGNATURES
  In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 
 FUEGO
ENTERTAINMENT, INC.
 (Registrant)
 
 Date: April
      21, 2008
                By:
                /s/ Hugo
      M. CancioHugo
      M. CancioTitle:
      Principal Executive Officer
 
 Date: April
      21, 2008
                By:
                /s/ Hugo
      M. CancioHugo
      M. CancioTitle:  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: April
      21, 2008
                By:
                /s/ Hugo
      M. CancioHugo
      M. CancioTitle: Director
   19