----

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-QSB**

**FUEGO      ENTERTAINMENT, INC.**

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

|   |  19250                  NW 89th Court                                                            |   |
|--------|-------------------------------------------------------------------------------------------------------|--------|
|   |  Miami,                  FL 33018                                                                |   |
|   |  (Address,                  including zip code, of principal                  executive offices) |   |
|   |                                                                                                  |   |
|   |  Issuer’s                  telephone number : (305)                  829-3777              |   |

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|  PART I:               |  FINANCIAL INFORMATION                                                                                                                                                                |  Page |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                        |                                                                                                                                                                                       |       |
|  Item              1.  |  Financial              Statements:                                                                                                                                                   |  4    |
|                        |                                                                                                                                                                                       |       |
|                        |     BALANCE              SHEET - August 31, 2006 (unaudited) and May 31, 2006                                                                                |  4    |
|                        |                                                                                                                                                                                       |       |
|                        |     UNAUDITED                STATEMENTS OF OPERATIONS - For The Three Months Ended August 31, 2006                and The Three Months Ended August 31, 2005 |  5    |
|                        |                                                                                                                                                                                       |       |
|                        |     UNAUDITED              STATEMENTS OF CASH FLOWS - For The Three Months Ended August 31, 2006              and The Three Months Ended August 31, 2005     |  6    |
|                        |                                                                                                                                                                                       |       |
|                        |     STATEMENTS              OF STOCKHOLDERS' EQUITY - Balance, August 31, 2006, (unaudited)                                                                            |  7    |
|                        |                                                                                                                                                                                       |       |
|                        |     Notes              to Financial Statements                                                                                                                         |  8    |
|                        |                                                                                                                                                                                       |       |
|  Item              2.  |  Managements              Discussion and Analysis of Financial Condition and Plan of Operations                                                                                       |  11   |
|                        |                                                                                                                                                                                       |       |
|  Item              3.  |  Controls              and Procedures                                                                                                                                                 |  13   |
|                        |                                                                                                                                                                                       |       |
|  PART              II: |  OTHER              INFORMATION                                                                                                                                                       |  14   |
|                        |                                                                                                                                                                                       |       |
|  Item              1.  |  Legal              Proceedings                                                                                                                                                       |  14   |
|                        |                                                                                                                                                                                       |       |
|  Item              2.  |  Changes              in Securities                                                                                                                                                   |  14   |
|                        |                                                                                                                                                                                       |       |
|  Item              3.  |  Defaults              upon Senior Securities                                                                                                                                         |  14   |
|                        |                                                                                                                                                                                       |       |
|  Item              4.  |  Submission              of Matters for a Vote of Security Holders                                                                                                                    |  14   |
|                        |                                                                                                                                                                                       |       |
|  Item              5.  |  Other              Information                                                                                                                                                       |  14   |
|                        |                                                                                                                                                                                       |       |
|  Item              6.  |  Exhibits              and Reports on Form 8-K                                                                                                                                        |  14   |
|                        |                                                                                                                                                                                       |       |
|                        |  SIGNATURES                                                                                                                                                                           |  15   |

----

*This      Form 10-QSB contains forward-looking statements within the meaning of the "safe      harbor" provisions under Section 21E of the Securities Exchange Act of 1934.      We      use forward-looking statements in our description of our plans and objectives      for future operations and assumptions underlying these plans and objectives.      Forward-looking terminology includes the words "August," "expects," "believes,"      "anticipates," "intends," "projects," or similar terms, variations of such      terms      or the negative of such terms. These forward-looking statements are based on      management's current expectations and are subject to factors and uncertainties,      which could cause actual results to differ materially from those, described      in      such forward-looking statements. We expressly disclaim any obligation or      undertaking to release publicly any updates or revisions to any forward-looking      statements contained in this Form 10-QSB to reflect any change in our      expectations or any changes in events, conditions or circumstances on which      any      forward-looking statement is based. Factors, which could cause such results      to      differ materially from those described in the forward-looking statements, and      elsewhere,, are incorporated by reference into this Form 10-QSB.*

----

**PART      I: FINANCIAL INFORMATION**

|                                                                                                                                  |   |   |                                  |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------|--------|--------|
| **FUEGO                  ENTERTAINMENT, INC.**                                                                                        |
| **BALANCE                  SHEET**                                                                                                    |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   |   | **August                  31,**  |   |   | **May                  31,** |   |
|                                                                                                                                  |   |   | **2006**                              |   |   | **2006** |   |
|                                                                                                                                  |   |   | (unaudited)                      |   |   |   |   |
| **ASSETS**                                                                                                                            |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| CURRENT                  ASSETS                                                                                                       |   |   |                                  |   |   |   |   |
|     Cash                                                                                                          |   | $      | 1,849                                 |   | $      | 152 |   |
|     Account                    receivable-trade, less allowance of                    $11,833 and 0, respectively |   |   | 26,994                                |   |   | 5,000 |   |
|     Accrued                  federal Income Tax Refund Receivable                                                 |   |   | 19,426                                |   |   | - |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
|     Total                  Current Assets                                                                         |   |   | 48,269                                |   |   | 5,152 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| EQUIPMENT,                  less accumulated depreciation of $4,720 and $2,190,                  respectively                         |   |   | 34,214                                |   |   | 33,531 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| OTHER                  ASSETS                                                                                                         |   |   |                                  |   |   |   |   |
|     Production                  costs                                                                             |   |   | 99,184                                |   |   | 93,431 |   |
|     Logo,                    less accumulated amortization of $675 and $630, respectively                    |   |   | 1,935                                 |   |   | 2,070 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
|     Total                  Other Assets                                                                           |   |   | 101,119                               |   |   | 95,501 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   | $      | 183,602                               |   | $      | 134,184 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                             |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| CURRENT                  LIABILITIES                                                                                                  |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
|     Accounts                  payable                                                                             |   | $      | 15,979                                |   | $      | 9,359 |   |
|     Accounts                  payable - Related Parties                                                           |   |   | 76,942                                |   |   | 23,642 |   |
|     Other                  Liabilities                                                                            |   |   | 2,205                                 |   |   | 1,630 |   |
|     Income                  taxes payable                                                                         |   |   | 25,702                                |   |   | 25,702 |   |
|     Deferred                  revenue                                                                             |   |   | 6,659                                 |   |   | 6,659 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
|     Total                  Current Liabilities                                                                    |   | $      | 127,487                               |   |   | 66,992 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                                                                                        |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| STOCKHOLDERS'                  EQUITY                                                                                                 |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| Common                    stock, par value $.001, 75,000,000 shares authorized, 35,520,441                    outstanding             |   |   | 35,521                                |   |   | 34,960 |   |
| Paid                  in capital                                                                                                      |   |   | 229,295                               |   |   | 118,398 |   |
| Retained                  earnings(deficit)                                                                                           |   |   | (208,701                              | )      |   | (86,166 | ) |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| Total                  Stockholders' Equity                                                                                           |   |   | 56,115                                |   |   | 67,192 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
|                                                                                                                                  |   | $      | 183,602                               |   | $      | 134,184 |   |
|                                                                                                                                  |   |   |                                  |   |   |   |   |
| SEE                  ACCOMPANYING NOTES TO FINANCIAL                  STATEMENTS                                                      |

----

|  **FUEGO                  ENTERTAINMENT, INC**                                                     |
|---------------------------------------------------------------------------------------------------------|
|  **STATEMENTS                  OF OPERATIONS**                                                     |
|  **(UNAUDITED)**                                                                                   |
|                                                                                                    |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |
|                                                                                                    |   |   | **For                  The**  |   |   | **For                  The** |   |
|                                                                                                    |   |   | **Three                  Months Ended**  |   |   | **Three                  Months Ended** |   |
|                                                                                                    |   |   | **August                  31, 2006**  |   |   | **August                  31, 2005** |   |
|                                                                                                    |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |
| REVENUES                                                                                                |   |   |   |   |   |   |   |
|     Music                                                                           |   | $ | 21,994 |   | $ | - |   |
|     Filming                                                                         |   |   | 30,550 |   |   | 5,400 |   |
|     Consulting                                                                      |   |   | 6,800 |   |   | 13,419 |   |
|                                                                                                    |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |
|     Total                  Revenues                                                 |   |   | 59,344 |   |   | 18,819 |   |
|                                                                                                    |   |   |   |   |   |   |   |
| COSTS                  AND EXPENSES                                                                     |   |   |   |   |   |   |   |
|     Music                  Royalties - Related Party                                |   |   | 5,499 |   |   |   |   |
|     Cost                  of                  revenue - Filming                     |   |   | 5,000 |   |   | - |   |
|     Selling,                  general and administrative:                           |   |   |   |   |   |   |   |
|     TV                  Development                                                 |   |   | 50,310 |   |   | - |   |
|     Stock                  Based Compensation                                       |   |   | 75,258 |   |   |   |   |
|                       Other                                                         |   |   | 62,573 |   |   | 30,668 |   |
|     Depreciation                  and amortization                                  |   |   | 2,665 |   |   | 753 |   |
|                                                                                                    |   |   |   |   |   |   |   |
|     Total                  costs and expenses                                       |   |   | 201,305 |   |   | 31,421 |   |
|                                                                                                    |   |   |   |   |   |   |   |
| (Loss)                  before income tax (benefit)                                                     |   |   | (141,961 | ) |   | (12,602 | ) |
|                                                                                                    |   |   |   |   |   |   |   |
| Income                  tax (benefit)                                                                   |   |   | (19,426 | ) |   | (347 | ) |
|                                                                                                    |   |   |   |   |   |   |   |
| NET                  (LOSS)                                                                             |   | $ | (122,535 | ) | $ | (12,255 | ) |
|                                                                                                    |   |   |   |   |   |   |   |
| EARNINGS                  (LOSS) PER SHARE - BASIC                                                      |   |   | * |   |   | * |   |
|                                                                                                    |   |   |   |   |   |   |   |
| WEIGHTED                    AVERAGE NUMBER OF COMMON SHARES OUTSTANDING -                    BASIC |   |   | 35,381,074 |   |   | 19,658,491 |   |
|                                                                                                    |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |
| *                  less than $.01 per share                                                             |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |  |   |
| SEE                  ACCOMPANYING NOTES TO FINANCIAL                  STATEMENTS                        |

----

| **FUEGO                  ENTERTAINMENT, INC.**                                                                                                              |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **STATEMENTS                  OF CASH FLOWS**                                                                                                               |
|  **(UNAUDITED)**                                                                                                                                       |
|                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                        |   | **For                  The**  |   |   | **For                  The** |   |
|                                                                                                                                                        |   | **Three                  Months Ended**  |   |   | **Three                  Months Ended** |   |
|                                                                                                                                                        |   | **August                  31, 2006**  |   |   | **August                  31, 2005** |   |
|                                                                                                                                                        |   |   |   |   |   |   |
| **OPERATING                  ACTIVITIES**                                                                                                                   |   |   |   |   |   |   |
|     Net                  income (loss)                                                                                                  | $ | (122,535 | ) | $ | (12,255 | ) |
|     Adjustments                  to                  reconcile net income to net cash provided by operating                  activities |   |   |   |   |   |   |
|         Contributed                  services                                                                       |   | 10,500 |   |   | 6,800 |   |
|         Depreciation                  and amortization                                                              |   | 2,665 |   |   | 1,004 |   |
|         Stock                  Based Compensation                                                                   |   | 75,258 |   |   |   |   |
|     Changes                  in operating assets and liabilities                                                                        |   |   |   |   |   |   |
|         Accounts                  receivable                                                                        |   | (21,994 | ) |   | (300 | ) |
|         Accrued                  federal Income Tax Refund Receivable                                               |   | (19,426 | ) |   |   |   |
|         Deferred                  tax                  asset                                                        |   | - |   |   | (1,509 | ) |
|         Other                  current asset                                                                        |   | - |   |   | 51 |   |
|         Accounts                  payable                                                                           |   | 6,620 |   |   | 2,115 |   |
|         Income                  taxes payable                                                                       |   | - |   |   | 1,162 |   |
|         Other                  current liabilities                                                                  |   | 575 |   |   | - |   |
|         Deferred                  revenue                                                                           |   | - |   |   | 5,276 |   |
| **NET                  CASH PROVIDED BY **(USED                  BY)**OPERATING ACTIVITIES**                                                                |   | (68,337 | ) |   | 2,344 |   |
|                                                                                                                                                        |   |   |   |   |   |   |
| **INVESTING                  ACTIVITIES**                                                                                                                   |   |   |   |   |   |   |
|     Purchased                  of                  equipment                                                                            |   | (3,213 | ) |   | (206 | ) |
|     Production                  costs                                                                                                   |   | (5,753 | ) |   | (13,247 | ) |
|     Logo                                                                                                                                |   | - |   |   | (45 | ) |
| **NET                  CASH (USED BY) INVESTING ACTIVITIES**                                                                                                |   | (8,966 | ) |   | (13,498 | ) |
|                                                                                                                                                        |   |   |   |   |   |   |
| **FINANCING                  ACTIVITIES**                                                                                                                   |   |   |   |   |   |   |
|     Proceeds                  from                  sale of common stock                                                                |   | 25,700 |   |   | 35,029 |   |
|     Deferred                  financing costs                                                                                           |   | - |   |   | (25,014 | ) |
|     Accounts                  payable from (to) - Related Parties                                                                       |   | 53,300 |   |   | (178 | ) |
| **NET                  CASH PROVIDED BY FINANCING ACTIVITIES**                                                                                              |   | 79,000 |   |   | 9,837 |   |
|                                                                                                                                                        |   |   |   |   |   |   |
| **NET                  INCREASE IN CASH**                                                                                                                   |   | 1,697 |   |   | (1,317 | ) |
|                                                                                                                                                        |   |   |   |   |   |   |
| **CASH,                  BEGINNING OF PERIOD**                                                                                                              |   | 152 |   |   | 7,479 |   |
|                                                                                                                                                        |   |   |   |   |   |   |
| **CASH,                  END OF PERIOD**                                                                                                                    | $ | 1,849 |   | $ | 6,162 |   |
|                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                        |   |   |   |   |   |   |
| SEE                  ACCOMPANYING NOTES TO FINANCIAL                  STATEMENTS                                                                            |

----

| **FUEGO                  ENTERTAINMENT, INC.**                                               |
|----------------------------------------------------------------------------------------------|
| **STATEMENTS                  OF STOCKHOLDERS' EQUITY**                                      |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |  **Subscriptions** |   |   | **Retained** |   |   |   |   |
|                                                                                         |   |  **Common                  Stock** |   |   | **Paid-in** |   |   | **Common** |   |   | **Amount** |   |   | **Earnings** |   |   |   |   |
|                                                                                         |   |   | **Shares**  |   |   | **Amount** |   |   | **Capital** |   |   | **Stock** |   |   | **Receivable** |   |   | **(Deficit**)**** |   |   | **Total** |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                  at inception**                                                   |   |   | - |   | $ | - |   | $ | - |   |   | - |   | $ | - |   | $ | - |   | $ | - |   |
| Proceeds                    from sale of common stock for $.001                    per share |   |   | 7,772,670 |   |   | 7,773 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7,773 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                    from sale of common stock for $.006 per share               |   |   | 5,500,000 |   |   | 5,500 |   |   | 24,350 |   |   |   |   |   |   |   |   |   |   |   | 29,850 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock subscribed                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 21,262,530                  shares @ $.001 per share                                         |   |   |   |   |   |   |   |   |   |   |   | 21,262 |   |   | (21,262 | ) |   |   |   |   | - |   |
| 295,450                  shares @ $.009 per share                                            |   |   |   |   |   |   |   |   |   |   |   | 2,955 |   |   | (2,955 | ) |   |   |   |   | - |   |
| 105,874                  shares @ $.179 per share                                            |   |   |   |   |   |   |   |   |   |   |   | 19,057 |   |   | (19,057 | ) |   |   |   |   | - |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contributed                  services                                                        |   |   |   |   |   |   |   |   | 21,708 |   |   |   |   |   |   |   |   |   |   |   | 21,708 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 39,489 |   |   | 39,489 |   |
|                                                                                         |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |
| **Balance,                  May 31, 2005**                                                   |   |   | 13,272,670 |   |   | 13,273 |   |   | 46,058 |   |   | 43,274 |   |   | (43,274 | ) |   | 39,489 |   |   | 98,820 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                  received from subscribed shares                                    |   |   | 21,658,977 |   |   | 21,659 |   |   | 29,412 |   |   | (51,072 | ) |   | 51,072 |   |   |   |   |   | 51,071 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                    from sale of common stock for  $.18 per share               |   |   | 27,915 |   |   | 28 |   |   | 4,997 |   |   |   |   |   |   |   |   |   |   |   | 5,025 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                    stock subscribed 53,111 shares @.179 per share                     |   |   |   |   |   |   |   |   |   |   |   | 9,561 |   |   | (9,561 | ) |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock subscriptions canceled                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 10,000                  shares @ .001 per share                                              |   |   |   |   |   |   |   |   |   |   |   | (10 | ) |   | 10 |   |   |   |   |   |   |   |
| 40,500                  shares @ .009 per share                                              |   |   |   |   |   |   |   |   |   |   |   | (405 | ) |   | 405 |   |   |   |   |   |   |   |
| 7,488                  shares @ .179 per share                                               |   |   |   |   |   |   |   |   |   |   |   | (1,348 | ) |   | 1,348 |   |   |   |   |   |   |   |
|                                                                                         |   |   |  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contributed                  services                                                        |   |   |   |   |   |   |   |   | 37,931 |   |   |   |   |   |   |   |   |   |   |   | 37,931 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  (loss) for the year                                                     |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |  (125,655 | ) |   | (125,655 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                  May 31, 2006**                                                   |   |   | 34,959,562 |   |   | 34,960 |   |   | 118,398 |   |   | - |   |   | - |   |   | (86,166 | ) |   | 67,192 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **(unaudited)**                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                    from sale of common stock for $.18                    per share  |   |   | 102,778 |   |   | 103 |   |   | 18,397 |   |   |   |   |   |   |   |   |   |   |   | 18,500 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                    based compensation $.18                    per share                |   |   | 458,101 |   |   | 458 |   |   | 82,000 |   |   |   |   |   |   |   |   |   |   |   | 82,458 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contributed                  services                                                        |   |   |   |   |   |   |   |   | 10,500 |   |   |   |   |   |   |   |   |   |   |   | 10,500 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  (loss) for the three months                                             |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   | (122,535 | ) |   | (122,535 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance,                  August 31, 2006, (unaudited)**                                   |   |   | 35,520,441 |   | $ | 35,521 |   | $ | 229,295 |   |   | - |   | $ | - |   | $ | (208,701 | ) | $ | 56,115 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SEE                  ACCOMPANYING NOTES TO FINANCIAL                  STATEMENTS             |

----

**1.      BASIS OF PRESENTATION**

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

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

***GOING      CONCERN***

| **4.** | **Related                Party Transactions** |
|--------|-----------------------------------------------|

|   | · | For                the three month period ended August 31, 2006, Mr. Cancio advanced                to the                Company a total of $ 47,513 to pay for audit fees, operating expenses                and                a portion for development expenses. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Fees                incurred in the three month period end August 31, 2006 for a related                party                accounting firm totaled $9,514. As of August 31, 2006, $14,455 remained                unpaid and is included in the category accounts payable-related party                in                the accompanying balance sheet. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **4.** | **Related                Party Transactions -                continued** |
|--------|--------------------------------------------------------------------------|

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

|                                           |   |   | **For                the three****months                ended Aug****31,                2006**  |   |   | **For                the three****months                ended Aug 31, 2005** |   |
|-----------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------|--------|
|                                                |   |   |                                                                                                 |   |   |                                                                         |   |
| Current                tax expense:                 |   |   |                                                                                                 |   |   |                                                                         |   |
|  Federal                tax at statutory rates |   | $      | (48,267                                                                                              | )      | $      | (4,112)                                                                      | )      |
|  Benefit                of surtax exemptions   |   |   | 25,296                                                                                               |   |   | 125                                                                          |   |
|  Valuation                allowance            |   |   | (98                                                                                                  | )      |   | 0                                                                            |   |
|  Permanent                differences          |   |   | 3,643                                                                                                |   |   | 3,640                                                                        |   |
| Income                tax expense                   |   | $      | (19,426                                                                                              | )      | $      | (347                                                                         | )      |

| ** **                        |   |   | **For the three****months ended****Aug 31, 2006**  |   |   | **For                the three****months                ended Aug 31, 2005** |   |
|-----------------------------------|--------|--------|---------------------------------------------------------|--------|--------|------------------------------------------------------------------------------|--------|
|                              |   |   |                                                    |   |   |                                                                         |   |
| Current                           |   | $      | (19,426                                                 | )      |   | 1,162                                                                        |   |
| Deferred                          |   |   | -                0 -                                    |   |   | (1,509                                                                       | )      |
| Income                tax expense |   | $      | (19,426                                                 | )      | $      | (347                                                                         | )      |

----

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

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

----

**Item      2. Management’s Discussion and Analysis of Financial Condition and Plan of      Operations**

*The      following discussion is intended to provide an analysis of our financial      condition and Plan of Operation and should be read in conjunction with our      financial statements and the notes thereto set forth herein. The matters      discussed in this section that are not historical or current facts, deal with      potential future circumstances and developments. Our 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. *

----

**Item      2. Management’s Discussion and Analysis of Financial Condition and Plan of      Operations - continued**

----

**Item      2. Management’s Discussion and Analysis of Financial Condition and Plan of      Operations - continued**

**Item      3. Controls and Procedures**

----

**PART      II: OTHER INFORMATION**

** **

----

|                                     |                                                  |                                              |
|------------------------------------------|-------------------------------------------------------|---------------------------------------------------|
|                                |                                             |                                         |
| Date: October              23, 2006 | By:                                         | /s/ Hugo              M.              Cancio |
|                                     | Hugo              M. Cancio                           |
|                                     | Title:              Principal Executive Officer  |

|                                     |                                                        |                                              |
|------------------------------------------|-------------------------------------------------------------|---------------------------------------------------|
|                                |                                                   |                                         |
| Date: October              23, 2006 | By:                                               | /s/ Hugo              M.              Cancio |
|                                     | Hugo              M. Cancio                                 |
|                                     | Title:  Principal              Accounting Officer |

|                                     |                        |                                              |
|------------------------------------------|-----------------------------|---------------------------------------------------|
|                                |                   |                                         |
| Date: October              23, 2006 | By:               | /s/ Hugo              M.              Cancio |
|                                     | Hugo              M. Cancio |
|                                     | Title: Director        |

----