UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark one)

|X|   QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF THE  SECURITIES
      EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

               For the transition period from ________ to ________

                        Commission file number: 005-79752


                             AGU Entertainment Corp.
    -------------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)


                Delaware                               84-1557072
    ---------------------------------     -----------------------------------
    (State or other jurisdiction of        (IRS Employer Identification No.)
     incorporation or organization)


                          3200 West Oakland Park Blvd.
                           Lauderdale Lakes, FL 33311
    -------------------------------------------------------------------------
                    (Address of principal executive offices)


                                 (954) 714-8100
    -------------------------------------------------------------------------
                           (Issuer's telephone number)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

The number of shares of the issuer's common stock, no par value,  outstanding as
of May 15, 2005 was 24,597,603.

Transitional Small Business Disclosure Format (check one): Yes |_| ; No |X|
<PAGE>

                             AGU ENTERTAINMENT CORP.
                 (Formerly Lexington Barron Technologies, Inc.)

                                   FORM 10-QSB

                                      INDEX

                                                                            Page
                                                                            ----
PART I.  UNAUDITED FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Condensed Consolidated Balance Sheet as of March 31, 2005
           (unaudited).......................................................  3
         Condensed Consolidated Statements of Operations for the
           Three Months Ended March 31, 2005 and 2004 (unaudited)............  4
         Condensed Consolidated Statement of Changes in Stockholders'
           Equity for the Three Months Ended March 31, 2005 (unaudited)......  5
         Condensed Consolidated Statements of Cash Flows for the
           Three Months Ended March 31, 2005 and 2004 (unaudited)............  6
         Notes to Condensed Consolidated Financial Statements (unaudited)....  7

Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations............................. 14

Item 3.  Controls and Procedures............................................. 20

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings................................................... 20

Item 2.  Unregistered Sales of Equity Securities and use of proceeds ........ 20

Item 3.  Defaults Upon Senior Securities..................................... 21

Item 4.  Submission of Matters to a Vote of Security
  Holders.................................................................... 21

Item 5.  Other Information................................................... 21

Item 6.  Exhibits ........................................................... 21

SIGNATURES................................................................... 23

                           FORWARD LOOKING STATEMENTS

         Cautionary Statement Pursuant to Safe Harbor Provisions of the
                Private Securities Litigation Reform Act of 1995

This report may include a number of "forward-looking statements" as that term is
defined in Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities Exchange Act of 1934, as amended. These statements reflect
management's   current  views  with  respect  to  future  events  and  financial
performance and include  statements  regarding  management's  intent,  belief or
current  expectations,  which are based upon assumptions about future conditions
that may prove to be  inaccurate.  Prospective  investors are cautioned that any
such  forward-looking  statements  are not  guarantees  of  future  performance,
involve risk and uncertainties,  and that as a result, actual results may differ
materially from those  contemplated  by such  forward-looking  statements.  Such
risks include, among other things, the volatile and competitive markets in which
we operate, our limited operating history, our limited financial resources,  our
ability to manage our growth and the lack of an  established  trading market for
our securities. When considering  forward-looking statements,  readers are urged
to carefully review and consider the various disclosures, including risk factors
and their  cautionary  statements,  made by us in this  report  and in our other
reports filed with the Securities and Exchange Commission.


                                       2
<PAGE>

                     Part 1. Unaudited Financial Information

Item 1. Financial Statements

                             AGU ENTERTAINMENT CORP.
                 (Formerly Lexington Barron Technologies, Inc.)
                           Consolidated Balance Sheets
                   As of March 31, 2005 and December 31, 2004

<TABLE>
<CAPTION>
                                                                         2005            2004
                                                                      Unaudited        Audited
<S>                                                                 <C>             <C>
Assets
Current Assets:
     Cash                                                           $      5,379    $    771,533
     Accounts receivable, net of allowance of $10,000 and $0             475,139         507,482
     Prepaid expenses                                                    254,628         225,037
                                                                    ------------    ------------
        Total current assets                                             735,146       1,504,052

     Property and equipment, net of accumulated
       depreciation of $187,661 and $123,260                           9,419,133       9,110,373
     Intangibles, net of accumulated amortization                        884,635         913,735
     Other assets                                                        137,635         164,737
                                                                    ------------    ------------
        Total assets                                                $ 11,176,549    $ 11,692,897
                                                                    ============    ============

Liabilities and Stockholders' Equity
Current Liabilities:
     Accounts payable                                               $    771,062    $    501,514
     Accounts payable - related parties                                  109,887         169,258
     Notes payable, related parties                                      636,325         445,642
     Convertible notes payable                                         7,150,000       7,150,000
     Equipment note - current portion                                     12,346          12,140
     Capital leases payable - current portion                             14,276          13,881
     Accrued expenses                                                    789,918         910,418
     Other current liabilities                                             6,872          36,965
                                                                    ------------    ------------
        Total current liabilities                                      9,490,686       9,239,818

Capital leases payable - long term portion                                 8,209          11,876
Equipment note - long term portion                                        33,503          36,668
Convertible notes payable - net of unamortized
  discounts                                                              944,052         854,178
                                                                    ------------    ------------
Total liabilities                                                     10,476,450      10,142,540
                                                                    ------------    ------------

Stockholders' Equity:
     Preferred stock, no par value; 10,000,000 shares authorized,
       -0- shares issued and outstanding                                      --              --
     Common stock, no par value; 100,000,000 shares authorized,
       24,220,361 and 23,392,576 shares issued and outstanding         5,646,246       4,658,380
     Additional paid-in capital                                        4,952,422       3,593,634
     Accumulated deficit                                              (9,898,569)     (6,701,657)
                                                                    ------------    ------------
        Total stockholders' equity                                       700,099       1,550,357
                                                                    ------------    ------------

        Total liabilities and stockholders' equity                  $ 11,176,549    $ 11,692,897
                                                                    ============    ============
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>

                    AGU Entertainment Corp. and Subsidiaries
                 (Formerly Lexington Barron Technologies, Inc.)
                 Condensed Consolidated Statements of Operations
               For the Three Months Ended March 31, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        2005            2004
                                                    ------------    ------------
<S>                                                 <C>             <C>
Revenues                                            $    150,503    $         --
Cost of sales and services performed                      36,745
                                                    ------------    ------------
     Gross profit                                        113,758              --

Operating Expenses
     Promotion and advertising                            71,530         133,968
     Depreciation and amortization                        93,501          12,299
     Other general and administrative costs            1,695,872         739,100
                                                    ------------    ------------

                         Total operating expenses      1,860,903         885,367
                                                    ------------    ------------

                         Operating loss               (1,747,145)       (885,367)
     Interest expense                                  1,449,767          12,514
                                                    ------------    ------------
                         Loss before income taxes     (3,196,912)       (897,881)

Income tax provision                                          --              --
                                                    ------------    ------------

                         Net loss                   $ (3,196,912)   $   (897,881)
                                                    ============    ============

Basic and diluted loss per share                    $      (0.15)   $      (0.06)
                                                    ============    ============

Weighted average common shares outstanding -
     Basic and diluted                                23,720,678      14,880,427
                                                    ============    ============
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                       4
<PAGE>

                    AGU Entertainment Corp. and Subsidiaries
                 (Formerly Lexington Barron Technologies, Inc.)
                      Condensed Consolidated Statements of
                         Changes in Stockholders' Equity
                    For the Three Months Ended March 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                      Retained
                                                                                        Additional    Earnings
                                                                                         Paid-In    (Accumulated
                                                            Shares          Amount       Capital       Deficit)       Total
                                                          --------------------------------------------------------------------
<S>                                                        <C>          <C>            <C>          <C>            <C>
Balance at December 31, 2004                               23,392,576   $ 4,658,380   $ 3,593,634   $(6,701,657)   $ 1,550,357
Issuance of shares of common stock for services               108,570       286,592            --            --        286,592
Issuance of shares of common stock to employees for
  compensation                                                 45,540       107,474            --            --        107,474
Issuance of common stock as a  price adjustment for
  cetain investors                                              5,000            --            --            --             --
Common stock issued in connection with the acquisition
  of property plant and equipment                              97,800       244,500            --            --        244,500
Issuance of warrants in connection with the issuance of
  convertible debt                                                 --            --     1,358,788            --      1,358,788
Issuance of shares in settlement of liabilities               121,875       337,500            --            --        337,500
Issuance of shares of common stock to directors for
  services                                                      5,000        11,800            --            --         11,800
Issuance of common stock to a director as an adjustment
  to shares awarded pursuant to an employment agreement       444,000            --            --            --             --
Net loss                                                           --            --            --    (3,196,912)    (3,196,912)
                                                          --------------------------------------------------------------------
Balance at March 31, 2005                                  24,220,361   $ 5,646,246   $ 4,952,422   $(9,898,569)   $   700,099
                                                          ====================================================================
</TABLE>

     See accompanying notes to condensed consolidated financial statements


                                       5
<PAGE>

                    AGU Entertainment Corp. and Subsidiaries
                 (Formerly Lexington Barron Technologies, Inc.)
                 Condensed Consolidated Statements of Cash Flows
               For the Three Months Ending March 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                              2005           2004
                                                                           -----------    -----------
<S>                                                                        <C>            <C>
Cash flows from operating activities:
      Net loss                                                             $(3,196,912)   $  (897,881)
      Adjustments to reconcile net loss to net cash
          used in operating activities:
               Depreciation and amortization                                    93,501         12,299
               Common stock issued as payment for services                     405,866         28,677
               Amortization of discount on convertible notes payable         1,178,662             --
               Amortization of deferred financing fees                          18,253
               Decrease in accounts receivable                                  32,343         40,671
               Increase in prepaid expenses                                    (29,591)      (200,200)
               Increase (decrease) in other assets                               8,849       (369,804)
               Increase in accounts payable and accrued liabilities            427,177         88,891
               (Decrease) increase in other liabilities                        (30,093)        24,462
                                                                           -----------    -----------
                               Net cash used in operating activities        (1,091,945)    (1,272,885)
                                                                           -----------    -----------

Cash flows from investing activities:
      Disbursements for property and equipment                                (128,661)       (22,334)
                                                                           -----------    -----------
                               Net cash used in investing activities          (128,661)       (22,334)
                                                                           -----------    -----------

Cash flows from financing activities:
      Payment of notes payable                                                  (2,959)        (9,972)
      Proceeds from notes payable to related parties                           190,683             --
      Payment on capital leases                                                 (3,272)        (3,417)
      Proceeds from other notes payable                                        270,000      1,220,000
                                                                           -----------    -----------
                               Net cash provided by financing activities       454,452      1,206,611
                                                                           -----------    -----------

                               Net decrease in cash                           (766,154)       (88,608)

Cash, beginning of period                                                      771,533        137,048
                                                                           -----------    -----------
Cash, end of period                                                        $     5,379    $    48,440
                                                                           ===========    ===========
Supplemental disclosure of cash flow information:
          Cash paid for income taxes                                       $        --    $        --
                                                                           ===========    ===========
          Cash paid for interest                                           $    50,512    $     4,862
                                                                           ===========    ===========
      Non-cash financing activities:
          Common stock issued as payment for services                      $   405,866    $    28,677
                                                                           ===========    ===========
          Conversion of liabilities to common stock                        $   337,500    $        --
                                                                           ===========    ===========
          Equipment acquired through issuance of common stock              $   244,500    $        --
                                                                           ===========    ===========
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                       6
<PAGE>

                    AGU Entertainment Corp. and Subsidiaries
                 (Formerly Lexington Barron Technologies, Inc.)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           March 31, 2005 (unaudited)

1.    NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Nature of Operations

      AGU Entertainment Corp. (formerly Lexington Barron Technologies, Inc.) was
incorporated in the state of Colorado on August 23, 2000 to engage in financial,
operational  and systems  consulting to startup and small  businesses.  Prior to
April 1, 2004, AGU Entertainment  Corp. ("AGU") was a development stage,  public
reporting company and did not engage in any significant operations or enter into
any material transactions.

      Effective April 1, 2004, AGU entered into a Share Exchange  Agreement with
Pyramid Music Corp.  ("PMC"), a Florida  corporation having an inception date of
May 20, 2003,  whereby AGU acquired 100% of the outstanding  common stock of PMC
in  exchange  for  issuing   16,922,464  shares  of  its  common  stock  to  the
stockholders  of PMC (see note 2). PMC was a  development  stage company and was
formed for the purpose of developing market share in the recording and broadcast
media  industries  through  the  establishment  of a music  oriented  television
network and archived video and music collection libraries.

      On October  20,  2004,  AGU was  reincorporated  in the state of  Delaware
through a merger of AGU into a wholly owned subsidiary corporation  incorporated
in the  State of  Delaware.  The  reincorporation  resulted  in AGU  becoming  a
Delaware corporation  effective as of October 21, 2004 and did not result in any
change in the company's name, business, assets, liabilities or net worth.

      At March 31, 2005, AGU had two wholly-owned  operating  subsidiaries  that
were engaged in the  following  services:(i)  the  formation  and operation of a
television  network,  The Tube  Music  Network,  Inc.,  ("The  Tube")  that airs
traditional  music videos and live concerts of contemporary  music material that
is  derived  from  archived  video and music  collection  libraries,  and (ii) a
production,  marketing and distribution  record company,  AGU Music,  Inc. ("AGU
Music"),  formerly Pyramid Records International,  Inc. In February of 2005, the
Company  formed two new  subsidiaries,  AGU  Studios,  Inc.,  ("AGU  Studios") a
Florida  corporation,   and  3200  Oakland  Park  Boulevard,   Inc.,  a  Florida
corporation  for the  purpose  of  developing  a media  center  for the film and
entertainment business.

Basis of Presentation

      The unaudited condensed  consolidated  financial statements of AGU and its
subsidiaries  (the  "Company")  have been prepared in accordance with accounting
principles  generally  accepted  in the  United  States of America  for  interim
financial   reporting  and  the  regulations  of  the  Securities  and  Exchange
Commission  ("SEC") for quarterly  reporting.  The interim  unaudited  condensed
consolidated  financial  statements  should  be read  in  conjunction  with  the
financial  statements and notes thereto  included in the Company's annual report
on Form  10-KSB as filed  with the SEC for the year  ended  December  31,  2004.
Management   acknowledges  its   responsibility   for  the  preparation  of  the
accompanying interim condensed  consolidated  financial statements which reflect
all adjustments considered necessary,  in the opinion of management,  for a fair
statement  of  the  results  of  interim  periods  presented.  The  accompanying
financial   statements  reflect  the  results  of  operations  of  AGU  and  its
subsidiaries  for the three  months  ended March 31, 2005 and the results of the
Company for the three  months  ended March 31,  2004.  Because the Company was a
development stage enterprise for most of 2004, the financial statements for 2005
are not  comparable  to those of the prior  year.  In  addition,  the results of
operations for the interim periods are not necessarily indicative of the results
of operations for the entire year.

Principles of Consolidation

      The accompanying consolidated financial statements include the accounts of
AGU  Entertainment  Corp. and its  subsidiaries.  All  significant  intercompany
transactions have been eliminated.


                                       7
<PAGE>

Use of Estimates

      The  preparation  of financial  statements  in accordance  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure  of  contingent  assets  and  liabilities  at the  date of  financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

2.    INTANGIBLES

      Intangible assets at March 31, 2005 are as follows:

<TABLE>
<CAPTION>
                                               Value at acquisition   Accumulated amortization   Balance at March 31, 2005
                                               --------------------   ------------------------   -------------------------
<S>                                            <C>                    <C>                        <C>
      Distribution agreement                   $            350,000   $               (116,400)  $                 233,600
      Other intangibles                                     651,035                         --                     651,035
                                               --------------------   -------------------------  -------------------------
      Total intangibles                        $          1,001,035   $               (116,400)  $                 884,635
                                               ====================   =========================  =========================
</TABLE>

      The  distribution  agreement is being  amortized on a straight  line basis
over a period of three  years.  Other  intangibles  pertain  to costs to develop
network logos,  graphic  templates and on-air  intersticials for The Tube, whose
national launch  commenced in the second quarter of 2005. The Company will begin
amortizing  these assets over their  estimated  useful lives beginning in May of
2005.  Aggregate  amortization  expense over the next three  years,  assuming an
estimated useful life of two years for the other intangibles,  is expected to be
as follows:

      For the year ending December 31:
      --------------------------------
      Remainder of 2005                              $      277,185
      2006                                                  441,918
      2007                                                  165,532


                                       8
<PAGE>

3.    NOTES PAYABLE

Convertible Notes

      Convertible  Notes Payable consists of the following at March 31, 2005 and
December 31, 2004:

<TABLE>
<CAPTION>
                                                                       2004                2004
                                                                   -------------      -------------
<S>                                                                <C>                <C>
      First mortgage note secured by Lauderdale Property           $   7,000,000      $   7,000,000
      Second mortgage note secured by Lauderdale Property              3,000,000          3,000,000
      Other convertible notes and subordinated debentures              1,745,000          1,475,000
                                                                   -------------      -------------
                                                                      11,745,000         11,475,000
      Less: current portion                                           (7,150,000)        (7,150,000)
      Less: Discount on convertible mortgage and notes payable        (3,650,948)        (3,470,822)
                                                                   -------------      -------------
      Notes payable, long term portion, net of discounts           $     944,052      $     854,178
                                                                   =============      =============
</TABLE>

      In connection  with the purchase of the Lauderdale  Property,  the Company
issued to the seller on December 22, 2004 a convertible mortgage promissory note
in the principal amount of $7,000,000.  The note pays interest at an annual rate
of 6.5% and is convertible at any time at the seller's option into shares of the
Company's  common  stock at a conversion  price of $2.50 per share.  A principal
payment of  $250,000 is due on June 25,  2005 and the  remaining  balance of the
note  matures on  December  22,  2005.  At the  closing of the  purchase  of the
Lauderdale  Property,  the Company made a prepayment  into an escrow  account of
$150,000  for  interest  on the  note and real  estate  taxes on the  Lauderdale
Property  covering  the  quarterly  period  ending  March 31,  2005.  Additional
quarterly  prepayments  of  interest  and real  estate  taxes in the  amount  of
$145,000  were  required to be put into escrow  beginning  March 22,  2005.  The
Company did not make the required  prepayment on March 22, 2005. This amount was
paid on behalf of the  Company  by the  holder of the  Mitchell  Note  (which is
evidenced by the second mortgage on the Lauderdale  Property) on April 22, 2005,
at which  time the  Company  received  a letter  from the  holder  of the  first
mortgage  note  acknowledging  the  cure  of  the  payment  default.  All of the
Company's  obligations  to the holder of this  convertible  promissory  note and
related  agreements are secured by a first mortgage on the Lauderdale  Property,
including  all of the Company's  rights,  title and interest as lessor in and to
all leases or rental arrangements of the Lauderdale Property.

      On May 13, 2005 the Company executed a letter agreement with the holder of
the Mitchell Note whereby the Company agreed that the $145,000 interest and real
estate tax payment made on behalf of the Company, the $100,000 that was advanced
to the Company on April 29, 2005 by the holder of the Mitchell  Note, the unpaid
interest  on the  Mitchell  Note for  March and  April  2005 and the legal  fees
incurred by the holder in  connection  with the letter  agreement,  would accrue
interest at the default  rate of 18% and would be due and payable by the Company
on August 1, 2005. The letter  agreement also extends the deadline for which the
Company was to have filed a  registration  statement to register  the  Company's
common stock pertaining to the Mitchell Note and related warrants from April 30,
2005 to June 30, 2005, and extends the date for which the registration statement
is required to be declared  effective  to November  30,  2005.  The Company also
agreed to grant the holder of the Mitchell Note an additional  150,000  warrants
to purchase the Company's  common stock at an exercise price of $1.50 per share,
with  the same  registration  and  anti-dilution  protections  contained  in the
warrants  originally  granted to the holder of the Mitchell  Note (See Note 10).
The Mitchell Note is evidenced by a second  mortgage on the Lauderdale  Property
and by  substantially  all of the Company's other assets,  including the capital
stock of its subsidiaries.  Because the Company did not pay the required monthly
interest  payments  for March and April  2005,  which  resulted  in the  Company
receiving  a default  letter  from the holder of the  Mitchell  Note on April 8,
2005, the interest rate on the note was increased to the default rate of 18%. If
in the future the  Company  is unable to comply  with the terms of the  Mitchell
Note,  the May 13 letter  agreement or the terms of the first mortgage note, the
holders of either note may seek to foreclose on the Lauderdale Property.

      During January and March of 2005 the Company issued convertible promissory
notes to various  accredited  investors  in the  aggregate  principal  amount of
$270,000.  The $270,000 of  convertible  promissory  notes are due on the second
anniversary  of their  issuance  date and are  convertible  into  shares  of the
Company's  common  stock at the option of each holder at a  conversion  price of
$3.00 per share. In connection with the issuance of the convertible  notes,  the
Company  issued to the holders an  aggregate  of 89,999  common  stock  purchase
warrants to purchase the  Company's  common stock (See Note 4). The common stock
purchase  warrants  have a two year  term and the  exercise  price is $3.00  per
share.  The common  stock  purchase  warrants  were valued at $46,217,  and this
amount was  recorded  as a discount to the  convertible  promissory  notes.  The
unamortized  balance of the  discount  for these  notes as of March 31, 2005 was
$42,982.


                                       9
<PAGE>

Related Party Notes

      On March 3, 2004,  AGU Music  entered into an  Assignment  and  Assumption
Agreement with Pyramid Media Group, Inc. ("PMG") (of which a related party and a
stockholder of the Company own a controlling interest), whereby AGU Music agreed
to assume all of the  covenants  and  obligations  of a  Distribution  Agreement
between  PMG  and ARK 21  Records,  LP  ("ARK21").  The  Distribution  Agreement
provides that ARK21 be the  manufacturer  and  distributor  of certain  recorded
music  projects for AGU Music through  normal  retail  channels  throughout  the
United  States.  In exchange for the rights to the  Distribution  Agreement  and
certain  assets of PMG, AGU Music assumed the  obligation  to repay  $350,000 of
notes payable ("the ARK 21 Notes") to certain principals of PMG. The Company has
guaranteed the payment of the ARK 21 Notes,  which have an annual  interest rate
of 8%, and were to have matured on May 1, 2007.  Approximately  $19,000 of these
notes  was paid in 2004 and the  outstanding  balance  as of March  31,  2005 is
approximately  $331,000.  The terms of the ARK 21 Notes require monthly payments
of  principal  and  interest.  The  Company  has not made the  required  monthly
principal and interest  payments since June of 2004. On May 5, 2005, the Company
entered into a settlement  agreement  with the holders of the ARK 21 Notes,  who
are significant  stockholders of the Company.  Under the terms of the settlement
agreement,  the ARK 21 Notes were  cancelled  and were  replaced  with new notes
containing the same terms and  conditions as the old notes,  except that the new
notes have a beginning principal balance of $331,240 and require, in addition to
the monthly payment of approximately  $8,500,  the repayment of principal in the
amount of $50,000 for every  $1,000,000 in equity capital raised by the Company.
In  addition,  upon the  Company's  closing  of a  capital  raising  of at least
$250,000,  the Company  must pay all the  principal  and  interest due under the
original  notes for the  period  January  through  April,  2005 in the amount of
approximately  $36,000.  The  Company  also agreed to issue  500,000  restricted
shares of the Company's common stock to the holders of the ARK 21 Notes.

      On March 31,  2005 the  Company  received a loan in the amount of $190,683
from a  stockholder  of the  Company  who is a  related  party.  This  loan pays
interest at 10% and is due June 30,  2005.  As of March 31, 2005 the Company had
outstanding  loans  payable  to  related  parties  in the  aggregate  amount  of
$636,325. The Company currently does not have the resources to repay these loans
upon their maturity.

4.    STOCKHOLDERS' EQUITY

      During the first three months of 2005,  the Company  issued 108,570 shares
of common  stock to third  parties in exchange  for  services  performed.  These
services were valued at $286,592 and this amount was charged to earnings  during
the period.  The Company also issued  45,540 shares of common stock to employees
and 5,000 shares to directors during the first three months of 2005 and recorded
compensation expense of $119,274. In addition, the Company issued 444,000 shares
of common stock to its chairman as an adjustment to the shares  allocated to the
original investors of the Company, 5,000 shares of common stock as a share price
adjustment  for certain  investors,  97,800 shares of common stock in connection
with the  acquisition  of property and equipment  valued at $244,500 and 121,875
shares of common stock in settlement of a liability of $337,500.

      During the first three months of 2005, the Company issued 89,999  detached
common  stock  purchase  warrants  to  acquire  the  Company's  common  stock in
connection with the issuance of convertible  promissory  notes (see note 3). The
warrants  have an exercise  price of $3.00 per share and expire on the  maturity
dates of the  respective  convertible  promissory  notes  with  which  they were
issued. In addition, the Company issued 2,550,000 common stock purchase warrants
at an exercise price of $3.00 per share and 3,575 common stock purchase warrants
at an  exercise  price  of  $2.00  per  share to a  significant  stockholder  in
consideration  for  converting a substantial  portion of his holdings of Company
promissory notes to common stock and for extending the maturity dates of some of
the other  promissory  notes of the Company held by him. The aggregate  value of
the  warrants  issued  during  the period was  $1,358,788,  and this  amount was
recorded as a discount on the Company's  convertible debt with an offset to Paid
in Capital. The discount is being amortized on a pro rata basis over the life of
the respective  convertible debt instruments.  No warrants were exercised during
the first three months of 2005 and 5,325,910  warrants were outstanding at March
31, 2005.


                                       10
<PAGE>

5.    EARNINGS PER SHARE

      Basic  income or loss per share is computed by dividing net income or loss
attributable  to common  stockholders  by the weighted  average number of shares
outstanding  during the year.  Diluted income or loss per share  attributable to
common  stockholders  further  considers  the impact of  dilutive  common  stock
equivalents.  Diluted loss per share has not been  presented  separately for the
three ending March 31, 2005 and 2004 because the effect of the additional shares
which would be issued,  assuming  conversion of the convertible notes and common
stock purchase warrants, are anti-dilutive for the aforementioned periods.

6.    COMMITMENTS AND CONTINGENCIES

      On January 27, 2005,  the Company was served with a summons with notice by
Jarred   Weisfeld  and  Cherry  Jones,   individually   and  doing  business  as
JarredCherry  Productions  LLC,  referred  to  herein as the  plaintiffs,  which
indicates  that the  plaintiffs  commenced an action  against the  Company.  The
plaintiffs  allege,  among other things,  breach of contract,  breach of implied
covenant  of  good  faith  and  fair  dealing,   unfair  competition,   tortuous
misappropriation  of goodwill,  and  deceptive  acts and  practices  pursuant to
Section 349 of the New York General  Business  Law.  This dispute  stems from an
alleged agreement between the plaintiffs and the Company related to the works of
the late Mr.  Russell  Jones,  who was the son of Ms.  Jones and the  management
client of Mr. Weisfeld.  The Company served on plaintiffs and filed a demand for
complaint in the  jurisdiction in which the summons with notice was filed by the
plaintiffs.  The plaintiffs  were required to respond within 20 calendar days as
measured  from  February 23, 2005,  to avoid  having the action  dismissed.  The
plaintiffs  did not respond  within the required 20 calendar days but did file a
complaint on March 15, 2005.  The complaint  indicates  that the  plaintiffs are
seeking compensatory and punitive damages of no less than $1,812,500 for each of
the six  causes  of  action  alleged.  On May 6, 2005 the  Company  forwarded  a
proposed  definitive  settlement  agreement  to the  Plaintiffs  Attorney and is
currently  waiting for their  response.  To date, the Company has not heard from
the Plaintiffs or their Counsel.  The Company believes that this dispute will be
resolved,  however  the  Company is unable to predict the outcome of this action
and the  effect  that it may have on the  Company's  liquidity  and  results  of
operations.

      October 13, 2004, The Tube received notification from a television channel
featuring  music  related  programming  that the circle logo used by The Tube is
"confusingly  similar"  to the  circle  logo  used by that  television  channel,
supporting claims of trademark infringement and unfair competition.  On November
3, 2004,  the Company  responded to the October 13,  letter  stating it does not
believe the logos are confusingly similar or that any trademark infringement has
occurred.  The  Company  has not  received a response  to its  November  3, 2004
letter. The Company intends to vigorously defend any challenge to its use of its
logo.

      The  Company  is subject  to claims  and legal  actions  that arise in the
ordinary  course  of its  business.  The  Company  believes  that  the  ultimate
liability, if any, with respect to these claims and legal actions, will not have
a material  effect on the  financial  position or results of  operations  of the
Company.

7.    RECENT ACCOUNTING PRONOUNCEMENTS

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123,  Share-Based  Payments  (revised  2004),  ("SFAS No. 123R").  This
statement  eliminates  the  option  to apply  the  intrinsic  value  measurement
provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, to stock based compensation issued to employees.  The
Statement  requires  companies to measure the cost of employee services received
in exchange  for an award of equity  instruments  based on the fair value of the
award at the date of grant, and recognize that cost over the period during which
an  employee is required  to provide  services  in exchange  for the award.  The
adoption of SFAS No. 123R could have a material effect on the Company's  results
of operations.


                                       11
<PAGE>

8.    SEGMENT REPORTING

      The Company has three reportable  operating segments:  The Tube, AGU Music
and AGU Studios.  The Tube airs  traditional  music videos and live  concerts of
contemporary  music  material  that is  derived  from  archived  video and music
collection libraries. When fully operational,  the Company expects that The Tube
will generate  revenues by selling  advertising time and through direct sales of
music related to the content  broadcasted on the network.  AGU Music is a record
company  engaged in the release of recorded  music  materials  acquired  through
artist signings and  acquisitions.  AGU Studios,  when fully  operational,  will
become a  comprehensive  media  entertainment  Center,  which will  offer  film,
television  and music  production  facilities,  sound stages for  recording  and
executive  offices  for  AGU's  operations  and  other  entertainment   industry
organizations. The Company expects to generate revenue by offering technical and
production services in the areas of film,  television and music production,  and
through  the rental of office  and  studio  space.  Each  segment is  separately
managed and is evaluated by the Company's  chief  operating  decision makers for
the purpose of  allocating  the  Company's  resources.  The  Company  also has a
corporate headquarters function which does not meet the criteria of a reportable
operating segment.

      The table below presents  information  about  reportable  segments for the
three months ending March 31, 2005 and 2004.

                                                 2005           2004
                                             -----------    -----------
Revenues
         AGU Music                           $   105,927    $        --
         AGU Studios                              44,576             --
         The Tube                                     --             --
                                             -----------    -----------
               Consolidated revenues         $   150,503    $        --
                                             ===========    ===========

Operating loss
         AGU Music                                18,760       (315,340)
         AGU Studios                             (21,555)            --
         The Tube                               (811,242)      (293,262)
                                             -----------    -----------
               Segment loss                     (814,037)      (608,602)
         Corporate                              (933,108)      (276,765)
                                             -----------    -----------
               Consolidated operating loss    (1,747,145)      (885,367)
                                             ===========    ===========

      The table below  reconciles the measurement of segment profit shown in the
previous table to the Company's consolidated income before taxes:

                                                 2005           2004
                                             -----------    -----------
Total segment loss                           $  (814,037)   $  (608,602)
Operating loss - corporate                      (933,108)      (276,765)
Interest expense                              (1,449,767)       (12,514)
                                             -----------    -----------
Loss before income tax                       $(3,196,912)   $  (897,881)
                                             ===========    ===========

9.    RELATED PARTY TRANSACTIONS

      On March 31, 2005 the Company  received a loan in the aggregate  amount of
$190,683 from a related  party and  stockholder  of the Company.  This loan pays
interest at 10% and is due June 30,  2005.  As of March 31, 2005 the Company had
outstanding  loans  payable  to  related  parties  in the  aggregate  amount  of
$636,325.  The Company  currently does not have the resources to pay these loans
upon their maturity.

      On May 5, 2005, the Company  entered into a settlement  agreement with the
holders of the ARK 21 Notes (See Note 3), who are  significant  stockholders  of
the Company. Under the terms of the settlement agreement,  the ARK 21 notes were
cancelled  and were  replaced  with new  notes  containing  the same  terms  and
conditions  as the old  notes,  except  that  the  new  notes  have a  beginning
principal balance of $331,240 and require, in addition to the monthly payment of
approximately  $8,500,  the  repayment of principal in the amount of $50,000 for
every $1,000,000 in equity capital raised by the Company. In addition,  upon the
Company's  closing of a capital raising of at least  $250,000,  the Company must
pay all the principal  and interest due under the original  notes for the period
January through April, 2005 in the amount of approximately  $36,000. The Company
also agreed to issue 500,000  restricted shares of the Company's common stock to
the holders of the ARK 21 Notes.


                                       12
<PAGE>

      For the period from  January 1, 2005 through  March 31, 2005,  the Company
received various  consulting  services totaling  approximately  $63,600 from two
stockholders. At March 31, 2005 approximately $58,600 was unpaid.

      Additionally,  two  officers of the  Company  agreed to defer a portion of
their  salary,  payable  under their  employment  agreements  until such time as
adequate capital has been raised by the Company. The amount deferred as of March
31, 2005 was approximately $151,000.

      Accounts   payable  to  related   parties  at  March  31,   2005   totaled
approximately  $110,000.  Included  in this  amount  was  $5,400  in  consulting
services and expenses provided by a director.

      For the period  from  April 1, 2005  through  May 17,  2005,  the  Company
received  various  loans from three  stockholders  totaling  $98,500 as follows;
$75,000 from DML Marketing  Corp,  $7,500 from John P.  Grandinetti , and $5,000
from David  Levy.  The loans will  accrue  interest at an annual rate of 10% and
mature on June 30, 2005.

10.   SUBSEQUENT EVENTS

      On May 5, 2005, the Company  entered into a settlement  agreement with the
holders of the ARK 21 Notes,  who are  significant  stockholders of the Company.
Under the terms of the settlement agreement, the ARK 21 notes were cancelled and
were replaced with new notes, terms of which are more fully described in Notes 3
and 9.

      On May 13, 2005, the Company  executed a letter  agreement with the holder
of the Mitchell Note whereby the Company  agreed that the $145,000  interest and
real estate tax payment  made on behalf of the Company,  the  $100,000  that was
advanced to the Company on April 29,  2005 by the holder of the  Mitchell  Note,
the unpaid  interest on the Mitchell Note for March and April 2005 and the legal
fees  incurred  by the holder in  connection  with the letter  agreement,  would
accrue  interest at the default  rate of 18% and would be due and payable by the
Company on August 1, 2005.  The letter  agreement  also extends the deadline for
which the Company was to have filed a  registration  statement  to register  the
Company's common stock pertaining to the Mitchell Note and related warrants from
April 30, 2005 to June 30, 2005, and extends the date for which the registration
statement is required to be declared effective to November 30, 2005. The Company
also  agreed to grant the  holder of the  Mitchell  Note an  additional  150,000
warrants to purchase the  Company's  common stock at an exercise  price of $1.50
per share, with the same registration and anti-dilution protections contained in
the warrants originally granted to the holder of the Mitchell Note.

      On April 19, 2005,  the Company was advanced  $100,000  from a stockholder
and issued a  promissory  note that  matures on June 30,  2005 and has an annual
interest rate of 10%.

      On April 20, 2005,  the Company  issued 277,242 shares of its common stock
as follow;

      o     200,000 shares in connection with a services agreement
      o     13,667 shares in exchange for professional  services received by the
            Company
      o     60,000 shares as consideration for defaults on promissory notes
      o     3,575 shares as payment of interest


                                       13
<PAGE>

11.   GOING CONCERN

      The  accompanying  consolidated  financial  statements  have been prepared
assuming  that the Company  will  continue  as a going  concern.  The  Company's
financial  condition  and  operating  results,  specifically  a working  capital
deficiency   of   approximately   $8.8  million  and   accumulated   deficit  of
approximately  $9.9  million  at  March  31,  2005,  as  well  as a net  loss of
approximately $3.2 million and net cash used in operations of approximately $1.1
million for the quarter ended March 31, 2005 and de minimus cash on hand,  raise
substantial  doubt  about  its  ability  to  continue  as a going  concern.  The
Company's  existence is dependent on Management's  ability to develop profitable
operations and resolve the Company's liquidity problems.  Management anticipates
that the Company will attain profitable status and improve its liquidity through
the continued  development of the Company's  television network,  recorded music
business and the Lauderdale Property.

      These  financial  statements  do not  include any  adjustments  that might
result from the outcome of this  uncertainty.  If the Company is unsuccessful in
obtaining the additional  capital  necessary to fund its  operations,  it may be
forced to downsize certain operations,  restructure its current debt obligations
on terms less  favorable to the Company than the  existing  obligations  or sell
some of its  assets.  It may also  need to seek  protection  under  the  federal
bankruptcy laws or be forced into  bankruptcy by its creditors.  There can be no
assurance  the Company  will be  successful  in its efforts to raise  additional
financing.

Item 2.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS.

Overview

      We were formerly  known as Lexington  Barron  Technologies,  Inc. and were
incorporated  in the State of  Colorado  on August 23,  2000 for the  purpose of
addressing the specific needs of small  businesses and startup  organizations by
providing a broad range of consulting and advisory services, ranging from market
research  and  analysis to business  plan and systems  development  to financial
consulting.  In early 2004, our former management determined that their business
model was not  progressing  and that we should  either  merge with or acquire an
operating company with an operating history and assets.

      Effective  April 1, 2004,  we completed a Share  Exchange  Agreement  with
Pyramid Music Corp., a Florida corporation ("PMC"). Under the terms of the Share
Exchange  Agreement,  we acquired 100% of the outstanding common stock of PMC in
exchange  for  16,922,464  shares of our common  stock.  On March 26,  2004,  in
anticipation of the completion of the share exchange, we changed our name to AGU
Entertainment Corp. Upon completion of this transaction, the former stockholders
of PMC owned,  on a fully diluted  basis,  approximately  eighty  percent of the
outstanding  common  stock of AGU  Entertainment  Corp.  as of  April  1,  2004,
resulting in a change in control. The transaction was accounted for as a reverse
merger and recapitalization  whereby PMC, which became a wholly owned subsidiary
of AGU  Entertainment  Corp.,  is  deemed  to be  the  acquirer  for  accounting
purposes. In addition, we had no identifiable assets and liabilities as of April
1, 2004. As a result, PMC is deemed to be the surviving accounting and reporting
entity, and all of the historical financial  information  presented in this Form
10-KSB,  including the consolidated  financial  statements and this Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations,
reflect the assets, liabilities, results of operations and cash flows of PMC and
its  subsidiaries,  The Tube Music Network,  Inc., a Florida  corporation  ("The
Tube") and Pyramid Records International, inc., a Florida corporation ("PRI").

      As a result of the share  exchange,  AGU became the parent company of PMC,
which was a  development  stage  company with an inception  date of May 20, 2003
with two wholly-owned  operating  subsidiaries that are engaged in the following
services:  (i) the  formation and  operation of a television  network,  The Tube
Music Network,  Inc., ("The Tube") that airs  traditional  music videos and live
concerts of contemporary  music material that is derived from archived video and
music collection  libraries,  and (ii) a production,  marketing and distribution
record company,  Pyramid Records International,  Inc. ("PRI"). PMC was dissolved
in  July  of 2004  and at  that  time  The  Tube  and  PRI  became  wholly-owned
subsidiaries of AGU Entertainment Corp. In February 2005, PRI officially changed
its name to AGU Music, Inc. ("AGU Music").


                                       14
<PAGE>

      The Tube is a 24-hour per day broadcast  digital  television  network that
delivers high quality music video, audio,  pay-per-view  options and commerce to
digital viewers nationally. Its national launch is expected to take place in the
second  quarter of 2005.  The Tube can currently be seen in a limited  number of
households in various parts of the United States.

      In the late  1990's,  broadcasters  throughout  the country  were  granted
portions  of the  airwaves  at no cost with the  understanding  that they  would
provide free digital  signals as part of the U.S.  government's  desire for high
definition   television.   However,   due  to  improvements  in  digital  signal
compression,   the  bandwidth  required  to  broadcast  digital  television  was
substantially  reduced,  leaving  broadcasters  with excess  bandwidth to use at
their discretion.  As a result,  there are currently a number of media companies
that have the ability to offer a digital  quality  picture over the air directly
to consumers and indirectly  through the cable and satellite  operators' digital
box using surplus  bandwidth  from local  broadcasters.  These media outlets can
offer  additional  channels to broadcast  local news,  sports,  weather or other
specialty services like The Tube. We expect to gain additional  distribution for
The Tube by reaching  agreements with these service  providers to air The Tube's
digital signal.  We are currently in negotiations  with several of these service
providers,  and expect to  eventually  leverage  this  market  penetration  into
households  served  by  larger  cable  and  satellite  systems.  There can be no
assurance  as to whether or when these  negotiations  will result in  definitive
agreements. We expect that The Tube will earn revenues through advertising sales
and through  e-commerce with respect to music and related  products that will be
seen by consumers on The Tube.

      AGU Music  produces both studio  albums and DVD concerts.  It entered into
several  agreements for  distribution and released three albums to the public in
2004.  Our  ability to  produce  new  albums  and DVD  concerts  in 2005 will be
dependent on the amount of working  capital  available to us (see  Liquidity and
Capital Resources) for the required  marketing,  promotional and other operating
expenses necessary to produce recorded music projects. We have already cancelled
plans for one  significant  music  project  due to a lack of  available  working
capital,  and do not  expect to release  any new  projects  until our  liquidity
situation improves substantially.

      In the third quarter of 2004,  our board of directors  decided to purchase
and develop a facility that would serve as a comprehensive  media  entertainment
recording and  production  facility that would  encompass  film,  television and
musical  projects.  On December 22, 2004, we closed on the purchase of a 162,000
square foot facility situated on 23 acres of land in Lauderdale  Lakes,  Florida
(the  "Lauderdale  Property").  Our business plan envisions a facility that will
consist of approximately 75,000 square feet of office space available for lease,
six sound stages ranging in size from 1,800 square feet to 28,000 square feet, a
12,000 square foot audio production studio, a 7,000 square foot commissary and a
two and a half acre back lot for film projects. We believe that this will be one
of the largest studio production  facilities on the east coast and that there is
substantial demand within the entertainment industry for a facility of this type
in South Florida.

      It was  originally  anticipated  that within three years the rental income
from the office space and  production  facilities  would be  sufficient to cover
substantially all of the operating expenses of the studio,  which would allow us
to use the  soundstages  and  production  studio to  develop  new music and film
projects  without  requiring  significant  cash  outlays.  To date,  we have not
entered  into any  leases or any other  material  contractual  commitments  with
respect to the usage of this facility.  The Company expects to generate  revenue
by offering technical and production  services in the areas of film,  television
and music production,  and through the rental of office and studio space.  There
can be no assurances  that we will be able to reach our projected  rental income
levels. A limited amount of production activity did take place on the Lauderdale
Property  in 2004 and in the first  quarter  of 2005,  and in  February  2005 we
formed a separate subsidiary,  AGU Studios,  Inc., a Florida Corporation,  under
which our studio development and production activities will take place.

      Because of the start up nature of our  business  throughout  most of 2004,
our results of  operations  and cash flows in the first  quarter of 2005 are not
comparable to the same period of a year ago.


                                       15
<PAGE>

Liquidity and Capital Resources

      We do not have  adequate cash to meet our current  obligations  as well as
our short and long term  objectives.  The growth and development of our business
will require a significant amount of additional working capital.  Our sources of
cash are not  adequate to fund the next 12 months of  operations.  We  currently
have very limited financial  resources and will need to raise additional capital
in order to continue as a going concern. If we are unsuccessful in obtaining the
additional  capital  necessary  to fund  our  operations,  we may be  forced  to
downsize certain  operations,  restructure our current debt obligations on terms
less  favorable to us than the existing  obligations or sell some of our assets.
We may also need to seek  protection  under the  federal  bankruptcy  laws or be
forced into bankruptcy by our creditors.

      Our  financial  condition and operating  results,  specifically  a working
capital  deficit  of  approximately  $8.8  million,  an  accumulated  deficit of
approximately  $9.9 million,  de minimus cash on hand as of March 31, 2005 and a
net loss of $3.2 million and net cash used in operations of  approximately  $1.1
million for the three months ending March 31, 2005 raise substantial doubt about
our ability to continue to operate as a going concern.

      As a company  that has recently  emerged  from the  start-up  phase with a
limited operating history,  we are subject to all the substantial risks inherent
in the development of a new business enterprise within an extremely  competitive
industry.  We cannot  assure  you that the  business  will  continue  as a going
concern  or ever  achieve  profitability.  Due to the  absence  of an  operating
history  and the  emerging  nature of the market in which we compete and lack of
sufficient  capital to fund our  operations  and implement our business plan, we
anticipate operating losses until such time as we can successfully implement our
business  strategy,  which  includes  the  national  launch  of The Tube and the
development of the Lauderdale Property. Because of losses incurred by us through
our  most  recent  fiscal  year end and our  general  financial  condition,  our
independent   registered   public  accounting  firm  inserted  a  going  concern
qualification  in their audit report for the most recent fiscal year that raises
substantial doubt about our ability to continue as a going concern.

      Since May 20, 2003, we have financed our operations  through numerous debt
and equity  issuances.  In addition to the convertible notes discussed below, we
issued   approximately   $4,699,000   of   convertible   notes  or   debentures,
approximately  $3,379,000  of which plus  accrued  interest,  were  subsequently
converted  into  1,173,540  shares of common stock of the Company and $75,000 of
which was repaid in 2004.  Approximately $1,095,000 of the remaining convertible
promissory notes mature between the fourth quarter of 2006 and the first quarter
of 2007 and a $150,000  promissory  note matures on June 30,  2005.  While these
convertible  notes  are  convertible  into  shares  of  our  common  stock  at a
conversion price of $3.00 per share, there can be no assurances that these notes
will be  converted  prior to their  becoming  due. We  currently do not have the
financial  resources  to repay these  promissory  notes  without  completing  an
additional  financing,  reducing  expenses,  selling  assets  or  extending  the
maturities of this debt.  If we are  unsuccessful  in obtaining  the  additional
capital  necessary to fund our operations,  it may be forced to downsize certain
operations,  restructure our current debt obligations, find a strategic partner,
and or sell some certain assets.  We may also have to seek protection  under the
federal bankruptcy laws or be forced into bankruptcy by its creditors.

      As part of the purchase price of the Lauderdale Property, we issued to the
seller on  December  22, 2004 a  convertible  promissory  note in the  principal
amount of  $7,000,000.  The note pays  interest at an annual rate of 6.5% and is
convertible  at any time at the seller's  option into shares of our common stock
at a conversion price of $2.50 per share. A principal payment of $250,000 is due
on June 25, 2005 and the  remaining  balance of the note matures on December 22,
2005.  All of our  obligations to the seller under this  convertible  promissory
note and related  agreements  are secured by a first  mortgage on the Lauderdale
Property,  including  all of our rights,  title and interest as lessor in and to
all leases or rental arrangements of the Lauderdale Property.  At the closing of
the purchase of the  Lauderdale  Property,  we made a prepayment  into an escrow
account  of  $150,000  for  interest  on the note and real  estate  taxes on the
Lauderdale  Property  covering  the  quarterly  period  ending  March 31,  2005.
Additional quarterly  prepayments of $145,000 are required to be put into escrow
beginning  March 22, 2005. We did not make the required  prepayment on March 22,
2005.  This  amount  was  paid on  behalf  of the  Company  by one of our  other
creditors (see below) on April 22, 2005, at which time we received a letter from
the holder of the first  mortgage  note  acknowledging  the cure of the  payment
default.

      Also on December 22, 2004,  we issued a secured  convertible  term note in
the  principal  amount of  $3,000,000  to Mitchell  Entertainment  Company  (the
"Mitchell  Note").  The note pays interest  monthly at an annual rate of 10% and
has a maturity date of December 19, 2006.  The note can be converted at any time
by the lender into shares of our common stock at an initial  conversion price of
$1.50  per  share,  subject  to  anti-dilution  protections  and  certain  other
adjustments. The Mitchell note is secured by a second mortgage on the Lauderdale
Property and by  substantially  all of our other  assets,  including the capital
stock of our subsidiaries.


                                       16
<PAGE>

      On May 13,  2005 we  executed  a letter  agreement  with the holder of the
Mitchell  Note whereby we agreed that the $145,000  interest and real estate tax
payment made on behalf of the Company,  the $100,000  that was advanced to us on
April 29, 2005 by the holder of the Mitchell Note, the interest  installments on
the Mitchell  Note for April 1,2005 and May 1, 2005 and the legal fees  incurred
by the  holder  in  connection  with the  letter  agreement,  together  with the
interest due on the foregoing  amount would accrue  interest at the default rate
of 18% and  would  be due and  payable  by us on  August  1,  2005.  The  letter
agreement  also  extends  the  deadline  for  which  we  were  to  have  filed a
registration  statement to register the Company's common stock pertaining to the
Mitchell  Note and related  warrants  from April 30, 2005 to June 30, 2005,  and
extends the date for which the registration statement is required to be declared
effective  to  November  30,  2005.  We also  agreed to grant the  holder of the
Mitchell  Note  additional  warrants  of  100,000  and 50,000  respectively,  to
purchase our common stock at an exercise price of $1.50 per share, with the same
registration and anti-dilution  protections contained in the warrants originally
granted to the holder of the Mitchell Note.  Because we did not pay the required
monthly  interest  payments  for March and April  2005,  which  resulted  in our
receiving  a default  letter  from the holder of the  Mitchell  Note on April 8,
2005, the interest rate on the note was increased to the default rate of 18%. If
in the future we are unable to comply with the terms of the Mitchell  Note,  the
May 13, letter agreement or the terms of the first mortgage note, the holders of
either note may seek to foreclose on the Lauderdale Property.

      On March 3, 2004 our AGU Music  subsidiary  entered into an Assignment and
Assumption  Agreement with Pyramid Media Group,  Inc.  ("PMG") whereby AGU Music
agreed  to  assume  all of  the  covenants  and  obligations  of a  Distribution
Agreement  between PMG and ARK 21 Records,  LP  ("ARK21").  In exchange  for the
rights to the  Distribution  Agreement  and  certain  assets  of PMG,  AGU Music
assumed the obligation to repay $350,000 of notes payable to certain  principals
of PMG (the "ARK 21 Notes").  The Company has  guaranteed the payment of the ARK
21 notes,  which have an annual  interest  rate of 8% and mature on May 1, 2007.
Allen Jacobi,  the former  President of AGU Music,  is an owner and  controlling
stockholder  of PMG.  Approximately  $19,000 of these notes was paid in 2004 and
the  outstanding  balance as of March 31, 2005 is  approximately  $331,000.  The
terms of these notes require monthly payments of principal and interest. We have
not made the required  monthly  principal  and interest  payments  since June of
2004. On May 5, 2005, we entered into a settlement agreement with the holders of
the ARK 21 Notes,  who are significant  stockholders  of the Company.  Under the
terms of the  settlement  agreement,  the ARK 21 Notes were  cancelled  and were
replaced  with new notes  containing  the same terms and  conditions  as the old
notes,  except that the new notes have a beginning principal balance of $331,240
and require,  in addition to the monthly payment of  approximately  $8,500,  the
repayment of principal in the amount of $50,000 for every  $1,000,000  in equity
capital raised by us. In addition,  upon the our closing of a capital raising of
at least  $250,000,  we must pay all the  principal  and  interest due under the
original  notes for the  period  January  through  April,  2005 in the amount of
approximately  $36,000. We also agreed to issue 500,000 restricted shares of the
Company's common stock to the holders of the ARK 21 Notes.

      We currently have a monthly cash requirement of approximately $550,000 and
we will need to raise  additional  capital in the second quarter and the balance
of  2005,  for  working  capital,  capital  expenditures,   business  expansion,
repayment of maturing  debt and to continue as a going  concern.  We  anticipate
that we will need to raise up to  approximately  $6 million  over the balance of
2005 to  provide  for  these  requirements.  Management  is  evaluating  several
alternatives,  including  the  sale of  assets,  sale of  equity  securities  or
issuance of additional  debt, or finding a strategic  partner.  We cannot assure
you that we will be successful in completing such an offering,  in executing the
business plan or achieving  profitability.  If we are not  successful in raising
additional  capital and refinancing the $7,000,000  convertible  promissory note
due in December 2005, our financial  condition,  business operations and ability
to continue as a going  concern will be adversely  affected,  and we may need to
seek protection under the federal bankruptcy laws.

      Cash used in operations for the first three months of 2005 was $1,092,000,
which was primarily the result of our operating  loss of  $1,747,000,  partially
offset by increases to accounts payable and accrued expenses and the issuance of
common  stock in exchange  for  services.  Cash used in  operations  in 2004 was
$1,273,000.  We  expect  to  continue  to  generate  negative  cash  flows  from
operations  until  such time as we can  complete  a  substantial  debt or equity
offering and more fully develop our three lines of business.  No assurances  can
be given as to when or if we will be able to develop profitable operations.


                                       17
<PAGE>

      Cash used in investing activities in the first quarter of 2005 amounted to
$129,000, as compared to $22,000 in 2004. The increase was due to higher capital
expenditures in 2005. Capital expenditures for the remainder of 2005 will depend
largely upon our ability to raise additional capital; however, our business plan
currently assumes approximately $1 million of capital expenditures over the next
twelve months.

      We received cash from financing in the first quarter of 2005 in the amount
of  $454,000,  as compared to  $1,207,000  in the same period of a year ago. The
decrease was due to fewer issuances of convertible notes in 2005.

      We have experienced  liquidity issues since our inception due primarily to
our limited ability,  to date, to raise adequate capital on acceptable terms. We
have  historically  relied  upon  the  issuance  of  promissory  notes  that are
convertible into shares of our common stock to fund our operations and currently
anticipate  that we will need to continue to issue  promissory  notes and common
stock to fund our operations and repay our outstanding  debt for the foreseeable
future.  At  March  31,  2005,  we  had  approximately  $12.5  million  of  debt
outstanding,  approximately  $7.3  million of which is due at  various  dates in
2005. We currently do not have the financial  resources to repay any of these or
any  of  the  aforementioned   obligations   without  completing  an  additional
financing.  We also  currently  do not have funds  available  for basic  working
capital requirements beyond May 31, 2005. There can be no assurance that we will
be successful in obtaining  additional  funds necessary to finance our operation
or repay debt.

      If we are unable to raise the  necessary  capital to meet our  current and
future  obligations,  we will need to consider other  alternatives,  which could
include  curtailing our business  plan,  selling some of our assets or finding a
strategic partner.

      Moreover,  as a result of our liquidity issues, we have experienced delays
in the repayment of certain  promissory  notes upon maturity.  However,  certain
holders of our  promissory  notes have agreed in 2004 and 2005 to extend the due
dates on their promissory notes. If in the future, the holders of our promissory
notes demand  repayment of principal and accrued interest instead of electing to
extend the maturity  dates on their notes and if we are unable to repay our debt
when due because of our  continued  liquidity  issues,  we may be forced into an
involuntary bankruptcy filing.

      We do not have  adequate cash to meet our current  obligations  as well as
its short and long term objectives.  The growth and development of the Company's
business will require a significant  amount of additional  working  capital.  We
currently  have  very  limited  financial  resources  and  will  need  to  raise
additional  capital  in order to  continue  as a going  concern.  Our  financial
condition and  operating  results,  specifically  a working  capital  deficit of
approximately  $8.8  million,  an  accumulated  deficit  of  approximately  $9.9
million,  de  minimus  cash on hand as of March 31,  2005 and a net loss of $3.2
million for the three months ending March 31, 2005 raise substantial doubt about
our ability to continue to operate as a going concern. If we are unsuccessful in
obtaining the additional  capital  necessary to fund our  operations,  we may be
forced to downsize certain operations,  restructure our current debt obligations
on terms less favorable to the existing  obligations or sell some of our assets.
We may also need to seek  protection  under the  federal  bankruptcy  laws or be
forced into bankruptcy by our creditors.

Critical Accounting Policies and Estimates

      The  accounting  policies  that  we have  identified  as  critical  to our
business  operations  and to an  understanding  of our results of operations are
described  in detail in our Annual  Report on Form  10-KSB  for the fiscal  year
ended December 31, 2004. In many cases, the accounting treatment of a particular
transaction is specifically dictated by accounting principles generally accepted
in the United States of America, with no need for management's judgment in their
application. In other cases, preparation of our unaudited condensed consolidated
financial  statements  for interim  periods  requires us to make  estimates  and
assumptions   that  affect  the  reported  amount  of  assets  and  liabilities,
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements,  and the  reported  amounts  of  revenues  and  expenses  during the
reporting  period.  There can be no assurance  that the actual  results will not
differ from those estimates.


                                       18
<PAGE>

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123,  Share-Based  Payments  (revised  2004),  ("SFAS No. 123R").  This
statement  eliminates  the  option  to apply  the  intrinsic  value  measurement
provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, to stock based compensation issued to employees.  The
Statement  requires  companies to measure the cost of employee services received
in exchange  for an award of equity  instruments  based on the fair value of the
award at the date of grant, and recognize that cost over the period during which
an employee is required to provide services in exchange for the award.  Adoption
of SFAS No.  123R  could  have a  material  effect on the  Company's  results of
operations.

Results of Operations for the Three Months ending March 31, 2005 and 2004

      Revenues were $151,000 in 2005 and $0 in 2004.  Approximately  $106,000 of
this  amount  was  related  to  recorded  music  shipments  by AGU Music and the
remainder  was  generated by AGU Studios.  AGU Music had gross profit of $83,000
and AGU Studios had gross profit of $31,000 during the period.

      Operating   expenses  were  $1,861,000  and  $885,000  in  2005  and  2004
respectively,  the  majority of which was general and  administrative  expenses.
Thus far in 2005 our liquidity  constraints have severely limited our ability to
engage in marketing,  promotion,  advertising and similar expenses  necessary to
develop our business. We expect this trend to continue until such time as we can
complete a substantial debt or equity offering.

      Interest  expense in 2005 was $1,450,000,  as compared to $12,500 in 2004,
and  includes  $1,197,000  for  the  amortization  of  debt  discounts  and  the
amortization  of deferred  financing  fees.  The  remainder  of the  increase in
interest expense is the result of increased indebtedness in 2005.

      We did not record a tax benefit  during this period as we determined  that
it was more  likely  than not that we would not be able to  generate  sufficient
taxable  income to use any net deferred tax assets.  As such,  we increased  our
valuation  allowance for the net deferred tax asset that existed at December 31,
2004 so that no net tax benefit was recorded in 2005.

      Our net loss for the period was $3,196,000, as compared to $898,000 in the
prior year.

      We anticipate  entering  into several  affiliate  agreements  with digital
broadcasters,  which will allow The Tube to be seen in  approximately 20 million
homes by the end of 2005. While we expect this market  penetration to generate a
substantial increase in marketing, promotion and other expenses both at The Tube
and at AGU Studios,  we also expect that our revenues will  ultimately  increase
sufficiently enough to cover these increases. Thus, our results of operations in
fiscal 2004 are not indicative of our projected  results of operations in fiscal
2005 and beyond.

Recent Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  No. 123,  Share-Based  Payments
(revised 2004), ("SFAS No. 123R"). This statement eliminates the option to apply
the  intrinsic  value  measurement  provisions of  Accounting  Principles  Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, to stock based
compensation  issued to employees.  The Statement  requires companies to measure
the cost of  employee  services  received  in  exchange  for an award of  equity
instruments  based on the  fair  value of the  award at the date of  grant,  and
recognize  that cost over the period  during  which an  employee  is required to
provide services in exchange for the award. Adoption of SFAS No. 123R could have
a material effect on the Company's results of operations.


                                       19
<PAGE>

Item 3. CONTROLS AND PROCEDURES

      The  Company,  under the  supervision  and with the  participation  of its
management,  including its principal  executive officer and principal  financial
officer,  evaluated  the  effectiveness  of  the  design  and  operation  of its
disclosure  controls and  procedures as of the end of the period covered by this
report. Based on this evaluation,  the principal executive officer and principal
financial  officer  concluded  that, as of the end of the period covered by this
report,  the Company's  disclosure  controls and  procedures  were  effective in
reaching a reasonable  level of assurance  that  management is timely alerted to
material  information related to and during the period when our periodic reports
are being prepared.

      A control system,  no matter how well conceived and operated,  can provide
only  reasonable,  not absolute,  assurance  that the  objectives of the control
system are met.  Further,  the design of a control  system must reflect the fact
that there are  resource  constraints,  and the  benefits  of  controls  must be
considered relative to their costs.  Because of the inherent  limitations in all
control systems,  no evaluation of controls can provide absolute  assurance that
all control issues and instances of fraud,  if any, within the Company have been
detected.  Because  of the  inherent  limitations  in a  cost-effective  control
system, misstatements due to error or fraud may occur and not be detected.

      There has been no change in the Company's  internal control over financial
reporting that occurred during the Company's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

                           PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

      On January 27, 2005,  the Company was served with a summons with notice by
Jarred   Weisfeld  and  Cherry  Jones,   individually   and  doing  business  as
JarredCherry  Productions  LLC,  referred  to  herein as the  plaintiffs,  which
indicates  that the  plaintiffs  commenced an action  against the  Company.  The
plaintiffs  allege,  among other things,  breach of contract,  breach of implied
covenant  of  good  faith  and  fair  dealing,   unfair  competition,   tortuous
misappropriation  of goodwill,  and  deceptive  acts and  practices  pursuant to
Section 349 of the New York General  Business  Law.  This dispute  stems from an
alleged agreement between the plaintiffs and the Company related to the works of
the late Mr.  Russell  Jones,  who was the son of Ms.  Jones and the  management
client of Mr. Weisfeld.  The Company served on plaintiffs and filed a demand for
complaint in the  jurisdiction in which the summons with notice was filed by the
plaintiffs.  The plaintiffs  were required to respond within 20 calendar days as
measured  from  February 23, 2005,  to avoid  having the action  dismissed.  The
plaintiffs  did not respond  within the required 20 calendar days but did file a
complaint on March 15, 2005.  The complaint  indicates  that the  plaintiffs are
seeking compensatory and punitive damages of no less than $1,812,500 for each of
the six  causes  of  action  alleged.  On May 6, 2005 the  Company  forwarded  a
proposed  definitive  settlement  agreement  to the  Plaintiffs  Attorney and is
currently  waiting for their  response.  To date, the Company has not heard from
the Plaintiffs or their counsel.  The Company believes that this dispute will be
resolved,  however  the  Company is unable to predict the outcome of this action
and the  effect  that it may have on the  Company's  liquidity  and  results  of
operations.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      See the Company's  Current  Reports on Form 8-K filed with the  Securities
and Exchange Commission on April 28, 2005, May 11, 2005 and May 20, 2005.


                                       20
<PAGE>

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

The following  exhibits are  incorporated by reference herein or filed herewith.
The warranties, representations and covenants contained in the agreements listed
below as exhibits should not be relied upon by buyers, sellers or holders of the
Company's  securities  and are not intended as  warranties,  representations  or
covenants to any  individual or entity except as  specifically  set forth in the
agreements.

Number      Title
------      -----

2.1         Share  Exchange  Agreement,   dated  March  15,  2004,  between  the
            shareholders  of  Pyramid  Music  Corp.,  Pyramid  Music  Corp.  and
            Lexington Barron  Technologies,  Inc.  (Incorporated by reference to
            the Registrants Form 8-K filed April 21, 2004, as amended)

2.2         Agreement and Plan of Merger, dated as of September 30, 2004, by and
            between AGU  Entertainment  Corp., a Colorado  corporation,  and AGU
            Entertainment Corp., a Delaware corporation  (incorporated herein by
            reference to the Registrant's Form 10-QSB filed November 12, 2004)

3.1         Certificate of Incorporation of AGU Entertainment  Corp., a Delaware
            corporation  (incorporated  herein by reference to the  Registrant's
            Form 10-QSB filed November 12, 2004)

3.2         Bylaws  of  AGU   Entertainment   Corp.,   a  Delaware   corporation
            (incorporated  herein by reference to the  Registrant's  Form 10-QSB
            filed November 12, 2004)

3.4         Specimen certificate of the common stock of AGU Entertainment Corp.,
            a  Delaware  company   (incorporated  herein  by  reference  to  the
            Registrant's   Registration   Statement   on  Form  SB-2  (File  No.
            333-86244)).

4.1         Convertible  Promissory  Note dated  September 13, 2004, made by AGU
            Entertainment  Corp. in favor of Galt Financial Corp.  (incorporated
            herein by reference to the Registrant's Form 8-K filed September 20,
            2004)

4.2         Warrant  to  subscribe  for  500,000  shares of common  stock of AGU
            Entertainment   Corp.   issued   to   Galt   Financial   Corporation
            (incorporated herein by reference to the Registrant's Form 8-K filed
            September 20, 2004)

4.3         Secured Convertible Term Note issued by AGU Entertainment Corp., The
            Tube Music Network, Inc., and Pyramid Records International, Inc. to
            Mitchell  Entertainment Company (incorporated herein by reference to
            the Registrant's Form 8-K filed December 29, 2004)


                                       21
<PAGE>

4.4         Common Stock Purchase Warrant of AGU  Entertainment  Corp. issued to
            Mitchell  Entertainment Company (incorporated herein by reference to
            the Registrant's Form 8-K filed December 29, 2004)

4.5         Promissory Note issued by AGU Entertainment Corp. to Charley Zeches,
            in her capacity as trustee of Lakes Holding Trust U/A  (incorporated
            herein by reference to the Registrant's  Form 8-K filed December 29,
            2004)

10.1        Letter Agreement regarding $145,000 Protective Advance,  dated April
            14, 2005 (incorporated  herein by reference to the Registrant's Form
            8-K filed April 20, 2005)

10.2        Letter,  dated April 22, 2005 from Elizabeth Buntrock  (incorporated
            herein by reference to the  Registrant's  Form 8-K/A filed April 28,
            2005)

10.3        Settlement and Mutual Release  Agreement,  effective April 15, 2005,
            by and among AgU  Entertainment  Corp. and each of its subsidiaries,
            and Ned  Siegel,  Neil  Strum and Strum  Brothers  Investment,  LLC.
            (incorporated herein by reference to the Registrant's Form 8-K filed
            May 11, 2005)

10.4        Charter Affiliate  Affiliation Agreement dated as of April 15, 2005,
            by and between The Tube Music Network,  Inc. and Raycom Media,  Inc.
            (incorporated  herein by  reference to the  Registrant's  Form 8-K/A
            filed May 23, 2005) (This agreement has been redacted  pursuant to a
            confidential treatment request filed with the SEC)

10.5        Technical Services  Agreement,  dated as of December 1, 2004, by and
            between The Tube Music  Network,  Inc.  and Skyport  Services,  Inc.
            (incorporated  herein by  reference to the  Registrant's  Form 8-K/A
            filed May 23, 2005) (This agreement has been redacted  pursuant to a
            confidential treatment request filed with the SEC)

31.1        Certification  of David C.  Levy,  Chief  Executive  Officer  of the
            Company,  dated May 23,  2005,  pursuant  to Rule 13a -  14(a)/15d -
            14(a) of the Securities Exchange Act of 1934, as amended, as adopted
            pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act of 2002.

31.2        Certification  of John W.  Poling,  Chief  Financial  Officer of the
            Company,  dated May 23,  2005,  pursuant  to Rule 13a -  14(a)/15d -
            14(a) of the Securities Exchange Act of 1934, as amended, as adopted
            pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act of 2002.

32.1        Certification  of David C.  Levy,  Chief  Executive  Officer  of the
            Company, and John W. Poling, Chief Financial Officer of the Company,
            dated May 23, 2005  pursuant to 18 U.S.C.  Section  1350, as adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


                                       22
<PAGE>

                                   SIGNATURES

      In accordance  with the  requirements  of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


Date: May 26, 2005                             /s/ John W. Poling
                                               ---------------------------------
                                               Name:  John W. Poling
                                               Title: Chief Financial Officer


                                       23