UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 (X)
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
                FOR THE
      QUARTERLY PERIOD ENDED: MARCH 31,
      2008
  (_)
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

                  For the
      transition period from _____________ to
    _____________.
  Commission
File No. 000-29019
  CHINA ENTERTAINMENT GROUP,
INC.
 (Name of
small business issuer as specified in its charter)
 
 NEVADA
              
              22-3617931(State
      or jurisdiction of incorporation or organization)
              
              (I.R.S.
      Employer Identification No.)Unit
      3409 Shun Tak Centre, West Tower,
                168-200
      Connaught Road Central, Hong Kong
              
              n/a(Address
      of principal executive offices)
              
              (Zip
      Code)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 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 oNo þ
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer
                o
                Accelerated
      filer
                oNon-accelerated
      filer
                o (Do not
      check if a smaller reporting company)
                Smaller
      reporting company
                x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes oNo þ
  APPLICABLE
ONLY TO CORPORATE ISSUERS:
 
 State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practical date.  As of May 19, 2008, there were
approximately 128,963,425shares
of the issuer's $.001 par value common stock issued and
outstanding.
  Transitional
Small Business Disclosure Form (Check one):  Yes o No þ
  
  TABLE
OF CONTENTS
 TO
QUARTERLY REPORT ON FORM 10-Q
 FOR
PERIOD ENDED MARCH 31, 2008
  PART
      I
              FINANCIAL
      INFORMATION
              PageItem
      1.
              Financial
      Statements
              1Condensed
      Balance Sheet (Unaudited)
              1Condensed
      Statement of Operations (Unaudited)
              2Condensed
      Statement of Cash Flows (Unaudited)
              4Notes
      to Condensed Financial Statements (Unaudited)
              6Item
      2.
              Management's
      Discussion and Analysis or Plan of Operations
              9Item
      3.
              Quantitative
      and Qualitative Disclosures about Market Risk
              14Item
      4.
              Controls
      and Procedures
              14
  PART
      II
              OTHER
      INFORMATIONItem
      1.
              Legal
      Proceedings
              14Item
      1A.
              Risk
      Factors
              14Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              15Item
      3.
              Defaults
      Upon Senior Securities
              15Item
      4.
              Submission
      of Matters to Vote of Security Holders
              15Item
      5.
              Other
      Information
              15Item
      6.
              Exhibits
              15Signatures
              
              16Exhibits
              
              Attached
  
  PART
I - FINANCIAL INFORMATION
 
 ITEM
1. FINANCIAL
STATEMENTS
  CHINA
ENTERTAINMENT GROUP, INC.
 CONDENSED
BALANCE SHEETS (UNAUDITED)
  March
      31,
                2008
              
              
              December
      31,
                2007$
              
              
              
              $ASSETCurrent
      AssetAmount
      due from an affiliate
              
              
              1
              
              
              
              1Total
      asset
              
              
              1
              
              
              
              1LIABILITIES
      AND STOCKHOLDERS’ (DEFICIENCY) EQUITYCurrent
      LiabilitiesAccrued
      liabilities
              
              
              88,216
              
              
              
              -Amount
      due to an affiliate
              
              
              55,090
              
              
              
              -Total
      current liabilities
              
              
              143,306
              
              
              
              -Commitments
      and contingenciesStockholders’
      (deficiency) equityCommon
      stock, $0.001 par value; 200,000,000 shares authorized;128,963,425
      shares issued and outstanding
              
              
              128,963
              
              
              
              128,963Additional
      paid-in capital
              
              
              118,762
              
              
              
              118,762Accumulated
      deficit
              
              
              (391,030
              )
              
              
              (247,724
              )Total
      stockholders’ (deficiency) equity
              
              
              (143,305
              )
              
              
              1Total
      liabilities and stockholders’ equity
              
              
              1
              
              
              
              1
 
 
 The
accompanying notes are an integral part of these condensed financial
statements.
  1
  CHINA
ENTERTAINMENT GROUP, INC.
 CONDENSED
STATEMENT OF OPERATIONS (UNAUDITED)
 
 Three
      months ended
                March
      31,
                2008$Revenue,
      net
              
              
              -Other
      revenue
              
              
              -General
      and administrative expenses
              
              
              (143,306
              )Loss
      before income tax
              
              
              (143,306
              )Income
      tax
              
              
              -Net
      loss
              
              
              (143,306
              )Basic
      and diluted loss per share
              
              
              (0.0011
              )Basic
      and diluted weighted average shares outstanding
              
              
              128,963,425
 
 
 The
accompanying notes are an integral part of these condensed financial
statements.
  2
  CHINA
ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
 
 Three
      months ended
                March
      31,
                2007$Revenue,
      net
              
              
              99,546Other
      revenue
              
              
              629General
      and administrative expenses
              
              
              (260,318
              )Loss
      before income tax
              
              
              (160,143
              )Income
      tax
              
              
              -Net
      loss
              
              
              (160,143
              )Basic
      and diluted loss per share
              
              
              (0.0012
              )Basic
      and diluted weighted average shares outstanding
              
              
              128,963,425
 
 
 The
accompanying notes are an integral part of these condensed financial
statements.
  3
  CHINA
ENTERTAINMENT GROUP, INC.
 CONDENSED
STATEMENT OF CASH FLOWS (UNAUDITED)
 
 Three
      months ended
                March
      31,
                2008$Operating
      activitiesNet
      loss
              
              
              (143,306
              )Changes
      in operating assets and liabilitiesIncrease
      in accounts payable, accrued liabilities, other liabilities and
      deposits
              
              
              88,216Net
      cash used in operating activities
              
              
              (55,090
              )Financing
      activitiesAdvance
      from an affiliate
              
              
              55,090Net
      cash provided by financing activities
              
              
              55,090Decrease
      in cash and cash equivalents
              
              
              -Cash
      and cash equivalents, beginning of period
              
              
              -Cash
      and cash equivalents, end of period
              
              
              -
   The
accompanying notes are an integral part of these condensed financial
statements.
  4
  CHINA
ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
 
 Three
      months ended
                March
      31,
                2007$Operating
      activitiesNet
      loss
              
              
              (160,143
              )Adjustment
      to reconcile net loss to net cash used in operating
    activitiesDepreciation
              
              
              2,743Changes
      in operating assets and liabilitiesDecrease
      in accounts receivable
              
              
              57,207Decrease
      in deposits paid, prepaid expenses and other current
assets
              
              
              112,284Decrease
      in accounts payable, accrued liabilities, other liabilities and deposits
      received
              
              
              (118,834
              )Net
      cash used in operating activities
              
              
              (106,743
              )Financing
      activitiesAdvances
      from affiliates
              
              
              38,611Net
      cash provided by financing activities
              
              
              38,611Decrease
      in cash and cash equivalents
              
              
              (68,132
              )Cash
      and cash equivalents, beginning of period
              
              
              1,019,888Cash
      and cash equivalents, end of period
              
              
              951,756
   The
accompanying notes are an integral part of these condensed financial
statements.
  5
  CHINA ENTERTAINMENT GROUP,
INC.
 NOTES
TO CONDENDSED FINANCIAL STATEMENTS (UNAUDITED)
   Note
      1.
              LIQUIDITY
      AND GOING CONCERN
 
 Subsequent to the disposal
of Metrolink Pacific Limited (“MPL”) and its subsidiaries (the “Disposal”)
during the year ended December 31, 2007, China Entertainment Group, Inc.
(the “Company”)has no active operation.  This matter raises substantialdoubt about the Company’s ability to continue as a going
concern.  The future of the Company is dependent upon its ability to
obtain financing and upon future profitable operations derived from the
development of new business opportunity.  The financial statements
have been prepared on a going concern basis as the stockholders agreed to
provide continuing financial supporting to the Company to enable it to continue
as a going concern and to settle its liabilities as and when they fall
due.  The financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts or any other
adjustment that
might be necessary should the Company be unable to continue as a going
concern.
 Note
      2.
                SUMMARY
      OF PRINCIPAL ACCOUNTING POLICIES
 Basis
of presentation
 
 The
balance sheet as at March 31, 2008 and December 31, 2007, and the condensed
statement of operations and cash flows for the three months ended March 31, 2008
represent the accounts of the Company only because the Company has disposed all
its subsidiaries as
of  December 31, 2007.  The condensed consolidated statement of
operations and cash flows for the three months ended March 31, 2007 include the
accounts of the Company and its subsidiaries (the “Group”).
 
 The
condensed financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (“US GAAP”). For
the condensed consolidated statement of operations and cash flows, all
significant intercompany transactions have been eliminated.
 
 The
condensed financial statements are unaudited and, in our opinion, include all
adjustments, consisting of normal recurring adjustments and accrued liabilities
necessary for a fair presentation of our condensed balance sheets, operating
results and cash flows for the periods presented. Operating results for the
periods presented are not necessarily indicatives of the results for a full
year. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with US GAAP have been condensed or
omitted in accordance with the rules and regulations of the Securities and
Exchange Commission (“SEC”). The condensed financial statements should be read
in conjunction with the audited financial statements and accompanying notes
included in the 2007 annual report on Form 10-KSB.
 
 Note
      3.
              RECENT
      ACCOUNTING PRONOUNCEMENTS
 
 In
September 2006, the FASB issued SFAS 157, Fair Value Measurements
(“SFAS 157”), which provides guidance about how to measure assets and
liabilities that use fair value. SFAS 157 apply whenever another US GAAP
standard requires (or permits) assets or liabilities to be measured at fair
value but does not expand the use of fair value to any new circumstances. This
standard also requires additional disclosures in both annual and quarterly
reports. SFAS 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007.  In February 2008,  the
FASB issued FASB Staff Position (“FSP”) 157-1, Application of FASB Statement No.157
to FASB Statement No.13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13 (“FSP 157-1”), which states that SFAS 157 does not address
fair value measurements for purposes of lease classification or
measurement.  In February 2008,  the FASB issued FSP 157-2,
Effective Date of FASB
Statement No.157 (“FSP 157-2”), which delays the effective date for
non-financial assets and non-financial liabilities to fiscal years beginning
after November 15, 2008, except for items that are measured at fair value in the
financial statement on a recurring basis (at least annually).  The
Company adopted the provisions of SFAS 157 for its financial assets and
liabilities and those items for which it has measured on a recurring basis
effective January 1, 2008, and the adoption did not have a material impact on
its financial position and results of operations.  As provided by FSP
157-2, the Company has elected to defer the adoption of SFAS 157 for certain of
its non-financial assets and liabilities and is currently evaluating the impact
of adopting SFAS 157 on its non-financial assets and liabilities.
  6
 
 In
February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115 (“SFAS 159”), which is effective for the Company beginning January 1,
2008. This standard permits entities to choose to measure many financial
instruments and certain other items at fair value and consequently report
unrealized gains and losses on such items in earnings. The Company has elected
not to adopt the fair value provisions of SFAS 159.
 
 In
December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations (“SFAS
141(R)”).  SFAS 141 (R) establishes principles and requirements for
how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling
interest in the acquiree and the goodwill acquired.  SFAS 141 (R) also
establishes disclosure requirements to enable the evaluation of the nature and
financial effects of the business combination.  SFAS 141 (R) will be
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and will be adopted by us beginning in the first quarter of
2009.  The Company expects the adoption of SFAS 141 (R) will have no
significant impact on its financial position, cash flows and results of
operations.
 
 In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements – an amendment of Accounting Research Bulletin
No.51(“SFAS 160”).  SFAS 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the noncontrolling interest, changes in a parent’s ownership
interest, and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated.  SFAS 160 also establishes disclosure
requirements that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners.  SFAS 160 will
be effective for financial statements issued for fiscal years beginning after
December 15, 2008, and will be adopted by us beginning in the first quarter of
2009.  The Company expects the adoption of SFAS 160 will have no
significant impact on its financial position, cash flows and results of
operations.
 
 In March
2008, the FASB issued SFAS No.161, Disclosures about Derivative
Instruments and Hedging Activities(“SFAS 161”).  SFAS 161 is
intended to improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entity’s financial position, financial
performance, and cash flows.  SFAS 161 achieves these improvements by
requiring disclosure of the fair values of derivative instruments and their
gains and losses in a tabular format.  It also provides more
information about an entity’s liquidity by requiring disclosure of derivative
features that are credit risk-related.  Finally, it requires
cross-referencing within footnotes to enable financial statement users to locate
important information about derivative instruments.  SFAS 161 will be
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, and will be adopted by us beginning in the
first quarter of 2009.  The Company expects the adoption of SFAS 161
will have no significant impact on its financial position, cash flows and
results of operations.
 
 Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force (“EITF”)), the American Institute of Certified Public
Accountants (“AICPA”), and the SEC did not or are not believed by management to
have a material impact on the Company's present or future financial
statements.
 
 Note
      4.
              SEGMENT
      INFORMATION
 
 Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operation decision maker, or decision-making group, in deciding how to allocate
resources and in assessing performance.
 
 For the
three months ended March 31, 2008, no segment information is presented as the
balance sheet as at March 31, 2008 and the statement of operations and cash
flows for the period then ended represents the Company only.
 
 For the
three months ended March 31, 2007, the main operations of
the Company were conducted through the Company's wholly-owned
subsidiary, MPL.  MPL’s wholly-owned subsidiaries were as follows:
Anglo Market International Limited ("AMIL"), China Star Management Limited
("CSML"), and Metrolink Global Limited ("MGL").  The principal
activities of MPL’s subsidiaries were the provision of artist managementservices.  The “other” column represents unallocated
corporate-related costs of the Company.
 
 The Company's
segment information for the three months ended March 31, 2007 and as at March
31, 2007 is as follows:
 
 2007
              
              AMIL
              
              
              CSML
              
              
              MGL
              
              
              OTHER
              
              
              Total$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Revenue,
      net
              
              
              49,231
              
              
              
              50,315
              
              
              
              -
              
              
              
              -
              
              
              
              99,546Net
      (loss) income
              
              
              45,402
              
              
              
              (184,338
              )
              
              
              (3,846
              )
              
              
              (17,361
              )
              
              
              (160,143
              )Total
      assets
              
              
              80,884
              
              
              
              1,117,408
              
              
              
              881,098
              
              
              
              -
              
              
              
              2,079,390
 
 7
  Geographic
information is based on the location of the selling service.  For the
three months ended March 31, 2008, no revenue was generated by the Company and
no geographic information to revenue is presented.  Revenue from
external customers by geographic region for the three months ended March 31,
2007 is as follows:
  Three
      months ended
                March
      31,
                2007People’s
      Republic of China
              
              
              51
              %Hong
      Kong
              
              
              49
              %100
              %
  Note
      5.
              INCOME
      TAX
 
 No income
tax was provided for the three months ended March 31, 2008 and 2007 as the Company and
the Group incurred tax losses for each period presented.
 
 Note
      6.
              CONTINGENCIES
 
 Litigation
 
 Lang, et
al. v. Welch, et
al. (China Entertainment Group, Inc.)
(United States District Court, Central District California, Case No. CV
07-1068-GHK-PJWx).OnDecember
20, 2006, plaintiffs Sanford Lang and Martin Goldrod (collectively,
“Plaintiffs”) initiated a lawsuit in the Los Angeles Superior Court, Central
District, alleging claims for fraud, breach of contract, violations of RICO, and
civil conspiracy against several parties, including the Company.  The
Company was provided with a copy of Plaintiffs’ Complaint on or about February
28, 2007, after the matter was removed to United States District
Court.  According to the Complaint, the Company is a “nominal
Defendant” as Plaintiffs purported to assert claims derivatively on its
behalf.  Accordingly, it appears that no relief was being sought
against the Company itself.  On or about January 31, 2008, Plaintiffs
and Defendants, including the Company, entered into a confidential settlement
agreement to resolve all claims pending between them.  Accordingly,
the Court dismissed the action without prejudice on March 31,
2008.
 
 Note
      7.
              RELATED
      PARTY TRANSACTIONS
 
 Except to
the related party balance disclosed in the balance sheet, the Company or the
Group had entered into the following material related party transactions during
the periods presented:
 
 Related
                party
              
              Nature
      of relationship
                and
      control
              
              Description
      of
                transactions
              
              Three
      months ended
                March
      31,2008
              
              2007$
              
              $China
      Star HK Distribution Limited
              
              Related
      company, a subsidiary of China Star Entertainment Limited (“China Star”)
      which owned 49% of Together Again Limited (“TAL”)
              
              Service
      income, net (note a)
              
              -
              
              15,499China
      Star
              
              Related
      company, owned 49% of TAL
              
              Management
      fee paid
                (note
      b)
              
              -
              
              26,923China
      Star Laser Disc Company Limited
              
              Related
      company, a subsidiary of China Star which owned 49% of TAL
              
              Management
      fee paid
                (note
      b)
              
              -
              
              126,923
 
 Notes:
              (a)
              The
      transactions were carried out at market price or, where no market price
      was available, at cost plus a percentage profit
  mark-up.
 (b)
                The
      transactions were carried out at terms agreed between both
      parties.
 8
 
 ITEM
2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
  THE
FOLLOWING INFORMATION SPECIFIES CERTAIN FORWARD-LOOKING STATEMENTS OF MANAGEMENT
OF THE COMPANY.  FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT
ESTIMATE THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL
FACT.  FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY, SUCH AS "MAY", "SHALL", "COULD", "EXPECT",
"ESTIMATE", "ANTICIPATE", "PREDICT", "PROBABLE", "POSSIBLE", "SHOULD",
"CONTINUE", OR SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE
TERMS.  THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING
INFORMATION HAVE BEEN COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS
MADE BY MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE.  OUR
FUTURE OPERATING RESULTS, HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO
REPRESENTATION, GUARANTEE, OR WARRANTY IS TO BE INFERRED FROM THOSE
FORWARD-LOOKING STATEMENTS.
 
 THE
ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE
FOLLOWING INFORMATION REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT TO
UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND OTHER
CIRCUMSTANCES.  AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF
DATA AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS
FROM AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO THE
EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY
FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED
ON THE ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS.  WE CANNOT
GUARANTEE THAT ANY OF THE ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS
SPECIFIED IN THE FOLLOWING INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION
TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS.
 
 INTRODUCTION
 
 China
Entertainment Group, Inc. (the “Company”) currently has no active operations
because of the Asset Sale transaction (as described more fully below under the
section titled “Recent Events”) and is currently searching for a new business
opportunity.
 
 Prior to
the Asset Sale transaction described below, which is to have effect from
December 31, 2007, we owned all of the equity interest in Metrolink Pacific
Limited ("MPL"), a British Virgin Islands corporation.  MPL, in turn,
owned a 100% equity interest in Anglo Market International Limited, a
corporation incorporated in the British Virgin Islands on September 15, 2000, a
100% equity interest in China Star Management Limited, a company incorporated in
Hong Kong on September 6, 1985, and a 100% interest in MPL subsidiary Metrolink
Global Limited, a corporation incorporated in the British Virgin Islands on
September 10, 2004. MPL's subsidiaries provided artist management, talent
development and artist brokering services. Prior the Asset Sale, China
Entertainment Group, Inc. (together with our direct and indirect subsidiaries,
and their respective predecessors, unless the context otherwise requires, the
"Company") had been a multi-faceted entertainment company with historically
profitable operations in film, television, print and music artist management
fees comprised of talent development fees, artist casting, booking and brokering
commissions, and artist promotional fees.
 
 Our
principal executive office is located at Unit 3409 Shun Tak Centre, West Tower,
168-200 Connaught Road Central, Hong Kong, China.  Our telephone
number is 011-852-2313-1888.
 
 HISTORICAL
BACKGROUND
 
 We were
originally incorporated in the state of Nevada as Shur De Cor, Inc. ("Shur De
Cor") on August 14, 1987. By 1999, Shur De Cor was a public company with no
operations searching for a business opportunity. In April 1999, Shur De Cor
merged with Interactive Marketing Technology, Inc., a New Jersey corporation
("Interactive New Jersey"), in an arm's length
transaction.  Interactive New Jersey was engaged in the business of
direct marketing of consumer products and desired to become a public company.
Shur De Cor was the surviving corporation and changed its name to Interactive
Marketing Technology, Inc. Shur De Cor's management resigned and the management
of Interactive New Jersey filled the vacancies.
 
 Through
our then wholly owned subsidiary, IMT's Plumber, Inc., we produced, marketed,
and sold a licensed product called the Plumber's Secret, which was discontinued
during fiscal 2001.  In May 2002, we discontinued our former business
and actively sought to either acquire a third party, merge with a third party or
pursue a joint venture with a third party in order to re-enter our former
business of direct marketing of proprietary consumer products in the United
States and worldwide.
  9
 
 On
November 17, 2004, our Board of Directors unanimously approved, subject to
shareholder approval, entering into a Share Exchange Agreement (the "Agreement")
with MPL, an international business company organized to do business under the
laws of the British Virgin Islands.  At that time, MPL was wholly
owned by Imperial International Limited ("Imperial"), a company incorporated
under the laws of the British Virgin Islands. The parent company and 100% owner
of Imperial is Together Again Limited ("TAL").
 
 On
November 17, 2004, the Board also approved, subject to shareholder approval,
amendments to our Articles of Incorporation to change our corporate name ("Name
Change") from Interactive Marketing Technology, Inc. to China Artists Agency,
Inc. ("China Artists"), and to increase the authorized common stock of the
Company to 200,000,000 shares (the "Authorized Share Increase").  On
that same date, and also subject to shareholder approval, the Board also
approved a 1 for 1.69 reverse stock split to accommodate the terms of the
Agreement (the "Reverse Split"), and a spin-off of the Company's existing
business, including its assets and liabilities, into a Nevada corporation formed
as the Company's wholly owned subsidiary into a separate public company by means
of pro-rata share dividend (the "Spin-off").
 
 The
above-described actions approved by the Board also required approval by a
majority of the Company's shareholders under Nevada Revised
Statutes.  Thus, on November 15, 2004, as authorized by the Nevada
Revised Statutes, the majority shareholders, who together owned 50.4% of our
issued and outstanding shares of common stock, approved the Agreement, the
Authorized Share Increase, the Name Change, the Reverse Split, and the Spin-off
by action of written consent.
 
 On
November 17, 2004, the Company, as contemplated under the Agreement, issued an
aggregate of 109,623,006 shares of its common stock to Imperial, the sole
shareholder of MPL, in exchange for 100% of the issued and outstanding shares of
MPL capital stock transferred to China Artists by Imperial at the closing (the
"Share Exchange").  The acquisition of the 100% interest includes
MPL's interests in its subsidiaries, Anglo Market International Limited, China
Star Management Limited, and Metrolink Global Limited (hereinafter MPL and its
subsidiaries are collectively referred to as the "Metrolink Group"). Upon
completion of the Share Exchange, MPL became the Company's wholly owned
subsidiary and China Artist's former owner subsequently transferred control of
China Artists to Imperial.  We relied on Rule 506 of Regulation D of
the Securities Act of 1933, as amended (the "Act") in regard to the shares that
we issued pursuant to the Share Exchange.  We believe this offering
qualified as a "business combination" as defined by Rule 501(d). Reliance on
Rule 506 requires that there are no more than 35 non-accredited purchasers of
securities from the issuer in an offering under Rule 506.  MPL
represented to us that they had one stockholder, who has certified that it is an
`accredited investor' as defined in Rule 501(a) of Regulation D. MPL also
represented to us that there had been no advertising or general solicitation in
connection with this transaction.
 
 The
Company's Certificate of Amendment to our Articles of Incorporation to effect
the Name Change, the Reverse Split, and the Authorized Share Increase was filed
with the Nevada Secretary of State and became effective on December 21,
2004.  Concurrent with Name Change, Reverse Split and Authorized Share
Increase, the Company also obtained a new stock symbol, "CAAY", and a new CUSIP
Number.  The new stock symbol and CUSIP number also became effective
on December 21, 2004.
 
 The
Spin-off, which was approved by both the Board and the majority shareholders
prior to the closing of the Agreement, resulted in the formation of a separate
public company, All Star Marketing, Inc. ("All Star").  All Star is a
Nevada corporation and it was formed as a wholly owned subsidiary of the
Company.  The Spin-off was satisfied by means of a pro-rata share
dividend to the Company's shareholders of record as of December 10,
2004.  The purpose of the Spin-Off was to allow the subsidiary to
operate as a separate public company and raise working capital through the sale
of its own equity.  This allowed our management to focus exclusively
on our business after the Share Exchange concluded, while at the same time,
allowing the spun-off company to have greater exposure by trading as an
independent public company. Additionally, the shareholders and the market will
then more easily identify the results and performance of the Company as a
separate entity from that of All Star.
 
 On June
27, 2005, the Company's Board of Directors and the Company's majority
shareholder approved and authorized a name change to China Entertainment Group,
Inc.  The Company's Certificate of Amendment to our Articles of
Incorporation to effect our name change to China Entertainment Group, Inc. was
filed with the Nevada Secretary of State and became effective on August 4,
2005.  Concurrent with Name Change, the Company also obtained a new
stock symbol, "CGRP", and a new CUSIP Number.  The new stock symbol
and CUSIP number became effective on August 9, 2005.
  10
 
 RECENT
EVENTS
 
 On
January 17, 2008, the Company entered into an Agreement (“Agreement”) with
Imperial, the Company’s current majority shareholder, pursuant to which the
Company agreed to sell and Imperial agreed to purchase substantially all of the
Company’s assets.  Pursuant to the Agreement, the Company sold 100% of
total issued and paid up capital of MPL, the Company’s wholly-owned subsidiary
and operating business to Imperial with effect from December 31, 2007 in
exchange for Imperial’s payment of US$1 to the Company (the “Asset Sale”) at the
closing of the Asset Sale transaction (the “Closing”).  The Closing of
the proposed Asset Sale transaction is subject to the satisfaction of all of the
closing conditions set forth in the Agreement.  As of the date of this
filing, all of the closing conditions of the Asset Sale transaction have either
been satisfied or waived by the Parties except for the Company’s compliance with
the required notification provisions of Section 14(c) of the Securities Exchange
Act of 1934, as amended, and Regulation 14C thereunder in regards to
administrative notification of all Company shareholders regarding the majority
shareholder’s approval of the Asset Sale (the “14C Requirements”) and thus the
accounts of MPL and its subsidiaries have been deconsolidated from the Company
effective as of December 31, 2007.
 
 The
Company presently intends to maintain its corporate existence after the Asset
Sale transaction is fully completed.  Although there are no specific
plans, the Company expects that it may seek to find a private, operating company
with which to combine.  In the event that the Company can find
and complete any such transaction, it is generally to be expected that the
current owners of Company, in the aggregate, would have a significantly reduced
equity ownership of the surviving company.  There can be no assurance
that the Company will be able to identify any business with which the Company
may conduct a business combination, nor that any such transaction could be
completed.  The Agreement was attached to our Current Report on Form
8-K filed with the Securities and Exchange Commission on February 22,
2008 as Exhibit 10.1 and is incorporated herein by reference; provided,
however, that the warranties and representations contained in such agreement are
made solely to Imperial and solely for purposes of the Asset
Sale.  The foregoing summary and description do not purport to be
complete and are qualified in their entirety by reference to the
Agreement.
 
 We are
currently authorized to issue 200,000,000 shares of common stock, $0.001 par
value, of which 128,963,425 shares of common stock are currently issued and
outstanding as of May 19, 2008.  We
are currently not authorized to issue preferred stock.
 
 RECENT
ACCOUNTING PRONOUNCEMENTS
 
 In
September 2006, the FASB issued SFAS 157, Fair
Value Measurements (“SFAS 157”), which provides guidance about how to
measure assets and liabilities that use fair value. SFAS 157 apply whenever
another US GAAP standard requires (or permits) assets or liabilities to be
measured at fair value but does not expand the use of fair value to any new
circumstances. This standard also requires additional disclosures in both annual
and quarterly reports. SFAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007.  In February 2008, the
FASB issued FASB Staff Position (“FSP”) 157-1, Application
of FASB Statement No.157 to FASB Statement No.13 and Other Accounting
Pronouncements That Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13 (“FSP
157-1”), which states that SFAS 157 does not address fair value
measurements for purposes of lease classification or measurement.  In
February 2008,  the FASB issued FSP 157-2, Effective
Date of FASB Statement No.157 (“FSP
157-2”),which delays the effective date for non-financial assets and
non-financial liabilities to fiscal years beginning after November 15, 2008,
except for items that are measured at fair value in the financial statement on a
recurring basis (at least annually).  The Company adopted the
provisions of SFAS 157 for its financial assets and liabilities and those items
for which it has measured on a recurring basis effective January 1, 2008, and
the adoption did not have a material impact on its financial position and
results of operations.  As provided by FSP 157-2, the Company has
elected to defer the adoption of SFAS 157 for certain of its non-financial
assets and liabilities and is currently evaluating the impact of adopting SFAS
157 on its non-financial assets and liabilities.
 
 In
February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115 (“SFAS 159”), which is effective for the Company beginning January 1,
2008. This standard permits entities to choose to measure many financial
instruments and certain other items at fair value and consequently report
unrealized gains and losses on such items in earnings. The Company has elected
not to adopt the fair value provisions of SFAS 159.
 
 In
December 2007, the FASB issued SFAS 141 (revised 2007), Business
Combinations (“SFAS 141(R)”).  SFAS 141 (R) establishes
principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
any noncontrolling interest in the acquiree and the goodwill
acquired.  SFAS 141 (R) also establishes disclosure requirements to
enable the evaluation of the nature and financial effects of the business
combination.  SFAS 141 (R) will be effective for financial statements
issued for fiscal years beginning after December 15, 2008, and will be adopted
by us beginning in the first quarter of 2009.  The Company expects the
adoption of SFAS 141 (R) will have no significant impact on its financial
position, cash flows and results of operations.
  11
 
 In
December 2007, the FASB issued SFAS 160, Noncontrolling
Interests in Consolidated Financial Statements – an amendment of Accounting
Research Bulletin No.51(“SFAS 160”).  SFAS 160 establishes
accounting and reporting standards for ownership interests in subsidiaries held
by parties other than the parent, the amount of consolidated net income
attributable to the parent and to the noncontrolling interest, changes in a
parent’s ownership interest, and the valuation of retained noncontrolling equity
investments when a subsidiary is deconsolidated.  SFAS 160 also
establishes disclosure requirements that clearly identify and distinguish
between the interests of the parent and the interests of the noncontrolling
owners.  SFAS 160 will be effective for financial statements issued
for fiscal years beginning after December 15, 2008, and will be adopted by us
beginning in the first quarter of 2009.  The Company expects the
adoption of SFAS 160 will have no significant impact on its financial
position, cash flows and results of operations.
  In March
2008, the FASB issued SFAS No.161, Disclosures
about Derivative Instruments and Hedging Activities(“SFAS
161”).  SFAS 161 is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity’s financial
position, financial performance, and cash flows.  SFAS 161 achieves
these improvements by requiring disclosure of the fair values of derivative
instruments and their gains and losses in a tabular format.  It also
provides more information about an entity’s liquidity by requiring disclosure of
derivative features that are credit risk-related.  Finally, it
requires cross-referencing within footnotes to enable financial statement users
to locate important information about derivative instruments.  SFAS
161 will be effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, and will be adopted by us
beginning in the first quarter of 2009.  The Company expects the
adoption of SFAS 161 will have no significant impact on its financial position,
cash flows and results of operations.
 
 Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force (“EITF”)), the American Institute of Certified Public
Accountants (“AICPA”), and the SEC did not or are not believed by management to
have a material impact on the Company's present or future financial
statements.
 
 CRITICAL
ACCOUNTING POLICIES
 
 See Note 2 of theNotes to Condensed Financial Statements (Unaudited) included as Item 1 of
Part 1 herein.
 
 RESULTS
OF OPERATIONS
 
 General
results of operations for the three months ended March 31, 2008 compared to
March 31, 2007 are summarized as follows:
  Three Months Ended
      March 31:
              
              2008
              
              
              2007
              
              
              ChangeRevenue
              
              $
              -
              
              
              $
              100,175
              
              
              
              (100.0)
              %General
      and administrative expenses
              
              
              (142,306)
              
              
              
              (260,318)
              
              
              
              (45.3)
              %Loss
      before income taxes
              
              
              (142,306)
              
              
              
              (160,143)
              
              
              
              (11.1)
              %Income
      taxes expenses
              
              
              -
              
              
              
              -
              
              
              
              -
              %Net
      loss
              
              $
              (142,306)
              
              
              $
              (160,143)
              
              
              
              (11.1)
              %
  REVENUE
 
 Our
consolidated revenue decreased100% to nil for the
three months ended March 31, 2008 from $100,175 for the same period in
2007.  The decrease in revenue was primarily due to the Asset Sale
transaction described above under the paragraph titled “Recent
Events”.
 
 GENERAL
AND ADMINISTRATIVE EXPENSES
 
 General
and administrative expenses incurred for the three months ended March 31, 2008
decreased $118,012, or 45.3%, to $142,306 compared to $260,318 for the same
period in 2007.  General and administrative expenses mainly consisted
of management fees, wages, rent, and professional fees for the three months
ended March 31, 2007 and such expenses mainly consisted of
professional fees for the three months ended March 31, 2008, The decrease
in general and administrative expenses for the three months ended March 31,
2008 was due to the Asset Sale transaction described
above.
  12
  INCOME
TAX
 
 The
income tax represents the aggregate taxes provided on the assessable
profits.  No income tax was provided for the three months ended March
31, 2008 and for the three months ended March 31, 2007 because the Company and
the Group incurred tax losses for both periods.
  NET
LOSS
 
 Netlossfor the three months
ended March 31, 2008 decreased $17,837, or 11.1%, to $142,306 as compared to
$160,143 for the same period in 2007.  The decrease in net losswas primarily due to a
decrease in revenue and general and administrative expenses.
 
 FINANCIAL
CONDITION, LIQUIDITY, CAPITAL RESOURCES
 
 Three
      Months Ended March 31:
              
              2008
              
              
              2007
              
              
              ChangeNet
      cash used in by operating activities
              
              $
              (55,090)
              
              
              $
              (160,743)
              
              
              
              (65.7)
              %Net
      cash used in investing activities
              
              $
              -
              
              
              $
              -
              
              
              
              -
              %Net
      cash provided by financing activities
              
              $
              55,090
              
              
              $
              38,611
              
              
              
              42.7
              %
 
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 LIQUIDITY
 
 We had
negative working capital as at March 31, 2008 of $143,305.  We
regularly review our cash funding requirements and attempt to meet those
requirements through a combination of cash on hand, cash provided by operations,
deposits received and possible future public and private equity
offerings.  We evaluate possible acquisitions of, or investments in,
businesses that our complementary to ours, which transactions may require the
use of cash. We believe that our cash, other liquid assets, operating cash
flows, credit arrangements, access to equity capital markets, taken together,
provide adequate resources to fund ongoing operating expenditures.  In
the event that they do not, we may require additional funds in the future to
support our working capital requirements or for other purposes and may seek to
raise such additional funds through the sale of public or private equity as well
as other sources.
  CASH
FLOWS USED IN OPERATING ACTIVITIES:
  For the
three months ended March 31, 2008, net cash flows used in operating
activities was $55,090 as compared to $160,743 for the three months ended March
31, 2007.  The decreaseprimarily
resulted from an increase in accrued liabilities.
 
 CASH FLOWS USED
IN INVESTING ACTIVITIES:
 
 For the
three months ended March 31, 2008 and March 31, 2007, there were no
investing activities.
 
 CASH
FLOWS PROVIDED BY
FINANCING ACTIVITIES:
 
 For the
three months ended March 31, 2008, net cash flows provided by
financing activities was $55,090 compared to $38,611 for the same period in
2007.  The cash inflows were mainly provided by advances from an
affiliate.
  PLAN
OF OPERATIONS
 
 After the
closing of the Asset Sale Transaction discussed more fully above under the
section “Recent Events”, the Company presently intends to maintain its corporate
existence.  Although
there are no specific plans, the Company expects that it may seek to find a
private, operating company with which to combine. In the event that the
Company can find and complete any such transaction, it is generally to be
expected that the current owners of Company, in the aggregate, would have a
significantly reduced equity ownership of the surviving
company.  There can be no assurance that the Company will be able to
identify any business with which the Company may conduct a business
combination, nor that any such transaction could be
completed.
  13
 
 EXPECTED
MATERIAL CAPITAL COMMITMENTS
 
 The
Company has no material commitments for capital expenditures and has no plans or
intention to purchase or sell any significant equipment.
 
 EXPECTED
SIGNIFICANT CHANGES IN NUMBER OF EMPLOYEES
 
 The
Company does not anticipate any significant changes in its number of
employees.
 
 ITEM
3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Not applicable.
 
 ITEM
4. CONTROLS AND
PROCEDURES
 
 (a) Evaluation of disclosure controls
and procedures. We maintain controls and procedures designed to ensure
that information required to be disclosed in the reports that we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission (“SEC”).  Based upon their
evaluation of those controls and procedures performed as of the period covered
by this report, our chief executive officer and the principal financial officer
concluded that our disclosure controls and procedures were inadequate to ensure
that information required to be disclosed by us in reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms.  We are
developing a plan to ensure that all information will be recorded, processed,
summarized and reported on a timely basis.  This plan is dependent, in
part, upon reallocation of responsibilities among various personnel, possibly
hiring additional personnel and additional funding. It should also be noted that
the design of any system of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote.
 
 (b) Changes in internal controls.
Other than as mentioned above, there were no changes in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of the evaluation of those controls by the chief executive officer and
principal financial officer.
   PART
II -- OTHER INFORMATION
 
 ITEM 1.LEGAL PROCEEDINGS
  Lang, et al. v. Welch, et
al. (China Entertainment Group, Inc.) (United States District Court,
Central District California, Case No. CV 07-1068-GHK-PJWx).  On
December 20, 2006, Plaintiffs Sanford Lang and Martin Goldrod (collectively,
“Plaintiffs”) initiated a lawsuit in the Los Angeles Superior Court, Central
District, alleging claims for fraud, breach of contract, violations of RICO, and
civil conspiracy against several parties, including the
Company.  The Company was provided with a copy of Plaintiffs’
Complaint on or about February 28, 2007, after the matter was removed to United
States District Court.  According to the Complaint, the
Company was “a nominal Defendant” as Plaintiffs purported to assert claims
derivatively on its behalf.  Accordingly, it appears that no
relief was being sought against the Company itself.  On or about
January 31, 2008, Plaintiffs and Defendants, including the Company, entered into
a confidential settlement agreement to resolve all claims pending between
them.  Accordingly, the Court dismissed the action without prejudice
on March 31, 2008.
  ITEM
1A.       RISK FACTORS
 
 Not
applicable.
  14
 
 ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS
 
 None.
 
 ITEM 3.DEFAULTS UPON SENIOR
SECURITIES
  None.
  ITEM 4.SUBMISSION OF MATTERS TO VOTE OF
SECURITY HOLDERS
 
 As
discussed more fully above under “Recent Events” in Part I, Item 2 section
titled “Management’s Discussion and Analysis or Plan of Operations”, on January
17, 2008, the stockholder of the Company holding in excess of a majority of the
outstanding shares of the Company's common stock, constituting the sole class of
voting securities of the Company, executed and delivered to the Company their
consent approving the sale by the Company of 100% of total issued and paid up
capital of MPL, the Company’s wholly-owned subsidiary and operating business to
Imperial with effect from December 31, 2007 at the closing of the Asset Sale
transaction, which shall occurnot
less than 21 calendar days after we mail the Schedule 14C Information Statement
to our record stockholders in compliance with the shareholder notification
provisions of Section 14(c) of the Securities Exchange Act of 1934, as amended,
and Regulation 14C thereunder as applicable to the Asset Sale
Transaction.
 
 ITEM 5.OTHER INFORMATION
 
 There
were no changes to the procedures by which security holders may recommend
nominees to our board of directors.
 
 ITEM
6. EXHIBITS
 
 Exhibit
                Number
              Description2.1
              Share
      Exchange Agreement dated November 17, 2004 by and among, inter alia, the
      Registrant, MPL, and the shareholders of MPL (1)3.1(i)
              Certificate
      of Amendment to Articles of Incorporation (1)3.1(ii)
              Articles
      of Amendment of Articles of Incorporation (2)3.1(iii)
              Articles
      of Incorporation (3)3.1(iv)
              Articles
      of Merger (3)3.2
              Bylaws
      (3)10.1
              Agreement
      for the sale and purchase of 120 shares in the issued sharecapital
      of MPL dated January 17, 2008 by and between the Company and Imperial
      International Limited (4)31.1
              Rule
      13a-14(a) Certifications of Chief Executive Officer pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002 *31.2
              Rule
      13a-14(a) Certifications of Chief Accounting Officer pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002 *32.1
              Certification
      of the Chief Executive Officer and pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
      *32.2
              Certification
      of the Chief Accounting Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
      *
  (1)
              Incorporated
      by reference from the Company’s Schedule 14C filed on November 30,
      2004.
 (2)
              Incorporated
      by reference from the Company’s Form 10-QSB filed on October 23,
      2001.
 (3)
              Incorporated
      by reference from the Company’s Form 10-QSB filed on January 19,
      2000.
 (4)
              Incorporated
      by reference from the Company’s Form 8-K filed on February 22,
      2008.
   15
  SIGNATURES
 
 In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
  CHINA
      ENTERTAINMENT GROUP, INC.
                (Registrant)Dated:
      May 20, 2008
              By:
              /s/
      Tang Chien ChangTang
      Chien ChangChief
      Executive Officer
   16