----

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|   | [X]                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE                ACT OF 1934 |
|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | For                  the quarterly period ended June 30, 2007 |
|--------|---------------------------------------------------------------|

|   | [   ]     TRANSITION  REPORT  PURSUANT  TO  SECTION                  13 OR 15(d) OF THE SECURITIESEXCHANGE  ACT  OF  1934 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For                the transition period                from                                                                                to |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Washington                                     | 98-0206033                         |
|------------------------------------------------|------------------------------------|
| (State                or other jurisdiction of | (IRS                Employer       |
| incorporation                or organization)  | Identification                No.) |

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Table          of Contents

ENTERTA

| PART                I    FINANCIAL INFORMATION                                                                                              |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                            |   |
| Item                1. Financial Statements                                                                                                                | 3      |
| Item                2.                Management’s                Discussion and Analysis of Financial Condition and Results of                Operations | 21     |
| Item                3.                Controls and                Procedures                                                                                    | 21     |
|                                                                                                                                                            |   |
| PART                II   OTHER                INFORMATION                                                                                        |   |
|                                                                                                                                                            |   |
| Item                1.                Legal                Proceedings                                                                                          | 22     |
| Item                2.                Change in                Securities                                                                                       | 22     |
| Item                3. Defaults upon                Senior Securities                                                                                      | 22     |
| Item                4. Submission                of                Matters to a Vote of Security Holders                                                   | 22     |
| Item                5.Other                Information                                                                                                          | 22     |
| Item                6.                Exhibits and                Reports                on Form 8-K                                                            | 23     |

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AL 

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Table          of Contents

|                                                                                  |   | June                30 |       |   | March                31 |   |
|---------------------------------------------------------------------------------------|--------|------------------------|------------|--------|-------------------------|--------|
|                                                                                  |   | 2007                   |       |   | 2007                    |   |
| ASSETS                                                                                |   |
| Current                                                                               |   |                   |       |   |                    |   |
| Cash                                                                                  |   | $                      | 296,859    |   |                    | $      | 3,035 |   |
|      Prepaid                expenses                         |   |                   | 9,517      |   |                    |   | - |   |
|                                                                                  |   |                   | 306,376    |   |                    | $      | 3,035 |   |
|                                                                                  |   |                   |       |   |                    |   |   |   |
| Equipment–                Note 3                                                |   |                   | 1,691      |   |                    |   | - |   |
| Screenplay                acquisition and deferred development costs                  |   |                   | 32,000     |   |                    |   | - |   |
|                                                                                  |   |                   |       |   |                    |   |   |   |
|                                                                                  |   | $                      | 340,068    |   |                    | $      | 3,035 |   |
|                                                                                  |   |                   |       |   |                    |   |   |   |
| LIABILITIES                                                                           |   |
|                                                                                  |   |                   |       |   |                    |   |   |   |
| Current                                                                               |   |                   |       |   |                    |   |   |   |
| Accounts                payable and accrued                liabilities – Note 7 |   | $                      | 125,603    |   |                    | $      | 73,613 |   |
| Due                to related parties – Note                7                   |   |                   | 12,616     |   |                    |   | 12,616 |   |
| Loans                payable to stockholders –                Note 4            |   |                   | 16,284     |   |                    |   | 16,264 |   |
|                                                                                  |   |                   |       |   |                    |   |   |   |
|                                                                                  |   |                   | 154,503    |   |                    |   | 102,513 |   |
|                                                                                  |   |                   |       |   |                    |   |   |   |
| STOCKHOLDERS’DEFICIENCY                                                         |   |
|                                                                                  |   |                   |       |   |                    |   |   |   |
| Preferred                Stock, $0.0001 par value                                     |   |                   |       |   |                    |   |   |   |
| 20,000,000shares                authorized; none issued                               |   |                   | -          |   |                    |   |   |   |
| Common                stock, $0.0001 par value – Note 5                         |   |                   |       |   |                    |   |   |   |
| 50,000,000shares                authorized                                            |   |                   |       |   |                    |   |   |   |
| 33,129,628shares              issued                                                  |   |                   | 3,342      |   |                    |   | 3,342 |   |
| Additional                paid-in capital                                             |   |                   | 1,537,205  |   |                    |   | 1,385,676 |   |
| Share                issue costs                                                      |   |                   | (504       | )      |                    |   | - |   |
| Deficit                accumulated during the prior development stage                 |   |                   | (151,117   | )      |                    |   | (151,117 | ) |
| Deficit                accumulated during the development stage                       |   |                   | (1,203,361 | )      |                    |   | (1,337,379 | ) |
|                                                                                  |   |                   |       |   |                    |   |   |   |
|                                                                                  |   |                   | 185,565    |   |                    |   | (99,478 | ) |
|                                                                                  |   |                   |       |   |                    |   |   |   |
|                                                                                  |   | $                      | 340,068    |   |                    | $      | 3,035 |   |
|                                                                                  |   |                   |       |   |                    |   |   |   |

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|                                                                                           |   | Three                    months endedJune                  30,  |       |   | April                            1, 2000(Date                          of Commencement of                      Development Stage)                    to June                  30,  |   |
|------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                           |   | 2007                                                                 |       |   | 2006                                                                                                                                                                                                        |   |   | 2007 |   |
|                                                                                           |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |
| Expenses                                                                                       |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |
| Advertising                  and                  promotion                                    |   | $                                                                    | -          |   |                                                                                                                                                                                                        | $      | - |   |   | $ | 44,692 |   |
| Amortization                                                                                   |   |                                                                 | -          |   |                                                                                                                                                                                                        |   | 171 |   |   |   | 21,379 |   |
| Audit                  and accounting fees –                  Note 7                     |   |                                                                 | 1,721      |   |                                                                                                                                                                                                        |   | 5,970 |   |   |   | 144,918 |   |
| Bank                  charges and interest –                  Note 7                     |   |                                                                 | 227        |   |                                                                                                                                                                                                        |   | 33 |   |   |   | 85,654 |   |
| Consulting                  fees – Note 7                                                |   |                                                                 | 31,667     |   |                                                                                                                                                                                                        |   | 4,500 |   |   |   | 544,148 |   |
| Investor                  relations and                  marketing fees – Note 7         |   |                                                                 | 1,141      |   |                                                                                                                                                                                                        |   | 3,000 |   |   |   | 122,314 |   |
| Legal                  fees – Note 7                                                     |   |                                                                 | 2,864      |   |                                                                                                                                                                                                        |   | (6,000 | ) |   |   | 90,374 |   |
| Office,                  telephone and                  miscellaneous – Note 7           |   |                                                                 | 3,807      |   |                                                                                                                                                                                                        |   | 4,256 |   |   |   | 173,108 |   |
| Software                  research and                  development                            |   |                                                                 | -          |   |                                                                                                                                                                                                        |   | - |   |   |   | 66,410 |   |
|                        Payroll                                        |   |                                                                 | 13,029     |   |                                                                                                                                                                                                        |   | - |   |   |   | 13,029 |   |
| Transfer                  agent fees                                                           |   |                                                                 | -          |   |                                                                                                                                                                                                        |   | 125 |   |   |   | 6,359 |   |
|       Stock                  based compensation                  |   |                                                                 | 41,667     |   |                                                                                                                                                                                                        |   | - |   |   |   | 41,667 |   |
| Travel&                  entertainment                                                     |   |                                                                 | 1,352      |   |                                                                                                                                                                                                        |   | - |   |   |   | 81,868 |   |
|                                                                                           |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |   |   |   |
| Loss                  before other items                                                       |   |                                                                 | 97,475     |   |                                                                                                                                                                                                        |   | 12,056 |   |   |   | 1,435,920 |   |
|                                                                                           |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |   |   |   |
| Other                  items:                                                                  |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |   |   |   |
|      Interest                  income                                 |   |                                                                 | (349       | )      |                                                                                                                                                                                                        |   |   |   |   |   | (346 | ) |
| Write-off                  of equipment – Note                  3                        |   |                                                                 | -          |   |                                                                                                                                                                                                        |   | 756 |   |   |   | (4,767 | ) |
| Loss                  on disposal of equipment –                  Note 3                 |   |                                                                 | -          |   |                                                                                                                                                                                                        |   |   |   |   |   | (2,217 | ) |
|                        Gain on acq. of Modern City Entertainment LLC  |   |                                                                 | (231,144   | )      |                                                                                                                                                                                                        |   |   |   |   |   | (231,144 | ) |
|                        Disposition of ASPSL                           |   |                                                                 | -          |   |                                                                                                                                                                                                        |   |   |   |   |   | (10,255 | ) |
| Foreign                  currency                  adjustments                                 |   |                                                                 | -          |   |                                                                                                                                                                                                        |   | (28 | ) |   |   | (2,204 | ) |
|                                                                                           |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |   |   |   |
|                                                                                           |   |                                                                 | (231,493   | )      |                                                                                                                                                                                                        |   | (28 | ) |   |   | (250,903 | ) |
|                                                                                           |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |   |   |   |
| Net                  income (loss) for the period                                              |   | $                                                                    | 134,018    |   |                                                                                                                                                                                                        | $      | (55,129 | ) |   | $ | (1,185,017 | ) |
|                                                                                           |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |   |   |   |
| Basic                  and diluted gain (loss) per share                                       |   | $                                                                    | 0.01       |   |                                                                                                                                                                                                        | $      | (0.01 | ) |   |   |   |   |
|                                                                                           |   |                                                                 |       |   |                                                                                                                                                                                                        |   |   |   |   |   |   |   |
| Weighted                  average number of shares outstanding for                  the period |   |                                                                 | 32,625,628 |   |                                                                                                                                                                                                        |   | 5,576,082 |   |   |   |   |   |

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|                                                                                                                |   |                              |          |   |                          |   |    | April                1, 2000 |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------------|--------|-------------------------------|--------|---------|------------------------------|--------|
|                                                                                                                |   |                              |          |   |                          |   |    | (Date                of      |   |
|                                                                                                                |   |                              |          |   |                          |   |    | Commencement                 |   |
|                                                                                                                |   |                              |          |   | of                Development |   |
|                                                                                                                |   | Three                months ended |          |   | Stage)                to      |   |
|                                                                                                                |   | June                30,           |          |   | June                30,       |   |
|                                                                                                                |   | 2007                              |          |   | 2006                          |   |    | 2007                         |   |
|                                                                                                                |   |                              |          |   |                          |   |    |                         |   |
| Cash                flows used in Operating Activities                                                              |   |                              |          |   |                          |   |    |                         |   |
| Net                income (loss) for the                period                                                      |   | $                                 | 134,018       |   |                          | $      | (2,807  | )                            |   | $ | (1,203,361 | ) |
| Add                items not involving                cash:                                                         |   |                              |          |   |                          |   |    |                         |   |   |   |   |
| Amortization                                                                                                        |   |                              | -             |   |                          |   | 171     |                         |   |   | 21,379 |   |
| Donated                interest                                                                                     |   |                              | -             |   |                          |   | -       |                         |   |   | 1,154 |   |
| Write-off                of equipment                                                                               |   |                              | -             |   |                          |   | 756     |                         |   |   | 4,767 |   |
| Loss                on disposal of                equipment                                                         |   |                              | -             |   |                          |   | -       |                         |   |   | 2,217 |   |
|          Gain                on disposal of Azul Studios Property SL   |   |                              | -             |   |                          |   | (10,442 | )                            |   |   | (10,255 | ) |
|          Stock                based compensation                       |   |                              | 41,667        |   |                          |   |    |                         |   |   | 41,667 |   |
|          Gain                on acquisition of Modern City Ent. LLC    |   |                              | (231,144      | )      |                          |   |    |                         |   |   | (231,144 | ) |
| Changes                in non-cash working                capital item related to operations:                       |   |                              |          |   |                          |   |    |                         |   |   |   |   |
|          Prepaid                expenses                               |   |                              | (9,517        | )      |                          |   |    |                         |   |   | (9,517 | ) |
| Accounts                payables and accrued                liabilities                                             |   |                              | 52,010        |   |                          |   | 252     |                         |   |   | 574,929 |   |
|           Increase                in amounts due to related party |   |                              | -             |   |                          |   | 1,260   |                         |   |   | 17,280 |   |
|                                                                                                                |   |                              | (12,966       | )      |                          |   | 13,330  |                         |   |   | (790,884 | ) |
| Cash                Flows used in Investing Activity                                                                |   |                              |          |   |                          |   |    |                         |   |   |   |   |
|      Acquisition                of equipment                                               |   |                              | (1,691        | )      |                          |   | -       |                         |   |   | (18,138 | ) |
|      Screenplay                acquisition and deferred development cost                   |   |                              | (32,000       | )      |                          |   | -       |                         |   |   | (32,000 | ) |
|      Cash                in Modern City Entertainment LLC - acquired                       |   |                              | 214,456       |   |                          |   | -       |                         |   |   | 214,456 |   |
|                                                                                                                |   |                              | 180,765       |   |                          |   | -       |                         |   |   | 164,318 |   |
| Cash                Flows provided by Financing Activities                                                          |   |                              |          |   |                          |   |    |                         |   |   |   |   |
| Increase                in loan payable to                stockholders                                              |   |                              | -             |   |                          |   | 10,409  |                         |   |   | 379,760 |   |
| Increase                in convertible                debenture                                                     |   |                              | -             |   |                          |   | -       |                         |   |   | 278,114 |   |
| Proceeds                from common stock                subscriptions                                              |   |                              | 151,500       |   |                          |   | -       |                         |   |   | 211,500 |   |
|      Distribution                to unit holders                                           |   |                              | (25,000       | )      |                          |   |    |                         |   |   | (25,000 | ) |
|      Share                issue costs                                                      |   |                              | (475          | )      |                          |   |    |                         |   |   | (475 | ) |
|      Net                cash decrease from disposition of ASPSL                            |   |                              | -             |   |                          |   | (628    | )                            |   |   | (628 | ) |
|                                                                                                                |   |                              |  126,025 |   |                          |   | 9,781   |                         |   |   | 843,271 |   |
| Increase                (decrease) in cash during the period                                                        |   |                              | 293,824       |   |                          |   | (1,029  | )                            |   |   | 216,705 |   |
| Cash,                beginning of the period                                                                        |   |                              | 3,035         |   |                          |   | 1,108   |                         |   |   | 80,154 |   |
| Cash,                end of the period                                                                              |   | $                                 | 296,859       |   |                          | $      | 79      |                         |   | $ | 296,859 |   |
| Supplementary                disclosure of cash flow information                                                    |   |                              |          |   |                          |   |    |                         |   |   |   |   |
| Cash                paid for:                                                                                       |   |                              |          |   |                          |   |    |                         |   |   |   |   |
| Interest                                                                                                            |   | $                                 | -             |   |                          | $      | -       |                         |   | $ | 620 |   |

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|                                                                |   |                         |       |   |                     |   |   |        |   |   | Deficit                     |   |   |        |     |   |   |   |
|---------------------------------------------------------------------|--------|------------------------------|------------|--------|--------------------------|--------|--------|-------------|--------|--------|-----------------------------|--------|--------|-------------|----------|--------|--------|--------|
|                                                                |   |                         |       |   |                     |   |   | Accumulated |   |   | Deficit                     |   |   |        |     |
|                                                                |   |                         |       |   |                     |   |   |        |   |   | During                prior |   |   | Accumulated |     |   |   |   |
|                                                                |   | Note                5        |       |   | Additional               |   |   | Development |   |   | During                the   |   |   |        |     |
|                                                                |   | Common                Shares |       |   | Paid-in                  |   |   | Stage       |   |   | Development                 |   |   |        |     |
|                                                                |   | Number                       |       |   | Par                Value |   |   | Capital     |   |   | (Note                1)     |   |   | Stage       |     |   | Total  |   |
|                                                                |   |                         |       |   |                     |   |   |        |   |   |                        |   |   |        |     |   |   |   |
| Balance                April 1, 2007                                |   |                         | 32,523,628 |   |                     |   | 3,252  |        |   |   | 1,385,766                   |   |   |        | (151,117 | )      |   |   | (1,337,379 | ) |   |   | (99,478 | ) |
| Capital                stock subscribed for cash at $0.25 per share |   |                         | 606,000    |   |                     |   | 61     |        |   |   | 151,439                     |   |   |        |     |   |   |   |   |   |   |   | 151,500 |   |
| Share                issue costs                                    |   |                         |       |   |                     |   |   |        |   |   | (504                        | )      |   |        |     |   |   |   |   |   |   |   | (504 | ) |
| Net                income for the three months ended June 30, 2007  |   |                         | -          |   |                     |   | -      |        |   |   | -                           |   |   |        | -        |   |   |   | 134,018 |   |   |   | 134,018 |   |
|                                                                |   |                         |       |   |                     |   |   |        |   |   |                        |   |   |        |     |   |   |   |   |   |   |   |   |   |
| Balance,                June 30, 2007                               |   |                         | 33,129,628 |   |                     |   | 3,313  |        |   |   | 1,536,226                   |   |   |        | (151,117 | )      |   |   | (1,203,361 | ) |   |   | 185,565 |   |
|                                                                |   |                         |       |   |                     |   |   |        |   |   |                        |   |   |        |     |   |   |   |   |   |   |   |   |   |

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|   | These                financial statements have been prepared in accordance with generally                accepted accounting principles applicable to a going concern, which                assumes that the Company will be able to meet its obligations and                continue                its operations for its next fiscal year. Realization values may be                substantially different from carrying values as shown and these financial                statements do not give effect to adjustments that would be necessary                to                the carrying values and classification of assets and liabilities                should                the Company be unable to continue as a going concern. At June 30,                2007,                the Company had not yet achieved profitable operations, has accumulated                losses of $1,185,107 since its inception, but has working capital                of                $151,873 but expects to incur further losses in the development of                its                business, all of which casts doubt about the Company’s ability to continue                as a going concern.  The Company’s ability to continue as a                going concern is dependent upon its ability to generate future profitable                operations and/or to obtain the necessary financing to meet its                obligations and repay its liabilities arising from normal business                operations when they come due.  Management considers that the                Company will be able to obtain additional funds by equity financing                and/or                related party advances, however there is no assurance of additional                funding being available.   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                financial statements of the Company have been prepared in accordance                with                accounting principles generally accepted in the United States of                America.                Because a precise determination of many assets and liabilities is                dependent upon future events, the preparation of financial statements                for                a period necessarily involves the use of estimates which have been                made                using careful judgement. Actual results may vary from these estimates. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                financial statements have, in management’s opinion, been properly prepared                within the framework of the significant accounting policies summarized                below: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company complies with FAS No. 7 for its characterization of the Company                as                development stage. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | The                Company reports the impairment of long-lived assets and certain                identifiable intangibles in accordance with FAS No. 144, “Accounting for                the Impairment of Long-lived Assets”.  Certain long-lived assets                held by the Company are reviewed for impairment whenever assets or                changes                in circumstances indicate the carrying amount of an asset may not                be                recoverable.  Accordingly, an impairment loss is recognized in                the year it is determined. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                    Company’s financial instruments consist primarily of cash, accounts                    payable and accrued expenses, and debt.  The carrying amounts of                    such financial instruments approximate their respective estimated                    fair                    value due to the short-term maturities and approximate market                    interest                    rates of these instruments.  The estimated fair value is not                    necessarily indicative of the amounts the Company would realize                    in a                    current market exchange or from future earnings or cash flows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company uses the asset and liability method of accounting for income                taxes                pursuant to FAS, No. 109 “Accounting for Income                Taxes”.  Deferred tax assets and liabilities are recognized for                future tax consequences attributable to differences between the financial                statement carrying amounts of existing assets and liabilities and                their                respective tax bases.  Deferred tax assets and liabilities are                measured using enacted tax rates expected to apply to taxable income                in                the years in which those temporary differences are expected to be                recovered or settled.  When necessary, a valuation allowance is                recorded to reduce tax assets to an amount for which realization                is more                likely than not.  The effect of changes in tax rates is                recognized in the period in which the rate change occurs. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Effective                December 31, 2006, we adopted FIN 48, “Accounting for                Uncertainty in                Income Taxes.” FIN 48 clarifies the accounting for uncertainty in                income taxes recognized in financial statements in accordance with                SFAS                No. 109, “Accounting for                Income Taxes.” FIN 48 prescribes a recognition threshold and                measurement attribute for the financial statement recognition and                measurement of a tax position taken or expected to be taken in a                tax                return. FIN 48 requires that we determine whether the benefit of                our tax                positions is more likely than not to be sustained upon audit, based                on the                technical merits of the tax position. For tax positions that are                more                likely than not to be sustained upon audit, we recognize the greatest                amount of the benefit that is more likely than not to be sustained                in our                consolidated condensed financial statements. For tax positions that                are                not more likely than not to be sustained upon audit, we do not recognize                any portion of the benefit in our condensed consolidated financial                statements. The provisions of FIN 48 also provide guidance on                derecognition, classification, interest and penalties, accounting                in                interim periods, and disclosure. Our policy for interest and penalties                under FIN 48, related to income tax exposures was not impacted as                a result                of the |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | adoption                of the recognition and measurement provisions of FIN 48. Therefore,                we                continue to recognize interest and penalties as incurred within “income taxes” in our                condensed consolidated statements of operations, when applicable.                There                was no change to our accumulated deficit as of December 31, 2006                as a                result of the adoption of the recognition and measurement provisions                of                FIN 48. We did identify certain potential liabilities that would                have met                the pre FIN 48 accruals criteria, discussed above, and therefore                recorded                the adjustment through our income tax provision in the current period,                as                it was not                material to any periods impacted. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Equipment                is recorded at cost. Amortization is provided using the declining                balance                method at the following rates: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Computer                  equipment | 30% |
|-------------------------------------|-----|
| Computer                  software  | 40% |
| Office                  equipment   | 30% |
| Office                  furniture   | 20% |

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|   | The                carrying value of the Company’s financial instruments, consisting of cash                and accounts payable and accrued liabilities approximate their fair                value                due to the short term maturity of such instruments.  Due to                related parties and loans payable to stockholders also approximate                fair                value. Unless otherwise noted, it is management’s opinion that the Company                is not exposed to significant interest, currency or credit risks                arising                from these financial instruments. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company accounts for convertible debt as required by APB Opinion                No. 14                “Accounting for Convertible Debt and Debt Issued with Stock Purchase                Warrants”. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company                adopted  SFAS  No.  123R,                "Accounting  for Stock-Based Compensation".  This                statement requires a                public  entity  to  measure  the                cost                of  employee  services  received  in                exchange for                an                award of equity  instruments  based                on the grant-date fair value of the award (with limited exceptions).                That                cost will be recognized                over the period                during which                an                employee is required to provide  service. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company has a stock-based compensation plan, which is described in                Note 5.                Under this plan, all stock based payments to non-employees are accounted                for using a fair value based method of accounting. No compensation                expense                is recognized when the stock options are granted to employees or                directors. Consideration received from employees, directors or consultants                on exercise of stock options is credited to share capital. If stock                is                repurchased from employees, directors or consultants, the excess                of the                consideration paid over the carrying amount of the stock is charged                to                deficit. On the granting of stock options to employees or directors                the                Company has elected to provide pro forma disclosure on their fair                value. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company’s previously wholly-owned subsidiary, Azul Studios Property S.L.                (disposed of on June 29, 2006), translates amounts from its functional                currency, Euro, to the reporting currency, United States dollars,                in                accordance with FAS No. 52, “Foreign Currency Translation”.  At                each balance sheet date, recorded balances that are denominated in                a                currency other than US dollars are adjusted to reflect the current                exchange rate which may give rise to a foreign currency translation                adjustment accounted for as a separate component of stockholder’s                deficiency and included in comprehensive loss. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Monetary                assets and liabilities are translated into the functional currency                at the                exchange rate in effect at the end of the period. Non-monetary assets                and                liabilities are translated at the exchange rate prevailing when the                assets                were acquired or the liabilities assumed. Revenues and expenses are                translated at the rate approximating the rate of exchange on the                transaction date. All exchange gains and losses are included in the                determination of net loss for the year. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | The                Company’s previously wholly-owned subsidiary, Azul Studios Property S.L.                (disposed of on June 29, 2006), translates amounts from its functional                currency, Euro, to the reporting currency, United States dollars,                in                accordance with FAS No. 52, “Foreign Currency Translation”.  At                each balance sheet date, recorded balances that are denominated in                a                currency other than US dollars are adjusted to reflect the current                exchange rate which may give rise to a foreign currency translation                adjustment accounted for as a separate component of stockholder’s                deficiency and included in comprehensive loss. |
|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | Monetary                assets and liabilities are translated into the functional currency                at the                exchange rate in effect at the end of the period. Non-monetary assets                and                liabilities are translated at the exchange rate prevailing when the                assets                were acquired or the liabilities assumed. Revenues and expenses are                translated at the rate approximating the rate of exchange on the                transaction date. All exchange gains and losses are included in the                determination of net loss for the year. |
|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                            |   | 2007   |   |
|---------------------------------|--------|--------|--------|
|                            |   |   |   |   | Accumulated |   |   |   |   |
|                            |   | Cost   |   |   | Amortization |   |   | Net |   |
|                            |   |   |   |   |   |   |   |   |   |
| Office                equipment |   |   | 1,691  |   |   |   | - |   |   |   | 1,691 |   |
|                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   | $      | 1,691  |   |   | $ | - |   |   | $ | 1,691 |   |

|                                                        |   | 2006   |   |
|-------------------------------------------------------------|--------|--------|--------|
|                                                        |   |   |   |   | Accumulated |   |   |   |   |
|                                                        |   | Cost   |   |   | Amortization |   |   | Net |   |
|                                                        |   |   |   |   |   |   |   |   |   |
| Computer                software                            |   | $      | 544    |   |   | $ | 521 |   |   | $ | 23 |   |
| Office                equipment                             |   |   | 2,778  |   |   |   | 2,450 |   |   |   | 328 |   |
| Office                furniture                             |   |   | 3,772  |   |   |   | 3,367 |   |   |   | 405 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   | $      | 7,094  |   |   | $ | 6,338 |   |   | $ | 756 |   |
| Write                off of equipment – June 30, 2006 |   |   |   |   |   |   |   |   |   | $ | 756 |   |

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|   | In                June 2003, the Board of Directors approved a stock option plan for                the                Company which provides for allocation of options to purchase up to                375,000                common shares of the Company. The Board of Directors also approved                the                issuance of options to a director to acquire up to 125,000 common                shares                of the Company at $0.50 per share. The options have a term of ten                years                expiring in June 2013. The option plan is subject to approval by                the                stockholders of the Company. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In                March 2004, the Board of Directors approved the issuance of options                to a                director of the Company to acquire up to 125,000 shares of common                stock at                $0.50 per share. The options vest over a period of two years evenly                every                3 months from the date of issuance and once vested may be exercised                at any                time up to ten years expiring in March, 2014. At March 31, 2006,                these                options were all exercisable. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On                May 18, 2007, the Board of Directors, Compensation committee approved                a                stock option plan for the Company which provides for the allocation                of                options to purchase up to 2,100,000 common shares of the Company.                The                Board of Directors also approved the issuance of options to two directors                and one consultant to acquire, in aggregate up to 1,000,000 common                shares                of the Company at $0.25 per share. The options have a term of five                years                expiring in May 2012. The option plan is subject to approval by the                directors and stockholders of the Company. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company does not record compensation expense on the granting of stock                options to employees. In accordance with FAS No. 123R “Share-Based                Payment”, disclosure of pro forma net loss and net loss per share is                required and is calculated by determining the fair value of the options                using fair value option pricing models.  The Company has                determined the fair value of vested employee stock options using                the fair                value method. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | At                June 30, 2007, 312,715 share purchase warrants are outstanding. Each                warrant entitles the holder to purchase an additional common share                of the                Company at $0.50 per share until September 30, 2007. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                following table summarizes the significant components of the Company’s                future tax assets: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|                                                         |   | 2007   |     |   | 2006   |   |
|--------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                         |   |   |     |   |   |   |
| Future                tax assets                             |   |   |     |   |   |   |
| Non-capital                loss                carry-forward |   | $      | 398,290  |   |   | $      | 512,320 |   |
| Valuation                allowance for deferred tax asset    |   |   | (398,290 | )      |   |   | (512,320 | ) |
|                                                         |   |   |     |   |   |   |   |   |
|                                                         |   | $      | -        |   |   | $      | - |   |

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|   | As                at June 30, 2007, the Company has accumulated non-capital losses                totaling                approximately $1,171,441, which are available to reduce taxable income                in                future taxation years. These losses expire beginning in 2017. The                potential benefit of these losses, if any, has not been recorded                in the                financial statements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | Amounts                paid or accrued to directors of the Company, former directors and                related                companies or companies in which a director is a partner or associate                are                as follows: |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | 2007   |   |   | 2006   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|
| Accounting                fees        |   | $      | 8,800  |   |   | $      | 3,909 |   |
| Consulting                fees        |   |   | 17,618 |   |   |   | 4,500 |   |
| Investor                relation fees |   |   | -      |   |   |   | 3,000 |   |
| Legal                fees             |   |   | -      |   |   |   | 6,000 |   |
| Office                                |   |   | -      |   |   |   | 1,200 |   |
|                                  |   |   |   |   |   |   |   |   |
|                                  |   | $      | 25,418 |   |   | $      | 18,609 |   |

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|   |  |
|--------|--|

|   | a) | On                August 10, 2007 the Company completed upon an additional private                placement                of 2,008,000 shares at a price of $0.25 per share with aggregate                proceeds                of $502,000 pursuant to a regulation 506 exemption from registration. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | On                August 11, 2007 the Company completed upon additional private placement                of                shares at a price of $1.00 per share with aggregate proceeds of $37,000                pursuant to a regulation 506 exemption from registration. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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gement

 and 

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 INFORMATION

Senior Securities

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Exhibits and 

| 31.1 | Certification                of Chief Executive officer pursuant to                Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|----------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification                of Chief Financial Officer Pursuant to                Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|----------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|                                        | Modern                  City                  Entertainment Inc |                                                        |
|---------------------------------------------|-----------------------------------------------------------------|-------------------------------------------------------------|
|                                        |                                                            |                                                        |   |
| Date:                      January 23, 2008 | By:                                                             | /s/ William                  Erfurth    |   |
|                                        |                                                            | William                  Erfurth                  |   |
|                                        |                                                            | President                  and Director                     |   |
|                                        |                                                            |                                                        |   |

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