Washington, D.C. 20549
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR VALUE $.001 PER SHARE
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Check whether the Registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
The number of outstanding shares of the Registrant's common stock, $0.001 par value, as of February 29, 2008 was 39,396,020.
Another Stock Subscription Agreement with Europäisches relating to an equity investment of 72,343 common shares for an amount of $50,000 was executed on March 1, 2008 for additional advertisement exposure on www.fuegoentertainment.net website for a period of 66 days. This advertising revenue will be reported in the next quarter.
FUEGO ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
| 4. | SIGNIFICANT ACCOUNTING POLICIES |
GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit, continued losses and a working capital deficit. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
Our financial position is of great concern to us and our investors, however, management's plan is to obtain additional capital and to develop, market and distribute musical tracks, increase our advertising revenue on our website and to pursue the multi-media releases of a popular film produced in Cuba. Additionally, since launching FEMI, we expanded our music and video catalog, by signing new artists, and acquiring music masters containing over 890 music tracks. We have also expanded our marketing and distribution capabilities and enhanced sales in the process. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 5. | RELATED PARTY TRANSACTIONS |
| | · | Ciocan is an entertainment company, owned by our President/CEO, that creates products for the Latino Market worldwide and anticipates using us to market, promote and commercialize some of its products (music, films, documentaries, artist, etc) for the Anglo and international markets. During the nine months ended February 29, 2008, Ciocan did not advance any funds and we paid the outstanding principal balance, leaving a balance owing as of February 29, 2008, of $0, and accrued interest of $5,328. In addition Ciocan was owed a total of $40,798 for music royalties as of February 29, 2008. There were no music royalties accrued to Ciocan during the current three month period, and there were $2,844 of music royalties accrued for the nine months ended February 29, 2008. |
| | · | Our President/CEO is owed $219,489 as of February 29, 2008 for cash advances to the company for a variety of general and administrative expenses and the development of TV station programming. During the nine months ended February 29, 2008 he advanced $76,382 and was repaid $95,986. No interest was paid on this date which accrues at 15 percent per annum and is payable on June 1, 2008. Accrued interest totaled $46,344 as of February 29, 2008. |
| | · | Fees incurred in the nine month period ended February 29, 2008 for a related party accounting firm totaled $59,138. The accounting firm received 525,000 shares in payment of certain outstanding invoices for accounting, tax and financial statement preparation services since September, 2006. The amount owed to the firm as of February 29, 2008 was $20,188. |
FUEGO ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
The following is an analysis of income taxes.
The provision for current income taxes is as follows:
| | | For the nine months ended February 29, 2008 | | | | For the nine months ended February 28, 2007 |
| | | | | | | | |
| Current tax expense (benefit): | | | | | | | |
| Federal tax at 34% statutory rate | $ | (104,204) | | | $ | (104,719) | |
| Benefit of surtax exemptions | | -0- | | | | 73,879 | |
| Valuation allowance | | 82,673 | | | | 4,335 | |
| Adjustment to 5/31/06 tax liability | | | | | | 9,717 | |
| Permanent differences | | 21,531 | | | | 14,382 | |
| Income tax expense | $ | -0- | | | $ | (2,406) | |
The analysis of income tax expense is as follows:
| | | For the nine months ended February 29, 2008 | | | For the nine months ended February 28, 2007 | |
| | | | | | | |
| Current | | $ | -0- | | | $ | (2,406 | ) |
| Deferred | | | -0- | | | | -0- | |
| Income tax expense | | $ | -0- | | | $ | (2,406 | ) |
A deferred tax asset was recognized of $104,204 for the $70,831 deferred tax benefit related to the net operating loss carry forward which expires in 2028 if unused, and $11,843 deferred tax benefit related to temporary timing differences during the nine months ended February 29, 2008. A valuation allowance for $82,674 was recorded as of February 29, 2008, as the Company believes it is more likely than not that this future tax benefit of this deferred tax asset will not be realized at this time.
FUEGO ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
| 6. | INCOME TAXES - continued |
The following is an analysis of the change in the deferred tax asset:
| | | For the nine months ended February 29, 2008 | | | For the nine months ended February 28, 2007 | |
| Deferred tax asset, beginning of year | | $ | -0- | | | $ | -0- | |
| | | | | | | | | |
| Net operating loss carryforward | | | 70,831 | | | | | |
| | | | | | | | | |
| Allowance for doubtful accounts | | | -0- | | | | (1,705 | ) |
| | | | | | | | | |
| Interest Expense related party | | | 11,569 | | | | (2,877 | ) |
| | | | | | | | | |
| Depreciation | | | (274 | ) | | | 248 | |
| | | | | | | | | |
| State income taxes | | | -0- | | | | -0- | |
| | | | | | | | | |
| Valuation allowance | | | (82,674 | ) | | | 4.334 | |
| | | | | | | | | |
| Deferred tax asset, end of year | | $ | -0- | | | $ | -0- | |
For the nine months ended February 29, 2008, the President contributed a total of $61,150 consisting of $40,500 for the value of services, $6,250 for the prorata share of auto expenses, and $14,400 for the rent of corporate office facilities.
On May 9, 2007, we entered into a contract with Var Growth Corporation (D.B.A. Ice Cold Stocks) and issued 875,000 shares of restricted common stock at $.15 in exchange for consulting services to be performed over the current fiscal year. For the nine months ended February 29, 2008, $122,979 of this cost was expensed. There is no remaining balance as a deferred charge.
In January 2008 Fuego and Jeffrey Collins (Echo Vista, Inc.) through Echo-Fuego Music Group, LLC announced plans to sell the eight “lost” Beatles’ club recordings. Apple Corps Limited, representing the Beatles, is seeking to have Fuego remove any information about the planned release from Fuego’s website, is requiring Fuego to cease any use of the trademark, The Beatles, for commercial purposes, and is also seeking $15 million in the lawsuit filed against Fuego, Echo-Fuego Music Group, LLC, Hugo Cancio and Jeffrey Collins. On April 4, 2008, Apple Corps Limited and Fuego struck an injunction agreement approved by a Miami U.S. District Judge that requires Fuego to halt plans to release the eight song recordings. No trial date has been set for the case. Fuego is vigorously defending the lawsuit and does not expect to incur a loss. The case and the ultimate outcome are presently uncertain. The accompanying financial statements do not include any adjustments that might be necessary should the case result in an unfavorable outcome.
On April 8, 2008 Fuego filed a lawsuit in the Miami-Dade Circuit Court against Var Growth Corporation (D.B.A. Ice Cold Stocks) and Barry Davis for non-performance regarding a consulting agreement executed May 9, 2007. The consulting agreement required Var Growth Corporation (D.B.A. Ice Cold Stocks) and Barry Davis advise and consult Fuego in conjunction with the development of Fuego’s marketing plan and business goals, scheduling and arranging meetings and conferences with strategic third party media representatives and investors. Fuego is requesting possession and return of its 875,000 shares of restricted common stock issued in exchange for consulting services. The case and the ultimate outcome are presently uncertain. The accompanying financial statements do not include any adjustments that might be necessary should the case result in a favorable outcome.
FUEGO ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
| 10. | ISSUANCE OF RESTRICTED COMMON STOCK |
We authorized the issuance of 157,000 shares of restricted common stock at $.15 per share on September 18, 2007, 83,000 shares of restricted common stock at $.15 per share on September 30, 2007, and 575,000 shares of restricted common stock at $.15 per share on October 15, 2007.
On December 7, 2007 we issued 1,841,667 restricted shares of stock to AES Capital Partners, LP regarding two separate Private Placement Memorandums. The first one was signed on October 15, 2007 for 541,667 restricted shares at $.12 for a total subscription amount of $65,000 and the funds deposited on October 17, 2007. The second one was signed on December 5, 2007 for 1,300,000 restricted shares at $.212 for a total subscription amount of $275,600, half the funds were deposited on December 10, 2007 and the other deposited on January 11, 2008.
Principally in connection with our efforts to obtain additional capital to sustain our business, the following restricted stock was issued. Restricted shares of stock consisted of 525,000 issued to the accounting firm in payment for outstanding invoices regarding their accounting, tax and financial statement preparation services, 175,000 shares issued to several board members, the sale of 1,924,667 shares for cash, and132,000 shares were issued to various individuals for services rendered
Item 2. Management's Discussion and Analysis or Plan of Operation
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATION
The following discussion is intended to provide an analysis of the Company’s consolidated financial condition and Plan of Operation and should be read in conjunction with the Company’s financial statements and the notes thereto set forth herein. For the first time, Fuego Entertainment, Inc. (Fuego) and its 51% majority-owned limited liability company, Echo-Fuego Music Group, LLC, will be presenting their financial statements on a consolidated basis. All significant intercompany accounts and transactions have been eliminated in the consolidation.
The matters discussed in these sections that are not historical or current facts deal with potential future circumstances and developments. The Company’s actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below.
PLAN OF OPERATION
We have been in operation for thirty-eight months as of February 29, 2008. Our efforts during that period have largely been to generate cash flows from operations and cash flow from the sales of our common shares. The majority of these cash flows were applied towards, production costs, and the investment in a series of shows, including Havana Nights, productions of the Luny Tunes new CD soon to be release, the acquisition of over 2,000 music tracks, the formation of Echo-Fuego Music Group joint venture in which we owned 51 % and the development of our new website.
Since inception, we have sold music CD’s representing the majority of our music revenue. Although the company will continue to sell music CD’s we have made a full transition into the digital sales and distribution of music and video content. In the prior fiscal year we created a music business segment named Fuego Entertainment Music International (FEMI) the purpose of which is to sell our music content under this name.
In December 2007, Fuego announced it had formed a new music division, Echo-Fuego Music Group, LLC, (Echo Fuego) in a joint venture with legendary music producer and promoter Jeffrey Collins. His music catalog of more than 2,000 tracks and 15 artists will be merged into the new joint venture, with a 51% majority stake owned by Fuego Entertainment, Inc. Mr. Collins will manage the joint venture which plans to release at least two albums per month over the next five years featuring artists such as KRS-One, Father MC, Ahmir, Marcus Allen, Eriq J'Mar, Don Connor, NoXcuse, Ram Squad, Euricka, Papa San, Jeff Maddox, DJ No-Rap, Culture, Meekie Renee, C.W., World Carnival, Colonel Abrams, La Velle and The L.C.D.'s. The joint venture Echo-Fuego is actively seeking to sign exciting new artists under the new label.
Recently four members of our Board of directors resigned from our in order to pursue other opportunities. We are currently conversation with two individual that have express interest in joining our Board of Directors. Because of their experience and knowledge of our industry their contribution will be a key component to the overall development of our Company. we hired two corporate executive to our team, Ernesto Hernandez as sales manager and marketing and promotion coordinator and legendary music producer Jeffrey Collins as Head of our music divisions.
We expanded our music and video catalog, by signing new artists, and acquiring music masters containing over 890 music tracks. We recently acquired over 2,000 music tacks creating a diverse catalog of music and videos. We executed a production deal with the award-winning producing duo Luny Tunes: Francisco Saldaña (Luny) and Victor Cabrera (Tunes).Under this five-year agreement, the popular and successful Latin urban music producers will co-produce two albums per year that will be released under Fuego Entertainment's music division FEMI (Fuego Entertainment Music International). Over the past three and a half years, Luny Tunes have produced several albums generating over $16.5 million dollars in sales for
Item 2. Management's Discussion and Analysis or Plan of Operation - continued
Universal Music Group. Luny Tunes have produced albums, music tracks, and remixes for top Latin Reggaeton, Pop and R&B recording artists such as Janet Jackson, Paris Hilton, The Black Eye Peas, Lenny Kravitz, R Kelly, Ricky Martin, Shakira, Alejandro Sanz, Fat Joe, Daddy Yankee's "Gasolina," Wisin y Yandel's "Rakata," Don Omar's "Dale Don Dale," Tego Calderon's "Métele Sazón," Ivy Queen, Hector y Tito, and many others. The Luny Tunes have a successful track record as the architects of the most significant crossover in Latin music in the last few years. This co-production agreement comes at a time where our music division is rapidly growing and expanding. This collaboration should generate substantial financial benefits to our company. The new Luny Tunes Fuego production has been completed and it is expected to be released on or before June 2008.
As successful music producers in the Reggaeton genre, the Luny Tunes have managed to earn an abundance of fans and awards while on the road to international stardom. Some awards include:
-- Latin Billboard Awards 2004: Más Flow -- "Tropical Album of the Year / Duo or Group;"
-- Latin Billboard Awards 2004: Más Flow -- "Tropical Album of the Year / New Generation;"
-- Reggaeton People's Choice Awards 2004: Luny Tunes -- "Producer of the Year";
-- Latin Grammy Awards 2005: Barrio Fino -- "Best Album of the Year / Urban" (as producers);
-- Reggaeton People's Choice Awards 2005: Luny Tunes -- "Producer of the Year;"
-- Reggaeton People's Choice Awards 2005: Mayor Que Yo -- "Best Song of the Year;"
-- Reggaeton People's Choice Awards 2005: Mas Flow 2 -- Best Album of the Year;"
-- Latin Billboard Awards 2006: Luny Tunes -- "Producer of the Year;"
-- Premios Lo Nuestro Awards 2006: Mas Flow 2 -- "Best Album of the Year / Urban Category;" and,
-- Musica Furia 2007: Luny Tunes -- "Reggaeton Producers of the Year
We have also expanded our marketing and distribution capabilities and enhanced sales in the process. We executed an agreement with Digital Music Group, Inc, one of the leaders in the digital distribution of entertainment product. Digital Music Group, Inc. has now merged with the leading online music and video distributor, The Orchard. We also executed an agreement with UK digital distributor Vidzone. Our music and video content is now available in more than 100 retailers. We executed a publishing agreement with Ediciones Musicales Clippers. On March 1, 2007 we retained the services of Adolfo Fernandez, a prestigious publicist from F&F Media Group. Mr. Fernandez's firm represents companies such as WEA Music, Sony BMG, Televisa Group, Univision Music Group, EMI US Latin, EMI Music Colombia, Venemusic, Fonosound, Grupo Origin, Warner Music Latina, and others. Mr. Fernandez has worked with many artists such as Andrea Bocelli, Ricky Martin, Alejandro Sanz, Mark Anthony, Shakira, Gilberto Santarosa, Jennifer Lopez, and others.
QUARTER ENDED FEBRUARY 29, 2008
There was a net income for the current quarter of $24,651. There was $259,767 of consolidated revenues this quarter resulting in a gross profit of approximately $211,551. There were $161,800 of expenses this quarter; there were three major expenses which contributed to the loss for the quarter. First there was $63,854 stock based compensation to board member for their services, to various other individuals for services rendered and the amortization of the Var Growth Corporation consulting agreement. Second, there were audit, accounting, bookkeeping and consulting fees of $28,989 relating to the preparation of financial statements for the second quarter of the current fiscal year. Third, there was $10,553 interest paid to a related party. The minority interest in Echo-Fuego’s earnings was $25,100.
Revenues for the current quarter-
Revenues in the current quarter were minimum due to the transition from the regular distribution of CDs to digital downloads sales and distribution of our entertainment content. However, there was advertising revenue for the first time this quarter. In January 2008, Fuego entered into a Stock Subscription Agreement with Beverage Plus, Inc. relating to an equity investment of 400,000 common shares for an amount of $300,000 in Beverage Plus, Inc., a Nevada Corporation. Subsequently, Beverage Plus, Inc. exchanged all of its issued and outstanding shares to Beverage Plus AG, a Swiss corporation holding company and Beverage Plus is now owned by Beverage Plus AG. The Swiss Corporation has been assigned an international securities identification number of CH0038503253 and the Swiss regulatory authories issued a securities idenficiation number also known as Valorennummer (VAL) of 3850325. Beverage Plus is completing its application for registration with the Frankfurt Stock Exchange (“FSE”) to be listed with a trading symbol to be assigned by the FSE for trading on the open market in May 2008. The German regulatory authority has issued its securities registration number or Wertpapierkennnummer (WKN) as follows: A0NJNV
Item 2. Management's Discussion and Analysis or Plan of Operation - continued
Beverage Plus’ stock is expected to open at approximately one Euro per share. Beverage Plus provides no assurances to its investors as to the liquidity of its share capital or it’s ability to maintain such share price in the market place.
The purchase price of $300,000 is equal to the fair market value of in-kind consideration in the form of marketing assistance and the placement of a marketing banner and link to the Beverage Plus web site on www.fuegoentertainment.net website for a period of no less than 90 days. During the current three month period we reported revenues of $150,000 for 45 days of advertising and deferred revenues of $150,000 for the remaining 45 days.
Another Stock Subscription Agreement with Beverage Plus relating to an equity investment of 108,516 common shares for an amount of $75,000 was executed on February 22, 2008 for additional advertisement exposure on www.fuegoentertainment.net website for a period of 75 days. During the current three month period we reported revenues of $8,000 for 8 days of advertising and deferred revenues of $67,000 for the remaining 67 days.
Furthermore, we reported and consolidated 100% of the net music sales of $100,642 from Echo-Fuego. A net adjustment for the Minority Interest in Affiliate’s Earnings was made on the consolidated statements of operations.
In October of 2007, we released 70 CD’s, approximately 900 music tracks to major online retailers such as ITunes, Yahoo Music, Wal-Mart Music, Virgen Mobile, Vodaphone, Movistar, YouTube, MySpace, CD Baby and others.
Selling, General and Administrative Expenses-
This category has routinely consisted of all of the recurring and/or normal corporate overhead expenses not separately identified such as depreciation and amortization. This category did not increase, as in the current quarter, for such items as Stock Based Compensation, Bonus to Officer and Accounting & Auditing Fees. If it were not for these large items, selling, general and administrative expense for the quarter would be indicative of the level of such expenses for this time period of approximately $80,257.
Income Tax Liability / Benefit-
There was no income tax liability or benefit earned in this quarter.
QUARTER ENDED FEBRUARY 29, 2008 COMPARED TO THE QUARTER ENDED FEBRUARY 28, 2007
The income for the current quarter increased compared to the loss for the same quarter a year ago by approximately $79,402 due to an increase in revenue.
Revenues-
Revenues in comparison to a year ago on a quarterly basis increased due to the transition from the regular distribution of CDs to digital downloads sales and distribution of our entertainment content, and advertising revenue.
Item 2. Management's Discussion and Analysis or Plan of Operation - continued
As discussed above in detail we generated $ 158,000 of advertising revenue from our Stock Subscription Agreement with Beverage Plus, Inc.
In October of 2007, we released 70 CD’s, approximately 900 music tracks to major online retailers such as ITunes, Yahoo Music, Wal-Mart Music, Virgen Mobile, Vodaphone, Movistar, YouTube, MySpace, CD Baby and others.
As a result of the recent joint venture with Jeffrey Collins, Echo-Fuego Music Group, LLC, we reported and consolidated 100% of the net music sales of $100,642 from Echo-Fuego. A net adjustment for the Minority Interest in Affiliate’s Earnings was made on the consolidated statements of operations.
Echo-Fuego Music Group, LLC acquired over 2,000 music tracks and the company plans to release 2 CD’s per months for the next 5 years. The first CD’s scheduled to be released in the coming months have contributed to 37,983 advance sales of (preorders) of CD’s which translates into approximately $322,000 in revenues This does not includes the anticipated release of the first Luny Tunes production soon to be released. Management expects music revenues to increase significantly as more music titles will be released in the coming months and our valuable and diverse library of music and video continues to be distributed to all major online music downloads retailers. As of the day of this filling the company has not received a sales report from our digital distributors. The launching of our new website has given us a new revenue stream opportunity, from music and video downloads, membership subscriptions and now advertising. We are aggressively pursuing other corporate advertisers who recognize the impact their ad dollars can have via advertising on our website. We are currently negotiating several advertising deals.
Cost of Revenues-
Revenues in the current quarter were not the type which required music royalties to be paid to any related or third party.
Selling, General and Administrative Expenses-
The current quarter’s selling, general and administrative expenses exceeded the comparable quarter’s expenses by approximately $81,000 due largely to an increase in stock based compensation of $43,000. The balance of the increase was due mainly to the increase in legal, auditing and accounting expenses which together were approximately $24,000 for the current quarter..
Income Tax Liability / Benefit-
There was no income tax liability or benefit earned in this quarter.
NINE MONTHS ENDED FEBRUARY 29, 2008 COMPARED TO THE NINE MONTHS ENDED FEBRUARY 28, 2007
Compared to the previous nine month period a year ago, the current nine month’s loss was approximately $45,000 higher due to various expense items. There was an increase in overall expenses of approximately $50,000.
Revenues-
Please refer to the three months ended February 29, 2008 comparison for a detail explanation for the increase in revenue.
In addition, no Filming revenues or work for hire occurred as a result of the president of the company spending considerable time developing the music division of Fuego. There was a significant increase in advertising revenue.
Item 2. Management's Discussion and Analysis or Plan of Operation - continued
Selling, General and Administrative Expenses-
This category resulted in approximately $202,000 more in expenses than last year’s nine month period. Though there was a significant decrease of $97,000 in Radio/TV Development Start-up Costs, the most influential of expense increases were related to Stock Based Compensation of $85,000, Interest Expense-Related Party of $30,000, Consulting and Auditing & Accounting Fees of $52,000, Marketing & Corporate Expenses of $16,000 and paid Compensation of Officers-Bonus of $15,000. Though Compensation to Officers increased by $13,500, Hugo has contributed his services to the company and has never been paid.
Income Tax Liability / Benefit-
There was no income tax liability or tax benefit in the current nine month period. There was an income tax benefit in the prior nine month period of approximately $21,800 as a result of carrying back losses to prior periods in which the company reported income.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
MATERIAL COMMITMENTS
We have no material commitments as at the date of this registration statement.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve (12) months.
LIQUIDITY AND CAPITAL RESOURCES
The Company has working capital of approximately $24,000 at the end of the nine months ended February 29, 2008.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act of 1934 are recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Principal Executive Officer and Principal Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.
Within the 90 days prior to the filing date of this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under the supervision and with the participation of our Principal Executive Officer/Principal Accounting Officer. Based upon that evaluation, we have concluded that our disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy our disclosure obligations under the Exchange Act.
Changes in Internal Controls
There were no significant changes in our internal controls or in other factors that could significantly affect those controls since the most recent evaluation of such controls.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
In January 2008 Fuego and Jeffrey Collins (Echo Vista, Inc.) through Echo-Fuego Music Group, LLC announced plans to sell the eight “lost” Beatles’ club recordings. Apple Corps Limited, representing the Beatles, is seeking to have Fuego remove any information about the planned release from Fuego’s website, is requiring Fuego to cease any use of the trademark, The Beatles, for commercial purposes, and is also seeking $15 million in the lawsuit filed against Fuego, Echo-Fuego Music Group, LLC, Hugo Cancio and Jeffrey Collins. On April 4, 2008, Apple Corps Limited and Fuego reached an injunction agreement approved by a Miami U.S. District Judge that requires Fuego to halt plans to release the eight song recordings. No trial date has been set for the case. Fuego is vigorously defending the lawsuit and does not expect to incur a loss. The case and the ultimate outcome are presently uncertain. The accompanying financial statements do not include any adjustments that might be necessary should the case result in an unfavorable outcome.
Subsequent Event
On April 8, 2008 Fuego filed a lawsuit in the Miami-Dade Circuit Court against Var Growth Corporation (D.B.A. Ice Cold Stocks) and Barry Davis for non-performance regarding a consulting agreement executed May 9, 2007. The consulting agreement required Var Growth Corporation (D.B.A. Ice Cold Stocks) and Barry Davis advise and consult Fuego in conjunction with the development of Fuego’s marketing plan and business goals, scheduling and arranging meetings and conferences with strategic third party media representatives and investors. Fuego is requesting possession and return of its 875,000 shares of restricted common stock issued in exchange for consulting services. The case and the ultimate outcome are presently uncertain. The accompanying financial statements do not include any adjustments that might be necessary should the case result in a favorable outcome.
Item 2. Changes in Securities and Use of Proceeds
On December 7, 2007 we issued 1,841,667 restricted shares of stock to AES Capital Partners, LP regarding two separate Private Placement Memorandums. The first one was signed on October 15, 2007 for 541,667 restricted shares at $.12 for a total subscription amount of $65,000 and the funds deposited on October 17, 2007. The second one was signed on December 5, 2007 for 1,300,000 restricted shares at $.212 for a total subscription amount of $275,600, half the funds were deposited on December 10, 2007 and the other deposited on January 11, 2008.
Principally in connection with our efforts to obtain additional capital to sustain our business, the following restricted stock was issued in the current quarter: 100,000 shares issued to several board members at $0.28 per share for services rendered and the sale of 1,841,667 common shares for cash as discussed above.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
The following documents are included or incorporated by reference as exhibits to this report:
Exhibit Number | Description |
| 31.1 | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(b) REPORTS ON FORM 8-K
Form 8-K filed with the U.S. SEC on December 12, 2007 announcing the sale of $340,000 in private placements.
Form 8-K filed with the U.S. SEC on March 13, 2008 announcing the resignation of Parnell F. Delcham, Director.
Form 8-K filed with the U.S. SEC on March 28, 2008 announcing the resignation of Marc Bodin, director, and announcing the notice of a lawsuit filed by Apple Corp. Ltd. and Apple Records Inc.
Form 8-K filed with the U.S. SEC on April 7, 2008 announcing the resignation of Barnardo Maurovich and Rene Lavandera as Directors.
Form 8-K filed with the U.S. SEC on April 21, 2008 announcing the Agreed Order for Preliminary Injunction of Apple Corp. Ltd. and Apple Records, Inc., and Fuego Entertainment, Inc.
Form 8-K filed with the U.S. SEC on April 21, 2008 announcing the lawsuit filed by the Company against Barry Davis, Ice Cold Stocks and Var Growth Corporation to prevent the block the transfer of 875,000 common shares of the Company.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FUEGO ENTERTAINMENT, INC.
(Registrant)
| | | |
| | |
| Date: April 21, 2008 | By: | /s/ Hugo M. Cancio |
| | Hugo M. Cancio |
| | Title: Principal Executive Officer |
| | | |
| | |
| Date: April 21, 2008 | By: | /s/ Hugo M. Cancio |
| | Hugo M. Cancio |
| | Title: Principal Accounting Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| | | |
| | |
| Date: April 21, 2008 | By: | /s/ Hugo M. Cancio |
| | Hugo M. Cancio |
| | Title: Director |
