SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K/A
 Amendment
No. 2
  [x]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 For the
fiscal year ended   December 31,
2008
 
 []
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 Commission
File No.000-52690
 
 Art Design,
Inc.
 (Exact
Name of Small Business Issuer as specified in its charter)
 
 Colorado
                86-1061005(State
      or Other Jurisdiction
                (IRS
      Employer File Number)of
      Incorporation)
 
 3636
      S. JasonEnglewood, Colorado
                80113(Address
      of Principal Executive Offices)
                (Zip
      Code)
 
 (303)
781-7280
 (Registrant's
telephone number, including area code)
 
 Securities
to be Registered Pursuant to Section 12(b) of the Act: None
 
 Securities
to be Registered Pursuant to Section 12(g) of the Act:
 
 Common Stock, $.0.001 per
share par value
 
 Indicate
by check mark if registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes []   No [X].
 
 Indicate
by check mark if registrant is not required to file reports pursuant to Section
13 or 15(d) of the Exchange Act.
 Yes
[] No [X].
 
 Indicate
by check mark whether the registrant (1) has filed all Reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes: [X]    No: [ ]
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K.
[X]
 
 Indicate
by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer,” and “small reporting company” in Rule
12b-2 of the Exchange Act.
 
 Large
      accelerated filer
      []
              Accelerated
      filer                   []Non-accelerated
      filer   [] (Do not check if a smaller reporting
      company)
              Smaller
      reporting company  [X]
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):  Yes []   No
[X].
 
 The
number of shares outstanding of the Registrant's common stock, as of the latest
practicable date, November
19, 2009, was 10,820,600.
  
  FORM
10-K/A
 Art
Design, Inc.
 
 INDEX
 
 PART
      IItem
      1. Business
                        3Item
      1A. Risk Factors
                        7Item
      2. Property
                        12Item
      3. Legal Proceedings
                        13Item
      4. Submission of Matters to a Vote of Security Holders
                        13PART
      IIItem
      5. Market for Registrant’s Common Equity, Related Stockholder Matters and
      Issuer Purchases of Equity Securities
                        13Item
      6. Selected Financial Data
                        15Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
                        15Item
      7A. Quantitative and Qualitative Disclosures About Market
    Risk
                        20Item
      8. Financial Statements and Supplementary Data
                        20Item
      9. Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosures
                        32Item
      9A(T). Controls and Procedures
                        32Item
      9B. Other Information
                        33PART
      IIIItem
      10. Directors, Executive Officers and Corporate Governance
                        34Item
      11. Executive Compensation
                        36Item
      12. Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
                        36Item
      13. Certain Relationships and Related Transactions, and Director
      Independence
                        37Item
      14. Principal Accountant Fees and Services
                        37Item
      15. Exhibits Financial Statement Schedules
                        37Financial
      Statements pages
                        20
      - 31Signatures
                        39
  -
2 -
  
 References
in this document to “us," "we," or "Company" refer to Art Design, Inc. and its
wholly owned subsidiary, Art Dimensions, Inc.
 
 Forward-Looking
Statements
 
 The
following discussion contains forward-looking statements regarding us, our
business, prospects and results of operations that are subject to certain risks
and uncertainties posed by many factors and events that could cause our actual
business, prospects and results of operations to differ materially from those
that may be anticipated by such forward-looking statements. Factors that may
affect such forward-looking statements include, without limitation: our ability
to successfully develop new products and services for new markets; the impact of
competition on our revenues, changes in law or regulatory requirements that
adversely affect or preclude clients from using us for certain applications;
delays our introduction of new products or services; and our failure to keep
pace with our competitors.
 
 
 When used
in this discussion, words such as "believes", "anticipates", "expects",
"intends" and similar expressions are intended to identify forward-looking
statements, but are not the exclusive means of identifying forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this report. We
undertake no obligation to revise any forward-looking statements in order to
reflect events or circumstances that may subsequently arise. Readers are urged
to carefully review and consider the various disclosures made by us in this
report and other reports filed with the Securities and Exchange Commission that
attempt to advise interested parties of the risks and factors that may affect
our business.
 
 
 PART
I
 
 Item
1. DESCRIPTION OF BUSINESS.
 
 General
 
 Art
Design, Inc. was incorporated in the State of Colorado on January 16, 2002. We
are a provider of custom framed artwork, accessories and interior design
consulting. We market and sell our products and services to commercial and
professional business offices, along with residential clients. We believe we
have developed a presence in the State of Colorado for creating custom framed
mirrors, art, and design furnishings.
 
 On June
18, 2007 we closed our public offering. We sold a total of 520,600 shares at a
price of $.25 per share, for a total of $130,150.
 
 We have
one wholly-owned subsidiary, Art Dimensions, Inc., which we incorporated in
January, 2008.
 We issued
a total of 2,000,000 shares to us. This company has been incorporated to
represent artists and other creative individuals in the interior design
business. We are currently in the process of spinning off  this
subsidiary to our shareholders.
 
 Our
headquarters are located at 3636 S. Jason, Englewood, Colorado 80113. Our phone
number at our headquarters is (303) 781-7280. Our fiscal year end is December
31.
  -
3 -
  Overview
of our Operations
  We
believe that we have created a business model that enables us to provide
products and services to our clients in a more convenient, efficient and
economical manner. We sell our products and services directly to the public and
not through design professionals.
 
 Mr. and
Mrs. Sheehan operate a private company known as the Accessory Warehouse. This
company markets art work, accessories, and furniture exclusively to design
industry professionals. The original concept of our Company was to have a
business which markets art work, accessories, furniture, and interior design
consulting to the public.
 
 We plan
to purchase most, if not all, of our products from Accessory Warehouse. These
products will be purchased under the same or better terms and conditions which
Accessory Warehouse would give to unaffiliated third parties.
 
 We
established our business strategy on the premise that on site consulting to the
public is a valuable service. We believe that most people do not have the time
or expertise to furnish their offices or living spaces with art, mirrors, or
other accessories.
 
 We
provide products that we believe share an aesthetic appeal and possess
distinctive design elements. We combine these products with our interior design
consulting, to give our clients a complete package of goods and services. We
provide detailed information regarding the designer and key design and
functional elements about each product. We obtain our merchandise from select
domestic designers and manufacturers that meet our requirements for design,
quality, packaging, and consistency of production and flow. We believe that our
individual assortment of products serves as a competitive
advantage.
 
 We
believe our success requires the development and maintenance of a broad base of
residential and commercial clients. Our clients include commercial and
professional business offices, along with high end homes. We target educated
consumers focused on quality of life and interested in self-enrichment.
Historically, our residential customers have been almost as likely to be male as
female, have spanned a wide range of ages and typically have had household
incomes greater than $75,000. We sell to the following commercial clients, who
we believe are representative of our commercial client base in a number of
different industries, including: architects, doctors, lawyers, and
accountants.
 
 Industry
Overview
  We
believe that businesses have begun to place more emphasis on design. A November
2003 article in Fortune magazine highlighted organizational initiatives at
several major corporations, which have created new positions for design
professionals and promoted other design professionals, reflecting the growing
importance of design in selling their products or services.
 
 We
believe small businesses, which account for all of our commercial sales,
historically have also had difficulties gaining access to design furnishings. We
believe that the design furnishings industry has generally marketed and sold
most design products in a manner that effectively excludes small businesses as
buyers. Factors that contribute to the exclusion of small businesses from the
market for design products include: the imposition of minimum order requirements
that often exceed such buyers’ requirements, limited physical presence of
product sellers in smaller markets; and lack of interest from product
distributors to sell to smaller buyers, among others.
 
 We believe this large
segment of the commercial market has traditionally been underserved and will
continue to be particularly receptive to our product offerings.
  -
4 -
  We
believe our business model makes design-oriented products available for
convenient purchase to a broad array of residential and commercial consumers,
helping us further expand and penetrate the market for design
products.
 
 Operations,
Management and Employees
 
 We
believe that initially operating from one location will be central to our
overall success. We sell to the public through direct contact with our
employees. Our plan is to concentrate our operations in the State of Colorado.
We have no plans to operate in additional locations.
  We have
two full-time employees, not including our two officers. As we expand, we intend
to hire additional employees. However, we have no present plans to do so. We may
hire part-time help as needed from time-to-time for specific
projects.
 
 While our
Mr. and Mrs. Sheehan have had extensive experience in our business, we must
eventually recruit additional personnel. We will strive to maintain quality and
consistency through the careful training and supervision of personnel and the
establishment of, and adherence to, high standards relating to personnel
performance and client service. We believe that we will be able to attract high
quality, experienced personnel by paying competitive wages and
salaries.
 
 Markets
 
 We plan
to market through direct contact with prospective clients. We have no sales
representative who solicits potential clients. However, Mr. and Mrs. Sheehan,
along with Mrs. Gregarek, plan to use their contacts to continue to generate the
clients and will attempt to develop repeat business from every
project.
 
 Raw
Materials
 
 The use
of raw materials is not a material factor in our operations at the present time.
We do not expect raw materials to be a material factor in the
future.
 
 Customers
and Competition
 
 The
market for residential and commercial furnishings is fragmented with no single
company holding a dominant market position. The market includes numerous smaller
specialty retailers, as well as department stores, larger mass merchandisers and
interior design stores, with department stores commanding a decreasing
percentage of the furnishings industry compared to specialty retailers. In
recent years, the industry has been characterized by consolidation, the
withdrawal of certain retailers from the marketplace and a de-emphasis by
traditional department stores on upscale merchandise, leaving fewer large
competitors focused exclusively on this segment of the furnishings
market.
  We face
competition from several sources, including the following:
  ·
              design
      companies selling solely through catalog and
  online;
 
 ·
              regional
      retailers specializing in design;
 
 All of
our competitors are larger than us and have substantially greater financial,
marketing and other resources than we do.
  -
5 -
  The U.S.
retail industry, along with the catalog and online commerce sectors are highly
competitive, dynamic in nature and have undergone significant change over the
past several years. Our ability to anticipate and respond successfully to these
changes is critical to our long-term growth. If we are unable to maintain or
increase our market share or compete effectively in the furnishings market, our
business, financial condition and operating results would be adversely
affected.
  We
believe that the ability to compete successfully is determined by a variety of
factors, including quality of product selection, effective product presentation,
client service and pricing. We believe that we can compete favorably on the
basis of these factors.
 
 We also
believe that we offer our clients flexibility and cost savings because our
overhead is lower than many of our competitors. However, we cannot guarantee
that we will be able to successfully compete.
 
 Our top
client in fiscal year 2008 accounted for approximately 95 % of our revenues. In
fiscal year 2007 our four top clients accounted for approximately 61% of our
revenues. We plan to particularly focus on this aspect of our business in the
next twelve months.
 
 Backlog
 
 At
December 31, 2008, we had no backlogs.
 
 Employees
 
 We have
two full-time employees, not including our two officers. As we expand, we intend
to hire additional employees. However, we have no present plans to do so. We may
hire part-time help as needed from time-to-time for specific projects. We do not
pay salaries to our two officers. However, we reimburse them for any
out-of-pocket expenses they incur on our behalf. In addition, in the future, we
may approve the payment of salaries for our management, but currently, no such
plans have been approved. We do not currently pay for vacation, holidays or
provide major medical coverage. None of our officers or directors is a party to
any employment agreement. However, we may adopt such plans in the
future.
 
 Proprietary
Information
 
 We do not
currently have any patent or trademark protection. If we determine it is
feasible to file for such trademark protection, we still have no assurance that
doing so will prevent competitors from using the same or similar names, marks,
concepts or appearance.
 
 Government
Regulation
 
 We are
not subject to any material government or industry regulation.
  Research
and Development
 
 We have
never spent any amount in research and development activities.
 
 Environmental
Compliance
 
 Since we
only act in the capacity of an intermediary, we do not expect environmental laws
to have any material impact on us.
  -
6 -
  How
to Obtain Our SEC Filings
 
 We file
annual, quarterly, and special reports, proxy statements, and other information
with the Securities Exchange Commission (SEC). Reports, proxy statements and
other information filed with the SEC can be inspected and copied at the public
reference facilities of the SEC at 100 F Street N.E., Washington, DC 20549. Such
material may also be accessed electronically by means of the SEC's website at
www.sec.gov.
 
 Our
investor relations department can be contacted at our principal executive office
located at our principal office, 3636 S. Jason, Englewood, Colorado 80113. Our
phone number at our headquarters is (303) 781-7280. We currently have no
website.
  Item
1A. RISK FACTORS.
 
 You
should carefully consider the risks and uncertainties described below and the
other information in this document before deciding to invest in shares of our
common stock.
 
 The
occurrence of any of the following risks could materially and adversely affect
our business, financial condition and operating result. In this case, the
trading price of our common stock could decline and you might lose all or part
of your investment.
 
 Risks
Associated With our Company
 
 We
have had a history of losses and may not be able to develop
profitability.
  We had a
net loss of $53,993 on revenues of $153,164 for the fiscal year ended December
31, 2008, compared to a net loss of $31,854 on revenues of $80,265 for the
fiscal year ended December 31, 2007.  We cannot assure you that we will
generate profits in the future, even if our sales increase dramatically. We will
need to generate greater revenues and improved margins to achieve and maintain
profitability in the future. If our operating losses continue on a long-term
basis, we may experience a shortage of working capital that could adversely
affect our business or our ability to continue our business, in which case our
stock price may decline, perhaps significantly, and you could lose the value of
your investment.
 
 Because
we had incurred continuing operating losses, our accountants have expressed
doubts about our ability to continue as a going concern.
  For the
fiscal year ended December 31, 2008 and 2007, our accountants have expressed
doubt about our ability to continue as a going concern as a result of our
continued net losses. Our ability to achieve and maintain profitability and
positive cash flow is dependent upon:
  ·
              our
      ability to locate clients who will purchase our products and use our
       services; and
 
 ·
              our
      ability to generate substantial
revenues.
 
 Based
upon current plans, we expect to incur operating losses in future periods
because we will be incurring expenses and not generating sufficient revenues. We
expect approximately $50,000 in operating costs over
the next twelve months. We cannot guarantee that we will be successful in
generating sufficient revenues or other funds in the future to cover these
operating costs. Failure to generate sufficient revenues will cause us to go out
of business.
  -
7 -
  Our
limited operating history makes it difficult for us to evaluate our future
business prospects and make decisions based on those estimates of our future
performance.
 
 The
concept for our business model was developed in 2002. Even though we have
operated as a corporation for some time, we have a limited operating history,
based upon limited revenues and a lack of profitability. These factors make it
difficult to evaluate our business on the basis of historical operations. As a
consequence, our past results may not be indicative of future results. Although
this is true for any business, it is particularly true for us because of our
limited operating history. Reliance on historical results may hinder our ability
to anticipate and timely adapt to increases or decreases in sales, revenues or
expenses. For example, if we overestimate our future sales for a particular
period or periods based on our historical growth rate, we may increase our
overhead and other operating expenses to a greater degree than we would have if
we correctly anticipated the lower sales level for that period and reduced our
controllable expenses accordingly. If we make poor budgetary decisions as a
result of unreliable historical data, we could continue to incur losses, which
may result in a decline in our stock price.
 
 We
have limited experience as a public company.
 
 We
have only operated as a public company since 2007. Thus, we have limited
experience in complying with the various rules and regulations which are
required of a public company. As a result, we may not be able to operate
successfully as a public company, even if our operations are successful. We plan
to comply with all of the various rules and regulations which are required of a
public company. However, if we cannot operate successfully as a public company,
your investment may be materially adversely affected. Our inability to operate
as a public company could be the basis of your losing your entire investment in
us.
 Our
clients have no obligation to purchase from us, which may result in sudden
declines in sales.
 
 Our
client mix currently consists of approximately ninety percent commercial and
professional business offices, and ten percent high-end residential homes. We do
not have supply agreements or other volume commitments that are binding on our
clients, and our sales originate solely from individual purchase orders that we
negotiate with our individual clients. As a consequence, our clients are not
obligated to purchase any amount of our products and they may choose to stop or
decrease their level of product purchases from us at any time, without giving us
prior notice. This could cause our sales to fluctuate, and we could experience a
sudden and unexpected decline in sales. We could experience unexpected
operational losses if our client sales were to decline significantly without
notice.
 
 We
currently rely upon two clients for a majority of our sales, which means that we
could be severally impacted by the loss of one or both of them.
 
 Our
revenue projections are subject to greater uncertainty than if we had volume
commitments from one or more of our largest clients. Our top client in fiscal
year 2008 accounted for approximately 95 % of our revenues. In fiscal year 2007
our four top clients accounted for approximately 61% of our revenues. We could
be severally impacted by the loss of any of them. As long as we rely upon a few
clients for a majority of our sales, we could be subject to uncertain revenue
results, if we lose a major client. We cannot assure you that these clients, or
any of our clients, will continue to purchase our products in significant
volume, or at all.
  -
8 -
  We
may need to raise additional funds, and these funds may not be available when we
need them.
 
 Based on
our current plans, we have adjusted our operating expenses so that cash
generated from operations and from working capital financing is expected to be
sufficient for the foreseeable future to fund our operations at our currently
forecasted levels. This has not always been the case, since we have had a
history of losses. To try to operate at a break-even level based upon our
current level of anticipated business activity, we believe, based upon our
operating history from 2007,  that we must generate a gross profit on
our revenue of approximately $50,000 per year. However, if our forecasts are
inaccurate, we will need to raise additional funds. On the other hand, we may
choose to scale back our operations to operate at break-even with a smaller
level of business activity, while adjusting our overhead to meet the revenue
from current operations. In addition, we expect that we will need to raise
additional funds if we decide to pursue more rapid expansion, the development of
new or enhanced services and products, appropriate responses to competitive
pressures, or the acquisition of complementary businesses or technologies, or if
we must respond to unanticipated events that require us to make additional
investments. . We cannot assure that additional financing will be available when
needed on favorable terms, or at all. If these funds are not available when we
need them, then we may need to change our business strategy and reduce our rate
of growth.
 We
must effectively manage the growth of our operations, or we may outgrow our
current infrastructure.
 
 As of
December 31, 2008, we had two employees. If we experience rapid growth of our
operations, we could see a backlog of client orders. We can resolve these
capacity issues by hiring additional personnel and upgrading our infrastructure.
However, we cannot guarantee that sufficient additional personnel will be
available or that we will find suitable technology to aid our growth. In any
case, we will continue pursuing additional sales growth for our company.
Expanding our infrastructure will be expensive, and will require us to train our
workforce, and improve our financial and managerial controls to keep pace with
the growth of our operations.
  Because
we are small and do not have much capital, we must limit our operations. A
company in our industry with limited operations has a smaller opportunity to be
successful.
 
 Because
we are small and do not have much capital, we must limit our operations. We must
limit our operations to the State of Colorado as the only geographical area in
which we operate. Because we may have to limit our operations, we may not
generate sufficient sales to make a profit. If we do not make a profit, we may
have to suspend or cease operations.
  -
9 -
  Because
our current officers and directors are involved with other businesses in the
same industry, the manner in which we operate may create the possibility of a
conflict of interest.
 
 All of
our officers and directors are also involved with other businesses in the same
industry. Mr. and Mrs. Sheehan own the Accessory Warehouse, Inc. Mrs. Gregarek
is an independent contractor for interior design work. These other arrangements
could create conflict of interest with respect to our operations. Each of our
officers and directors is aware of their responsibilities with respect to
corporate opportunities and plans to operate our Company in such a manner as to
minimize the effect of any conflict of interest. Each officer and director has
agreed to contract with the Company on the same or better terms and conditions
than each would with unaffiliated third parties and to deal with the public for
interior design work only through the Company. Each of these officers and
directors will use their best judgments to resolve all potential conflicts. The
other related business activities of our officers and directors involve sales
limited to design professionals. We cannot guarantee that any potential
conflicts can be avoided.
  Our
success will be dependent upon our management.
 
 Our
success will be dependent upon the decision making of our directors and
executive officers. These individuals intend to commit as much time as necessary
to our business, but this commitment is no assurance of success. The loss of any
or all of these individuals, particularly Mr. and Mrs. Sheehan, could have a
material, adverse impact on our operations. We have no written employment
agreements with any officers and directors, including Mr. and Mrs. Sheehan. We
have not obtained key man life insurance on the lives of any of these
individuals.
 
 We
face substantial competition from numerous sources, many of which have access to
better resources.
 
 Competition
in sale of art work and interior design services is intense. We compete with a
diverse group of competitors ranging from internet businesses to traditional
brick-and-mortar companies, many of which have greater resources than we do. We
believe that barriers to entry in this business are not significant and start-up
costs are relatively low, so our competition may increase in the future. Our
belief that there are minimal barriers to entry is based on our observation that
operations such as ours do not require the ownership of warehouses, showrooms or
factories to operate, which we think is because (i) our direct ship business can
be operated with minimal warehousing needs and costs, which are significantly
less than traditional models, (ii) wholesale product orders can be placed after
receipt of client orders, in order to further reduce warehousing needs, (iii)
samples can be shown to clients at little or no cost, without the necessity of
showroom space for actual product, (iv) if a competitor wants showroom space, it
is typically available for lease at competitive rates in most United States
markets, and (v) all manufacturing can be done by third party suppliers, so
there is no need to own or lease a manufacturing facility. New competitors may
be able to launch new businesses similar to ours, and current competitors
may replicate our business model, at a relatively low cost. If competitors
with significantly greater resources than ours decide to replicate our business
model, they may be able to quickly gain recognition and acceptance of their
business methods, products and services through marketing and promotion. We may
not have the resources to compete effectively with current or future
competitors. If we are unable to effectively compete, we will lose sales to our
competitors and our revenues will decline.
  -
10 -
  Our
directors have the ability to significantly influence any matters to be decided
by the stockholders, which may prevent or delay a change in control of our
company.
 
 The
current members of our Board of Directors beneficially own, in the aggregate,
approximately 78.5% of our common stock, on a fully diluted basis. As a result,
if they choose to vote in concert, our directors are collectively able to
significantly influence the outcome of any corporate matters submitted to our
stockholders for approval, including any transaction that might cause a change
in control, such as a merger or acquisition. It is unlikely that stockholders in
favor of a matter, which is opposed by the Board of Directors, would be able to
obtain the number of votes necessary to overrule the vote of the Board of
Directors. Further, the control by the directors means that they may make
decisions for us with which you may disagree or that you may feel is not in our
best interests.
 
 We
may need to substantially increase our marketing efforts in order to grow our
business, which is expensive.
 
 In order
to grow our business, we will need to develop and maintain widespread
recognition and acceptance of our company, our business model, our services and
our products. We believe that we have presented our service and product offering
to only a small percentage of the potential market. Currently, we rely primarily
on word of mouth from our existing clients and contacts we develop personally
through industry events to promote and market ourselves. In order to
successfully grow our company, we may need to significantly increase our
financial commitment to creating awareness and acceptance of our company among
retailers, which would be expensive. In fiscal year 2006, marketing and
advertising expenses were negligible. If we fail to successfully market and
promote our business, we could lose current clients to our competitors, or our
growth efforts may be ineffective. If we incur significant expenses promoting
and marketing ourselves, it could cause our profitability to
decline.
 
 Our
business is not diversified, which could result in significant fluctuations in
our operating results.
 
 All of
our business is involved in the marketing of art work products and interior
design services, and, accordingly, is dependent upon trends in the interior
design sector. Downturns in the interior design sector could have a material
adverse effect on our business. A downturn in the interior design sector may
reduce our stock price, even if our business is successful.
 
 Risks
Associated With our Securities.
  Buying
low-priced penny stocks is very risky and speculative.
 
 Our
common stock is defined as a penny stock under the Securities and Exchange Act
of 1934, and rules of the Commission. The Exchange Act and such penny stock
rules generally impose additional sales practice and disclosure requirements on
broker-dealers who sell our securities to persons other than certain accredited
investors who are, generally, institutions with assets in excess of $5,000,000
or individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 jointly with spouse, or in transactions not recommended by
the broker-dealer. For transactions covered by the penny stock rules, a
broker-dealer must make a suitability determination for each purchaser and
receive the purchaser's written agreement prior to the sale. In addition, the
broker-dealer must make certain mandated disclosures in penny stock
transactions, including the actual sale or purchase price and actual bid and
offer quotations, the compensation to be received by the broker-dealer and
certain associated persons, and deliver certain disclosures required by the
Commission. Consequently, the penny stock rules may affect the ability of
broker-dealers to make a market in or trade our common stock and may also affect
your ability to resell any shares you may purchase in the public
markets.
  -
11 -
  Our common stock currently has no
trading market and thereis no guarantee a trading market will
ever develop for our securities.
 
 There is
presently no demand for our common stock. While we do intend to apply for
quotation in the Over-the-Counter Bulletin Board, we cannot guarantee that our
application will be approved and our stock listed and quoted for sale. If no
market is ever developed for our common stock, it will be difficult for you to
sell any shares you purchase. In such a case, you may find that you are unable
to achieve any benefit from your investment or liquidate your shares without
considerable delay, if at all. In addition, if we fail to have our common stock
quoted on a public trading market, your common stock will not have a
quantifiable value and it may be difficult, if not impossible, to ever resell
your shares, resulting in an inability to realize any value from your
investment.
  The
over-the-counter market for stock such as ours has had extreme price and volume
fluctuations.
 
 The
securities of companies such as ours have historically experienced extreme price
and volume fluctuations during certain periods. These broad market fluctuations
and other factors, such as new product developments and trends in the our
industry and in the investment markets generally, as well as economic conditions
and quarterly variations in our operational results, may have a negative effect
on the market price of our common stock.
  All
of our common stock is restricted but could become eligible for resale under
Rule 144; this could cause the market price of our common stock to drop
significantly, even if our business is doing well.
 
 Of our
total outstanding shares, 10,300,000 or approximately 95% are restricted from
immediate resale but may now be sold into the market subject to volume and
manner of sale limitations under Rule 144. This could cause the market price of
our common stock to drop significantly, even if our business is doing well. We
have outstanding 10,820,600 shares of common stock outstanding at March 25,
2009. This includes the common shares which we sold to the public in our recent
public offering, which may be resold in the public market
immediately.
 
 As
restrictions on resale end, the market price of our stock could drop
significantly if the holders of restricted shares sell them or are perceived by
the market as intending to sell them.
 
 We
do not expect to pay dividends on common stock.
 
 We have
not paid any cash dividends with respect to our common stock, and it is unlikely
that we will pay any dividends on our common stock in the foreseeable future.
Earnings, if any, that we may realize will be retained in the business for
further development and expansion.
 
 
 ITEM
2. DESCRIPTION OF PROPERTY.
 
 We
currently own various items of office equipment. We rent office and production
space under a verbal month to month lease at a cost of $500 per month from
Accessory Warehouse, an entity owned by Kathy and Todd Sheehan, who are our
principal shareholders. This office and production space is located at 3636 S.
Jason, Englewood, Colorado 80113. We currently carry no inventory and have no
other property. We own no real estate nor have plans to acquire any real
estate.
   -
12 -
  ITEM
3. LEGAL PROCEEDINGS.
 
 We are
not a party to any material legal proceedings, nor is our property the subject
of any material legal proceeding.
  
 ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
 We held
no shareholders meeting in the fourth quarter of our fiscal year.
 
 
 PART
II
 
 ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
 
 Holders
  As of
March 25, 2009, we had a total of 10,820,600 shares of our Common Stock
outstanding. The number of holders of record of our common stock at that date
was one hundred.
 
 Market
Information
  The
following table sets forth the high and low closing bid prices of our common
stock on for the periods indicated in 2008. We began trading in January,
2008.
 Closing
      Bid Price2008
                          
                          High
                          
                          
                          LowFirst
      Quarter
                          
                          $
                          .25
                          
                          
                          $
                          .05Second
      Quarter
                          
                          $
                          .25
                          
                          
                          $
                          .05Third
      Quarter
                          
                          $
                          .25
                          
                          
                          $
                          .05Fourth
      Quarter
                          
                          $
                          .25
                          
                          
                          $
                          .05
 
 Our common stock currently trades on the
Over-the-Counter Bulletin Board under the trading symbol ATDN. The bid quotation
for our common stock as of March 24, 2009 was $.10.
 
 Dividend
Policy
 
 Holders
of common stock are entitled to receive such dividends as may be declared by our
Board of Directors. No dividends on the common stock were paid by us during the
periods reported herein nor do we anticipate paying dividends in the foreseeable
future.
 
 Equity
Compensation Plan Information
 
 We have
no outstanding stock options or other equity compensation plans.
  -
13 -
  The
Securities Enforcement and Penny Stock Reform Act of 1990
 
 The
Securities Enforcement and Penny Stock Reform Act of 1990 requires additional
disclosure and documentation related to the market for penny stock and for
trades in any stock defined as a penny stock. Unless we can acquire substantial
assets and trade at over $5.00 per share on the bid, it is more likely than not
that our securities, for some period of time, would be defined under that Act as
a "penny stock." As a result, those who trade in our securities may be required
to provide additional information related to their fitness to trade our shares.
These requirements present a substantial burden on any person or brokerage firm
who plans to trade our securities and would thereby make it unlikely that any
liquid trading market would ever result in our securities while the provisions
of this Act might be applicable to those securities.
 
 Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
 
 The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, to deliver a standardized risk disclosure
document prepared by the Commission, which:
 
 -
              contains
      a description of the nature and level of risk in the market for penny
      stocks in both public offerings and secondary trading;-
              contains
      a description of the broker's or dealer's duties to the customer and of
      the rights and remedies available to the customer with respect to a
      violation to such duties or other requirements of the Securities Act of
      1934, as amended;-
              contains
      a brief, clear, narrative description of a dealer market, including "bid"
      and "ask" prices for penny stocks and the significance of the spread
      between the bid and ask price;-
              contains
      a toll-free telephone number for inquiries on disciplinary
      actions;
 -
              defines
      significant terms in the disclosure document or in the conduct of trading
      penny stocks; and-
              contains
      such other information and is in such form (including language, type, size
      and format) as the Securities and Exchange Commission shall require by
      rule or regulation;
 
 The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, to the customer:
 
 -
              the
      bid and offer quotations for the penny
stock;
 
 -
              the
      compensation of the broker-dealer and its salesperson in the
      transaction;
 
 -
              the
      number of shares to which such bid and ask prices apply, or other
      comparable information relating to the depth and liquidity of the market
      for such stock; and
 
 -
              monthly
      account statements showing the market value of each penny stock held in
      the customer's account.
 
  -
14 -
  In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
their securities.
 
 Stock
Transfer Agent
 
 The stock
transfer agent for our securities is Corporate Stock Transfer of Denver,
Colorado.  Their address is 3200 Cherry Creek Drive South, Suite 430,
Denver, Colorado 80209. Their phone number is (303)282-4800.
 
 
 ITEM
6. SELECTED FINANCIAL DATA
 
 A smaller
reporting company is not required to provide the information in this
Item.
 
 
 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 Certain
statements in this Management’s Discussion and Analysis of Financial Condition
and Results of Operations that are not historical facts are forward-looking
statements such as statements relating to future operating results, existing and
expected competition, financing and refinancing sources and availability and
plans for future development or expansion activities and capital expenditures.
Such forward-looking statements involve a number of risks and uncertainties that
may significantly affect our liquidity and results in the future and,
accordingly, actual results may differ materially from those expressed in any
forward-looking statements. Such risks and uncertainties include, but are not
limited to, those related to effects of competition, leverage and debt service
financing and refinancing efforts, general economic conditions, and changes in
applicable laws or regulations. The following discussion and analysis should be
read in conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this report.
 
 Critical
Accounting Policies
 
 We have
identified the following policies below as critical to our business and results
of operations. For further discussion on the application of these and other
accounting policies, see Note 1 to the accompanying audited financial statements
for the year ended December 31, 2007, included elsewhere in this document. Our
reported results are impacted by the application of the following accounting
policies, certain of which require management to make subjective or complex
judgments. These judgments involve making estimates about the effect of matters
that are inherently uncertain and may significantly impact quarterly or annual
results of operations. For all of these policies, management cautions that
future events rarely develop exactly as expected, and the best estimates
routinely require adjustment. Specific risks associated with these critical
accounting policies are described in the following paragraphs.
  -
15 -
  Use
of Estimates in the Preparation of Financial Statements
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
 
 Results
of Operations
 
 We have a
history of losses. Furthermore, our losses may continue into the future. We have
never had a profitable fiscal year, including the fiscal year ended December 31,
2008.
 
 We have
had declining revenues for some reporting periods but had an increase in
revenues for the fiscal year ended December 31, 2008. The changes in revenues
from year to year have been a direct result of our marketing efforts, or lack
thereof, and the number of clients and projects we generate.
 
 Our
accountants have expressed doubt about our ability to continue as a going
concern as a result of our continued net losses. Our ability to achieve and
maintain profitability and positive cash flow is dependent upon our ability to
locate clients who will purchase our products and use our services and our
ability to generate revenues.
 
 Comparing
our operations, we had sales-net of returns of $153,164 for the twelve months
ended December 31, 2008. This compares with sales-net of returns of $80,265 for
the twelve months ended December 31, 2007. We had an increase in the number of
projects, which was the basis for our increase in sales.
 
 Our costs
of goods for the twelve months ended December 31, 2008 was $150,042, or
approximately 97.9% of sales-net of returns. Our costs of goods for the fiscal
year ended December 31, 2007 was $57,932, or approximately 72.2% of sales-net of
returns. Costs of goods sold include all direct costs incurred in selling
products. We do not separate sales of different product lines into operating
segments.
 
 The
difference between total sales-net of returns and costs of goods is gross
profit. Our gross profit for the twelve months ended December 31, 2008 was
$3,122. This compares with gross profit for the fiscal year ended December 31,
2007 was $22,333. Our higher percentage in cost of goods resulted in a lower
percentage gross profit for 2008, compared to 2007.
 
 To the
extent that we market more products and fewer consulting services in connection
with our sales, our cost of goods is a much larger factor, which tends to reduce
our gross profitability. We make a higher gross profit from our consulting
services than from our product sales. In addition, some product sales have
higher profit margins. Our lower gross profit in 2008 is a reflection of both
lower profit margins on product and fewer consulting services as a part of
overall sales.
 
 Operating
expenses, which includes depreciation and general and administrative expenses
for the twelve months ended December 31, 2008 was $57,115. This compares to
operating expenses for the twelve months ended December 31, 2007 of $54,187. The
major components of operating expenses include professional fees, salaries and
associated payroll costs, rent and telephone expenses.
  -
16 -
  We
believe that operating expenses in current operations should remain fairly
constant as product sales and consulting services improve. Each additional sale
or service and correspondingly the gross profit of such sale or service have
minimal offsetting operating expenses. Thus, additional sales could become
profit at a higher return on sales rate as a result of not needing to expand
operating expenses at the same pace.
 
 We had a
net loss of $53,993 for the twelve months ended December 31, 2008. This compares
with a net loss of $31,854 for the fiscal year ended December 31,
2007.
 
 Based
upon our current plans, we have adjusted our operating expenses so that cash
generated from operations and from working capital is expected to be sufficient
for the foreseeable future to fund our operations at our currently forecasted
levels. This has not always been the case, since we have had a history of
losses. To try to operate at a break-even level based upon our current level of
anticipated business activity, we believe , based upon our operating history
from 2007,  that we must generate approximately a gross profit on our
revenue of approximately $50,000 per year. However, if our forecasts are
inaccurate, we will need to raise additional funds. On the other hand, we may
choose to scale back our operations to operate at break-even with a smaller
level of business activity, while adjusting our overhead to meet the revenue
from current operations. In addition, we expect that we will need to raise
additional funds if we decide to pursue more rapid expansion, the development of
new or enhanced services and products, appropriate responses to competitive
pressures, or the acquisition of complementary businesses or technologies, or if
we must respond to unanticipated events that require us to make additional
investments. We cannot assure that additional financing will be available when
needed on favorable terms, or at all.
 
 We may
incur operating losses in future periods because we will be incurring expenses
and not generating sufficient revenues. Historically, this has been our
experience. We expect approximately $50,000 in operating costs over the next
twelve months. We cannot guarantee that we will be successful in generating
sufficient revenues or other funds in the future to cover these operating costs.
We have been relying upon the funds from our 2007 public offering to make up for
shortfalls in our operations. Failure to generate sufficient revenues or
additional financing when needed could cause us to go out of
business.
  Liquidity
and Capital Resources
 
 As of
December 31, 2008, we had cash or cash equivalents of $80,390, compared to
$112,664 as of December 31, 2007.
 
 Net cash
used for operating activities was $32,274 for the period ended December 31,
2008, compared to $27,839  for the period ended December 31, 2007. We
anticipate that overhead costs in current operations will remain fairly constant
as sales improve.
 
 Cash
flows used by investing activities were $-0-for the period ended December 31,
2008 and 2007.
 
 Cash
flows provided by financing activities accounted for $-0- for the period ended
December 31, 2008 compared to $109,330 for the period ended December 31, 2007.
These cash flows were all related to sales of stock and deferred offering costs
for both periods.
 
 To date
our public offering in 2007 has  provided sufficient capital for our
current level of operations. It is our plan to become profitable in our
operations before we need additional capital, although we cannot guarantee that
we will do so. If we open additional locations, additional resources will be
needed. However, we have no plans to open additional locations at this
time.
 
 -
17 -
  We do not
anticipate needing to raise additional capital resources in the next twelve
months.
 Until
current operations become cash flow positive, our officers and directors may be
required to fund the operations to continue the business. At this time, other
than our cash, we have no other resources on which to get cash if needed without
their assistance.
 
 Our
principal source of liquidity is our operations. Our variation in revenues is
based upon the level of our sales activity and will account for the difference
between a profit and a loss. Also business activity is closely tied to the
economy of Denver and the U.S. economy. The slow down in the Denver and the U.S.
economy has not significantly decreased our interior design work. However, our
revenues have not grown, which we attribute to the slowdown in the Denver and
the U.S. economy. We believe that as the Denver and the U.S. economy recover, we
will have the opportunity to develop greater revenues, such that we can operate
at a break even or even a profit. In any case, we try to operate with minimal
overhead. Our primary activity will be to seek to expand the interior design
projects and, consequently, our sales. If we succeed in expanding our client
base and generating sufficient sales, we will become profitable. We cannot
guarantee that this will ever occur. Our plan is to build our company in any
manner which will be successful.
 
 Plan
of Operation
 
 Our plan
for the next twelve months is to operate at a profit or at break even, although
we have a history of losses. Our plan is to attract sufficient additional
product sales and services within our present organizational structure and
resources to become profitable in our operations.
 Currently,
we are conducting business in only one location in the Denver Metropolitan area.
We have no plans to expand into other locations or areas. The timing of the
completion of the milestones needed to become profitable are not directly
dependent on the success of our public offering. We believe that we can achieve
profitability as we are presently organized with sufficient
business.
 Other
than the shares offered by our 2007 public offering, no other source of capital
has been identified or sought.
 If we are
not successful in our operations we will be faced with several
options:
 
 1.
                Cease
      operations and go out of business;
 
 2.
                Continue
      to seek alternative and acceptable sources of
  capital;
 
 3.
                Bring
      in additional capital that may result in a change of control;
      or
 
 4.
                Identify
      a candidate for acquisition that seeks access to the public marketplace
      and its financing sources.
 
 Currently,
we have sufficient capital to implement our proposed business operations or to
sustain them for the next twelve months. If we can become profitable, we could
operate at our present level indefinitely.
 
 To date,
we have never had any discussions with any possible acquisition candidate.
However, if we cannot operate our business in a profitable manner, we may seek
other opportunities, including, but not limited to, one or more
acquisitions.
  -
18 -
  Proposed
Milestones to Implement Business Operations
  At the
present time, we are operating from one location in the Denver Metropolitan
area.
 We
believe that we can be profitable or at break even by the end of the current
fiscal year, assuming sufficient sales. Based upon our current plans, we have
adjusted our operating expenses so that cash generated from operations and from
working capital financing is expected to be sufficient for the foreseeable
future to fund our operations at our currently forecasted levels. This has not
always been the case, since we have had a history of losses. To try to operate
at a break-even level based upon our current level of anticipated business
activity, we believe, based upon our operating history from
2007,  that we must generate a gross profit on our revenue of
approximately $50,000 per year. However, if our forecasts are inaccurate, we
will need to raise additional funds. On the other hand, we may choose to scale
back our operations to operate at break-even with a smaller level of business
activity, while adjusting our overhead to meet the revenue from current
operations. In addition, we expect that we will need to raise additional funds
if we decide to pursue more rapid expansion, the development of new or enhanced
services and products, appropriate responses to competitive pressures, or the
acquisition of complementary businesses or technologies, or if we must respond
to unanticipated events that require us to make additional investments. We
cannot assure that additional financing will be available when needed on
favorable terms, or at all.
 We expect
to incur operating losses in future periods because we will be incurring
expenses and not generating sufficient revenues. We expect approximately  $50,000 in operating costs over the next twelve
months. We cannot guarantee that we will be successful in generating sufficient
revenues or other funds in the future to cover these operating costs. Failure to
generate sufficient revenues or additional financing when needed could cause us
to go out of business
  No
commitments to provide additional funds have been made by management or current
shareholders. There is no assurance that additional funds will be made available
to us on terms that will be acceptable, or at all, if and when needed. We expect
to continue to generate and increase sales, but there can be no assurance we
will generate sales sufficient to continue operations or to expand.
 
 We also
are planning to rely on the possibility of referrals from clients and will
strive to satisfy our clients. We believe that referrals will be an effective
form of advertising because of the quality of service that we bring to clients.
We believe that satisfied clients will bring more and repeat clients. In the
next 12 months, we do not intend to spend any funds on research and development
and do not intend to purchase any large equipment.
 
 Recently
Issued Accounting Pronouncements
 
 We do not
expect the adoption of any recently issued accounting pronouncements to have a
significant impact on our net results of operations, financial position, or cash
flows.
 
 Seasonality
 
 We do not
expect our sales to be impacted by seasonal demands for our products and
services.
 
 Trends
 
 There are
no known trends, events or uncertainties that have had or that are reasonably
expected to have a material impact on the net sales or revenues or income from
our proposed operations. Our management has not made any commitments, which will
require any material financial resources.
  -
19 -
  ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
 
 A smaller
reporting company is not required to provide the information in this
Item.
 
 
 ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
   ART
DESIGN, INC.
 
 CONSOLIDATED
FINANCIAL STATEMENTS
 
 with
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
  December
31, 2007 and 2008
 
 
 -
20 -
 
 ART
DESIGN, INC.
 Consolidated
Financial Statements
 
 
 
 TABLE
OF CONTENTS
 
 
 
 PageREPORT
      OF INDEPENDENT REGISTEREDPUBLIC
      ACCOUNTING FIRM
                            22CONSOLIDATED
      FINANCIAL STATEMENTSConsolidated balance
      sheets
                            23Consolidated statements of
      operations
                            24Consolidated statements of
      stockholders’ equity
                            25Consolidated statements of cash
      flows
                            26Notes to consolidated financial
      statements
                            28
 
  -
21 -
  RONALD R.
CHADWICK, P.C.
 Certified
Public Accountant
 2851
South Parker Road, Suite 720
 Aurora,
Colorado  80014
 Telephone
(303)306-1967
 Fax
(303)306-1944
 
 
 
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 Board of
Directors
 Art
Design, Inc.
 Englewood,
Colorado
 
 I have
audited the accompanying consolidated balance sheets of Art Design, Inc. as of
December 31, 2007 and 2008, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
 
 I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  I believe that my audit provides a
reasonable basis for my opinion.
 
 In my
opinion, the consolidated financial statements referred to above present fairly,
in all material  respects, the consolidated financial position of Art
Design, Inc. as of December 31, 2007 and 2008, and the consolidated results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of
America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 6 to the
financial statements the Company has suffered recurring losses from operations
and has a working capital deficitthat raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 6. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 Aurora,
Colorado                                                                                             /s/   Ronald R. Chadwick,
P.C.
 March 24,
2009                                                                                                RONALD
R. CHADWICK, P.C.
 
 -
22 -
 
 
 ART
      DESIGN, INC.CONSOLIDATED
      BALANCE SHEETSDec.
      31, 2007
                                                
                                                
                                                Dec.
      31, 2008ASSETSCurrent
      assetsCash
                                                
                                                $
                                                112,664
                                                
                                                
                                                $
                                                80,390Accounts
      receivable
                                                
                                                
                                                19,230
                                                
                                                
                                                
                                                223Total current
      assets
                                                
                                                
                                                131,894
                                                
                                                
                                                
                                                80,613Accounts
      receivable - related party
                                                
                                                
                                                7,290Fixed
      assets
                                                
                                                
                                                13,269
                                                
                                                
                                                
                                                13,269Less
      accumulated depreciation
                                                
                                                
                                                (11,234
                                                )
                                                
                                                
                                                (11,654
                                                )Other
      assets
                                                
                                                
                                                2,759
                                                
                                                
                                                
                                                -12,084
                                                
                                                
                                                
                                                1,615Total
      Assets
                                                
                                                $
                                                143,978
                                                
                                                
                                                $
                                                82,228LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                                                
                                                $
                                                984
                                                
                                                
                                                $
                                                -Accounts payable -
      related party
                                                
                                                
                                                29,135
                                                
                                                
                                                
                                                309Note
      payable - related party
                                                
                                                
                                                34,201
                                                
                                                
                                                
                                                34,201Total current
      liabilties
                                                
                                                
                                                64,320
                                                
                                                
                                                
                                                34,510Total
      Liabilities
                                                
                                                
                                                64,320
                                                
                                                
                                                
                                                34,510Stockholders'
      EquityPreferred
      stock, $.10 par value;1,000,000
      shares authorized;No
      shares issued & outstanding
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Common
      stock, $.001 par value;50,000,000
      shares authorized;10,820,600
      sharesissued
      & outstanding
                                                
                                                
                                                10,821
                                                
                                                
                                                
                                                10,821Additional
      paid in capital
                                                
                                                
                                                163,165
                                                
                                                
                                                
                                                185,218Accumulated
      deficit
                                                
                                                
                                                (94,328
                                                )
                                                
                                                
                                                (148,321
                                                )Total
      Stockholders' Equity
                                                
                                                
                                                79,658
                                                
                                                
                                                
                                                47,718Total
      Liabilities and Stockholders' Equity
                                                
                                                $
                                                143,978
                                                
                                                
                                                $
                                                82,228
  The
accompanying notes are an integral part of the consolidated financial
statements.
  -
23 -
  
 ART
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF OPERATIONSYear
      Ended
                                                  
                                                  
                                                  Year
      EndedDec.
      31, 2007
                                                  
                                                  
                                                  Dec.
      31, 2008Sales
      - net of returns
                                                  
                                                  $
                                                  80,265
                                                  
                                                  
                                                  $
                                                  153,164Cost
      of goods sold
                                                  
                                                  
                                                  57,932
                                                  
                                                  
                                                  
                                                  150,042Gross
      profit
                                                  
                                                  
                                                  22,333
                                                  
                                                  
                                                  
                                                  3,122Operating
      expenses:Amortization
      & depreciation
                                                  
                                                  
                                                  1,776
                                                  
                                                  
                                                  
                                                  420General
      and administrative
                                                  
                                                  
                                                  52,411
                                                  
                                                  
                                                  
                                                  56,69554,187
                                                  
                                                  
                                                  
                                                  57,115Gain
      (loss) from operations
                                                  
                                                  
                                                  (31,854
                                                  )
                                                  
                                                  
                                                  (53,993
                                                  )Other
      income (expense):-
                                                  
                                                  
                                                  
                                                  --
                                                  
                                                  
                                                  
                                                  -Income
      (loss) beforeprovision
      for income taxes
                                                  
                                                  
                                                  (31,854
                                                  )
                                                  
                                                  
                                                  (53,993
                                                  )Provision
      for income tax
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Net
      income (loss)
                                                  
                                                  $
                                                  (31,854
                                                  )
                                                  
                                                  $
                                                  (53,993
                                                  )Net
      income (loss) per share(Basic
      and fully diluted)
                                                  
                                                  $
                                                  (0.00
                                                  )
                                                  
                                                  $
                                                  (0.01
                                                  )Weighted
      average number ofcommon
      shares outstanding
                                                  
                                                  
                                                  10,603,683
                                                  
                                                  
                                                  
                                                  10,603,683
 
 The
accompanying notes are an integral part of the consolidated financial
statements.
  -
24 -
  
 ART
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITYCommon
      Stock
                                
                                
                                
                                
                                
                                
                                
                                
                                Stock-Amount
                                
                                
                                Paid
      in
                                
                                
                                Accumulated
                                
                                
                                holders'Shares
                                
                                
                                ($.001
      Par)
                                
                                
                                Capital
                                
                                
                                Deficit
                                
                                
                                EquityBalances
      at December 31, 2006
                                
                                
                                10,300,000
                                
                                
                                $
                                10,300
                                
                                
                                $
                                72,899
                                
                                
                                $
                                (62,474
                                )
                                
                                $
                                20,725Issuance
      of stock for cash - net
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                -of
      deferred offering costs of$24,543
      in 2006 and $20,820in
      2007 - $45,363 total
                                
                                
                                520,600
                                
                                
                                
                                521
                                
                                
                                
                                84,266
                                
                                
                                
                                
                                
                                
                                
                                84,787Donated
      services - officer
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                6,000
                                
                                
                                
                                
                                
                                
                                
                                6,000Gain
      (loss) for the period
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (31,854
                                )
                                
                                
                                (31,854
                                )Balances
      at December 31, 2007
                                
                                
                                10,820,600
                                
                                
                                $
                                10,821
                                
                                
                                $
                                163,165
                                
                                
                                $
                                (94,328
                                )
                                
                                $
                                79,658Related
      party debt relief
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                16,646
                                
                                
                                
                                
                                
                                
                                
                                16,646Donated
      services - officer
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                2,000
                                
                                
                                
                                
                                
                                
                                
                                2,000Warrant
      issuances - subsidiary
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                3,407
                                
                                
                                
                                
                                
                                
                                
                                3,407Gain
      (loss) for the period
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (53,993
                                )
                                
                                
                                (53,993
                                )Balances
      at December 31, 2008
                                
                                
                                10,820,600
                                
                                
                                $
                                10,821
                                
                                
                                $
                                185,218
                                
                                
                                $
                                (148,321
                                )
                                
                                $
                                47,718
 
 The
accompanying notes are an integral part of the consolidated financial
statements.
  -
25 -
  
 ART
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSYear
      Ended
                                          
                                          
                                          Year
      EndedDec.
      31, 2007
                                          
                                          
                                          Dec.
      31, 2008Cash
      Flows From Operating Activities:Net
      income (loss)
                                          
                                          $
                                          (31,854
                                          )
                                          
                                          $
                                          (53,993
                                          )Adjustments
      to reconcile net loss tonet
      cash provided by (used for)operating
      activities:Amortization
      & depreciation
                                          
                                          
                                          1,776
                                          
                                          
                                          
                                          420Donated
      services
                                          
                                          
                                          6,000
                                          
                                          
                                          
                                          5,407Accounts
      receivable
                                          
                                          
                                          (10,950
                                          )
                                          
                                          
                                          26,297Accrued
      payables - related party
                                          
                                          
                                          8,964
                                          
                                          
                                          
                                          (12,489
                                          )Accrued
      payables
                                          
                                          
                                          984
                                          
                                          
                                          
                                          (675
                                          )Other
      assets
                                          
                                          
                                          (2,759
                                          )
                                          
                                          
                                          2,759Net cash provided by (used
      for)operating
      activities
                                          
                                          
                                          (27,839
                                          )
                                          
                                          
                                          (32,274
                                          )Cash
      Flows From Investing Activities:-
                                          
                                          
                                          
                                          -Net
      cash provided by (used for)investing
      activities
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -(Continued
      On Following Page)
  The
accompanying notes are an integral part of the consolidated financial
statements.
  -
26 -
  
 ART
      DESIGN, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS(Continued
      From Previous Page)Year
      Ended
                                        
                                        
                                        Year
      EndedDec.
      31, 2007
                                        
                                        
                                        Dec.
      31, 2008Cash
      Flows From Financing Activities:Deferred
      offering costs
                                        
                                        
                                        (20,820
                                        )
                                        
                                        
                                        -Issuance
      of common stock
                                        
                                        
                                        130,150
                                        
                                        
                                        
                                        -Net cash provided by (used
      for)financing
      activities
                                        
                                        
                                        109,330
                                        
                                        
                                        
                                        -Net
      Increase (Decrease) In Cash
                                        
                                        
                                        81,491
                                        
                                        
                                        
                                        (32,274
                                        )Cash
      At The Beginning Of The Period
                                        
                                        
                                        31,173
                                        
                                        
                                        
                                        112,664Cash
      At The End Of The Period
                                        
                                        $
                                        112,664
                                        
                                        
                                        $
                                        80,390Schedule of Non-Cash Investing and Financing
      ActivitiesIn
      2008 a Company officer donated $16,646 in receivables and $2,000
      inservices
      to Company capital.Supplemental DisclosureCash
      paid for interest
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -Cash
      paid for income taxes
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
 
 The
accompanying notes are an integral part of the consolidated financial
statements.
  -
27 -
  
 
 ART
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2007 and 2008
 
 
 NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 Art
Design, Inc. (the “Company”), was incorporated in the State of Colorado on
January 16, 2002. The Company sells art work and interior decorating to
professional and business offices.
 
 Principles of
consolidation
 
 The
accompanying consolidated financial statements include the accounts of Art
Design, Inc. and its wholly owned subsidiary. All intercompany accounts and
transactions have been eliminated in consolidation.
 
 Use of
Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
 
 Cash and cash
equivalents
 
 The
Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
 
 Accounts
receivable
 
 The
Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary. At December 31, 2007 and 2008 the Company had no balance in
its allowance for doubtful accounts.
 
 Property and
equipment
 
 Property
and equipment are recorded at cost and depreciated under accelerated methods
over each item's estimated useful life.
 
 Revenue
recognition
 
 Revenue
is recognized on an accrual basis as earned under contract terms, generally when
ordered products are shipped, and any corresponding consulting and design
services have been rendered.
 
  -
28 -
  ART
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2007 and 2008
 
 NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES  (Continued):
 
 Advertising
costs
 
 Advertising
costs are expensed as incurred. The Company had no advertising costs in 2007 or
2008.
 
 Income
tax
 
 The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (“SFAS 109”). Under SFAS 109 deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
 
 Net income (loss) per
share
 
 The net
income (loss) per share is computed by dividing the net income (loss) by the
weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
 
 Financial
Instruments
 
 The
carrying value of the Company’s financial instruments, as reported in the
accompanying balance sheets, approximates fair value.
 
 Long-Lived
Assets
 
 In
accordance with Statement of Financial Accounting Standard 144 “Accounting for
the Impairment or Disposal of Long-Lived Assets”, the Company regularly reviews
the carrying value of intangible and other long-lived assets for the existence
of facts or circumstances, both internally and externally, that may suggest
impairment. If impairment testing indicates a lack of recoverability, an
impairment loss is recognized by the Company if the carrying amount of a
long-lived asset exceeds its fair value.
  -
29 -
  
 ART
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2007 and 2008
  
 
 NOTE
1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES  (Continued):
 
 Products and services,
geographic areas and major customers
 
 The
Company earns revenue from the sale of art products and design services, but
does not separate sales of different product lines into operating segments. The
Company does not separately report revenue from art products versus that from
design and consulting services, as both are generally sold to the customer as
part of a complete package, making separation impractical. All sales each year
were domestic and to external customers.
 
 NOTE
2. RELATED PARTY TRANSACTIONS
 
 The
Company has a note payable to a Company officer. The note is unsecured and
payable upon demand. The note bears interest at 8% per annum if not paid
promptly upon demand. The outstanding principal balance on the note was $34,201
at December 31, 2007 and 2008.
 
 The
Company purchases materials from and pays occasional operating expenses to
a  company related through common control. Cost of goods sold incurred
from the related company was $45,985 and $150,042 in 2007 and 2008. The Company
had related party payables at December 31, 2007 and 2008 of $29,135 and $309 for
materials, services and rent advanced to the Company.
 
 The
Company also recorded compensation expense of $500 per month in 2007 for
administrative and management services donated to the Company by an officer.
Total donated services compensation expense for 2007 was $6,000.
 
 NOTE
3. INCOME TAXES
 
 Deferred
income taxes arise from the temporary differences between financial statement
and income tax recognition of net operating losses. These loss carryovers are
limited under the Internal Revenue Code should a significant change in ownership
occur.
 
 At
December 31, 2007 and 2008 the Company had net operating loss carryforwards of
approximately $21,000 and $71,000 which begin to expire in 2026. The deferred
tax asset of $4,200 and $14,000 created by the net operating loss has been
offset by a 100% valuation allowance. The change in the valuation allowance in
2007 and 2008 was $4,000 and $10,000.
  -
30 -
  
 ART
DESIGN, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2007 and 2008
 
 
 NOTE
4. FIXED ASSETS
 
 Fixed asset values recorded at cost are
as follows:
 2007
                              
                              
                              2008Furniture
      &
      Fixtures
                              
                              $
                              2,560
                              
                              
                              $
                              2,560Computers
                              
                              
                              6,511
                              
                              
                              
                              6,511Leasehold
      Improvements
                              
                              
                              4,198
                              
                              
                              
                              4,19813,269
                              
                              
                              
                              13,269Less
      accumulated
      depreciation
                              
                              
                              (11,234
                              )
                              
                              
                              (11,654
                              )Total
                              
                              $
                              2,035
                              
                              
                              $
                              1,615
 
 Depreciation
expense in 2007 and 2008 was $1,776 and $420.
 
 
 NOTE
5. OTHER MATTERS
 
 During
2008 the Company’s subsidiary Art Dimensions, Inc., granted 350,000 common stock
warrants to two entities including 300,000 to a related party, allowing the
holder to purchase one share of common stock of Art Dimensions, Inc. per
warrant, exercisable immediately at a price of $0.001 per share with the warrant
terms expiring in 2013. As of December 31, 2008 all of these warrants remained
outstanding. The fair value of these warrant grants were estimated on the date
of grant using the Black-Scholes option pricing model with the following
assumptions: risk free interest rate of 3.52%, dividend yield of 0%, expected
life of 5 years, volatility of 142%. The Company recorded total compensation
expense under the warrant issuances of $3,407 in 2008. Art Design, Inc. has
filed a registration statement with the SEC to spin-off Art Dimensions, Inc. as
an independent entity.
 
 NOTE
6. GOING CONCERN
 
 The
Company has suffered recurring losses from operations and has a large working
capital deficit. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. The Company may raise additional capital
through the sale of its equity securities, through offerings of debt securities,
or through borrowings from financial institutions. Management believes that
actions presently being taken to obtain additional funding provide the
opportunity for the Company to continue as a going concern.
 
 -
31 -
   ITEM
9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
 
 We did
not have any disagreements on accounting and financial disclosures with our
present accounting firm during the reporting period.
  
 ITEM
9A(T). CONTROLS AND PROCEDURES.
  Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures
 
 Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (the Exchange Act).  As a result of this evaluation, we
identified no material weaknesses in our internal control over financial
reporting as of December 31, 2008.  Accordingly, we concluded that our
disclosure controls and procedures were effective as of December 31,
2008.
 
 Our
internal control over financial reporting (ICFR) are designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external purposes in
accordance with U. S. generally accepted accounting principles. Our internal
control over financial reporting includes those policies and procedures
that:
 
 i.            pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;
 ii.            provide
reasonable assurance that transactions are recorded as necessary to permit the
preparation of our  consolidated financial statements
in
 accordance
with U. S. generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with
 authorizations
of our management and directors; and
 iii.           provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could
have
 a material effect on the consolidated financial
statements .
 
 Management’s
Annual Report on Internal Control Over Financial Reporting.
 
 Management
is responsible for establishing and maintaining adequate internal control over
financial reporting.  Our management conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the
framework in Internal Control
— Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.  Based on our evaluation,
management has concluded, as of December 31, 2008, we did maintain effective
control over the financial reporting process.
  -
32 -
 
 Inherent
Limitations Over Internal Controls
 
 Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations, including
the possibility of human error and circumvention by collusion or overriding of
controls. Accordingly, even an effective internal control system may not prevent
or detect material misstatements on a timely basis. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions or that the
degree of compliance with the policies or procedures may
deteriorate.
 
 Attestation
Report of the Registered Public Accounting Firm.
 
 This
annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report in this annual
report.
 
 Changes
in Internal Control Over Financial Reporting.
 
 We have
made no change in our internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
   ITEM
9B. OTHER INFORMATION.
 
 Nothing to report.
  -
33 -
  PART
III
  
 ITEM10. DIRECTORS,
EXECUTIVE OFFICERS,AND CORPORATE
GOVERNANCE
 
 Our
Directors and Executive Officers, their ages and positions held with us as of
March 25, 2009 are as follows:
 
 Name
      and Address
                                Age
                                Position(s)Kathy
      Sheehan
                                  3636
      S. Jason
                                  Englewood,
      Colorado 80113
                                47
                                President,
      Chief Executive
                                  Officer,
      Treasurer, Chief
                                  Financial
      Officer and
                                  DirectorTodd
      Sheehan
                                  3636
      S. Jason
                                  Englewood,
      Colorado 80113
                                54
                                Secretary
      and DirectorRebecca
      Gregarek
                                  3636
      S. Jason
                                  Englewood,
      Colorado 80113
                                54
                                Director
 
 The
persons named above are expected to hold said offices/positions until the next
annual meeting of our stockholders. These officers and directors are our only
officers, directors, promoters and control persons. Todd and Kathy Sheehan are
husband and wife.
 
 Background
Information about Our Officers and Directors
 
 Kathy
Sheehan has been the President Chief Executive Officer, Treasurer, Chief
Financial Officer and a Director of our company since inception in January,
2002. She has been the Chief Financial Officer, director and principal owner of
Accessory Warehouse, Inc., a private company in the wholesale art framing
manufacturing and home furnishing warehouse business, located in Denver,
Colorado, from 1992 to the present. She attended Front Range Community College
from 1980 to 1983. She has completed the Dale Carnegie Leadership Course. She
will devote a minimum of forty hours per month to our operations.
 
 Todd
Sheehan has been the Secretary and Director of our company from inception in
January, 2002. He has been the Chief Executive Officer, director and principal
owner of Accessory Warehouse, Inc., a private company in the wholesale art
framing manufacturing and home furnishing warehouse business, located in Denver,
Colorado, from 1984 to the present. He does not hold an academic degree. He will
devote a minimum of forty hours per month to our operations.
  Rebecca
Gregarek has been a Director of our company since May, 2007. She has been
involved in the interior design business in various capacities since 1975. From
2006 to the present, she has also been an Interior Design Consultant with By
Design Group, Englewood, Colorado. From 2001-2006, she was associated with Home
Builders Flooring, LLC- HBF Designs, Denver, Colorado. This group worked at the
Shea Design Center in Highlands Ranch, Colorado to develop custom window
Coverings and after-market sales for new home buyers. She oversaw a sales team
in training and developing marketing and advertising strategies. Her group won
the JD Powers Award for customer satisfaction for 2001, 2002 and 2003. Ms.
Gregarek does not hold an academic degree but attended Arapahoe Community
College, with courses in Interior Design. She is a Certified Window Fashion
Designer and a member of American Society of Interior Designers. She will devote
minimum of ten hours per month to carry out her responsibilities.
 
  -
34 -
  Compliance
with Section 16(a) of the Securities Exchange Act of 1934
 
 Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s
directors and executive officers, and persons who own more than 10% of a
registered class of the Company’s outstanding equity securities to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. We have nothing to report in this regard.
 
 Committees
of the Board of Directors
 
 Currently,
we do not have any committees of the Board of Directors.
 
 Director
and Executive Compensation
 
 No
compensation has been paid and no stock options granted to any of our officers
or directors in the last three fiscal years.
 
 Employment
Agreements
 
 We have
no written employment agreements with any of our executive officers or key
employees.
 
 Equity
Incentive Plan
 
 We have
not adopted an equity incentive plan, and no stock options or similar
instruments have been granted to any of our officers or directors.
 
 Indemnification
and Limitation on Liability of Directors
 
 Our
Articles of Incorporation limit the liability of our directors to the fullest
extent permitted by Colorado law. Specifically, our directors will not be
personally liable to our company or any of its shareholders for monetary damages
for breach of fiduciary duty as directors, except liability for (i) any breach
of the director’s duty of loyalty to the corporation or its shareholders; (ii)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) voting for or assenting to a distribution in
violation of Colorado Revised Statutes Section 7-106-401 or the articles of
incorporation if it is established that the director did not perform his duties
in compliance with Colorado Revised Statutes Section 7-108-401, provided that
the personal liability of a director in this circumstance shall be limited to
the amount of distribution which exceeds what could have been distributed
without violation of Colorado Revised Statutes Section 7-106-401 or the articles
of incorporation; or (iv) any transaction from which the director directly or
indirectly derives an improper personal benefit. Nothing contained in the
provisions will be construed to deprive any director of his right to all
defenses ordinarily available to the director nor will anything herein be
construed to deprive any director of any right he may have for contribution from
any other director or other person.
 
 At
present, there is no pending litigation or proceeding involving any of our
directors, officers, employees or agents where indemnification will be required
or permitted. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
  -
35 -
  Item
11. EXECUTIVE COMPENSATION.
 
 No
compensation has been paid and no stock options granted to any of our officers
or directors in the last three fiscal years. The Company recorded compensation
expense of $500 per month in 2007 and 2008 for administrative and management
services donated to the Company by Kathy Sheehan. Total donated services
compensation expense for 2007 and 2008 was $6,000 each year.
 
  ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
 
 The
following table sets forth, as of March 25, 2009, information regarding the
ownership of our common stock by:
 
 *
                  persons
      who own more than 5% of our common
stock;
 
 *
                  each
      of our directors and each of our executive officers;
  and
 
 *
                  all
      directors and executive officers as a
group.
 
 We had
10,820,600 shares issued and outstanding as of  October
22, 2009. The following table reflects our stock ownership as of that
date. For the purposes of this table, we have used 10,820,600 shares as our
total issued and outstanding.
  Name
      and Address
                                                                                                      Beneficial
                                                                                                      Owner
                                                                                                    No.
      of
                                                                                                      Common
      Shares
                                                                                                    Percentage
                                                                                                      of
      Ownership(1)Kathy
      Sheehan(2)
                                                                                                    5,150,000
                                                                                                    47.6%3636
      S. JasonEnglewood,
      Colorado 80113Todd
      Sheehan(2)
                                                                                                    5,150,000
                                                                                                    47.6%3636
      S. JasonEnglewood,
      Colorado 80113Rebecca
      Gregarek(3)
                                                                                                    3,350,000
                                                                                                    30.9%3636
      S. JasonEnglewood,
      Colorado 80113All
      Officers and
                                                                                                      Directors
      as a Group
                                                                                                      (three
      persons)
                                                                                                    8,500,000
                                                                                                    78.5%
 ____________
  -
36 -
  
 (1)
                  All
      shares of owned beneficially or of record.(2)
                  Kathy
      and Todd Sheehan are husband and wife. Kathy Sheehan owns 2,550,000 shares
      of record. Todd Sheehan owns 2,450,000 shares of record. The minor
      children of Mr. and Mrs. Sheehan own a total of 150,000 shares of
      record.
 
 (3)
                  Rebecca
      Gregarek owns 3,200,000 shares of record. Her husband owns 100,000 shares
      of record. Her minor child owns 50,000 shares of record. Her adult child
      owns 50,000 shares of record, for which she disclaims beneficial
      ownership.
   ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
 The
Company has a note payable to Mr. Todd Sheehan. The note is unsecured and
payable upon demand. The note bears interest at 8% per annum if not paid
promptly upon demand. The outstanding principal balance on the note was $34,201
at December 31, 2007 and 2008.
 
 The
Company purchases materials from and pays occasional operating expenses to
Accessory Warehouse, Inc., a company controlled by Mr. and Mrs. Sheehan. Cost of
goods sold incurred from Accessory Warehouse, Inc. was $45,985 and $150,042 in
2007 and 2008, respectively. The Company had related party payables at December
31, 2007 and 2008 of $29,135 and $309, for materials, services and rent advanced
to the Company.
 
 The
Company also recorded compensation expense of $500 per month in 2007 for
administrative and management services donated to the Company by Mrs. Sheehan.
Total donated services compensation expense for 2007 was $6,000.
 
  ITEM
14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 Our
independent auditor, Ronald R. Chadwick, P.C., Certified Public Accountants,
billed an aggregate of $8,700 for the year ended December 31, 2008 and for
professional services rendered for the audit of the Company's annual financial
statements and review of the financial statements included in its quarterly
reports. The firm billed an aggregate of $4,500 for the year ended December 31,
2007 and for professional services rendered for the audit of the Company's
annual financial statements and review of the financial statements included in
its quarterly reports.
 
 We do not
have an audit committee and as a result our entire board of directors performs
the duties of an audit committee. Our board of directors evaluates the scope and
cost of the engagement of an auditor before the auditor renders audit and
non-audit services.
 
 
 ITEM
15. EXHIBITS FINANCIAL STATEMENT SCHEDULES.
 
 The
following financial information is filed as part of this report:
 
 (a)        (1)
FINANCIAL STATEMENTS
 
 (2)
SCHEDULES
  -
37 -
 
 
 (3)
EXHIBITS. The following exhibits required by Item 601 to be filed herewith are
incorporated by reference to previously filed documents:
  Exhibit
                      Number
                    Description3.1*
                    Articles
      of Incorporation3.2*
                    Amended
      and Restated Articles of Incorporation3.3*
                    Bylaws10.1**
                    Promissory
      Note dated  December 31, 2004 with Mr. Todd
      Sheehan14**
                    Code
      of Business Ethics14.1
                    Revised
      Code of Business Ethics21.1**
                    List
      of Subsidiaries31.1
                    Certification
      of CEO/CFO pursuant to Sec. 30232.1
                    Certification
      of CEO/CFO pursuant to Sec.
906
 
 *
Previously filed with Form SB-2 Registration Statement, July 25,
2007.
 **
Previously filed with amended Form 10-K, October 23,
2009.
 (b)  Reports
on Form 8-K. No reports were filed under cover of Form 8-K for the fiscal year
ended December 31. 2007.
 
 -
38 -
   SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
 Art
      Design, Inc.Date:   November
      19, 2009
                      By:
                      /s/ 
      Kathy SheehanKathy
      Sheehan, President and Chief
                        Executive
      and Financial Officer
 
  Pursuant
to the requirements of the Securities Exchange Act of 1934 this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
 
 Date:   November
      19, 2009
                                By:
                                /s/ 
      Kathy SheehanKathy
      SheehanDirector,
      Treasurer, Principal Accounting Officer,
                                  and
      Chief Executive and Financial OfficerDate:   November
      19, 2009
                                By:
                                /s/ 
      Todd SheehanTodd
      SheehanDirector
      and SecretaryDate:   November
      19, 2009
                                By:
                                /s/ 
      Rebecca GregarekRebecca
      GregarekDirector
  - 39 -