SECURITIES AND EXCHANGE
COMMISSION


Washington,
D.C. 20549








FORM 10-KSB/A








Annual
Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934








For the
Fiscal Year Ended: December 31,
2006








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








Check
whether issuer is not required to file reports pursuant to Section 13 or 15(d)
of the Exchange Act [ ]





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-KSB. [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 ].





Registrant's
revenues for its most recent fiscal year were $-0-. State the aggregate market
value of the voting stock held by nonaffiliates computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within the past 60 days: $-0-.  The number of
shares outstanding of the Registrant's common stock, as of the latest
practicable date, August 1, 2007, was 10,820,600.








- 1 -











FORM 10-KSB


Art
Design, Inc.





INDEX


PagePART
      IItem
      1. Description of Business
            3Item
      2. Description of Property
            12Item
      3. Legal Proceedings
            13Item
      4. Submission of Matters to a Vote of Security Holders
            13PART
      IIItem
      5. Market for Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
            13Item
      6. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
            14Item
      7. Financial Statements
            F-1Item
      8. Changes in and Disagreements with Accountants onAccounting and
      Financial Disclosures
            33Item
      8A. Controls and Procedures
            33Item
      8B. Other Information
            33PART
      IIIItem
      9. Directors, Executive Officers, Promoters and Control Persons;
      Compliance with Section 16(a) of the Exchange Act
            33Item
      10. Executive Compensation
            35Item
      11. Security Ownership of Certain Beneficial Owners and
      Management
            35Item
      12. Certain Relationships and Related Transactions
            36Item
      13. Exhibits and Reports on Form 8-K
            37Item
      14. Principal Accountant Fees and Services
            37Financial
      Statements pages
            F-1 
      - F-14Signatures
            38








- 2 -





References
in this document to “us," "we," or "Company" refer to Art Design,
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.








(a) RISK
FACTORS





You should carefully consider the
risks and uncertainties described below andthe other information in this
document before deciding to invest in shares ofour common
stock.





The occurrence of any of the
following risks could materially and adverselyaffect our business, financial
condition and operating result. In this case,the trading price of our common
stock could decline and you might lose all orpart 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 $13,021 on revenues of $34,316 for the fiscal year ended December
31, 2006, compared to a net loss of $8,953 on revenues of $62,009 for the fiscal
year ended December 31, 2005.  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.







- 3 -





We have had a history of declining
revenues and may not be able to develop profitability.





We had
revenues of $34,316 for the fiscal year ended December 31, 2006, compared to
revenues of $62,009 for the fiscal year ended December 31, 2005. We have had
lower annual revenues for the past few years. We cannot assure you that our
sales will increase. We must generate greater revenues and improved margins to
achieve and maintain profitability in the future. If our revenues continue to
decline, 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, 2006, 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.





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 $33,000 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.




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 be continue to incur losses,
which may result in a decline in our stock price.




We have no experience as a public
company.





We have
never operated as a public company. We have no 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.








- 4 -





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 two top clients in
fiscal year 2006 accounted for approximately 62% of our revenues and
approximately 52% of our revenues in fiscal year 2005. We could be severally
impacted by the loss of one or both 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.




We are implementing a strategy to
grow and expand our business, which is expensive and may not generate increases
in our revenues.





We intend
to expand our business, and we plan to incur expenses associated with our growth
and expansion. Although we recently raised funds through public and private
offerings to implement our growth strategy, these funds may not be adequate to
offset all of the expenses we incur in expanding our business. We will need to
generate greater revenues to offset expenses associated with our growth, and we
may be unsuccessful in achieving greater revenues, despite our attempts to grow
our business. If our growth strategies do not result in increased revenues, we
may have to abandon our plans for further growth or may even reduce the current
size of our operations.




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 that we must generate
approximately $36,000 in revenue 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.








- 5 -





We must effectively manage the growth
of our operations, or we may outgrow our current
infrastructure.





As of
December 31, 2006, 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.





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.








- 6 -





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.





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 2005, 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.








- 7 -





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.





Our common stock currently has no
trading market and there is 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.





- 8 -





Of our
total outstanding shares, 10,300,000 or approximately 95% are restricted from
immediate resale but may be sold into the market subject to volume and manner of
sale limitations under Rule 144 beginning in May, 2007. 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
August
1, 2007. 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.





(b)
NARRATIVE DESCRIPTION OF THE BUSINESS





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.




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.





(c)
OPERATIONS





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.








- 9 -





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.




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.





(d)
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.








- 10 -





(e)
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.





(f)
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.




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 two
top clients in fiscal year 2006 accounted for approximately 63% of our revenues.
In fiscal year 2005 our two top clients accounted for approximately 52% of our
revenues. A part of our strategy is to expand the number of clients. We plan to
particularly focus on this aspect of our business in the next twelve
months.





(g)
BACKLOG





At
December 31, 2006, we had no backlogs.








- 11 -





(h)
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.





(i)
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.





(j)
GOVERNMENT REGULATION





We are
not subject to any material government or industry regulation.




(k)
RESEARCH AND DEVELOPMENT





We have
never spent any amount in research and development activities.





(l)
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.





(m)
SUBSEQUENT EVENTS





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.





(n) 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 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 COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.





(a)
PRINCIPAL MARKET OR MARKETS





There is
currently no public trading market for our securities. We intend to apply to
have our common stock listed for quotation on the Over-the-Counter Bulletin
Board.





(b)
APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK





As of
August 1, 2007, 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.





(c)
DIVIDENDS





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.





(d) 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:





- 13 -





-
            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 ofthe 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.





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.








ITEM 6. 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.








- 14 -





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, 2006, included elsewhere in this Prospectus. 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.





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
31,2006.





We have
had declining revenues for each of the reporting periods. 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 $34,316 for the twelve months
ended December 31, 2006. This compares with sales-net of returns of $62,009 for
the twelve months ended December 31, 2005.





Our costs
of goods for the twelve months ended December 31, 2006 was $22,621, or
approximately 66% of sales-net of returns. Our costs of goods for the fiscal
year ended December 31, 2005 was $54,183,or approximately 87% 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, 2006 was
$11,695. This compares with gross profit for the fiscal year ended December 31,
2005 was $7,826.





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 higher gross profit in 2005 is a reflection of both
higher profit margins on product and more consulting services as a part of
overall sales.








- 15 -





Operating
expenses, which includes depreciation and general and administrative expenses
for the twelve months ended December 31, 2006 was $24,733. This compares to
operating expenses for the twelve months ended December 31, 2005 of $16,806. The
major components of operating expenses include professional fees, salaries and
associated payroll costs, rent and telephone expenses.





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 $13,021 for the twelve months ended December 31, 2006. This compares
with a net loss of $8,953 for the fiscal year ended December 31,
2005.





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 that we must generate approximately
$36,000 in revenue 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 $33,000
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




Liquidity and Capital
Resources





As of
December 31, 2006, we had cash or cash equivalents of $31,173.
 
 Net cash
used for operating activities was $4,774 for the period ended December 31, 2006,
compared to $9,812 for the period ended December 31, 2005. 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,
2006 and 2005.
 
 Cash
flows provided by financing activities accounted for $29,857 for the period
ended December 31, 2006 compared to $-0- for the period ended December 31, 2005.
These cash flows were all related to sales of stock and deferred offering
costs.





Over the
next twelve months our capital costs will be approximately $10,000 to $12,000
primarily to expand our current operations. We plan to buy additional equipment
to be used in our operations.







- 16 -





We
believe that our recent public offering will provide sufficient capital in the
short term for our current level of operations. This is because we believe that
we can attract sufficient additional product sales and services within our
present organizational structure and resources to become profitable in our
operations. Additional resources will be needed to expand into additional
locations, which we have no plans to do at this time.





Otherwise,
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
principle 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. A slow down in interior design work will
have a negative impact to our business. 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 twelve months immediately after the closing of our public offering is to
operate at a profit or at break even. 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 this prospectus 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.





- 17 -





Proposed Milestones to Implement
Business Operations




At the
present time, we are operating from one location in the Denver Metropolitan
area. Our plan is to make our operation profitable by the end of our next fiscal
year. We estimate that we must generate approximately $3,000 in sales per month
to be profitable.





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 that we must generate approximately $36,000 in revenue 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 $33,000
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.








- 18 -





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.








ITEM 7. FINANCIAL
STATEMENTS.

















FINANCIAL
STATEMENTS





with





REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM





























F-1








ART DESIGN, INC.





FINANCIAL
STATEMENTS





December 31, 2005 and
2006







F-2











ART DESIGN, INC.


Financial
Statements











TABLE OF CONTENTS








PageREPORT
      OF INDEPENDENT REGISTEREDPUBLIC
      ACCOUNTING FIRM
            F-4FINANCIAL
      STATEMENTSBalance sheet
            F-5Statements of
      operations
            F-6Statements of stockholders’
      equity
            F-7Statements of cash
      flows
            F-8Notes to financial
      statements
            F-10








F-3








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 balance sheet of Art Design, Inc. as of December 31,
2006, and the related statements of operations, stockholders' equity and cash
flows for the years ended December 31, 2005 and 2006. 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 financial statements referred to above present fairly, in all
material  respects, the financial position of Art Design, Inc. as of
December 31, 2006, and the results of its operations and its cash flows for the
years ended December 31, 2005 and 2006 in conformity with accounting principles
generally accepted in the United States of America.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements the Company has suffered recurring losses from operations and has a
working capital deficit that 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 5. 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.


April 2,
2007                                                                                  
RONALD R. CHADWICK, P.C.





F-4





ART DESIGN, INC.


BALANCE SHEET








Dec. 31,
      2006ASSETSCurrent
      assetsCash
            
            $
            31,173Accounts
      receivable
            
            
            10,400Total current
      assets
            
            
            41,573Accounts
      receivable - related party
            
            
            5,170Deferred
      offering costs
            
            
            24,543Fixed
      assets
            
            
            13,269Less
      accumulated depreciation
            
            
            (9,458
            )33,524Total
    Assets
            
            $
            75,097LIABILITIES & STOCKHOLDERS'
      EQUITYCurrent
      liabilitiesAccounts payable -
      related party
            
            $
            20,171Note
      payable - related party
            
            
            34,201Total current
      liabilties
            
            
            54,372Total
      Liabilities
            
            
            54,372Stockholders'
      EquityPreferred
      stock, $.10 par value;1,000,000
      shares authorized;No
      shares issued & outstanding
            
            
            -Common
      stock, $.001 par value;50,000,000
      shares authorized;10,300,000
      sharesissued
      & outstanding
            
            
            10,300Additional
      paid in capital
            
            
            72,899Accumulated
      deficit
            
            
            (62,474
            )Total Stockholders'
      Equity
            
            
            20,725Total Liabilities and
      Stockholders' Equity
            
            $
            75,097







The
accompanying notes are an integral part of the financial
statements.





F-5








ART DESIGN, INC.


STATEMENTS OF
OPERATIONS





Year
    Ended
            
            
            Year
    EndedDec. 31,
      2005
            
            
            Dec. 31,
      2006Sales
      - net of returns
            
            $
            62,009
            
            
            $
            34,316Cost
      of goods sold
            
            
            23,605Cost
      of goods sold - related party
            
            
            30,578
            
            
            
            22,621Gross
      profit
            
            
            7,826
            
            
            
            11,695Operating
      expenses:Amortization
      & depreciation
            
            
            1,027
            
            
            
            1,776General
      and administrative
            
            
            9,779
            
            
            
            16,957General
      and adm. - related party
            
            
            6,000
            
            
            
            6,00016,806
            
            
            
            24,733Gain
      (loss) from operations
            
            
            (8,980
            )
            
            
            (13,038
            )Other
      income (expense):Other
      income
            
            
            27
            
            
            
            1727
            
            
            
            17Income
      (loss) beforeprovision
      for income taxes
            
            
            (8,953
            )
            
            
            (13,021
            )Provision
      for income tax
            
            
            -
            
            
            
            -Net income
      (loss)
            
            $
            (8,953
            )
            
            $
            (13,021
            )Net income (loss) per
      share(Basic
      and fully diluted)
            
            $
            (8.95
            )
            
            $
            (0.00
            )Weighted
      average number ofcommon
      shares outstanding
            
            
            1,000
            
            
            
            5,833,750








The
accompanying notes are an integral part of the financial
statements.





F-6







ART DESIGN, INC.


STATEMENTS OF STOCKHOLDERS'
EQUITY








Common
      StockAmount
            
            
            Paid
      in
            
            
            Accumulated
            
            
            Stockholders'Shares
            
            
            ($.001
      Par)
            
            
            Capital
            
            
            Deficit
            
            
            EquityBalances
      at December 31, 2004
            
            
            1,000
            
            
            $
            1
            
            
            $
            6,999
            
            
            $
            (40,500
            )
            
            $
            (33,500
            )Donated
      services - officer
            
            
            
            
            
            
            
            
            
            
            6,000
            
            
            
            
            
            
            
            6,000Gain
      (loss) for the year
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (8,953
            )
            
            
            (8,953
            )Balances
      at December 31, 2005
            
            
            1,000
            
            
            $
            1
            
            
            $
            12,999
            
            
            $
            (49,453
            )
            
            $
            (36,453
            )Debt
      conversion
            
            
            4,899,000
            
            
            
            4,899
            
            
            
            4,900
            
            
            
            
            
            
            
            9,799Issuance
      of stock for cash
            
            
            5,400,000
            
            
            
            5,400
            
            
            
            49,000
            
            
            
            
            
            
            
            54,400Donated
      services - officer
            
            
            
            
            
            
            
            
            
            
            6,000
            
            
            
            
            
            
            
            6,000Gain
      (loss) for the period
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (13,021
            )
            
            
            (13,021
            )Balances
      at December 31, 2006
            
            
            10,300,000
            
            
            $
            10,300
            
            
            $
            72,899
            
            
            $
            (62,474
            )
            
            $
            20,725








The
accompanying notes are an integral part of the financial
statements.








F-7





ART DESIGN, INC.


STATEMENTS OF CASH
FLOWS








Year
    Ended
            
            
            Year
    EndedDec. 31,
      2005
            
            
            Dec. 31,
      2006Cash Flows From Operating
      Activities:Net
      income (loss)
            
            $
            (8,953
            )
            
            $
            (13,021
            )Adjustments
      to reconcile net loss tonet
      cash provided by (used for)operating
      activities:Amortization
      & depreciation
            
            
            1,027
            
            
            
            1,776Donated
      services
            
            
            6,000
            
            
            
            6,000Accounts
      receivable
            
            
            1,759
            
            
            
            (12,819
            )Accrued
      payables - related party
            
            
            (3,905
            )
            
            
            13,525Accrued
      payables
            
            
            235
            
            
            
            (235
            )Unearned
      revenue
            
            
            (5,975
            )
            
            
            -Net cash provided by (used
      for)operating
      activities
            
            
            (9,812
            )
            
            
            (4,774
            )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 financial
statements.








F-8







.ART DESIGN, INC.


STATEMENTS OF CASH
FLOWS





(Continued
From Previous Page)





Year
    Ended
            
            
            Year
    EndedDec. 31,
      2005
            
            
            Dec. 31,
      2006Cash Flows From Financing
      Activities:Deferred
      offering costs
            
            
            
            
            
            (24,543
            )Issuance
      of common stock
            
            
            
            
            
            54,400Net cash provided by (used
      for)financing
      activities
            
            
            -
            
            
            
            29,857Net Increase (Decrease) In
      Cash
            
            
            (9,812
            )
            
            
            25,083Cash At The Beginning Of The
      Period
            
            
            15,902
            
            
            
            6,090Cash At The End Of The
      Period
            
            $
            6,090
            
            
            $
            31,173Schedule Of Non-Cash
      Investing And Financing ActivitiesIn
      2006 the Company issued 4,899,000 shares valued at $9,799 for for related
      party debt relief.Supplemental
      DisclosureCash
      paid for interest
            
            $
            -
            
            
            $
            -Cash
      paid for income taxes
            
            $
            -
            
            
            $
            -











The
accompanying notes are an integral part of the financial
statements.





F-9





ART DESIGN, INC.


NOTES TO FINANCIAL
STATEMENTS


December 31, 2005 and
2006








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.





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, 2005 and 2006 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.




Advertising costs




Advertising
costs are expensed as incurred. The Company had no advertising costs in 2005 or
2006.





F-10








ART DESIGN, INC.


NOTES TO FINANCIAL
STATEMENTS


December 31, 2005 and
2006










NOTE 1. ORGANIZATION, OPERATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES  (Continued):






Income
tax





The
Company is currently treated as an S-Corporation for income tax purposes, and
therefore pays no income taxes at the corporate level.





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.




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. In 2005 two customers
accounted for 52% of sales, and in 2006 2customers accounted for 62% of
sales.  All sales each year were domestic and to external
customers.










F-11








ART DESIGN, INC.


NOTES TO FINANCIAL
STATEMENTS


December 31, 2005 and
2006







NOTE 1. ORGANIZATION, OPERATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):





Recent Accounting
Pronouncements





In March
2005, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment". SFAS
123(r) requires that the cost resulting from all share-based payment
transactions be recognized in the financial statements. The Company has adopted
the provisions of SFAS No. 123(r) which are effective in general for
transactions entered into or modified after June 15, 2005. The adoption did not
have a material effect on the results of operations of the Company.




In May
2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154,
“Accounting Changes and Error Corrections – A Replacement of APB Opinion No. 20
and SFAS No. 3”. SFAS 154 changes the requirements for the accounting for and
reporting of a change in accounting principle and applies to all voluntary
changes in accounting principle. It also applies to changes required by an
accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition provisions. SFAS 154 requires retrospective
application to prior periods’ financial statements of changes in accounting
principle, unless it is impracticable to determine either the period-specific
effects or the cumulative effect of the change. The Company has adopted the
provisions of SFAS No. 154, which are effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005. The
adoption did not have a material effect on the results of operations of the
Company. In February 2006, the FASB issued SFAS No. 155 “Accounting for Certain
Hybrid Financial Instruments – an amendment of FASB Statements No. 133 and 140”,
to simplify and make more consistent the accounting for certain financial
instruments. The Company has adopted the provisions of SFAS No. 155, which are
effective in general for financial instruments acquired or issued in fiscal
years beginning after September 15, 2006. The adoption did not have a material
effect on the results of operations of the Company.




In March
2006, the FASB issued SFAS No. 156 "Accounting for Servicing of Financial
Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities". This
statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization and impairment requirements of
Statement No. 140. The Company has adopted the provisions of SFAS No. 156, which
are effective in general for an entity's fiscal year beginning after September
15, 2006. The adoption did not have a material effect on the results of
operations of the Company.










F-12








ART DESIGN, INC.


NOTES TO FINANCIAL
STATEMENTS


December 31, 2005 and
2006








NOTE 1. ORGANIZATION, OPERATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):







In
December 2006, the FASB issued SFAS No. 157 “Fair Value Measurements”, to
improve consistency and comparability in fair value measurements, and to expand
related disclosures. The Company has adopted the provisions of SFAS No. 157,
which are effective for financial statements for fiscal years beginning after
November 15, 2007. The adoption did not have a material effect on the results of
operations of the Company.







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 $44,000
at December 31, 2005, and $34,201 at December 31, 2006.





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 $30,578 and $22,621 in 2005 and 2006. The Company
had related party payables at December 31, 2005 and 2006 of $6,646 and $20,171,
for materials, services and rent advanced to the Company.





The
Company also recorded compensation expense of $500 per month in 2005 and 2006
for administrative and management services donated to the Company by an officer.
Total donated services compensation expense for 2005 and 2006 was $6,000 each
year.







F-13








ART DESIGN, INC.


NOTES TO FINANCIAL
STATEMENTS


December 31, 2005 and
2006








NOTE 3. FIXED
ASSETS







Fixed
asset values recorded at cost are as follows:


2005
            
            
            2006Furniture
      &
      Fixtures
            
            $
            2,560
            
            
            $
            2,560Computers
            
            
            6,511
            
            
            
            6,511Leasehold
      Improvements
            
            
            4,198
            
            
            
            4,19813,269
            
            
            
            13,269Less
      accumulated
      depreciation
            
            
            (7,682
            )
            
            
            (9,458
            )Total
            
            $
            5,587
            
            
            $
            3,811





Depreciation
expense in 2005 and 2006  was $1,027 and $1,776.





NOTE 4. LEASE
COMMITMENT





The
Company rents office and production space at $500 per month on a verbal month to
month basis from a corporation under common control. Rent expense for 2005 and
2006 was $6,000 each year.





NOTE 5. 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.




NOTE 6.  STOCK
OFFERING





The
Company is currently attempting to sell up to 800,000 shares of its common stock
on a best efforts basis for $0.25 per share, or $200,000, under a Form SB-2
offering. The costs of this offering through December 31, 2006 amounted to
$24,543. This amount will reduce the offering proceeds if the offering is
successful, or will be deducted as part of operations if the offering is
unsuccessful.







F-14







ITEM 8. 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 8A. CONTROLS AND
PROCEDURES.





Evaluation of Disclosure Controls and
Procedures





As of the
end of the period covered by this annual report on Form 10-KSB, we evaluated the
effectiveness of the design and operation of its disclosure controls and
procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e)
and 15d-15(e)). That evaluation was performed under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer. Based on that evaluation, our Chief Financial Officer
concluded that our disclosure controls and procedures are effective in timely
alerting him to material information required to be included in its periodic SEC
filings.





Changes in Internal Control over
Financial Reporting




We have
made no significant change in our internal control over financial reporting
during the most recent fiscal quarter covered by this annual report on Form
10-KSB that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.








ITEM 8B. OTHER
INFORMATION.





Nothing
to report.





PART III








ITEM 9. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT.





Our
Directors and Executive Officers, their ages and positions held with us as of
July 1, 2007 are as follows:





Name and
      Address
            Age
            Position(s)Kathy
      Sheehan
              3636
      S. Jason
              Englewood,
      Colorado 80113
            44
            President,
      Chief Executive
              Officer,
      Treasurer, Chief
              Financial
      Officer and
              DirectorTodd
      Sheehan
              3636
      S. Jason
              Englewood,
      Colorado 80113
            52
            Secretary
      and DirectorRebecca
      Gregarek
              3636
      S. Jason
              Englewood,
      Colorado 80113
            51
            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.








- 33 -





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, 2006. She has been
involved in the interior design business in various capacities since 1975. From
2005 to the present, she has also been an Interior Design Consultant with By
Design Group, Englewood, Colorado. From 2001-2005, 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.





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.








- 34 -





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.







Item 10. 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 2005 and 2006 for administrative and management
services donated to the Company by Kathy Sheehan. Total donated services
compensation expense for 2005 and 2006 was $6,000 each year.





ITEM 11. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.





The
following table sets forth, as of August 1, 2007, 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 August
1, 2007. 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.





- 35 -








Name and
      Address
              Beneficial
              Owner
            No. of
              Common
      Shares
            Percentage
              of
      Ownership(1)Kathy
      Sheehan(2)3636
      S. Jason
            5,150,000
            47.6%Englewood,
      Colorado 80113Todd
      Sheehan(2)3636
      S. Jason
            5,150,000
            47.6%Englewood,
      Colorado 80113Rebecca
      Gregarek(3)3636
      S. Jason
            3,350,000
            30.9%Englewood,
      Colorado 80113Sanders
      Huttner Partnership651
      Bering Dr. #2002
            700,000
            6.5%Houston,
      Texas 77057All
      Officers and
              Directors
      as a Group
              (three
      persons)
            8,500,000
            78.5%


____________





(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 12. 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 $44,000
at December 31, 2005, and $34,201 at December 31, 2006.





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 $30,578 and $22,621 in
2005 and 2006. The Company had related party payables at December 31, 2005 and
2006 of $6,646 and $20,171, for materials, services and rent advanced to the
Company.





The
Company also recorded compensation expense of $500 per month in 2005 and 2006
for administrative and management services donated to the Company by Mrs.
Sheehan. Total donated services compensation expense for 2005 and 2006 was
$6,000 each year.








- 36 -






ITEM 13. EXHIBITS AND REPORTS ON FORM
8-K.





The
following financial information is filed as part of this report:





(a)        (1)
FINANCIAL STATEMENTS





(2)
SCHEDULES





(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*
            Bylaws31.1
            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,
2006.





(b)  Reports
on Form 8-K. No reports were filed under cover of Form 8-K for the fiscal year
ended December 31. 2006.








ITEM 14: PRINCIPAL ACCOUNTANT FEES
AND SERVICES





Our
independent auditor, Ronald R. Chadwick, P.C., of Aurora, Colorado, Certified
Public Accountants, billed an aggregate of $9,450 for the year ended
December 31, 2006 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.











- 37 -





SIGNATURES





In
accordance with Section 12 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 on February
21, 2008.








Art Design,
      Inc.Date:  February
      21, 2008
            By:
            /s/ 
      Kathy SheehanKathy
      Sheehan, President and Chief Executive and Financial
    Officer







Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.








Date:  February
      21, 2008
            By:
            /s/ 
      Kathy SheehanKathy
      SheehanDirector,
      Treasurer, Principal Accounting Officer, and Chief Executive and
      Financial OfficerDate:  February
      21, 2008
            By:
            /s/ 
      Todd SheehanTodd
      SheehanDirector
      and SecretaryDate:  February
      21, 2008
            By:
            /s/ 
      Rebecca GregarekRebecca
      GregarekDirector










- 38 -