U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549


FORM
10-K


ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934




For
the fiscal year ended March 31, 2009




Commission
file number: 333-152404




ENTERTAINMENT
ART, INC.


(Exact
name of registrant as specified in its charter)





Nevada
              
              26-0370478(State
      of incorporation)
              
              (I.R.S.
      Employer Identification No.)





c/o
Joseph Koegel


Entertainment Art,
Inc.


571
Washington Street


West
Hempstead, New York 11552


(Address of principal
executive offices)





516-946-2049


(Registrant’s telephone
number, including area code)





Securities registered
pursuant to Section 12(b) of the Exchange Act:


None





Securities registered
pursuant to Section 12(g) of the Exchange Act:


Common
Stock, $0.0001 par value





Indicate by check mark if
the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes o     No
x





Indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act.  Yes o     No
x





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No o





Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405
of this chapter) is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o





Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one):





Large
accelerated filer o                                                                                                           Accelerated
filer o


Non-accelerated filer
o                                                                                                           Smaller
reporting company x


(Do
not check if a smaller reporting company)





Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).


Yes
x No o




State
the aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently computed second fiscal
quarter. There is no bid and ask price for the common equity held by
non-affiliates.





The
number of shares of the issuer’s common stock issued and outstanding as of June
17, 2009 was 1,810,000 shares.





Documents Incorporated By
Reference:  None


TABLE
OF CONTENTS





PagePART I
                      
                      1Item 1
                      Business
                      1Item 1A
                      Risk
      Factors
                      3Item 1B
                      Unresolved
      Staff Comments
                      3Item 2
                      Properties
                      3Item 3
                      Legal
      Proceedings
                      3Item 4
                      Submission
      of Matters to a Vote of Security Holders
                      3PART II
                      
                      3Item 5
                      Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                      3Item 6
                      Selected
      Financial Data
                      4Item 7
                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                      4Item 7A
                      Quantitative
      and Qualitative Disclosures About Market Risk.
                      10Item 8
                      Financial
      Statements.
                      F-1
      - F-10Item 9
                      Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
                      11Item 9A(T)
                      Controls
      and Procedures
                      11Item 9B
                      Other
      Information
                      12PART III
                      
                      12Item 10
                      Directors,
      Executive Officers and Corporate Governance
                      12Item 11
                      Executive
      Compensation
                      14Item 12
                      Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                      14Item 13
                      Certain
      Relationships and Related Transactions, and Director
      Independence
                      15Item 14
                      Principal
      Accountant Fees and Services
                      16PART IV
                      
                      17Item 15
                      Exhibits,
      Financial Statement Schedules
                      17SIGNATURES
                      
                      18








PART I





Item 1.
            Business.





As used
in this Annual Report on Form 10-K (this “Report”), references to the “Company,”
the “Registrant,” “we,” “our” or “us” refer to Entertainment Art, Inc., unless
the context otherwise indicates.





Forward-Looking
Statements





This
Report contains forward-looking statements. For this purpose, any statements
contained in this Report that are not statements of historical fact may be
deemed to be forward-looking statements. Forward-looking information includes
statements relating to future actions, prospective products, future performance
or results of current or anticipated products, sales and marketing efforts,
costs and expenses, interest rates, outcome of contingencies, financial
condition, results of operations, liquidity, business strategies, cost savings,
objectives of management, and other matters. You can identify forward-looking
statements by those that are not historical in nature, particularly those that
use terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,”
“potential,” or “continue” or the negative of these similar terms. The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor” for
forward-looking information to encourage companies to provide prospective
information about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the
information.





These
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that we cannot predict. In evaluating these
forward-looking statements, you should consider various factors, including the
following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently and
operate profitable operations, (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations, (d) whether we
are able to successfully fulfill our primary requirements for cash, which are
explained below under “Liquidity and Capital Resources”. We assume no obligation
to update forward-looking statements, except as otherwise required under the
applicable federal securities laws.





Corporate
Background





Entertainment Art, Inc.
(the “Company”) was incorporated on June 15, 2007 in the State of Nevada. We
were initially focused on the business of designing, marketing and selling a
line of fashionable zipper bags. In October 2007 we sold 610,000 shares of
common stock to private investors at $.10 per share for gross proceeds of
$61,000. The Company registered these shares, which represents 33.70% of the
issued and outstanding shares of common stock, for resale. Collectible Sales,
Inc., an affiliate of the Company, shipped us goods on consignment. In September
2008, the Company received a purchase order from a not for profit organization
for the purchase of 500 units of zipper bags. The merchandise was delivered to
the organization on consignment. We have not received any further orders and
have effectively ceased operations in this business. In May 2009 the merchandise
that was originally shipped to the organization on consignment was sold and we
received $1,500 as proceeds.





1


The
address of our principal executive office is c/o Mr. Joseph Koegel,
Entertainment Art, Inc. 571 Washington Street, West Hempstead, New York 11552.
Our telephone number is (516) 946-2049.  We do not have a functioning
website at this time.





Due to
the state of the economy, the Company has conducted virtually no business other
than organizational matters, filing its Registration Statement and filings of
periodic reports with the SEC. The Company has since abandoned its business plan
and is now seeking an operating company with which to merge or to
acquire.





We are
now considered a blank check company. The U.S. Securities and Exchange
Commission (the “SEC”) defines those companies as “any development stage company
that is issuing a penny stock, within the meaning of Section 3 (a)(51) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that has
no specific business plan or purpose, or has indicated that its business plan is
to merge with an unidentified company or companies.” Under SEC Rule 12b-2 under
the Securities Act of 1933, as amended (the “Securities Act”), we also qualify
as a “shell company,” because we have no or nominal assets (other than cash) and
no or nominal operations. Many states have enacted statutes, rules and
regulations limiting the sale of securities of “blank check” companies in their
respective jurisdictions. Management does not intend to undertake any efforts to
cause a market to develop in our securities, either debt or equity, until we
have successfully concluded a business combination. We intend to comply with the
periodic reporting requirements of the Exchange Act for so long as we are
subject to those requirements.





The
Company’s current business plan is to attempt to identify and negotiate with a
business target for the merger of that entity with and into the Company. In
certain instances, a target company may wish to become a subsidiary of ours or
may wish to contribute or sell assets to the Company rather than to merge. No
assurances can be given that we will be successful in identifying or negotiating
with any target company, or, if we do enter into such a business combination, no
assurances can be given as to the terms of a business combination, or as to the
nature of the target company. We seek to provide a method for a foreign or
domestic private company to become a reporting or public company whose
securities are qualified for trading in the United States secondary
markets.





Competition





The  Company  is
an  insignificant  participant  among  firms  which  engage
in business  combinations  with, or financing
of,  development  stage  enterprises. There are
many established management and financial consulting companies and venture
capital firms which have significantly greater financial and personnel
resources, technical expertise and experience than the Company. In view of the
Company’s limited financial resources and
management  availability,  the Company
will  continue  to  be at
a  significant  competitive  disadvantage  vis-a-vis  the
Company’s competitors.





Regulation
and Taxation





The
Investment Company Act of 1940 defines an “investment company” as an issuer
which is or holds  itself out as
being  engaged  primarily  in
the  business  of
investing,  reinvesting  or trading
of  securities.  While the Company  does not
intend to  engage in
such  activities,  the  Company  could  become  subject  to
regulation  under
the  Investment  Company  Act of 1940 in the event
the Company obtains or  continues  to hold a
minority  interest  in a number of  development
stage   enterprises.   The  Company  could  be  expected  to  incur  significant
registration  and compliance  costs if required to register
under the Investment Company  Act of 1940.  Accordingly,
management will continue to review the Company’s  activities  from  time  to  time  with
a  view  toward  reducing  the
likelihood the Company could be classified as an “investment
company.”





2


The
Company intends to structure a merger or acquisition in such manner as to
minimize Federal and state tax consequences to the Company and to any target
company.




Employees




The  Company’s  only  employees  at
the  present  time  are  its  officers  and
directors,  who will devote as much time as the Board of
Directors  determine is necessary to carry out the affairs of the
Company.





Item
      1A.
            Risk
      Factors




Smaller
reporting companies are not required to provide the information required by this
item.





Item
      1B.
            Unresolved
      Staff Comments




None





Item
      2.
            Properties




We
currently maintain our corporate offices at 571 Washington Street, West
Hempstead, New York 11552. Our telephone number is (516) 946-2049. Our offices
are currently provided by a director and officer at no cost to us. The
Company believes that its current office space will be adequate for the
foreseeable future.





Item
      3.
            Legal
      Proceedings.




There are
no pending legal proceedings to which the Company is a party or in which any
director, officer or affiliate of the Company, any owner of record or
beneficially of more than 5% of any class of voting securities of the Company,
or security holder is a party adverse to the Company or has a material interest
adverse to the Company. The Company’s property is not the subject of any pending
legal proceedings.





Item
      4.
            Submission
      of Matters to a Vote of Security
Holders.




During
the period ending March 31, 2009, there has not been any matter which was
submitted to a vote of the Company’s shareholders through the solicitation of
proxies or otherwise.




PART II





Item
      5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.




Market
Information




Our
common stock is eligible to be traded on the Over-The-Counter Bulletin Board
under the ticker symbol EERT. There has been no active trading in the Company’s
securities, and there has been no bid or ask prices quoted.




3


Holders




As of
June 17, 2009, there were 1,810,000 common shares issued and outstanding, which
were held by 37 stockholders of record.




Dividends




We have
never declared or paid any cash dividends on our common stock nor do we
anticipate paying any in the foreseeable future. Furthermore, we expect to
retain any future earnings to finance our operations and expansion. The payment
of cash dividends in the future will be at the discretion of our Board of
Directors and will depend upon our earnings levels, capital requirements, any
restrictive loan covenants and other factors the Board considers
relevant.




Equity
Compensation Plans




We do not
have any equity compensation plans.





Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities




On June
15, 2007, we issued an aggregate of 1,200,000 shares of our common stock to our
officers and directors for the total consideration of $5,100. These issuances
were made pursuant to the exemption from the registration requirements of the
Securities Act provided by Section 4(2) of the Securities Act.




During
November 2007 to March 2008, the Company sold 610,000 shares of common
stock to private investors at $.10 per share for gross proceeds of $61,000. The
sale of the shares represents 33.7% of the Company’s issued and outstanding
shares of common stock.




Purchases
of Equity Securities by the Small Business Issuer and Affiliated
Purchasers





We have
not repurchased any shares of our common stock during the fiscal year ended
March 31, 2009.





Item
      6.
            Selected
      Financial Data.




Smaller
reporting companies are not required to provide the information required by this
item.





Item
      7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.




Certain
statements contained in this prospectus, including statements regarding the
anticipated development and expansion of our business, our intent, belief or
current expectations, primarily with respect to the future operating performance
of Entertainment Art, Inc. All forward-looking statements speak only as of the
date on which they are made. We undertake no obligation to update such
statements to reflect events that occur or circumstances that exist after the
date on which they are made.




Plan
of Operation




Plan
of Operation - General




During
the next 12 months, the Company intends to seek, investigate and, if such
investigation warrants, acquire an interest in one or
more  business  opportunities  presented to it by
persons or firms who or which desire to seek the perceived advantages of a
publicly held corporation. At this time, the  Company  has
no  plan,  proposal,  agreement,  understanding  or
arrangement to acquire or merge with any specific  business or
company,  and the Company has not  identified any
specific  business or company for  investigation
and  evaluation.  No member of management has had any
material discussions with any other company with respect to any acquisition of
that company.




4


The
Company will not restrict its search to any specific business, industry or
geographical location, and the Company may participate in a business venture of
virtually any kind or nature. The discussion of the proposed plan of operation
under this caption and throughout this Annual Report is purposefully general and
is not meant to be restrictive of the Company’s virtually unlimited discretion
to search for and enter into potential business opportunities.




The
Company will have to obtain funds in one or more private placements to finance
the operation of any acquired business. Persons purchasing securities in these
placements and other shareholders will likely not have the opportunity to
participate in the decision relating to any acquisition.  The
Company’s proposed business is sometimes referred to as a “blind pool” because
any investors  will entrust their investment  monies to the
Company’s  management before they have a
chance  to  analyze  any   ultimate  use  to  which  their  money  may  be  put.
Consequently,  the  Company’s  potential  success  is
heavily  dependent  on the
Company’s  management,   which  will  have  virtually  unlimited  discretion  in
searching for and entering into a business opportunity. None of the officers and
directors of the Company has had any experience in the proposed business of the
Company.  There can be no assurance that the Company will be able to
raise any funds in private placements.  In any private placement,
management may purchase shares on the same terms as offered in the private
placement.




Management
anticipates that it will only participate in one potential business venture.
This lack of diversification should be considered a substantial risk in
investing  in the  Company  because  it
will not  permit  the  Company to offset
potential  losses  from
one  venture  against  gains  from  another.  The
Company  may seek a business  opportunity  with a
firm which only  recently
commenced  operations,  or a developing  company
in need of additional funds for expansion  into new products or
markets,  or seeking to develop a new product or
service,  or
an  established  business  which may
be  experiencing  financial or
operating  difficulties and is in
the  need  for  additional  capital  which
is perceived  to be  easier  to raise by a
public  company.  In some instances, a business opportunity
may involve the acquisition or merger with a corporation which does not need
substantial additional cash but which desires to establish a public trading
market for its common stock.  The Company may purchase assets and
establish wholly owned subsidiaries in various businesses or purchase existing
businesses as subsidiaries.




The
Company anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky.  Because of general
economic
conditions,  rapid  technological  advances being
made in some  industries,  and shortages  of
available  capital,  management  believes  that
there are numerous firms  seeking the benefits of a
publicly  traded  corporation.  Such  perceived
benefits of a publicly traded corporation may include  facilitating or
improving
the  terms  on  which  additional  equity  financing  may
be  sought,  providing liquidity  for
the  principals  of
a  business,  creating a means for  providing
incentive  stock  options  or  similar  benefits  to  key  employees,  providing
liquidity (subject to restrictions of applicable statutes) for all shareholders,
and other
factors.  Potentially  available   business  opportunities
may occur in many different  industries and at
various  stages of  development,  all of which
will make the task
of  comparative  investigation  and analysis of
such business opportunities extremely difficult and complex.




As part
of any transaction, the acquired company may require that management or other
stockholders  of the Company sell all or a portion of their shares to
the
acquired  company,  or  to  the  principals  of  the  acquired  company.  It
is anticipated that the sales price of such shares will be lower than the
current market price or anticipated market price of the Company’s Common
Stock.  The Company’s funds are not expected to be used for purposes
of any stock purchase from insiders.  The Company shareholders will
not be provided the opportunity to approve or consent to such
sale.  The opportunity to sell all or a portion of their shares in
connection with an acquisition may influence management’s decision to enter into
a specific transaction. However, management believes that since
the  anticipated  sales  price will be less
than  market  value,  that the potential of a
stock  sale by  management  will be
a  material  factor on their decision to enter a specific
transaction.




5


The above
description of potential sales of management stock is not based upon any
corporate bylaw, shareholder or board resolution, or contract or agreement. No
other payments of cash or property are expected to be received by management in
connection with any acquisition.




The
Company has not formulated any policy regarding the use of consultants or
outside advisors, but does not anticipate that it will use the services of such
persons.




The
Company has, and will continue to have, insufficient capital with which to
provide the owners of business opportunities with any significant cash or other
assets.  However, management believes the Company will offer owners of
business opportunities the opportunity to acquire a controlling ownership
interest in a public company at substantially less cost than is required to
conduct an initial public offering.  The owners of the business
opportunities will, however, incur significant post-merger or acquisition
registration costs in the event they wish to register a portion of their shares
for subsequent sale. The Company will also incur significant legal and
accounting costs in connection with the acquisition of a business opportunity
including the costs of preparing post-effective amendments,  Forms
8-K, agreements and related reports
and  documents  nevertheless,  the officers and
directors of the Company have not conducted  market research and are
not aware of statistical  data which would support the perceived
benefits of a merger or acquisition  transaction for the owners of a
business opportunity.




The
Company does not intend to make any loans to any prospective merger or
acquisition candidates or to unaffiliated third parties.




Sources
of Opportunities




The
Company  anticipates that business  opportunities for
possible  acquisition will be referred by
various  sources,  including  its  officers  and  directors,
professional advisers, securities broker-dealers,  venture
capitalists,  members of the financial community, and others who may
present unsolicited proposals.




The
Company will seek a potential business opportunity from all known sources, but
will rely principally on personal contacts of its officers and directors as well
as indirect associations between them and other business and professional
people.  It is not presently anticipated that the Company will engage
professional firms specializing in business acquisitions or
reorganizations.




The
officers  and  directors  of the Company
are  currently  employed in other positions  and
will  devote only a portion of their time (not more than three hour
per week)  to the  business  affairs  of
the  Company,  until  such  time as an
acquisition  has been  determined  to be
highly  favorable.  In addition, in the face of competing
demands for their time, the officers and directors may grant priority to their
full-time positions rather than to the Company.




Evaluation
of Opportunities




The
analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company. Management intends to
concentrate on
identifying   prospective   business opportunities
which may be brought to its attention through present associations with
management.  In analyzing  prospective
business  opportunities,  management will consider such
matters as the available technical,  financial and managerial
resources;  working  capital  and  other  financial  requirements;




6


history  of
operation,  if any; prospects for the future;  present and
expected competition; the quality and experience of management services which
may be available and the depth of that  management;  the
potential for further  research,  development or
exploration;  specific  risk factors not
now  foreseeable  but which then may be anticipated to
impact the proposed activities of the Company;  the potential for
growth or expansion;  the potential for profit; the perceived public
recognition or acceptance of products,  services or trades;
name  identification;  and other
relevant  factors.  Officers and directors of each Company
will meet  personally
with   management  and  key  personnel  of  the  firm  sponsoring  the  business
opportunity as part of their investigation.  To the extent possible,
the Company intends to utilize written reports and personal investigation to
evaluate the above factors.  The Company will not acquire or merge
with any company for which audited financial statements cannot be
obtained.




It may be
anticipated that any opportunity in which the Company participates will present
certain risks. Many of these risks cannot be adequately identified prior to
selection of the specific opportunity, and the Company’s shareholders must,
therefore, depend on the ability of management to identify and evaluate such
risk. In the case of some of the opportunities available to the Company, it may
be  anticipated  that
the  promoters  thereof  have been unable to
develop a going concern or that such business is in
its  development  stage in that it has not
generated  significant revenues from its principal business activities
prior to the  Company’s  anticipation.  There is a
risk,  even  after  the  Company’s
participation  in the  activity  and the
related  expenditure  of the  Company’s
funds,  that
the  combined  enterprises  will  still
be unable to become a going concern or advance beyond the
development  stage.  Many of the opportunities may involve
new and untested products, processes, or market strategies which may not
succeed.  Such risks will be assumed by the Company and, therefore,
its shareholders.




The
Company will not restrict its search for any specific kind of business, but may
acquire a venture which is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It is
currently impossible to predict the status of any business in which the Company
may become  engaged,  in that such  business may
need  additional  capital,  may merely desire to
have its shares  publicly  traded,  or may seek
other perceived advantages which the Company may offer.




Acquisition
of Opportunities




In
implementing a structure for a particular business acquisition, the Company may
become a party to a merger, consolidation, reorganization, joint venture,
franchise or licensing agreement with another corporation or entity. It may also
purchase stock or assets of an existing business.  On the consummation
of a transaction, it is possible that the present management and shareholders of
the Company will not be in control of the Company. In addition, a majority or
all of
the  Company’s  officers  and  directors  may,  as  part  of  the  terms  of
the acquisition  transaction,  resign and be replaced by new
officers and  directors without a vote of the Company’s
shareholders.




It is
anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable Federal and
state securities laws.  In some circumstances, however, as a
negotiated element of this transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified time thereafter.  The issuance of
substantial additional securities and their  potential  sale
into any  trading  market  which
may  develop  in the Company’s  Common Stock may
have a depressive  effect on such market.  While the actual
terms of a transaction  to which the Company  may be a
party  cannot be predicted,  it may be expected that the
parties to the business transaction will find it desirable to avoid the creation
of a taxable event and thereby structure
the  acquisition  in  a
so  called  “tax  free”  reorganization  under  Sections
368(a)(1) or 351 of the Internal  Revenue Code of 1986, as amended
(the “Code”). In order to obtain tax free treatment under the Code, it may be
necessary for the owners of the acquired  business to own 80% or more
of the voting  stock of the surviving entity. In such event, the
shareholders of the Company,  including investors  in
this  offering,  would  retain  less  than
20% of the  issued  and outstanding  shares of the
surviving  entity,  which could result in significant
dilution in the equity of such shareholders.




7


As part
of the Company’s investigation,  officers and directors of the Company
will meet personally  with  management and key
personnel,  may visit and inspect
material  facilities,  obtain  independent  analysis
or  verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative measures,
to the extent of the Company’s limited financial resources and management
expertise.




The
manner in which each company participates in an opportunity will depend on the
nature of the  opportunity,  the respective needs and
desires of the company and other
parties,  and  the  relative negotiating strength
of the company and its management.




With
respect to any mergers or acquisitions, negotiations with target company
management will be expected  to focus on
the  percentage  of the Company  which target
company shareholders would acquire in exchange for their shareholdings in the
target company.  Depending upon, among other things, the
target  company’s assets and liabilities, the Company’s shareholders
will in all likelihood hold a
lesser  percentage  ownership  interest in the
Company  following  any merger or acquisition. The
percentage ownership may be subject to significant reduction in the event the
Company acquires a target company with substantial assets.  Any merger
or acquisition  effected  by
the  Company  can
be  expected  to  have a significant dilutive
effect on the percentage of shares held by the Company’s
shareholders.




The
Company will not have sufficient funds (unless it is able to raise funds in a
private placement) to undertake any significant development, marketing and
manufacturing of any products which may be acquired.




Accordingly,
following the acquisition of any such product, the Company will, in
all  likelihood,  be required to either seek debt or
equity  financing or obtain funding from third parties,  in
exchange for which the Company would probably be required  to give up
a  substantial  portion  of
its  interest  in any  acquired
product.  There is no assurance that the Company will be able either
to obtain additional financing or interest third parties in providing funding
for the further development, marketing and manufacturing of any products
acquired.




It is
anticipated that the investigation of specific business opportunities and
the  negotiation,  drafting  and  execution
of relevant  agreements,  disclosure documents and
other  instruments  will
require  substantial  management time and attention
and  substantial  costs
for  accountants,  attorneys and others.  If a
decision is made not to participate in a specific business opportunity the costs
therefore incurred in the related investigation would not be
recoverable.




Furthermore,
even if an agreement is reached for the participation in a specific business
opportunity, the failure to consummate that transaction may result in the loss
of the Company of the related costs incurred.




Management
believes that the Company may be able to benefit from the use of “leverage” in
the acquisition of a
business   opportunity.   Leveraging a transaction
involves the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price for that
business.




Through a
leveraged transaction, the Company would be required to use less of its
available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business opportunities or to other activities.  The borrowing
involved in a leveraged transaction will ordinarily be secured by the assets of
the business opportunity to be acquired. If the business opportunity acquired is
not able to generate  sufficient  revenues to
make




8


payments
on the debt incurred by the Company to acquire
that  business  opportunity,  the lender would be
able to
exercise  the  remedies  provided  by  law  or  by  contract.  These
leveraging techniques, while reducing the amount of funds that the Company must
commit to acquiring a business opportunity, may correspondingly increase the
risk of loss to the Company. No assurance can be given as to the terms or the
availability of financing for any acquisition by the Company.  No
assurance can be given as to the terms or the availability  of
financing for any acquisition by the Company.
During  periods  when  interest  rates
are  relatively  high,  the  benefits  of
leveraging  are not as great as during  periods of
lower  interest rates because the investment in the
business  opportunity  held on a leveraged basis will only
be profitable if it generates  sufficient revenues to cover the
related debt and other costs of
the  financing.  Lenders  from which the Company
may obtain funds for  purposes  of
a  leveraged  buy-out  may
impose  restrictions  on the future
borrowing,  distribution,  and  operating  policies  of
the  Company.  It is not possible at this time to predict
the  restrictions,  if
any,  which  lenders may impose or the impact thereof on the
Company.




Liquidity
and Capital Resources




Our
balance sheet as of March 31, 2009 reflects cash assets in the amount of $5,289.
Cash and cash equivalents from inception to date have been sufficient to provide
the operating capital necessary to operate to date. The Company had no revenues
and incurred a net loss of $53,402 for the year ended March 31, 2009. During the
period from June 15 2007 (inception) to March 31, 2008, the Company’s balance
sheet reflected $28,675 in cash.




The
Company does not believe that it has sufficient capital to fund its expenses
over the next twelve months.  The Company raised $61,000 in a private
placement held from November 2007 through March 2008.  There can be no
assurance that additional capital will be available to the Company. The Company
currently has no agreements, arrangements or understandings with any person to
obtain funds through bank loans, lines of credit or any other
sources.  Since the Company has no such arrangements or plans
currently in effect, its inability to raise funds for the above purposes will
have a severe negative impact on its ability to remain a viable
company.




Going
Concern Consideration




The
Company is a development stage company and has not commenced planned principal
operations. The Company had no revenues and incurred a net loss of $53,402 for
the fiscal year ended March 31, 2009. In addition, the Company has a working
capital deficiency of $26,677 at March 31, 2009. For the period from June 15,
2007 (inception) to March 31, 2008, the Company incurred a net loss of
$39,375. These factors raise substantial doubt about the Company’s ability to
continue as a going concern.




Recently
Issued Accounting Pronouncements




SAB
108




In
September 2006, the SEC staff issued Staff Accounting Bulletin No. 108, Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements (SAB 108).  SAB 108 was
issued in order to eliminate the diversity in practice surrounding how public
companies quantify financial statement misstatements.  SAB 108
requirements that registrants quantify errors using both a balance sheet and
income statement approach and evaluate whether either approach results in a
misstated amount that, when all relevant quantitative and qualitative factors
are considered, is material.  The Company has considered the SAB 108
to be not material.




9


SFAS
157




In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, Fair
Value Measurements(SFAS 157).  SFAS 157 provides a common
definition of fair value and establishes a framework to make the measurement of
fair value in generally accepted accounting principles more consistent and
comparable.  SFAS 157 also requires expanded disclosures to provide
information about the extent to which fair value is used to measure assets and
liabilities, the methods and assumptions used to measure fair value, and the
effect of fair value measures on earnings.  SFAS 157 is effective for
the Company’s year end 2008, although early adoption is
permitted.  The Company has considered SFAS 157 to be not
material.




SFAS
162




The FASB
has issued FASB Statement No. 162, The
Hierarchy of Generally Accepted Accounting Principles (SFAS
162).  SFAS 162 is intended to improve financial reporting by
identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with U.S. generally accepted accounting principles for
nongovernmental entities.  The hierarchy under SFAS 162 is as
follows:




●
            FASB
      Statements of Financial Accounting Standards and Interpretations, FASB
      Statement 133 Implementation Issues, FASB Staff Positions, AICPA
      Accounting Research Bulletins and Accounting Principles Board Opinions
      that are not superseded by actions of the FASB, and Rules and interpretive
      releases of the SEC for SEC
registrants.




●
            FASB
      Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and
      Accounting Guides and Statements of
Position.




●
            AICPA
      Accounting Standards Executive Committee Practice Bulletins that have been
      cleared by the FASB, consensus positions of the EITF, and Appendix D EITF
      topics.




Statement
162 is effective 60 days following the SEC’s approval of the PCAOB amendments to
AU Section 411, The
Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.  Since SFAS 162 is only effective for
nongovernmental entities, the GAAP hierarchy will remain in AICPA Statement on
Auditing Standards (SAS) No. 69, The
Meaning of “Present Fairly in Conformity with Generally Accepted Accounting
Principles” in the Independent Auditor’s Report, for state and local
governmental entities and federal governmental entities.  The Company
believes the adoption of this standard will not have a material impact on the
financial condition or the results of the Company’s operations.




Off-Balance
Sheet Arrangements




We have
no off-balance sheet arrangements.





Item
      7A.
            Quantitative
      and Qualitative Disclosures About Market
Risk.




A smaller
reporting company is not required to provide the information required by this
item.




10







Item
      8.
            Financial
      Statements.




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Board of
Directors and Stockholders
 Entertainment
Art, Inc.
  We have
audited the accompanying balance sheets of Entertainment Art, Inc. (a
Development Stage Company) (“the Company”) as of March 31, 2009 and 2008 and the
related statements of operations, stockholders’ equity and cash flows for the
year ended March 31, 2009, for the period June 15, 2007 (inception) to March 31,
2008 and for the period June 15, 2007 (inception) to March 31,
2009.  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.  Also, an audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Entertainment Art, Inc. at March
31, 2009 and 2008, and the results of its operations and its cash flows for the
year ended March 31, 2009, the period June 15, 2007 (inception) to March 31,
2008 and for the period June 15, 2007 (inception) to March 31, 2009 in
conformity with accounting principles generally accepted in the United States of
America.
  The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern.  As discussed in Note 2 to the financial
statements, the Company has incurred an operating loss for the year ended March
31, 2009, has had no revenues and has not commenced planned principal
operations.  These factors raise substantial doubt about the Company’s
ability to continue as a going concern.  Management’s plans regarding
those matters are also described in Note 2.  The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
   WOLINETZ,
LAFAZAN & COMPANY, P.C.
  Rockville
Centre, New York
 June 15,
2009
 F-1
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 BALANCE
SHEET
  ASSETSMarch
      31,2009
                  
                  
                  2008Current
      Assets:Cash
                  
                  $
                  5,289
                  
                  
                  $
                  28,675Prepaid
      Expenses
                  
                  
                  -
                  
                  
                  
                  1,050Total
      Current Assets
                  
                  
                  5,289
                  
                  
                  
                  29,725Deferred
      Offering Costs
                  
                  
                  -
                  
                  
                  
                  8,000Total
      Assets
                  
                  $
                  5,289
                  
                  
                  $
                  37,725LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIENCY)Current
      Liabilities:Accounts
      Payable - Related Party
                  
                  $
                  28,593
                  
                  
                  $
                  10,000Accrued
      Liabilities
                  
                  
                  3,373
                  
                  
                  
                  1,000Total
      Current Liabilities
                  
                  
                  31,966
                  
                  
                  
                  11,000Total
      Liabilities
                  
                  
                  31,966
                  
                  
                  
                  11,000Commitments
      and ContingenciesStockholders’
      Equity (Deficiency):Preferred
      Stock, $.001 par value; 10,000,000 shares authorized, none issued and
      outstanding
                  
                  
                  -
                  
                  
                  
                  -Common
      Stock, $.001 par value; 100,000,000 shares authorized, 1,810,000 shares
      issued and outstanding
                  
                  
                  1,810
                  
                  
                  
                  1,810Additional
      Paid-In Capital
                  
                  
                  64,290
                  
                  
                  
                  64,290Deficit
      Accumulated During the Development Stage
                  
                  
                  (92,777
                  )
                  
                  
                  (39,375
                  )Total
      Stockholders’ Equity (Deficiency)
                  
                  
                  (26,677
                  )
                  
                  
                  26,725Total
      Liabilities and Stockholders’ Equity (Deficiency)
                  
                  $
                  5,289
                  
                  
                  $
                  37,725
  The
accompanying notes are an integral part of these financial
statements.
  F-2
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENT
OF OPERATIONS
  For
      the
                    Year
      Ended
                    March
      31, 2009
                  
                  
                  For
      the Period
                    June
      15, 2007
                    (Inception)
      to
                    March
      31, 2008
                  
                  
                  For
      the Period
                    June
      15, 2007
                    (Inception)
      to
                    March
      31, 2009Net
      Revenues
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Costs
      and Expenses:Rent
                  
                  
                  3,000
                  
                  
                  
                  10,000
                  
                  
                  
                  13,000Consulting
      Fees
                  
                  
                  -
                  
                  
                  
                  9,000
                  
                  
                  
                  9,000Professional
      Fees
                  
                  
                  42,802
                  
                  
                  
                  2,000
                  
                  
                  
                  44,802Other
      Selling, General andAdministrative
      Expenses
                  
                  
                  7,600
                  
                  
                  
                  18,375
                  
                  
                  
                  25,975Total
      Costs and Expenses
                  
                  
                  53,402
                  
                  
                  
                  39,375
                  
                  
                  
                  92,777Net
      Loss
                  
                  $
                  (53,402
                  )
                  
                  $
                  (39,375
                  )
                  
                  $
                  (92,777
                  )Basic
      and Diluted Loss Per Share
                  
                  $
                  (.03
                  )
                  
                  $
                  (.03
                  )Weighted
      Average Common Shares Outstanding
                  
                  
                  1,810,000
                  
                  
                  
                  1,393,959
  The
accompanying notes are an integral part of these financial
statements.
  F-3
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENT
OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
 FOR
THE PERIOD JUNE 15, 2007 (INCEPTION) TO MARCH 31,
2009
  Additional
                  
                  
                  DeficitAccumulatedDuring
      theCommon
      Stock
                  
                  
                  Paid-In
                  
                  
                  DevelopmentShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Stage
                  
                  
                  TotalBalance,
      June 15, 2007
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Common
      Stock Issued to Founders at $.00425 per share, June 2007
                  
                  
                  1,200,000
                  
                  
                  
                  1,200
                  
                  
                  
                  3,900
                  
                  
                  
                  -
                  
                  
                  
                  5,100Common
      Stock Issued to Private Investors at $.10 Per Share, November 2007 to
      March 2008
                  
                  
                  610,000
                  
                  
                  
                  610
                  
                  
                  
                  60,390
                  
                  
                  
                  -
                  
                  
                  
                  61,000Net
      Loss for the Period
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (39,375
                  )
                  
                  
                  (39,375
                  )Balance,
      March 31, 2008
                  
                  
                  1,810,000
                  
                  
                  
                  1,810
                  
                  
                  
                  64,290
                  
                  
                  
                  (39,375
                  )
                  
                  
                  26,725Net
      Loss for the year ended March 31, 2009
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (53,402
                  )
                  
                  
                  (53,402
                  )Balance,
      March 31, 2009
                  
                  
                  1,810,000
                  
                  
                  $
                  1,810
                  
                  
                  $
                  64,290
                  
                  
                  $
                  (92,777
                  )
                  
                  $
                  (26,677
                  )
  The
accompanying notes are an integral part of these financial
statements.
  F-4
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENT
OF CASH FLOWS
  For
      the
                    Year
      Ended
                    March
      31, 2009
                  
                  
                  For
      the Period
                    June
      15, 2007
                    (Inception)
      to
                    March
      31, 2008
                  
                  
                  For
      the Period
                    June
      15, 2007(Inception) to
                    March
      31, 2009Cash
      Flows from Operating Activities:Net
      Loss
                  
                  $
                  (53,402
                  )
                  
                  $
                  (39,375
                  )
                  
                  $
                  (92,777
                  )Adjustments
      to Reconcile Net Loss to Net Cash Used in Operating
      Activities:Decrease
      (Increase) in Prepaid Expenses
                  
                  
                  1,050
                  
                  
                  
                  (1,050
                  )
                  
                  
                  -Decrease
      in Deferred Offering Costs
                  
                  
                  8,000
                  
                  
                  
                  -
                  
                  
                  
                  8,000Increase
      in Accounts Payable - Related Party
                  
                  
                  18,593
                  
                  
                  
                  2,000
                  
                  
                  
                  20,593Increase
      in Accrued Liabilities
                  
                  
                  2,373
                  
                  
                  
                  1,000
                  
                  
                  
                  3,373Net
      Cash Used in Operating Activities
                  
                  
                  (23,386
                  )
                  
                  
                  (37,425
                  )
                  
                  
                  (60,811
                  )Cash
      Flows from Investing Activities:
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Cash
      Flows from Financing Activities:Proceeds
      from Sale of Common Stock
                  
                  
                  -
                  
                  
                  
                  66,100
                  
                  
                  
                  66,100Net
      Cash Provided by Financing Activities
                  
                  
                  -
                  
                  
                  
                  66,100
                  
                  
                  
                  66,100(Decrease)
      Increase in Cash
                  
                  
                  (23,386
                  )
                  
                  
                  28,675
                  
                  
                  
                  5,289Cash
      – Beginning of Period
                  
                  
                  28,675
                  
                  
                  
                  -
                  
                  
                  
                  -Cash
      – End of Period
                  
                  $
                  5,289
                  
                  
                  $
                  28,675
                  
                  
                  $
                  5,289Supplemental
      Disclosures of Cash Flow Information:Interest
      Paid
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Income
      Taxes Paid
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Supplemental
      Disclosures of Non-Cash Financing Activities:Deferred
      Offering Costs Recorded in Accounts Payable - Related
Party
                  
                  $
                  -
                  
                  
                  $
                  8,000
                  
                  
                  $
                  8,000
  The
accompanying notes are an integral part of these financial
statements.
  F-5
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
  NOTE
      1 -
                Summary
      of Significant Accounting
      Policies  Organization
  Entertainment
Art, Inc. (“the Company”) was incorporated on June 15, 2007 under the laws of
the State of Nevada.
  The
Company has not yet generated revenues from planned principal operations and is
considered a development stage company as defined in Statement of Financial
Accounting Standards (“SFAS”) No. 7. The Company intended to focus on designing,
providing and selling a line of fashionable zip bags. The Company has since
abandoned its business plan and is now seeking an operating company with which
to merge or acquire. Accordingly, the Company is now considered a blank check
company. There is no assurance, however, that the Company will achieve its
objectives or goals.
  Cash
and Cash Equivalents
  The
Company considers all highly-liquid investments purchased with a maturity of
three months or less to be cash equivalents.
  Deferred
Offering Costs
  Deferred
offering costs of $8,000 related to a proposed offering of common stock by the
Company were written off during the year ended March 31, 2009 as professional
fees.
  Revenue
Recognition
  For
revenue from product sales, the Company will recognize revenue in accordance
with Staff Accounting Bulletin No. 104, “Revenue Recognition” (SAB No. 104),
which superseded Staff Accounting Bulletin No. 101, “Revenue Recognition in
Financial Statements” (SAB No. 101). SAB No. 104 requires that four basic
criteria must be met before revenue can be recognized: (1) persuasive evidence
of an arrangement exists; (2) delivery has occurred; (3) the selling price is
fixed and determinable; and (4) collectibility is reasonably assured.
Determination of criteria (3) and (4) are based on management’s judgment
regarding the fixed nature of the selling prices of the products delivered and
the collectibility of those amounts. Provisions for discounts and rebates to
customers, estimated returns and allowance, and other adjustments will be
provided for in the same period the related sales are recorded.
  Advertising
Costs
  Advertising
costs will be charged to operations when incurred. The Company did not incur any
advertising costs during the year ended March 31, 2009 or for the period June
15, 2007 (inception) to March 31, 2008.
  Income
Taxes
  The
Company accounts for income taxes using the asset and liability method described
in SFAS No. 109, “Accounting For Income Taxes”, the objective of which is to
establish deferred tax assets and liabilities for the temporary differences
between the financial reporting and the tax bases of the Company’s assets and
liabilities at enacted tax rates expected to be in effect when such amounts are
realized or settled. A valuation allowance related to deferred tax assets is
recorded when it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
  F-6
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
  NOTE
      1 -
                Summary
      of Significant Accounting Policies
      (Continued)
  Loss
Per Share
  The
computation of loss per share is based on the weighted average number of common
shares outstanding during the period presented. Diluted loss per common share is
the same as basic loss per common share as there are no potentially dilutive
securities outstanding (options and warrants).
  Accounting
Estimates
  The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosures of contingent assets and liabilities at the date of
the financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
  Fair
Value of Financial Instruments
  The
carrying value of cash and accounts payable approximates fair value because of
the immediate or short-term maturity of these financial
instruments.
  Research
and Development
  Research
and development costs will be charged to expense as incurred. The Company did
not incur any research and development costs during the year ended March 31,
2009 or the period June 15, 2007 (inception) to March 31, 2008.
  Recently
Issued Accounting Pronouncements
  SAB
108
  In
September 2006, the SEC staff issued Staff Accounting Bulletin No. 108, Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements(SAB 108). SAB 108 was issued in order
to eliminate the diversity in practice surrounding how public companies quantify
financial statement misstatements. SAB 108 requirements that registrants
quantify errors using both a balance sheet and income statement approach and
evaluate whether either approach results in a misstated amount that, when all
relevant quantitative and qualitative factors are considered, is material. The
Company has considered the SAB 108 to be not material.
  SFAS
157
  In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, Fair
Value Measurements(SFAS 157). SFAS 157 provides a common definition of
fair value and establishes a framework to make the measurement of fair value in
generally accepted accounting principles more consistent and comparable. SFAS
157 also requires expanded disclosures to provide information about the extent
to which fair value is used to measure assets and liabilities, the methods and
assumptions used to measure fair value, and the effect of fair value measures on
earnings. SFAS 157 is effective for the Company’s year end 2008, although early
adoption is permitted. The Company has considered SFAS 157 to be not
material.
  F-7
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
  NOTE
      1 -
                Summary
      of Significant Accounting Policies
      (Continued)
 Recently Issued Accounting
Pronouncements (Continued)
  SFAS 162
  The FASB
has issued FASB Statement No. 162, The
Hierarchy of Generally AcceptedAccounting
Principles(SFAS 162). SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. generally accepted accounting principles for
nongovernmental entities. The hierarchy under SFAS 162 is as
follows:
  ●
                FASB
      Statements of Financial Accounting Standards and Interpretations, FASB
      Statement 133 Implementation Issues, FASB Staff Positions, AICPA
      Accounting Research Bulletins and Accounting Principles Board Opinions
      that are not superseded by actions of the FASB, and Rules and interpretive
      releases of the SEC for SEC
registrants.
  ●
                FASB
      Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and
      Accounting Guides and Statements of
Position.
  ●
                AICPA
      Accounting Standards Executive Committee Practice Bulletins that have been
      cleared by the FASB, consensus positions of the EITF, and Appendix D EITF
      topics.
  Statement
162 is effective 60 days following the SEC's approval of the PCAOB amendments to
AU Section 411, The
Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.Since SFAS 162 is only effective for nongovernmental
entities, the GAAP hierarchy will remain in AICPA Statement on Auditing
Standards (SAS) No. 69, The
Meaning of "Present Fairly in Conformity with Generally Accepted Accounting
Principles"in the Independent Auditor's Report, for state and local
governmental entities and federal governmental entities. The Company believes
the adoption of this standard will not have a material impact on the financial
condition or the results of the Company's operations.
 NOTE 2
      -
                  Going
      Concern
 The
Company is a development stage company and has not commenced planned principal
operations. The Company had no revenues and incurred a net loss of $53,402 for
the year ended March 31, 2009, and a net loss of $39,375 for the period June 15,
2007 (inception) to March 31, 2008. In addition, the Company had a working
capital deficiency and stockholders' deficiency of $26,677 at March 31, 2009.
These factors raise substantial doubt about the Company’s ability to continue as
a going concern.
  There can
be no assurance that sufficient funds required during the next year or
thereafter will be generated from operations or that funds will be available
from external sources such as debt or equity financings or other potential
sources. The lack of additional capital resulting from the inability to generate
cash flow from operations or to raise capital from external sources would force
the Company to substantially curtail or cease operations and would, therefore,
have a material adverse effect on its business. Furthermore, there can be no
assurance that any such required funds, if available, will be available on
attractive terms or that they will not have a significant dilutive effect on the
Company’s existing stockholders.
  The
accompanying financial statements do not include any adjustments related to the
recoverability or classification of asset-carrying amounts or the amounts and
classification of liabilities that may result should the Company be unable to
continue as a going concern.
  F-8
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 NOTE 3
      -
                  Income
      Taxes
 At March
31, 2009, the Company had available a net-operating loss carry-forward for
Federal tax purposes of approximately $93,000, which may be applied against
future taxable income, if any, through 2028. Certain significant changes in
ownership of the Company may restrict the future utilization of these tax loss
carry-forwards.
  At March
31, 2009, the Company has a deferred tax asset of approximately $40,000
representing the benefit of its net operating loss carry-forward. The Company
has not recognized the tax benefit because realization of the tax benefit is
uncertain and thus a valuation allowance has been fully provided against the
deferred tax asset. The difference between the Federal Statutory Rate of 34% and
the Company’s effective tax rate of 0% is due to an increase in the valuation
allowance of approximately $27,000 for the year ended March 31,
2009.
 NOTE 4
      -
                  Common
      Stock
 In June
2007 the Company issued 1,200,000 shares of common stock to its Founders for
$5,100.
  The
Company sold 610,000 shares of common stock to private investors, from November
2007 to March 2008, at $.10 per share for gross proceeds of
$61,000.
 NOTE 5
      -
                  Preferred
      Stock
 The
Company’s Board of Directors may, without further action by the Company’s
stockholders, from time to time, direct the issuance of any authorized but
unissued or unreserved shares of preferred stock in series and at the time of
issuance, determine the rights, preferences and limitations of each series. The
holders of preferred stock may be entitled to receive a preference payment in
the event of any liquidation, dissolution or winding-up of the Company before
any payment is made to the holders of the common stock. Furthermore, the board
of directors could issue preferred stock with voting and other rights that could
adversely affect the voting power of the holders of the common
stock.
 NOTE 6
      -
                  Related
      Party
Transactions
 During
the period June 15, 2007 (inception) to March 31, 2008, the Company paid
approximately $35,000 to an entity owned by two of its officers' and directors.
Included in such payments was consulting fees and rent in the amount of $9,000
and $10,000, respectively. The Company rents space from this entity on a month
to month basis.
  During
the period June 15, 2007 (inception) to March 31, 2008, the Company paid a law
firm owned by an officer and director approximately $1,000 for start-up
organization expenses.
  At March
31, 2008 accounts payable - related parties represents legal fees owed to a law
firm owned by an officer and director of the Company.
  F-9
  ENTERTAINMENT
ART, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS
 NOTE 6
      -
                    Related
      Party Transactions(Continued)
  During
the year ended March 31, 2009, the Company was charged approximately $3,600 by
an entity owned by two of its officers' and directors. Included in such payments
was rent in the amount of $3,000. The Company previously rented space from this
entity on a month to month basis.
  At March
31, 2009, accounts payable - related party represents legal fees owed to a law
firm owned by an officer and director of the Company, in the amount of
approximately $25,000 and approximately $3,600 in expenses owed to an entity
owned by two of its officers' and directors.
 NOTE 7
      -
                    Subsequent
      Events
 On May 1,
2009, the principal shareholders of the Company entered into a Stock Purchase
Agreement which provided for the sale of 1,200,000 shares of common stock of the
Company (the "Purchased Shares") owned by the three principals to Medford
Financial Ltd. (the "Purchaser"). The consideration paid for the Purchase
Shares, which represent 66.3% of the issued and outstanding share capital of the
Company on a fully-diluted basis, was $120,000
  In
connection with this change of control, the acquiring entity loaned the Company
$27,500 to satisfy some of its obligations.
  F-10







Item
      9.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure.




None.





Item
      9A.
            Controls
      and Procedures.




Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of March 31, 2009. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of March 31,
2009.




There has
not been any change in our internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period from
June 15, 2007 (inception) to March 31, 2008 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.




Item
      9A(T)
            Controls
      and Procedures.




Management’s
annual report on internal control over financial reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process
designed by, or under the supervision of, a company’s principal executive and
principal financial officers and effected by the company’s board of directors,
management and other personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:




●
            pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      Company;




●
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the Company
      are being made only in accordance with authorizations of management and
      directors of the Company; and




●
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the Company’s assets that
      could have a material effect on the financial statements.




Management acknowledges its
responsibility for establishing and maintaining adequate internal controls over
financial reporting. We are not in compliance with Section 404 of the
Sarbanes-Oxley Act of 2002, but intend to commence shortly the system and
process of documentation and evaluation needed to comply with Section
404.




11


Attestation
report of the registered public accounting firm




This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management’s report
in this annual report.




Changes
in internal control over financial reporting




During
the year ended March 31, 2009, there was no change in our internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect our internal control over financial reporting.





Item
      9B.
            Other
      Information.




None.


PART III





Item
      10.
            Directors,
      Executive Officers and Corporate
Governance.




Directors
and Executive Officers




The
following table sets forth certain information regarding the members of our
board of directors and our executive officers:




Name
      and Business Address
                    
                    Age
                    
                    PositionJoseph
      Koegel
                    
                    54
                    
                    President
      and DirectorDavid
      Lubin
                    
                    44
                    
                    Chief
      Financial Officer, Secretary and
Director




Joseph
Koegel -Since January 2001, Mr. Mr Koegelhas
been the president of Collectible Sales, Inc. which is an independent
manufacturer’s representative company, serving the major catalogs, syndicators
and electronic media with various products including collectibles, health and
beauty products, general merchandise and sports memorabilia. Mr. Koegel is also
the President of Kingwell Trading, LLC, which specializes in the marketing and
sales of solar garden products and houseware items.




David
Lubin has been the principal of David Lubin & Associates, PLLC since
2002. Mr. Lubin counsels clients in all aspects of corporate and securities laws
matters. Mr. Lubin has a J.D. with honors from Brooklyn Law School and a M.B.A.
from Baruch College.




There are
no familial relationships among any of our directors or officers. None of our
directors or officers is a director in any other U.S. reporting companies. None
of our directors or officers has been affiliated with any company that has filed
for bankruptcy within the last five years. The Company is not aware of any
proceedings to which any of the Company’s officers or directors, or any
associate of any such officer or director, is a party adverse to the Company or
any of the Company’s subsidiaries or has a material interest adverse to it or
any of its subsidiaries.




12


Each
director of the Company serves for a term of one year or until the successor is
elected at the Company’s annual shareholders’ meeting and is qualified, subject
to removal by the Company’s shareholders. Each officer serves, at the pleasure
of the board of directors, for a term of one year and until the successor is
elected at the annual meeting of the board of directors and is
qualified.




Section
16(a) Beneficial Ownership Reporting Compliance




Section
16(a) of the Securities Exchange Act of 1934 requires officers and directors of
the Company and persons who own more than ten percent of a registered class of
the Company’s equity securities to file reports of ownership and changes in
their ownership with the Securities and Exchange Commission, and forward copies
of such filings to the Company. We believe, based solely on our review of the
copies of such forms, that during the fiscal year ended March 31, 2009, all
reporting persons complied with all applicable Section 16(a) filing
requirements.




Auditors




Wolinetz,
Lafazan & Company, P.C., an independent registered public accounting firm,
is our auditor.




We do not
currently have a Code of Ethics applicable to our principal executive, financial
and accounting officers. We do not have a “financial expert” on the board or an
audit committee or nominating committee.




Potential
Conflicts of Interest




Since we
do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our directors. The Board of Directors has not established an audit
committee and does not have an audit committee financial expert, nor has the
Board established a nominating committee. The Board is of the opinion that such
committees are not necessary since the Company has only two directors, and to
date, such directors have been performing the functions of such committees.
Thus, there is a potential conflict of interest in that our directors and
officers have the authority to determine issues concerning management
compensation, nominations, and audit issues that may affect management
decisions. We are not aware of any other conflicts of interest with any of our
executive officers or directors.




Involvement
in Certain Legal Proceedings




There are
no legal proceedings that have occurred within the past five years concerning
our directors, or control persons which involved a criminal conviction, a
criminal proceeding, an administrative or civil proceeding limiting one’s
participation in the securities or banking industries, or a finding of
securities or commodities law violations.




13







Item
      11.
            Executive
      Compensation.




Summary
Compensation




SUMMARY
      COMPENSATION TABLENameandprincipalposition
                          (a)
                        Year
                          (b)
                        Salary($)
                          (c)
                        Bonus($)
                          (d)
                        StockAwards($)
                          (e)
                        OptionAwards($)
                          (f)
                        Non-EquityIncentive
      Plan Compensation($)
                          (g)
                        NonqualifiedDeferredCompensationEarnings($)
                          (h)
                        All
      OtherCompensation($)
                          (i)
                        Total($)
                          (j)Joseph Koegel(2)
                        2009
                        0
                        0
                        0
                        0
                        0
                        0
                        0
                        02008(1)
                        0
                        0
                        0
                        0
                        0
                        0
                        4,500
                        4,500(3)Ian Beiss(4)
                        2009
                        0
                        0
                        0
                        0
                        0
                        0
                        0
                        02008(1)
                        0
                        0
                        0
                        0
                        0
                        0
                        4,500
                        4,500(3)David Lubin(5)
                        2009
                        0
                        0
                        0
                        0
                        0
                        0
                        20,000
                        20,0002008(1)
                        0
                        0
                        0
                        0
                        0
                        0
                        10,000
                        10,000(6)




(1) 
Represents the period from June 15, 2007 (Inception) to March 31,
2008.




(2) 
Mr. Koegel has been serving as our Director, President and Chief Executive
Officer since our inception on June 15, 2007.




(3) 
Represents amounts paid to Kingswell Trading, an affiliate of Messrs. Koegel and
Beiss, in consideration for services rendered as a consultant to the
Company.




(4) 
Mr. Beiss had served as our Director, Treasurer and Chief Financial Officer
since our inception on June 15, 2007 until his resignation on May 1,
2009.




(5) 
Mr. Lubin has been serving as our Secretary and a Director since our inception
on June 15, 2007.




(6) 
Represents fees paid to the law firm of David Lubin & Associates, PLLC in
connection with start up organizational expenses, legal fees associated with the
offering conducted November 2007 through March 2008 and the preparation of a
registration statement. As of March 31, 2008, the Company owed the law firm of
David Lubin & Associates, PLLC, a total of $10,000, of which the Company
paid $5,000 on June 20, 2008.  As of March 31, 2009, the Company owed
the law firm of David Lubin & Associates, PLLC, a total of $25,000, of which
the Company paid $22,500 in May 2009.




Outstanding
Equity Awards




Since our
incorporation on June 15, 2007, no stock options or stock appreciation rights
were granted to any of our directors or executive officers, none of our
directors or executive officers exercised any stock options or stock
appreciation rights, and none of them hold unexercised stock options. We have no
long-term incentive plans. Our directors and officers do not have unexercised
options, stock that has not vested, or equity incentive plan
awards.





Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.




The
following table lists, as of June 17, 2009, the number of shares of common stock
of our Company that are beneficially owned by (i) each person or entity known to
our Company to be the beneficial owner of more than 5% of the outstanding common
stock; (ii) each officer and director of our Company; and (iii) all officers and
directors as a group. Information relating to beneficial ownership of common
stock by our principal shareholders and management is based upon information
furnished by each person using




14


“beneficial
ownership” concepts under the rules of the Securities and Exchange Commission.
Under these rules, a person is deemed to be a beneficial owner of a security if
that person has or shares voting power, which includes the power to vote or
direct the voting of the security, or investment power, which includes the power
to vote or direct the voting of the security. The person is also deemed to be a
beneficial owner of any security of which that person has a right to acquire
beneficial ownership within 60 days. Under the Securities and Exchange
Commission rules, more than one person may be deemed to be a beneficial owner of
the same securities, and a person may be deemed to be a beneficial owner of
securities as to which he or she may not have any pecuniary beneficial interest.
Except as noted below, each person has sole voting and investment
power.




The
percentages below are calculated based on 1,810,000 shares of our common stock
issued and outstanding as of June 17, 2009. We do not have any outstanding
options, warrants or other securities exercisable for or convertible into shares
of our common stock. Unless otherwise indicated, the address of each person
listed is c/o Entertainment Art, Inc., 571 Washington Avenue, West Hempstead,
New York 11552.




Name
      of Beneficial Owner
                      
                      Number
      of
                        Shares
                        of
      Common
                        Stock
                        Beneficially
                        Owned
                      
                      Percent
      of
                        Common
      Stock
                        Beneficially
                        OwnedMedford
      Financial Ltd.

                          35
      Barack Road, Belize City, Belize
                      
                      
                      1,200,000
                      
                      
                      66.3
                      %Joseph
      Koegel
                      
                      
                      0
                      
                      
                      0
                      %David
      Lubin
                      
                      
                      0
                      
                      
                      0
                      %All
      directors and executive officers as a group (two persons)
                      
                      
                      0
                      
                      
                      0
                      %








Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence.




On June
16, 2007, we issued 400,000 shares of our common stock to Mr. Joseph Koegel, our
President and a director of the Company.  These shares were issued in
exchange for $$1,700. The shares were issued under Section 4(2) of the
Securities Act of 1933, as amended.  Mr. Koegel is an officer and
director of the Company and had access to all of the information which would be
required to be included in a registration statement, and the transaction did not
involve a public offering.




On June
16, 2007, we issued 400,000 shares of our common stock to Mr. Ian Beiss, who was
our treasurer and a director until May 2009.  These shares were issued
in exchange for $1,700. The shares were issued under Section 4(2) of the
Securities Act of 1933, as amended.  Mr. Beiss is an officer and
director of the Company and had access to all of the information which would be
required to be included in a registration statement, and the transaction did not
involve a public offering.  During the period from June 15, 2007
(inception) to March 31, 2008, our board of directors agreed to compensate Mr.
Beiss in the amount of $5,000 in consideration for services rendered to the
Company as a consultant.




On June
16, 2007, we issued 400,000 shares of our common stock to Mr. David Lubin, our
Secretary and a director of the Company.  These shares were issued in
exchange for $$1,700. The shares were issued under Section 4(2) of the
Securities Act of 1933, as amended.  Mr. Lubin is an officer and
director of the Company and had access to all of the information which would be
required to be included in a registration statement, and the transaction did not
involve a public offering.




15


Kingswell
Trading, an affiliate of Messrs. Koegel and Beiss, was paid an aggregate of
$9,000 in consulting fees in consideration for services rendered as a consultant
to the Company during the year ended March 31, 2008.




We have
retained the services of the law firm of David Lubin & Associates, PLLC,
where Mr. Lubin is the sole member, in connection with the preparation of the
Registration Statement relating the offering described in this
prospectus.  As of March 31, 2008, the Company owed the law firm of
David Lubin & Associates, PLLC, a total of $10,000, of which the Company
paid $5,000 on June 20, 2008.  The Company also reimbursed the law
firm of David Lubin & Associates, PLLC approximately $1,000 for the expenses
associated with start up organizational activities. We owed $25,000 in legal
fees as of March 31, 2009 to David Lubin & Associates, of which $22,500 were
paid in May 2009.




In May
2009, Messrs. Koegel, Beiss and Lubin sold their shares in the company to
Medford Financial Ltd., a Belize corporation, for an aggregate of
$120,000.




Director
Independence




We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
We do not believe that any of our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of the American Stock
Exchange.





Item
      14.
            Principal
      Accounting Fees and Services.




Our
principal independent accountant is Wolinetz, Lafazan & Company, P.C. Their
pre-approved fees billed to the Company are set forth below:




For
      Fiscal Year Ended
                  March
      31, 2009
                
                Period
      FromJune 15, 2007(Inception) to
                  March
      31, 2008Audit
      Fees
                
                $9,500
                
                $7,000Audit
      Related Fees
                
                $0
                
                $0Tax
      Fees
                
                $0
                
                $0All
      Other Fees
                
                $0
                
                $0




As of
March 31, 2009, the Company did not have a formal documented pre-approval policy
for the fees of the principal accountant. The Company does not have an audit
committee. The percentage of hours expended on the principal accountant’s
engagement to audit our financial statements for the most recent fiscal year
that were attributed to work performed by persons other than the principal
accountant’s full-time, permanent employees was none.




16


PART IV





Item
      15.
            Exhibits.
      Financial Statement Schedules.




Exhibit
              Description3.1
              Articles
      of Incorporation of Registrant (filed as Exhibit 3.1 to Registration
      Statement on Form S-1, filed with the Securities and Exchange Commission
      on July 18, 2008, file no. 333-152404)3.2
              By-Laws
      of Registrant (filed as Exhibit 3.2 to Registration Statement on Form S-1,
      filed with the Securities and Exchange Commission on July 18, 2008, file
      no. 333-152404)3.3
              Form
      of Stock Certificate (filed as Exhibit 3.3 to Registration Statement on
      Form S-1, filed with the Securities and Exchange Commission on July 18,
      2008, file no. 333-152404)10.1
              Form
      of Regulation D Subscription Agreement (filed as Exhibit 10.1 to
      Registration Statement on Form S-1, filed with the Securities and Exchange
      Commission on July 18, 2008, file no. 333-152404)10.2
              Form
      of Regulation S Subscription Agreement (filed as 10.2 to Registration
      Statement on Form S-1, filed with the Securities and Exchange Commission
      on July 18, 2008, file no. 333-152404)23.1
              Consent
      of Wolinetz, Lafazan & Company, P.C. (filed as Exhibit 23.1 to
      Registration Statement on Form S-1, filed with the Securities and Exchange
      Commission on July 18, 2008, file no. 333-152404)31.1
              Certification
      of Principal Executive Officer pursuant to Section 302(a) of the
      Sarbanes-Oxley Act of 2002(filed herewith).31.1
              Certification
      of Principal Financial Officer pursuant to Section 302(a) of the
      Sarbanes-Oxley Act of 2002(filed herewith).32.1
              Certification
      of Principal Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley (filed herewith).32.2
              Certification
      of Principal Financial Officer pursuant to Section 906 of the
      Sarbanes-Oxley (filed
herewith).




17


SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




Date:
      June 17, 2009ENTERTAINMENT
      ART, INC.By:
            /s/
      Joseph KoegelName:
      Joseph KoegelTitle:
      President, Chief Executive Officer, Chairman and Director (Principal
      Executive Officer)




By:
            /s/
      David LubinName:
      David LubinTitle:
      Chief Financial Officer, Treasurer and Director (Principal Financial and
      Accounting Officer)




In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.




Date:
                      
                      Signature:
                      
                      Name:
                      
                      Title:June
      17, 2009
                      
                      /s/
      Joseph Koegel
                      
                      Joseph
      Koegel
                      
                      President,
      Chief Executive Officer, Chairman and DirectorJune
      17, 2009
                      
                      /s/
      David Lubin
                      
                      David
      Lubin
                      
                      Treasurer
      and
Director






18