SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB

                            Annual Report Pursuant to
                       the Securities Exchange Act of 1934

                       Fiscal Year Ended December 31, 2006

                        Commission file number: 000-32099

                             THE ART BOUTIQUE, INC.
                     -------------------------------------
             (Exact name of registrant as specified in its charter)


        Wyoming                                             83-0269496
      ------------                                        --------------
(State of incorporation)                                (I.R.S. Employer
                                                        Identification No.)

        7th Floor, New Henry House, 10 Ice House St., Central, Hong Kong
                    ----------------------------------------
               (Address of principal executive offices) (Zip Code)

            Registrant's telephone number, including area code: None

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


         Class                         Name of each exchange on which registered
--------------------------------------------------------------------------------
  Common Stock, No Par Value                         None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for at least the past 90 days. Yes X No

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained,  to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. X

State issuer's revenues for its most recent fiscal year. $0

As of the close of  trading on April 10,  2007,  there  were  47,471,900  common
shares  were  issued and  outstanding,  18,271,900  shares of which were held by
non-affiliates.  The  aggregate  market  value  of the  common  shares  held  by
non-affiliates,  based on the average  closing bid and asked prices on April 10,
2007, was approximately $3,654,380.


                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). X Yes  __ No


<PAGE>



                                TABLE OF CONTENTS

PART I                                                                     Page

         Item 1. Description of Business                                      1
         Item 2. Description of Property                                      2
         Item 3. Legal Proceedings                                            2
         Item 4. Submission of Matters to a Vote of Security Holders          2

PART II

         Item 5. Market for Common Equity and Related Stockholder Matters     2
         Item 6. Management's Discussion and Analysis or Plan of Operation    3
         Item 7. Financial Statements                                         5
         Item 8. Changes in and Disagreements With Accountants on Accounting  6
                 and Financial Disclosure
         Item 8a Controls and Procedures                                      6
         Item 8a (T) Controls and Procedures (Not Applicable)                 6
         Item 8b Other Information                                            6

PART III

         Item 9. Directors, Executive Officers, Promoters and Control
                 Persons; Compliance with Section 16(a) of the Exchange Act   8
         Item 10. Executive Compensation                                      9
         Item 11. Security Ownership of Certain Beneficial Owners and
                  Management                                                  11
         Item 12. Certain Relationships and Related Transactions              12
         Item 13. Exhibits and Reports on Form 8-K                            12
         Item 14. Principal Accountant Fees and Services                      12


SIGNATURES                                                                    14




<PAGE>





                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------
General Overview
----------------
     The Art Boutique, Inc. (the Company) was incorporated under the laws of the
State of Wyoming on May 15, 1984 as Fred Hudson  Studios,  Inc.  Since 1996, the
Company's  activities have been  re-organizational  ones,  directed at seeking a
business. The name was changed to The Art Boutique, Inc. in 1996.

     In November 2000,  the Company  executed a Plan and Articles of Merger with
Kearney, Inc. At the time of the effective date of the merger, the Company owned
100% of the issued and outstanding  stock of Kearney,  Inc. Prior to the merger,
720,000 of the outstanding shares of Kearney,  Inc. were rescinded.  The Company
is the surviving entity after the merger.

     On October 20, 2003,  Capital Hero Holdings,  LTD, a British Virgin Islands
company,  purchased  3,700,000  shares of the common  stock of the Company  from
Elaine Erickson and Michael R. Butler.

     In 2003, the Company formed a new wholly-owned subsidiary under the name of
Key Chance International,  LTD. ("Key Chance") which was existing under the laws
of the British  Virgin  Islands.  Since then Key Chance has been a  wholly-owned
foreign operating subsidiary of the Company.

     During the year ended  December 31,  2006,  the Company has been engaged in
pursuing business  opportunities for the purpose of enhancing shareholder value.
During  the year  ended  December  31,  2005 and 2006,  the  Company  explored a
business opportunity involving the potential real estate redevelopment of landed
properties  in the  Republic  of Palau  located  within  the  Federal  States of
Micronesia,  the Company has since then been  engaged in  negotiations  with the
persons in control of Micronesian  Resort Inc. ("MRI"),  a corporation  existing
under the laws of the British Virgin Islands.  MRI was and is the lessee under a
lease agreement,  to which the lessor in the capacity of a sub-lessor under such
lease  agreement has agreed to grant a sub-lease to MRI as sub-lessee of a piece
of  property  situated  in a location  being  adjacent  to the Koror  Babelthuap
Bridge,  southwest of Ngerebeselch in Airai State in the Republic of Palau.  The
lease has a term of 50 years,  commencing upon the date of the lease,  April 25,
2005.  It was the intention of MRI to invest in the  construction  of a high end
resort hotel on such property.

     The board of directors of the Company  considered the  redevelopment of the
property into a high end resort hotel on the property.  In connection  with such
plans,  the Company  entered into a stock exchange  agreement with Mr. Choy Kwok
Fai (Mr.  Choy),  who held a 90% interest of MRI. The stock exchange  agreement,
dated May 24,  2005,  provided  for the Company to acquire 80% of the issued and
outstanding  share  capital of MRI by Key Chance.  In exchange  for the 80%, the
Company  agreed to issue Mr.  Choy  25,000,000  shares of the  Company's  common
stock. Since the closing of the stock exchange  agreement,  the Company has been
in  negotiation  with various  parties in connection  with the  contribution  of
adequate  capital as well as the  preparation of business plans for the purposes
of carrying out the redevelopment project. As of the date of this annual report,
the  Company has not been able to develop an  adequate  business  plan or has it
been able to find adequate capital in order to exploit such business plan.

                                       1

<PAGE>




     Currently,  the Company does not have any loan arrangements or arrangements
for any financing whatsoever relating to any business opportunities.

     In August 2006, the Company  underwent a change in management.  See Item 9.
Directors,   Executive  Officers,   Promoters,  Control  Persons  and  Corporate
Governance; Compliance with Section 16(a) of the Exchange Act.

Employees
---------

     As of  December  31,  2006,  the Company  had no  employees  apart from the
employment of a part-time  secretary.  Two  consultants act as management of the
Company as officers  and  directors.  Management  of the Company  expects to use
consultants,  attorneys and accountants as necessary,  and does not anticipate a
need to engage any full-time  employees so long as it is seeking and  evaluating
business  opportunities.  The need for employees and their  availability will be
addressed  in  connection  with  the  decision  whether  or  not to  acquire  or
participate in specific business opportunities. See "Executive Compensation" and
under "Certain Relationships and Related Transactions."

ITEM 2.  PROPERTIES
-------------------
     The Company  currently  maintains a mailing  address at the 7th Floor,  New
Henry House, 10 Ice House St.,  Central,  Hong Kong which is the mailing address
of its attorney in Hong Kong. Other than this mailing address,  the Company does
not currently maintain any other office facilities,  and does not anticipate the
need for maintaining  office  facilities at any time in the foreseeable  future.
The Company pays no rent or other fees for the use of this mailing address.

ITEM 3.  LEGAL PROCEEDINGS
-------------------------
     As of  December  31,  2006,  the  Company  was  not a  party  to any  legal
proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
        On  December  9,  2006,  the  Company  was  to  hold  a  meeting  of its
shareholders  in Kowloon,  Hong Kong. The meeting was cancelled due to a failure
to have a presence of a quorum of the Company's voting shareholders of record.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock
---------------------------
The Company's common stock is presently quoted on the over-the-counter  bulletin
board maintained by the National  Association of Securities  Dealers,  Inc. (the
"NASD") under the symbol "ARTB.OB".

The  following  table  sets forth the range of high and low  quotations  for the
common stock of each full quarterly  period during the fiscal year or equivalent
period for the fiscal periods indicated below. The quotations were obtained from
information published by the NASD and reflect interdealer prices, without retail
mark-up,  markdown  or  commission  and may  not  necessarily  represent  actual
transactions.

                                       2

<PAGE>





2005                    High            Low
----                    ----            ---
1st Quarter             $0.35           $0.14
2nd Quarter             $0.20           $0.07
3rd Quarter             $0.20           $0.20
4th Quarter             $0.39           $0.12

2006
----
1st Quarter             $0.28           $0.10
2nd Quarter             $0.35           $0.20
3rd Quarter             $0.35           $0.20
4th Quarter             $0.35           $0.20

         As of December 31, 2006, there were  approximately 97 record holders of
the Company's common Stock.

Dividends
---------
         The Company has not  declared or paid any cash  dividends on its common
stock and does not anticipate paying dividends for the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------------------------------------------------------------------------------
OF OPERATIONS
-------------
Certain  statements  contained  in this  Form  10-KSB  contain  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995 and involve risks and  uncertainties  that could cause actual results to
differ   materially  from  the  results,   financial  or  otherwise,   or  other
expectations described in such forward-looking  statements.  Any forward-looking
statement or statements  speak only as of the date on which such statements were
made,  and the Company  undertakes no  obligation to update any  forward-looking
statement  to  reflect  events or  circumstances  after  the date on which  such
statements  are  made  or  reflect  the  occurrence  of  unanticipated   events.
Therefore, forward-looking statements should not be relied upon as prediction of
actual future results.

Our  independent  registered  public  accounting  firm's report on the Company's
consolidated  financial  statements as of December 31, 2006, and for each of the
years in the two-year period then ended,  includes a "going concern" explanatory
paragraph,  that  describes  substantial  doubt about the  Company's  ability to
continue  as a going  concern.  Management's  plans  in  regard  to the  factors
prompting the  explanatory  paragraph are discussed  below and also in Note 2 to
Notes to the Consolidated Financial Statements.

Financial Condition and Changes in Financial Condition
------------------------------------------------------

         The Company has experienced  continuing  losses and shortage of capital
in the past fiscal year.

                                       3

<PAGE>




         During the year ended  December 31, 2006,  the Company has been engaged
in pursuing  business  opportunities  for the purpose of  enhancing  shareholder
value. During the years ended December 31, 2006 and 2005, the Company explored a
business opportunity involving the potential real estate redevelopment of landed
properties  in the  Republic  of Palau  located  within  the  Federal  States of
Micronesia.

         The board of directors of the Company  considered the  redevelopment of
the property  into a high end resort hotel on the property.  In connection  with
such plans,  the Company  entered into a stock exchange  agreement with Mr. Choy
Kwok  Fai (Mr.  Choy),  who  held a 90%  interest  of MRI.  The  stock  exchange
agreement,  dated May 24,  2005,  provided for the Company to acquire 80% of the
issued and outstanding  share capital of MRI by Key Chance.  In exchange for the
80%, the Company  agreed to issue Mr. Choy  25,000,000  shares of the  Company's
common stock. Since the closing of the stock exchange agreement, the Company has
been in negotiation  with various parties in connection with the contribution of
adequate  capital as well as the  preparation of business plans for the purposes
of carrying out the redevelopment project. As of the date of this annual report,
the  Company has not been able to develop an  adequate  business  plan or has it
been able to find adequate capital in order to exploit such business plan.

RESULTS OF  OPERATIONS  FOR THE YEAR ENDED  DECEMBER  31, 2006  COMPARED TO YEAR
ENDED DECEMBER 31, 2005.

     During the years  ended  December  31,  2006 and 2005,  the Company did not
recognize any revenues. The Company incurred an operational loss of $126,735 for
the year  ended  December  31,  2006  compared  to  $697,772  for the year ended
December  31,  2005.  The  decrease  of  $571,037  was  due to the  decrease  in
operational  activities.  The Company had  operational  expenses  consisting  of
expenses  of $126,735 in general  and  administrative  expenses  during the year
ended December 31, 2006 compared to $695,327  during the year ended December 31,
2005.  The  decrease  of  $568,592  was  due in part  to the  Company's  limited
operations during the year ended December 31, 2005.

         The  Company  incurred a net income of  $456,677  during the year ended
December  31,  2006  compared  to a net loss of  $709,207  during the year ended
December 31, 2005.  The increase of  $1,165,884  was due in part to the $571,037
decrease in  operational  expenses  combined  with  income of $583,716  from the
forgiveness of debt held by Key Chance.

Liquidity and Capital Resources
-------------------------------

     At  December  31,  2006,  the  Company  did  not  have  any  cash  or  cash
equivalents, in addition, the Company had no other liquid or tangible assets. At
December 31, 2006, the Company had $92,298 in liabilities, all current.

         During the year ended  December 31, 2006, a shareholder  of the Company
forgave outstanding debt of $415,400.

         The Company will be forced to either borrow or make private  placements
of stock in order to fund  operations.  No assurance exists as to the ability to
achieve loans or make private placements of stock.

                                       4

<PAGE>





Need for Additional Funding
--------------------------

     The  Company  may not be able to  carry  out its plan of  business  without
adequate  funding.  The  Company  cannot  predict  to what  extent  its  current
liquidity and capital  resources  will allow  business  operations or whether it
Will incur further operating losses.  There is no assurance that the Company can
continue as a going concern without substantial  funding,  for which there is no
committed  source.  The  Company  has a deficit  of  working  capital of $92,298
approximately and no revenues or cash flow whatsoever.

     The Company  estimates it will  require  $25,000 to $30,000 to cover legal,
accounting, transfer and miscellaneous costs of being a reporting company in the
next fiscal year.

     The Company may not have  capital  sufficient  to meet the  Company's  cash
needs, in the future.  The Company will have to seek loans or equity  placements
to cover such cash needs.  Lack of capital  may be a  sufficient  impediment  to
prevent it from  accomplishing  the goal of successfully  executing its business
plan of finding a business acquisition. The Company may need to raise additional
funds to conduct its business activities in the next twelve months.

     No commitments to provide  additional funds have been made by management or
other stockholders.  Accordingly,  there can be no assurance that any additional
funds will be available to the Company to allow it to cover its expenses as they
may be incurred.

     Irrespective of whether the Company's cash assets prove to be inadequate to
meet the  Company's  operational  needs,  the Company  might seek to  compensate
providers of services by issuances of stock in lieu of cash.

     Except  as  disclosed  in Item 1 above,  the  Company  has no plans for any
research and development in the next twelve months.  The Company has no plans at
this time for purchases or sales of fixed assets,  which would occur in the next
twelve months.

Going Concern Qualification.
---------------------------
     The Company has incurred losses from operations for the year ended December
31, 2006, and such losses are expected to continue. In addition, the Company has
minimal  working capital but no operating  business,  and $92,298 in debt and no
assets.  The foregoing raises  substantial  doubt about the Company's ability to
continue as a going  concern.  Management's  plans  include  seeking  additional
capital  and/or debt  financing  or the  possible  business  combination  of the
Company.  There is no guarantee  that  additional  capital and/or debt financing
will be available when and to the extent required, or that if available, it will
be on terms acceptable to the Company. The consolidated  financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------
         The response to this item is  submitted  as a separate  section of this
report beginning on page F-1.

                                       5

<PAGE>





ITEM 8.  CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
----------------------------------------------------------------------------
     In  connection  with audits of two most recent fiscal years and any interim
period preceding resignation,  no disagreements exist with any former accountant
on any  matter  of  accounting  principles  or  practices,  financial  statement
disclosure, or auditing scope of procedure,  which disagreements if not resolved
to the  satisfaction  of the former  accountant  would  have  caused him to make
reference  in  connection   with  his  report  to  the  subject  matter  of  the
disagreement(s).

     The principal  accountants'  reports on the financial statements for any of
the past two years  contained no adverse  opinion or a disclaimer of opinion nor
was qualified as to uncertainty,  audit scope, or accounting  principles  except
for the "going concern" qualification.

ITEM 8a CONTROLS AND PROCEDURES
-------------------------------

Evaluation of Internal and Disclosure Controls
----------------------------------------------
     The  management  of the  Company has  evaluated  the  effectiveness  of the
issuer's disclosure controls and procedures as of a date within 90 days prior to
the filing  date of the report  (evaluation  date) and have  concluded  that the
disclosure  controls and procedures are adequate and effective  based upon their
evaluation as of the evaluation date.

     There were no significant  changes in internal controls or in other factors
that could significantly  affect internal controls subsequent to the date of the
most recent evaluation of such,  including any corrective actions with regard to
significant deficiencies and material weaknesses.

ITEM 8a. (T) Controls and Procedures (Not Applicable)
----------------------------------------------------

Item 8b. Other Information
--------------------------
None.

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AND COMPLIANCE WITH
-------------------------------------------------------------------------------
SECTION 16(a)
------------

The  directors  and  executive  officers  of the Company  currently  serving the
Company, were appointed to their offices in August 2006 and are as follows:

 Name                        Age           Position
------                      -----         ----------
Tsang Ping Lam               63            President/Director
Jun Kobayashi                43            Vice President/Director/CEO
Tsang Hung Quen Quentin      32            Secretary/Treasurer/Director
Kentaro Ono                  38            Director
Minoru Hirota                64            Director
Ken Ukai                     38            Director


                                       6

<PAGE>





The individuals listed below held their offices until August 2006.

Hung Tsoi Mow              President/Director
Chi Ho Lui Ronald          Secretary/Treasurer/Director
Choy Kwak Fai              Director
Lam Tuen La                         Director

Mr.  Tsang Ping Lam. Mr.  Tsang  serves as the  President  and a Director of the
Company.  Mr. Tsang was the Managing  Director of Singapore Hong Kong Properties
Investment  Limited,  a company  specializing  in real estate and properties and
listed as a public  company on the Stock Exchange of Hong Kong Ltd. from 1973 to
1982. Mr. Tsang was the Managing  Director of Yahiya  International  Corporation
Limited,  a  Japanese  conglomerate  listed  as a public  company  on the  Stock
Exchange  of Hong  Kong  Ltd.  from  1987 to 1996.  With  more  than 35 years of
management experience in global real estate and infrastructure  industries,  Mr.
Tsang is currently  serving as a Board of Advisor Member to several  independent
business ventures currently being undertaken in Asia.

Mr. Jun Kobayashi.  Mr. Kobayashi serves as the Vice President and a Director of
the Company.  Mr.  Kabayashi  graduated  from Nanzan  University  and Tokyo YMCA
College of Hotel Management School. Mr. Kobayashi was appointed as a Director of
Yahiya  International  Corporation  Limited,  Japanese  conglomerate listed as a
public  company on the Stock  Exchange  of Hong Kong Ltd.  from  1987-1997.  Mr.
Kobayashi  was the General  Manager of the Overseas  Planning  Department of The
Bird Inc., a full-service advertising agency in Japan from 1997-2005. Presently,
he is also the Managing Director of Micronesia  Holdings Inc., a resort and real
estate development company in Japan.

Mr.  Ken Ukai.  Mr.  Ukai  serves as a Director  of the  Company.  Mr.  Ukai was
employed at Ask  Planning  Center,  Inc.,  a company  listed on the JASDAQ Stock
Exchange of Japan from 1991 to 1998. Mr. Ukai has been the Chief Producer of Ask
Kankyo  Kaihatus Co., Ltd., a planning and development  company  specializing in
real estate industry in Japan, since 1998.  Presently,  he is also a Director of
Micronesia Holdings Inc., a resort and real estate development company in Japan.

Mr.  Kentaro Ono.  Mr. Ono serves as a Director of the Company.  Mr. Ono was the
Manager of General Affairs of Yoshiya  Company  Limited,  Japan,  and a catering
industrial  company  from 1989 to 1999.  Mr.  Ono was the  Manager  of the Tokyo
office of Bird of Paradise  Holdings,  Inc., a management  consultant  firm from
1999 to 2005. Presently, Mr. Ono is also a Director of Micronesia Holdings Inc.,
a resort and real estate development company in Japan.

Mr. Tsang Hung Quen Quentin. Mr. Quentin serves as the Secretary,  Treasurer and
a Director of the  Company.  Mr.  Quentin  holds an H.B.A.  degree and an M.B.A.
degree in Finance and  Accounting  from  Richard  Ivey School of Business at The
University of Western Ontario. He is also a Certified Management Accountant. Mr.
Tsang was previously  employed at NCR  Corporation,  an  information  technology
services company, and began his career with a brokerage and securities firm. Mr.
Tsang had  further  acted as an  independent  consultant  to several  technology
ventures.  He was also with an investment group that invests in public equities,
private  company  buyouts,  special  situation  opportunities  and  real  estate
properties.

                                       7

<PAGE>




Mr. Minoru  Hirota.  Mr. Hirota serves as a Director of the Company.  Mr. Hirota
has been a  supervisor  of  Japanese  Society of  Enterprise  for  promotion  of
investment  in China from 2001.  Presently,  Mr.  Hirota is also a president  of
Pioneer Planning Limited, a director of Restoration Co., Ltd. and vice president
of Medical Advertising Agency.

The following are the biographies of those officers and directors of the Company
who resigned their positions in August 2006.

Ronald Chi Ho Lui, age 54. Mr. Liu was the Chief  Executive  Officer,  President
and a director of Minghua Group International Holdings Limited, a company listed
on NASD's Over-The-Counter  Bulletin Board in the United States of America until
March 2003. For the previous years, Mr. Lui had worked for Fuller  International
Development  Limited, a real estate development  company,  as the Southeast Asia
Regional Director.  Mr. Lui is also the Chairman and controlling  stockholder of
Loyalty United (US), Inc., a private  investment holding company that was formed
in October of 2001 and the Chairman of Loyalty United  International  Limited, a
consulting company.

Tsoi Mow Hung,  age 64. Tsoi Mow Hung  graduated  in 1968 from Asia  University,
Japan.  From 1972 to 1978, he was appointed as a director of Singapore Hong Kong
Industrial  Company  Limited,  a public  company listed on the Stock Exchange in
Hong Kong. Mr. Tsoi also has extensive  experience in the jewelry  business.  As
from 1983  until  present,  Mr.  Tsoi has been the  managing  director  of Kohan
Corporation, Japan and Kobiz Corporation, Japan.

Choy Kwok  Fai,  age 61.  Mr.  Choy  Kowk Fai was  graduated  from The Hong Kong
College of  Language  and  Commerce.  From 1971 to 1975,  he was the  manager of
Excellent  Trading  Co.,  Ltd.  and from  1976 to 1978,  he was the  manager  of
Singapore  Hong Kong Industry Co.,  Ltd., a public  company  listed on the Stock
Exchange in Hong Kong He was subsequently the general manager of P.T. Super Food
Indonesia,  Indonesia from 1979 to 1986.  From 1987 to 2005, he was the managing
director of P.T. Imperial Utama Agung, Indonesia.

Lam Tuen La, age 55. Mr. Lam Tuen La was graduated from St. Christopher College,
Hong Kong. From 1972 to 1978, she was the manager of Margurite Thursby Designing
House,  Hong Kong.  From 1979 to 1986,  she was the  manager  of P.T.  Tri Usaha
Indonesia,  Indonesia. Following that, she was the general manager of P.T. Aneka
South Sea Pearl Farming, Indonesia as from 1986 to 2005.

     The Board of  Directors  acts as the Audit  Committee  and the Board has no
separate  committee.  The Company does not have a qualified  financial expert at
this  time  because  it has not been  able to hire a  qualified  candidate.  The
Company intends to continue to search for a qualified individual for hire.

     The Board of Directors has not adopted a Code of Ethics.

     No  appointee  for a  director  position  has  been  subject  of any  civil
regulatory proceeding or any criminal proceeding in the past five years.

     The term of office  of each  director  and  executive  officer  ends at, or
immediately  after,  the next annual  meeting of  shareholders  of the  Company.
Except as otherwise indicated,  no organization by which any director or officer
has been  previously  employed  is an  affiliate,  parent or  subsidiary  of the
Company.

                                       8

<PAGE>




Compliance with Section 16(a)
----------------------------
         Section 16(a) of the  Securities  Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors,  and persons who
own more than 10% of a registered class of the Company's equity  securities,  to
file reports of ownership  and changes in ownership of equity  securities of the
Company  with the  Securities  and  Exchange  Commission  and NASDAQ.  Officers,
directors and  greater-than  10% shareholders are required by the Securities and
Exchange Commission regulation to furnish the Company with copies of all Section
16(a) filings. The Company has not disclosed delinquent or late filers herein.

ITEM 10. EXECUTIVE COMPENSATION

         The  following  table  summarizes  the  compensation  of key  executive
("Named  Executives")  for the years ended  December  31,  2006,  2005 and 2004,
respectively.  No other officers of directors  received  annual  compensation in
excess of $100,000 during the last three complete fiscal years.
<TABLE>
<CAPTION>
<S>                     <C>      <C>          <C>        <C>            <C>           <C>           <C>

                    SUMMARY COMPENSATION TABLE OF EXECUTIVES

  Name and Principal                                                                  Securities
       Position                                          Consulting     Number of     Underlying    Long Term Compensation/
                         Year    Salary ($)   Bonus      Fees/Other       Shares       Options/             Option
                                                          Fees ($)                     SARS (#)
Tsang Pin Lang,         2004         0          0             0             0             0                    0
President (1)
                        2005         0          0             0             0             0                    0
                        2006         0          0             0             0             0                    0
Jun Kobayashi,          2004         0          0             0             0             0                    0
Vice President (1)
                        2005         0          0             0             0             0                    0
                        2006         0          0             0             0             0                    0
Tsang Hung Quen         2004         0          0             0             0             0                    0
Quentin, Secretary &
Treasurer (1)
                        2005         0          0             0             0             0                    0
                        2006         0          0             0             0             0                    0
Hung Tsoi Mow (2)       2004         0          0          153,840          0             0                    0
                        2005         0          0          154,839          0             0                    0
                        2006         0          0             0             0             0                    0
Chi Ho Lui Ronald (3)   2004      153,840       0             0             0             0                    0
                        2005      153,839       0             0             0             0                    0
                        2006         0          0             0             0             0                    0
</TABLE>

(1)  These individuals were appointed their positions in August 2006.

(2)  Mr. Mow resigned as the  President of the Company in August 2006.  Mr. Tsoi
     Mow Hung is the beneficial  owner of Bollywood  Limited.  The Company has a
     consulting services contract with Bollywood Limited for $12,820,  per month
     (USD) or a total of $153,840 in 2005 in (USD).

(3)  Mr. Lui resigned  his position in August 2006.  Ronald Lui is employed as a
     consultant, acting as Secretary/Director,  for the Company, month to month,
     at the rate of $12,820 per month (USD).

     The Company does not have an employee incentive stock option plan.

                                       9

<PAGE>




     There are no plans pursuant to which cash or non-cash compensation was paid
or  distributed  during  the last  fiscal  year,  or is  proposed  to be paid or
distributed in the future,  to the executive  officers of the Company.  No other
compensation not described above was paid or distributed  during the last fiscal
year to the executive  officers of the Company.  There are no compensatory plans
or  arrangements,  with respect to any  executive  office of the Company,  which
result or will result from the resignation,  retirement or any other termination
of such individual's  employment with the Company or from a change in control of
the Company or a change in the individual's  responsibilities following a change
in control.

Option/SAR Grants Table (None)

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
value (None)

Long Term Incentive Plans - Awards in Last Fiscal Year (None)
<TABLE>
<CAPTION>
<S>               <C>               <C>              <C>               <C>              <C>                  <C>         <C>

        DIRECTOR COMPENSATION FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

Name              Fees              Stock            Options           Non-Equity       Nonqualified         All Other   Total
                  Earned or         Awards           Awards            Incentive Plan   Deferred             Compen-($)
                  Paid-in           ($)              ($)               Compensation     Compensation         sation
                  Cash ($)                                             ($)              ($)                    ($)

Tsang Ping Lam    $0                $0               $0                $0               $0                     $0        $0

Jun Kobayashi     $0                $0               $0                $0               $0                     $0        $0

Tsang Hung
Quen Quentin      $0                $0               $0                $0               $0                     $0        $0

Kentaro Ono       $0                $0               $0                $0               $0                     $0        $0

Minoru Hirota     $0                $0               $0                $0               $0                     $0        $0

Ken Ukai          $0                $0               $0                $0               $0                     $0        $0

Lam Tuen La(1)    $0                $0               $0                $0               $0                     $0       $0

Hung Tsoi
Mow(1)            $0                $0               $0                $0               $0                     $0       $0

Chi Ho Lui
Ronald(1)         $0                $0               $0                $0               $0                     $0       $0

Choy Kwak
Fai(1)            $0                $0               $0                $0               $0                     $0       $0
--------
(1) These individuals resigned their positions in August 2006.

</TABLE>

                                       10

<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth  information,  as of December 31, 2006,
with respect to the  beneficial  ownership of the  Company's no par value common
stock by each  person  known by the Company to be the  beneficial  owner of more
than five percent of the outstanding common stock.
<TABLE>
<CAPTION>
<S>                                                                                     <C>

                                                     Number of              Percentage of
Name                                                 Shares Owned                Class(1)
- --------------------------------------------------------------------------------------

Tsang Ping Lam, President/Director                   0                                  0.00%
7th Floor, New Henry House,
10 Ice House St.,
Central, Hong Kong

Jun Kobayashi, Vice President/Director               0                                  0.00%
7th Floor, New Henry House,
10 Ice House St.,
Central, Hong Kong

Tsang Hung Quen Quentin,                             0                                  0.00%
Secretary/Treasurer
7th Floor, New Henry House,
10 Ice House St.,
Central, Hong Kong

Kentaro Ono                                          0                                  0.00%
Director
7th Floor, New Henry House,
10 Ice House St.,
Central, Hong Kong

Minoru Hirota                                        0                                  0.00%
Director
7th Floor, New Henry House,
10 Ice House St.,
Central, Hong Kong

Ken Ukai                                             0                                  0.00%
Director
7th Floor, New Henry House,
10 Ice House St.,
Central, Hong Kong

Yasuhiro Sakakibaro                                  10,100,000                        21.00%
1-15-1001 Mihonbashi Ningyo-Cho
Cho-Ku, Tokyo, Japan

Officers and Directors
as a group (6 individual)                            0                                  0.00%

</TABLE>


(1)  Based upon  47,471,900  shares of the  Company's  common  stock  issued and
     outstanding.

                                       11

<PAGE>




                                     PART IV

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-------------------------------------------------------

Transactions with Management and Others
---------------------------------------
Except as follows,  there were no transactions or series of transactions  during
the  Registrant's  last fiscal year or the current fiscal year, or any currently
proposed  transactions  or series of transactions of the remainder of the fiscal
year,  in  which  the  amount  involved  exceeds  $100,000  and in  which to the
knowledge of the Registrant,  any director,  executive officer,  nominee, future
director, five percent shareholder, or any member of the immediate family of the
foregoing persons, have or will have a direct or indirect material interest.

Ronald Lui, a former officer and director of the Company, loaned to Key Chance a
sum of $416,269. Mr. Lui is an officer, director and received consulting fees of
$153,840  in 2005.  This is  carried  as a note  payable  on demand  and with no
interest.  Mr. Lui owns 50% of Capital Hero  Holdings,  LTD which owns 3,700,000
common shares of the Company.  During the year ended  December 31, 2006, Mr. Lui
forgave the debt.

Mr. Tsoi Mow Hung, a former  officer and director,  is the  beneficial  owner of
Bollywood Limited.  The Company has consulting  services contract with Bollywood
Limited for $12,820 per month or a total of $153,840 in 2005. Mr. Hung also owns
50% of Capital Hero  Holdings,  LTD which owns  3,700,000  common  shares of the
Company.

The Company  issued  25,000,000  shares of its common  stock to Choy Kwok Fai, a
former  officer  and  director  of  the  Company,  as  part  of the  Key  Chance
acquisition of the Micronesia  Palau resort  opportunity.  The  transaction  was
exempt under Regulation S, to a non US resident in an offshore transaction.

The Company sold  10,000,000  Common  Shares in a  Regulation  S Exempt  Private
Placement  for  $425,000.  All shares were  purchased  by Non US residents in an
offshore transaction.

ITEM 13. EXHIBITS
-----------------
The following is a complete list of exhibits  filed as part of this Form 10-KSB.
Exhibit  numbers  correspond  to the numbers in the Exhibit Table of Item 601 of
Regulation S-B.

31   Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002

32   Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
-----------------------------------------------
     General.  Jaspers + Hall,  PC, LLC, CPAs ("JH") is the Company's  principal
auditing  accountant  firm.  The  Company's  Board of Directors  has  considered
whether the provisions of audit  services is compatible  with  maintaining  JH's
independence.

     Audit Fees.  JH billed the Company  $6,250 for the  following  professional
services:  audit of the annual financial statement of the Company for the fiscal
year ended  December 31, 2005,  and review of the interim  financial  statements
included in  quarterly  reports on Form  10-QSB for the periods  ended March 31,
2006, June 30, 2006 and September 30, 2006. Michael Johnson & Company billed the
Company $4,000 for the 2005 audit and JH billed $4,000 for the 2005 Audit.

                                       12

<PAGE>


         There were no "audit  related" fees in 2005 or 2006.  There was not any
tax fees or other fees in 2005 or 2006 paid to Auditors or Auditors affiliates.

         The   Company's   Board  acts  as  the  audit   committee  and  had  no
"pre-approval  policies and  procedures" in effect for the auditors'  engagement
for the audit year 2005 and 2006.

         All audit work was performed by the auditors' full time employees.



                                       13

<PAGE>





                               ART BOUTIQUE, INC.

                          (A DEVELOPMENT STAGE COMPANY)
                              FINANCIAL STATEMENTS

                          Year Ended December 31, 2006

<PAGE>
                             THE ART BOUTIQUE, INC.
                          INDEX OF FINANCIAL STATEMENTS



                                                                          Pages

Auditors Report                                                              F-1

Consolidated Balance Sheets                                                  F-2

Consolidated Statements of Operations                                        F-3

Consolidated Statements of Changes in Stockholders Deficit                   F-4

Consolidated Statements of Cash Flows                                        F-5

Notes to Consolidated Financial Statements                            F-6 - F-12




<PAGE>
                               Art Boutique, Inc.

                              Financial Statements
                          Year Ended December 31, 2006






<PAGE>





JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
9175 Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099

To the Board of Directors
Art Boutique, Inc.


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the  accompanying  consolidated  balance  sheet of Art Boutique,
Inc. (a Development  Stage Company) and its  subsidiaries  of December 31, 2006
and 2005, and the related consolidated statements of operations, cash flows, and
changes in stockholders' deficit for the years then ended and for the period May
15, 1984  (inception) to December 31, 2006.  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 audit.

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.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   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 Art  Boutique,  Inc.  and
subsidiaries  at December 31, 2006 and 2005,  and the results of its  operations
and its cash flows for the years  then  ended and for the  period  May 15,  1984
(inception)  to December 31, 2006,  in  conformity  with  accounting  principles
generally accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  described  in  Note 2 to the
financial  statements,  the Company is in the  development  stage and conditions
exist which raise substantial doubt about the Company's ability to continue as a
going  concern.  Management's  plans in regard to these matters are described in
Note 2. The  financial  statements  do not  include any  adjustments  that might
result from the outcome of this uncertainty.



March 31, 2007
/s/Jaspers + Hall PC

                                      F-1

<PAGE>
<TABLE>
<CAPTION>

                       ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                           Consolidated Balance Sheets
<S>                                                                           <C>                   <C>

                                                                                December 31,          December 31,
                                                                                    2006                  2005
                                                                              -----------------     -----------------
Assets
Current assets:
         Cash                                                                              $ -               $ 4,284
                                                                              -----------------     -----------------
                 Total current assets                                                        -                 4,284
                                                                              -----------------     -----------------

Property and equipment
         Furniture and fixtures, net                                                         -                13,218
                                                                              -----------------     -----------------
                 Total property and equipment                                                -                13,218
                                                                              -----------------     -----------------

Other assets:
         Deposits                                                                            -                    65
         Prepaid expenses                                                                    -                 1,162
                                                                              -----------------     -----------------
                 Total other assets                                                          -                 1,227
                                                                              -----------------     -----------------

Total assets                                                                               $ -              $ 18,729
                                                                              =================     =================


Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
         Accounts payable                                                             $ 38,227              $ 91,193
         Advance payable, related party                                                 53,202                53,202
         Advance payable, related party                                                    869               416,269
                                                                              -----------------     -----------------

                 Total current liabilities                                              92,298               560,664
                                                                              -----------------     -----------------

Minority interest in consolidated subsidary                                            (10,944)              (10,640)

Stockholders' Equity (Deficit)
Common Stock, no par value; 50,000,000 shares authorized
         47,471,900 shares issued and outstanding December 31,                         858,095               858,095
         2006 and December 31, 2005, respectively
Accumulated other comprehensive loss                                                    (7,040)                    -
Deficit accumulated during the development stage                                      (932,409)           (1,389,390)
                                                                              -----------------     -----------------

                 Total stockholders' equity (deficit)                                  (81,354)             (531,295)
                                                                              -----------------     -----------------

Total liabilities and stockholders' equity (deficit)                                       $ -              $ 18,729
                                                                              =================     =================

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-2

<PAGE>
<TABLE>
<CAPTION>


                       ART BOUTIQUIE, INC. and Subsidiares
                          (A Development Stage Company)
                      Consolidated Statements of Operations

<S>                                                      <C>                    <C>                    <C>
                                                                                                         May 15, 1984
                                                                                                        (Inception) to
                                                              December 31,                               December 31,
                                                              2006                   2005                    2006
                                                         --------------------------------------        -----------------
Revenue                                                            $ -                    $ -              $ 61,102
                                                         -------------          ---------------        -----------------

Operational expenses:
         Depreciation                                                 -                  2,445                    4,144
         Loss from discontinued operations                            -                      -                   26,331
         Acquisition costs                                            -                      -                    2,100
         General and administrative                             126,735                695,327                1,543,452
                                                         ---------------        ---------------        -----------------
                 Total operational expenses                     126,735                697,772                1,576,027
                                                         ---------------        ---------------        -----------------
Loss from operations                                           (126,735)              (697,772)              (1,514,925)
                                                         ---------------        ---------------        -----------------
Other income (expense):
         Forgiveness of debt                                    583,716                      -                  583,716
         Exchange Rate Gain/ (Loss)                                   -                   (795)                  (1,200)
                                                         ---------------        ---------------        -----------------
                                                                583,716                   (795)                 582,516

Income (loss) before minority interest                          456,981               (698,567)                (932,409)
                                                         ---------------        ---------------        -----------------
Minority interest in net loss of consolidated
         subsidiary                                                (304)               (10,640)                 (10,944)
                                                         ---------------        ---------------        -----------------
Net income (loss)                                             $ 456,677              $(709,207)              $ (943,353)
                                                         ===============        ===============        =================
Net income (loss) per share of
         common stock                                            $ 0.01              $   (0.03)
                                                         ===============        ===============
Weighted average number of common
         shares outstanding                                  47,471,900             27,554,092
                                                         ===============        ===============

</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-3

<PAGE>
<TABLE>
<CAPTION>

                       ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                                Indirect Method
<S>                                                              <C>                 <C>                  <C>


                                                                                                            May 15, 1984
                                                                                                           (Inception) to
                                                                           December 31,                     December 31,
                                                                    2006                 2005                   2006
                                                                 ------------        -------------        -----------------
Cash flows from operating activities:
Net Income (loss)                                                   $456,677            $(709,207)              $ (932,409)
Adjustments to reconcile net income (loss) to net cash
         used by operating activities:
         Common stock issued for services                                  -                    -                    1,000
         Depreciation                                                      -                2,445                    4,144
Changes in operating assets and liabilities:
         Decrease in deposits                                             65                  544                      609
         Decrease in prepaid expenses                                  1,162                   55                    1,217
         (Decrease) increase in accounts payable                      (52,966)              91,193                   25,761
           and accrued liabilities                               ------------        -------------        -----------------
         Total adjustments                                           (51,739)              94,237                   32,731
                                                                 ------------        -------------        -----------------
           Net cash used in operating activities                     405,242             (614,970)                (899,678)
                                                                 ------------        -------------        -----------------
Cash flows from investing activities:
         Sale of equipment                                            13,218                    -                   13,218
         Acquisition of fixed assets                                       -               (7,984)                 (17,362)
                                                                 ------------        -------------        -----------------
           Net cash provided (used) by
             investing activities                                     13,218               (7,984)                  (4,144)
                                                                 ------------        -------------        -----------------
Cash flows from financing activities:
         Proceeds from notes payable, stockholders                         -              143,949                  416,269
         Proceeds from notes payable                                       -               53,202                   53,202
         Payment of notes payable, stockholders                     (415,400)                   -                 (415,399)
         Issuance of common stock for cash                                 -              425,000                  857,095
                                                                 ------------        -------------        -----------------
         Net cash (used) provided by financing activities           (415,400)             622,151                  911,167
                                                                 ------------        -------------        -----------------
Effect of exchange rate changes on cash                               (7,040)                   -                   (7,345)
                                                                 ------------        -------------        -----------------
Net decrease in cash                                                  (4,284)                (803)                       -
                                                                 ------------        -------------        -----------------
Cash, beginning                                                        4,284                5,087                        -
                                                                 ------------        -------------        -----------------
Cash, ending                                                        $      -            $   4,284               $        -
                                                                 ============        =============        =================
Supplemental disclosure of cash flow informantion
         Cash paid for interest                                     $      -            $       -               $        -
                                                                 ============        =============        =================
         Cash paid for taxes                                        $      -            $       -               $        -
                                                                 ============        =============        =================
Supplemental disclosure of non-cash transactions
         Common stock issued for services                           $      -            $       -               $    1,000
                                                                 ============        =============        =================


</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-4

<PAGE>
<TABLE>
<CAPTION>

                       ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                   Consolidated Stockholders' Equity (Deficit)
                      For the year ended December 31, 2006

<S>                                     <C>               <C>             <C>             <C>                   <C>


                                                                             Accum             Deficit
                                                                             other          accum. during
                                           Comon Stock                     comprehensive   the development
                                        # of Shares          Amount           loss              stage             Totals
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 1995                   471,900          $29,795             $ -            $ (29,842)          $ (47)
                                        --------------    -------------   -------------   ------------------    ------------
Net income for year                                 -                -               -                   47               -
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 1996                   471,900           29,795               -              (29,795)              -
                                        --------------    -------------   -------------   ------------------    ------------
Issuance of common stock                    4,000,000            1,000               -                    -           1,000
Net loss for year                                   -                -               -               (1,000)         (1,000)
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 1997                 4,471,900           30,795               -              (30,795)              -
                                        --------------    -------------   -------------   ------------------    ------------
Net income for year                                 -                -               -                    -               -
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 1998                 4,471,900           30,795               -              (30,795)              -
                                        --------------    -------------   -------------   ------------------    ------------
Net income for year                                 -                -               -                    -               -
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 1999                 4,471,900           30,795               -              (30,795)              -
                                        --------------    -------------   -------------   ------------------    ------------
Shares for acquisition                              -            2,300               -                    -           2,300
Net loss for year                                   -                -               -               (2,300)         (2,300)
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 2000                 4,471,900           33,095               -              (33,095)              -
                                        --------------    -------------   -------------   ------------------    ------------
Net loss for year                                   -                -               -               (4,608)         (4,608)
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 2001                 4,471,900           33,095               -              (37,703)         (4,608)
                                        --------------    -------------   -------------   ------------------    ------------
Net loss for year                                   -                -               -              (12,683)        (12,683)
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 2002                 4,471,900           33,095               -              (50,386)        (17,291)
                                        --------------    -------------   -------------   ------------------    ------------
Issuance of stock for cash                  8,000,000          400,000               -                    -         400,000
Net loss for year                                   -                -               -             (115,445)       (115,445)
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 2003                12,471,900          433,095               -             (165,831)        267,264
                                        --------------    -------------   -------------   ------------------    ------------
Net loss for year                                   -                -               -             (524,992)       (524,992)
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 2004                12,471,900          433,095               -             (690,823)       (257,728)
                                        --------------    -------------   -------------   ------------------    ------------
Issuance of stock for Acquisition          25,000,000                -               -                    -               -
Issuance of common stock for cash          10,000,000          425,000               -                    -         425,000
Net loss for year                                   -                -               -             (698,567)       (698,567)
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 2005                47,471,900          858,095               -           (1,389,390)       (531,295)
                                        --------------    -------------   -------------   ------------------    ------------
Net income for year                                 -                -               -              456,981         456,981
Change in foreign currency
    translation                                     -                -          (7,040)                   -          (7,040)
                                        --------------    -------------   -------------   ------------------    ------------
Balance - December 31, 2006                47,471,900         $858,095        $ (7,040)          $ (932,409)       $(81,354)
                                        ==============    =============   =============   ==================    ============

</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-5

<PAGE>
                       ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                 For the years ended December 31, 2006 and 2005

Note 1. Organization, Basis of Presentation and Significant Accounting Policies:

Organization:

The accompanying  consolidated  financial statements include the accounts of the
Art Boutique,  Inc., a Wyoming  corporation  (the  "Company"),  its wholly-owned
subsidiary  Key  Chance  International,  LTD  ("Key  Chance")  and its 80% owned
subsidiary,  Micronesian  Resort,  Inc.  ("MRI").  All significant  intercompany
accounts and transactions have been eliminated in consolidation.

The Company  operated from the date of  organization  through  November 30, 1996
conducting art classes, teaching painting techniques,  and selling supplies. The
Company  closed  their  operations  and  liquidated  all of its  assets  in full
settlement  of its  liabilities  on December  19,  1996.  On November  10, 2003,
through a share purchase agreement, Key Chance International, LTD ("Key Chance")
became the wholly-owned  subsidiary of the Company. On May 24, 2005, the Company
acquired 80% of the outstanding  capital stock of Micronesian Resort, Inc. (MRI)
(a corporation existing under the laws of the British Virgin Islands.

Basis of Presentation

Development Stage Company:

The Company  has not earned  significant  revenues  from its  principal  limited
operations.  Accordingly,  the Company's  activities  have been accounted for as
those of a "Development  Stage Enterprise" as set forth in Financial  Accounting
Standards Board  Statement No. 7 ("FASB 7"). Among the  disclosures  required by
FASB 7 are that the Company's financial  statements be identified as those of an
development stage company, and that the statements of operations,  stockholders'
equity  (deficit)  and  cash  flows  disclose  activity  since  the  date of the
Company's inception.

Basis of Accounting:

The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with accounting  principles  generally  accepted in the
United States.

                                      F-6


<PAGE>





                       ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                 For the years ended December 31, 2006 and 2005

Basis of Consolidation:

The financial statements include the Company and its wholly-owned subsidiary Key
Chance and MRI, as an 80% owned entity.

Cash and Cash Equivalents:

The Company  considers  all  highly-liquid  debt  instruments,  with an original
maturity of three months, to be cash equivalents.

Use of Estimates:

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  certain  reported  amounts of assets and  liabilities at the date of the
financial statements. Actual results could differ from those estimates.

Property and Equipment:

Property  and  equipment  are  stated at cost,  less  accumulated  depreciation.
Depreciation is provided for using the  straight-line  method over the estimated
useful life of the assets.

Foreign Currency Translation:

The  financial  statements of the Company's  foreign  subsidiaries  are measured
using the local  currency  (the Hong Kong  Dollar) as the  functional  currency.
Assets and liabilities of the  subsidiaries  are translated at exchange rates as
of the balance sheet date. Revenues and expenses are translated at average rates
of exchange in effect  during the period.  The  resulting  comprehensive  income
(loss), included as a separate item in stockholders' equity.

Foreign Currency Transactions:

Gains and losses from foreign  currency  transaction  are included in net income
(loss).  Foreign  currency  transaction  gains and losses  were not  significant
during the years ended December 31, 2006 and 2005.

                                      F-7

<PAGE>








                         ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                 For the years ended December 31, 2006 and 2005

Comprehensive Income

Statement of Financial  Accounting  Standard  No. 130,  Reporting  Comprehensive
Income  (SFAS No.  130),  requires the  reporting  and display of  comprehensive
income and its components.  SFAS No. 130 requires unrealized gains and losses on
the  Company's  foreign  currency  translation  adjustments  to be  included  in
comprehensive income (loss).

Loss Per Share:

Loss per  share is  based  on the  weighted  average  number  of  common  shares
outstanding during the period.

Recently Issued Accounting Pronouncements:

In February 2006, the FASB issued SFAS No. 155,  "Accounting  for Certain Hybrid
Financial  Instruments-an  amendment  of FASB  Statements  No.133  and 140",  to
simplify  and  make  more  consistent  the  accounting  for  certain   financial
instruments.  SFAS No. 155  amends  SFAS No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities," to permit fair value re-measurement for any
hybrid financial  instrument with an embedded  derivative that otherwise require
bifurcation, provided that the whole instrument is accounted for on a fair value
basis.  SFAS No. 155 amends  SFAS No. 140,  "Accounting  for the  Impairment  or
Disposal of Long-Lived Assets," to allow a qualifying  special-purpose entity to
hold a derivative  financial  instrument that pertains to a beneficial  interest
other than other derivative  financial  instrument.  SFAS No. 155 applies to all
financial  instruments  acquired or issued  after the  beginning  of an entity's
first fiscal year that begins after September 15, 2006, with earlier application
allowed.  The  adoption  of this  statement  is not  expected to have a material
effect on our  company's  future  reported  financial  position  or  results  of
operations.

                                      F-8

<PAGE>




                         ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                 For the years ended December 31, 2006 and 2005

In March  2006,  the FASB  issued SFAS No. 156,  "Accounting  for  Servicing  of
financial  Assets,  an  amendment  of FASB  statement  No. 140,  Accounting  for
transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
This  statement   requires  all  separately   recognized  assets  and  servicing
liabilities be initially measure at fair value, if practicable,  and permits for
subsequent  measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization  and impairment  requirements of
Statement No. 140. The Subsequent measurement of separately recognized servicing
assets and  servicing  liabilities  at fair value  eliminates  the necessity for
entities  that  manage the risks  inherent  in  servicing  assets and  servicing
liabilities  with  derivatives  to qualify for hedge  accounting  treatment  and
eliminates the characterization  declines in fair value as impairments or direct
write-downs.  SFAS No.  156 is  effective  for an  entity's  first  fiscal  year
beginning  after  September  15,  2006.  The  adoption of this  statement is not
expected to have a material effect on our company's  future  reported  financial
position or results of operations.

In June 2006, the FASB issued  Interpretation No. 48, Accounting for Uncertainty
in Income Taxes - An  Interpretation of FASB Statement No. 109, (FIN 48). FIN 48
clarifies  the  accounting  for  uncertainty  in income taxes  recognized  in an
enterprise's  financial  statements in accordance  with FASB  Statement No. 109,
Accounting for Income Taxes. FIN 48 also prescribes a recognition  threshold and
measurement attribute for the financial statement recognition and measurement of
a tax  position  taken or expected to be taken in a tax return that results in a
tax benefit.  Additionally,  FIN 48 provides guidance on de-recognition,  income
statement  classification  of  interest  and  penalties,  accounting  in interim
periods,  disclosure,  and transition.  This interpretation is effective for the
Company for its year ended  December 31, 2007. The Company has not yet evaluated
the  effect  that the  application  of FIN 48 may have,  if any,  on its  future
results of operations and financial condition.

In September 2006, the FASB issued SFAS No. 157, "Fair Value  Measurements." The
objective of SFAS 157 is to increase consistency and comparability in fair value
measurements and to expand disclosures about fair value  measurements.  SFAS 157
defines  fair  value,  establishes  a  framework  for  measuring  fair  value in
generally accepted  accounting  principles,  and expands  disclosures about fair
value measurements.  SFAS 157 applies under other accounting pronouncements that
require or permit  fair value  measurements  and does not  require  any new fair
value

                                      F-9

<PAGE>




                         ART BOUTIQUE, INC.  and Subsidiaries
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                 For the years ended December 31, 2006 and 2005

measurements.  The  provisions  of SFAS  No.157  are  effective  for fair  value
measurements  made in fiscal  years  beginning  after  November  15,  2007.  The
adoption of this  statement  is not  expected  to have a material  effect on our
company's future reported financial position or results of operations.

On February 15, 2007,  the FASB issued SFAS No. 159,  "The Fair Value Option for
Financial  Assets and  Financial  Liabilities  - Including  an Amendment of FASB
Statement  No. 115." This standard  permits an entity to measure many  financial
instruments  and  certain  other  items at  estimated  fair  value.  Most of the
provisions  of SFAS No. 115  ("Accounting  for Certain  Investments  in Debt and
Equity   Securities)   applies   to  all   entities   that   own   trading   and
available-for-sale  securities.  The fair value  option  created by SFAS No. 159
permits  an entity  to  measure  eligible  items at fair  value as of  specified
election dates. Among others,  eligible items exclude (1) financial  instruments
classified  (partially  or in total) as  permanent  or  temporary  stockholders'
equity (such as a convertible  debt security  with a  non-contingent  beneficial
conversion  feature)  and (2)  investments  in  subsidiaries  and  interests  in
variable interests that must be consolidated.  A for-profit business entity will
be  required to report  unrealized  gains and losses on items for which the fair
value option has been elected in its statements of operations at each subsequent
reposting date. The fair value option (a) may generally be applied instrument by
instruments, (b) is irrevocable unless a new elections date occurs, and (c) must
be applied to the entire instrument and not to only a portion of the instrument.
SFAS No. 159 is  effective  as of the  beginning  of the first  fiscal year that
begins after  November 15, 2007.  The Company has not yet  evaluated  the effect
that the  application  of FIN 48 may have,  if any,  on its  future  results  of
operations and financial condition.

Note 2.  Going Concern and Results of Operations:

The Company's  financial  statements  for the year ended  December 31, 2006 have
been presented on the basis that it is a going concern,  which  contemplated the
realization of assets and the  satisfaction  of liabilities in the normal course
of  business.  The Company  reported a net loss of  $456,981  for the year ended
December 31, 2006, and an accumulated  deficit during the  development  stage of
$932,409.

                                      F-10

<PAGE>





                       ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                 For the years ended December 31, 2006 and 2005

The Company is in the  development  stage and has not earned any  revenues  from
operations.  The  Company's  ability to continue as a going concern is dependent
upon its  ability  to develop  additional  sources of capital or locate a merger
candidate  and  ultimately,  achieve  profitable  operations.  The  accompanying
financial  statements do not include any adjustments  that might result from the
outcome of these uncertainties.  Management is seeking new capital to revitalize
the Company.

Note 3.  Ownership in Micronesian Resort, Inc.:

On May 25, 2005, the Company  purchased an 80% interest in  Micronesian  Resort,
Inc. (MRI) for an issuance of 25,000,000  shares of the Company's  common stock.
MRI is the lessee of a piece of property in the Republic of Palau, under a lease
agreement dated April 25, 2005 for the grant of a lease of such property to MRI.
The  Company  will  indirectly  control  MRI and will  commence  to develop  the
property  into a resort  hotel.  The minority  interest held by MRI is disclosed
separately in the Company's Consolidated Financial Statements.

Note 4.  Fixed Assets:

Fixed assets consist of the following for the year ended December 31, 2006:

         Office Equipment and Furniture              $   0
         Mobile Phone                                  926
                                                     -----
         Total Fixed Assets                          $ 926
         Less:  Accumulated depreciation              (926)
                                                     -----
         Net Fixed Assets                            $   -
                                                     =====

The useful lives of the fixed assets are three years.  Depreciation  expense was
$0 for the year ended December 31, 2006.

Note 5.  Advance Payables, Related Party:

Mr. Choy Kwok Fai, a director  of MRI, is due an amount of $53,202 for  advances
made to the Company to pay for operational  expenses of the Company.  The amount
is unsecured, interest free and has no fixed terms of repayment.

Prior to the year ended  December  31, 2006,  Mr.  Ronald Lui, a director of the
Company  had  advanced  the  Company  funds in the amount of $416,269 to pay for
operational expenses of the Company. The funds were unsecured, interest free and
had no fixed rate of payment.  During the year ended  December 31, 2006, Mr. Lui
was paid $415,399 in connection with these advances.

                                      F-11

<PAGE>




                       ART BOUTIQUE, INC. and Subsidiaries
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                 For the years ended December 31, 2006 and 2005


Note 6.  Stockholders' Equity (Deficit):

There were no capital stock transactions during the current fiscal year.

Note 7.  Federal Income Tax:

The Company has made no provision  for income taxes  because  there have been no
operations to date causing income for financial statement or tax purposes.

The FASB has issued SFAS No. 109,  "Accounting for Income Taxes," which requires
a  change  from the  deferred  method  to the  asset  and  liability  method  of
accounting  for income  taxes.  Under the asset and liability  method,  deferred
income taxes are recognized for the tax consequences of "temporary  differences"
by  applying  enacted   statutory  tax  rates  applicable  to  future  years  to
differences  between the financial  statement carrying amounts and the tax basis
of existing assets and liabilities.

                                           December 31,           December 31,
                                              2006                   2005
                                              ----                   ----
Deferred tax assets:                        $950,880               $1,400,030
Net deferred tax assets                     (950,880)              (1,400,030)
                                           ------------            -----------
                                            $      0               $        0
                                           ============            ===========

The Company had net operating loss carry forwards of approximately  $950,880 and
$1,400,030 at December 31, 2006 and 2005,  respectively,  for federal income tax
purposes.  These carry forwards,  if not utilized to offset taxable income, will
expire in 2010.

Note 8. Segment Information:

The Company operates primarily in a single operating segment,  mainly the merger
and acquisition of small businesses interested in merging.

                                      F-12


<PAGE>
 SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                            THE ART BOUTIQUE, INC.
                                            (Registrant)


Date: April 16, 2007
                                            /s/ Tsang  Ping Lam
                                            ----------------------------------
                                            Tsang  Ping Lam, President




                                            DIRECTORS:


                                        /s/ Tsang Hung Quen Quentin
                                            ---------------------------------

                                            Tsang Hung Quen Quentin


                                            /s/Tsang  Ping Lam
                                            ---------------------------------
                                            Tsang  Ping Lam




                                       14