UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 _______________
  FORM
10-Q
 _______________
  x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the quarterly period ended March 31, 2008
   o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the transition period from
______to______.
  ARTCRAFT
V, INC.
 (Exact
name of registrant as specified in Charter
  Delaware
              
              26-0744863(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (Commission
      File No.)
              
              (IRS
      Employee Identification No.)
 
 Room
1131, XianKeJiDian Building
 BaGuaSi
Road Futian District
 Shenzhen
City, China 518029
 (Address
of Principal Executive Offices)
 _______________
  011-86775
23990959
 (Issuer
Telephone number)
 _______________
 
 
 (Former
Name or Former Address if Changed Since Last Report)
  Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2)has been
subject to such filing requirements for the past 90 days. Yes T  No
*
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company
filer.  See definition of “accelerated filer” and “large accelerated
filer” 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
  Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.
 Yes x No o
  As of
March 11, 2008, the Company had 10,250,000 shares of common stock
outstanding.
  
 
  
   ARTCRAFT
V, INC.
 
 FORM
10-Q
  March
31, 2008
  INDEX
  PART
I-- FINANCIAL INFORMATION
   
 Item 1.
              Financial StatementsItem 2.
              Management’s
      Discussion and Analysis of Financial ConditionItem 3
              Quantitative
      and Qualitative Disclosures About Market RiskItem 4.
              Control
      and Procedures
   PART
II-- OTHER INFORMATION
  Item 1
              Legal
      ProceedingsItem 2.
              Unregistered
      Sales of Equity Securities and Use of ProceedsItem 3.
              Defaults
      Upon Senior SecuritiesItem 4.
              Submission
      of Matters to a Vote of Security HoldersItem 5.
              Other
      InformationItem 6.
              Exhibits
      and Reports on Form 8-K
   SIGNATURE
   Table of Contents
  ITEM
1. FINANCIAL INFORMATION
 
 The
financial statement of the Company are included following the signature page of
this Form 10-Q.
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  In this
section, "Management's Discussion and Analysis or Plan of Operation," references
to "we," "us," "our," and "ours" refer to Artcraft V, Inc. and its
subsidiary.
 
 The
following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Form 10-KSB.
The following discussion contains forward-looking statements. Our actual results
may differ significantly from those projected in the forward-looking
statements.
 
 Critical
Accounting Policies:
 
 Our
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
generally accepted accounting principles in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amount of assets, liabilities and expenses,
and related disclosure of contingent assets and liabilities. We based our
estimates on historical experience and on other various assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis from making judgments about carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions and/or conditions.
 
 Overview:
 
 We
operate our business through our wholly owned subsidiary, Top Interest
International Limited, which operates our "188Info" service. 188Info provides a
number of services including an information search engine, an online web
application and an image designing, digital network service, online market
research, online promotion and advertising services, and query searches for both
individuals and businesses.
 
 188Info
has a strong reputation among Shenzhen residents. Many Shenzhen residents use
188Info to publish and search for information.
 
 188Info
enjoys several competitive advantages including innovative information
categorization, sophisticated product and service categorization. For example,
188Info's categories include career services, real estate, lodging
accommodations, transportation, computer networking, communications electronics,
furniture, gifts and apparel, printing presses, and other businesses.
Information is presented in a variety of ways to enhance
readability.
  We are
also completing a website to be utilized in various real estate services such as
relocation, listings of real estate sales or rentals, mortgage information and
other real estate related information or content. We have not spent any money
for research and development.
 Plan of
Operation:
 
 We intend
to grow through internal development and strategic alliances. Because of
uncertainties surrounding our growth and limited operating history, we
anticipate incurring losses in the foreseeable future. We have already incurred
significant net losses, with a net loss of $1,781 in 2005 and a net loss of
$92,812 in 2006. The difference was due to an increase in operating expenses,
and as we attempt to grow are business, these expenses will certainly increase.
Also, we may incur substantial net losses in the future due to the relatively
high risk associated with our revenue and the high level of planned operating
and capital expenditures, including sales and marketing costs, personnel hires,
and product development. Also, maintaining and further expanding our brand is
critical to our ability to expand our user base and our revenues. We believe
that the importance of brand recognition will increase as the number of Internet
users in China grows. In order to attract and retain Internet users,
advertisers, subscribers, and wireless and e-commerce customers, we may need to
substantially increase our expenditures for creating and maintaining brand
loyalty. If our revenues do not increase proportionately, our results of
operations and liquidity will suffer. For some periods, we may have net profits;
however, we may not sustain profitability over time.
  Accordingly,
our ability to achieve our business objectives is contingent upon our success in
raising additional capital until adequate revenues are realized from operations.
During the next twelve months, we expect to take the following steps in
connection with the expansion of our business and the continuance of our
operations:
   1
 Table of Contents
   1) Initiate
substantive construction of our corporate website. We currently have constructed
a comprehensive webpage at www.188info.com which outlines the products and
services that we offer and such website includes additional sub-pages, our phone
and email information, navigational tools and a more detailed description of our
products and services. 188 infonet features a wide range of Web advertisement.
Web advertising can reach any part of the world equally fast, which is an
impossible feat for conventional advertisement. Our multimedia presentation is
rich in audio, and video. Our web content is interactive by nature. Current
programs such as Flash, Shockwave provide vivid, animated
interaction. 
 The
next stage of web expansion will focus on promoting 188 infonet and expand its
influence into people’s daily activities. Including a plan to discuss with
various industries consultants to assist us, as well as companies within the
industry to partner with; further promote of 188Info and develop related
websites to attract a younger demographic and achieve one million hits on a
daily basis; establish a community information service in Shenzhen by
cooperating with communities, such as publish yellow pages in
Shenzhen.
 Incorporation
of these services could run from $2,500 to $100,000 depending upon the level of
detail in these services and the nature of the partnerships reached. If we reach
partnerships whereby we incorporate other company’s services into our site and
co-brand with partners, programming will be far simpler and thereby cheaper than
if we have to offer users the ability to design their own service
requests.
  Further
website expansion in 2008 will be in various phases subject to revenue and
capital availability.
 
 2) We are
currently identifying funding options to raise additional capital for the
company and key geographic markets to target during our first phase of
operations. We intend to seek funding options such as equity or debt financing.
However, currently we have had no preliminary discussions with any group
regarding such financing. As we grow and the overall economic climate improves,
we expect to be in a better position to raise outside capital later. The only
associated costs for such funding may be the due diligence costs or expenses
associated with putting a financing deal together. The costs would be as much as
5%-6% of the funding raised.  Any such fees, however, would be taken
out of the closing of the funding transaction. Searching for capital will likely
be an ongoing process even if we raise an initial amount of funds. The only
potential expenses would be if we decide to pay for outside research or if
business trips are required.
 3) Hire
and train additional staff, including management, marketing staff, and
administrative personnel; we anticipate hiring at a minimum 10 employees in the
next twelve months. The number of employees hired will be dependent upon a
variety of factors including our progress in implementing our business plan and
available capital. Ultimately, we expect to require approximately $10,000 per
month for payroll. We will need additional capital to meet these expenses and
will scale down accordingly until we are in such a position. The hiring of
employees will be an ongoing process during the company’s
existence.
  We intend
to grow through internal development and strategic alliances.  Because
of uncertainties surrounding our growth and strong competition, we anticipate
incurring losses in the foreseeable future. Our ability to achieve our business
objectives is contingent upon its success in raising additional capital until
adequate revenues are realized from operations.
 
 Employees
 
 As of
March 11, 2008, we have 10 full time employees located in China. We intend to
hire and train additional staff, including management, marketing staff, and
administrative personnel. We anticipate hiring a minimum of 10 employees in the
next twelve months. The number of employees hired will depend on a variety of
factors including our progress in implementing our business plan and available
capital. Ultimately, we expect to require approximately $10,000 per month for
payroll. We will need additional capital to meet these expenses and will scale
down accordingly until we are in such a position. The hiring of employees will
be an ongoing process during the Company's existence.
  RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 
 The
following table presents certain consolidated statement of operations
information for the three months ended March 31, 2008 and 2007. The discussion
following the table is based on these results. Certain columns may not add due
to rounding.
  Three
      months ended
                  March
      31, 2008
                
                
                Three
      months ended
                  March
      31, 2007Revenue,
      net
                
                $
                7,389
                
                
                $
                4,783General
      and administrative expenses
                
                
                16,170
                
                
                
                23,684Income from
      operations
                
                
                (8,780
                )
                
                
                (18,901
                )Other
      (Income) ExpenseInterest income
                
                
                (2
                )
                
                
                (1,814
                )Income tax
                
                
                111
                
                
                
                -Interest expense
                
                
                -
                
                
                
                39Total Other (Income) Expense
                
                
                109
                
                
                
                (1,775
                )Minority
      Interest
                
                
                -
                
                
                
                1,040Net
      loss
                
                $
                (8,889
                )
                
                $
                (16,086
                )
    2
 Table of Contents
 
 Net
Revenue
  Net sales
for the three months ended March 31, 2008 totaled $7,389 compared to $4,783 for
the three months ended March 31, 2007, an increase of $2,606 or approximately
54.5%. In 2008, due to marketing department’s hard working and technical
department’s development, our website was improved with more categories and
information available to our users.
 
 Operating
Expense
  General
and administrative expenses for the three months ended March 31, 2008 totaled
$16,170 compared to $23,684 for the three months ended March 31,
2007.  The decrease in operating expense of $7,514 or approximately
31.7% was because we did not have to write-off of bad debt recognized from loan
and other receivable that realized in the three months ended March 31,
2007.
 
 Income
(Loss) from Operations
  Income
(loss) from operations for the three months ended March 31, 2008 totaled
$(8,780) compared to $(18,901) for the three months ended March 31, 2007, an
improvement of $10,121or approximately 53.5%. The improvement in income from
operations was primarily due to a decrease in expenses as stated
above.
 
 Net
Income (Loss)
  Net
income (loss) for the three months ended March 31, 2008 totaled $(8,889)
compared to $(16,086) for the three months ended March 31, 2007, an improvement
of $7,197 or approximately 44.7%. The increase in net loss was primarily due to
the reasons described above.
 
 LIQUIDTY
AND CAPITAL RESOURCES
  We have
limited liquidity and capital resources. Earnings were insufficient in three
months ended March 31, 2008 to meet the liquidity needs of operations in that
period. We believe we will be able to generate revenues from sales and raise
capital through private placement offerings of its equity securities to provide
the necessary cash flow to meet anticipated working capital requirements. Our
actual working capital needs for the long and short term will depend upon
numerous factors, including our operating results, competition, and the
availability of credit facilities, none of which can be predicted with
certainty. Our future expansion will depend on operating results and will be
limited by its ability to enter into financings and raise capital.
 
 On
November 7, 2005, pursuant to the closing of the Stock Purchase Agreement and
Share Exchange with Top Interest International Limited, we ceased being a "blank
check" company, as that term is defined in rule 419 of Regulation C under the
rules of the Securities Act of 1933, and began operating an a professional
information searching platform that categorizes the information it provides
based on geographical boundaries.
  Our cash
requirements consist of general and administrative expenses, and professional
fees, which are expected to average $1,700 per month for the next 12 months. We
believe we have sufficient cash to meet our minimum development and operating
costs for the next 12 months. We will need to raise additional capital to
continue our operations past 12 months, and there is no assurance we will be
successful in raising the needed capital. Due to difficult market conditions, we
are focusing on growing through strategic alliances without the necessity of
outlaying cash.
 Working Capital
Requirements
  Historically
operations and short term financing have been sufficient to meet our cash needs.
We believe that we will be able to generate revenues from sales and raise
capital through private placement offerings of its equity securities to provide
the necessary cash flow to meet anticipated working capital requirements.
However, our actual working capital needs for the long and short term will
depend upon numerous factors, including operating results, competition, and the
availability of credit facilities, none of which can be predicted with
certainty. Future expansion will be limited by the availability of financing
products and raising capital.
  OFF-BALANCE
SHEET ARRANGEMENTS
  We have
never entered into any off-balance sheet financing arrangements and have never
established any special purpose entities. We have not guaranteed any debt or
commitments of other entities or entered into any options on non-financial
assets.
   3
 Table of Contents
    ITEM 3.        QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
 The
Company is subject to certain market risks, including changes in interest rates
and currency exchange rates.  The Company does not undertake any specific
actions to limit those exposures.
 
 Foreign
Currency Exchange Rate Risk
 
 The
Company has operations located overseas.  As such, its financial results
could be indirectly affected by the weakening of the dollar.  If that were
to occur, and if it were material enough in movement, the financial results of
the Company could be affected, but not immediately because the Company has
entered into contracts with these vendors which establish product pricing levels
for up to one year.  Management believes these contracts provide a
sufficient amount of time to mitigate the risk of changes in exchange
rates.
 ITEM 4.        CONTROLS AND
PROCEDURES.
  Evaluation of Disclosure Controls and Procedures
- Our Principal Executive Officer and Principal Financial Officer, after
evaluating the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of
the period covered by this report, have concluded that, based on the evaluation
of these controls and procedures, that our disclosure controls and procedures
were effective to ensure that information required to be disclosed by the
Company in reports or filed or submitted under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission’s rules and forms and that the
Company’s disclosure and controls are designed to ensure that information
required to be disclosed by the Company in the reports that we file or submit
under the Exchange Act is accumulated and communicated to management, including
our principal executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
 
 PART
II - OTHER INFORMATION
  Item 1. Legal Proceedings.
  Currently
we are not aware of any litigation pending or threatened by or against the
Company.
  Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
  None.
  Item 3. Defaults Upon Senior Securities.
  None
  Item 4. Submission of Matters to a Vote of Security
Holders.
  None.
  Item 5. Other Information.
  None
  Item 6. Exhibits and Reports of Form 8-K.
  (a)           Exhibits
  31.1
Certifications pursuant to Section 302 of Sarbanes Oxley Act of
2002
  32.1
Certifications pursuant to Section 906 of Sarbanes Oxley Act of
2002
  (b)           Reports
of Form 8-K
  None.
  
 4
 Table of Contents
  SIGNATURES
    Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
  
  ARTCRAFT
      V, INCDate:
      May 12, 2008
              By:
              By: /s/ Li Te
      XiaoLi
      Te XiaoPresident,
      Chief Executive Officer,Chief
      Financial Officer and Director
 
   
 5
 Table of Contents
 
 
  
 
 
 
 ARTCRAFT
V, INC. AND SUBSIDIARIES
 
 CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
 MARCH
31, 2008
 
 
 
 
 
 
 TABLE OF CONTENTS
 
 
 Unaudited
      Condensed Consolidated Balance Sheets
                F2Unaudited
      Condensed Consolidated Statements of Operations
                F3Unaudited
      Condensed Consolidated Statements of Cash Flow
                F4Notes
      to unaudited Condensed Consolidated Financial Statements
                F5
 
 
  Table of Contents
   ARTCRAFT
      V, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSMARCH
      31, 2008 (UNAUDITED) AND DECEMBER 31, 2007ASSETSMarch
      31, 2008
                
                
                December
      31, 2007(Unaudited)Current
      AssetsCash
      and cash equivalents
                
                $
                124,829
                
                
                $
                18,070Other
      receivable from related parties
                
                
                286
                
                
                
                274Loan
      receivable, net
                
                
                -
                
                
                
                26,250Total
      Current Assets
                
                
                125,115
                
                
                
                44,594Property
      & equipment, net
                
                
                15,178
                
                
                
                15,777Intangible
      assets, net
                
                
                6,220
                
                
                
                6,636$
                146,513
                
                
                $
                67,006LIABILITIES AND
      STOCKHOLDERS' DEFICITCurrent
      LiabilitiesAccounts
      payable and accrued expenses
                
                $
                23,461
                
                
                $
                36,142Loan
      payable to related party
                
                
                304,633
                
                
                
                265,721Deferred
      revenue
                
                
                14,387
                
                
                
                3,313Total
      Current Liabilities
                
                
                342,481
                
                
                
                305,176Stockholders'
      DeficitCommon
      stock, $.001 par value, 100,000,000shares authorized, 10,250,000 issued and outstanding
                
                
                10,250
                
                
                
                10,250Additional paid
      in capital
                
                
                109,431
                
                
                
                108,872Subscription
      receivable
                
                
                -
                
                
                
                (50,000
                )Other
      accumulated comprehensive gain
                
                
                7,203
                
                
                
                6,673Accumulated
      deficit
                
                
                (322,852
                )
                
                
                (313,965
                )Total
      Stockholders' Deficit
                
                
                (195,969
                )
                
                
                (238,170
                )$
                146,513
                
                
                $
                67,006
    The
accompanying notes are an integral part of these unaudited consolidated
financial statements.
   F2
 Table of Contents
  ARTCRAFT
      V, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007(UNAUDITED)2008
                
                
                2007Revenue,
      net
                
                $
                7,389
                
                
                $
                4,783Operating
      Expenses:General
      and administrative expenses
                
                
                16,170
                
                
                
                23,684Loss
      from operations
                
                
                (8,780
                )
                
                
                (18,901
                )Other
      (Income) ExpenseInterest
      income
                
                
                (2
                )
                
                
                (1,814
                )Income
      tax
                
                
                111
                
                
                
                -Interest
      expense
                
                
                -
                
                
                
                39Total
      Other (income) expense
                
                
                109
                
                
                
                (1,775
                )Loss
      before minority interest
                
                
                (8,889
                )
                
                
                (17,126
                )Minority
      interest
                
                
                -
                
                
                
                1,040Net
      loss
                
                
                (8,889
                )
                
                
                (16,086
                )Other
      comprehensive incomeForeign
      currency translation
                
                
                530
                
                
                
                1,107Comprehensive
      loss
                
                $
                (8,359
                )
                
                $
                (14,979
                )Net
      loss per share:Basic
      & diluted
                
                $
                (0.0009
                )
                
                $
                (0.0015
                )Weighted
      average number of shares outstanding:Basic
      & diluted
                
                
                10,250,000
                
                
                
                10,100,000Weighted
      average number of shares for dilutive securities has not been taken since
      the effect of dilutive securities is anti-dilutive
  The
accompanying notes are an integral part of these unaudited consolidated
financial statements.
    F3
 Table of Contents
   ARTCRAFT
      V, INC. AND SUBSIDIARIESFOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007(UNAUDITED)2008
                
                
                2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                
                $
                (8,889
                )
                
                $
                (16,086
                )Adjustments to
      reconcile net loss to net cashprovided by
      (used in) operating activities:Depreciation
      & amortization
                
                
                1,905
                
                
                
                2,163Minority
      interest
                
                
                -
                
                
                
                (1,040
                )Payment
      of rental by an officer
                
                
                559
                
                
                
                -Decrease/
      (increase) in current assets:Other
      receivables
                
                
                26,250
                
                
                
                (1,813
                )Increase/
      (decrease) in current liabilities:Accounts
      payable and accrued expenses
                
                
                (13,038
                )
                
                
                (16,091
                )Deferred
      revenue
                
                
                10,704
                
                
                
                4,443Total
      adjustments
                
                
                26,380
                
                
                
                (12,338
                )Net
      cash provided by (used in) operations
                
                
                17,491
                
                
                
                (28,424
                )CASH
      FLOWS FROM FINANCING ACTIVITIESLoan from
      related party
                
                
                88,912
                
                
                
                29,967Effect
      of exchange rate changes on cash and cash equivalents
                
                
                355
                
                
                
                78Net
      increase in cash and cash equivalents
                
                
                106,759
                
                
                
                1,622Cash
      and cash equivalents, beginning balance
                
                
                18,070
                
                
                
                7,750Cash
      and cash equivalents, ending balance
                
                $
                124,829
                
                
                $
                9,372SUPPLEMENTAL
      DISCLOSURES:Cash
      paid during the year for:Income
      tax payments
                
                $
                -
                
                
                $
                -Interest
      payments
                
                $
                -
                
                
                $
                -
     The
accompanying notes are an integral part of these unaudited consolidated
financial statements.
    F4
 Table of Contents
  ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
 Note
1 – ORGANIZATION
 
 Artcraft
V, Inc. was incorporated under the laws of the State of Delaware on June 7,
2004.  On November 7, 2005, the Company entered into an Exchange
Agreement with Top Interest International Limited (“Top
Interest”).  Top Interest owns 70% equity interest of Shenzhen Xin Kai
Yuan Info Consult Co., Ltd. (“188info.com”) which operates 188info.com, a
professional information searching platform that is engaged in the business of
providing information search engine, online web application and image designing,
digital network service, online market research, online promotion and
advertising services, and query searches for both individuals and
businesses.  Top Interest was incorporated under the laws of the
British Virgin Islands.  188info.com was legally established under the
laws of the People’s Republic of China.  When used in these notes, the
terms “Company”, “we”, “our” or “us” mean Artcraft V, Inc. and its
subsidiaries.
 
 Pursuant
to the Stock Purchase and Share Exchange Agreement, the Company purchased all of
the issued and outstanding shares of Top Interest from the shareholders for
issuance of a total of 10,000,000 shares of the Company’s common stock, or
approximately 99% of the total issued and outstanding shares.  This
transaction closed on November 7, 2005 and has been accounted for as a reverse
acquisition.
 
 Note
2 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
 
 Unaudited Interim Financial
Information
 The
accompanying unaudited consolidated financial statements have been prepared by
Artcraft V, Inc., pursuant to the rules and regulations of the Securities and
Exchange Commission (the “SEC”) Form 10-QSB and Item 310 of Regulation S-B, and
generally accepted accounting principles for interim financial reporting.
The information furnished herein reflects all adjustments (consisting of normal
recurring accruals and adjustments) which are, in the opinion of management,
necessary to fairly present the operating results for the respective
periods. Certain information and footnote disclosures normally present in
annual consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been omitted
pursuant to such rules and regulations. These consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and footnotes included in the Company’s Annual Report on Form 10-KSB. The
results of the three months ended March 31, 2008 are not necessarily indicative
of the results to be expected for the full year ending December 31,
2008.
 
 Basis of
Presentation
 
 The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America.  The Company’s functional currency is the Chinese Renminbi
(CNY); however the accompanying consolidated financial statements have been
translated and presented in United States Dollars.
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of Artcraft V, Inc. and
its wholly owned subsidiary Top Interest International and majority owned
subsidiary Shenzhen Xin Kai Yuan Info Consult Co., Ltd., collectively referred
to within as the Company.  All material intercompany accounts,
transactions and profits have been eliminated in consolidation.
   F5
 Table of Contents
 ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
  Exchange Gain
(Loss)
 
 During
the three month periods ended March 31, 2008 and 2007, the transactions of
Shenzhen were denominated in foreign currency and were recorded in CNY at the
rates of exchange in effect when the transactions occur. Exchange gains and
losses are recognized for the different foreign exchange rates applied when the
foreign currency assets and liabilities are settled.
 
 Translation
Adjustment
 
 As of
March 31, 2008, the accounts of Shenzhen were maintained, and its financial
statements were expressed, in CNY. Such financial statements were translated
into U.S. Dollars (USD) in accordance with Statement of Financial Accounts
Standards (“SFAS”) No. 52, “Foreign Currency Translation,” with the CNY as the
functional currency. According to the Statement, all assets and liabilities were
translated at the current exchange rate, stockholder’s equity are translated at
the historical rates and income statement items are translated at the average
exchange rate for the period. The resulting translation adjustments are reported
under other comprehensive income in accordance with SFAS No. 130, “Reporting
Comprehensive Income” as a component of shareholders’ equity.
 
 Use of
Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
  Risks and
Uncertainties
 
 The
Company is subject to substantial risks from, among other things, intense
competition associated with the industry in general, other risks associated with
financing, liquidity requirements, rapidly changing customer requirements,
limited operating history, foreign currency exchange rates and the volatility of
public markets.
 
 Contingencies
 
 Certain
conditions may exist as of the date the financial statements are issued, which
may result in a loss to the Company but which will only be resolved when one or
more future events occur or fail to occur.  The Company’s management
and legal counsel assess such contingent liabilities, and such assessment
inherently involves an exercise of judgment.  In assessing loss
contingencies related to legal proceedings that are pending against the Company
or unasserted claims that may result in such proceedings, the Company’s legal
counsel evaluates the perceived merits of any legal proceedings or unasserted
claims as well as the perceived merits of the amount of relief sought or
expected to be sought.
 
 If the
assessment of a contingency indicates that it is probable that a material loss
has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial
statements.  If the assessment indicates that a potential material
loss contingency is not probable but is reasonably possible, or is probable but
cannot be estimated, then the nature of the contingent liability, together with
an estimate of the range of possible loss if determinable and material would be
disclosed.
 
 Loss
contingencies considered to be remote by management are generally not disclosed
unless they involve guarantees, in which case the guarantee would be
disclosed.
   F6
 Table of Contents
 ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
  Cash and Cash
Equivalents
 
 Cash and
cash equivalents include cash in hand and cash in time deposits, certificates of
deposit and all highly liquid debt instruments with original maturities of three
months or less.
 
 Property, Plant &
Equipment
 
 Property
and equipment are stated at cost. Expenditures for maintenance and repairs are
charged to earnings as incurred; additions, renewals and betterments are
capitalized. When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method for
substantially all assets with estimated lives of:
  Automobile
                5
      yearsOffice
      equipment
                5
      years
  As of
March 31, 2008 and December 31, 2007, Property, Plant & Equipment consist of
the following:
  2008
                
                
                2007Automobile
                
                $
                12,453
                
                
                
                11,957Office
      equipment
                
                
                21,660
                
                
                
                20,79434,112
                
                
                
                32,751Accumulated
      depreciation
                
                
                (18,934
                )
                
                
                (16,974
                )$
                15,178
                
                
                $
                15,777
 
 Depreciation
expenses were $1,228 and $1,539 for the three month periods ended March 31,
2008, and 2007.
 
 Intangible
Assets
 
 Intangible
assets consist of software for information search engine and online web
application. The Company evaluates intangible assets for impairment, at least on
an annual basis and whenever events or changes in circumstances indicate that
the carrying value may not be recoverable from its estimated future cash flows.
Recoverability of intangible assets, other long-lived assets and, goodwill is
measured by comparing their net book value to the related projected undiscounted
cash flows from these assets, considering a number of factors including past
operating results, budgets, economic projections, market trends and product
development cycles. If the net book value of the asset exceeds the related
undiscounted cash flows, the asset is considered impaired, and a second test is
performed to measure the amount of impairment loss.  As of March 31,
2008, there is no impairment of intangible assets.
  As of
March31, 2008 and December 31, 2007 intangible assets consist of the
following:
   F7
 Table of Contents
  ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
 2008
                
                
                2007Software
                
                $
                13,823
                
                
                
                13,27113,823
                
                
                
                13,271Accumulated
      amortization
                
                
                (7,603
                )
                
                
                (6,635
                )$
                6,220
                
                
                $
                6,636
  Amortization
expenses were $677 and $624 for the three month periods ended March 31, 2008 and
2007.
 Amortization
expenses for the next 3 years are as follows:
  Year
      Ending2009
                
                $
                2,7652010
                
                
                2,7652011
                
                
                691Total
                
                
                6,220
  Long-Lived
Assets
  Effective
January 1, 2002, the Company adopted Statement of Financial Accounting Standards
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
144”), which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
the Results of Operations for a Disposal of a Segment of a Business.” The
Company periodically evaluates the carrying value of long-lived assets to be
held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets’ carrying amounts. In that event, a
loss is recognized based on the amount by which the carrying amount exceeds the
fair market value of the long-lived assets. Loss on long-lived assets to be
disposed of is determined in a similar manner, except that fair market values
are reduced for the cost of disposal. Based on its review, the Company believes
that, as of March 31, 2008 there were no significant impairments of its
long-lived assets.
  Fair Value of Financial
Instruments
  Statement
of financial accounting standard No. 107, Disclosures about fair value of
financial instruments, requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.
  Revenue
Recognition
 
 The
Company’s revenue recognition policies are in compliance with Staff accounting
bulletin (SAB) 104. Revenue from marketing services through World Wide Web is
recognized when services are rendered. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as deferred
revenue. As of March 31, 2008 and December 31, 2007, deferred revenue was
$14,387 and $3,313 respectively.
   F8
 Table of Contents
 ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
  Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Stock-Based
Compensation
  In
October 1995, the FASB issued SFAS No. 123, “Accounting for Stock-Based
Compensation”. SFAS No. 123 prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, “Accounting for stock issued to employees” (APB 25) and
related interpretations with proforma disclosure of what net income and earnings
per share would have been had the Company adopted the new fair value method. The
Company uses the intrinsic value method prescribed by APB 25 and has opted for
the disclosure provisions of SFAS No.123. During the three month period ended
March 31, 2008, the company did not grant or issue any option or
warrant.
  Advertising
 
 Advertising
expenses consist primarily of costs of promotion for corporate image and product
marketing and costs of direct advertising. The Company expenses all advertising
costs as incurred. The company did not incur any advertising expense during the
three month periods ended March 31, 2008 and 2007.
  Income
Taxes
  The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
  Basic and Diluted Earnings
(Loss) Per Share
  Earnings
(loss) per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Net income (loss)
per share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period. Basic and diluted loss per share were $0.0009 and $0.0015 for the
three month ended March 31, 2008 and 2007 respectively.
  Statement of Cash
Flows
  In
accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from the
Company’s operations is based upon the local currencies. As a result, amounts
related to assets and liabilities
   F9
 Table of Contents
  ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  reported
on the statement of cash flows will not necessarily agree with changes in the
corresponding balances on the balance sheet.
  Concentration of Credit
Risk
  Financial
instruments that potentially subject the Company to concentrations of credit
risk are cash, accounts receivable and other receivables arising from its normal
business activities. The Company places its cash in what it believes to be
credit-worthy financial institutions. The Company has a diversified customer
base. The Company controls credit risk related to accounts receivable through
credit approvals, credit limits and monitoring procedures. The Company routinely
assesses the financial strength of its customers and, based upon factors
surrounding the credit risk, establishes an allowance, if required, for
uncollectible accounts and, as a consequence, believes that its accounts
receivable credit risk exposure beyond such allowance is limited.
  Segment
Reporting
 
 Statement
of Financial Accounting Standards No. 131 (“SFAS 131”), “Disclosure about
Segments of an Enterprise and Related Information” requires use of the
“management approach” model for segment reporting. The management approach model
is based on the way a company’s management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. SFAS
131 has no effect on the Company’s consolidated financial statements as the
Company consists of one reportable business segment. All revenue is from
customers in People’s Republic of China. All of the Company’s assets are located
in People’s Republic of China.
  Recent accounting
pronouncements
 
 In
September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
employer to recognize the over funded or under funded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset or
liability in its statement of financial position and to recognize changes in
that funded status in the year in which the changes occur through comprehensive
income of a business entity or changes in unrestricted net assets of a
not-for-profit organization. This Statement also improves financial reporting by
requiring an employer to measure the funded status of a plan as of the date of
its year-end statement of financial position, with limited exceptions. An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and to
provide the required disclosures as of the end of the fiscal year ending after
December 15, 2006. An employer without publicly traded equity securities is
required to recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:
  a.
              A
      brief description of the provisions of this
  Statement
  b.
              The
      date that adoption is required
  c.
              The
      date the employer plans to adopt the recognition provisions of this
      Statement, if earlier.
   F10
 Table of Contents
 ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
  Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 The
requirement to measure plan assets and benefit obligations as of the date of the
employer’s fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. The management is currently
evaluating the effect of this pronouncement on financial
statements.
  In
February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FAS 159 for their first quarter 2007
financial statements.
 
 The new
Statement allows entities to choose, at specified election dates, to measure
eligible financial assets and liabilities at fair value that are not otherwise
required to be measured at fair value. If a company elects the fair value option
for an eligible item, changes in that item's fair value in subsequent reporting
periods must be recognized in current earnings. FAS 159 also establishes
presentation and disclosure requirements designed to draw comparison between
entities that elect different measurement attributes for similar assets and
liabilities.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements”. This Statement amends ARB 51 to establish
accounting and reporting standards for the noncontrolling (minority) interest in
a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for the Company’s fiscal year
beginning October 1, 2009. Management is currently evaluating the effect of this
pronouncement on financial statements.
 
 In March,
2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities”. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The new standard also improves transparency about the location and
amounts of derivative instruments in an entity’s financial statements; how
derivative instruments and related hedged items are accounted for under
Statement 133; and how derivative instruments and related hedged items affect
its financial position, financial performance, and cash flows. FASB Statement
No. 161 achieves these improvements by requiring disclosure of the fair values
of derivative instruments and their gains and losses in a tabular format. It
also provides more information about an entity’s liquidity by requiring
disclosure of derivative features that are credit risk–related. Finally, it
requires cross-referencing within footnotes to enable financial statement users
to locate important. Based on current conditions, the Company does not expect
the adoption of SFAS 161 to have a significant impact on its results of
operations or financial position.
 
 In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141(R) will apply prospectively to business combinations for which the
acquisition date is on or after Company’s fiscal year beginning October 1, 2009.
While the Company has not yet evaluated this statement for the impact, if any,
that SFAS No. 141(R) will have on its consolidated financial statements, the
Company will be required to expense costs related to any acquisitions after
September 30, 2009.
    F11
 Table of Contents
  ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
  Note
3-  LOAN
RECEIVABLE
 
 As of
December 31, 2007, the Company has advanced loans to an ex-shareholder. The loan
receivable of $62,129 is unsecured, non interest-bearing and due on
demand.  Another loan receivable of $84,038 is due on demand and
interest bearing to the same ex-shareholder. Interest receivable of $5,263 has
been accrued as of December 31, 2007 on the loan at the prevailing bank deposit
interest rate of 2.25% per China Renmin Bank.
 
 On
January 1, 2008, the Company entered a new loan agreement with the
ex-shareholder for the outstanding loans amounting to $146,167 as of December
31, 2007, included the original loan principal of $140,904 and accrued interest
of $5,263. The new due date for the loan is on December 31, 2008 with interest
rate 8% annually and no secure. The interest income was $0 and $1,813 for the
three month periods ended March 31, 2008 and 2007.
 
 On
December 31, 2007, the management of the Company determined that the loan was
doubtful and therefore provided an allowance ofr bad debts against the loan,
amounting $146,167.
 
 The
Company has loan receivables of $26,250 to third parties as of December 31,
2007. These loans are unsecured, non interest-bearing and due on demand. The
loans of $26,250 was recovered as of March 31, 2008.
  Note
4-  RELATED
PARTY TRANSACTION
  As of
March 31, 2008 and December 31, 2007, the Company advanced $267 and $274,
respectively, to a shareholder of a subsidiary .
 
 Note
5 – ACCOUNTS PAYABLE
AND ACCRUED EXPENSES
 
 As of
March 31, 2008, account payable and accrued expenses were $23,461, including
accrued professional expenses of $15,625, accrued payroll and welfare expenses
of $7,571  and other payable of $266.
 
 As of
December 31, 2007, account payable and accrued expenses were $36,142, including
$26,344 accrued professional expenses and $9,798 accrued payroll and welfare
expenses.
 
 Note
6 – LOAN PAYBLE TO
RELATED PARTIES
 
 As of
March 31, 2008, total loan payable to related parties were $304,633, including a
non interest-bearing, unsecured and due on demand note payable to an officer
of a subsidiary amounting $84,000 and a non interest-bearing, unsecured and
due on demand note payable to a shareholder of the Company in the amount of
$220,633.
 
 As of
December 31, 2007, total loan payable to related parties were $265,721,
including a non interest-bearing, unsecured and due on demand note payable to an
officer of a subsidiary amounting $84,000 and a non interest-bearing,
unsecured and due on demand note payable to a shareholder of the Company in the
amount of $181,721.
  Note
7 – COMMON
STOCK
 
 On May
17, 2005, the Company agreed to issue 150,000 shares of common stock to
individuals for subscriptions receivable of $60,000 ($0.40 per share). The
shares were issued during the month of August 2007. However, the physical
certificates were not issued as the company was still waiting for the SB-2
filing to become effective.  The Company plans to issue the
certificates in next few months.
 
 On
November 7, 2005, the Company issued 10,000,000 shares of common stock at par of
$0.001 per share for purchase all of the issued and outstanding shares of Top
Interest from its shareholders.
   F12
 Table of Contents
 ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
  Note
8 – ADDITIONAL PAID-IN CAPITAL
  The
Company utilizes office space arranged by an officer of the Company, free of
charge. The fair market rent value amounting $559 has been taken as a
contribution to the capital from officer and credited to the additional paid in
capital as of March 31, 2008.
  The
Company utilizes office space arranged by an officer of the Company, free of
charge. The fair market rent value amounting $6,322 has been taken as a
contribution to the capital from officer and credited to the additional paid in
capital as of December 31, 2007.
 
 Note
9 – INCOME
TAXES
 
 The
Company is registered in the State of Delaware and has operations in primarily
two tax jurisdictions - the PRC and the United States. For certain operations in
the US and PRC, the Company has incurred net accumulated operating losses for
income tax purposes The Company believes that it is more likely than not that
these net accumulated operating losses will not be utilized in the future.
Therefore, the Company has provided full valuation allowance for the deferred
tax assets arising from the losses at these locations as of March 31, 2008 and
2007, and the Company has recorded income tax provisions for the periods as
follows:
  The provision for income taxes from continuing operations on
income consists of the following for the three month periods ended March 31,
2008 and 2007:
 
 3/31/2008
                
                
                3/31/2007US
      Current Income Tax Expense (Benefit)Federal
                
                $
                -
                
                
                $
                -StatePRC
      Current Income Expense (Benefit
                
                
                111
                
                
                
                -Total
      Provision for Income Tax
                
                $
                111
                
                
                $
                -Tax
      expense (credit) at statutory rate - federal
                
                
                34
                %
                
                
                34
                %State
      tax expense net of federal tax
                
                
                6
                %
                
                
                6
                %Changes
      in valuation allowance
                
                
                (40
                %)
                
                
                (40
                %)Foreign
      income tax - PRC
                
                
                14
                %
                
                
                15
                %Exempt
      from income tax due to net loss
                
                
                0
                %
                
                
                (15
                %)Tax
      expense at actual rate
                
                
                14
                %
                
                
                0
                %
  United States of
America
  As of
March 31, 2008, the Company in the United States had approximately $7,986in net
operating loss carry forwards available to offset future taxable income. Federal
net operating losses can generally be carried forward 20 years. The deferred tax
assets for the United States entities at March 31, 2008 consists mainly of net
operating loss carry forwards and were fully reserved as the management believes
it is more likely than not that these assets will not be realized in the
future.
 
 The
following table sets forth the significant components of the net deferred tax
assets for operation in the US as of March 31, 2008 and December 31,
2007.
 
 March
      31, 2008
              
              
              December
      31, 2007Net
      operation loss carry forward
              
              $
              7,986
              
              
              $
              87,002Total
      deferred tax assets
              
              
              60,500
              
              
              
              57,800Less:
      valuation allowance
              
              
              (60,500
              )
              
              
              (57,800
              )Net
      deferred tax assets
              
              $
              -
              
              
              $
              -
   F13
 Table of Contents
 ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
  People’s Republic of China
(PRC)
 
 Pursuant
to the PRC Income Tax Laws, the Company's subsidiary is generally subject to
Enterprise Income Taxes ("EIT") at a statutory rate of 33%, which comprises 30%
national income tax and 3% local income tax. The subsidiary is qualified as a
new technology enterprises and under PRC Income Tax Laws, it subject to a
preferential tax rate of 15%.
 
 Beginning
January 1, 2008, the new Enterprise Income Tax ("EIT") law will replace the
existing laws for Domestic Enterprises ("DES") and Foreign Invested Enterprises
("FIEs"). The new standard EIT rate of 25% will replace the 33% rate currently
applicable to both DES and FIEs. The Company’s applicable EIT rate under new EIT
law is differ from the amounts computed by applying the EIT primarily. The local
government has implemented a special tax rate based on income rather than net
income for the enterprises reported operation loss continuously for more than
two years.  Pursuant to the special tax rate, the Company’s subsidiary
is first subject to a tax rate of 6% on their income and than multiply that by
the standard tax rate of 25% or simply 1.5% of income. Income tax expenses for
the three month periods ended March 31, 2008 and 2007 were $111 and $0
respectively.
 
 2008/3/31
                
                
                2007/3/31Loss
      from China
                
                
                (791
                )
                
                
                (3,408
                )Income
      tax expense for operation in the PRC
                
                $
                111
                
                
                $
                -Tax
      expense at actual rate
                
                
                14
                %
                
                
                0
                %
  Note
10 – STATUTORY
RESERVE
 
 In
accordance with the laws and regulations of the PRC, after the payment of the
PRC income taxes shall be allocated to the statutory surplus reserves and
statutory public welfare fund for staff and workers.  The proportion
of allocation for reserve is 5 to 10 percent of the profit after tax until the
accumulated amount of allocation for statutory reserve reaches 50 percent of the
registered capital.  Statutory surplus reserves are to be utilized to
offset prior years’ losses, or to increase its share capital. Statutory public
welfare fund is no longer requested for the companies invested by foreign
countries in 2006.
 
 General
reserve fund and statutory surplus fund are restricted for set off against
losses, expansion of production and operation or increase in register capital of
the respective company. Statutory public welfare fund is restricted to the
capital expenditures for the collective welfare of employees. These reserves are
not transferable to the Company in the form of cash dividends, loans or
advances. These reserves are therefore not available for distribution except in
liquidation. As of March 31, 2008, the Company had no reserves to these
non-distributable reserve funds since it had no income from
operation.
 
 Note
11 – OTHER
COMPREHENSIVE INCOME (LOSS)
 
 Balances
of related after-tax components comprising accumulated other comprehensive
income (loss), included in Stockholders’ Deficit, at March 31, 2008 and
December 31, 2007 are as follows:
 
 Foreign
      Currency Translation AdjustmentBalance
      at December 31, 2007
              
              $
              6,673Change
      for 2008
              
              
              530Balance
      at March 31, 2008
              
              $
              7,203
 
 Foreign
      Currency Translation AdjustmentBalance
      at December 31, 2006
              
              $
              3,581Change
      for 2007
              
              
              3,092Balance
      at December 31, 2007
              
              $
              6,673
 
 
   F14
 Table of Contents
 ARTCRAFT
V, INC. AND SUBSIDIARIES
 CONSOLIDATED
FINANCIAL STATEMENTS
 March
31, 2008 and December 31, 2007
  Note
12  – CURRENT VULNERABILITY DUE TO
RISK FACTORS
 
 The
Company’s operations are carried out in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC, by the general state of
the PRC’s economy. The Company’s business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.
  Note
13  – GOING
CONCERN
 
 The
accompanying consolidated financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate continuation of
the company as a going concern.  However, the Company has an
accumulated deficit of $322,852 and $313,965 as of March 31, 2008 and December
31, 2007 including losses of $218,495 and $92,812 for the years ended December
31, 2007 and 2006. The Company’s current liabilities exceed its current assets
by $267,366 and $260,581 as of March 31, 2008 and December 31, 2007. In view of
the matters described above, recoverability of a major portion of the recorded
asset amounts shown in the accompanying consolidated balance sheet is dependent
upon continued operations of the company, which in turn is dependent upon the
Company’s ability to raise additional capital, obtain financing and succeed in
its future operations, The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
 
 Management
has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern.  Management devoted
considerable effort from inception through the three month ended March 31, 2008,
towards obtaining additional equity and management of accrued expenses and
accounts payable.
 
 Management
believes that actions presently being taken to obtain additional funding and
implement its strategic plans provide the opportunity for the Company to
continue as a going concern.