----

----

**JUNE      30, 2007**

**000-49676**

**ARTFEST      INTERNATIONAL, INC.**

| Delaware                                         |  03-0390855                   |
|--------------------------------------------------|------------------------------------|
| (State                or jurisdiction            | (IRS                Employer       |
| of                incorporation or organization) | Identification                No.) |

|                                                                 |                      |
|----------------------------------------------------------------------|---------------------------|
| 27758                Santa Margarita Parkway, # 281 Mission Viejo CA | 92691                     |
| (Address                of Principal Executive Offices)              | (Zip                Code) |

** 1-888-692-7833**

**None**

**Common      Stock**

----

| PART                I.         | FINANCIAL                INFORMATION                            |
|--------------------------------|---------------------------------------------------------------------------|
|       |                                                                      |
| Item                1.    | Financial                Statements                                       |
|       |                                                                      |
| Item                2.    | Management's                Discussion and Analysis and Plan of Operation |
|       |                                                                      |
| Item                3.    | Controls                and Procedures.                                   |
|       |                                                                      |
| PART                II.        | OTHER                INFORMATION                                          |
|       |                                                                      |
| Item                1.    | Legal                Proceedings                                          |
|       |                                                                      |
| Item                2.    | Unregistered                Sales of Securities and Use of Proceeds       |
|       |                                                                      |
| Item                3.    | Defaults                Upon Senior Securities                            |
|       |                                                                      |
| Item                4.    | Submission                of Matters to a Vote of Security Holders        |
|       |                                                                      |
| Item                5.    | Other                Information                                          |
|       |                                                                      |
| Item                6.    | Exhibits                and Reports on Form 8-K                           |
|       |                                                                      |
| Signatures                     |                                                                      |
|       |                                                                      |
| CERTIFICATIONS                 |                                                                      |

----

**PART      **
**I      - FINANCIAL INFORMATION**

|                                           | PAGE      |
|------------------------------------------------|-----------|
|                                           |      |
|                                           |      |
| ACCOUNTANT'S                  REVIEW REPORT    | F-1       |
|                                           |      |
| FINANCIAL                  STATEMENTS          |      |
|                                           |      |
| Balance                  Sheets                | F-2       |
|                                           |      |
| Statements                  of Operations      | F-3       |
|                                           |      |
| Statements                  of Cash Flows      | F-4       |
|                                           |      |
| Notes                  to Financial Statements | F-5  |
|                                           |      |

----

**THOMAS        BAUMAN**

**CERTIFIED        PUBLIC ACCOUNTANT**

**4        SCHAEFFER STREET**

**HUNTINGTON        STATION, NY 11746**

**Telephone        (631) 427-4789     Fax (631)        424-3649**

----

|                                                         |   | **June 30,** |       |   | **December                31,** |   |
|--------------------------------------------------------------|--------|-------------------|------------|--------|---------------------------------|--------|
|                                                         |   | **2007**          |       |   | **2006**                        |   |
| Current                Assets:                               |   |              |       |   |                            |   |
| Cash                                                         |   | $                 | 1,536      |   |                            | $      | 255 |   |
| Prepaid                Expenses                              |   |              | 291        |   |                            |   | 561 |   |
|                                                         |   |              |       |   |                            |   |   |   |
| Total                Current Assets                          |   |              | 1,827      |   |                            |   | 816 |   |
|                                                         |   |              |       |   |                            |   |   |   |
| Property                and Equipment, at cost less          |   |              |       |   |                            |   |   |   |
| accumulated                depreciation                      |   |              | 2,775      |   |                            |   | 5,125 |   |
|                                                         |   |              |       |   |                            |   |   |   |
| TOTAL                ASSETS                                  |   |              | 4,602      |   |                            |   | 5,941 |   |
|                                                         |   |              |       |   |                            |   |   |   |
|                                                         |   |              |       |   |                            |   |   |   |
| Current                Liabilities:                          |   |              |       |   |                            |   |   |   |
| Accounts                Payable and Accrued Liabilities      |   | $                 | 132,757    |   |                            | $      | 110,882 |   |
| Note                Payable - Current Portion                |   |              | 18,806     |   |                            |   | 18,806 |   |
| Loans                Payable (Note 11)                       |   |              | 709,607    |   |                            |   | 624,107 |   |
|                                                         |   |              |       |   |                            |   |   |   |
|                                                         |   |              |       |   |                            |   |   |   |
| TOTAL                LIABILITIES                             |   |              | 861,170    |   |                            |   | 753,795 |   |
|                                                         |   |              |       |   |                            |   |   |   |
| Stockholders'                Equity:                         |   |              |       |   |                            |   |   |   |
| Common                Stock - $.00001 par value - 40,000,000 |   |              |       |   |                            |   |   |   |
| shares                authorized, 28,090,629 and 28,000,629  |   |              |       |   |                            |   |   |   |
| shares                  issued and outstanding               |   |              | 198        |   |                            |   | 198 |   |
| Additional                Paid-in Capital                    |   |              | 264,490    |   |                            |   | 264,490 |   |
| Accumulated                deficit                           |   |              | (1,121,256 | )      |                            |   | (1,012,542 | ) |
|                                                         |   |              |       |   |                            |   |   |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY    |   | $                 | 4,602      |   |                            | $      | 5,941 |   |
|                                                         |   |              |       |   |                            |   |   |   |

----

|                                                               |   | **For                    the                    Three** |       |   | **For                    the Six**  |   |
|--------------------------------------------------------------------|--------|---------------------------------------------------------|------------|--------|-------------------------------------|--------|
|                                                               |   | **Months                    ended**                     |       |   | **Months                    ended** |   |
|                                                               |   | **June                    30,**                         |       |   | **June                    30,**     |   |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |
|                                                               |   | **2007**                                                |       |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |
| Revenues                                                           |   | $                                                       | -          |   |                                | $      | 24,587 |   |   | $ | - |   |   | $ | 91,257 |   |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Cost                    of Revenue                                 |   |                                                    | -          |   |                                |   | 36,962 |   |   |   | - |   |   |   | 69,929 |   |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Gross                    Profit (Loss)                             |   |                                                    | -          |   |                                |   | (12,375 | ) |   |   | - |   |   |   | 21,328 |   |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Sales,                    General and Administrative Expenses      |   |                                                    | (57,995    | )      |                                |   | 72,362 |   |   |   | (108,713 | ) |   |   | (161,605 | ) |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net                    (Loss) From Operations                      |   |                                                    | (57,995    | )      |                                |   | (84,737 | ) |   |   | (108,713 | ) |   |   | (140,277 | ) |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Other                    Income (Expense) , Net (Notes 5 & 12) |   |                                                    | -          |   |                                |   | (17,573 | ) |   |   | - |   |   |   | (17,573 | ) |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| (Deficit)-                    Development Stage                    |   | $                                                       | (57,995    | )      |                                | $      | (102,310 | ) |   | $ | (108,713 | ) |   | $ | (157,850 | ) |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                    average number of common shares        |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| outstanding                    - basic and fully diluted           |   |                                                    | 28,060,629 |   |                                |   | 27,800,629 |   |   |   | 28,040,629 |   |   |   | 27,756,629 |   |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net                    (Loss) per share - basic and fully diluted  |   | $                                                       | 0          |   |                                | $      | 0 |   |   | $ | 0 |   |   | $ | (0.01 | ) |
|                                                               |   |                                                    |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                        |   | **For                  the Six****Months                  ended****June                  30,** |     |
|-------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|----------|
|                                                        |   | **2007**                                                                                       |     |   | **2006** |   |
|                                                        |   |                                                                                           |     |   |   |   |
| Cash                  Flows from Operating Activities:      |   |                                                                                           |     |   |   |   |
| Net                  Income (Loss)                          |   | $                                                                                              | (108,713 | ) |   | $ | (157,850 | ) |
| Adjustments                  to reconcile net (loss) to     |   |                                                                                           |     |   |   |   |   |   |
| net                  cash (used) by operating activities:   |   |                                                                                           |     |   |   |   |   |   |
| Depreciation                                                |   |                                                                                           | 2,350    |   |   |   | 2,350 |   |
| (Increase)                  Decrease in other assets        |   |                                                                                           | -        |   |   |   | 21,410 |   |
| Increase                  in loan receivable                |   |                                                                                           | -        |   |   |   | 995 |   |
| Increase                  (Decrease) in accounts payable    |   |                                                                                           | 21,874   |   |   |   | 12,241 |   |
| Increase                  in prepaid expenses               |   |                                                                                           | 270      |   |   |   | (561 | ) |
| Net                  Cash (Used) by Operating Activities:   |   |                                                                                           | (84,219  | ) |   |   | (121,415 | ) |
|                                                        |   |                                                                                           |     |   |   |   |   |   |
| Cash                  Flows From Investing Activities:      |   |                                                                                           |     |   |   |   |   |   |
| (Purchase                  ) Disposal of Equipment          |   |                                                                                           | -        |   |   |   | 30,114 |   |
| Net                  Cash Used by Investing Activities:     |   |                                                                                           | -        |   |   |   | 30,114 |   |
|                                                        |   |                                                                                           |     |   |   |   |   |   |
| Cash                  Flows From Financing Activities:      |   |                                                                                           |     |   |   |   |   |   |
|                                                        |   |                                                                                           |     |   |   |   |   |   |
| Issuance                  of Common Stock                   |   |                                                                                           | -        |   |   |   | - |   |
| Decrease                  in Notes payable                  |   |                                                                                           | -        |   |   |   | 2,267 |   |
| Increase                  in loans payable                  |   |                                                                                           | 85,500   |   |   |   | 56,765 |   |
| Increase                  in contributed capital            |   |                                                                                           | -        |   |   |   | 40,000 |   |
|                                                        |   |                                                                                           |     |   |   |   |   |   |
| Net                  Cash Provided by Financing Activities: |   |                                                                                           | -        |   |   |   | 99,032 |   |
|                                                        |   |                                                                                           |     |   |   |   |   |   |
| Net                  Increase in Cash                       |   |                                                                                           | 1,281    |   |   |   | 7,731 |   |
|                                                        |   |                                                                                           |     |   |   |   |   |   |
| Cash                  at Beginning of Period                |   |                                                                                           | 255      |   |   |   | 878 |   |
|                                                        |   |                                                                                           |     |   |   |   |   |   |
| Cash                  at End of Period                      |   | $                                                                                              | 1,536    |   |   | $ | 8,609 |   |
|                                                        |   |                                                                                           |     |   |   |   |   |   |

----

| **Note                  1 - History and organization of the company**                                                                                |
|------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                 |
| The                  Company was organized February 21, 2002 (Date of Inception) under                  the laws                  of the             |
| state                  of Delaware to operate a retailing business through its wholly-owned                  subsidiary.                             |
|                                                                                                                                                 |
| **Note                  2 - Accounting policies and procedures**                                                                                     |
|                                                                                                                                                 |
| Cash                  and cash equivalents                                                                                                           |
| The                  Company maintains a cash balance in a non-interest-bearing account                  that                  currently does        |
| not                  exceed federally insured limits. For the purpose of the statements                  of cash                  flows, all highly  |
| liquid                  investments with an original maturity of three months or less are                  considered to be cash                     |
| equivalents.                  There were no cash equivalents as of June 30, 2007.                                                                    |
|                                                                                                                                                 |
| Fixed                  Assets                                                                                                                        |
| Property                  and equipment are recorded at historical cost. Minor additions                  and                  renewals are          |
| expensed                  in the year incurred. Major additions and renewals are capitalized                  and                  depreciated       |
| over                  their estimated useful lives. Depreciation is calculated using                  the                  straight-line method over |
| the                  estimated useful lives as                  follows:                                                                             |

| Computer                  equipment | 3                  years |
|-------------------------------------|--------------------------|
| Office                  equipment   | 4                  years |

| Office                    equipment              |   |   | 15,928  |   |
|--------------------------------------------------|--------|--------|---------|--------|
| Less-accumulated                    depreciation |        |   | (13,153 | )      |
|                                                  |        | $      | 2,775   |        |

| Impairment                    of long-lived assets                                                                                            |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| Long-lived                    assets held and used by the Company are reviewed for possible                    impairment                     |
| whenever                    events or circumstances indicate the carrying amount of an asset                    may not                    be |
| recoverable                    or is impaired. No such impairments have been identified by                    management                      |
| at                    June 30, 2007.                                                                                                          |
|                                                                                                                                          |
| Revenue                    recognition                                                                                                        |
| The                    Company recognized revenue and gains when earned and related                    costs of                    sales and  |
| expenses                    when incurred.                                                                                                    |

| Advertising                  costs                                                                                                                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| The                  Company expenses all costs of advertising as incurred. There were                  nominal                  advertising costs       |
| included                  in selling, or general and administrative expenses in 2007 or                  2006.                                           |
|                                                                                                                                                     |
| Loss                  per share                                                                                                                          |
| Net                  loss per share is provided in accordance with Statement of Financial                  Accounting Standards                          |
| No.                  128 (SFAS # 128) "Earnings Per Share". Basic loss per share is                  computed by                  dividing losses        |
| available                  to common stockholders by the weighted average number of common                  shares                                       |
| outstanding                  during the period. The Company had no dilutive common stock equivalents,                  such                              |
| as                  stock options or warrants as of June 30, 2007 or 2006.                                                                               |
|                                                                                                                                                     |
| Reporting                  on the costs of start-up activities                                                                                           |
| Statement                  of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up                  Activities", which                          |
| provides                  guidance on the financial reporting of start-up costs and organizational                  costs, requires                      |
| most                  costs of start-up activities and organizational costs to be expensed                  as                  incurred. SOP-98-5       |
| is                  effective for fiscal years beginning after December 15, 1998. With                  the                  adoption of SOP-98,         |
| there                  has been little or no effect on the Company's financial                  statements.                                              |
|                                                                                                                                                     |
| 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 revenue and expenses                  during the reporting                        |
| period.                  Actual results could differ from those estimates.                                                                               |
|                                                                                                                                                     |
| Fair                  value of financial instruments                                                                                                     |
| Fair                  value estimates discussed herein are based upon certain market                  assumptions                  and pertinent         |
| information                  available to management as of June 30, 2007 and 2006 respectively.                  The                                     |
| respective                  carrying value of certain on-balance-sheet financial instruments                  approximated their                         |
| fair                  values. These financial instruments include cash and accounts payable.                  Fair values are                            |
| assumed                  to approximate carrying values for cash and payables because they                  are                  short term              |
| in                  nature and their carrying amounts approximated fair values or they                  are                  payable on demand.          |
|                                                                                                                                                     |
| Income                  Taxes                                                                                                                            |
| Deferred                  income tax assets and liabilities are computed annually for differences                  between the                           |
| financial                  statement and tax basis of assets and liabilities that will result                  in                  taxable or deductible |
| amounts                  in the future based on enacted tax laws and rates applicable on                  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.                  Income tax                              |
| expense                  is the tax payable or refundable for the period plus or minus the                  change                  during the           |
| period                  in deferred tax assets and liabilities.                                                                                          |
|                                                                                                                                                     |

----

| Segment                  reporting                                                                                                                    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| The                  Company follows Statement of Financial Accounting Standards No.                  130,                  "Disclosures              |
| About                  Segments of an Enterprise and Related Information". The Company                  operates                  as a                |
| single                  segment and will evaluate additional segment disclosure requirements                  as it                  expands its      |
| operations.                                                                                                                                           |
|                                                                                                                                                  |
| Dividends                                                                                                                                             |
| The                  Company has not yet adopted any policy regarding payment of dividends.                  No                  dividends            |
| have                  been paid or declared since inception.                                                                                          |
|                                                                                                                                                  |
| Recent                  pronouncements                                                                                                                |
| In                  June 2001, SFAS No. 141, "Business Combinations", and SFAS No.                  142,                  "Goodwill and               |
| Other                  Intangible Assets", were issued. SFAS No. 141 requires that all                  business                  combinations        |
| initiated                  after June 30, 2001 be accounted for using the purchase method                  of                  accounting, and        |
| that                  identifiable intangible assets acquired in a business combination                  be                  recognized as an assets  |
| apart                  from goodwill if they meet certain criteria. The impact of the                  adoption of                  SFAS No. 141      |
| on                  our reported operating results, financial position and existing                  financial                  statements            |
| disclosure                  is not expected to be material.                                                                                           |
|                                                                                                                                                  |
| SFAS                  No. 142 applies to all goodwill and identified intangible assets                  acquired                  in a business       |
| combination.                  Under the new standard, all goodwill and indefinite-lived intangible                  assets,                           |
| include                  the acquired before initial application of the standard, will not                  be                  amortized but will    |
| be                  tested for impairment at least annually. The new standard is effective                  for                  fiscal years         |
| beginning                  after December 15, 2001. The impact of the adoption of SFAS No.                  142 on                  our               |
| reported                  operating results, financial position and existing financial statement                  disclosure is not                   |
| expected                  to be material.                                                                                                             |
|                                                                                                                                                  |
| In                  July 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations",                  was issued                               |
| which                  requires the recognition of a liability for an asset retirement                  obligation                  in the period in  |
| which                  it is incurred. When the liability is initially recorded, the carrying                  amount of the related                  |
| long-lived                  asset is correspondingly increased. Over time, the liability is                  accreted                  to its present |
| value                  and the related capitalized charge is depreciated over the useful                  life of                  the asset.         |
| SFAS                  No. 143 is effective for fiscal years beginning after June 15,                  2002. The                  impact of the        |
| adoption                  of SFAS No. 143 on the Company's reported operating results, financial                  position                            |
| and                  existing financial statement disclosure is not expected to be                  material.                                         |
|                                                                                                                                                  |

| In                  August 2001, SFAS No. 144, "Accounting for the Impairment of Disposal                  of                  Long-lived             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| Assets",                  was issued. This statement addresses the financial accounting and                  reporting for the                        |
| impairment                  of disposal of long-lived assets and broadens the definition of                  what                  constitutes a      |
| discontinued                  operation and how results of a discontinued operation are to be                  measured                  and          |
| presented.                  The provisions of SFAS No. 144 are effective for financial statements                  issued for                         |
| fiscal                  years beginning after December 15, 2001. The impact of the adoption                  of                  SFAS No. 144         |
| on                  our reported operating results, financial position and existing                  financial                  statement disclosure  |
| is                  not expected to be material.                                                                                                      |
|                                                                                                                                                  |
| Stock-Based                  Compensation                                                                                                             |
| The                  Company accounts for stock-based awards to employees in accordance                  with                  Accounting             |
| Principles                  Board Opinion No. 25, "Accounting for Stock Issued to Employees"                  and                  related            |
| interpretations                  and has adopted the disclosure only alternative of SFAS No. 123,                  "Accounting                        |
| for                  Stock-Based Compensation". Options granted to consultants, independent                  representatives                          |
| and                  other non-employees are accounted for using the fair value method                  as                  prescribed by             |
| SFAS                  No. 123.                                                                                                                        |
|                                                                                                                                                  |
| Year                  end                                                                                                                             |
| The                  Company has adopted December 31 as its fiscal year end.                                                                          |
|                                                                                                                                                  |
| **Note                  3 - Going concern**                                                                                                           |
|                                                                                                                                                  |
| The                  accompanying financial statements have been prepared assuming the                  Company                  will                 |
| continue                  as a going concern. As shown in the accompanying financial statements,                  the                  Company        |
| has                  incurred a net loss of $1,121,256 for the period from February                  21, 2002                  (inception) to         |
| June                  30, 2007. The future of the Company is dependent upon its ability                  to                  obtain financing         |
| and                  upon future profitable operations from the development of its new                  business                  opportunities.      |
| Management                  has plans to seek additional capital through a public offering                  of its                  common stock.     |
| The                  financial statements do not include any adjustments relating to                  the                  recoverability and         |
| classification                  of recorded assets, or the amount of the classification of liabilities                  that might be                 |
| necessary                  in the event the Company cannot continue in existence.                                                                     |
|                                                                                                                                                  |
| **Note                  4 - Income taxes**                                                                                                            |
|                                                                                                                                                  |
| The                  Company accounts for income taxes under Statement of Financial                  Accounting                  Standards            |
| No.                  109, "Accounting for Income Taxes" (SFAS No. 109), which requires                  use of                  the liability         |
| method.                  SFAS No. 109 provides that deferred tax assets and liabilities                  are                  recorded based on       |
| the                  differences between the tax bases of assets and liabilities and                  their                  carrying amounts for     |
| financial                  reporting purposes, referred to as temporary differences. Deferred                  tax                  assets and        |
| liabilities                  at the end of each period are determined using the currently enacted                  tax                  rates applied |
| to                  taxable income in the periods in which the deferred tax assets                  and                  liabilities are expected to  |
| be                  settled or realized.                                                                                                              |

----

| The                  provisions for income taxes differs from the amount computed by                  applying                  the statutory |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| federal                  income tax rate to Income before provision for income taxes. The                  source                  and tax    |
| effects                  of the differences are as                  follows:                                                                  |

| U.S.                  federal statutory rate |   |   | 34.00  | %      |
|----------------------------------------------|--------|--------|--------|--------|
|                                         |   |   |   |   |
| Valuation                  reserve           |   |   | 34.00  | %      |
|                                         |   |   |   |   |
| Total                                        |   |   | 0.00   | %      |

| As                    of June 30, 2007, the Company has a net operating loss carryforward                    of                    approximately      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| $1,121,000                    for tax purposes, which will be available to offset future taxable                    income.                           |
| This                    carryforward will expire in 2027.                                                                                             |
|                                                                                                                                                  |
| **Note 5                    - Stockholders' Equity**                                                                                             |
|                                                                                                                                                  |
| The                    Company is currently authorized to issue 40,000,000 shares of                    its $0.00001                    par value     |
| common                    stock.                                                                                                                      |
|                                                                                                                                                  |
| On                    November 19, 2002 the Company issued 19,685,000 shares of its                    .00001 par                    value            |
| common                    stock as founders' shares to acquire 100% of the outstanding                    shares of                    Artfest, Inc., |
| a                    Delaware Corporation for a net book value of $197. Artfest provides                    sales,                    marketing,      |
| financial                    and e-commerce systems to the industries of Arts, Antiques, Collectibles                    and                          |
| Luxury                    Goods. The markets are serviced by artists, dealers, galleries,                    and                    manufacturers of  |
| reproductions                    and luxury goods.                                                                                                    |
|                                                                                                                                                  |
| **Note 6                    - Warrants and options**                                                                                             |
|                                                                                                                                                  |
| As                    of June 30, 2007 and 2006, there were no warrants or options                    outstanding                    to acquire       |
| any                    additional shares of common stock.                                                                                             |
|                                                                                                                                                  |

| **Note                  7 - Related party transactions**                                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                               |
| Office                  space and services were provided without charge by the Chief Executive                  Officer.                           |
| Such                  costs are immaterial to the financial statements and, accordingly,                  have                  not been reflected |
| therein.                                                                                                                                           |
|                                                                                                                                               |
| The                  officers and directors of the Company are involved in other business                  activities and may, in                  |
| the                  future become involved in other business opportunities. If a specific                  business opportunity                   |
| becomes                  available, such person may face a conflict in selecting between                  the                  Company and         |
| their                  other business interest. The Company has not formulated a policy                  for the                  resolution       |
| of                  such conflicts.                                                                                                                |
|                                                                                                                                               |
| **Note 8                  - Loans Payable**                                                                                                   |
|                                                                                                                                               |
| On                  January 5, 2003, the Company purchased a 2002 Chevrolet Avalanche                  through                  GMAC               |
| for                  $29,717. The note calls for a term of 5 years at a rate of 5.9%                  beginning                  on                |
| February                  24, 2003, and maturing on December 24, 2007. As of the report                  date,                                     |
| the                  Company had defaulted on the note and the vehicle has been returned                  to                                       |
| to                  GMAC for sale.                                                                                                                 |
|                                                                                                                                               |

| The                  Company has $709,607 short term notes payable to shareholders.                  The                  notes               |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| call                  for varying interest rates ranging from 1% to 8% per annum, and                  contain a                  stock       |
| payment                  option payable to the lender's discretion.                                                                           |
|                                                                                                                                          |
| As                  of the report date, the Company is in default on all of its short                  term                  notes payable to |
| non-shareholder                  investors. Management has not formulated a repayment plan, and                  no                           |
| contingency                  plan has been established in the event that the lenders seek legal                  remedies.                    |
|                                                                                                                                          |

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**Equity      Securities Sold Without Registration**

| **Period**             | **Shares              Issued** | **Purpose**                                | **Amount              Received** |
|------------------------|--------------------------------|--------------------------------------------|----------------------------------|
|                   |                           |                                       |                             |
| Q1                2005 | 2,100,000                      | Gifts                / Services            |  -                0 -       |
| Q2                2005 | *                              | *                                          | *                                |
| Q3                2005 | 50,000                         | Capital                Contribution        | $35,000                          |
| Q4                2005 | 10,000                         | Capital                Contribution        | $15,000                          |
|                   | 40,000                         | Gifts                / Services            | *                                |
|                   |                           |                                       |                             |
|                   |                           |                                       |                             |
| Q1                2006 | 132,000                        | Capital                  Contribution      | $40,000                          |
| Q2                2006 | *                              | *                                          | *                                |
| Q3                2006 | 200,000                        | Services                                   |  -                  0 -     |
| Q4                2006 | *                              | *                                          | *                                |
|                   |                           |                                       |                             |
| Q1              2007   | 30,000                         | Prior                Capital Contributions | *                                |
| Q2              2007   | 60,000                         | Services                                   |  -                  0 -     |

**General      Information**

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|                                   |                                                                                                  |                                 |
|----------------------------------------|-------------------------------------------------------------------------------------------------------|--------------------------------------|
|                                   | **Artfest              International,              Inc.**                                             |
|                              |                                                                                             |                            |
| Date: August 3,              2007 | By:                                                                                         | /s/ Larry D.              Ditto |
|                                   |                                                                                                       |
|                                   | President (principal                executive officer and principal financial                officer) |

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**ITEM      6. EXHIBITS AND **
**REPORTS      ON FORM 8-K.**

**EXHIBIT      INDEX**

| **Number**                                                                            | **Description**                                                                                                                                                                                                                                                                                                                          |
|------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1    3.2    3.3                                            | Articles                of Incorporation [1] Articles                of Amendment of the Articles of Incorporation [3] Bylaws                [1]                                                                                                                                                                                         |
| 10.1 10.2                                                                                       | Agreement                and Plan of Reorganization, Soldnet, Inc. and Artfest, Inc.                [2] Loan                Agreement (form) with Promissory Note (form), December, 2005                [3]                                                                                                                                        |
|  23.1** 31                ** 32                **       | Consent                  of Thomas Bauman C.P.A., Independent Registered                  Public Accountant Certifications                pursuant to Sarbanes - Oxley Act of                2002  Certifications                of Officers pursuant to Section 1350, of                the Sarbanes - Oxley Act of                2002 |

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