SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


FORM
10-Q





x QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the
quarterly period ended March 31, 2008




or


o TRANSITION REPORT UNDER
SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the
transition period from _____________ to ___________





Commission
File Number 33-19048-NY





ARTFEST
INTERNATIONAL, INC.


(Exact
Name of Small Business Issuer as specified in its charter)




Delaware
            30-0177020(State or other jurisdiction of incorporation or
    organization)
            (I.R.S. employer identification
no.)






15851
      Dallas Parkway, Suite 600
              Addison,
      Texas 75001(Address of principal executive offices) (Zip Code)Registrant's telephone number, including area code:
              (877)
      278-6672





Indicate
by check mark whether the Issuer:





(1) Has
filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the past 12 months (or for such shorter period that the registrant
was required to file such reports):




Yes x No o





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





Large
      Accelerated Filer
            o
            Accelerated
      Filer
            oNon-Accelerated
      Filer
            o
            Smaller
      Reporting Company
            x





(2) Has
been subject to such filing requirements for the past 90 days.




Yes x No o





62,275,629
shares of the registrant's Common Stock, $.001 per share, were outstanding as of
March 31, 2008.







AMERICAN
METAL & TECHNOLOGY, INC.


TABLE OF
CONTENTS


FORM
10-Q





Item
      Number
            
            PageItem
      1.
            Financial
      Statements
            3Consolidated  Balance
      Sheet as of March 31, 2008 (Unaudited)
            3Consolidated
      Statements of Income and Expenses for the Three Months Ended March 31,
      2008 and 2007  (Unaudited)
            4Consolidated
      Statements of Cash Flows for The Three Months Ended March 31, 2008 and
      2007 (Unaudited)
            5Changes
      in Stockholders’ Equity for the Three Months Ended March 31, 2008 and 2007
      (Unaudited)
            6Notes
      to Financial Statements
            7
      - 11Item
      2.
            Management’s
      Discussion and Analysis Or Plan of Operation
            12Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            14Item
      4
            Controls
      and Procedures
            15PART
      II OTHER INFORMATION
            15Item
      1.
            Legal
      Proceedings
            15Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            15Item
      3.
            Defaults
      upon Senior Securities
            16Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            16Item
      5.
            Other
      Information
            16Item
      6.
            Exhibits
            16Signatures
            18











PART I
FINANCIAL INFORMATION




ARTFEST
INTERNATIONAL, INC.


BALANCE
SHEET


MARCH
31st
(2007 & 2008)


(UNAUDITED)





ASSETS


March
      31, 2008
            
            
            March
      31, 2007Current
      AssetsCash
      and cash equivalents
            $
            26,587
            
            
            $
            (18,255
            )Prepaid
      Expenses
            
            -
            
            
            
            291Accounts
      Receivable
            
            351,000
            
            
            
            351,000Total
      Current Assets
            
            377,587
            
            
            
            333,036Non-Current
      AssetsIntangible
      Asset, net of accumulated amortization
            
            29,450
            
            
            
            -Total
      Non-Current Assets
            
            29,450
            
            
            
            -Property,
      Plant and Equipmentat
      cost, net of accumulated depreciation
            
            72,346
            
            
            
            48,018TOTAL
      ASSETS
            
            $
            479,383
            
            
            $
            381,054LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable and Accrued Liabilities
            $
            579,752
            
            
            $
            117,920Current
      Portion of Notes Payable (Note 8)
            
            359,873
            
            
            
            (127
            )Deferred
      Revenue
            
            351,000
            
            
            
            351,000Rewards
      Payable
            
            479,347
            
            
            
            -Total
      Current Liabilities
            
            1,769,973
            
            
            
            468,793Non-current
      LiabilitiesLoans
      Payable (Note 8)
            
            699,747
            
            
            
            682,914TOTAL
      LIABILITIES
            
            $
            2,469,719
            
            
            $
            1,151,706Stockholders'
      Equity:Common
      Stock - $.001 par value - 500,000,000shares
      authorized, 62,275,629 issued andoutstanding
            
            $
            62,276
            
            
            $
            198Preferred
      Stock - $0.001 par value - 2,000,000shares
      authorized, none issued or outstanding
            
            -
            
            
            
            -Additional
      paid-in capital
            
            528,198
            
            
            
            264,490Retained
      earnings (deficit)
            
            (2,580,809
            )
            
            
            (1,035,340
            )TOTAL
      STOCKHOLDERS EQUITY
            $
            (1,990,336
            )
            
            $
            (770,652
            )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
            $
            479,383
            
            
            $
            381,054


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




-3-


ARTFEST
INTERNATIONAL, INC.


STATEMENT
OF INCOME AND EXPENSES


FOR THE
THREE MONTHS ENDED MARCH 31st (2007
& 2008)


(UNAUDITED)





March
      31, 2008
            
            
            March
      31, 2007Revenue
            
            $
            12
            
            
            $
            180,143Cost
      of Revenue
            
            
            12,740
            
            
            
            30,665Gross
      Profit (Loss)
            
            
            (12,728
            )
            
            
            149,478Operating
      Expenses
            
            
            726,701
            
            
            
            171,101Net
      Income (Loss) from Operations
            
            
            (739,429
            )
            
            
            (21,623
            )Other
      Income (Expense), Net
            
            
            (6,448
            )
            
            
            (1,175
            )Net
      Income (Loss)
            
            $
            (745,876
            )
            
            $
            (22,798
            )Weighted
      average number of common sharesoutstanding
      - basic and fully diluted
            
            
            62,275,629
            
            
            
            28,000,629Net
      (Loss) per share - basic and fully diluted
            
            $
            0.00
            
            
            $
            0.00


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




-4-


ARTFEST
INTERNATIONAL, INC.


STATEMENT
OF CASH FLOWS


FOR THE
THREE MONTHS ENDED MARCH 31st (2007
& 2008)


(UNAUDITED)





March
      31, 2008
            
            
            March
      31, 2007Cash
      Flows From Operating ActivitiesNet
      income (loss)
            
            $
            (745,876
            )
            
            $
            (22,798
            )Adjustments
      to reconcile net income (loss) tonet
      cash (used) provided by operating activities:Increase
      in Depreciation
            
            
            5,089
            
            
            
            1,175Increase
      in Amortization
            
            
            50
            
            
            
            -Increase
      in Inventory
            
            
            -
            
            
            
            -Increase
      in Rewards Payable
            
            
            -
            
            
            
            -(Increase)
      in Accounts Receivable
            
            
            -
            
            
            
            (351,000
            )Increase
      in Accounts Payable and Accrued Expenses
            
            
            420,027
            
            
            
            (25,962
            )Increase
      in Deferred Revenue
            
            
            -
            
            
            
            351,000Increase
      in Prepaid Expenses
            
            
            -
            
            
            
            270Net
      cash (used) by operating activities
            
            
            (320,710
            )
            
            
            (47,315
            )Cash
      Flows From Investing ActivitiesIntangible
      Assets
            
            
            (21,500
            )
            
            
            -Purchase
      of property, plant and equipment
            
            
            (2,000
            )
            
            
            (11,068
            )Net
      cash used in investing activities
            
            
            (23,500
            )
            
            
            (11,068
            )Cash
      Flows From Financing ActivitiesIssuance
      of Common Stock
            
            
            26,045
            
            
            
            -Increase
      (Decrease) in Notes Payable
            
            
            62,753
            
            
            
            (127
            )Increase
      in Loans Payable
            
            
            6,730
            
            
            
            40,000Increase
      in Retained Earnings
            
            
            -
            
            
            
            -Increase
      in Contributed Capital
            
            
            274,955
            
            
            
            -Net
      cash used in financing activities
            
            
            370,483
            
            
            
            39,873Net
      decrease in cash and cash equivalents
            
            
            26,274
            
            
            
            (18,510
            )Cash
      and cash equivalents, Beginning of Period
            
            
            315
            
            
            
            255Cash
      and cash equivalents, March 31, 2008
            
            $
            26,587
            
            
            $
            (18,255
            )


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




-5-


ARTFEST
INTERNATIONAL, INC.


CHANGES
IN STOCKHOLDERS’ EQUITY


FOR THE
THREE MONTHS ENDED MARCH 31st (2007
& 2008)


(UNAUDITED)





2007Common
            
            
            Additional
            
            
            RetainedStock
            
            
            Paid
      In Capital
            
            
            Earnings
            
            
            TotalBalance
      at January 1, 2007
            
            $
            198
            
            
            $
            224,490
            
            
            $
            (785,033
            )
            
            $
            (560,345
            )Stock
      Purchased
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Additional
      Paid in Capital
            
            
            -
            
            
            
            40,000
            
            
            
            (227,509
            )
            
            
            (187,510
            )Retained
      Earnings Adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
      Income
            
            
            -
            
            
            
            -
            
            
            
            (22,798
            )
            
            
            (22,798
            )Balance
      at March 31, 2007
            
            $
            198
            
            
            $
            264,490
            
            
            $
            (1,035,340
            )
            
            $
            (770,652
            )2008Common
            
            
            Additional
            
            
            RetainedStock
            
            
            Paid
      In Capital
            
            
            Earnings
            
            
            TotalBalance
      at January 1, 2008
            
            $
            36,231
            
            
            $
            253,243
            
            
            $
            (1,834,933
            )
            
            $
            (1,545,460
            )Stock
      Purchased
            
            
            26,045
            
            
            
            -
            
            
            
            -
            
            
            
            26,045Additional
      Paid in Capital
            
            
            71,080
            
            
            
            203,875
            
            
            
            -
            
            
            
            274,955Retained
      Earnings Adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
      Income
            
            
            -
            
            
            
            -
            
            
            
            (745,876
            )
            
            
            (745,876
            )Balance
      at March 31, 2008
            
            $
            133,356
            
            
            $
            457,118
            
            
            $
            (2,580,809
            )
            
            $
            (1,990,335
            )


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












-6-


ARTFEST
INTERNATIONAL, INC.


March 31,
2008


NOTES TO
FINANCIAL STATEMENTS





Note 1 - History and
organization of the company





The
Company was incorporated on February 21, 2002 (Date of Inception) under the laws
of the State of Delaware.  Artfest International Inc. 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.





On
December 28, 2007, pursuant to an Acqusition Agreement dated December 28, 2007,
the Company acquired 100% of The Art Channel, Inc. in exchange for 28,000,000
shares of Artfest International, Inc. stock, which were issued to the former
shareholders of The Art Channel, Inc. of which 8,000,000 shares were issued as
of December 28, 2007 and 20,000,000 shares were issued as of March 28, 2008
subsequent to the Company’s annual meeting at which time the shareholders of the
Company voted to increase the number of the authorized shares of the Company’s
common stock to 500,000,000.





In
addition, the Company agreed to issue an additional 1,500,000 shares of stock to
the Company’s former Chairman and CEO, Larry Ditto pursuant to the terms in the
Acquisition Agreement.





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 March 31, 2008.





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
      yearsOffice
      equipment
            4
      yearsProprietary
      Software
            3
      yearsFurniture
      and Fixtures
            7
      years





Property
and Equipment consist of the following:





Office
      equipment
            
            $
            6,208Proprietary
      software
            
            $
            60,500Furniture
      and Fixtures- Art
            
            $
            43,095Less-accumulated
      depreciation
            
            
            (37,457
            )Total
      PP&E (net of depreciation)
            
            $
            72,346





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 March 31, 2008.





Revenue
recognition


The
Company recognized revenue and gains when earned and related costs of sales and
expenses when incurred.





-7-


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
2008 or 2007.





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
March 31, 2008.





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 March 31, 2008 and 2007 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.





-8-


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 $2,580,809 for the period from February
21, 2002 (inception) to March  31, 2008. 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. 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.





-9-


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
March 31, 2008, the Company has a net operating loss carryforward of
approximately $2,585,300
for tax purposes, which will be available to offset future taxable income. This
carryforward will expire in various years through 2027.








Note 5 - Stockholders'
Equity





The
Company was authorized to issue 500,000,000 shares of its $0.001 par value common
stock and 2,000,000 shares of its $0.001 par value preferred stock as of March
31, 2008.





On
November 19, 2002 the Company issued 19,832,000 shares of its $0.001 par value common
stock as founders' shares to acquire 100% of the outstanding shares of Artfest International,
Inc., a Delaware Corporation for a net book value of $19,832.





As of
December 28, 2007 the Company issued 8,000,000 shares of its $0.001 par value
common stock as partial payment to shareholders of The Art Channel, Inc.
pursuant to an acquisition agreement.   As of December 31, 2007,
the Company’s authorized shares were 40,000,000.





In March
2008, the Company amended its Certificate of Incorporation to increase its
authorized shares to 502,000,000, of which 500,000,000 shares are common stock,
par value $0.001 and 2,000,000 shares are preferred stock, par value
$0.001.   The Company then issued an additional 20,000,000 shares
of common stock to shareholders of The Art Channel, Inc. and 1,500,000 shares of
common stock to Larry D. Ditto pursuant to an acquisition
agreement.








Note 6 - Warrants and
options





As of
March 31, 2008, there were no warrants outstanding; there are 1,600,000 options
outstanding to acquire any additional shares of common stock.








Note 7 - Related party
transactions





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.





-10-


Note 8 - Loans and Notes
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 was returned to GMAC for sale. GMAC has sold the
vehicle and credited the company with $10,491 leaving a balance due of $
8,315.




The
Company has $769,547 in loans payable to shareholders and $226,620 in short-term
notes. The notes call for
varying interest rates ranging from 1% to 12% per annum, and contain a stock
payment option payable at the lender's discretion.  As of the report
date, the Company is in default on all of its short term notes payable to
shareholders and non-shareholders. Management has not formulated a repayment
plan, and no contingency plan has been established in the event that the lenders
seek legal remedies.





On May
22, 2007, the Company signed a loan payable to Brothers Realty & Investment
Group, LLC for $120,000 due on May 22, 2008.  This loan accrues
interest at 12% per annum.





On July
5, 2007, the Company signed a loan payable to Brothers Realty & Investment
Group, LLC for $30,000 due on July 5, 2008.   This loan accrues
interest at 12% per annum. The original amount was $35,000, with a $5,000
payment having been made in February 29, 2008.
 
 On August
26, 2007, the Company signed a
loan payable to Andy Haase in the amount of $25,000 due on August 26,
2008.  The loan accrues interest at 10% per annum.  The
original amount was $35,000, with a $5,000 payment having been made in July
2007.


On April
3, 2007, the Company signed a loan payable to Dale Bagwell for $20,000 with no
fixed due date.  The loan is non-interest bearing. The original amount
was $25,000, with a $5,000 payment having been made in July 2007.





On
December 7, 2007 the Company signed a loan payable to Patrick Haxton in the
amount of $15,000 with no fixed due date.  The loan is non-interest
bearing.





On
January 31, 2008, the Company signed a Promissory Note payable to Frady Zyskind
as Trustee
for $50,000 due on July 31, 2008. The loan accrues an interest at 1.5% per
month, or 18% per annum.





On March
17, 2008, March 24, 2008, and March 25, 2008 the Company received an advance on
a loan prior to the execution of loan documents in the amounts of $10,000,
$7,200 and $7,800 respectively for a total of $25,000 from a third party (See
Note 9 for further details).





Note
9 - MATERIAL SUBSEQUENT EVENTS AND CONTINGENCIES





In March
2008, the Company amended its Certificate of Incorporation to increase its
authorized shares to 502,000,000, of which 500,000,000 shares are common stock,
par value $0.001 and 2,000,000 shares are preferred stock, par value
$0.001.   The Company then issued an additional 20,000,000 shares
of common stock to shareholders of The Art Channel, Inc. and 1,500,000 shares of
common stock to Larry D. Ditto pursuant to an acquisition
agreement.




On March
28, 2008, the Company filed a Form S-8 with the Securities and Exchange
Commission, registering a proposed maximum of 7,500,000 shares of Common
Stock.  Pursuant to a Consulting Agreement dated March 13, 2008, 3,000,000
of the registered shares were issued to Beryl Zyskind, and the remaining
4,500,000 registered shares will be issued to Mr. Zyskind on or prior to May 22,
2008.





On April
4, 2008, the Company received an advance on a loan prior to the execution of
loan documents in the amount of $25,000 from a third party. The Company is
currently awaitin the execution of documents for financing
of up to $300,000 from this third party pursuant to Convertible Debentures.
Pursuant
to the terms of a Securities Purchase Agreement, the third party
will advance the Company an aggregate of $300,000, to be paid in twelve
payments of $25,000 each over a period of fifteen weeks, with each advance to be
evidenced by a Convertible Debenture.





-11-





ITEM 2. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.





The following discussion and analysis
provides information which we believe is relevant to an assessment and
understanding of our results of operations and financial
condition.  This discussion should be read in conjunction with the
financial statements and notes thereto appearing elsewhere herein.








RESULTS OF
OPERATIONS





Overview





Until the
Company begins to generate cash flows through operations, the Company continues
to seek both equity investment through the sale of unregistered securities and
debt capital as its sources of liquidity.





Management
believes the success of the business, potential in the future, needs a stable
foundation as a public company.  The first part is compliance with
laws and regulations, primarily updating and keeping current filings with the
SEC, and next establishing the business as a “trading” entity upon a stock
exchange such as the OTC Bulletin Board.  At the same time, it is
important to continue core business pursuits, such as operational improvements,
and become a profitable business.  We anticipate obtaining funding to
address cash flow needs through private placements, loans and similar
fundraising initiatives.  Our plan is subject to many
risks.  There can be no assurance of success.  See Part III,
Item 9, Loan Obligation and Management Restructuring, and other information,
contained in the Company Form 10-KSB report for the fiscal year ended December
31, 2004, and the subsequent filings and amendments, if any.





Three
months ended March 31, 2008 compared with the three months ended March 31,
2007.




Revenue





Revenue
for the three months ended March 31, 2008, was $12, a decrease of 99.99% as
compared to $180,143 for the three months ended March 31,
2007.  Revenue decreased for the three months ended March 31, 2008, as
compared with the three months ended March 31, 2007, largely as a result of our
acquisition of The Art Channel, Inc. (“Art Channel”) during the quarter ended
December 31, 2007.  Our revenue for the three months ended March 31,
2008 reflects that we had virtually no business during this period, as we
prepared the Company for operation of Art Channel.  Gross profit
margin (loss) for the three months ended March 31, 2008, was $(12,728), or
-1060.67% of revenues, compared to a gross profit of $149,478, or 82.98% of
revenues, for the same period in 2007.  The decrease was due to our
acquisition of Art Channel during the quarter ended December 31, 2007, and the
costs associated with operating a new business attempting to establish itself in
the marketplace.





-12-


Expenses from
Operations





Total
expenses, comprised mostly of general and administrative expenses were
approximately $726,701 for the three months ended March 31, 2008, a net increase
of $555,600 compared to $171,101 for the three months ended March 31,
2008.





The
increase in operating expenses for the three months ended March 31, 2008 was
mainly due to general operating expenses associated to growing the Company’s
business and operations.





Other
Expenses





Other
expenses for the three months ended March 31, 2008 were $6,448 as compared to
other expenses of $1,175 for the three months ended March 31,
2007.  The increase in other expenses was mainly due to depreciation
expenses inherited from the acquisition of Art Channel.





Net
Income





We had
net loss of $745,876 for the three months ended March 31, 2008 an increase of
3,271.67% as compared to net income of $22,798 for the three months ended March
31, 2007.  The increase was mainly due to an increase in operating
expenses which increased 424.72% compared with the three months ended March 31,
2007, and gross loss in the three months ended March 31, 2008 as opposed to a
gross profit in the three months ended March 31, 2007.





LIQUIDITY AND CAPITAL
RESOURCES





Liquidity
and capital resources





Cash
balance amounted to $26,587 in the three months ended March 31, 2008, and a cash
deficit of $18,255 as of March 31, 2007.





We will
need additional financing to meet our capital requirements.  We
currently have no arrangements to obtain additional financing and we will be
dependent upon sources such as funds from private sources such as, loans and
additional private placements, funds from public offerings,
and future earnings, if any.  In view of our limited operating
history, our ability to obtain additional funds is
limited.  Additional financing may only be available, if at all, upon
terms which may not be commercially advantageous.




On April
4, 2008, the Company received an advance on a loan prior to the execution of
loan documents in the amount of $25,000 from a third party. The Company is
currently awaiting the execution of documents for the financing of up to $300,000 from
this third party pursuant to Convertible Debentures. Pursuant to the terms of
the Securities Purchase Agreement, the third party will advance the Company an
aggregate of $300,000, to be paid in twelve payments of $25,000 each over a
period of fifteen (15) weeks, with each advance to be evidenced by a Convertible
Debenture.








-13-


Operating
activities





Net cash
used by operating activities for the three months ended March 31, 2008 was
$320,710 compared to $47,315 used by operating activities in the three months
ended March 31, 2008.  This change was mainly due to the acquisition
of Art Channel, and the preparation of the Company for operation of Art
Channel’s business.





The
Company had a net loss of $745,876 for the three months ended March 31, 2008
compared to a net loss of $22,798 for the three months ended March 31,
2007.  Net accounts receivable for the three months ended March 31,
2008 was $0 compared to $351,000 for the three months ended March 31,
2007.  The difference in both net income and net accounts receivable
were mainly due to the acquisition of Art Channel.





Investing
activities





Net cash
used by investing activities was $23,500 for the three months ended March 31,
2008 compared to $11,068 used in the same period of 2007.





Financing
activities





Net cash
used in financing activities was $370,483for
the three months ended March 31, 2008 compared to $39,873 in the same period of
2007.





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements.





Material
Commitments





We have
no material commitments during the next fiscal period.





Purchase of Significant
Equipment





We do not
intend to purchase any significant equipment during the next fiscal
period.





ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Changes
in foreign currency exchange rates could materially adversely affect the
Company’s results of operations or financial condition in the
future.  Currently, the functional currency for all of the Company’s
operations is the U.S. dollar.  We believe our current exposure to
fluctuations in foreign currency exchange rates is immaterial.  We
have not entered into any foreign currency exchange and option contracts to
reduce our exposure to foreign currency exchange risk and the corresponding
variability in operating results as a result of fluctuations in foreign currency
exchange rates.  However, we are attempting to enter foreign markets,
and changes in foreign currency exchange rates may affect our business in the
future.











-14-


ITEM
4T. CONTROLS AND PROCEDURES





Our
principal executive and financial officers, after evaluating the effectiveness
of our “disclosure controls and procedures” (as defined in the Securities
Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the most recently
completed quarter, have concluded that as of the end of the most recently
completed quarter, our disclosure controls and procedures were effective to
provide reasonable assurance that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act (i) is accumulated and
communicated to our management, including our Chief Executive Officer, as
appropriate to allow timely decisions regarding required disclosure, and (ii) is
recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms.





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





There
have been no changes in our internal controls or in other factors that could
affect these controls during or subsequent to the end of the most recently
completed quarter.





PART
II - OTHER INFORMATION





Item
1. Legal Proceedings.





We know
of no material, existing or pending legal proceedings against our company, nor
are we involved as a plaintiff in any material proceeding or pending litigation.
There are no proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our interest.





Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.





Previously
reported in Part II, Item 5 of the Company’s Form 10-KSB for the fiscal year
ending December 31, 2007.

















-15-


Item
3. Defaults upon Senior Securities.





None





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





Previously
reported in Part I, Item 4 of the Company’s Form 10-KSB for the fiscal year
ending December 31, 2007.








Item
5. Other Information:





None.








Item
6. Exhibits and Reports on Form 8-K




(A)  Exhibits





ITEM
      13.
            EXHIBITS.Exhibit
            ExhibitNumber
            Description3(i)
            Articles
      of Incorporation *3(ii)
            Bylaws
      *4
            Stock
      Option Plan **10
            Acquisition
      Agreement ***20
            Proxy
      **22
            Published
      report regarding matters submitted to vote of security holders
      ****31
            Rule
      13a-14(a)/15d-14(a) Certifications32
            Section
      1350 Certifications





*  Incorporated
by reference to the Company’s Form 10-KSB for the fiscal year ending December
31, 2007.





**  Incorporated
by reference to the Company’s Form 14A, which was filed with the Securities and
Exchange Commission on February 27, 2008.





***  Incorporated
by reference to the Company’s Form 8-K/A, which was filed with the Securities
and Exchange Commission on January 18, 2008.





****  Incorporated
by reference to the Company’s Form 8-K which was filed with the Securities and
Exchange Commission on April 18, 2008.

















-16-


(B)  Reports
on Form 8-K





(1)
            Filed
      January 18, 2008, the Company announced the acquisition of The Art
      Channel, Inc.(2)
            Failed
      March 11, 2008, the Company announced a change in its certifying
      accountant.(3)
            Filed
      April 18, 2008, the Company announced the results of votes with respect to
      four proposals at its annual stockholders’ meeting held on March 28,
      2008.(4)
            Filed
      April 25, 2008, the Company announced that it would be late in filings its
      Form 10-KSB for the fiscal year ended December 31, 2007 with the
      Securities and Exchange Commission.













































-17-


SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





ARTFEST INTERNATIONAL,
INC.


(Registrant)




Date:
      May 15, 2008
            By:
            /s/
      Edward
      VakserEdward
      VakserTitle:
      President and Chief Executive Officer (Principal Executive Officer and
      Principal Financial Officer)



















































-18-