UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)





[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934


FOR THE
QUARTERLY PERIOD ENDED MARCH
31, 2009





OR





[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD


FROM
______________ TO ______________








COMMISSION
FILE NUMBER: 000-49676





ARTFEST
INTERNATIONAL, INC.


(Exact
name of registrant as specified in its charter)







Delaware
                03-0390855(State
      or jurisdiction
                (IRS
      Employerof
      incorporation or organization)
                Identification
      No.)





13342
      Midway Road, Suite 250
                  Dallas,
      TX
                75244(Address
      of Principal Executive Offices)
                (Zip
      Code)





Issuer's
telephone number: 1-877-278-6672





Securities
registered pursuant to Section 12(b) of the Act: None





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





Check whether the Issuer (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was
required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[X ] No [ ] Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X]





As
of May 14, 2009, the Registrant had 261,763,003  shares of
common stock outstanding.





Transitional
Small Business Disclosure Format (Check one): Yes [ ] No [X]

























Table of
Contents













PART
      I.
                FINANCIAL
      INFORMATION
                PageItem
      1.
                Financial
      Statements
                F-1ACCOUNTANT'S
      REVIEW REPORT
                F-1FINANCIAL
      STATEMENTSBalance
      Sheets
                F-2Statements
      of Operations
                F-3Statements
      of Cash Flows
                F-4Notes
      to Financial Statements
                F-5Item
      2.
                Management's
      Discussion and Analysis and Plan of Operation
                12PART
      II.
                OTHER
      INFORMATION
                20Item
      1.
                Legal
      Proceedings
                20Item
      2.
                Unregistered
      Sales of Securities and Use of Proceeds
                20Item
      3.
                Defaults
      Upon Senior Securities
                20Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                20Item
      5.
                Other
      Information
                20Item
      6.
                Exhibits
      and Reports on Form 8-K
                21Signatures
                
                22Exhibit
      Index
                
                23CERTIFICATIONS
                
                23




















EUGENE
M EGEBERG




CERTIFIED
PUBLIC ACCOUNTANT




834
SOUTH MILTON AVENUE




BALTIMORE,
MARYLAND  21224




Telephone
(410) 218-1711  Fax (410) 374-8121



















To the
Board of Directors and Stockholders


Artfest
International, Inc.


13342
Midway Road


Suite
250


Dallas,
TX 75244




Report of Independent
Registered Public Accounting Firm





I have
audited the Balance Sheet of Artfest International, Inc. (A Development Stage
Company) as of December 31, 2008 and  have reviewed the Balance Sheet
of Artfest International, Inc for the quarter ended march 31, 2009 and the
related Statements of Operations, Stockholders' Equity, and Cash Flows for the
periods then ended. These interim financial statements are the responsibility of
the company's management.





I
conducted the review in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters.  It is substantially less in scope than an audit
conducted in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the objective of which is the expression of an
opinion regarding the financial statements taken as a
whole.  Accordingly, I do not express such an opinion.




Based on
my review, I am not aware of any material modifications that should be made to
the accompanying financial statements in order for them to be in conformity with
US generally accepted accounting principles.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 3 to the
financial statements, the Company has had limited operations and has not
commenced planned principal operations.  The Company's financial
position and operating results raise substantial doubt about its ability to
continue as a going concern.  Management's plan regarding those
matters also are described in Note 3.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.














Eugene M.
Egeberg, C.P.A.


May 15,
2009
















F-1













ARTFEST
INTERNATIONAL, INC.


(A
Development Stage Company)


BALANCE SHEETS


(Unaudited)







March
      31,
                                      
                                      
                                      December
      31,2009
                                      
                                      
                                      2008Current
      Assets:Cash
                                      
                                      $
                                      (4,146
                                      )
                                      
                                      $
                                      (2196
                                      )Prepaid
      Expenses
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Accounts
      Receivable
                                      
                                      
                                      351,000
                                      
                                      
                                      
                                      351,000Total
      Current Assets
                                      
                                      
                                      346,854
                                      
                                      
                                      
                                      348,804Non-Current
      AssetsInventory
                                      
                                      
                                      555,210Other
      Assets
                                      
                                      
                                      130,217
                                      
                                      
                                      
                                      130,217Total
      Non-current Assets
                                      
                                      
                                      685,427Property and Equipment,
      at cost lessaccumulated
      depreciation
                                      
                                      
                                      54,221
                                      
                                      
                                      
                                      58,464TOTAL
      ASSETS
                                      
                                      
                                      1,086,502
                                      
                                      
                                      
                                      537,485Current
      Liabilities:Accounts
      Payable and Accrued Liabilities
                                      
                                      $
                                      1,419,443
                                      
                                      
                                      $
                                      675,840Note
      Payable - Current Portion (Note 8)
                                      
                                      
                                      460,873
                                      
                                      
                                      
                                      460,873Deferred
      Revenue
                                      
                                      
                                      351,000
                                      
                                      
                                      
                                      351,000Loans
      Payable (Note 8)
                                      
                                      
                                      -
                                      
                                      
                                      
                                      475,317Total
      Current Liabilities
                                      
                                      
                                      2,231,316
                                      
                                      
                                      
                                      1,963,074Non-current
      LiabilitiesLoans
      Payable (Note 8)
                                      
                                      
                                      690,103
                                      
                                      
                                      
                                      784,497TOTAL
      LIABILITIES
                                      
                                      
                                      2,921,419
                                      
                                      
                                      
                                      2,747,571Stockholders'
      Equity:
                                        Preferred
      stock - $.001 par value – 2,000,000 shares authorized, no shares issued
      and outstanding,Common
      Stock - $.001 par value – 500,000,000shares
      authorized, 199,263,003 and 168,763,003
                                      
                                      
                                      199,263
                                      
                                      
                                      
                                      168,763shares
      issued and outstanding
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Additional
      Paid-in Capital
                                      
                                      
                                      733,592
                                      
                                      
                                      
                                      671,198Accumulated
      deficit
                                      
                                      
                                      (2,767,772
                                      )
                                      
                                      
                                      (3,050,047
                                      )TOTAL
      SHAREHOLDERS EQUITY
                                      
                                      
                                      (1,834,917
                                      )
                                      
                                      
                                      (2,210,086
                                      )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                                      
                                      $
                                      1,086,502
                                      
                                      
                                      $
                                      537,485












F-2








ARTFEST
INTERNATIONAL, INC.


(A
Development Stage Company)


STATEMENT
OF OPERATIONS


(Unaudited)




For
      the ThreeMonths
      endedMarch
      31,2009
                            
                            
                            2008Revenues
                            
                            $
                            469,000
                            
                            
                            $
                            12Cost
      of Revenue
                            
                            
                            143,054
                            
                            
                            
                            12,740Gross
      Profit (Loss)
                            
                            
                            325,946
                            
                            
                            
                            (12,728)Sales,
      General and Administrative Expenses
                            
                            
                            355,671
                            
                            
                            
                            726,701Net
      (Loss) From Operations
                            
                            
                            (29,725
                            )
                            
                            
                            (739,429
                            )Other
      Income (Expense) , Net
                            
                            
                            310,500
                            
                            
                            
                            (6,448)(Deficit)
      - Development Stage
                            
                            $
                            280,775
                            
                            
                            $
                            (745,876
                            )Weighted
      average number of common sharesoutstanding
      - basic and fully diluted
                            
                            
                            181,929,670
                            
                            
                            
                            62,275,629Net
      (Loss) per share - basic and fully diluted
                            
                            $
                            0
                            
                            
                            $
                            0





































F-3





ARTFEST
INTERNATIONAL, INC.


(A
Development Stage Company)


STATEMENT OF CASH FLOWS


(Unaudited)


For
      the ThreeMonths
      endedMarch
      31,2009
                                
                                
                                2008Cash
      Flows from Operating Activities:Net
      Income (Loss)
                                
                                $
                                280,775
                                
                                
                                $
                                (745,876
                                )Adjustments
      to reconcile net (loss) tonet
      cash (used) by operating activities:Depreciation
                                
                                
                                4,243
                                
                                
                                
                                5,089Amortization
                                
                                
                                -(Increase)
      Decrease in other assets
                                
                                
                                -
                                
                                
                                
                                50Increase
      in loan receivable
                                
                                
                                -
                                
                                
                                
                                -Decrease
      in Rewards Payable
                                
                                
                                (54,236)
                                
                                
                                
                                -Inventory
                                
                                
                                (555,210)
                                
                                
                                
                                -Increase
      in accounts payable and accrued expenses
                                
                                
                                332,478
                                
                                
                                
                                420,027Increase
      in prepaid expenses
                                
                                
                                -
                                
                                
                                
                                -Net
      Cash (Used) by Operating Activities:
                                
                                
                                8,050
                                
                                
                                
                                (320,710
                                )Cash
      Flows From Investing Activities:Intangible
      Assets
                                
                                
                                -
                                
                                
                                
                                (21,500
                                )(Purchase
      ) Disposal of Equipment
                                
                                
                                -
                                
                                
                                
                                (2,000
                                )Net
      Cash Used by Investing Activities:
                                
                                
                                -
                                
                                
                                
                                (23,500
                                )Cash
      Flows From Financing Activities:Issuance
      of Common Stock
                                
                                
                                30,500
                                
                                
                                
                                26,045Increase/(Decrease)
      in Notes payable
                                
                                
                                (102,894
                                )
                                
                                
                                62,753Increase
      in loans payable
                                
                                
                                -
                                
                                
                                
                                6,730Increase
      in contributed capital
                                
                                
                                62,394
                                
                                
                                
                                274,955Net
      Cash Used by Financing Activities:
                                
                                
                                (10,000
                                )
                                
                                
                                370,483Net
      Decrease in Cash
                                
                                
                                (1,950
                                )
                                
                                
                                26,274Cash
      at Beginning of Period
                                
                                
                                (2,196
                                )
                                
                                
                                315Cash
      at End of Period
                                
                                $
                                (4,146
                                )
                                
                                $
                                26,587














F-4





ARTFEST
INTERNATIONAL, INC.


(A
Development Stage Company)


NOTES TO FINANCIAL STATEMENTS


(Unaudited)







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 Acquisition 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, 2009.




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
                
                $
                3,240Proprietary
      software
                
                $
                60,500Furniture
      and Fixtures- Art
                
                $
                41,095Less-accumulated
      depreciation
                
                
                (46,371)Total
      PP&E (net of depreciation)
                
                $
                58,464





Total
Depreciation Expense for Jan-March 31, 2009 was $4,243.




F-5








Intangible
Assets




With the
acquisition of The Art Channel Inc. on December 28, 2007, the Company acquired
the subsidiary with shares of stock whose total value exceeded the net assets of
the company being purchased by $29,500.  The excess amount of $29,500
was booked to the parent company (Artfest International Inc.) as Goodwill and
listed under “Other Assets/Intangible Assets.”   This will be
amortized over a period of 40 years beginning January 1, 2008.




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, 2009.





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
2009 and 2008.




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, 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, 2009 and 2008
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.








F-6


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.




F-7








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 $3,050,047for the period from February
21, 2002 (inception) to March 31, 2009. 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.




The
provisions for income taxes differ  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, 2009, the Company has a net operating loss carryforward of
approximately $3,050,047for 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, 2009.





In
February, 2009 the Company issued 12,500,000 restricted common shares to
consultants and advisors in lieu of cash compensation.




On March
27, 2009 the Company issued 17,500,000 restricted common shares to a former
employee, Jacob D. Cohen, as partial payment on a Convertible Promissory Note,
dated June 1, 2008 in the amount of $87,250.00 bearing interest at 10% per annum
in lieu of a cash payment.  The shares issued represented a partial
principal payment of $43,500.00.




On April
1, 2009 the Company issued 14,500,000 restricted common shares to a former
employee, Jacob D. Cohen, as final payment on a Convertible Promissory Note
dated June 1, 2008 in the amount of $87,250.00 bearing interest at 10% per annum
in lieu of a cash payment. The shares issued represented the final principal
payment of $43,750.00 and accrued interest of $7,144.00.




F-8




Note 6 - Warrants and
options




As of
March 31, 2009 and 2008, there were no warrants outstanding; there are 1,600,000
options outstanding to acquire  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.




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 $690,103 in loans payable to shareholders and $460,873 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 July
5, 2007, the Company signed a loan payable to Brothers Realty & Investment
Group, LLC for $35,000 due on July 5, 2008.   This loan accrues
interest at 12% per annum.




On August
26, 2007, the Company signed a loan payable to Andy Haase in the amount of
$30,000 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 the TBF
Charitable Trust Foundation for $50,000 due on July 31, 2008. The loan accrues
an interest at 1.5% per month, or 18% per annum and with interest and penalties
the Note payable has increased to $190,000.




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 agreements in the amounts of
$10,000, $7,200 and $7,800 respectively for a total of $25,000 from a third
party source (See Note 9 for further details).   On April 4,
2008, the Company received an advance on a loan prior to the execution of loan
agreements in the amount of $25,000 from a third party source. Pursuant to the
terms of a Securities Purchase Agreement, the third party has agreed to 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.  Such payments have not been received on a timely
basis.




Note 9- Other
Income





In March
of 2009, the company relocated to its new warehouse facility and office and
conducted an extensive inventory of its portfolio of domestic and international
art and discovered its inventory had been understated by $310,500. The company
recorded this inventory adjustment to Other Income for the quarter ended March
31, 2009.





F-9




ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION





DESCRIPTION OF OUR
BUSINESS




Introduction




Artfest
International, Inc. (the "Company", "we", "us", "our") is publicly traded on the
Over the Counter Bulletin Board under the symbol (ARTI.OB).  We
currently market, sell, and print paintings and autographed limited-edition
celebrity photographs which are reproduced on canvas using the Giclée and
lithograph processes.  Giclée creates fine art prints from a digital
source using ink-jet printing.  Lithography creates fine art prints
utilizing a chemical process to apply ink to a flat surface using a printing
plate.  The Giclée method is used to reproduce signed and numbered
limited editions of fine art, and autographed limited-edition celebrity art from
existing photographs.  Our products, fine art reproductions and
celebrity collectibles (hereinafter, our “Products”) will be sold utilizing a
direct marketing system, as well as over the Internet through independent
contractors known as Associate Members (“Associate Members”).  We have
also commenced operating and managing a full-scale television network called the
Art Channel NetworkTM (the “Art Channel Network”) which broadcasts art and other
creative-related programming and is currently syndicated to 20,000,000
viewers in 218 independent TV market nation-wide, and which our management
believes will eventually be broadcast to over 40,000,000 households via
satellite and cable.  In addition to art-centric programming, we
intend to use the Art Channel Network to broadcast advertising for our
Products.




Value
Proposition




Art
Channel Galleries combines the high margins and universal appeal of artistic
reproductions with direct marketing.  Added legitimacy of the Art
Channel Network to educate, promote awareness of the arts, entertain and promote
product sales. According to Mac Report, a media company that provides a
Web-based forum for public and private issuers, the worldwide market for
collectibles is worth $120 Billion annually.  With the penetration of
the personal computer and the Internet into most nations, this market is
predicted to grow at a healthy pace over the next two decades.




In
February 2007, the Art Channel officially launched a 2-month test run that
amassed over 350 members and experienced gross revenues of over $400,000.
According to these numbers, on a per member basis, this translates into $571 per
month or $6,857 a year in per member revenues to the Art Channel.




Direct Marketing and Sales &
Independent Dealers: This model is centered on an Associate Rewards
Referral / Party Plan System modeled after companies like Home Interiors,
Tupperware, Pampered Chef and Avon.  This ARTI Virtual Commissions
Reward Card System is patent-pending protected because of the new and exciting
applications it brings to this direct-sales business model.  New Art
Dealers receive special training from the artists themselves and a personalized
e-commerce Art Channel Galleries website.




We intend
to utilize three (3) sales strategies.




(1)
            Direct
      Marketing and Sales: We will utilize an Associate Rewards Referral / Party
      Plan System modeled after companies like Home Interiors, Tupperware,
      Pampered Chef and Avon.(2)
            Internet
      Driven: We will offer our Associate Members a state-of-the-art website
      which is a completely automated, turn-key online business building system
      which will create unlimited spam-free traffic to our Associate Members’
      websites.  This system uses our software technology, which our
      management believes is unmatched in the industry.(3)
            Our
      signed and numbered fine art and autographed celebrity collectibles will
      be marketed and sold through independent contractors known as our
      “Associate Members”.  Individuals can become Associate Members
      by enrolling and agreeing to the terms and conditions for a free
      information and ecommerce personalized Company
  website.











12


Description
of Our Products and Services




We will
be careful to set a limiting boundary on anything creative that may not be sold
via Artfest. As long as it is creative, of quality and there is demand our
creative managers will take it in consideration. Artfest will list museum
quality reproductions, originals & collectables.




Quality Reproductions: The
Giclée technique was designed to reproduce, and protect rare and valuable pieces
of art.  The average person will not easily recognize a Giclée reproduction
and original. The Giclée method is used to reproduce Signed and Numbered Limited
Editions of Fine Art, and Autographed Limited-Edition Celebrity Art from
existing photographs.  Images are generated from high resolution digital
scans and printed with archival quality inks onto various substrates including
canvas, fine art, and photo-base paper. The Giclée printing process provides
better color accuracy than other means of reproduction.




RFID: Fraud is a big problem
in the collectables and art community.   Artfest has engaged
Prova, Inc. for access of state of the art RFID technology.  The Prova
Company enables Artfest to validate reproduction numbers, replace damaged goods,
and prove providence.  The relationship with Prova will allow for insurance
underwriting on the Company’s goods.




Major
products include original pictures, drawings, prints, photographs, and
sculptures. Prints include lithographs, Giclées, serigraphs/silk-screens,
posters, and etchings. Art dealers may also sell collectibles, books, or artist
supplies. Services include framing, delivery, and hanging. Companies may provide
appraisals, especially for expensive artwork. High-end dealers may help
individuals or museum curators find specific pieces of art or develop
collections.




Collectables: Artfest will
offer collectables of all kinds from statues to reproductions.  The
accelerate offerings of collectables, Artfest has partnered with CSD
Sports.




Sports Memorabilia:We will
start offering guaranteed authenticity sports memorabilia. We will look to
engaging sports personalities and professional players.  Artfest
recently entered into a distribution agreement with Celebrity Sports to gain
access to sports memorabilia products.




Hero Art:What we call hero
art is the artwork of the beloved. Shunned by the "high art" community, many
famous and well liked people feel compelled to create. Though not master
pieces of epic scale the adoring public would love to have a piece of their
hero. Whether a music performer, sports star, business giant, fashion designer,
author, actor or television personality, Artfest will be happy to create the
distribution.




MyArtfest.com
serves as a concierge, a referral service between artists, private collectors,
interior designers, retailers, wholesalers, and gallery operators who buy, sell
and trade valuable art and home décor. This subscriber service offers e-commerce
visibility and convenience.  Subscribers can post items for sale or trade,
search for their perfect item, and post information about themselves. 
New items will be uploaded regularly and fresh artists and galleries constantly
featured so buyers will have reason to return again and again to
MyArtfest.com.




The Buyers Awards Program:We
appreciate our buyers – and to support our sellers we are offering FREE art
incentives to Buyers.  MyArtfest.com provides a gallery of art choices from
which the buyer can choose. The procedure for claiming awards is easy
and convenient.




Designer Members (Pending)
will receive auto-renewed subscription fees that will pay for base services
while add-on fees, such as premier placement of an item and attention-getting
icons, color and bolding will be charged on an opt-in basis.




13


Buyers
and sellers will find a simple, one page registration process that takes
only a minute to sign up. Although it is not required to register if all they
want to do is view listings on this site, the site will encourage them to
take advantage of all the other free features that registering has to
offer.




Art Investment Programs: Every
financial advisor knows that collectables as an asset-class offer the highest
risk to reward ratio. As Artfest creates a viable secondary market our
newscasters will report on the business of art as auctions, trades and swaps
take place. People will want to know how their assets that hang on their
wall or in their vault are being traded.




The
Giclée technique was designed to reproduce, and protect rare and valuable pieces
of art by using an ink-jet printing technique to recreate images from a digital
source.  The average person will not easily recognize the difference
between a Giclée reproduction and an original work of art.




In order
to quickly respond to anticipated competition, and in order to keep the public
up to date on our current offerings, we produce our own television
series.  This allows us to keep television programming fresh and
inclusive of our latest offerings.




We are
currently marketing a business opportunity to individuals by allowing them to
become our Associate Members.  After individuals become Associate
Members, they will be able to sell our Products using our state-of-the-art
website.




Business
Profitability Prospects




Our
management believes that we have substantial potential for both short and long
term profitability because our management believes that the fine art and
autographed limited-edition celebrity collectable concept will offer a valued
product for art collectors, art dealers, and fans of sports, movies and
music.




With the
proliferation of personal computers and Internet access in most nations, our
management believes it is likely that the worldwide market for collectibles will
grow at a healthy pace over the next two decades.




There are
several companies which are experiencing phenomenal success in the art
reproduction direct-sales industry.  One of these companies which uses
a direct-sales approach has enjoyed $136 million in sales in less than 21
months.  Another company in 1996 sold 66.7% of its ownership for
$930,000,000.  These figures are even more impressive considering that
our management believes that the artists whose works were sold by these
companies are relatively unknown.




The idea
of limited-edition signed and numbered fine art and celebrity collectibles
creates unlimited opportunities to quickly expand into International markets as
well.  International access to the Internet allows us to expand to
countries all around the world.  Our website, when completed, will
support multiple languages, multiple payment methods used around the world and a
global debit card system for commissions.




Our
management believes that the art, music and sports collectibles industry as a
whole has experienced unprecedented growth over the past two decades and the
trend is for even more growth for the future.  Our management further
believes that the ever changing and expanding world of fine art and celebrity
memorabilia provides a never ending source of new and exciting product
offerings.  Our management believes that our fine art and autographed
and numbered celebrity collectibles appeal to all age groups, allowing us to
maximize our penetration of this expanding market.









STRATEGIC
PLAN




Our
motive is to build value and increase market penetration with vertically
integrated companies and service providers. The strategic acquisitions or “Roll
Ups,” is a part of Artfest’s global expansion plan that includes Media, Art,
Memorabilia and Distribution companies that will compliment and enhance
Artfest's sophisticated business model.




14


Direct Marketing and Sales &
Independent Dealers: This model is centered on an Associate Rewards
Referral / Party Plan System modeled after companies like Home Interiors,
Tupperware, Pampered Chef and Avon.  This ARTI Virtual Commissions
Reward Card System is patent-pending protected because of the new and exciting
applications it brings to this direct-sales business model.  New Art
Dealers receive special training from the artists themselves and a personalized
e-commerce Art Channel Galleries website.




Internet Driver:This strategy
offers Art Channel Associates and Members a state-of-the-art website that is a
completely automated and turn-key online business building system that will
create unlimited traffic SPAM FREE to the Art Channel Associate and Members
websites.  This system uses Artfest’s proprietary technology process
that is unmatched in the industry.




Art Channel
Network:  Artfest International is in negotiations to set up
its own television network which will be referred to as the Art Channel
Network.  It will be an additional source of advertising revenue &
art sales leveraged from the years of production experience of the management
team.









THE
MARKET




Total
annual sales in the Art Industry: $120 Billion annually.




According
to Daniel Gross of MoneyBox Magazine, "Fine art is making huge financial news
this week, what with cosmetics-heir-turned-super-collector Ronald Lauder paying
$135 million for a Gustav Klimt painting and Sotheby's and Christie's posting
gigantic numbers at their Impressionist and Modern art auctions.




Consumer
spending and home decorating trends drive demand. The profitability of
individual companies depends on effective merchandising and marketing. Large
companies have advantages in buying, financing, and marketing. Small companies
can compete effectively by offering unique products, providing superior customer
service, or serving a local market. Average annual revenue per worker is
$200,000.




Art
dealers compete with a wide range of retailers, including Internet retailers,
auction houses, mass merchandisers, and home decor and framing service
shops.




According
to Mac Report, a media company that provides a Web-based forum for public and
private issuers, the worldwide market for collectibles is worth $120 Billion
annually. With the penetration of the personal computer and the Internet into
most nations, this market is predicted to grow at a healthy pace over the next
two decades.




The art
dealer industry includes about 6,000 stores with combined annual revenue of $4
billion. The Thomas Kinkade Company is one of the largest art dealers in the US:
most companies have only a single location. The industry is highly fragmented:
the top 50 companies hold 30 percent of industry sales.









MARKETING
PLAN




Artfest
models its distribution strategy similar to Home Interiors Inc.,
www.homeinteriors.com,However, providing high quality, limited edition, signed
and numbered fine art and celebrity endorsed collectibles.  Artfest
operates and markets itself to its Members through four distinct sales channels
that are associated with the following high quality and reputation orientated
brands:




Initial
Distribution is through the members of MyArtfest.com.  Four member
types are structured with prices and features specific to their
needs.




Business
members can buy and sell.  They can post an unlimited number of items for
durations of 1 to 90 days.  Their subscription-based membership runs for 90
day increments with an automatic renewal by credit card.  Members can
opt-out at any time.  Business members are defined as those holding a
retail license and a physical and/or Internet presence.




Artist
Members can buy and sell.  They can post and unlimited number of items for
durations of 1 to 90 days.  Their subscription-based membership runs for 90
day increments with an automatic renewal by credit card.  Members can
opt-out at any time.  Artist members are defined as those only
selling their own works.




Private
Collectors can buy and sell.  There is no registration or subscription fee
for these members.  They "pay as they go" for each 90-day posting and a
referral fee when they wish to contact a Seller. The per occurrence-per item
price is much higher than the subscription rates so private collectors are
defined as buyers who primarily want to buy, but will also occasionally sell
items that no longer fit in their home or matches their design
plan.




15







Artfest AUCTIONS – Online
Auctions My Artfest TM (www.myartfest.com) is an internet auction website that
operates and generates revenue similar to eBay. Through this online revenue
medium, galleries, wholesalers, artists, dealers, and private collectors have an
art focused venue to auction their fine art and collectibles.




Artfest
also intends to operate and manage a full-scale television network which will
broadcast to over 40,000,000 households via satellite and cable, full power and
low power distribution, art and other creative related programming. It is also
intended that this television medium, which will be referred to as the Art
Channel Network, will be used as an additional premier marketing tool to market
and sell Artfest’s products thus creating additional market share for the
Company’s products.






Artfest NETWORKS – National TV
Syndication and Art Channel Art Channel NetworkTM (www.artchannel.tv) provides a
range of multi-cultural programming including artist documentaries, live
paintings, artist collections, artist interviews, live concerts and other art
centric content that is available online and that is syndicated to 20 million
viewers in 218 independent TV markets nationwide. Artfest is working towards
broadcasting its content via IP TV online and acquiring larger slivers of
satellite time and such so that it can eventually broadcast art centric content
24 hours a day, 7 days a week realizing an Art Channel that is similar to the
History Channel, Home & Garden Channel, etc.




The Art
Channel will be yet another division of Artfest. We will capitalize upon
our management experience in broadcasting and production. We already have
content available and being in the sector of art/creativity, we will have
endless subject matter. We have the ability to inexpensively have the
ability to convert such content into valuable and entertaining
shows.




We will
feature short documentaries about movements in all aspects of the human drive to
create from the pre-historic to the contemporary.




Artists
who have signed on to Artfest will be featured on the Art Channel. This
will allow for additional content, artist branding and a push for our members so
they can show legitimacy as well as stir demand for the creative enterprise of
each talent.




Being a
full television station we will of course garner another revenue stream of those
who wish to target the art consuming demographic through advertising. The larger
the reach and better the content the more we can charge for add
time.




Infomercials:
The main revenue driver for Art Channel will be to feature contracted artists
and their creations. Infomercials are inexpensive to produce and will drive
a large portion of revenues.




Partnerships/Auctions:
Having live TV capabilities give us the ability to have auctions and
partnerships with auction houses, art dealers, antique dealers and private
sellers. It will also be a prime place to showcase our
artists.







Artfest DIRECT – Direct-Sales
Model Art Channel GalleriesTM (www.artchannelgalleries.com) is a wholly owned
subsidiary of Artfest functioning as a direct-sales proprietary self-replicating
e-commerce venue. Membership is free and includes a member branded, direct-sales
e-commerce website having full back office support including a merchant account,
just-in-time inventory, and fulfillment. Fine art is available in high quality
and popular formats including Giclée Lithography, and Serigraph.






16


Artfest GALLERIES – Brick and
Mortar Galleries and Celebrity Events Artfest GalleriesTM are brick and mortar
galleries that showcase fine art and collectibles in a traditional gallery
setting. On an ongoing basis, Artfest will have luncheons, and weekend gala’s
locally in Dallas, Texas. Artfest will also showcase new artists, special
exhibits, and celebrity events in different markets internationally all with the
mindset of attracting new Members to www.artchannelgalleries.com.




Artfest
plans to leverage the many diverse skills and marketing opportunities that
present themselves.  Since Artfest has a multi-dimensional sales platform
and product line there will be an appearance of complication. They will add
synergies, positive feedback loops and diversify revenues. It will be our job
here to simplify and give an orderly account on how best to
proceed.




In all
aspects of business we will seek to widen and deepen our economic moat.  By
leveraging our strengths in multiple lines of business we will create a fully
diversified art and collectables company. Below are tactics that we will
use to increase market dominance, diversify revenue streams and expand
internationally.




Artist
Lockdown: Success breeds success and as we reach a tipping point more artists
will see others have been successful with our program.  They will start to
seek us out.  Most artists struggle to make any kind of living.  We
offer a program where they can take control of their destiny and find the
rewards of their creative genius.  As first to market we will be able to be
first in the land rush of artists, affording us the most liked and top selling
artists. Once we have them and they are receiving payment very few
leave. They will tell their artists friends and word spreads throughout
this small community quickly.




Direct
Artist Education: Artists now have a vested interest to educate and help the
members sell. At our Galleries the artists themselves (with our help) will
teach and instruct members on the qualities, motivations and expiations to the
art. Selling art is telling a story. Who better to tell the story then
the artist? This also has many effects as the members then build an
emotional connection to not just the art but the artist themselves.




International
expansion: It is the goal of Artfest to expand globally. As of now we
already have by signing some of the hottest Russian artists and are beginning to
market in Moscow. However our intention is to have a true global company
with the majority of sales outside the US. Art is the only median that
breaks through the language barrier. We will continue to exploit our
Russian and European sales and the focus our expansion on China, the United
Kingdom and South America.









OUR
SALES CHANNELS AND ASSOCIATED COMPANY BRANDS




The
Company operates and markets itself to our Associate Members through four
distinct sales channels which are associated with the following high quality and
reputation orientated brands:




Artfest DIRECT –
Direct-Sales Model




Art Channel GalleriesTM (www.artchannelgalleries.com),our wholly owned subsidiary,
is our direct-sales proprietary Internet-based company where Associate
Members can buy, sell, and trade limited edition signed and numbered fine art
and collectibles.  Membership is free and Associate Members will be able to
create their own website which will bear our brand name.  People who become
Associate Members will have full support from us; including help setting up
their own website, utilizing our software which allows the Associate Member to
utilize a global debit card system, and place and fulfill orders for limited
edition signed and numbered fine art and collectibles from customers.  Fine
art is available in high quality and popular formats including Giclée,
lithography, and serigraph, which uses a stencil to create sharp lines upon the
medium.







17




Artfest NETWORKS – National
TV Syndication and Art Channel




Art Channel NetworkTM
(www.artchannel.tv), our wholly owned subsidiary,provides a range of
multi-cultural programming including artist documentaries, live paintings,
artist collections, artist interviews, live concerts and other art centric
content which is available online and which is syndicated to twenty million
viewers in 218 independent television market nation-wide.  We are
working towards broadcasting our content via Internet Protocol television
(“IPTV”) online and acquiring larger slivers of satellite time so that we can
eventually broadcast art centric content 24 hours per day, 7 days per
week, creating an Art Channel Network which is similar to the History
Channel, Home & Garden Channel, etc.









Artfest GALLERIES – Brick
and Mortar Galleries and Celebrity Events




Artfest GalleriesTMcurrently
consists of one brick and mortar gallery which showcases fine art and
collectibles in a traditional gallery setting. On an ongoing basis, we will have
luncheons and weekend gala’s locally in Dallas, Texas. We anticipate that we
will soon open additional brick and mortar galleries to expand Artfest
GalleriesTM.  We will also showcase new artists, special exhibits, and
celebrity events in different markets in the United States and internationally
in order to attract new Associate Members to www.artchannelgalleries.com.









Artfest AUCTIONS – Online
Auctions




My Artfest TM (www.myartfest.com)is an internet auction website which operates and generates revenue
similar to eBayTM. Through this online revenue medium, galleries, wholesalers,
artists, dealers, and private collectors have an art-focused website to auction
their fine art and collectibles.




Results
of Operations





(a)
Revenues




The
Company generated operating revenues of $469,000 for the three months ended
March 31, 2009 and recorded a net profit of $280,775. Operating revenues for the
quarter ended March 31, 2008 were $12 with an operating loss of
$12,728.




(b) Costs
and Expenses




Selling,
General and Administrative expenses of $355,671 increased in the subject fiscal
quarter compared to $726,701 for the year preceding. The increase is primarily
due to the increase in salary accrual and interest on the notes
payable.





(c)
Depreciation, Depletion and Amortization




Depreciation
totaled $4,243 as of March 31, 2009 compared to $5,089 in 2008.





(e) Net
Loss





The
company had a net profit of $280,775 for the three months ended March 31, 2009
compared to a net loss of $745,876 for the prior year three month period. The
decrease in net loss is the result of decreased operating costs.





18


Forward
Looking Statements





The
foregoing Management’s Discussion and Analysis or Plan of Operation and comments
elsewhere herein may contain “forward looking statements” within the meaning of
Rule 175 under the Securities Act of 1933, as amended, and Rule 3b-6 under the
Securities Act of 1934, as amended, or may be amended, including statements
regarding, among other items, business strategies, continued growth in markets,
projections, and anticipated trends in business and the industry in which it
operates. The words “believe,” “expect,” “anticipate,” “intends,” “forecast,”
“project,” and similar expressions identify forward-looking statements. These
forward-looking statements are based largely on expectations and are subject to
a number of risks and uncertainties, certain of which are beyond control. The
Company cautions that these statements are further qualified by important
factors that could cause actual results to differ materially from those in the
forward looking statements, including, among others, the following: reduced or
lack of increase in demand for products, competitive pricing pressures. In light
of these risks and uncertainties, there can be no assurance that the
forward-looking information contained herein will in fact transpire or prove to
be accurate. We disclaim any intent or obligation to update “forward looking
statements.”

































19





PART II -
OTHER INFORMATION





ITEM 1.
LEGAL PROCEEDINGS.





There
were no legal proceedings during the three months ended March 31,
2009.





ITEM 2.
UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS




Equity
Securities Sold Without Registration





There
were no securities issued without registration during the three months ended
March 31, 2009




ITEM 3.
DEFAULTS UPON SENIOR SECURITIES.





Not
Applicable.





ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.





None





ITEM 5.
OTHER INFORMATION.





Proposed
Charity Sports Distributor Acquisition




In
February 2009 the Company entered into a Letter of Intent to acquire Charity
Sports Distributor, Inc. (d.b.a. CSD Sports Framing and Memorabilia) which was
founded in 1996. CSD is a vertically integrated Texas based custom framing
company which specializes in the design, production, and distribution of
authentic framed autographed sports and entertainment collectibles and art
pieces.  CSD’s distribution avenues include B2B and B2C sales, charity
fundraising auctions, professional and college sports team’s pro shops,
e-stores, online auctions and a revolutionary in-game silent auction concept
known as Home Game Auction.  CSD’s thirteen (13) year experience in
the professional and college sports marketplace has developed an extensive
client list which consists of hundreds of private charities and over forty (40)
professional and college teams, including the Dallas Cowboys, Washington
Redskins, Oakland Raiders, Houston Rockets, Dallas Mavericks, Cleveland
Cavaliers, Phoenix Suns, Arizona Diamondbacks, Dallas Stars, Ohio State, Texas,
Texas A&M, Oklahoma, Alabama, Georgia, Auburn, Florida State and
UCLA.




The
Company expects to complete the acquisition during the Second Quarter of 2009
and be in a position to launch the distribution of CSD’s product line through
Art Channel Galleries, the marketing arm and wholly owned subsidiary of Artfest
International, Inc., during the Second Quarter 2009. The addition of CSD’s
product line in the Second Quarter would compliment and expand the Company’s
ongoing product promotions and special purchase packages that are directed
towards introducing a select number of acclaimed artists to our members.
Presently, the Company is reviewing several financing options in order to
complete this synergistic acquisition as efficiently as possible in light of the
Company having completed its required due diligence.




CSD
recorded revenues in calendar year 2008 of $3.3 million. Upon closing, CSD will
operate as a wholly owned subsidiary of Artfest International, Inc.




The
Company believes that the acquisition of CSD will result in the immediate
expansion and enhancement of our current product offerings and will lead to an
expansion of the Company’s current audience.  Furthermore the
acquisition will enable the Company to vertically integrate framing and canvas
stretching operations and enable the company to increase the overall
profitability of our existing product lines.




“CSD’s
innovative framing is widely regarded as the premier quality brand in the
autographed memorabilia marketplace, and by joining teaming with Artfest
International, CSD would posses one of the most expansive product portfolios in
the autographed collectibles industry.







20












Artists
Licensing Agreements




As of
March 31, 2009, the Company has signed Licensing Agreements with 40 artists and
is in various stages of signing Licensing Agreements with an additional 215
artists.









Noteholder
Discussions




During
the quarter ending March 31, 2009 the Company has initiated discussions to
convert approximately $700,000 of notes into common shares of the Company at an
average price of $.10 per share.








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




Exhibits.





Exhibits
included or incorporated by reference herein are set forth in the attached
Exhibit Index.





None




















21








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.Date: May
      15, 2009
              By:
              /s/ Eddie
      VakserChairman
      and CEO
                (principal
      executive officer and principal financial officer)

















22


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








EXHIBIT INDEX





Number
                Description3.1
                  
                  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]31
      **
                  
                  32
      **
                Certifications pursuant to Sarbanes - Oxley Act of
      2002
                  
                  Certifications of Officers pursuant to Section
      1350, of the Sarbanes - Oxley Act of
2002


** Filed
Herewith


[1]
Incorporated by reference to the Company’s filed Form 10SB with the SEC,
February, 2002.


[2]
Incorporated by reference to the Company’s filed Form 8K with the SEC, November,
2002.


[3]
Incorporated by reference to the Company’s filed Form 10KSB with the SEC, for
the year ended  December 31, 2002.












23