----

----

**MARCH      31, 2007**

**000-49676**

**ARTFEST      INTERNATIONAL, INC.**

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

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

** 1-888-692-7833**

**None**

**Common      Stock**

----

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

----

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

ITEM      1. FINANCIAL      STATEMENTS

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

----

**THOMAS        BAUMAN **

**CERTIFIED        PUBLIC ACCOUNTANT**

**4        SCHAEFFER STREET**

**HUNTINGTON        STATION, NY 11746**

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

----

BALANCE      SHEETS

|                                                         |       | **March                31,** | ** ** | **December                31,** | ** ** |
|--------------------------------------------------------------|------------|------------------------------|------------|---------------------------------|------------|
| ** **                                                   | ** ** | ** **                   | **2007**   | ** **                      | ** ** | **2006** |   |
| Current                Assets:                               |       |                         |       |                            |       |   |   |
| Cash                                                         |       | $                            | 132        |                            | $          | 255 |   |
| Prepaid              Expense                                 |       |                         | 290        |                            |       | 561 |   |
|                                                         |       |                         |       |                            |       |   |   |
| Total                Current Assets                          |       |                         | 422        |                            |       | 816 |   |
|                                                         |       |                         |       |                            |       |   |   |
| Property                and Equipment, at cost less          |       |                         |       |                            |       |   |   |
| accumulated                depreciation                      |       |                         | 3,950      |                            |       | 5,125 |   |
|                                                         |       |                         |       |                            |       |   |   |
| TOTAL                ASSETS                                  |       |                         | 4,372      |                            |       | 5,941 |   |
|                                                         |       |                         |       |                            |       |   |   |
|                                                         |       |                         |       |                            |       |   |   |
| Current                Liabilities:                          |       |                         |       |                            |       |   |   |
| Accounts                Payable and Accrued Liabilities      |       | $                            | 120,032    |                            | $          | 110,882 |   |
| Note                Payable (Note 8)                         |       |                         | 18,806     |                            |       | 18,806 |   |
| Loans                Payable (Note 8 )                  |       |                         | 664,107    |                            |       | 624,107 |   |
|                                                         |       |                         |       |                            |       |   |   |
| TOTAL                LIABILITIES                             |       |                         | 802,945    |                            |       | 753,795 |   |
|                                                         |       |                         |       |                            |       |   |   |
| Stockholders'                Equity:                         |       |                         |       |                            |       |   |   |
| Common                Stock - $.00001 par value - 40,000,000 |       |                         |       |                            |       |   |   |
| shares                authorized, 28,030,629 and 28,000,629  |       |                         |       |                            |       |   |   |
| shares                  issued and outstanding               |       |                         | 198        |                            |       | 198 |   |
| Additional                Paid-in Capital                    |       |                         | 264,490    |                            |       | 264,490 |   |
| Accumulated                deficit                           |       |                         | (1,063,261 | )                               |       | (1,012,542 | ) |
|                                                         |       |                         |       |                            |       |   |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY    |       | $                            | 4,372      |                            | $          | 5,941 |   |
|                                                         |       |                         |       |                            |       |   |   |

----

STATEMENTS        OF OPERATIONS

|                                                                   |   |   | **For                  the threeMonths endedMarch 31,**  |       |
|------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------|------------|
|                                                                   |   |   | **2006**                                                      | ** ** | ** ** | **2006** |   |
|                                                                   |   |   |                                                          |       |   |   |   |
| Revenues                                                               |   | $      | -                                                             |       | $ | 66,669 |   |
|                                                                   |   |   |                                                          |       |   |   |   |
| Cost                  of Revenue                                       |   |   | -                                                             |       |   | 32,967 |   |
|                                                                   |   |   |                                                          |       |   |   |   |
| Gross                  Profit (Loss)                                   |   |   | -                                                             |       |   | 33,702 |   |
|                                                                   |   |   |                                                          |       |   |   |   |
| Sales,                  General and Administrative Expenses            |   |   | 50,718                                                        |       |   | 89,243 |   |
|                                                                   |   |   |                                                          |       |   |   |   |
| Income                  (Deficit)- Development Stage                   |   | $      | (50,718                                                       | )          | $ | (55,541 | ) |
|                                                                   |   |   |                                                          |       |   |   |   |
| Weighted                  average number of common shares              |   |   |                                                          |       |   |   |   |
| outstanding                  - basic and fully diluted                 |   |   | 28,015,629                                                    |       |   | 27,734,629 |   |
|                                                                   |   |   |                                                          |       |   |   |   |
| Net                  Income (Loss) per share - basic and fully diluted |   | $      | -                                                             |       | $ | - |   |

----

STATEMENTS      OF CASH FLOW

|                                                      |       | **For                the Three** | ** ** |
|-----------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                | ** ** | **Months                ended**  | ** ** |
| ** **                                                | ** ** | **March                31,**     |       |
|                                                      |       | **2007**                         | ** ** | **2006** | ** ** |
| Cash                Flows from Operating Activities:      |       |                             |       |   |   |   |   |
| Net                Income (Loss)                          |       | $                                | (50,718    | ) | $ | (55,541 | ) |
| Adjustments                to reconcile net (loss) to     |       |                             |       |   |   |   |   |
| net                cash (used) by operating activities:   |       |                             |       |   |   |   |   |
| Depreciation                                              |       |                             | 1,175      |   |   | 1,175 |   |
| Increase                (Decrease) in accounts payable    |       |                             | -          |   |   | (6,777 | ) |
| Increase                (Decrease) in other, net          |       |                             | 9,420      |   |   | (5,759 | ) |
| Net                Cash (Used) by Operating Activities:   |       |                             | (40,123    | ) |   | (66,902 | ) |
|                                                      |       |                             |       |   |   |   |   |
| Cash                Flows From Investing Activities:      |       |                             |       |   |   |   |   |
| (Purchase                ) Disposal of Equipment          |       |                             | -          |   |   | - |   |
| Net                Cash Used by Investing Activities:     |       |                             | -          |   |   | - |   |
|                                                      |       |                             |       |   |   |   |   |
| Cash                Flows From Financing Activities:      |       |                             |       |   |   |   |   |
|                                                      |       |                             |       |   |   |   |   |
| Issuance                of Common Stock                   |       |                             | -          |   |   | - |   |
| Increase                in loans payable                  |       |                             | 40,000     |   |   | 34,338 |   |
| Increase                in contributed capital            |       |                             | -          |   |   | 40,000 |   |
|                                                      |       |                             |       |   |   |   |   |
| Net                Cash Provided by Financing Activities: |       |                             | 40,000     |   |   | 74,338 |   |
|                                                      |       |                             |       |   |   |   |   |
| Net                Increase in Cash                       |       |                             | (123       | ) |   | 7,436 |   |
|                                                      |       |                             |       |   |   |   |   |
| Cash                at Beginning of Period                |       |                             | 255        |  |   | 878 |   |
|                                                      |       |                             |       |   |   |   |   |
| Cash                at End of Period                      |       | $                                | 132        |   | $ | 8314 |   |

----

NOTES          TO FINANCIAL STATEMENTS

| **Note                      1 - History and organization of the company**                                                                                        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                             |
| The                      Company was organized February 21, 2002 (Date of Inception)                      under the laws                      of the             |
| state                      of Delaware to operate a retailing business through its wholly-owned                      subsidiary.                                 |
|                                                                                                                                                             |
| **Note                      2 - Accounting policies and procedures**                                                                                             |
|                                                                                                                                                             |
| Cash                      and cash equivalents                                                                                                                   |
| The                      Company maintains a cash balance in a non-interest-bearing                      account that                      currently does        |
| not                      exceed federally insured limits. For the purpose of the statements                      of cash                      flows, all highly  |
| liquid                      investments with an original maturity of three months or less                      are                      considered to be cash    |
| equivalents.                      There were no cash equivalents as of March 31, 2007.                                                                           |
|                                                                                                                                                             |
| Fixed                      Assets                                                                                                                                |
| Property                      and equipment are recorded at historical cost. Minor additions                      and                      renewals are          |
| expensed                      in the year incurred. Major additions and renewals are capitalized                      and                      depreciated       |
| over                      their estimated useful lives. Depreciation is calculated using                      the                      straight-line method over |
| the                      estimated useful lives as                      follows:                                                                                 |

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

| Property                      and Equipment consist of the                      following: |
|--------------------------------------------------------------------------------------------|

| Office                        equipment              |   |   | 15,928  |          |
|------------------------------------------------------|--------|--------|---------|---------------|
| Less-accumulated                        depreciation |   |   | (11,978 | )   |
|                                                 |   | $      | 3,950   |          |

| 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, 2007.                                                                                                         |
|                                                                                                                                          |
| Revenue                    recognition                                                                                                        |
| The                    Company recognized revenue and gains when earned and related                    costs of                    sales and  |
| expenses                    when incurred.                                                                                                    |

| Advertising                      costs                                                                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The                      Company expenses all costs of advertising as incurred. There                      were nominal                      advertising costs       |
| included                      in selling, or general and administrative expenses in 2007                      or                      2006.                          |
|                                                                                                                                                                 |
| Loss                      per share                                                                                                                                  |
| Net                      loss per share is provided in accordance with Statement of                      Financial                      Accounting Standards         |
| No.                      128 (SFAS # 128) "Earnings Per Share". Basic loss per share                      is computed by                      dividing losses        |
| available                      to common stockholders by the weighted average number of common                      shares                                           |
| outstanding                      during the period. The Company had no dilutive common stock                      equivalents,                      such             |
| as                      stock options or warrants as of March 31, 2007 or 2006.                                                                                      |
|                                                                                                                                                                 |
| Reporting                      on the costs of start-up activities                                                                                                   |
| Statement                      of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up                      Activities", which                              |
| provides                      guidance on the financial reporting of start-up costs and organizational                      costs, requires                          |
| most                      costs of start-up activities and organizational costs to be                      expensed as                      incurred. SOP-98-5       |
| is                      effective for fiscal years beginning after December 15, 1998.                      With the                      adoption of SOP-98,         |
| there                      has been little or no effect on the Company's financial                      statements.                                                  |
|                                                                                                                                                                 |
| Estimates                                                                                                                                                            |
| The                      preparation of financial statements in conformity with generally                      accepted                      accounting              |
| principles                      requires management to make estimates and assumptions that                      affect the                      reported             |
| amounts                      of assets and liabilities and disclosure of contingent assets                      and                      liabilities at the date of  |
| the                      financial statements, and the reported amounts of revenue and                      expenses                      during the reporting       |
| period.                      Actual results could differ from those estimates.                                                                                       |
|                                                                                                                                                                 |
| Fair                      value of financial instruments                                                                                                             |
| Fair                      value estimates discussed herein are based upon certain market                      assumptions                      and pertinent         |
| information                      available to management as of March 31, 2007 and 2006 respectively.                      The                                        |
| respective                      carrying value of certain on-balance-sheet financial instruments                      approximated their                             |
| fair                      values. These financial instruments include cash and accounts                      payable.                      Fair values are           |
| assumed                      to approximate carrying values for cash and payables because                      they are                      short term              |
| in                      nature and their carrying amounts approximated fair values                      or they are                      payable on demand.          |
|                                                                                                                                                                 |
| Income                      Taxes                                                                                                                                    |
| Deferred                      income tax assets and liabilities are computed annually for                      differences                      between the          |
| financial                      statement and tax basis of assets and liabilities that will                      result in                      taxable or deductible |
| amounts                      in the future based on enacted tax laws and rates applicable                      on the                      periods in which the      |
| differences                      are expected to affect taxable income. Valuation allowances                      are                      established when          |
| necessary                      to reduce deferred tax assets to the amount expected to be                      realized.                      Income tax             |
| expense                      is the tax payable or refundable for the period plus or minus                      the change                      during the           |
| period                      in deferred tax assets and                      liabilities.                                                                             |

----

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

| In                  August 2001, SFAS No. 144, "Accounting for the Impairment of Disposal                  of                  Long-lived             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| Assets",                  was issued. This statement addresses the financial accounting and                  reporting for the                        |
| impairment                  of disposal of long-lived assets and broadens the definition of                  what                  constitutes a      |
| discontinued                  operation and how results of a discontinued operation are to be                  measured                  and          |
| presented.                  The provisions of SFAS No. 144 are effective for financial statements                  issued for                         |
| fiscal                  years beginning after December 15, 2001. The impact of the adoption                  of                  SFAS No. 144         |
| on                  our reported operating results, financial position and existing                  financial                  statement disclosure  |
| is                  not expected to be material.                                                                                                      |
|                                                                                                                                                  |
| Stock-Based                  Compensation                                                                                                             |
| The                  Company accounts for stock-based awards to employees in accordance                  with                  Accounting             |
| Principles                  Board Opinion No. 25, "Accounting for Stock Issued to Employees"                  and                  related            |
| interpretations                  and has adopted the disclosure only alternative of SFAS No. 123,                  "Accounting                        |
| for                  Stock-Based Compensation". Options granted to consultants, independent                  representatives                          |
| and                  other non-employees are accounted for using the fair value method                  as                  prescribed by             |
| SFAS                  No. 123.                                                                                                                        |
|                                                                                                                                                  |
| Year                  end                                                                                                                             |
| The                  Company has adopted December 31 as its fiscal year end.                                                                          |
|                                                                                                                                                  |
| **Note                  3 - Going concern**                                                                                                           |
|                                                                                                                                                  |
| The                  accompanying financial statements have been prepared assuming the                  Company                  will                 |
| continue                  as a going concern. As shown in the accompanying financial statements,                  the                  Company        |
| has                  incurred a net loss of $1,063,261 for the period from February                  21, 2002                  (inception) to         |
| March                  31, 2007. The future of the Company is dependent upon its ability                  to                  obtain financing        |
| and                  upon future profitable operations from the development of its new                  business                  opportunities.      |
| Management                  has plans to seek additional capital through a public offering                  of its                  common stock.     |
| The                  financial statements do not include any adjustments relating to                  the                  recoverability and         |
| classification                  of recorded assets, or the amount of the classification of liabilities                  that might be                 |
| necessary                  in the event the Company cannot continue in existence.                                                                     |
|                                                                                                                                                  |
| **Note                  4 - Income taxes**                                                                                                            |
|                                                                                                                                                  |
| The                  Company accounts for income taxes under Statement of Financial                  Accounting                  Standards            |
| No.                  109, "Accounting for Income Taxes" (SFAS No. 109), which requires                  use of                  the liability         |
| method.                  SFAS No. 109 provides that deferred tax assets and liabilities                  are                  recorded based on       |
| the                  differences between the tax bases of assets and liabilities and                  their                  carrying amounts for     |
| financial                  reporting purposes, referred to as temporary differences. Deferred                  tax                  assets and        |
| liabilities                  at the end of each period are determined using the currently enacted                  tax                  rates applied |
| to                  taxable income in the periods in which the deferred tax assets                  and                  liabilities are expected to  |
| be                  settled or realized.                                                                                                              |

----

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

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

| As                    of March 31, 2007, the Company has a net operating loss carryforward                    of                    approximately     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| $1,063,000                    for tax purposes, which will be available to offset future taxable                    income.                           |
| This                    carryforward will expire in 2026.                                                                                             |
|                                                                                                                                                  |
| **Note 5                    - Stockholders' Equity**                                                                                             |
|                                                                                                                                                  |
| The                    Company is currently authorized to issue 40,000,000 shares of                    its $0.00001                    par value     |
| common                    stock.                                                                                                                      |
|                                                                                                                                                  |
| On                    November 19, 2002 the Company issued 19,685,000 shares of its                    .00001 par                    value            |
| common                    stock as founders' shares to acquire 100% of the outstanding                    shares of                    Artfest, Inc., |
| a                    Delaware Corporation for a net book value of $197. Artfest provides                    sales,                    marketing,      |
| financial                    and e-commerce systems to the industries of Arts, Antiques, Collectibles                    and                          |
| Luxury                    Goods. The markets are serviced by artists, dealers, galleries,                    and                    manufacturers of  |
| reproductions                    and luxury goods.                                                                                                    |
|                                                                                                                                                  |
| **Note 6                    - Warrants and options**                                                                                             |
|                                                                                                                                                  |
| As                    of March 31, 2007 and 2006, there were no warrants or options                    outstanding                    to acquire      |
| any                    additional shares of common stock.                                                                                             |
|                                                                                                                                                  |

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

| The                  Company has $664,107 short term notes payable to shareholders.                  The                  notes               |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| call                  for varying interest rates ranging from 1% to 8% per annum, and                  contain a                  stock       |
| payment                  option payable to the lender's discretion.                                                                           |
|                                                                                                                                          |
| As                  of the report date, the Company is in default on all of its short                  term                  notes payable to |
| shareholder                  investors. Management has not formulated a repayment plan, and                  no                               |
| contingency                  plan has been established in the event that the lenders seek legal                  remedies.                    |
|                                                                                                                                          |

----

      MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF      OPERATION

ITEM          3.          CONTROLS AND PROCEDURES

**Evaluation          of Disclosure Controls and Procedures **

|   | 1. | Enhanced                    control over disbursements. All disbursements require the approval                    of the                    Chief Executive Officer and are made only on his                    signature. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | The                    addition of a new Board member, Earl Brickner. Mr Brickner has                    been a                    legal administrator since 1971 for the second oldest law firm                    in Indiana.                    He is responsible for the firms operations including budget preparation,                    management of account functions and all purchasing. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | The                    creation of an Audit Committee. The rules have been adopted and                    the                    committee filled. The Committee is made up of individuals familiar                    with                    financing and operations and including a Certified Public Accountant.                    The                    Audit Committee will be responsible for monitoring the Company’s                    compliance with policies and procedures the Company will establish.                    Such                    procedures will be audited annually by the Company’s Independent                    Registered Public Accountant. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | The                    appointment of a new corporate attorney with extensive experience                    in                    corporate, securities, and regulatory matters. The firm will                    assist                    Company management in maintaining compliance in these areas. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

FORMATION

ITEM      1. LEGAL PROCEEDINGS.

ITEM      2

**Equity      Securities Sold Without Registration**

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

**General      Information**

ITEM      3

ITEM      4

ITEM      5

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ITEM      6. 

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SIGNATURES

|                                             |                                                                                                 |                                              |
|--------------------------------------------------|------------------------------------------------------------------------------------------------------|---------------------------------------------------|
|                                             | **Artfest              International, Inc.**                                                         |
|                                        |                                                                                            |                                         |
| Date: May              7,              2007 | By:                                                                                        | /s/ Larry              D.              Ditto |
|                                             |                                                                                                      |
|                                             | President(principal                executive officer and principal financial                officer) |

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

**EXHIBIT      INDEX**

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

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