UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-QSB  (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended SEPTEMBER 30, 2006  [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT  For the transition period from ___________ to ______________   ELITE ARTZ, INC. (Name of small business issuer in its charter)  Nevada000-5202090-0201309(State or jurisdiction of incorporation)(Commission file no.)(I.R.S. Employer Identification No.)   4950 W. Craig Road, Suite 3-235, Las Vegas, NV 89130 (Address of principal executive offices)  (702) 655-3591 (Issuers telephone number)  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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]  APPLICABLE TO CORPORATE ISSUERS:  As of October 15, 2006 the issuer had 3,059,400 shares of common stock outstanding.  Transitional Small Business Disclosure Format (Check one): YES [  ]   NO [X}   TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial Statements3Item 2. Managements Discussion and Analysis or Plan of Operation10Item 3. Controls and Procedures14PART II  OTHER INFORMATIONItem 1.  Legal Proceedings14Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds14Item 3.  Defaults Upon Senior Securities14Item 4.  Submission of Matters to a Vote of Security Holders15Item 5.  Other Information15Item 6.  Exhibits15Signatures16  2    PART I  FINANCIAL INFORMATION  Item 1.  Financial Statements     ELITE ARTZ, INC.  (A Development Stage Company)  Unaudited Financial Statements  September 30, 2006  3     ELITE ARTZ, INC.(A Development Stage Company)BALANCE SHEETSSeptember 30,December 31,20062005ASSETS(Unaudited)Current AssetsCash$             1,134$           17,505Inventory - for resale8,10010,240Total Current Assets9,23427,745Fixed Assets:Office Equipment - net of accumulated depreciation7551,037$             9,989$           28,782LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts Payable$             2,015$                975Notes Payable49,920-Total Current Liabilities51,935975STOCKHOLDERS' EQUITY (DEFICIT)Preferred Stock20,000,000 shares authorized at $0.001 par value;none issued--Common Stock50,000,000 shares authorized at $0.001 par value;3,059,400 shares issued and outstanding3,0593,059Capital in excess of par value282,141282,001Deficit accumulated during the development stage(327,146)(257,253)Total Stockholders' Equity (Deficit)(41,946)27,807$             9,989$           28,782The accompanying notes are an integral part of these financial statements   4     ELITE ARTZ, INC.(A Development Stage Company)STATEMENTS OF OPERATIONSFor the Three and Nine Months Ended September 30, 2006 and 2005And the Period July 15, 2002 (Date of Inception) to September 30, 2006(Unaudited)InceptionThree Months EndedNine Months EndedtoSeptember 30,September 30,September 30,September 30,September 30,20062005200620052006Sales$              7,411$          16,000$          45,411$            27,700$        255,440Cost of Sales3,6408,50015,76115,650241,646Groff Profit (Loss)3,7717,50029,65012,05013,794ExpensesSales & Marketing19,6822,73825,6455,77047,213Depreciation94-282-376General & Administrative26,0479,92073,61617,654200,85145,82312,65899,54323,424248,440Net Operating Loss(42,052)(5,158)(69,893)(11,374)(234,646)Other ExpensesRealized loss in availablefor-sale securities-(28,000)-(43,500)(92,500)Net Loss(42,052)(33,158)(69,893)(54,874)(327,146)Net Loss Per Common ShareBasic$              (0.01)$             (0.01)$             (0.02)$              (0.02)Diluted$              (0.01)$            (0.01)$             (0.02)$              (0.02)Average Outstanding SharesBasic (stated in 1,000's)3,0593,0383,0593,038Diluted (stated in 1,000's)3,9693,0383,9693,038The accompanying notes are an integral part of these financial statements   5     ELITE ARTZ, INC.(A Development Stage Company)STATEMENTS OF CASH FLOWSFor the Nine Months Ended September 30, 2006 and 2005And the Period July 15, 2002 (Date of Inception) to September 30, 2006(Unaudited)Inception toSeptember 30,September 30,September 30200620052006Cash Flows From Operating Activities:Net Loss$           (69,893)$            (54,874)$       (327,146)Adjustments to reconcile net loss tonet cash used by operating activities:Net Cash Used In Operating Activities:Depreciation282-376Changes in Inventory2,1409,950(8,100)Changes in Accounts Payable1,0401,7602,015Realized loss in available-for -sale securities-43,500-Net Cash provided from (used in) Operating Activities(66,431)336(332,855)Cash Flows From Investing Activities:Purchase of Equipment & Furniture--(1,131)Net Cash from (used in) Investing Activities--(1,131)Cash Flows From Financing Activities:Contributions to capital140200500Proceeds from notes payable49,920-49,920Proceeds from issuance of common stock-10,500284,700Net Cash provided from (used in) Financing Activities50,06010,700335,120Net (Decrease) Increase In Cash(16,371)11,0361,134Cash at Beginning of Period17,5051,958-Cash at the End of Period$                1,134$              12,994$            1,134Supplemental Disclosures of Cash Flow Information:Cash paid during the period for:Interest$                       -$                       -$                    -Income taxes$                       -$                       -$                    -The accompanying notes are an integral part of these financial statements  6    ELITE ARTZ, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS September 30, 2006 ==============================================================================  1.  ORGANIZATION  The Company was incorporated under the laws of the State of Delaware on July 15, 2002 with authorized common stock of 50,000,000 shares at $0.001 par value with the name "North American Marketing Corporation".  On March 25, 2004 the Company changed it domicile to the state of Nevada in connection with a name change to "Elite Artz, Inc." and the addition of authorized preferred stock of 20,000,000 shares with a par value of $.001. The terms of  the preferred stock have not been determined by the board of directors of the Company.  The Company was organized to engage in the business of direct marketing of fine quality original oil paintings, and framed and matted prints, by well known artists, as well as specialty collections to hospitals, corporations, colleges and private individuals.  2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Accounting Methods  The Company recognizes income and expenses based on the accrual method of accounting.  Dividend Policy  The Company has not yet adopted a policy regarding payment of dividends.  Basic and Diluted Net Income (Loss) Per Share  Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.  Estimates and Assumptions  Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles.  Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could vary from the estimates that were assumed in preparing these financial statements.  Financial Instruments  The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short term maturities.     7    ELITE ARTZ, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS - continued September 30, 2006 ==============================================================================  2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued  Income Taxes  The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse.  An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.  On September 30, 2006, the Company had a net operating loss available for carry forward of $234,646.  The tax benefit of approximately $70,394 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company has been unable to project an estimated future operating profit.  The loss carryforward expires beginning in the years 2023 through 2027.  Concentration of Credit Risk  There are no financial instruments that potentially subject the Company to significant concentration of credit risks.  Revenue Recognition  Revenue is recognized on the sale and delivery of a product or the completion of services provided.  Advertising and Market Development  The company expenses advertising and market development costs as incurred.  Inventory  Inventory consists of oil paintings and framed matted prints ready for sale and is stated at the lower of cost or market, which is determined on an individual basis.  Recent Accounting Pronouncements  The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.  3.  NOTES PAYABLE  During the six months ended September 30, 2006 a non-related party made two no interest loans to the Company for a total of $8,920 payable on December 31, 2006. The notes are convertible at the option of the holder anytime after December 31, 2006 but no later than December 31, 2007 at a conversion price equal to the bid price of the Companys stock, or in the event there is no bid price, then the notes shall be converted into 90,000 shares of the Companys common stock.  The holder must give notice of conversion during the conversion period, absent such notice, the conversion rights expire at the end of the conversion period on December 31, 2007.  During the six months ended September 30, 2006 a non-related party made two no interest loans to the Company for a total of $41,000 payable on December 31, 2006. The notes are convertible at the option of the holder anytime after December 31, 2006 but no later than December 31, 2007 at a conversion price equal to the bid price of the Companys stock, or in the event there is no bid price, then the notes shall be converted into 820,000 shares of the Companys common stock.  The holder must give notice of conversion during the conversion period, absent such notice, the conversion rights expire at the end of the conversion period on December 31, 2007.   8    ELITE ARTZ, INC. (Development Stage Company) NOTES TO FINANCIAL STATEMENTS - continued September 30, 2006 ==============================================================================   4.  CAPITAL STOCK  Since inception the Company completed private placement offerings of 3,038,400 common shares for $284,700.   5.  SIGNIFICANT RELATED PARTY TRANSACTIONS  An officer-director has acquired 66% of the outstanding common stock of the Company.   9    Item 2. Managements Discussion and Analysis  In this report, references to "Elite Artz" "we," "us," and "our" refer to Elite Artz, Inc.  SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS  The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements.  Words such as "may," "will," "expect," "believe," "anticipate," "estimate," "project," or "continue" or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.  General  We are a development stage company founded in July of 2002. Although we have conducted operations since then, we have limited revenues and have operated at a loss. Our activities to date consist of our formation and business plan development, the acquisition and sale of our artwork inventory, and various placements of our common stock.  The following discussions are based on the financial statements for the three and nine months ended September 30, 2006 and 2005, for Elite Artz, Inc.  The following discussions are a summary and should be read in conjunction with the financial statements and notes thereto, included with this report in Item 1. Financial Statements.  Results of Operations Three and Nine Months Ended September 30, 2006/2005  The following is a summary comparison our operations for the three and nine month periods ended September 30, 2006 and 2005.  Three Months EndedNine Months EndedSeptember 30,September 30,2006200520062005Sales$       7,411$       16,000$       45,411$       27,700Cost of Sales3,6408,50015,76115,650Gross Profit3,7717,50029,65012,050Expenses45,82312,65899,54323,424Operating Loss(42,052)(5,158)(69,893)(11,374)Other Expenses-(28,000)-(43,500)Net Loss(42,052)(33,158)(69,893)(54,874)Net loss per share(0.01)(0.01)(0.02)(0.02)   10    We have experienced losses since inception.  We suffered a net loss of $42,052 during our quarter ended September 30, 2006, which brings our losses since inception to $327,146.  Revenues  Sales of our artwork inventory for our third quarter of 2006 resulted in revenues of $7,411, down from the $33,000 we achieved in our second quarter, compared to $16,000 in sales revenues during our 2005 third quarter.  Costs of our 2006 third quarter sales were $3,640 compared to $8,500 in the prior years second quarter resulting in a gross profit of $3,771 or 51% in our third quarter this year compared to  $7,500 or 47% gross profit in the third quarter of last year.  When comparing our nine month periods between the two years: our sales were $45,411 this year compared to $27,700 last year; cost of sales was $15,761 during our 2006 nine months ended compared to $15,650 in our 2005 nine month period; and, our gross profit was $29,650 or 66% in the first nine months of 2006 compared to $12,050 or 44% in the first nine months of 2005.  Our overall sales since inception are $255,440, with a gross profit of $13,794. We are experiencing declining revenues overall due to lack of inventory as well as unsuccessful sales efforts despite the fact that our gross profit margin is higher.  Expenses  We had $45,823 in expenses for our quarter ended September 30, 2006, compared to $12,658 in the third quarter of 2005. Our third quarter expenses for this year included $19,682 in sales and marketing expenses, depreciation of $94 and administrative expenses of $26,047. Comparatively, we spent significantly less on sales and marketing last year or $2,738, had no depreciation expenses and experienced much lower administrative costs of $9,920. Generally, the higher expenses in the three months ended September 30, 2006, were a result of managements efforts to both increase sales and analyze our market potential. We now rent office space in Salt Lake City, Utah, for both sales and administrative work and to store our artwork inventory.  Rent is month to month at a cost of $2,500.  Other expenses included costs of outside marketing sources to help us analyze and redirect our efforts at $6,000; higher travel expenses of $3,500; and, higher reimbursement to our sole director for auto expenses and other costs incurred in connection with efforts to increase revenues. During the nine months ended September 30, 2006, our expenses were $99,543 with nearly 50% of that spent during the third quarter.  They consist of $25,645 in sales and marketing expenses, depreciation of $282 and general and administrative expenses of $73,616.  In the comparative period of last year, we spent only $23,424, with about 75% of that spent in the general and administrative category.  Operating Losses/Net Loss  Our net operating loss for the quarter ended September 30, 2006, was $42,052, significantly higher than the operating loss of  $5,158 for the same quarter in 2005; the higher third quarter losses in 2006 reflect both minimal sales revenue in our third quarter and increased spending all round.  During the nine months ended September 30, 2006, we had a net operating loss of $69,893 compared to a net operating loss of $11,374 in the prior years nine month period. Again we had higher spending all round this year which accounted for a significant portion of the operating loss; the operating loss this year was mitigated somewhat with the higher revenues in this years first nine months than in last years comparative period.  Our net loss for the three and nine month periods ended September 30, 2006 was the same as our operating loss in those periods or $42,052 and $69,893 respectively.  During the three and nine month periods ended September 30, 2005 our net loss increased to $33,158 and $54,874  11    respectively due to the realization of a $28,000 third quarter loss on available-for-sale securities; in the nine month period we recorded a loss of $43,500 on those same securities.  Liquidity and Capital Resources  Balance Sheet Information  We have assets of $9,989 consisting of $1,134 in cash, $8,100 in original artwork inventory and fixed assets of $755 in office equipment, net of depreciation.   This is a significant reduction from the $28,782 in total assets we had at December 31, 2005 and reflects mostly a reduction in available cash. In addition our liabilities increased from a $975 accounts payable at December 31, 2005 to $51,935 as of September 30, 2006 with accounts payable of $2,015 and loans from non-related parties aggregating  $49,920.  The loans are the subject of the four convertible notes discussed below.  Cash Flows from Operations  We used  $66,431 in operations during our nine months ended September 30, 2006; whereas our operations provided us with $336 in cash at September 30, 2005 nine-month period.  Financing Activities  During the nine months ended September 30, 2006 we have funded our losses mostly through loans from non-related parties represented by four convertible notes below:  · Thefirst is for $2,537 and is due and payable on December 31, 2006. The holder has the option to convert this note into common stock at a conversion price equal to the bid price of our common stock on the conversion date, or, if there is no bid price, into 25,000 shares of common stock.  The holder can convert any time after December 31, 2006, but not later than December 31, 2007, by giving notice to Elite.  · Thesecond note is for $6,383 and is due and payable on December 31, 2006.  It has the same conversion rights as above and is convertible into 65,000 shares of our common stock.  · Thethird is for $25,000 and is due and payable on December 31, 2006. The holder has the option to convert this note at a conversion price equal to the bid price of our common stock at the conversion date, or if there is no bid price, into 500,000 shares.  The conversion period is anytime after December 31, 2006 and no later than December 31, 2007 by giving notice to Elite.  · Thefourth is for $20,000 and is due and payable on December 31, 2006.  It has the same conversion rights as the third note and is convertible into 400,000 of our shares absent a bid price,  The principal on the fourth note has been reduced to $16,000 and the shares into which the note can be converted have reduced proportionately to 320,000 shares.  We also utilized sales of our art inventory and additional financing from a small $140 capital contribution.  12     Last year we funded our operations through cash flows from operations with some additional funding provided by sales of our common stock.  In July 2005, our Form SB-2 Registration Statement was declared effective for the sale of up to 200,000 shares of our common stock by us and the resale of 745,900 shares by selling shareholders. Our offering closed on October 31, 2005, with only 21,000 shares sold for $10,500 in proceeds. In addition, we sold our available for sale securities which consisted of 50,000 shares of iMedia International, Inc. that we received as payment for $171,525 worth of inventory in June of  2004. We realized a loss of $28,000 on those securities in June of 2005 which increased to $43,500 as of September 30, 2005.  Trends and Uncertainties  Our prospects must be considered in light of the risks, difficulties and expenses frequently encountered by companies in their early stage of development, particularly companies in rapidly changing markets such as ours without significant barriers to entrance. To address these risks, we must, among other things, maintain an awareness of current trends in art appreciation as it relates to interior design and consumer demand for both public and private use; implement and successfully execute our business and marketing strategy; update and add to our existing inventory in response to evolving customer demands; provide quality customer service; respond to competitive developments; find and solicit new artists or unknown artists where we can purchase quality art at reasonable prices and attract, retain and motivate qualified personnel. There can be no assurance we will be successful in addressing such risks, and the failure to do so would seriously harm our business, financial condition and results of operations. Our current and future expense levels are based on our planned operations and estimates of future revenues.  We have not been able to accurately forecast revenues nor have we yet been able to capture any substantial portion of our target market. Accordingly, we believe that period-to-period comparisons of our operating results are not very meaningful and should not be relied upon as an indication of future performance.  Some of the following conditions could have a material impact on our short or long-term liquidity:  · our failure to successfully complete our offering (closed in October of 2005) which leaves us unable to purchase any significant amount of new inventory;  · general risks associated with buying and selling original artwork which is very unpredictable and often a matter of personal taste;  · the overall inexperience of current management in the purchase and sale of  artwork;  · any failure to obtain additional working capital when needed;  · loss of key personnel and dependence on one individual to generate business;  · lack of market acceptance of our services;  · inability to compete with art galleries with name experience and name  recognition in our geographical location;   13    · an inability to forecast trends in original art work or provide our  clients with what they are looking for;  · the ability to attract and retain qualified and effective personnel,  and  · management of our growth in an effective manner.  We also face the following immediate and specific risks:  · we have seen a reduction in our revenues,  have not increased or replaced our inventory, and have increased our marketing efforts with little success resulting in limited cash flows from operations which are not sufficient to fund our operations or service our debt;  we need to replace our inventory and increase our market presence  which we may not be successful in doing;  · we must seek immediate sources of funding to survive and such funding may not be available or if it is available, it may not be on terms favorable to Elite Artz, Inc.  · we have incurred net losses of approximately $327,146 since inception and there is substantial doubt as to our ability to continue as a going concern.  Item 3.  Controls and Procedures  (a) Evaluation of disclosure controls and procedures. Based on the evaluation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) required by Securities Exchange Act Rules 13a-15(b) or 15d-15(b), our Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.  (b) Changes in internal controls. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.   PART II  OTHER INFORMATION   Item 1.  Legal Proceedings.  None.  Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.  None.  Item 3.  Defaults Upon Senior Securities  None.  14     Item 4.  Submission of Matters to a Vote of Security Holders.  None.  Item 5.  Other Matters.  None.  Item 6.  Exhibits.  3.1.1 Articles of Incorporation Elite Artz (1) 3.1.2 Articles of Merger (1) 3.2 By-laws (1) 10.1 Convertible Note - $2,537(2) 10.2 Convertible Note - $6,383 (2) 10.3 Convertible Note - $25,000(3) 10.4 Convertible Note - $20,000(3) 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (3) 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2003(3) 32.1 Certification of Principal Executive and Financial Officer Pursuant to 18 U.S.C Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(3)  (1) Filed as part of our initial registration on Form SB-2 with the Securities and Exchange Commission on December 23, 2004 (2) Filed with our Form 10-QSB Quarterly Report for June 30, 2006 with the Securities and Exchange Commission on August 10, 2006 (3) Filed herewith   15    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.    ELITE ARTZ, INC. (Registrant)    Dated: October 31, 2006 By: /s/ David Miles Oman David Miles Oman President/Chief Executive and Financial Officer/Chief Accounting Officer/Director  16