**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

----

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|   | [X] | ANNUAL                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT                  OF                  1934 |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------|

|   | [  ] | TRANSITION                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT                  OF                  1934 |
|--------|----------------|---------------------------------------------------------------------------------------------------------------------------------------|

**ARTFEST        INTERNATIONAL, INC.**

| **DELAWARE**                                                                                    | **03-0390855**                                                        |
|-------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------|
|  (State                  or jurisdiction ofincorporation                  or organization) | (I.R.S.                  EmployerIdentification                  No.) |

** **

----

| PART                  I                                                                                                         |     |
|---------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                            |     |
| ITEM                  1. DESCRIPTION OF BUSINESS                                                                                |  3  |
| ITEM                  2. DESCRIPTION OF PROPERTY                                                                                |  5  |
| ITEM                  3. LEGAL PROCEEDINGS                                                                                      |  5  |
| ITEM                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                    |  5  |
|                                                                                                                            |     |
| PART                  II                                                                                                        |     |
|                                                                                                                            |     |
| ITEM                  5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER                  MATTERS                              |  6  |
| ITEM                  6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF                  OPERATION                            |     |
| ITEM                  7. FINANCIAL STATEMENTS                                                                                   |  10 |
| ITEM                  8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON                  ACCOUNTING                           |     |
| AND                  FINANCIAL DISCLOSURE                                                                                       |  13 |
| ITEM                  8A. CONTROLS AND PROCEDURES                                                                               |     |
| ITEM                  8B. REPORTS ON FORM 8-K                                                                                   |  13 |
|                                                                                                                            |     |
|                                                                                                                            |     |
| PART                  III                                                                                                       |     |
|                                                                                                                            |     |
| ITEM                  9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL                  PERSONS                          |     |
| COMPLIANCE                  WITH SECTION 16(a) OF THE EXCHANGE ACT                                                              |  14 |
| ITEM                  10. EXECUTIVE COMPENSATION                                                                                |  18 |
| ITEM                  11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                  MANAGEMENT                       |     |
| AND                  RELATED STOCKHOLDER MATTERS                                                                                |  19 |
| ITEM                  12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                        |  19 |
|                                                                                                                            |     |
| PART                  IV                                                                                                        |     |
|                                                                                                                            |     |
| ITEM                  13. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON                  FORM                  8-K |  20 |
| ITEM                  14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                |  21 |
|                                                                                                                            |     |
| SIGNATURES                                                                                                                      |  22 |
|                                                                                                                            |     |
| CERTIFICATIONS                                                                                                                  |     |

----

**PART        I.**

**ITEM        1. DESCRIPTION OF BUSINESS.**

**Past        Business Development**

**Current        Status-Summary**

**Current        Business Plans and Pursuits**

----

**Need        for Capital and Risks**

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**Competition        and Markets**

**Definitions**

**ITEM        2. DES**
**CRIPTIO****N        OF PROPERTY.**

**ITEM        3. LEGAL**
**PROCEEDINGS****.**

**ITEM        4. SUBMISSION OF M**
**ATTE****RS        TO A VOTE OF SECURITY HOLDERS.**

----

**P**
**ART****II.**

**ITEM        5. MARKET FOR **
**COMMON        EQUITY****AND        RELATED STOCKHOLDER MATTERS.**

**Market        Information**

**Holders        of Common Equity**

**Dividends**

**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                            | Gifts/Services                          | *                                    |
| Q4                  2006 | *                                  | *                                       | *                                    |

----

**General        Information**

**Item        6. Management’s Discussion and Analysis and Plan of        Operation**

----

----

----

**ITEM        7.**
**FINANCIAL****STATEMENTS        AND****S****UPPLEMENTARY        DATA**

|                                   |                                                                              |                                   |
|----------------------------------------|-----------------------------------------------------------------------------------|----------------------------------------|
|                                   |                                                                                   |
|                              |                                                                         |                              |
| DATED:                  March 23, 2007 | By:                                                                     | /s/ Larry                D. Ditto |
|                                   | Larry                  D. Ditto                                                   |
|                                   | Chairman,                  President and Chief Executive                  Officer |

----

*Internal        Control-Integrated Framework *

*Internal        Control-Integrated Framework *
*Internal        Control-Integrated Framework *

|         |                                  |                                         |
|--------------|---------------------------------------|----------------------------------------------|
|         |                                       |
|    |                             |                                    |
|              | By:                         | /s/ Thomas                Bauman C.P.A. |
|         | Thomas                  Bauman C.P.A. |
|         | March                  23, 2007       |

----

|                                                                | **PAGE** |
|---------------------------------------------------------------------|----------|
|                                                                |     |
| ACCOUNTANT'S                    AUDIT REPORT                        | F-2      |
|                                                                |     |
| FINANCIAL                    STATEMENTS                             |     |
|                                                                |     |
| Balance                    Sheets - December 31, 2006 and 2005      | F-3      |
|                                                                |     |
| Statements                    of Operations and Accumulated Deficit | F-4      |
| During                    the Development Stage                     |     |
|                                                                |     |
| Statements                      of Cash Flows                       | F-5      |
|                                                                |     |
| Statement                    of Changes in Stockholders' Equity     | F-6      |
|                                                                |     |
| Notes                    to Financial Statements                    | F-7      |

----

| To                      the Board of Directors and Stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Artfest                      International, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Mission                      Viejo, California                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| INDEPENDENT                      AUDITOR'S REPORT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| I                      have audited the accompanying balance sheets of Artfest International,                      Inc. (A Development Stage Company) as of December 31, 2006                      and 2005, and                      the related Statements of Operations, Stockholders’ Equity, and Cash Flows                      for the years then ended. These financial statements are the                      responsibility of the Company’s management. My responsibility is to                      express an opinion on these financial statements based on my                      audit.                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| I                      conducted the audit in accordance with standards established                      by the Public                      Company Accounting Oversight Board. Those standards require                      that I plan                      and perform the audit to obtain reasonable assurance about                      whether the                      financial statements are free of material misstatement. An                      audit includes                      examining, on a test basis, evidence supporting the amounts                      and                      disclosures in the financial statements. An audit also includes                      assessing                      the accounting principles used and significant estimates made                      by                      management, as well as evaluating the overall financial statement                      presentation. I believe that my audit provides a reasonable                      basis for my                      opinion. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| In                      my opinion, the financial statements referred to above present                      fairly, in                      all material respects, the financial position of Artfest International,                      Inc. (A Development Stage Company) as of December 31, 2006                      and 2005, and                      the results of its operations and cash flows for the years                      then ended, in                      conformity with 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 principle 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.                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Thomas                      Bauman, C.P.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| March                      23,  2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

| ASSETS                                                                 |   |   |       |   |   |     |   |
|------------------------------------------------------------------------|--------|--------|------------|--------|--------|----------|--------|
|                                                                   |   |   | **2006**   |   |   | **2005** |   |
| Current                      Assets:                                   |   |   |       |   |   |     |   |
| Cash                                                                   |   | $      | 255        |   | $      | 878      |   |
| Inventory                                                              |   |   | -          |   |   | 21,410   |   |
| Prepaid                      Expenses                                  |   |   | 561        |   |   | -        |   |
|                                                                   |   |   |       |   |   |     |   |
| Total                      Current Assets                              |   |   | 816        |   |   | 22,288   |   |
|                                                                   |   |   |       |   |   |     |   |
| Property                      and Equipment, at cost, less accumulated |   |   |       |   |   |     |   |
| depreciation                      of $24,606 and $13,963 in 2005 and   |   |   |       |   |   |     |   |
| 2004,                      respectively (Notes 2 & 9)              |   |   | 5,125      |   |   | 21,039   |   |
| Other                      Assets                                      |   |   | -          |   |   | 19,895   |   |
|                                                                   |   |   |       |   |   |     |   |
| TOTAL                      ASSETS                                      |   | $      | 5,941      |   | $      | 63,222   |   |
|                                                                   |   |   |       |   |   |     |   |
| LIABILITIES                      AND STOCKHOLDERS' EQUITY              |   |   |       |   |   |     |   |
|                                                                   |   |   |       |   |   |     |   |
| Current                      Liabilities:                              |   |   |       |   |   |     |   |
| Accounts                      Payable                                  |   | $      | 28,409     |   | $      | 49,744   |   |
| Accrued                      Expenses                                  |   |   | 78,181     |   |   | 28,078   |   |
| Sales                      Tax Payable                                 |   |   | 4,292      |   |   | 1,989    |   |
| Note                      Payable - Current Portion ( Note 10)         |   |   | 18,806     |   |   | 8,929    |   |
| Loans                      Payable (Notes 8 & 9)              |   |   | 624,107    |   |   | 527,216  |   |
|                                                                   |   |   |       |   |   |     |   |
| Total                      Current Liabilities                         |   |   | 753,795    |   |   | 615,956  |   |
|                                                                   |   |   |       |   |   |     |   |
| Long                      Term Liabilities:                            |   |   |       |   |   |     |   |
| Note                      Payable (Note 9)                             |   |   | -          |   |   | 7,610    |   |
|                                                                   |   |   |       |   |   |     |   |
| TOTAL                      LIABILITIES                                 |   |   | 753,795    |   |   | 623,566  |   |
|                                                                   |   |   |       |   |   |     |   |
| Stockholders'                      Equity:                             |   |   |       |   |   |     |   |
| Common                      Stock - $.00001 par value - 40,000,000     |   |   |       |   |   |     |   |
| shares                      authorized, 28,000,629 and 27,668,629 |   |   |       |   |   |     |   |
| shares                      issued and outstanding in 2005 and         |   |   | 198        |   |   | 198      |   |
| 2004,                      respectively                                |   |   |       |   |   |     |   |
| Additional                      Paid-in Capital                        |   |   | 264,490    |   |   | 224,490  |   |
| Accumulated                      deficit                               |   |   | (1,012,542 | )      |   | (785,032 | )      |
|                                                                   |   |   |       |   |   |     |   |
| TOTAL                      LIABILITIES AND STOCKHOLDERS' EQUITY        |   | $      | 5,941      |   | $      | 63,222   |   |
|                                                                   |   |   |       |   |   |     |   |

----

|                                                                   |   |   | **For                        the**                      |    |   | **February                        21, 2002** |   |
|------------------------------------------------------------------------|--------|--------|---------------------------------------------------------|---------|--------|----------------------------------------------|--------|
|                                                                   |   |   | **Years                        ended**** **        |    |   | **(Inception)                        to**    |   |
|                                                                   |   |   | **December                        31, **** ** |    |   | **December                        31, 2006** |   |
|                                                                   |   |   | **2006**                                                |    |   | **2005**                                     |   |   | **2004** |   |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Revenue                                                                |   | $      | 91,257                                                  |    | $      | 186,794                                      |   | $ | 44,158 |   | $ | 411,809 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Cost                        of Revenue                                 |   |   | 69,929                                                  |    |   | 10,017                                       |   |   | 16,164 |   |   | 261,852 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Gross                        Profit (Loss)                             |   |   | 21,328                                                  |    |   | 176,777                                      |   |   | 27,994 |   |   | 149,957 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Selling,                        General and Administrative             |   |   | 231,265                                                 |    |   | 515,003                                      |   |   | 297,021 |   |   | 1,204,815 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Net                        (Loss) From Operations                      |   |   | (209,937                                                | )       |   | (338,226                                     | )      |   | (269,027 | ) |   | (1,054,858 | ) |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Other                        Income (Expense) , Net (Notes 5 & 10) |   |   | (17,573                                                 |  ) |   | 59,889                                       |   |   | - |   |   | 42,316 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| (Deficit)                        - Development Stage                   |   | $      | (227,510                                                | )       | $      | (278,337                                     | )      | $ | (269,027 | ) | $ | (1,012,542 | ) |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Weighted                        average number of common shares        |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| outstanding                        - basic and fully diluted           |   |   | 27,817,629                                              |    |   | 26,758,629                                   |   |   | 25,468,629 |   |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Net                        (Loss) per share - basic and full diluted   |   | $      | (0.01                                                   | )       | $      | (0.01                                        | )      | $ | (0.01 | ) |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |

----

|                                                                |   |   | **For                          the**               |    |   |                                           |   |
|---------------------------------------------------------------------|--------|--------|----------------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                                                |   |   | **Years                          ended**** ** |    |   | **February                          21, 2002** |   |
|                                                                |   |   | **December                          31, **    |    |   | **(Inception)                          to**    |   |
| Cash                            Flows from Operating Activities:    |   |   | **2006**                                           |    |   | **2005**                                       |   |   | **2004** |   |   | **December                          31, 2006** |   |
| Net                          (loss)                                 |   | $      | (227,510                                           | )       | $      | (278,337                                       | )      | $ | (269,027 | ) | $ | (1,012,542 | ) |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Adjustments                          to reconcile net (loss) to     |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| net                          cash (used) by operating activities:   |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Depreciation                                                        |   |   | 4,700                                              |    |   | 10,643                                         |   |   | 6,303 |   |   | 10,803 |   |
| (Increase)                          Decrease in Inventory           |   |   | 21,410                                             |    |   | (21,410                                        | )      |   |   |   |   | 0 |   |
| (Increase)                          Decrease in prepaid expenses    |   |   | (561                                               | )  |   | 1,098                                          |   |   | 5,400 |   |   | (561 | )  |
| Increase                          (Decrease) in accounts payable    |   |   | (21,335                                            | )       |   | (61,169                                        | )      |   | 1 |   |   | 28,409 |   |
| Increase                          (Decrease) in accrued expenses    |   |   | 50,103                                             |    |   | 22,229                                         |   |   | 5,849 |   |   | 78,181 |   |
| Increase                          (Decrease) in sales payable       |   |   | 2,303                                              |    |   | 160                                            |   |   | 1,828 |   |   | 4,291 |   |
| (Increase)                          Decrease in other assets        |   |   | 19,895                                             |    |   | 11,200                                         |   |   | (31,095 | ) |   | 0 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Net                          Cash (Used) by Operating Activities:   |   |   | (150,995                                           | )       |   | (315,585                                       | )      |   | (280,741 | ) |   | (891,419 | ) |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Cash                          Flows From Investing Activities:      |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Purchase                          of Equipment                      |   |   | 11,214                                             |    |   | 0                                              |   |   | (15,928 | ) |   | (15,927 | ) |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Net                          Cash Used by Investing Activities:     |   |   | 0                                                  |    |   | 0                                              |   |   | (15,928 | ) |   | (15,927 | ) |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Cash                          Flows From Financing Activities:      |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Issuance                          of common stock                   |   |   | -                                                  |    |   | -                                              |   |   | 0 |   |   | 198 |   |
| (Increase)                          Decrease in loans receivable    |   |   | 0                                             |    |   | 50,000                                         |   |   | 0 |   |   | 0  |   |
| Increase                          in loans payable                  |   |   | 99,158                                             |    |   | 223,731                                        |   |   | 251,372 |   |   | 642,913 |   |
| Increase                          in contributed capital            |   |   | 40,000                                             |    |   | 50,000                                         |   |   | 45,391 |   |   | 264,490 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Net                          Cash Provided by Financing Activities: |   |   | 139,158                                            |    |   | 323,731                                        |   |   | 296,763 |   |   | 907,601 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Net                          Increase (Decrease) in Cash            |   |   | (623                                               | )  |   | 8,146                                          |   |   | 94 |   |   | 255 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Cash                          at Beginning of Period                |   |   | 878                                                |    |   | (7,268                                         | )      |   | (7,362 | ) |   | 0 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Cash                          at End of Period                      |   | $      | 255                                                |    | $      | 878                                            |   | $ | (7,268 | ) | $ | 255 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |

----

|                                               |       |       |                                          |       |       |           |       |       |        |       |       | **(Deficit) **   | ** ** | ** ** | ** **        | ** ** |
|----------------------------------------------------|------------|------------|-----------------------------------------------|------------|------------|----------------|------------|------------|-------------|------------|------------|-----------------------|------------|------------|-------------------|------------|
|                                               | ** ** | ** ** | ** **                                    | ** ** | ** ** | ** **     | ** ** | ** ** | ** **  | ** ** | ** ** | **Accumulated ** | ** ** | ** ** | ** **        | ** ** |
|                                               | ** ** | ** ** | **Common                        Stock ** | ** ** | ** ** | **Additional** | ** ** | ** ** | **During**  | ** ** | ** ** | **Total**             | ** ** |
|                                               | ** ** | ** ** | ** **                                    | ** ** | ** ** | ** **     | ** ** | ** ** | **Paid-in** | ** ** | ** ** | **Development**       | ** ** | ** ** | **Stockholders'** | ** ** |
|                                               | ** ** | ** ** | **Shares**                                    | ** ** | ** ** | **Amount**     | ** ** | ** ** | **Capital** | ** ** | ** ** | **Stage**             | ** ** | ** ** | **Equity**        |       |
|                                               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| February                        2002               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Issued                        for Cash             |       |       | 200,000                                       |       |       | 200            |       |       |        |       |       |                  |       |       | 200               |       |
| June                        2002                   |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Issued                        for Cash             |       |       | 19,685,000                                    |       |       | 197            |       |       |        |       |       |                  |       |       | 197               |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 50,000      |       |       |                  |       |       | 50,000            |       |
| July                        2002                   |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 1,000       |       |       |                  |       |       | 1,000             |       |
| November                        2002               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Relinquished                        by Shareholder |       |       | (200,000                                      | )          |       | (200           | )          |       |        |       |       |                  |       |       | (200              | )          |
| Net                        Loss                    |       |       | -                                             |       |       | -              |       |       | -           |       |       | (129,311              | )          |       | (129,311          | )          |
| Balance                        December 31, 2002   |       |       | 19,685,000                                    |       |       | 197            |       |       | 51,000      |       |       | (129,311              | )          |       | (78,114           | )          |
| April                        2003                  |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Issued                        for Cash             |       |       | 27,000                                        |       |       |           |       |       | 33,600      |       |       |                  |       |       | 33,600            |       |
| May                        2003                    |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Issued                        for Cash             |       |       | 120,000                                       |       |       | 1              |       |       | 36,499      |       |       |                  |       |       | 36,500            |       |
| September                        2003              |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 2,155,500                                     |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 8,000       |       |       |                  |       |       | 8,000             |       |
| December                        2003               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 100,000                                       |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Net                        Loss                    |       |       | -                                             |       |       | -              |       |       | -           |       |       | (108,357              | )          |       | (108,357          | )          |
| Balance                        December 31, 2003   |       |       | 22,087,500                                    |       |       | 198            |       |       | 129,099     |       |       | (237,668              | )          |       | (108,371          | )          |
| May                        2004                    |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 495,000                                       |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 14,691      |       |       |                  |       |       | 14,691            |       |
| July                        2004                   |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 1,499,400                                     |       |       |           |       |       |        |       |       |                  |       |       | 0                 |       |
| August                        2004                 |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 1,265,300                                     |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 700         |       |       |                  |       |       | 700               |       |
| November                        2004               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 121,429                                       |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 30,000      |       |       |                  |       |       | 30,000            |       |
| Net                        Loss                    |       |       | -                                             |       |       | -              |       |       | -           |       |       | (269,027              | )          |       | (269,027          | )          |
| Balance                        December 31,2004    |       |       | 25,468,629                                    |       |       | 198            |       |       | 174,490     |       |       | (506,695              | )          |       | (332,007          | )          |
| May                        2005                    |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 2,100,000                                     |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| September                        2005              |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       | 50,000                                        |       |       |           |       |       | 40,000      |       |       |                  |       |       | 40,000            |       |
| October                        2005                |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       | 50,000                                        |       |       |           |       |       | 10,000      |       |       |                  |       |       | 10,000            |       |
| Net                        (loss)                  |       |       | -                                             |       |       | -              |       |       | -           |       |       | (278,337              | )          |       | (278,337          | )          |
| Balance                        December 31, 2005   |       |       | 27,668,629                                    |       | $          | 198            |       | $          | 224,490     |       | $          | (785,032              | )          | $          | (560,344          | )          |
| February                      2006                 |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                      Capital           |       |       | 132,000                                       |       |       |           |       |       | 40,000      |       |       |                  |       |       |              |       |
| September                      2006                |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Shares                      Issued                 |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Shares                      Issued                 |       |       |  200,000                                 |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Net                      Loss                      |       |       |                                          |       |       |           |       |       |        |       |       | (227,510              | )     |       | (227,510          | )     |
| Balance                      December 31, 2006     |       |       | 28,000,629                                    |       | $          | 198            |       |  $    | 264,490     |       | $          | 1,012,542             |       |       | 795,584           |       |

----

| **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. The                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Company has limited operations and in accordance                      with                      SFAS# 7, the Company is                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| considered a development stage company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| As                    of May, 2006 The company ceased operations. Activities are limited                    to                    administrative and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| routine                    matters related to winding down operations and conforming with                    regulatory                    and compliance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| As                      of the report date, the Company has ceased operations and is                      seeking a                      merger. Management  does not have a plan in place in the event                      that such a merger does not materialize. If a merger is completed, the                      transaction would be accounted for as a Type B Reorganization                      as defined                      in  IRC Code Section 368.    Lease termination                        In May 2006 the Company terminated its lease agreements                      and                      vacated the properties leased. The lease and security deposits were                      charged to rent expense in 2006.   |
| **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 December                      31, 2006 or 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 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 |
|-----------------------------------------|------------------------------|
| Automobile                              | 5                      years |
| Office                      equipment   | 7                      years |

| Property                        and Equipment consist of the following as of December, |
|----------------------------------------------------------------------------------------|

|                                             |   |   | **2006** |   |   | **2005** |   |
|--------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                             |   |   |     |   |   |     |   |
| Automobile                                       |   | $      | -        |   | $      | 29,717   |   |
| Office                    equipment              |   |   | 15,928   |   |   | 15,928   |   |
|                                             |   |   | 15,928   |   |   | 45,645   |   |
| Less:accumulated                    depreciation |   |   | 10,803   |   |   | (24,606  | )      |
|                                             |   | $      | 5,125    |   | $      | 21,039   |   |

| Depreciation                    expense for the years ended December 31, 2006 and 2005 was                    $4,700                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| and                    $10,643, respectively.                                                                                                 |
|                                                                                                                                          |
| 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                    December 31, 2006 or 2005.                                                                                              |

| 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 no                    advertising costs           |
| included                    in selling, or general and administrative expenses in 2006 or                    2005.                                            |
|                                                                                                                                                          |
| 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 of warrants as of December 31, 2006 or                    2005.                                                           |
|                                                                                                                                                          |
| 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 December 31, 2006 or 2005 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 $1,012,542 for the period from February                    21, 2002                    (inception) to         |
| December                    31, 2006. 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 December 31, 2006, the Company has a net operating loss                          carryforward of                          approximately        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| $1,012,542                          for tax purposes, which will be available to offset future                          taxable income.                          If not used, |
| 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 December 31, 2006 or 2005, there were no warrants or options                    outstanding to                     |
| acquire                    any additional shares of common stock.                                                                           |
|                                                                                                                                        |
| **Note 7                    - Leases**                                                                                                 |
|                                                                                                                                        |
| In                    May 2006 the Company terminated its lease agreements and vacated                    the                    properties |
| that                    were being leased.                                                                                                  |

----

| **Note 8                      - Related party transactions**                                                                                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                              |
| Office                      space and services have been and are provided without charge                      by the Chief                      Executive Officer |
| during                      2006. 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 9                      - Loans Payable**                                                                                                              |
|                                                                                                                                                              |
| During                      the year ended December 31, 2006, the Company signed a promissory                      note                      payable              |
| to                      a shareholder in the amounts of $342,991. The loan is due upon                      demand and                      bears interest at the |
| prime                      rate.                                                                                                                                  |
|                                                                                                                                                              |
| 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                      loan was           |
| delequent                    and the vehicle has been returned to GMAC.  The balance due is                    categorized under                             |
| current                    liabilities as of December 31, 2006.                                                                                                   |
|                                                                                                                                                              |
| Current                      and long term portions of the note payable are as                      follows:                                                      |

| **Year** | **Principal**                       | **Interest**                                        |
|----------|-------------------------------------|-----------------------------------------------------|
|     |                                |                                                |
| 2006     |                          6,606 |                             662 |
| 2007     |                          7,607 |                             264 |

| Included                          in the accompanying balance sheet under the following                          captions: |
|----------------------------------------------------------------------------------------------------------------------------|

|                                                     |   |   | **2006** |   |   | **2005** |   |
|----------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                                     |   |   |     |   |   |     |   |
| Note                            Payable- Current Portion |   | $      | 18,806   |   | $      | 8,930    |   |
| Note                            Payable - Long Term      |   |   | -        |   |   | 7,609    |   |
|                                                     |   | $      | 18,806   |   | $      | 16,539   |   |

| At                              December 31, 2006, the Company has short term notes                              payable to                              non-shareholder and              |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| shareholder                              investors in the amount of $321,110. The notes call                              for varying interest                              rates ranging |
| from                              1% to 8% per annum, and contain a stock payment option                              payable at the                              lender's                |
| discretion.                                                                                                                                                                               |
|                                                                                                                                                                                      |
| Included                              in the accompanying balance sheet under Loans                              Payable                                                                  |

|                                                          |   |   | **2006** |   |   | **2005** |   |
|---------------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                                          |   |   |     |   |   |     |   |
| Loans                      Payable - shareholders   |   | $      | 605,075  |   | $      | 508,184  |   |
| Loans                      Payable - non shareholders         |   |   | 19,032   |   |   | 19,032   |   |
| Total                      current loans payable              |   | $      | 624,707  |   | $      | 527,216  |   |

| **Note                          10 - Other Income (Expense), Net**                                                                                                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                        |
| Included                          in this caption is a loan receivable from an affiliated                          company for                          $50,000 that was    |
| deemed                          uncollectible and written off to bad debt expense in 2005.                          Accounts                          payable consisting of |
| of                          unpaid consulting fees to an individual and the Company’s former Chief                          Operating Officer in                      |
| the                          amount of $82,000 were recorded as relief of debt income.                          In addition, a                          loan payable due    |
| a                          shareholder in the amount of $15,000 was satisfied upon                          completion of a                          sales transaction for  |
| inventory                          in 2004.                                                                                                                                 |
|                                                                                                                                                                        |
| **Note                          11- Subsequent Events**                                                                                                                     |
|                                                                                                                                                                        |
| As                          of the report date, the Company is in default on all of                          its short term                          notes payable.         |
| At                          December 31, 2006 the outstanding balance of the notes                          payable is                          $624,107,                   |
| exclusive                          of accrued interest and royalties in the amount of $72,145                          and $20,265,                                         |
| respectively.                          Management estimates that the accrued interest and royalty                          expense                                          |
| related                          to the short term notes payable to date is approximately                          $87,000 and                          $37,000,            |
| respectively.                          Management has not formulated a repayment plan, and no                          contingency                                          |
| plan                          has been established in the event that the lenders seek                          legal                          remedies.                     |
|                                                                                                                                                                        |

----

**ITEM        8. CHANGES IN **
**AND****DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL        DISCLOSURE.**

**ITEM        8a CONTROLS **
**AND        PROCEDURES****.**

**Evaluation        of Disclosure Controls and Procedures **

**ITEM        8b REPORTS ON FORM 8-K**

----

**PART        III.**

**ITEM        9. DIRECTORS, EXECUTIVE **
**OFFICERS,****PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE        ACT.**

**Directors        and Executive Officers**

**Larry        D. Ditto, Ph. D., President, Chief Executive Officer, and        Director**
* *

**Eric        Hansen, Director**

**Mark        Gordon, Director **

----

**Loan        Obligation and Management Restructuring **

----

----

**Compliance        with Section 16(a) of the Exchange Act**

----

**ITEM        10. **
**EXECUTIVE        COMPENSATION****.**

**Summary        Compensation Table**

|                                                   |   |     |   |                                     |   |                            |   |                                     |   |                                |   | **Long-term                  compensation**           |   |
|--------------------------------------------------------|--------|----------|--------|------------------------------------------|--------|---------------------------------|--------|------------------------------------------|--------|-------------------------------------|--------|-------------------------------------------------------|--------|
|                                                   |   |     |   | **Annual                  compensation** |   |                            |   |                                     |   | **Awards**                          |   |                                                  |   | **Payouts** |   |
| **Name                  and****principal****position** |   | **Year** |   | **Salary**                               |   | **Bonus**                       |   | **Other****annual****compen-****sation** |   | **Restricted****stock****award(s)** |   | **Securities****under-****lying****options/****SARs** |   | **LTIP****payouts** |   | **All                  other****compen-****sation** |   |
|                                                   |   |     |   | **($)    **          |   | **($)    ** |   | **($)**                                  |   | **($)**                             |   | **(#)**                                               |   | **($)** |   | **($)** |   |
| **(a)**                                                |   | **(b)**  |   | **(c)    **          |   | **(d)    ** |   | **(e)**                                  |   | **(f)**                             |   | **(g)**                                               |   | **(h)** |   | **(i)** |   |
| Larry                  D. Ditto                        |   |     | 2004   |                                     |   |                                 |   | $                                        | 0      |                                |   |                                                       |   | $ | 0 |   |   |  |   | $ | 0 |   | $ | 0 |   | $ | 0 |   |   |  |   | $ | 0 |   | $ | 0 |   |   |   |   |
| President                  and                         |   |     | 2005   |                                     |   |                                 |   | $                                        | 0      |                                |   |                                                       |   | $ | 0 |   |   |  |   | $ | 0 |   | $ | 0 |   | $ | 0 |   |   |  |   | $ | 0 |   | $ | 0 |   |   |   |   |
|  CEO                  (A)                         |   |     | 2006   |                                     |   |                                 |   | $                                        | 0      |                                |   |                                                       |   | $ | 0 |   |   |  |   | $ | 0 |   | $ | 0 |   | $ | 0 |   |   |  |   | $ | 0 |   | $ | 0 |   |   |   |   |
|                                                   |   |     |        |                                     |   |                                 |   |                                     |        |                                |   |                                                       |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |   |   |

**Other        Compensation**

----

**ITEM        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL**
**OWNERS AND MANAGEMENT****AND        RELATED STOCKHOLDER MATTERS.**

|                                   |   |                        |                                                                                 |
|----------------------------------------|--------|-----------------------------|--------------------------------------------------------------------------------------|
| **Title                  of Class(4)** |   |                        | **Name                  and Address of****Beneficial                  Owner (1)(5)** |   |   |   | **Amount                  of Beneficial****Ownership** | **Percent                  of Class (2)(3)** |
|  Common                           |   |  2,3,4                 | Larry                  D. Ditto                                                      |   |   |   |   |   |   |   |   |
| Stock                                  |   |                        | 27758                  Santa Margarita Parkway, # 281 Mission Viejo CA 92691         |   |   |   | 3,000,000 | 11  |   | % |
|                                   |   |                        |                                                                                 |   |   |   |
| Common                                 |   |  2                     | Eric                  Hansen                                                         |   |   |   |   |   |   |   |   |
| Stock                                  |   |                        | 27758                  Santa Margarita Parkway, # 281 Mission Viejo CA 92691         |   |   |   | 0 | 0  |   | % |
|                                   |   |                        |                                                                                 |   |   |   |   |   |   |   |   |
|                                   |   |                        |                                                                                 |
| Common                                 |   |  2                     | Mark                  Gordon                                                         |   |   |   |
| Stock                                  |   |                        | 27758                  Santa Margarita Parkway, # 281 Mission Viejo CA 92691         |   |   |   | 0 | 0  |   | % |
|                                   |   |                        |                                                                                 |   |   |   |
|                                   |   |                        |                                                                                 |
|                                   |   |                        |                                                                                 |   |   |   |   |   |   |   |   |
|                                   |   |                        |                                                                                 |
| Common                                 |   |  6,                  7 | Joseph                  Walsh                                                        |   |   |   |
| Stock                                  |   |                        | 5200                  US 1, Key West FL 33040                                        |   |   |   | 5,000,000 | 18  |   | % |
|                                   |   |                        |                                                                                 |   |   |   |
| Common                                 |   |  2,3                   | Shares                  of all Directors and                                         |   |   |   |
| Stock                                  |   |                        | executive                  officers as a group                                       |   |   |   | 8,000,000 | 29  |   | % |
|                                   |   |                        | (3                  persons)                                                         |   |   |   |
|                                   |   |                        |                                                                                 |

**ITEM      12. **
**CERTAIN      RELATIONSHIPS****AND      RELATED TRANSACTIONS.**

----

**PART      IV.**

**ITEM      13.**
**                        **
**EXHIBITS      AND FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K**

(b)    Exhibits      

| 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   Certification                of Chief Executive Officer pursuant to Section 302 Sarbanes-Oxley Act                of 2002   Certifications                pursuant to Sarbanes - Oxley Act of 2002    Certification                Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to                Section 906 of                      the                Sarbanes-Oxley Act of 2002   |

----

NONE

**ITEM      14. **
**PRINCIPAL      ACCOUNTANT****FEES      AND SERVICES**

**Audit      Fees**

| **Fee Category**             | ** ** | **Years Ended December 31,** | ** ** |
|-----------------------------------|------------|---------------------------------------------|------------|
| **(in thousands)**           | ** ** | **2006**                                    | ** ** | **2005** | ** ** | **2004** | ** ** |
| Audit                fees         |       | $                                           | 11         |   | $ | 11 |   | $ | 11 |   |
| Audit-related                fees |       | —                                     |       | — |   | — |   |
| Tax                fees           |       | —                                     |       | — |   | — |   |
| All                other fees     |       | —                                     |       | — |   | — |   |
| Total                fees         |       | $                                           | 11         |   | $ | 11 |   | $ | 11 |   |

*Audit      Fees. *

*Audit-Related      Fees. *

*Tax      Fees. *

----

**SIGNATURES**

Exchange Act of

|                                     |                                                                                 |                                         |
|------------------------------------------|--------------------------------------------------------------------------------------|----------------------------------------------|
|                                     | Artfest                International, Inc.                                           |
|                                |                                                                            |                                    |
| Date: March                23, 2007 | By:                                                                        | /s/  Larry                D. Ditto |
|                                     |  Larry                D. Ditto                                                  |
|                                     | Chairman,                President, and Chief Executive                Officer  |

| **Signature**                                                                                                                                                                                                                                                                  | **Title**                                                                                                                                                                                                                             | **Date**                                                                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   /s/                 Larry D. Ditto Larry                D. Ditto      /s/                Eric HansenEric                Hansen      /s/                Mark GordonMark                Gordon |   Chariman,                Chief Executive Officer and President(principal                executive officer), Treasurer                (principal financial officer)/Director Director    Director |   March                23,  2007   March                23,  2007   March                23,  2006  |

----

|                                                                | **PAGE** |
|---------------------------------------------------------------------|----------|
|                                                                |     |
| ACCOUNTANT'S                    AUDIT REPORT                        | F-2      |
|                                                                |     |
| FINANCIAL                    STATEMENTS                             |     |
|                                                                |     |
| Balance                    Sheets - December 31, 2006 and 2005      | F-3      |
|                                                                |     |
| Statements                    of Operations and Accumulated Deficit | F-4      |
| During                    the Development Stage                     |     |
|                                                                |     |
| Statements                      of Cash Flows                       | F-5      |
|                                                                |     |
| Statement                    of Changes in Stockholders' Equity     | F-6      |
|                                                                |     |
| Notes                    to Financial Statements                    | F-7      |

----

| To                      the Board of Directors and Stockholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Artfest                      International, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Mission                      Viejo, California                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| INDEPENDENT                      AUDITOR'S REPORT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| I                      have audited the accompanying balance sheets of Artfest International,                      Inc. (A Development Stage Company) as of December 31, 2006                      and 2005, and                      the related Statements of Operations, Stockholders’ Equity, and Cash Flows                      for the years then ended. These financial statements are the                      responsibility of the Company’s management. My responsibility is to                      express an opinion on these financial statements based on my                      audit.                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| I                      conducted the audit in accordance with standards established                      by the Public                      Company Accounting Oversight Board. Those standards require                      that I plan                      and perform the audit to obtain reasonable assurance about                      whether the                      financial statements are free of material misstatement. An                      audit includes                      examining, on a test basis, evidence supporting the amounts                      and                      disclosures in the financial statements. An audit also includes                      assessing                      the accounting principles used and significant estimates made                      by                      management, as well as evaluating the overall financial statement                      presentation. I believe that my audit provides a reasonable                      basis for my                      opinion. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| In                      my opinion, the financial statements referred to above present                      fairly, in                      all material respects, the financial position of Artfest International,                      Inc. (A Development Stage Company) as of December 31, 2006                      and 2005, and                      the results of its operations and cash flows for the years                      then ended, in                      conformity with 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 principle 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.                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| /s/ Thomas                    Bauman, C.P.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Thomas                      Bauman, C.P.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| March                      23,  2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

| ASSETS                                                                 |   |   |       |   |   |     |   |
|------------------------------------------------------------------------|--------|--------|------------|--------|--------|----------|--------|
|                                                                   |   |   | **2006**   |   |   | **2005** |   |
| Current                      Assets:                                   |   |   |       |   |   |     |   |
| Cash                                                                   |   | $      | 255        |   | $      | 878      |   |
| Inventory                                                              |   |   | -          |   |   | 21,410   |   |
| Prepaid                      Expenses                                  |   |   | 561        |   |   | -        |   |
|                                                                   |   |   |       |   |   |     |   |
| Total                      Current Assets                              |   |   | 816        |   |   | 22,288   |   |
|                                                                   |   |   |       |   |   |     |   |
| Property                      and Equipment, at cost, less accumulated |   |   |       |   |   |     |   |
| depreciation                      of $24,606 and $13,963 in 2005 and   |   |   |       |   |   |     |   |
| 2004,                      respectively (Notes 2 & 9)              |   |   | 5,125      |   |   | 21,039   |   |
| Other                      Assets                                      |   |   | -          |   |   | 19,895   |   |
|                                                                   |   |   |       |   |   |     |   |
| TOTAL                      ASSETS                                      |   | $      | 5,941      |   | $      | 63,222   |   |
|                                                                   |   |   |       |   |   |     |   |
| LIABILITIES                      AND STOCKHOLDERS' EQUITY              |   |   |       |   |   |     |   |
|                                                                   |   |   |       |   |   |     |   |
| Current                      Liabilities:                              |   |   |       |   |   |     |   |
| Accounts                      Payable                                  |   | $      | 28,409     |   | $      | 49,744   |   |
| Accrued                      Expenses                                  |   |   | 78,181     |   |   | 28,078   |   |
| Sales                      Tax Payable                                 |   |   | 4,292      |   |   | 1,989    |   |
| Note                      Payable - Current Portion ( Note 10)         |   |   | 18,806     |   |   | 8,929    |   |
| Loans                      Payable (Notes 8 & 9)              |   |   | 624,107    |   |   | 527,216  |   |
|                                                                   |   |   |       |   |   |     |   |
| Total                      Current Liabilities                         |   |   | 753,795    |   |   | 615,956  |   |
|                                                                   |   |   |       |   |   |     |   |
| Long                      Term Liabilities:                            |   |   |       |   |   |     |   |
| Note                      Payable (Note 9)                             |   |   | -          |   |   | 7,610    |   |
|                                                                   |   |   |       |   |   |     |   |
| TOTAL                      LIABILITIES                                 |   |   | 753,795    |   |   | 623,566  |   |
|                                                                   |   |   |       |   |   |     |   |
| Stockholders'                      Equity:                             |   |   |       |   |   |     |   |
| Common                      Stock - $.00001 par value - 40,000,000     |   |   |       |   |   |     |   |
| shares                      authorized, 28,000,629 and 27,668,629 |   |   |       |   |   |     |   |
| shares                      issued and outstanding in 2005 and         |   |   | 198        |   |   | 198      |   |
| 2004,                      respectively                                |   |   |       |   |   |     |   |
| Additional                      Paid-in Capital                        |   |   | 264,490    |   |   | 224,490  |   |
| Accumulated                      deficit                               |   |   | (1,012,542 | )      |   | (785,032 | )      |
|                                                                   |   |   |       |   |   |     |   |
| TOTAL                      LIABILITIES AND STOCKHOLDERS' EQUITY        |   | $      | 5,941      |   | $      | 63,222   |   |
|                                                                   |   |   |       |   |   |     |   |

----

|                                                                   |   |   | **For                        the**                      |    |   | **February                        21, 2002** |   |
|------------------------------------------------------------------------|--------|--------|---------------------------------------------------------|---------|--------|----------------------------------------------|--------|
|                                                                   |   |   | **Years                        ended**** **        |    |   | **(Inception)                        to**    |   |
|                                                                   |   |   | **December                        31, **** ** |    |   | **December                        31, 2006** |   |
|                                                                   |   |   | **2006**                                                |    |   | **2005**                                     |   |   | **2004** |   |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Revenue                                                                |   | $      | 91,257                                                  |    | $      | 186,794                                      |   | $ | 44,158 |   | $ | 411,809 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Cost                        of Revenue                                 |   |   | 69,929                                                  |    |   | 10,017                                       |   |   | 16,164 |   |   | 261,852 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Gross                        Profit (Loss)                             |   |   | 21,328                                                  |    |   | 176,777                                      |   |   | 27,994 |   |   | 149,957 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Selling,                        General and Administrative             |   |   | 231,265                                                 |    |   | 515,003                                      |   |   | 297,021 |   |   | 1,204,815 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Net                        (Loss) From Operations                      |   |   | (209,937                                                | )       |   | (338,226                                     | )      |   | (269,027 | ) |   | (1,054,858 | ) |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Other                        Income (Expense) , Net (Notes 5 & 10) |   |   | (17,573                                                 |  ) |   | 59,889                                       |   |   | - |   |   | 42,316 |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| (Deficit)                        - Development Stage                   |   | $      | (227,510                                                | )       | $      | (278,337                                     | )      | $ | (269,027 | ) | $ | (1,012,542 | ) |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Weighted                        average number of common shares        |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| outstanding                        - basic and fully diluted           |   |   | 27,817,629                                              |    |   | 26,758,629                                   |   |   | 25,468,629 |   |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |
| Net                        (Loss) per share - basic and full diluted   |   | $      | (0.01                                                   | )       | $      | (0.01                                        | )      | $ | (0.01 | ) |   |   |   |
|                                                                   |   |   |                                                    |    |   |                                         |   |   |   |   |   |   |   |

----

|                                                                |   |   | **For                          the**               |    |   |                                           |   |
|---------------------------------------------------------------------|--------|--------|----------------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                                                |   |   | **Years                          ended**** ** |    |   | **February                          21, 2002** |   |
|                                                                |   |   | **December                          31, **    |    |   | **(Inception)                          to**    |   |
| Cash                            Flows from Operating Activities:    |   |   | **2006**                                           |    |   | **2005**                                       |   |   | **2004** |   |   | **December                          31, 2006** |   |
| Net                          (loss)                                 |   | $      | (227,510                                           | )       | $      | (278,337                                       | )      | $ | (269,027 | ) | $ | (1,012,542 | ) |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Adjustments                          to reconcile net (loss) to     |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| net                          cash (used) by operating activities:   |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Depreciation                                                        |   |   | 4,700                                              |    |   | 10,643                                         |   |   | 6,303 |   |   | 10,803 |   |
| (Increase)                          Decrease in Inventory           |   |   | 21,410                                             |    |   | (21,410                                        | )      |   |   |   |   | 0 |   |
| (Increase)                          Decrease in prepaid expenses    |   |   | (561                                               | )  |   | 1,098                                          |   |   | 5,400 |   |   | (561 | )  |
| Increase                          (Decrease) in accounts payable    |   |   | (21,335                                            | )       |   | (61,169                                        | )      |   | 1 |   |   | 28,409 |   |
| Increase                          (Decrease) in accrued expenses    |   |   | 50,103                                             |    |   | 22,229                                         |   |   | 5,849 |   |   | 78,181 |   |
| Increase                          (Decrease) in sales payable       |   |   | 2,303                                              |    |   | 160                                            |   |   | 1,828 |   |   | 4,291 |   |
| (Increase)                          Decrease in other assets        |   |   | 19,895                                             |    |   | 11,200                                         |   |   | (31,095 | ) |   | 0 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Net                          Cash (Used) by Operating Activities:   |   |   | (150,995                                           | )       |   | (315,585                                       | )      |   | (280,741 | ) |   | (891,419 | ) |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Cash                          Flows From Investing Activities:      |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Purchase                          of Equipment                      |   |   | 11,214                                             |    |   | 0                                              |   |   | (15,928 | ) |   | (15,927 | ) |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Net                          Cash Used by Investing Activities:     |   |   | 0                                                  |    |   | 0                                              |   |   | (15,928 | ) |   | (15,927 | ) |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Cash                          Flows From Financing Activities:      |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Issuance                          of common stock                   |   |   | -                                                  |    |   | -                                              |   |   | 0 |   |   | 198 |   |
| (Increase)                          Decrease in loans receivable    |   |   | 0                                             |    |   | 50,000                                         |   |   | 0 |   |   | 0  |   |
| Increase                          in loans payable                  |   |   | 99,158                                             |    |   | 223,731                                        |   |   | 251,372 |   |   | 642,913 |   |
| Increase                          in contributed capital            |   |   | 40,000                                             |    |   | 50,000                                         |   |   | 45,391 |   |   | 264,490 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Net                          Cash Provided by Financing Activities: |   |   | 139,158                                            |    |   | 323,731                                        |   |   | 296,763 |   |   | 907,601 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Net                          Increase (Decrease) in Cash            |   |   | (623                                               | )  |   | 8,146                                          |   |   | 94 |   |   | 255 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Cash                          at Beginning of Period                |   |   | 878                                                |    |   | (7,268                                         | )      |   | (7,362 | ) |   | 0 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |
| Cash                          at End of Period                      |   | $      | 255                                                |    | $      | 878                                            |   | $ | (7,268 | ) | $ | 255 |   |
|                                                                |   |   |                                               |    |   |                                           |   |   |   |   |   |   |   |

----

|                                               |       |       |                                          |       |       |           |       |       |        |       |       | **(Deficit) **   | ** ** | ** ** | ** **        | ** ** |
|----------------------------------------------------|------------|------------|-----------------------------------------------|------------|------------|----------------|------------|------------|-------------|------------|------------|-----------------------|------------|------------|-------------------|------------|
|                                               | ** ** | ** ** | ** **                                    | ** ** | ** ** | ** **     | ** ** | ** ** | ** **  | ** ** | ** ** | **Accumulated ** | ** ** | ** ** | ** **        | ** ** |
|                                               | ** ** | ** ** | **Common                        Stock ** | ** ** | ** ** | **Additional** | ** ** | ** ** | **During**  | ** ** | ** ** | **Total**             | ** ** |
|                                               | ** ** | ** ** | ** **                                    | ** ** | ** ** | ** **     | ** ** | ** ** | **Paid-in** | ** ** | ** ** | **Development**       | ** ** | ** ** | **Stockholders'** | ** ** |
|                                               | ** ** | ** ** | **Shares**                                    | ** ** | ** ** | **Amount**     | ** ** | ** ** | **Capital** | ** ** | ** ** | **Stage**             | ** ** | ** ** | **Equity**        |       |
|                                               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| February                        2002               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Issued                        for Cash             |       |       | 200,000                                       |       |       | 200            |       |       |        |       |       |                  |       |       | 200               |       |
| June                        2002                   |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Issued                        for Cash             |       |       | 19,685,000                                    |       |       | 197            |       |       |        |       |       |                  |       |       | 197               |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 50,000      |       |       |                  |       |       | 50,000            |       |
| July                        2002                   |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 1,000       |       |       |                  |       |       | 1,000             |       |
| November                        2002               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Relinquished                        by Shareholder |       |       | (200,000                                      | )          |       | (200           | )          |       |        |       |       |                  |       |       | (200              | )          |
| Net                        Loss                    |       |       | -                                             |       |       | -              |       |       | -           |       |       | (129,311              | )          |       | (129,311          | )          |
| Balance                        December 31, 2002   |       |       | 19,685,000                                    |       |       | 197            |       |       | 51,000      |       |       | (129,311              | )          |       | (78,114           | )          |
| April                        2003                  |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Issued                        for Cash             |       |       | 27,000                                        |       |       |           |       |       | 33,600      |       |       |                  |       |       | 33,600            |       |
| May                        2003                    |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Issued                        for Cash             |       |       | 120,000                                       |       |       | 1              |       |       | 36,499      |       |       |                  |       |       | 36,500            |       |
| September                        2003              |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 2,155,500                                     |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 8,000       |       |       |                  |       |       | 8,000             |       |
| December                        2003               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 100,000                                       |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Net                        Loss                    |       |       | -                                             |       |       | -              |       |       | -           |       |       | (108,357              | )          |       | (108,357          | )          |
| Balance                        December 31, 2003   |       |       | 22,087,500                                    |       |       | 198            |       |       | 129,099     |       |       | (237,668              | )          |       | (108,371          | )          |
| May                        2004                    |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 495,000                                       |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 14,691      |       |       |                  |       |       | 14,691            |       |
| July                        2004                   |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 1,499,400                                     |       |       |           |       |       |        |       |       |                  |       |       | 0                 |       |
| August                        2004                 |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 1,265,300                                     |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 700         |       |       |                  |       |       | 700               |       |
| November                        2004               |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 121,429                                       |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       |                                          |       |       |           |       |       | 30,000      |       |       |                  |       |       | 30,000            |       |
| Net                        Loss                    |       |       | -                                             |       |       | -              |       |       | -           |       |       | (269,027              | )          |       | (269,027          | )          |
| Balance                        December 31,2004    |       |       | 25,468,629                                    |       |       | 198            |       |       | 174,490     |       |       | (506,695              | )          |       | (332,007          | )          |
| May                        2005                    |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Dividends                                          |       |       | 2,100,000                                     |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| September                        2005              |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       | 50,000                                        |       |       |           |       |       | 40,000      |       |       |                  |       |       | 40,000            |       |
| October                        2005                |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                        Capital         |       |       | 50,000                                        |       |       |           |       |       | 10,000      |       |       |                  |       |       | 10,000            |       |
| Net                        (loss)                  |       |       | -                                             |       |       | -              |       |       | -           |       |       | (278,337              | )          |       | (278,337          | )          |
| Balance                        December 31, 2005   |       |       | 27,668,629                                    |       | $          | 198            |       | $          | 224,490     |       | $          | (785,032              | )          | $          | (560,344          | )          |
| February                      2006                 |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Contributed                      Capital           |       |       | 132,000                                       |       |       |           |       |       | 40,000      |       |       |                  |       |       |              |       |
| September                      2006                |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Shares                      Issued                 |       |       |                                          |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Shares                      Issued                 |       |       |  200,000                                 |       |       |           |       |       |        |       |       |                  |       |       |              |       |
| Net                      Loss                      |       |       |                                          |       |       |           |       |       |        |       |       | (227,510              | )     |       | (227,510          | )     |
| Balance                      December 31, 2006     |       |       | 28,000,629                                    |       | $          | 198            |       |  $    | 264,490     |       | $          | 1,012,542             |       |       | 795,584           |       |

----

| **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. The                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Company has limited operations and in accordance                      with                      SFAS# 7, the Company is                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| considered a development stage company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| As                    of May, 2006 The company ceased operations. Activities are limited                    to                    administrative and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| routine                    matters related to winding down operations and conforming with                    regulatory                    and compliance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| As                      of the report date, the Company has ceased operations and is                      seeking a                      merger. Management  does not have a plan in place in the event                      that such a merger does not materialize. If a merger is completed, the                      transaction would be accounted for as a Type B Reorganization                      as defined                      in  IRC Code Section 368.    Lease termination                        In May 2006 the Company terminated its lease agreements                      and                      vacated the properties leased. The lease and security deposits were                      charged to rent expense in 2006.   |
| **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 December                      31, 2006 or 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 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 |
|-----------------------------------------|------------------------------|
| Automobile                              | 5                      years |
| Office                      equipment   | 7                      years |

| Property                        and Equipment consist of the following as of December, |
|----------------------------------------------------------------------------------------|

|                                                   |   |   | **2006** |   |   | **2005** |   |
|--------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                                   |   |   |     |   |   |     |   |
| Automobile                                             |   | $      | -        |   | $      | 29,717   |   |
| Office                    equipment                    |   |   | 15,928   |   |   | 15,928   |   |
|                                                   |   |   | 15,928   |   |   | 45,645   |   |
| Less:accumulated                          depreciation |   |   | 10,803   |   |   | (24,606  | )      |
|                                                   |   | $      | 5,125    |   | $      | 21,039   |   |

| Depreciation                    expense for the years ended December 31, 2006 and 2005 was                    $4,700                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
| and                    $10,643, respectively.                                                                                                 |
|                                                                                                                                          |
| 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                    December 31, 2006 or 2005.                                                                                              |

| 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 no                    advertising costs           |
| included                    in selling, or general and administrative expenses in 2006 or                    2005.                                            |
|                                                                                                                                                          |
| 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 of warrants as of December 31, 2006 or                    2005.                                                           |
|                                                                                                                                                          |
| 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 December 31, 2006 or 2005 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 $1,012,542 for the period from February                    21, 2002                    (inception) to         |
| December                    31, 2006. 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 December 31, 2006, the Company has a net operating loss                          carryforward of                          approximately        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| $1,012,542                          for tax purposes, which will be available to offset future                          taxable income.                          If not used, |
| 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 December 31, 2006 or 2005, there were no warrants or options                    outstanding to                     |
| acquire                    any additional shares of common stock.                                                                           |
|                                                                                                                                        |
| **Note 7                    - Leases**                                                                                                 |
|                                                                                                                                        |
| In                    May 2006 the Company terminated its lease agreements and vacated                    the                    properties |
| that                    were being leased.                                                                                                  |

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| **Note 8                      - Related party transactions**                                                                                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                              |
| Office                      space and services have been and are provided without charge                      by the Chief                      Executive Officer |
| during                      2006. 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 9                      - Loans Payable**                                                                                                              |
|                                                                                                                                                              |
| During                      the year ended December 31, 2006, the Company signed a promissory                      note                      payable              |
| to                      a shareholder in the amounts of $342,991. The loan is due upon                      demand and                      bears interest at the |
| prime                      rate.                                                                                                                                  |
|                                                                                                                                                              |
| 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                      loan was           |
| delequent                    and the vehicle has been returned to GMAC.  The balance due is                    categorized under                             |
| current                    liabilities as of December 31, 2006.                                                                                                   |
|                                                                                                                                                              |
| Current                      and long term portions of the note payable are as                      follows:                                                      |

| **Year** | **Principal**                       | **Interest**                                        |
|----------|-------------------------------------|-----------------------------------------------------|
|     |                                |                                                |
| 2006     |                          6,606 |                             662 |
| 2007     |                          7,607 |                             264 |

| Included                          in the accompanying balance sheet under the following                          captions: |
|----------------------------------------------------------------------------------------------------------------------------|

|                                                     |   |   | **2006** |   |   | **2005** |   |
|----------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                                     |   |   |     |   |   |     |   |
| Note                            Payable- Current Portion |   | $      | 18,806   |   | $      | 8,930    |   |
| Note                            Payable - Long Term      |   |   | -        |   |   | 7,609    |   |
|                                                     |   | $      | 18,806   |   | $      | 16,539   |   |

| At                              December 31, 2006, the Company has short term notes                              payable to                              non-shareholder and              |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| shareholder                              investors in the amount of $321,110. The notes call                              for varying interest                              rates ranging |
| from                              1% to 8% per annum, and contain a stock payment option                              payable at the                              lender's                |
| discretion.                                                                                                                                                                               |
|                                                                                                                                                                                      |
| Included                              in the accompanying balance sheet under Loans                              Payable                                                                  |

|                                                          |   |   | **2006** |   |   | **2005** |   |
|---------------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                                          |   |   |     |   |   |     |   |
| Loans                      Payable - shareholders   |   | $      | 605,075  |   | $      | 508,184  |   |
| Loans                      Payable - non shareholders         |   |   | 19,032   |   |   | 19,032   |   |
| Total                      current loans payable              |   | $      | 624,707  |   | $      | 527,216  |   |

| **Note                          10 - Other Income (Expense), Net**                                                                                                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                        |
| Included                          in this caption is a loan receivable from an affiliated                          company for                          $50,000 that was    |
| deemed                          uncollectible and written off to bad debt expense in 2005.                          Accounts                          payable consisting of |
| of                          unpaid consulting fees to an individual and the Company’s former Chief                          Operating Officer in                      |
| the                          amount of $82,000 were recorded as relief of debt income.                          In addition, a                          loan payable due    |
| a                          shareholder in the amount of $15,000 was satisfied upon                          completion of a                          sales transaction for  |
| inventory                          in 2004.                                                                                                                                 |
|                                                                                                                                                                        |
| **Note                          11- Subsequent Events**                                                                                                                     |
|                                                                                                                                                                        |
| As                          of the report date, the Company is in default on all of                          its short term                          notes payable.         |
| At                          December 31, 2006 the outstanding balance of the notes                          payable is                          $624,107,                   |
| exclusive                          of accrued interest and royalties in the amount of $72,145                          and $20,265,                                         |
| respectively.                          Management estimates that the accrued interest and royalty                          expense                                          |
| related                          to the short term notes payable to date is approximately                          $87,000 and                          $37,000,            |
| respectively.                          Management has not formulated a repayment plan, and no                          contingency                                          |
| plan                          has been established in the event that the lenders seek                          legal                          remedies.                     |
|                                                                                                                                                                        |

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