**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**


**FORM
      10-KSB**





(Mark One)


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


FOR
      THE
      FISCAL YEAR ENDED DECEMBER 31, 2002.





OR




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


FOR
      THE
      TRANSITION PERIOD FROM ______________ TO ______________


COMMISSION
        FILE NUMBER: 000-49676





**ARTFEST
      INTERNATIONAL, INC.**


(Name
      of
      small business issuer in its charter)




**DELAWARE**
            **03-0390855**(State
                or jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)




**800
      Duval Street, Key West, FL  33040**


(Address
      of Principal Executive Offices) (Zip Code)





Issuer's
      telephone number: 1-888-692-7833





Securities
      registered under Section 12(b) of the Exchange Act:
**None**





Securities
      registered under Section 12(g) of the Exchange Act:





Common
      Stock, par value0.00001





Check
      whether the Issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the Registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes
oNo
x





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in the form, and no disclosure will be
      contained, to the best of Registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes oNo
x





Issuer
      had revenues of $ 52,056 for the fiscal year ended December 31,
      2002.





The
      aggregate market value of the voting stock held by non-affiliates cannot be
      readily determined.





As
      of
      December 21, 2005, the Registrant had 27,668,629 shares of common stock
      outstanding.





Transitional
      Small Business Disclosure Format (Check one): Yes oNo x




-1-


**TABLE
      OF CONTENTS**


PART
                I
            
            
            
            PA
            GEITEM
                1. DESCRIPTION OF BUSINESS
            
            
            
            3ITEM
                2. DESCRIPTION OF PROPERTY
            
            
            
            6ITEM
                3. LEGAL PROCEEDINGS
            
            
            
            6ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS
            
            
            
            6PART
                IIITEM
                5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS
            
            
            
            7ITEM
                6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION
            
            
            
            8ITEM
                7. FINANCIAL STATEMENTS
            
            
            
            F-1ITEM
                8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTINGAND
                FINANCIAL DISCLOSURE
            
            
            
            11ITEM
                8A. CONTROLS AND PROCEDURES
            
            
            
            11PART
                IIIITEM
                9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                CONTROL PERSONSCOMPLIANCE
                WITH SECTION 16(a)OF THE EXCHANGE
                ACT
            
            
            
            12ITEM
                10. EXECUTIVE COMPENSATION
            
            
            
            17ITEM
                11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENTAND
                RELATED STOCKHOLDER MATTERS
            
            
            
            18ITEM
                12. CERTAIN RELATIONSHIPS AND RELATED
                TRANSACTIONS
            
            
            
            19ITEM
                13. EXHIBITS
            
            
            
            19ITEM
                14. PRINCIPAL ACCOUNTANT FEES AND
                SERVICES
            
            
            
            20SIGNATURES
            
            
            
            21





-2-


**PART
      I.**


**ITEM
      1. DESCRIPTION OF BUSINESS.**





**Past
      Business Development**





Soldnet,
      Inc., now called Artfest International, Inc. (the "Company" or “Artfest”), was
      incorporated on February 21, 2001, under the laws of the State of Delaware.





On
      November 19, 2002, Soldnet, Inc., consummated an Agreement and Plan of
      Reorganization (the "Agreement" or “Exchange Transaction”) with Artfest, Inc., a
      Delaware corporation.





Pursuant
      to the terms and conditions of the Agreement, Artfest, Inc. (the owners) was
      issued 19,685,000 shares of restricted Company common stock in exchange for
      19,685,000 common shares of Artfest, Inc.





**Early
      2002 Business**





In
      2002, our Company, Soldnet, sought to engage in a corporate undertaking,
      including, but not limited to, selected mergers and acquisitions. Soldnet has
      been in the developmental stage since inception and had no operations other
      than
      issuing shares to its original shareholders. Soldnet was established to provide
      a method for a foreign or domestic private company to become a reporting
      ("public") company whose securities would be qualified for trading in the United
      States secondary market. The business we sought to undertake was subject to
      numerous risk factors, including : lack of operating history and no significant
      assets or financial resources. Our current business also is subject to numerous
      risk factors.





Soldnet
      intended to enter into a business combination with a target in exchange for
      Soldnet's securities. Management anticipated seeking out a target through
      solicitation including newspaper or magazine advertisements, and other methods.
      Soldnet entered into an agreement with Judith Stahl, former officer and
      Director, to supervise the search for target companies as potential candidates
      for a business combination. Judith Stahl received common stock of Soldnet.
      Soldnet had no full time employees.





The
      analysis of any business opportunities was undertaken by, or under the
      supervision of, the officer and director of Soldnet, who was not a professional
      business analyst. The Securities Exchange Act of 1934, as amended, required
      that
      any merger or acquisition candidate comply with certain reporting requirements,
      which include providing audited financial statements to be included in the
      reporting filings made under the Exchange Act. Soldnet determined not to acquire
      or merge with any company without audited financial statements or able to supply
      them within the required period of time after closing of the proposed
      transaction. While the intentions were pursued, our Company was unable to timely
      comply with the requirements of reporting, including financial statement
      disclosures. Soldnet had no properties at that time and had no agreements to
      acquire any properties. Soldnet used the offices of management at no cost to
      Soldnet. Mrs. Stahl was the controlling shareholder, sole director and officer
      and served as a marketing and consulting person for the
      Company.


-3-


**Current
      Status-Summary**





The
      Company is deficient in its filings with the U.S. Securities and Exchange
      Commission (“SEC”). The current goal of Management is to update the SEC filings.
      The Company is in the process of completing necessary audits and reports, with
      the assistance of professionals, including accountants and lawyers. At the
      same
      time, the Company intends to continue to operate existing businesses and expand,
      while it does need and is seeking additional capital to meet cash flow
      requirements.





Artfest
      operates two retail store locations and seeks to expand its outlets and is
      developing a plan to provide sales, marketing, financial and e-commerce systems
      to the industries of, and buyers of, Arts, Antiques, Collectibles and Luxury
      Goods.





**Current
      Business Plans and Pursuits**





The
      current business plan, in summary, is to complete a process of bringing the
      Company into compliance with state and Federal filing requirements, such as
      the
      SEC, and then to take steps for the common stock to commence trading. Also,
      we
      see the need to maintain operations at our two retail locations while making
      efforts to expand our stores, called galleries, and develop an e-commerce or
      “internet” based business.





The
      Company remains focused on developing processes to further enhance efficiencies
      as well as expediting corporate compliance. We are also currently seeking
      additional employees and consultants, and have made changes this past year
      in
      this regard. We require more capital to undertake our plans. We may restructure
      our Management with new members.





As
      discussed above, our business plan is also tied into the need for capital
      besides cash flow. We continue to modify plans and efforts to raise capital
      to
      help fund our various operations until we reach, if possible, the position
      of
      being able to self finance from cash flow.





One
      of
      the first major efforts, following regulatory compliance tasks, specifically
      updating our SEC filings, will be to establish relations with investment bankers
      and brokers. Trips may be made to New York and from New York possibly overseas
      to London for this purpose and though we have had minimal discussions with
      persons and companies relating to this, we plan more discussions and trips
      during the year of 2006.





We
      are
      also looking at venture capital opportunities and joint ventures, and similar
      transactions. We plan to strive to keep investors and the market informed about
      Company happenings by future press releases, updating our web site and periodic
      President letters.


-4-


**Need
      for Capital and Risks**





We
      are
      subject to many risks, most important being the risk we may not achieve the
      necessary level of capital to operate and maintain our business long term.





We
      have,
      as of December, 2005, confirmed terms on a loan and related arrangements. We
      may
      experience additional funding from this source, no guarantee, but also are
      subject to restrictions on obtaining other funding, and undertaking both
      corporate level and operational level actions while the agreement is in place.





See,
      Loan
      Obligation and Management Restructuring.





**Galleries**





We
      operate two retail gallery locations.





They
      are
      located at:





Gallery
      in Key West, FL:





800
      Duval Street





Key
      West, FL  33040








Gallery
      in Grand Rapids, MI:





Picasso
      Joe's The Gallery





3655
      28th Street





Suite
      3-H





Grand
      Rapids, MI  49512





These
      locations are subject to typical retail business issues including product
      pricing, return policies, employee staffing and turnover, landlord relations,
      decline or increase in sales due to seasonality (both stores experience, in
      general, higher sales during December and the summer time, as compared to other
      times during the year).





-5-


**Competition
      and Markets**





The
      retail business is highly competitive in all of its phases, with competition
      from local and national competitors, many of which have substantially greater
      technical and financial resources.





**Definitions**





**ITEM
      2. DESCRIPTION OF PROPERTY.**


We
      do not
      own real
      estate. We lease two locations, where our retail stores are located, and these
      are considered on commercially reasonable terms.




**ITEM
      3. LEGAL PROCEEDINGS.**


The
      Company is not a party to any legal
      proceeding.




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


None .


-6-


**PARTII.**




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




**Market
      Information**





Our
      common stock is not traded on any exchange.




**Holders
      of Common Equity**




As
      of
      December 21, 2005, we had approximately 142 shareholders of record of our common
      stock.





**Dividends**





We
      have
      not declared or paid a cash dividend to stockholders since we were originally
      organized. The Board of Directors presently intends to direct the Company to
      retain any earnings to finance operations and does not expect to authorize
      cash
      dividends in the foreseeable future. Any payment of cash dividends in the future
      will depend upon earnings, capital requirements and other factors.




**General
      Information**




All
      of
      the above noted securities were issued directly by the Company, and no
      commissions or fees were paid in connection with any of these transactions.
      The
      transactions were private, and the Company endeavored to comply both with
      Regulation D, and also Section 4(2) of the Securities Act of 1933, as amended,
      as exemption(s) from registration. The Company gave the purchasers the
      opportunity to ask questions and receive answers concerning the terms and
      conditions of the transactions and to obtain any additional information which
      the Company possessed or could acquire; the Company advised the purchasers
      of
      the limitations on resale, and neither the Company nor any person acting on
      its
      behalf sold the securities by any form of general solicitation or general
      advertising; and the Company exercised reasonable care to assure that the
      purchasers of the securities are not underwriters and were “accredited
      investors” under Regulation D and/or sophisticated investors.


-7-


**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLANOF
      OPERATION.**





**Plan
      of Operation**





Our
      current plan, in summary, is focused primarily on corporate and securities
      law
      considerations in completing a process of updating filings with both applicable
      state and Federal agencies, as needed, including the SEC, and related efforts.
      Management believes the success of the business, potential in the future, needs
      a stable foundation as a public company. The first part is compliance with
      laws
      and regulations, primarily updating and keeping current filings with the SEC,
      and next establishing the business as a “trading” entity upon some stock
      exchange or similar trading medium. At the same time, it is important to
      continue core business pursuits, such as operational improvements, and become
      a
      profitable business. We believe at least $500,000 is needed to continue for
      a
      period of approximately 12 months, not undertaking any material transaction,
      which would require even more funding. We anticipate obtaining funding to
      address cash flow needs through private placements, loans and similar matters.
      Our plan is subject to many risks. No assurance of success can be given. We
      are
      subject to many risks. We have, as of December, 2005, confirmed terms on a
      loan
      and related arrangements. We may experience additional funding from this source,
      no guarantee, but also are subject to restrictions on obtaining other funding,
      and undertaking both corporate level and operations level actions while the
      agreement is in place. See, Loan Obligation and Management Restructuring.





**Critical
      Accounting Policies**




None


**Equity
          Securities Sold Without Registration**
 
 The
          following securities of our Company were sold without registration for
          the
          periods indicated:
 
 **Period**
                **Shares
                    Issued**
                **Purpose**
                **Amount
                    Received**Q1
                    2002
                200,000
                Original
                    incorporation
                $200Q2
                    2002
                19,685,000
                Artfest
                    reverse merger
                $197Q3
                    2002
                -
                Capital
                    contribution
                $51,000Q4
                    2002
                (200,000)
                Dissolution
                    of Soldnet, Inc.
                -$200Q1
                    2003
                -
                -
                -Q2
                    2003
                147,000
                Capital
                    contribution
                $70,100Q3
                    2003
                2,155,500
                Gifts
                    / Services
                --
                Capital
                    contribution
                $8,000Q4
                    2003
                100,000
                Consulting
                    services
                -Q1
                    2004
                *
                *
                *Q2
                    2004
                495,000
                Gifts
                    / Services
                --
                Capital
                    contribution
                $14,691Q3
                    2004
                2,764,700
                Gifts
                    / Services
                --
                Capital
                    contribution
                $700Q4
                    2004
                -
                Capital
                    contribution
                $30,000121,429
                Gifts
                    / Services
                -Q1
                    2005
                *
                *
                *Q2
                    2005
                *
                *
                *Q3
                    2005
                100,000
                Capital
                    contribution
                $50,000Q4
                    2005
                **
                **
                **
 
 
 *
          -
          Indicates that there was no stock activity during the respective
          quarter.
 **-
          Indicates that there was no stock activity during Q4, 2005 as of date of
          filing.
 **Results
        of Operations**




**(a)
      Revenues**





Operating
      revenues for the 10 months ended December 31, 2002 were $ 52,056 with an
      operating loss of $ 108,357.




**(b)
      Costs and Expenses**




Cost
      of Revenue: Our cost of revenue for the period June
      17, 2002 ending December 31, 2002, was $129,760.




General
      and Administrative: Our general and
      administrative expenses for the period June 17, 2002 ended December 31, 2002,
      was $30,653.


-8-


**(c)
      Depreciation, Depletion and Amortization**




No
        depreciation, depletion and amortization was charged as of
        12/31/02.




**(e)
      Other Income (Expense)**


No
        other
        Income (Expense) was recorded as of 12/31/02.


**(f)
      Net Loss**




Net
        loss from continuing operations for the period
        June 17, 2002 ending December 31, 2002, was $108,357.


**Liquidity
      and Capital Resources**





The
      Company is meeting its material obligations, though is unable to expand or
      incur
      any material obligations as part of its new direction.





The
      Company plans to continue to raise capital through the private placement of
      company stock, debt, and, eventually, through public offerings. Management
      intends to use the proceeds of these pursuits to first pay accountants, lawyers
      and others to maintain, once achieved, a current public company, and then to
      carry out its business plan and ultimately achieve profitable
      operations.





**Income
      Tax Matters**





The
      Company is in the process of coordination of obligations on income tax filings
      and payments, as applicable, based upon the advice of professionals.





**Inflation**





Management
      does not believe that inflation has had or is likely to have any significant
      impact on it’s operations.





**Going
      Concern**





The
      financial statements have been prepared on a going concern basis, which
      contemplates realization of assets and liquidation of liabilities in the
      ordinary course of business. Since we are in the development stage, we have
      limited capital resources, insignificant revenue and a loss from operations.
      The
      appropriateness of using the going concern basis is dependent upon ability
      to
      obtain additional financing or equity capital and, ultimately, to achieve
      profitable operations. The uncertainty of these conditions raises substantial
      doubt about ability to continue as a going concern. The financial statements
      do
      not include any adjustments that might result from the outcome of this
      uncertainty.





-9-


**Forward
      Looking Statements**





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




-10-


**ITEM
      7. FINANCIAL STATEMENTS.**




ARTFEST
      INCORPORATED


INDEX
      TO
      FINANCIAL STATEMENTS


DECEMBER
      31, 2002














PAGEINDEPENDENT
                AUDITOR’S REPORT
            F-1FINANCIAL
                STATEMENTSBalance
                Sheet - December 31, 2002
            F-2Statement
                of Operations and Accumulated
                DeficitDuring
                the Development Stage
            F-3Statement
                of Changes in Stockholders’ Equity
            F-4Statement
                of Cash Flows
            F-5Notes
                to Financial Statements
            F-6











**THOMASBAUMAN**


**CERTIFIED
      PUBLIC ACCOUNTANT**


**4
      SCHAEFFER STREET**


**HUNTINGTON
      STATION, NY 11746**


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




To
      the
      Board of Directors and Stockholders


Artfest,
      Inc.




INDEPENDENT
      AUDITOR’S REPORT





I
      have
      audited the accompanying balance sheet of Artfest, Inc. (A Development Stage
      Company) as of December 31, 2002 and the related Statements of Operations,
      Stockholders’ Equity, and Cash Flows for the period June 17, 2002 (Date of
      Inception) to December 31, 2002. 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 generally accepted auditing standards.
      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, Inc. (A Development Stage
      Company) as of December 31, 2002 and the results of its operations and cash
      flows for the period June 17, 2002 (Date of Inception) to December 31, 2002,
      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
              21, 2003
            By:
            /s/ Thomas
              Bauman, C.P.A.Thomas
              Bauman, C.P.A.


F-1


ARTFESTINCORPORATED


(A
      Development Stage Company)


BALANCE
      SHEET


DECEMBER
      31, 2002





ASSETSCurrent
                Assets:Cash
                (Note 2)
            
            $
            40Loan
                Receivable (Notes 5 & 8)
            
            
            50,000Total
                Current Assets
            
            $
            50,040LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                Liabilities:Accounts
                Payable
            
            $
            107,200Total
                Current Liabilities
            
            $
            107,200Stockholders’
                Equity:Common
                Stock - $.00001 par value - 25,000,000shares
                authorized, 19,685,000 sharesissued
                and outstanding
            
            
            197Additional
                Paid-in Capital
            
            
            51,000(Deficit)
                accumulated during developmental stage
            
            
            (108,357
            )TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            50,040














See
      accompanying notes to financial statements See
      Accountant’s Audit Report


F-2


ARTFESTINCORPORATED


(A
      Development Stage Company)


STATEMENT
      OF OPERATIONS AND ACCUMULATED DEFICIT


For
      the
      period June17, 2002 (date of inception) to December 31, 2002





Revenues
            
            $
            52,056Cost
                of Revenue:
            
            
            129,760(Deficit)
                Accumulated During Development Stage
            
            
            (
                77,704
            )General
                and Administrative
            
            
            30,653Net
                (Loss)
            
            $
            (
                108,357
            )Weighted
                average number of common sharesoutstanding
                - basic and fully diluted
            
            
            19,685,000Net
                (Loss) per share - basic and fully diluted
            
            $
            (0.00
            )







See
      accompanying notes to financial statements.


See
      Accountant’s Audit Report


F-3




ARTFEST
      INCORPORATED


(
      A
      Development Stage Company)


STATEMENT
      OF CHANGES IN STOCKHOLDERS’ EQUITY


For
      the
      period June 17, 2002 (date of inception) to December 31, 2002





**(Deficit)****Accumulated****Common
                Stock**
            **Additional**
            
            **During**
            
            **Total****Paid-in**
            
            **Development**
            
            **Stockholders’****Shares**
            
            **Amount**
            
            **Capital**
            
            **Stage**
            
            ******Equity**June
                2002Issued
                for Cash
            
            
            19,685,000
            
            $
            197
            
            $
            
            
            $
            
            
            $
            197Contributed
                Capital
            
            
            
            
            
            
            
            
            50,000
            
            
            
            
            
            50,000July
                2002Contributed
                Capital
            
            
            
            
            
            
            
            
            1,000
            
            
            
            
            
            1,000Net
                (loss)June
                17, 2002(Inception)
                toDecember
                31, 2002
            
            
            
            
            
            
            
            
            
            
            
            (108,357
            )
            
            (108,357
            )Balance
                December 31, 2002
            
            
            19,685,000
            
            $
            197
            
            $
            51,000
            
            $
            (108,357
            )
            $
            (
                57,160
            )








See
      accompanying notes to financial statements.


See
      Accountant’s Report


F-4


ARTFEST
      INCORPORATED


(
      A
      Development Stage Company)


STATEMENT
      OF CASH FLOWS


For
      the
      period June 17, 2002 (date of inception) to December 31, 2002











Cash
              Flows from Operating
              Activities:Net
                (loss)
            
            $
            (
                108,357
            )Adjustments
                to
                reconcile net (loss) tonet
                cash (used) by operating activities:Increase
                in
                loan receivable
            
            
            (
                50,000
            )Increase
                in
                accounts payable
            
            
            107,200Net
                Cash (Used) By Operating Activities
            
            
            (
                51,157
            )Cash
                Flows from investing activities:
            
            
            -0-Cash
                Flows From Financing Activities:Issuance
                of
                Common Stock
            
            
            197Increase
                in
                contributed capital
            
            
            51,000Net
                Cash Provided by Financing Activities
            
            
            51,197Net
                Increase in Cash
            
            
            40Cash
                at Beginning of Period
            
            
            -0-Cash
                at End of Period
            
            $
            40











See
      accompanying notes to financial statements


See
      Accountant’s Audit Report


F-5




ARTFEST
      INCORPORATED


(A
      Development Stage Company)


Notes





**Note
      1 - History and organization of the company**





The
      Company was organized June 17, 2002 (Date of Inception) under the laws of the
      state of Delaware, as Artfest Incorporated. The Company has limited operations
      and in accordance with SFAS # 7, the Company is considered a development stage
      company.





**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, 2002.





Fixed
      Assets


Property
      and equipment are recorded at historical cost. Minor additions and renewals
      are
      expensed in the year incurred. Major additions and renewals are capitalized
      and
      depreciated over their estimated useful lives. Depreciation is calculated using
      the straight-line method over the estimated useful lives as
      follows:


Computer
                equipment
            3
                yearsOffice
                equipment
            4
                years





The
      Company had no property and equipment as of December 31, 2002.





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, 2002.





Revenue
      recognition


The
      Company recognizes 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
      2002.





F-6


ARTFEST
      INCORPORATED


(A
      Development Stage Company)


Notes





Loss
      per share


Net
      loss
      per share is provided in accordance with Statement of Financial Accounting
      Standards No. 128 (SFAS #128) “Earnings Per Share”. Basic loss per share is
      computed by dividing losses available to common stockholders by the weighted
      average number of common shares outstanding during the period. The Company
      had
      no dilutive common stock equivalents, such as stock options or warrants as
      of
      December 31, 2002.





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 coformity 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, 2002. 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 were 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.





F-7


ARTFEST
      INCORPORATED


(A
      Development Stage Company)


Notes





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 asset 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 statement
      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, including that 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.





F-8


ARTFEST
      INCORPORATED


(Aa
      Development Stage Company)


Notes





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 $108,357 for the period from June 17,
      2002 (inception) to December 31, 2002. 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 amounts of and 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. Defferred 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.


F-9


ARTFEST
      INCORPORATED


(A
      Development Stage Company)


Notes





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





U.S.
                federal statutory rate
            (34.0%)Valuation
                reserve
            34.0%Total
            -%





As
      of
      December 31, 2002, the Company has a net operating loss carryforward of
      approximately $108,357 respectively, for tax purposes, which will be available
      to offset future taxable income. If not used, this carryforward will expire
      in
      2022.





**Note
      5 - Loan Receivable**





On
      June
      23, 2002, the Company loaned $50,000 to an affiliated company. The note is
      due
      upon demand and bears no interest rate. (See related party
      transactions).





**Note
      6 - Stockholders’ Equity**





The
      Company is currently authorized to issue 25,000,000 shares of its $0.00001
      par
      value common stock.





On
      June
      17, 2002, the Company issued 19,685,000 shares of its $0.00001 par value common
      stock as founders’ shares for cash. Ten million of these shares were issued to
      the Chief Operating Officer of the Company.





There
      have been no other issuances of common stock.





**Note
      7 - Warrants and options**





As
      of
      December 31, 2002, there were no warrants or options outstanding to acquire
      any
      additional shares of common stock.


F-10


ARTFEST
      INCORPORATED


(A
      Development Stage Company)


Notes





**Note
      8 - Related party transactions**





On
      June
      23, 2002, the Company loaned $50,000 to an affiliated company. The note is
      due
      upon demand and bears no interest rate. (See Note 5)





The
      loan
      is to a company who’s principle owner, Joseph Walsh, is also the principle
      owner, Chief Operating Officer, Treasurer, and Chairman of the Board of the
      Company.





On
      July
      9, 2002, the Chief Operating Officer of the Company donated capital of
      $1,000.





Office
      space and services are provided without charge by the Chief Operating Officer.
      Such costs are immaterial to the financial statements and, accordingly, have
      not
      been reflected therein.





The
      officers and directors of the Company are involved in other business activities
      and may, in the future become involved in other business opportunities. If
      a
      specific business opportunity becomes available, such persons may face a
      conflict in selecting between the Company and their other business interests.
      The Company has not formulated a policy for the resolution of such
      conflicts.


F-11


**ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE.**
  Not
        applicable.
  **ITEM
        8a CONTROLS AND PROCEDURES.**
 
 We
        have
        made efforts to complete an evaluation of our controls, performed under the
        supervision and with the participation of the Company’s management, and this
        included consideration of the effectiveness of the design and operation of
        the
        Company’s disclosure controls and procedures. We have been deficient in meeting
        filing requirements and related accounting demands. We are very focused on
        correcting these concerns and maintaining new controls. Based on that
        evaluation, Management concluded the Company’s disclosure controls and
        procedures need to be improved. An accounting person may employed. There
        has
        been significant changes i   n
        the
        past approximately 24 months which we are focused upon correcting and avoiding
        in future operations.
 -11-
 **PART
        III.**
  **ITEM
        9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH
        SECTION 16(A) OF THE EXCHANGE ACT.**
  **Directors
        and Executive Officers**
 
 The
        names, ages, and certain information as to the Directors and executive officers
        are set forth below. The Directors named below will serve until the next
        annual
        meeting of stockholders and until their successors are duly elected and have
        qualified or until they are sooner removed or resign. Officers will hold
        their
        positions at the will of the Board of Directors, absent any employment
        agreement, of which none currently exist. There are no family relationships
        between the Directors and officers. See the
        discussion concerning, Loan Obligation and Management Restructuring.
 
 *Current:
        The following sets forth information on the current officers and Directors
        of
        the Company:*
 
 ** PRESIDENT,
        CHIEF EXECUTIVE OFFICER AND
        DIRECTOR
 
 Joseph
        Walsh
 
 Mr.
        Walsh, age 52, has been the President and Chief Executive Officer of the
        Company
        since the formation of the Company in 2002. Mr.
        Walsh
        has a background in advertising and marketing as well as extensive technical and
        management experience, with concentration in the electronics field, including
        graphical and video
        production and various forms of electronic communications. From 1991 to 1993
        he
        served as Chief
        Executive Officer at The Falcon Group, Inc., where he managed the world’s
        l argest
        multimedia contract up to that time, with EDS and the United States Postal
        Service. In 1993 Mr.
        Walsh
        founded Resource Finance Group, Inc., which manufactured private label personal computers
        labeled as iMedia. Under his direction the company introduced an innovative
        video computer
        system to serve as a turnkey medical information processor and product
        distribution system
        for doctors’ offices and nursing homes. Since 1996 Mr. Walsh has been CEO of
        Epoch Resources,
        Inc., which produced high end video and graphics products. At
        his
        own advertising agency, Mr. Walsh directed the sales, marketing, and creative services
        for the development of television programs, which led to the creation of
        his own
        video facility
        with complete computer graphics, animation, and digital video. He developed
        his
        first fullmotion multimedia
        kiosk, which was followed by other multimedia applications,
        such as the Postal Buddy project for EDS and the U. S. Postal Service, for
        which
        he designed
        the man-to-machine interface and the specialized digital video enhanced CPU
        that
        made it operate. Mr.
        Walsh
        is responsible for our overall direction. He brings to us a wide range of successful
        sales and marketing experience, along with expertise in the key technical
        disciplines that drive
        our
        corporation: graphics, video, and multimedia. Much of our innovative spirit
        stems from his
        energy and creativity. The idea of an efficient, universal distribution system,
        based on the Internet,
        grew out of his desire to find a way to consolidate the highly fragmented
        arts,
        antiques, and
        collectibles industry and provide it with a safe, reliable, universal
        transactional tool.
 -12-
 Roger
        Bergman
 
 Mr.
        Bergman, age 61, has been a Director since the formation of the Company in
        2002.
        He is the president of Borr’s Bootery, Inc. and has been the sole owner of this
        chain of retail shoe stores since 1966. Mr. Bergman is presently the Mayor
        of
        Grand Haven, Michigan and served as city councilmen and chairman of the business
        development board.
 
 Scott
        Dyk
 
 Mr.
        Dyk,
        age 36, has been a Director since the formation of the Company in 2002. He
        is
        employed by Jost International, Grand Haven, MI, a product manufacturing
        company, as a controller since October, 2001. He has a Bachelors of Science
        degree in Electrical Engineering, Calvin College, MI, 1994.
 
 The
        following supplies summary information, current as of February, 2002 when
        reported to the SEC, as to the past Management of the Company prior to the
        Exchange Transaction. Mrs. Stahl served until November, 2002:
 
 The
        Company had one Director and Officer as follows:
 **Name**
                **Age**
                **Positions
                    and Offices Held**Judith
                    Stahl
                36
                President,
                    Secretary, Director4719
                    Quarton RdBloomfield
                    Hills, MI 48301
  Mrs.
        Stahl graduated from the University of Western Ontario with a B.S. in Office
        Management Studies. From 1987 through 1990 she worked as a political strategist
        and speech writer in Canada. From 1990 though 1992 Mrs. Stahl worked as
        a Marketing and Advertising Coordinator. Since 1992 she has worked as a Independent
        Business Consultant.
 
 
 **Loan
        Obligation and Management Restructuring**
  In
        December, 2005, the Company entered into a Loan Agreement and signed a
        Promissory Note and related items supplying the “Creditor, “ with rights
        concerning repayment of the loan and providing for conditions on the Company
        as
        to operations and possible future changes in Management. The Creditor may
        designate new members to the Board of Directors and also replace the current
        President and Chief Executive Officer of our Company. The following summarizes
        certain of the applicable provisions:
 -13-
 From
        time
        to time the Secured Party has made or may, in its absolute discretion, further
        make loans (the “Loans”) to the Company, as advances to the Company or to others
        on behalf of the Company and the Secured Party is entitled to, among other
        things, (i) to have such Loans reflected under a promissory note or notes
        executed on, before or following this date (the “Promissory Notes”), (ii)
        security interests in all assets and proceeds of the Company and its business,
        and also (iii) related representations and promises from the Company and
        affiliated parties; and the Company has agreed to execute and deliver to
        the
        Secured Party this Agreement, and exhibits, for the benefit of the Secured
        Party
        and to grant to it a first priority security interest in all property and
        proceeds of Company to secure the prompt payment, performance and discharge
        in
        full of all of Company’s obligations under the Promissory Notes.
  The
        security interest covers all tangible and intangible personal property,
        including but not limited to furniture, furnishings, fixtures, accounts
        receivable, cash, software, customer lists, all art, valuable items, collectable
        items and luxury items in stock or on loan, customer data, and all agreements
        in
        the favor of the Company with other companies and individuals, etc. At the
        request of the Secured Party, the Company will sign and deliver to the Secured
        Party at any time or from time to time one or more financing statements pursuant
        to the UCC (or any other applicable statute) in form reasonably satisfactory
        to
        the Secured Party and will pay the cost of filing the same in all public
        offices
        wherever filing is, or is deemed by the Secured Party to be, necessary or
        desirable to effect the rights and obligations provided for herein.
  So
        long
        as the Company shall have any obligation under the Promissory Notes, the
        Company
        shall not without the Secured Party’s written consent (a) pay, declare or set
        apart for such payment, any dividend or other distribution (whether in cash,
        property or other securities) on shares of capital stock other than dividends
        on
        shares of Common Stock solely in the form of additional shares of Common
        Stock
        or (b) directly or indirectly or through any subsidiary make any other payment
        or distribution in respect of its capital stock. So long as the Company shall
        have any obligation under the Promissory Notes, the Company shall not without
        the Secured Party’s written consent, redeem, repurchase or otherwise acquire
        (whether for cash or in exchange for property or other securities or otherwise)
        in any one transaction or series of related transactions any shares of capital
        stock of the Company or any warrants, rights or options to purchase or acquire
        any such shares. So long as the Company shall have any obligation under the
        Promissory Notes, the Company shall not, without the Secured Party’s written
        consent, create, incur, assume or suffer to exist any liability for borrowed
        money, except (a) borrowings in existence or committed on the date hereof
        and of
        which the Company has informed Secured Party in writing prior to the date
        hereof, (b) indebtedness to trade creditors or financial institutions incurred
        in the ordinary course of business or (c) borrowings, the proceeds of which
        shall be used to repay the Promissory Notes. So long as the Company shall
        have
        any obligation under the Promissory Notes, the Company shall not, without
        the
        Secured Party’s written consent, sell, lease or otherwise dispose of any
        significant portion of its assets outside the ordinary course of business.
        Any
        consent to the disposition of any assets may be conditioned on a specified
        use
        of the proceeds of disposition. So long as the Company shall have any obligation
        under the Promissory Notes, the Company shall not, without the Secured Party’s
        written consent, lend money, give credit or make advances to any person,
        firm,
        joint venture or corporation, including, without limitation, officers,
        directors, employees, subsidiaries and affiliates of the Company, except
        loans,
        credits or advances (a) in existence or committed on the date hereof and
        which
        the Company has informed Secured Party in writing prior to the date hereof,
        (b)
        made in the ordinary course of business or (c) not in excess of $500.
  -14-
 As
        to
        Board of Director and shareholder and related actions: i. General Actions.
        The
        Company shall provide the Secured Party with prior notification, in writing
        at
        least 10 days prior, of any meeting of the Company’s shareholders and/or Board
        of Directors supplying Secured Party with details of the purposes of such
        events. The Company agrees not to allow any action, at such event, other
        than
        stated in the notice. ii. Actions Without Meetings. No action by the Board
        of
        Directors or shareholders, by written consent in lieu of a meeting, shall
        be
        valid until 10 days after a complete copy of said document is delivered to
        Secured Party. iii. Material Actions. In the event of the Company determination
        to take any of the following actions: determining owners who are entitled
        to
        receive payment of any dividend or other distribution, any right to subscribe
        for, purchase or otherwise acquire (including by way of merger, consolidation,
        reclassification or recapitalization) any share of any class or any other
        securities or property, or to receive any other right, or for the purpose
        of
        determining shareholders who are entitled to vote in connection with any
        proposed sale, lease or conveyance of all or substantially all of the assets
        of
        the Company or any proposed liquidation, dissolution or winding up of the
        Company or similar event, the determination to sue any person or firm, the
        determination to issue any shares of common stock in one or related transactions
        equal to 10% or more of the Company, or other material corporate events,
        the
        Company shall deliver a more detailed notice to the Secured Party, at least
        20
        days prior to the record date specified therein (or 20 days prior to the
        consummation of the transaction or event, whichever is earlier).
  The
        Company further agreed that during the term of this Agreement and for a period
        of two years after any termination it shall:
  a.
        do all
        it can to be in complete compliance with all laws and regulations;
  b.
        utilize a bona fide transfer agent to handle the transfer and disposition
        of the
        securities;
  c.
        maintain appropriate financial and internal controls, financial reporting,
        and
        other legally required reporting;
  d.
        not
        comment on the Secured Party or any affiliate in any adverse or negative
        manner
        waiving all “first amendment” and other defenses;
  e.
        properly communicate with owners of the securities of the Company in a manner
        equal to all owners;
  f.
        utilize all proceeds from this Agreement to the benefit of the Company in
        good
        faith as directed by its Management in compliance with law with the first
        priority to pay its accountants, lawyers, and any governmental requirements
        as a
        compliant business;
  g.
        undertake sale of any securities equal to 20% or more of the class in any
        one or
        series of related transactions during any six month period, sale, outside
        the
        ordinary course of business, of 20% or more of the assets, make a dividend,
        or
        similar action as to the Company assets, or any securities, unless adequate
        and
        reasonable steps are taken to protect and benefit the owners of the shares
        of
        common stock of the Company and the Secured Party and other requirements
        applicable are fully complied with but never shall such action be taken outside
        the ordinary course of business.
  -15-
 The
        following shall also apply: a. the Company shall take all necessary legal
        action
        to update all Federal and state filings, as in the case of annual reports
        with
        the SEC, and such action shall be as prompt as possible; b. the Company agrees,
        as does Joseph Walsh (“Joe”), that upon the Company filing it’s annual reports
        on Form 10-KSB with the SEC for the years ended December 31, 2003 and 2004,
        then by
        resignation and appointment, the Company shall cause the following changes
        to
        take place: -Joe will cease to be President and C.E.O., no longer being an
        officer, but will become Chairperson of the Company to serve for such time
        as he
        determines, but at least until the Company has filed all necessary reports
        up to
        and including the year 2005; -a new President and C.E.O. will be appointed,
        someone nominated or suggested by Secured Party, and such person will be
        vested
        and appointed by the Board of the Company immediately at that time, the only
        exception being if the person has some material defect which makes a reasonable
        person reasonably conclude the person should not become President, and this
        is
        set out by the Company in writing to the Secured Party prior to appointment,
        another person will be presented by the Secured Party; and -the Board of
        Directors will be reconstituted to be a majority of persons nominated or
        suggested by the Secured Party, so that the current Directors may resign,
        or
        remain, and additional people will be added or take the positions of the
        current
        Directors, as long as the majority are persons nominated or suggested by
        the
        Secured Party (it is anticipated and agreed, with Joe’s termination as officers,
        discussed above, that the current Board will resign at the same time appointing
        replacements presented by Secured Party, for one, two or the three current
        positions, as Secured Party determines).; and c. the parties agree that from
        time to time the debt reflected by the loan, including the principal and
        interest, may be converted into shares of common stock at such valuation
        and
        upon such terms, including conversion, only if and as mutually agreed to
        between
        the Company and Secured Party in writing.
 
 **Compliance
        with Section 16(a) of the Exchange Act**
 
 Section
        16(a) of the Securities Exchange Act of 1934 requires Directors, certain
        officers and persons holding 10% or more of the common stock to file reports
        regarding their ownership and regarding their acquisitions and dispositions
        of
        common stock with the SEC. Such persons are required by SEC regulations to
        furnish us with copies of all Section 16(a) forms they file.
 
 -16-
 **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)**Joseph
                  Walsh
              
              
              2002
              
              
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              0President
                  and CEORoger
                  Bergman
              
              
              2002
              
              
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              0DirectorScott
                  Dyk
              
              
              2002
              
              
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              0Director0
 
 **Other
        Compensation**
 
 (a)    
        There are no annuity, pension or retirement benefits proposed to be paid
        to
        officers, directors, or employees.
 (b)    
        No remuneration is contracted to be paid in the future directly or indirectly
        to
        any officer or director.
 -17-
 **ITEM
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
        STOCKHOLDER MATTERS.**
 
 The
        following table sets forth information regarding the beneficial ownership
        of
        shares of common stock as of December 21, 2005 by (i) all stockholders known
        to
        be beneficial owners of more than 5% of the outstanding common stock; and
        (ii)
        all Directors and executive officers, individually and as a group:
 
 **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
              Joseph
                  WalshStock
              
              
              800
                  Duval Street, Key West, FL  33040
              
              
              
              15,859,000
              
              
              43.7
              
              %Common
              
              2
              Roger
                  BergmanStock
              
              
              800
                  Duval Street, Key West, FL  33040
              
              
              
              100,000
              
              .2
              
              %Common
              
              2
              Scott
                  DykStock
              
              
              800
                  Duval Street, Key West, FL  33040
              
              
              
              100,000
              
              .2
              
              %Common
              
              2,3
              Shares
                  of all Directors andStock
              
              
              executive
                  officers as a group
              
              
              
              16,059,000
              
              44
              
              %(3
                  persons)
 
 (1)
              Each
                  person has sole voting power and sole dispositive power as to all
                  of the
                  shares shown as beneficially owned by them, to our
                  knowledge.
 
 (2)
              Director
 
 (3)
              Executive
                  Officer
 (4)
                These
                    shares do not include shares held by family members of Mr. Walsh,
                    which
                    total 410,000 shares.
 (5)
                  The
                      table identifies ownership on a current basis, as of the date
                      indicated,
                      not considering ownership as of the prior fiscal period. Previously,
                      prior
                      to the Exchange Transaction, the ownership of the Company was
                      as follows:
                      Judith
                      Stahl, 200,000,100%, 719 Quarton Rd
                      Bloomfield
                        Hills, MI 48301.
  -18-
 **ITEM
            12. CERTAIN RELATIONSHIPS AND RELATED
            TRANSACTIONS.**
 
 The
        Company entered into a Loan Agreement and executed related items. See Loan
        Obligation and Management Restructuring. These terms supply the creditor
        with an
        ability to appoint persons to the Management of the Company. While it is
        the
        position of the creditor that it is not an affiliate, the existence of the
        agreement and the potential actions may be considered to impact on the
        relationship of the Company, Management and others.
  **ITEM
        13. EXHIBITS AND REPORTS ON FORM 8-K.**
 
 **Exhibits**
 
 **EXHIBIT
        INDEX**
 
 **Number**
              **Description**3.1
                
                3.2
                
                3.3
              Articles
                  of Incorporation [1]
                
                Articles
                  of Amendment of the Articles of Incorporation,
                  attached
                
                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, attached31.1
                
                31.2
                
                32
              Certification
                  pursant to section 302 of the Sarbanes -
                  Oxley Act of 2002
                
                Certification
                  pursant to section 302 of the Sarbanes -
                  Oxley Act of 2002
                
                Certification
                  of Officer pursant to section 906 of
                  the Sarbanes - Oxley Act of
                  2002
 [1] Incorporated by reference to the Company’s filed Form 10SB with the SEC, February, 2002.
 [2]
        Incorporated by reference to the Company’s filed Form 8K with the SEC, November,
        2002.
 -19-
 **ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
 
 **Audit
        Fees**
 
 The
        aggregate fees paid to the principal accountant for the audit of the financial
        statements for the year ended December 31, 2002, were $ 11,000.
 
 The
        aggregate fees paid to the principal accountant for the audit of the financial
        statements for the year ended December 31, 2003, were $ 11,000.
 
 The
        aggregate fees paid to the principal accountant for the audit of the financial
        statements for the year ended December 31, 2004, were $ 11,000.
 
 **Audit-Related
        Fees**
 
 None.
 
 **Tax
        Fees**
 
 None.
 
 **All
        Other Fees**
 
 None.
 
 **Audit
        Committee** **Fee**
 
 None.
 
 **Hours
        By Others**
 
 None.
 -20-
 **SIGNATURES**
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Registrant
        caused this report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized.
  **Artfest
                  International, Inc.**Dated:
                  December 29, 2005
                By:
                /s/ Joseph
                  Walsh,Joseph
                  Walsh,President
 In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the registrant  and in
        the capacities and on the dates indicated.
  **Signature**
              **Title**
              **Date**/s/
                  Joseph Walsh
                Joseph Walsh
                
                
                /s/
                  Roger Bergman
                Roger Bergman
                
                
                
                /s/
                  Scott Dyk
                Scott Dyk
              President(principal
                  executive officer), Treasurer (principal financial officer)
                /Director
                
                Director
                
                
                
                
                Director
              December
                  29, 2005
                
                
                
                December
                  29, 2005
                
                
                
                
                December
                  29, 2005
 -21-