Artfest International 10-Q 2008 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

 (Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008

OR

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

SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD

FROM ______________ TO ______________

COMMISSION FILE NUMBER: 000-49676

ARTFEST INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

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

15851 Dallas Parkway, Suite 225 Addison, TX	75001
(Address of Principal Executive Offices)	(Zip Code)

Issuer's telephone number:  1-972-687-7260

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

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

Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was

required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 19, 2008, the Registrant had 168,763,003 shares of common stock outstanding.

Transitional Small Business Disclosure Format (Check one): Yes o No x

Table of Contents

		PAGE
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis and Plan of Operation	4
Item 3.	Controls and Procedures.
PART II.	OTHER INFORMATION	5
Item 1.	Legal Proceedings	5
Item 2.	Unregistered Sales of Securities and Use of Proceeds	5
Item 3.	Defaults Upon Senior Securities	5
Item 4.	Submission of Matters to a Vote of Security Holders	5
Item 5.	Other Information	5
Item 6.	Exhibits and Reports on Form 8-K	6
Signatures		7
CERTIFICATIONS

2

PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

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

3

EUGENE M. EGEBERG

CERTIFIED PUBLIC ACCOUNTANT

834 SOUTH MILTON AVENUE

BALTIMORE, MD 21224

Telephone (410) 218-1711     Fax (410) 248-2811

To the Board of Directors and Stockholders

Artfest International, Inc.

15851 Dallas Parkway, Suite 225

Addison, TX 75001

Report of Independent Registered Public Accounting Firm

I have reviewed the Balance Sheets of Artfest International, Inc. (A Development Stage Company) as of September 30, 2007 and 2006 and the related Statements of Operations, Stockholders' Equity, and Cash Flows for the periods then ended. These interim financial statements are the responsibility of the company's management.

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

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

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

Eugene M. Egeberg, C.P.A.

November 19, 2008

F-1

ARTFEST INTERNATIONAL, INC.

(A Development Stage Company)

BALANCE SHEETS

(Unaudited)

	September 30,			December 31,
	2008			2007
Current Assets:
Cash	$	(6,648)		$	315
Prepaid Expenses		-			-
Accounts Receivable		351,000			351,000
Total Current Assets		344,352			351,315
Non-Current Assets
Inventory		9,568
Notes Receivable		91,500
Intangible Asset, net of accumulated amortization		29,149			8,000
Total Non-current Assets		130,217			8,000
Property and Equipment, at cost less accumulated depreciation		85,287			75,435
TOTAL ASSETS		559,856			434,750
Current Liabilities:
Accounts Payable and Accrued Liabilities	$	407,321		$	159,725
Note Payable - Current Portion (Note 8)		460,873			226,620
Deferred Revenue		351,000			351,000
Loans Payable (Note 8)		475,361			473,317
Total Current Liabilities		1,694,555			1,210,662
Non-current Liabilities
Loans Payable (Note 8)		748,497			769,547
TOTAL LIABILITIES		2,479,052			1,980,209
Stockholders' Equity:
Preferred stock - $.001 par value - 2,000,000 shares authorized;
no shares issued and outstanding
Common Stock - $.00001 par value - 500,000,000 shares authorized,
136,263,005 and 36,230,629 shares issued and outstanding		136,263			36,231
Additional Paid-in Capital		703,698			253,243
Accumulated deficit		(2,759,157	)		(1,834,933	)
TOTAL SHAREHOLDERS EQUITY		(1,919,196	)		(1,545,460	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	559,856		$	434,750

F-2

ARTFEST INTERNATIONAL, INC.

(A Development Stage Company)

STATEMENT OF OPERATIONS

(Unaudited)

	For the Three						For the Nine
	Months ended						Months ended
	September 30,						September 30,
	2008			2007			2008			2007
Revenues	$	4,000		$	-		$	28,736		$	-
Cost of Revenue		432			-			15,682			-
Gross Profit (Loss)		3,568			-			13,054			-
Sales, General and Administrative Expenses		33,430			50,752			882,790			159,465
Net (Loss) From Operations		(29,862	)		(50,752	)		(869,736	)		(159,465	)
Other Income (Expense) , Net		-			-			-			-
(Deficit) - Development Stage	$	(29,862	)	$	(50,752	)	$	(869,736	)	$	(159,465	)
Weighted average number of common shares
outstanding - basic and fully diluted		127,122,006			28,190,629			96,425,931			28,063,962
Net (Loss) per share - basic and fully diluted	$	0		$	0		$	0		$	0

F-3

ARTFEST INTERNATIONAL, INC.

(A Development Stage Company)

STATEMENT OF CASH FLOWS

(Unaudited)

	For the Nine
	Months ended
	September 30,
	2008			2007
Cash Flows from Operating Activities:
Net Income (Loss)	$	(869,736	)	$	(159,465	)
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
Depreciation		12,377			3,525
Amortization		351
(Increase) Decrease in other assets		-			-
Increase in loan receivable		(91,500)			-
Increase in Rewards Payable		2,044			-
Inventory		(9,568)			-
Increase in accounts payable and accrued expenses		252,594			51,601
Increase in prepaid expenses		-			270
Net Cash (Used) by Operating Activities:		(703,438	)		(104,160	)
Cash Flows From Investing Activities:
Decrease in Notes Receivables		(91,500)			-
(Purchase) Disposal of Equipment		(22,228)			-
Net Cash Used by Investing Activities:		(113,728)			-
Cash Flows From Financing Activities:
Issuance of Common Stock		(30,545)			-
Increase in Notes payable		249,203			(10,492	)
Increase in loans payable		115,225			115,225
Increase in contributed capital		460,455			-
Net Cash Provided by Financing Activities:		740,203			104,733
Net Decrease in Cash		(6,963)			574
Cash at Beginning of Period		315			255
Cash at End of Period	$	(6,648)		$	829

F-4

ARTFEST INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Note 1 - History and organization of the company

The Company was incorporated on February 21, 2002 (Date of Inception) under the laws of the State of Delaware.  Artfest International Inc. provides sales, marketing, financial and e-commerce systems to the industries of Arts, Antiques, Collectibles and Luxury Goods. The markets are serviced by artists, dealers, galleries, and manufacturers of reproductions and luxury goods.

On December 28, 2007, pursuant to an Acquisition Agreement dated December 28, 2007, the Company acquired 100% of The Art Channel, Inc. in exchange for 28,000,000 shares of Artfest International, Inc. stock, which were issued to the former shareholders of The Art Channel, Inc. of which 8,000,000 shares were issued as of December 28, 2007 and 20,000,000 shares were issued as of March 28, 2008 subsequent to the Company’s annual meeting at which time the shareholders of the Company voted to increase the number of the authorized shares of the Company’s common stock to 500,000,000.

In addition, the Company agreed to issue an additional 1,500,000 shares of stock to the Company’s former Chairman and CEO, Larry Ditto pursuant to the terms in the Acquisition Agreement.

Note 2 - Accounting policies and procedures

Cash and cash equivalents

The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of September 30, 2008.

F-5

Fixed Assets

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

Computer equipment	3 years
Office equipment	4 years
Proprietary Software	3 years
Furniture and Fixtures	7 years

Property and Equipment consist of the following:

Computer & Video	$	3,717
Office equipment	$	3,240
Proprietary software	$	60,500
Furniture and Fixtures- Art	$	78,502
Less-accumulated depreciation		(60,672	)
Total PP&E (net of depreciation)	$	85,287

Total Depreciation Expense for Jan-Sept. 2008 was $12,377.

Intangible Assets

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

Total Amortization Expense for Jan–September 2008 was $351.

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 September 30, 2008.

F-6

Revenue recognition

The Company recognized revenue and gains when earned and related costs of sales and expenses when incurred.

Advertising costs

The Company expenses all costs of advertising as incurred. There were nominal advertising costs included in selling, or general and administrative expenses in 2008 and 2007.

Loss per share

Net loss per share is provided in accordance with Statement of Financial Accounting Standards No. 128 (SFAS # 128) "Earnings Per Share". Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. The Company had no dilutive common stock equivalents, such as stock options or warrants as of  June 30, 2008.

Reporting on the costs of start-up activities

Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up Activities", which provides guidance on the financial reporting of start-up costs and organizational costs, requires most costs of start-up activities and organizational costs to be expensed as incurred. SOP-98-5 is effective for fiscal years beginning after December 15, 1998. With the adoption of SOP-98, there has been little or no effect on the Company's financial statements.

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2008 and 2007 respectively. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable. Fair values are  assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximated fair values or they are payable on demand.

F-7

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.

F-8

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 $1,919,196 for the period from February 21, 2002 (inception) to September 30, 2008. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its new business opportunities. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amount of the classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Note 4 - Income taxes

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109), which requires use of the liability method. SFAS No. 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

F-9

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 September 30, 2008, the Company has a net operating loss carryforward of approximately $1,919,196 for tax purposes, which will be available to offset future taxable income. This carryforward will expire in various years through 2027.

Note 5 - Stockholders' Equity

The Company was authorized to issue 500,000,000 shares of its $0.001 par value common stock and 2,000,000 shares of its $0.001 par value preferred stock as of September 30, 2008.

On November 19, 2002 the Company issued 19,832,000 shares of its $0.001 par value common stock as founders' shares to acquire 100% of the outstanding shares of Artfest International, Inc., a Delaware Corporation for a net book value of $19,832.

As of December 28, 2007 the Company issued 8,000,000 shares of its $0.001 par value common stock as partial payment to shareholders of The Art Channel, Inc. pursuant to an acquisition agreement.   As of December 31, 2007, the Company’s authorized shares were 40,000,000.

In March 2008, the Company amended its Certificate of Incorporation to increase its authorized shares to 502,000,000, of which 500,000,000 shares are common stock, par value $0.001 and 2,000,000 shares are preferred stock, par value $0.001.   The Company then issued an additional 20,000,000 shares of common stock to shareholders of The Art Channel, Inc. and 1,500,000 shares of common stock to Larry D. Ditto pursuant to an acquisition agreement.

In May 2008, the Company issued 4,500,000 shares of its $0.001 par value common stock to Beryl Zyskind for consulting services.

F-10

Note 6 - Warrants and options

As of June 30, 2008 and 2007, there were no warrants outstanding; there are 1,600,000 options outstanding to acquire any additional shares of common stock.

Note 7 - Related party transactions

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

Note 8 - Loans and Notes Payable

On January 5, 2003, the Company purchased a 2002 Chevrolet Avalanche through GMAC for $29,717. The note calls for a term of 5 years at a rate of 5.9% beginning on  February 24, 2003, and maturing on December 24, 2007.  As of the report date, the Company had  defaulted on the note and the vehicle was returned to GMAC for sale. GMAC has sold the vehicle and credited the company with $10,491 leaving a balance due of $ 8,315.

The Company has $784,497 in loans payable to shareholders and $460,873 in short-term notes. The notes call for varying interest rates ranging from 1% to 12% per annum, and contain a stock payment option payable at the lender's discretion.

As of the report date, the Company is in default on all of its short term notes payable to shareholders and non-shareholders. Management has not formulated a repayment plan, and no contingency plan has been established in the event that the lenders seek legal remedies.

On July 5, 2007, the Company signed a loan payable to Brothers Realty & Investment Group, LLC for $35,000 due on July 5, 2008.   This loan accrues interest at 12% per annum.

On August 26, 2007, the Company signed a loan payable to Andy Haase in the amount of $30,000 due on August 26, 2008.  The loan accrues interest at 10% per annum.  The original amount was $35,000, with a $5,000 payment having been made in July 2007.

On April 3, 2007, the Company signed a loan payable to Dale Bagwell for $20,000 with no fixed due date.  The loan is non-interest bearing. The original amount was $25,000, with a $5,000 payment having been made in July 2007.

On December 7, 2007 the Company signed a loan payable to Patrick Haxton in the amount of $15,000 with no fixed due date.  The loan is non-interest bearing.

On January 31, 2008, the Company signed a Promissory Note payable to the TBF Charitable Trust Foundation for $50,000 due on July 31, 2008. The loan accrues an interest at 1.5% per month, or 18% per annum.

On March 17  2008, March 24, 2008, and March 25, 2008 the Company received an advance on a loan prior to the execution of loan agreements in the amounts of $10,000, $7,200 and $7,800 respectively for a total of $25,000 from a third party source (See Note 9 for further details).   On April 4, 2008, the Company received an advance on a loan prior to the execution of loan agreements in the amount of $25,000 from a third party source. Pursuant to the terms of a Securities Purchase Agreement, the third party has agreed to advance the Company an aggregate of $300,000, to be paid in twelve payments of $25,000 each over a period of fifteen weeks, with each advance to be evidenced by a Convertible Debenture.  Such payments have not been received on a timely basis.

F-11

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

Results of Operations

(a) Revenues

The Company generated Operating revenues of $28,736 for the nine months ended September 30, 2008 and recorded an operating loss of $(869,736). Operating revenues for the quarter ended September 30, 2007 were $0 with an operating loss of $159,465.

(b) Costs and Expenses

Selling, General and Administrative expenses of $33,430 decreased in the subject fiscal quarter compared to $50,752 for the year preceding. The decrease is primarily due to the reduction in expenses as the company reduced operations.

(c) Depreciation, Depletion and Amortization

Depreciation totaled $12,377 as of September 30, 2008 compared to $1,175 in 2007. No depletion or amortization was charged during 2007 versus $351 in amortization for the nine months ended September 2008.

(e) Net Loss

The company had a net loss of $869,736 for the nine months ended September 30, 2008 compared to a net loss of $159,465 for the prior year nine month period. The decrease in net loss is the result of decreased operating costs.

Plan of Operation

Our current plan, in summary, as of September, 2008, 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 which we have done, 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 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 have, as of September, 2007, confirmed terms on a loan and related arrangements. We may experience additional funding from this source, with 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 Part III, Item 9, Loan Obligation and Management Restructuring, and other information, contained in the Company Form 10-KSB report for the fiscal year ended December 31, 2004, and subsequent filings and amendments, if any.

Forward Looking Statements

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

4

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On July 31, 2008, we agreed to a binding arbitration through the Fresno County Bar Association in Fresno, California with respect to a dispute between us and our former attorney, David Kahn, Esq. with respect to his fee for legal services rendered.  

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

Equity Securities Sold Without Registration

There were no securities issued without registration during the three months ended June 30, 2008

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not Applicable.

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

None

ITEM 5. OTHER INFORMATION.

None.

5

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

Exhibits.

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

Form 8-K

None

6

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Artfest International, Inc.
Date: November 19, 2008	By:	/s/ Eddie Vakser
		Chairman and CEO (principal executive officer and principal financial officer)

7

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

EXHIBIT INDEX

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

** Filed Herewith

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

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

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

8