UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10QSB
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(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended March 31, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 000-32099
ART BOUTIQUE, INC.
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(Exact name of registrant as specified in its charter)
Wyoming 83-0269496
- ---------------------------------- --------------------
(State of Incorporation) (IRS Employer ID Number)
7th Floor, New Henry House, No. 10 Ice House Street, Central, Hong Kong, China
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(Address of principal executive offices)
011-852-2824-0008
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(Registrant's Telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 the filing requirements for the past 90
days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of May 9, 2007, there were 47,471,900 shares of the registrant's sole class
of common shares outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
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Report of Independent Registered Public Accounting Firm F-1
Consolidated Balance Sheets - March 31, 2007
and December 31, 2006 F-2
Consolidated Statements of Operations -
Three months ended March 31, 2007 and 2006 and
From May 15, 1984 (Inception) to March 31, 2007 F-3
Consolidated Statement of Changes in Stockholders' Deficit -
From May 15, 1984 (Inception) to March 31, 2007 F-4
Consolidated Statements of Cash Flows -
Three months ended March 31, 2007 and 2006 and
From May 15, 1984 (Inception) to March 31, 2007 F-5
Notes to Financial Statements F-6
Item 2. Management's Discussion and Analysis 1
Item 3. Controls and Procedures 3
Item 3A(T). Controls and Procedures 4
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 4
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 4
- Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable 4
Item 4. Submission of Matters to a Vote of Security Holders -
Not Applicable 4
Item 5. Other Information - Not Applicable 4
Item 6. Exhibits 4
SIGNATURES 5
PART I
ITEM 1. FINANCIAL STATEMENTS
JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
9175 Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Art Boutique, Inc.
We have reviewed the accompanying Balance Sheets of Art Boutique, Inc. as of
March 31, 2007 and the related Statements of Operations for the three-month
period ended March 31, 2007 and 2006, the related Statements of Cash Flows for
the three-months ended March 31, 2007 and 2006 and the Statement of Changes of
Stockholders' Equity (Deficit) from December 22, 1988 (Inception) to March 31,
2007. These financial statements are the responsibility of the Company's
management.
We conducted our reviews 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 as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2, conditions
exist which raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Jaspers + Hall, PC
May 15, 2007
F-1
ART BOUTIQUE, INC.
(A Development Stage Company)
Consolidated Balance Sheets
(Unaudited) Audited
March 31, December 31,
2007 2006
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ASSETS:
Current Assets:
Cash $ - $ -
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Total Current Assets - -
------------- -------------
Furniture & Fixtures (Net) - -
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Total Fixed Assets - -
------------- -------------
Other Assets:
Deposits - -
Prepaid Expenses 4,900 -
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Total Other Assets 4,900 -
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TOTAL ASSETS $ 4,900 $ -
============= =============
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 5,671 $ 38,227
Due to Director - Micronesian Resort 53,202 53,202
Due to Director - Key Chance International 47,765 869
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Total Current Liabilities 106,638 92,298
------------- -------------
Minority Interest in Consolidated Subsidiary (11,241) (10,944)
Stockholders' Deficit
Common Stock, no par value; 50,000,000 shares authorized
47,471,900 shares issued and outstanding March 31, 858,095 858,095
2007 and December 31, 2006, respectively
Accumulated other comprehensive loss (6,992) (7,040)
Deficit accumulated during the development stage (941,600) (932,409)
------------- -------------
Total Stockholders' Deficit (90,497) (81,354)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 4,900 $ -
============= =============
See Accountant's Review Report and the notes to these financial statements.
F-2
ART BOUTIQUE, INC.
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
May 15, 1984
Three-Month Period Ended Inception to
March 31, March 31,
2007 2006 2007
--------------- --------------- ------------------
Revenue $ - $ - $ 61,102
Operational expenses:
Depreciation - - 4,144
Loss from discontinued operations - - 26,331
Acquisition costs - - 2,100
General and administrative 9,191 90,015 1,552,643
--------------- --------------- ---------------
Total operational expenses 9,191 90,015 1,585,218
--------------- --------------- -----------------
Loss from operations (9,191) (90,015) (1,524,116)
--------------- --------------- ------------------
Other income (expense):
Forgiveness of Debt - - 583,716
Exchange Rate (Gain)/Loss - - (1,200)
--------------- --------------- ------------------
- - 582,516
Loss before minority interest (9,191) (90,015) (941,600
--------------- --------------- ------------------
Minority interest in net loss of
consolidated subsidiary (297) (1) (11,241)
--------------- --------------- ------------------
Net income (loss) $ (9,488) $ (90,016) $ (952,841)
=============== =============== ==================
Net income (loss) per share of common
stock * *
=============== ===============
Weighted average number of common
shares outstanding 47,471,900 47,471,900
=============== ===============
"*" indicates a value of less than $0.01
See Accountant's Review Report and the notes to these financial statements.
F-3
ART BOUTIQUE, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
May 15, 1984
Three-month period ended (Inception) to
March 31, March 31,
2007 2006 2007
------------ ------------- -----------------
Cash flows from operating activities
Net income (loss) $ (9,488) $(90,016) $ (941,897)
Common stock issued for services - - 1,000
Depreciation - - 4,144
Changes in operating assets and liabilities
Increase (Decrease) in Accounts Payable (32,556) (59,016) (6,795)
(Increase) decrease in deposits - 65 609
(Increase) Decrease in prepaid expenses (4,900) 560 (3,683)
------------ ------------- -----------------
Net Cash Flows Used by Operating Activities (46,944) (148,407) (946,622)
------------ ------------- -----------------
Cash Flows from Investing Activities
Sale of Equipment - 13,218 13,218
Acquisition of Fixed Assets - - (17,362)
------------ ------------- -----------------
Net Cash Flows Provided (Used) by Investing Activities - 13,218 (4,144)
------------ ------------- -----------------
Cash Flows from Financing Activities
Proceeds from advance from, stockholders 46,896 119,287 463,165
Proceeds from notes payable - 11,641 53,202
Payment of notes payable, stockholders - (415,399)
Issuance of common stock for cash - - 857,095
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Net Cash Flows Provided by Financing Activities 46,896 130,928 958,063
------------ ------------- ----------------
Effect of exchange rate changes on cash 48 - (7,297)
Net Increase (Decrease) in Cash - (4,261) -
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Cash at Beginning of Period - 4,284 -
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Cash at End of Period $ - $ 23 $ -
============ ============= =================
Supplemental Disclosure of Cash Flow Information
Cash paid for interest $ - $ - $ -
============ ============= =================
Cash paid for taxes $ - $ - $ -
============ ============= =================
Supplemental Disclosure of Non-Cash Transactions
Stock issued for services - 4,000,000 shares $ 1,000
=================
See Accountant's Review Report and the notes to these financial statements.
F-4
ART BOUTIQUE, INC.
(A Development Stage Company)
Consolidated Stockholders' Equity (Deficit)
(Unaudited)
Accumulated Deficit
other Accum. During
Common Stock comprehensive the Development
# of Shares Amount loss Stage Totals
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 1995 471,900 $ 29,795 $ - $ (29,842) $ (47)
------------ ----------- ----------- ----------------- -----------
Net income for year - - - 47 -
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 1996 471,900 29,795 - (29,795) -
------------ ----------- ----------- ----------------- -----------
Issued March 14, 1997 4,000,000 1,000 - 1,000
Net income for year - - - (1,000) (1,000)
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 1997 4,471,900 30,795 - (30,795) -
------------ ----------- ----------- ----------------- -----------
Net income for year - - - - -
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 1998 4,471,900 30,795 - (30,795) -
------------ ----------- ----------- ----------------- -----------
Net income for year - - - - -
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 1999 4,471,900 30,795 - (30,795) -
------------ ----------- ----------- ----------------- -----------
Shares for acquisition - 2,300 - - 2,300
Net income for year - - - (2,300) (2,300)
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 2000 4,471,900 33,095 - (33,095) -
------------ ----------- ----------- ----------------- -----------
Net income for year (4,608) (4,608)
------------ ----------- ----------- ----------------- ----------
Balance - December 31, 2001 4,471,900 33,095 - (37,703) (4,608)
------------ ----------- ----------- ----------------- -----------
Net income for year - - - (12,683) (12,683)
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 2002 4,471,900 33,095 - (50,386) (17,291)
------------ ----------- ----------- ----------------- -----------
Issuance of stock for cash 12/03 8,000,000 400,000 - - 400,000
Net income for year - - - (115,445) (115,445)
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 2003 12,471,900 433,095 - (165,831) 267,264
------------ ----------- ----------- ----------------- -----------
Net income for year - - - (524,992) (524,992)
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 2004 12,471,900 433,095 - (690,823) (257,728)
------------ ----------- ----------- ----------------- -----------
Issuance of stock for Acquisition 25,000,000 - - - -
Issuance of stock for cash 10,000,000 425,000 - 425,000
Net income for year - - - (698,567) (698,567)
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 2005 47,471,900 858,095 - (1,389,390) (531,295)
------------ ----------- ----------- ----------------- -----------
Net income for year - - - 456,981 456,981
Change in foreign currency - - - - -
translation - - (7,040) - (7,040)
------------ ----------- ----------- ----------------- -----------
Balance - December 31, 2006 47,471,900 858,095 (7,040) (932,409) (81,354)
Net income for period - - - (9,191) (9,191)
Change in foreign currency
translation - - 48 - 48
------------ ----------- ----------- ----------------- ----------
Balance - March 31, 2007 47,471,900 $858,095 $ (6,992) $ (941,600) $(90,497)
============ =========== =========== ================= ===========
See Accountant's Review Report and the notes to these financial statements.
F-5
ART BOUTIQUE, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Unaudited)
Note 1 - Organization, Basis of Presentation and Significant Accounting
Policies:
Organization:
The accompanying consolidated financial statements include the accounts of Art
Boutique, Inc., a Wyoming corporation, (the "Company") and its wholly-owned
subsidiary, its wholly-owned subsidiary Key Chance International, LTD ("Key
Chance") and its 80% owned subsidiary, Micronesian Resort, Inc. ("MRI"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Basis of Presentation - Development Stage Company:
The Company has not earned significant revenues from limited principal
operations. Accordingly, the Company's activities have been accounted for as
those of a "Development Stage Enterprise" as set forth in Financial Accounting
Standards Board Statement No. 7 ("FASB 7"). Among the disclosures required by
FASB 7 are that the Company's financial statements be identified as those of a
development stage company, and that the statements of operations, stockholders'
equity (deficit) and cash flows disclose activity since the date of the
Company's inception.
In the opinion of the management of Art Boutique, Inc., and Key Chance
International, LTD (a wholly owned subsidiary) the accompanying unaudited
financial statements include all normal adjustments considered necessary to
present fairly the financial position as of March 31, 2007 and the results of
operations for the three-months ended March 31, 2007 and 2006 and the period May
15, 1984 (inception) to March 31, 2007 and cash flows for the three-months ended
March 31, 2007 and 2006, and for the period May 15, 1984 (inception) to March
31, 2007. Interim results are not necessarily indicative of results for the full
year.
The financial statements and notes are presented as permitted by Form 10-QSB,
and do not contain certain information included in the Company's audited
financial statements and notes for the fiscal year ended December 31, 2006.
Note 2 - Going Concern:
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company's current
liabilities exceed the current assets by $106,638 with an accumulated deficit of
$941,600.
F-6
ART BOUTIQUE, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Unaudited)
The Company is in the development stage and has not earned any revenue from
operations. The Company's ability to continue as a going concern is dependent
upon its ability to develop additional sources of capital or locate a merger
candidate and ultimately, achieve profitable operations. The accompanying
financial statements do not include any adjustments that might result from the
outcome of these uncertainties. Management is seeking new capital to revitalize
the Company.
Note 3 - Due to Directors:
A director of Key Chance (Tsang Ping Lam) is due an amount of $47,765 for
advances made to the Company to pay for Company expenses. The amount is
unsecured, interest free and has no fixed terms of repayment.
The Director of MRI (Masakazu Kobayashi) is due an amount of $53,202 for
advances made to the Company to pay for Company expenses. The amount is
unsecured, interest free and has no fixed terms of repayment.
Note 4 - Ownership Interest in Affiliated Company:
On May 25, 2005, the Company purchased an 80% interest in Micronesian Resort,
Inc. (MRI) for an issuance of 25,000,000 shares of common stock in the Company.
MRI is the lessee of a piece of property in the Republic of Palau under a lease
agreement dated April 25, 2005 for the grant of a lease of such property to MRI.
The Company will indirectly control MRI and intends to develop the property into
a resort hotel. The minority interest held by MRI is disclosed separately in the
Company's Consolidated Financial Statements.
F-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Cautionary and Forward Looking Statements
In addition to statements of historical fact, this Form 10-QSB contains
forward-looking statements. The presentation of future aspects of The Art
Boutique, Inc. ("The Art Boutique," the "Company" or "issuer") found in these
statements is subject to a number of risks and uncertainties that could cause
actual results to differ materially from those reflected in such statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof.
Without limiting the generality of the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "intend," or "could" or the negative
variations thereof or comparable terminology are intended to identify
forward-looking statements.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause The Art Boutique, Inc. actual results to be
materially different from any future results expressed or implied by The Art
Boutique in those statements. Important facts that could prevent The Art
Boutique from achieving any stated goals include, but are not limited to, the
following:
(a) volatility or decline of the Company's stock price;
(b) potential fluctuation in quarterly results;
(c) failure of the Company to earn revenues or profits;
(d) inadequate capital to continue or expand its business, inability to
raise additional capital or financing to implement its business plans;
(e) failure to commercialize its technology or to make sales;
(f) rapid and significant changes in markets;
(g) litigation with or legal claims and allegations by outside parties;
(h) insufficient revenues to cover operating costs.
There is no assurance that the Company will be profitable, the Company may not
be able to successfully develop, manage or market its products and services, the
Company may not be able to attract or retain qualified executives and technology
personnel, the Company's products and services may become obsolete, government
regulation may hinder the Company's business, additional dilution in outstanding
stock ownership may be incurred due to the issuance of more shares, warrants and
stock options, or the exercise of warrants and stock options, and other risks
inherent in the Company's businesses.
1
The Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the date hereof.
Readers should carefully review the factors described in other documents the
Company files from time to time with the Securities and Exchange Commission,
including the Quarterly Reports on Form 10-QSB and Annual Reports on Form 10-KSB
filed by the Company in 2005 and any Current Reports on Form 8-K filed by the
Company.
OVERVIEW OF OPERATIONS
- ----------------------
The management of the Company has been actively seeking potential new businesses
so as to enable the Company to achieve a sustainable level of operations.
Various attempts have been made by the Company in trying to achieve such an
objective, including considering the potential acquisitions of certain
businesses in Japan. Unfortunately, no agreements have been entered into by the
Company despite efforts by the management. In November 2004, an opportunity for
the Company to invest in a real estate development project arose whereby the
Company might act as the developer of a land situated in the Airai State in the
Republic of Palau for a resort hotel. The Company continues planning to develop
a resort property in Palau.
RESULTS OF OPERATIONS FOR QUARTER ENDED MARCH 31, 2007 COMPARED TO SAME PERIOD
- --------------------------------------------------------------------------------
ENDED MARCH 31, 2006.
- --------------------
The Company did not recognize any revenues from operations during the three
months ended March 31, 2007 and 2006. During the three months ended March 31,
2007, the Company incurred operational expenses of $9,191 and $90,015 during the
three months ended March 31, 2006. The decrease of $80,824 in operational
periods is due to the decrease in the Company's operational activities. During
the three months ended March3 31, 2007, the Company's operations were limited to
its search for potential new business activities.
The Company recognized a loss before minority interest of $9,191 during the
three months ended March 31, 2007 compared to a loss before minority interest of
$90,015 for the three months ended March 31, 2006. During the three months ended
March 31, 2007, the Company recognized a loss $292 as result of the minority
interest compared to a loss of $1 for the three months ended March 31 2006.
During the three months ended March 31, 2007, the Company has a net loss of
$9,191 compared to a net loss of $90,015 for the three months ended March 31,
2006. The decrease of $80,824 was due to the decrease in the Company's
operational activities, as discussed above. During the three months ended March
31, 2007 and 2006, the Company's net loss per share was minimal.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the three months ended March 31, 2007, the Company used $46,896 cash in
its operating activities. The Company did not have any cash or cash equivalents
at March 31, 2007. During the three months ended March 31, 2007, the Company
received $46,896 from financing activities. The Company did not receive or use
any funds through investing activities. At March 31, 2007, the Company currently
has a working capital deficit of $90,497 and current liabilities exceed current
assets by $106,638.
During the three months ended March 31, 2007, the Company did receive funds of
$46,896 from a director of the Company's subsidiary, Key Chance International.
The funds are unsecured and are not accruing interest and have no fixed date of
payment. The funds were used by the Company for the payment of expenses.
2
At March 31, 2007, the Company did not have any cash or cash equivalents. In
addition, the Company had no other assets other then $4,900 in prepaid expenses.
The Company will be forced to either borrow or make private placements of stock
in order to fund operations. No assurance exists as to the ability to achieve
loans or make private placements of stock.
NEED FOR ADDITIONAL FINANCING
- -----------------------------
The Company does not have capital sufficient to meet the Company's cash needs,
including the costs of compliance with the continuing reporting requirements on
the Securities Exchange Act of 1934. The Company will have to seek loans or
equity placements to cover such cash needs. In the event the Company is able to
complete a business combination during this period, lack of existing capital may
be a sufficient impediment to prevent it from accomplishing the goal of
completing a business combination. There is no assurance, however, that without
funds it will ultimately allow registrant to carry out its business.
The Company will need to raise additional funds to conduct any business
activities in the next twelve months.
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any additional funds
will be available to the Company to allow it to cover its expenses as they may
be incurred.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuance of stock in lieu of cash.
ITEM 3. CONTROLS AND PROCEDURES
a. Evaluation of Disclosure Controls and Procedures:
The management of the company has evaluated the effectiveness of the issuer's
disclosure controls and procedures as of the end of the period of the report
March 31, 2007 and have concluded that the disclosure controls, internal
controls and procedures are adequate and effective based upon their evaluation
as of the evaluation date.
b. Changes in Internal Control over Financial Reporting:
There were no changes in the small business issuers internal control over
financial reporting identified in connection with the Company evaluation
required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange act
that occurred during the small business issuers last fiscal quarter that has
materially affected or is reasonable likely to materially affect, the small
business issuers internal control over financial reporting.
3
ITEM 3(A)T. CONTROLS AND PROCEDURES
There have been no changes in the small business issuers internal control over
financial reporting identified in connection with the evaluation required by
paragraph (d) of Rule 240.15d-15 that occurred during the small business
issuer's last fiscal quarter that has materially affected, or is reasonable
likely to materially affect, the small business issuer's internal control over
financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-QSB. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-B.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act
4
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ART BOUTIQUE, INC.
(Registrant)
Dated: May 15, 2007 By: /s/ Tsang Ping Lam
------------------
Tsang Ping Lam, President
4