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EX-31.2 - Bourbon Brothers Holding Corpartdim10q331201x312_5152011.htm
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EX-32.1 - Bourbon Brothers Holding Corpartdim10q3312011x321_5152011.htm
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended   March 31, 2011

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File No. 000-53853

Art Dimensions, Inc.
 (Exact Name of Small Business Issuer as specified in its charter)

Colorado
 80-0182193
(State or Other Jurisdiction
(IRS Employer File Number)
of Incorporation)
 

3636 S. Jason Street
 
Englewood, Colorado
80113
(Address of Principal Executive Offices)
(Zip Code)

(303) 781-7280
 (Registrant's telephone number, including area code)


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 [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(Section 232.405 of this chapter) during the preceding 12 months(or such shorter period that the registrant was required to submit and post such files. Yes []  No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer []
Accelerated filer []
Non-accelerated filer [] (Do not check if a smaller reporting company)
Smaller reporting company  [X]

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

 The number of shares outstanding of the Registrant's common stock, as of the latest practicable date, March 31, 2011, was 1,082,060.

 
 
 

 

FORM 10-Q

Art Dimensions, Inc.

TABLE OF CONTENTS



 
 
 Page
PART I  FINANCIAL INFORMATION
 
 
Item 1. Financial Statements for the period ended March 31, 2011
  3
                  Consolidated Balance Sheet (Unaudited)
  5
                  Consolidated Statements of Operations (Unaudited)
  6
                  Consolidated Statements of Cash Flows (Unaudited)
  7
                  Notes to Consolidated Financial Statements
  8
   
Item 2. Management’s Discussion and Analysis and Plan of Operation
  9
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
14
Item 4 Controls and Procedures
14
 Item 4T. Controls and Procedures
14
   
PART II  OTHER INFORMATION
 
   
  Item 1. Legal Proceedings
14
  Item 1A.  Risk Factors
14
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
20
  Item 3. Defaults Upon Senior Securities
20
  Item 4. Submission of Matters to a Vote of Security Holders
21
  Item 5. Other Information
21
  Item 6. Exhibits
21
   
Signatures
22
   

 
 
- 2 -

 

PART I  FINANCIAL INFORMATION

References in this document to "us," "we," or "Company" refer to Art Dimensions, Inc.

ITEM 1.  FINANCIAL STATEMENTS



 
 
ART DIMENSIONS, INC.
(A Development Stage Company)

FINANCIAL STATEMENTS
(Unaudited)

Quarter Ended March 31, 2011





 


 
 
- 3 -

 


 


ART DIMENSIONS, INC.
(A Development Stage Company)
Financial Statements
(Unaudited)


TABLE OF CONTENTS


 
Page
   
FINANCIAL STATEMENTS
 
   
Balance sheets
5
Statements of operations
6
Statements of cash flows
7
Notes to financial statements
8


 

 
 
- 4 -

 


ART DIMENSIONS, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
 
   
March 31, 2011
   
Dec. 31, 2010
 
ASSETS
           
             
Current assets
           
      Cash
  $ 1,043     $ 736  
      Accounts Receivable
    -       533  
             Total current assets
    1,043       1,269  
                 
Total Assets
  $ 1,043     $ 1,269  
                 
LIABILITIES &
               
   STOCKHOLDERS' DEFICIT
               
                 
Current liabilities
               
      Accounts payables
  $ 2,715     $ 3,513  
      Related party payables
    24,500       15,000  
          Total current liabilities
    27,215       18,513  
                 
Total Liabilities
    27,215       18,513  
                 
                 
Stockholders' Deficit
               
      Preferred stock, no par value;
               
          1,000,000 shares authorized;
               
          no shares issued and outstanding
    -       -  
      Common stock, no par value;
               
          50,000,000 shares authorized;
               
          1,082,060 shares issued and outstanding
    2,000       2,000  
      Additional paid in capital
    11,865       11,865  
      Deficit accumulated during the dev. stage
    (40,037 )     (31,109 )
                 
Total Stockholders' Deficit
    (26,172 )     (17,244 )
                 
Total Liabilities and Stockholders' Deficit
  $ 1,043     $ 1,269  
 
The accompanying notes are an integral part of the unaudited financial statements.

 
 
- 5 -

 


ART DIMENSIONS, INC.
 
(A Development Stage Company)
 
STATEMENTS OF OPERATIONS
 
(Unaudited)
 
 
               
Period From
 
               
Jan. 29, 2008
 
   
3 Months
   
3 Months
   
(Inception)
 
   
Ended
   
Ended
   
Through
 
   
March 31, 2011
   
March 31, 2010
   
March 31, 2011
 
                   
                   
Sales - net of returns
  $ -     $ 28,473     $ 279,247  
Cost of goods sold - related party
    -       27,373       275,000  
                         
Gross profit
    -       1,100       4,247  
                         
Operating expenses:
                       
     General and administrative
    8,928       7,770       44,284  
      8,928       7,770       44,284  
                         
Gain (loss) from operations
    (8,928 )     (6,670 )     (40,037 )
                         
Income (loss) before
                       
     provision for income taxes
    (8,928 )     (6,670 )     (40,037 )
                         
Provision for income tax
    -       -       -  
                         
Net income (loss)
  $ (8,928 )   $ (6,670 )   $ (40,037 )
                         
Net income (loss) per share
                       
(Basic and diluted)
  $ (0.00 )   $ (0.01 )        
                         
Weighted average number of
                       
common shares outstanding
    1,082,060       1,082,060          
 
The accompanying notes are an integral part of the unaudited financial statements.

 
 
- 6 -

 

 
ART DIMENSIONS, INC.
 
(A Development Stage Company)
 
STATEMENTS OF CASH FLOWS
 
(Unaudited)
 
 
               
Period From
 
               
January 29, 2008
 
   
3 Months
   
3 Months
   
(Inception)
 
   
Ended
   
Ended
   
Through
 
   
March 31, 2011
   
March 31, 2010
   
March 31, 2011
 
Cash Flows From Operating Activities:
                 
     Net income (loss)
  $ (8,928 )   $ (6,670 )   $ (40,037 )
                         
     Adjustments to reconcile net loss to
                       
     net cash provided by (used for)
                       
     operating activities:
                       
          Common stock issued for services
    -       -       2,000  
          Warrant expense
    -       -       3,407  
          Change in operating assets and liabilities:
                       
             Accounts Receivable
    533       -       -  
             Related party payables
    (798 )     6,000       11,173  
               Net cash provided by (used for)
                       
               operating activities
    (9,193 )     (670 )     (23,457 )
                         
                         
Cash Flows From Financing Activities:
                       
       Borrowing on debt-affiliated company
    9,500       -       24,500  
               Net cash provided by (used for)
                       
               financing activities
    9,500       -       24,500  
                         
Net Increase (Decrease) In Cash
    307       (670 )     1,043  
                         
Cash At The Beginning Of The Period
    736       1,365       -  
                         
Cash At The End Of The Period
  $ 1,043     $ 695     $ 1,043  
                         
Supplemental Disclosure
                       
                         
Cash paid for interest
  $ -     $ -     $ -  
Cash paid for income taxes
  $ -     $ -     $ -  
 
The accompanying notes are an integral part of the unaudited financial statements.

 
 
- 7 -

 

ART DIMENSIONS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
 (Unaudited)
 

 

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accompanying unaudited interim consolidated financial statements of Art Dimension Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year, 2010, as reported in Form 10-K, have been omitted.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
 

NOTE 2. GOING CONCERN

The Company has suffered recurring losses from operations and has a working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company may raise additional capital through the sale of its equity securities, through offerings of debt securities, or through borrowings from financial institutions. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.
 
 
NOTE 3. RELATED PARTY TRANSACTIONS

During the three months ended March 31, 2011, The Company has borrowed $9,500 from a company affiliated through common control. The related party payable balance was $24,500 at March 31, 2010. The loan does not bear interest and is payable upon demand.
 

 
- 8 -

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.

Forward-Looking Statements
 
This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management.  Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, variations of such words, and similar expressions are intended to identify such forward-looking statements.  These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements.  Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.  However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the Annual Reports on Form 10-K, Quarterly reports on Form 10-Q and any Current Reports on Form 8-K.
 
Overview and History
 
We were incorporated in January 29, 2008. We were formerly a wholly-owned subsidiary of Art Design, Inc.(“ATDN”).  On August 21, 2009, the directors of ATDN approved, subject to the effectiveness of a registration with the Securities and Exchange Commission, a spin-off to ATDN shareholders on a pro rata basis, with one share each of our company to be issued for each ten shares issued and outstanding of common stock owned by such ATDN shareholders as of the Record Date.  The shares of Art Dimensions were spun off to the shareholders of ATDN in December, 2009.
 
Our business is to primarily service and consulting with the sale of products as an ancillary component. We began operations as of our date of incorporation, January 29, 2008.

On June 1, 2008, an organization named Spyglass Investment Partnership (“Spyglass ”) agreed to provide operating capital in the form of a loan of $250,000 to cover operating expenses. This loan is evidenced by an unsecured promissory note which is due December 31, 2011. It should be noted that Spyglass is under no obligation to lend us funds under the term of the note.

We issued have a total of 300,000 warrants to Spyglass , exercisable at a price of $0.001 per share subject to adjustment, for a period of five years from the date of issuance. These warrants were issued as an additional inducement for Spyglass to loan us $250,000. The warrants are subject to registration rights.

Our principal executive offices are located at 3636 S. Jason Street, Englewood, Colorado 80110. Our telephone number is (303) 781-7820. We have no website.


 
- 9 -

 

Results of Operations
 
The following discussion involves our results of operations for the fiscal quarters ending March 31, 2011 and March 31, 2010.

Comparing our operations, we had $-0-  in sales-net of returns for the three months ended March 31, 2011. This compares with $28,473 in sales-net of returns for the three months ended March 31, 2010.

Our costs of goods for the three months ended March 31, 2011 was $-0-. Our costs of goods for the three months ended March 31, 2010 was $27,373. Costs of goods sold include all direct costs incurred in selling products. We do not separate sales of different product lines into operating segments.

The difference between total sales-net of returns and costs of goods is gross profit. Our gross profit for the three months ended March 31, 2011 was $-0-. This compares with gross profit for the three months ended March 31, 2010 of $1,100.

Operating expenses, which includes depreciation and general and administrative expenses for the three months ended March 31, 2011 was $8,928. This compares to operating expenses for the three months ended March 31, 2010 of $7,770. The major component of operating expenses was general and administrative expenses.

We believe that operating expenses in current operations should remain fairly constant as product sales and consulting services improve. Each additional sale or service and correspondingly the gross profit of such sale or service have minimal offsetting operating expenses. Thus, additional sales could become profit at a higher return on sales rate as a result of not needing to expand operating expenses at the same pace.

We had a net loss of $8,928 for the three months ended March 31, 2011. This compares with a net loss of $6,670 for the three months ended March 31, 2010.

Because we do not pay salaries, and our major professional fees have been paid for the year, operating expenses are expected to remain fairly constant.

We expect to incur operating losses in future periods because we will be incurring expenses and not generating sufficient revenues. We believe that we will be required to make significant future expenditures in connection with marketing efforts along with general administrative expenses. We expect approximately to range between $10,000 and $20,000 in operating costs through December 31, 2011. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues or additional financing when needed could cause us to go out of business.

Liquidity and Capital Resources

As of March 31, 2011, we had cash or cash equivalents of $1,043, compared to $695 as of March 31, 2010.
 
Net cash used for operating activities was $9,193 for the period ended March 31, 2011, compared to cash used for operating activities of $670 for the period ended March 31, 2010. We anticipate that overhead costs in current operations will remain fairly constant as sales improve.

Cash flows used or provided by investing activities were $-0-for both periods.

Cash flows provided by financing activities was $9,500 for the period ended March 31, 2011, compared to cash provided by or used for financing activities of $-0- for the period ended March 31, 2010..

Over the next twelve months we do not expect any material capital costs to develop operations. We do not plan to purchase real estate or large capital item.

 
- 10 -

 


On June 1, 2008, an organization named Spyglass Investment Partnership (“Spyglass ”) agreed to provide operating capital in the form of a loan of $250,000 to cover operating expenses. This loan is evidenced by an unsecured promissory note which is due December 31, 2011. This promissory note is under the same terms and conditions and same amount as the prior promissory note with Spyglass.It should be noted that Spyglass is under no obligation to lend us funds under the term of the note.

We believe that we have sufficient capital in the short term for our current level of operations. Further, we believe that we can attract sufficient product sales and services within our present organizational structure and resources to become profitable in our operations. We also have the potential of additional capital from Spyglass. While additional resources would be needed to expand into additional locations, which we have no plans to do at this time.

We do not know how long we will be required to rely upon our loan from Spyglass. We plan to repay any loan amounts from our operations. It should be noted that we have not had to draw down on this loan from Spyglass to date.  If we are unable to develop sufficient revenues or raise funds to cover any operating deficit after December 31, 2011, our business may fail. We do not anticipate needing to raise additional capital resources in the next twelve months, other than our loan from Spyglass. It should be noted that Spyglass is under no obligation to lend us funds under the term of the note. We have no indication that Spyglass would refuse to lend us funds if we should ask. However, if such funds were unavailable when needed, we would have a choice to substitute lenders, use operations for our funds, or go out of business.

We believe that the combination of revenues and funds which Spyglass can provide to offset any revenue shortfall will sustain us at least through December 31, 2011. Based upon our past history of operations, we estimate that we must generate between $10,000 and $20,000 in gross profit to be profitable.  We do not know when we will be able to generate this level of gross profit. Our principal source of liquidity will be our operations. We expect variation in revenues to account for the difference between a profit and a loss. Also business activity is closely tied to the U.S. economy, particularly the economy in Denver, Colorado. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully develop our business and our ability to generate revenues.

In any case, we try to operate with minimal overhead. Our primary activity will be to seek to develop clients for our products and services and, consequently, our sales. If we succeed in developing clients for our products and services and generating sufficient sales, we will become profitable. We cannot guarantee that this will ever occur. Our plan is to build our company in any manner which will be successful.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements with any party.

Critical Accounting Policies

Our discussion and analysis of results of operations and financial condition are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

 
- 11 -

 


We have identified the following policies below as critical to our business and results of operations.

Revenue is recognized on an accrual basis as earned under contract terms, the product or service price to the client is fixed or determinable, and collectability is reasonably assured. More specifically, revenue is recognized when ordered products are shipped, and any corresponding consulting and design services have been rendered. Services performed under contract, which may vary in length, are recognized on an ongoing basis over the life of the contract as services are performed. Our consulting service contracts generally allow either party to terminate the contract upon reasonable notice.

General and administrative costs include those costs allocated to the ongoing expenditures of running our business including in general such items as office overhead, professional fees and management compensation.

For further discussion on the application of these and other accounting policies, see Note 1 to the accompanying audited financial statements for the period ended September 30, 2008, included elsewhere in this document. Our reported results are impacted by the application of the following accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the following paragraphs.
 
Use of Estimates in the Preparation of Financial Statements

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.

We have had revenue during the period ended March 31, 2011.  Anticipated future operating revenue will come from art consulting, marketing and agent representation services provided to individuals whom are in the business of selling art.  Such revenues will be recorded as the art services are performed.

Secondarily, and as an adjunct to our primary purpose, we  also earn revenue from the sale of art and interior design products. We anticipate that the sale of products will primarily be to our artist clients but may also incidentally be to the general public.

Trends
 
There are no known trends, events or uncertainties that have had or that are reasonably expected to have a material impact on the net sales or revenues or income from our operations.  Our management has not made any commitments, which will require any material financial resources.

Plan of Operation

Our plan for the next twelve months is to operate at a profit or at break even, although we have a history of losses. Our plan is to attract sufficient additional product sales and services within our present organizational structure and resources to become profitable in our operations.

Currently, we are conducting business in only one location in the Denver Metropolitan area. We have no plans to expand into other locations or areas. The timing of the completion of the milestones needed to become profitable are not directly dependent on the success of our public offering. We believe that we can achieve profitability as we are presently organized with sufficient business.

 
- 12 -

 


If we are not successful in our operations we will be faced with several options:

1.
Cease operations and go out of business;

2.
Continue to seek alternative and acceptable sources of capital;

3.
Bring in additional capital that may result in a change of control; or

4.
Identify a candidate for acquisition that seeks access to the public marketplace and its financing sources.

Currently, we have sufficient capital to implement our business operations or to sustain them for the next twelve months. If we can become profitable, we could operate at our present level indefinitely.

To date, we have never had any discussions with any possible acquisition candidate. However, if we cannot operate our business in a profitable manner, we may seek other opportunities, including, but not limited to, one or more acquisitions.

Proposed Milestones to Implement Business Operations
 
At the present time, we are operating from one location in the Denver Metropolitan area. Our plan is to make our operation profitable by the end of our next fiscal year.

We believe that we can be profitable or at break even by the end of the current fiscal year, assuming sufficient sales. Based upon our current plans, we have adjusted our operating expenses so that cash generated from operations and from working capital financing is expected to be sufficient for the foreseeable future to fund our operations at our currently forecasted levels. This has not always been the case, since we have had a history of losses. To try to operate at a break-even level based upon our current level of anticipated business activity, we believe, based upon our operating history that we must generate a gross profit on our revenue of approximately $50,000 per year. However, if our forecasts are inaccurate, we will need to raise additional funds. On the other hand, we may choose to scale back our operations to operate at break-even with a smaller level of business activity, while adjusting our overhead to meet the revenue from current operations. In addition, we expect that we will need to raise additional funds if we decide to pursue more rapid expansion, the development of new or enhanced services and products, appropriate responses to competitive pressures, or the acquisition of complementary businesses or technologies, or if we must respond to unanticipated events that require us to make additional investments. We cannot assure that additional financing will be available when needed on favorable terms, or at all.

We expect to incur operating losses in future periods because we will be incurring expenses and not generating sufficient revenues. We expect approximately $50,000 in operating costs over the next twelve months. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. Failure to generate sufficient revenues or additional financing when needed could cause us to go out of business
 
No commitments to provide additional funds have been made by management or current shareholders. There is no assurance that additional funds will be made available to us on terms that will be acceptable, or at all, if and when needed. We expect to continue to generate and increase sales, but there can be no assurance we will generate sales sufficient to continue operations or to expand.


 
- 13 -

 

We also are planning to rely on the possibility of referrals from clients and will strive to satisfy our clients. We believe that referrals will be an effective form of advertising because of the quality of service that we bring to clients. We believe that satisfied clients will bring more and repeat clients. In the next 12 months, we do not intend to spend any funds on research and development and do not intend to purchase any large equipment.

Recently Issued Accounting Pronouncements

We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.

Seasonality

We do not expect our sales to be impacted by seasonal demands for our products and services.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

None.


ITEM 4. CONTROLS AND PROCEDURES

Not applicable.


ITEM 4T. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a -15(e) and 15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief Financial Officer each have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the applicable time periods specified by the SEC’s rules and forms.

There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal three months that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
PART II.  OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS

There are no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results.
  

 
- 14 -

 

ITEM 1A. RISK FACTORS
 
You should carefully consider the risks and uncertainties described below and the other information in this document before deciding to invest in shares of our common stock.

The occurrence of any of the following risks could materially and adversely affect our business, financial condition and operating result. In this case, the trading price of our common stock could decline and you might lose all or part of your investment.

We were recently formed as a Colorado business entity, have a limited operating history, and have never been profitable.  Our limited operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance. We are inherently a risky investment. If we make poor budgetary decisions as a result of unreliable historical data, we could continue to incur losses, which may result in a decline in our stock price. We cannot guarantee we will ever develop a substantial number of clients.  Even if we develop a substantial number of clients, there is no assurance that we will become a profitable company.  As a result, we may never become profitable, and could go out of business.

We were formed as a Colorado business entity in January 2008.  At the present time, we have a limited operating history and have never been profitable. There can be no guarantee that we will ever be profitable.  From our inception on January 29, 2008 through March 31, 2011, we generated $279,247 in revenue.  We had a net loss of $40,036 for this period.  Our revenues depend upon the number of clients we can develop and service.  Our limited operating history makes it difficult to evaluate our business on the basis of historical operations.  As a consequence, our past results may not be indicative of future results.  Although this is true for any business, it is particularly true for us because of our limited operating history.  Reliance on historical results may hinder our ability to anticipate and timely adapt to increases or decreases in sales, revenues or expenses.  For example, if we overestimate our future sales for a particular period or periods based on our historical growth rate, we may increase our overhead and other operating expenses to a greater degree than we would have if we correctly anticipated the lower sales level for that period and reduced our controllable expenses accordingly.  If we make poor budgetary decisions as a result of unreliable historical data, we could continue to incur losses, which may result in a decline in our stock price. We cannot guarantee we will ever develop a substantial number of clients.  Even if we develop a substantial number of clients, there is no assurance that we will become a profitable company.  Because we are a company with a limited history, the operations in which we engage in, the art consulting, marketing and agent business, is an extremely risky business. We have no historical frame of reference to determine whether this proposed business model will be successful. We may never become profitable, and, as a result, we could go out of business.
 
Because we had incurred operating losses from our inception during our limited operating history, our accountants have expressed substantial doubts about our ability to continue as a going concern.

 For the period ended December 31, 2010, our accountants have expressed substantial doubt about our ability to continue as a going concern as a result of our loss from operations and the requirement of significant future expenditures in connection with marketing efforts and general and administrative expenses.  Our ability to achieve and maintain profitability and positive cash flow is dependent upon:
  
  our ability to locate clients who will purchase our services; and
 
  our ability to generate revenues.
 

 
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Based upon current plans, we may incur operating losses in future periods because we may, from time to time, be incurring expenses but not generating sufficient revenues.  We expect between $10,000 and  $20,000 in operating costs over the next twelve months.  We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs.  Failure to generate sufficient revenues will cause us to go out of business.           

We have a business plan which is expensive and may not generate increases in our revenues.

We intend to grow our business and have a business plan.  In connection with this plan, we anticipate that we will incur expenses associated with our growth and expansion.  Our funds may not be adequate to offset all of the expenses we incur in expanding our business.  We will need to generate revenues to offset expenses associated with our growth, and we may be unsuccessful in achieving revenues, despite our attempts to grow our business.  If our growth strategies do not result in significant revenues, we may have to abandon our plans for further growth or may even cease our operations.

Because we are small and do not have much capital, we must limit our operations to the Denver, Colorado metropolitan area. A company in our industry with limited operations has a smaller opportunity to be successful.  If we do not make a profit, we may have to suspend or cease operations.

Because we are small and do not have much capital, we must limit our operations.  We must limit our operations to the Denver, Colorado metropolitan area as the only geographical area in which we operate.  Because we may have to limit our operations, we may not generate sufficient sales to make a profit.  If we do not make a profit, we may have to suspend or cease operations.
 
Because our current officers and directors are involved with other businesses in the same industry, the manner in which we operate may create the possibility of a conflict of interest.

Both Mrs. Gregarek and Mrs. Sheehan are also involved with other businesses in the same industry. Both are officers and directors of Art Design, Inc. Additionally, Mr. and Mrs. Sheehan own the Accessory Warehouse, Inc. Mrs. Gregarek is an independent contractor for interior design work. These other arrangements could create conflict of interest with respect to our operations. We cannot guarantee that any potential conflicts can be avoided.

We are a company with limited operating history which intends to grow its operations to become profitable as soon as possible. As a result, we must effectively manage the growth of our operations, or we may outgrow our current infrastructure.

We have two part-time employees, Mrs. Gregarek, our President and Kathy Sheehan, our Secretary-Treasurer.  If we experience rapid growth of our operations, we could see a backlog of client orders.  We can resolve these capacity issues by hiring additional personnel and upgrading our infrastructure.  However, we cannot guarantee that sufficient additional personnel will be available or that we will find suitable personnel to aid our growth.  In any case, we will continue pursuing additional sales growth for our company. Expanding our infrastructure will be expensive, and will require us to train our workforce, and improve our financial and managerial controls to keep pace with the growth of our operations.


 
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Because we are a company with limited operating history and revenues and only minimally capitalized, we have a lack of liquidity and will need additional financing in the future. Our future success depends, in large part, on the continued financing of Spyglass.  The loss of this financing would have a material adverse effect on our business. Additional financing may not be available when needed, which could delay our development or indefinitely postpone it.  Our investors could lose some or all of their investment.
 
We are only minimally capitalized.  Because we are only minimally capitalized, we expect to experience a lack of liquidity for the foreseeable future in our operations.  We will adjust our expenses as necessary to prevent cash flow or liquidity problems.  However, we expect we will need additional financing of some type, which we do not now possess, to fully develop our operations.  We expect to rely principally upon our ability to raise additional financing, the success of which cannot be guaranteed. Spyglass is currently our only source of financing. It should be noted that Spyglass is under no obligation to lend us funds under the term of the note. We have no indication that Spyglass would refuse to lend us funds if we should ask. Spyglass is owned, in part by Mrs. Gregarek’s husband. It would be very difficult to find a financing source to replace Spyglass.   The loss of the Spyglass financing would have a material adverse effect on our business. At the present time, we have no definitive plans for financing in place, other than the funds which we have already obtained.  In the event that we need additional capital, we will need to identify alternate sources of capital for working capital purposes.  To the extent that we experience a substantial lack of liquidity, our development in accordance with our proposed plan may be delayed or indefinitely postponed, our operations could be impaired, we may never become profitable, fail as an organization, and our investors could lose some or all of their investment.
 
Because we are a company with limited operating history, we have no experience as a public company. Our inability to operate as a public company could be the basis of your losing your entire investment in us.
 
We have never operated as a public company.  We have no experience in complying with the various rules and regulations which are required of a public company.  As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We plan to comply with all of the various rules and regulations which are required of a public company.  However, if we cannot operate successfully as a public company, your investment may be materially adversely affected.  Our inability to operate as a public company could be the basis of your losing your entire investment in us.

Our ability to grow our business depends on relationships with others. We have only a few established relationships at this time.  We may never develop sufficient relationships to grow a successful business. Further, if we were to lose those relationships, we could lose our ability to sell services. If we lose enough clients, we could go out of business.
 
Eventually, all of our revenue and gross profit are expected to come from consulting, marketing and representing artists in their business dealings.  However, in the interim, we will also sell products. To date, however, all of our revenue has come solely from the sale of products. Nevertheless, our business plan is clearly focused to develop revenue and gross profit primarily from consulting, marketing and representing artists in their business dealings. While our relationships will change from time to time, we must rely upon our clients for our success.  Our performance depends, in large part, on our ability to engage with successful artists to perform consulting and marketing services and advise or represent individuals whom are in the business of creating, producing or selling art.  Artists are skilled in their vocation, but often lack the general business knowledge and expertise to obtain and secure contracts.  Most artists do not understand what they do not know and therefore how to avoid them or what value an organization like ours provides.   This means that there can be no assurance that we will be able to secure clients at fees they can afford or are willing to pay.  If we can identify and establish relationships with a select group of clients that see value in and can afford the services we provide we will be able to establish a reputation and develop and grow our niche market. At the present time, we do not have a significant number of  clients and cannot guarantee we will ever develop sufficient numbers of clients to be profitable. We plan to use the efforts of our management to develop our clients. If we do develop such clients, we risk that a given client will switch to utilizing similar services from another provider or decide to perform the tasks on his or her own. Our ability to generate revenue from the sale consulting, marketing and agent representation services would diminish.  If we lose enough clients, we could go out of business.
 

 
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We are a relatively small company with limited resources compared to some of our current and potential competitors, which may hinder our ability to compete effectively. The art consulting industry is highly fractured competitive.  If we are not well received or successful, we may never achieve profitability.
 
The art consulting business is highly fractured with respect to price and services offered.  There are a handful of competitors that represent the very successful artists.  Many of these firms are well-established, including national, regional and local organizations possessing substantially greater financial, marketing, personnel and other resources than we do.  There can be no assurance that we will be able to respond to various competitive factors affecting the art industry and be able to attract and advise our clients accordingly.  There is very little competition for up and coming artists, but the demand for consulting, marketing and agent representation services is hard to gauge.  We believe that this market is underserved, but most artists are not familiar with treating their vocation as a business and may not believe they need our services.  If we are unable to develop an economical model to serve this market we will not be profitable.  We cannot guarantee that we will be able to successfully compete in the highly competitive high-end or poorly served low-end markets.
 
We believe that the key to our success will be successful marketing of our service and product offering. As a result, we may need to substantially invest in marketing efforts in order to grow our business, which will be expensive.

In order to grow our business, we will need to develop and maintain widespread recognition and acceptance of our company, our business model and our services.  We have only recently begun to present our service and product offering to our potential market as we have identified it in our business plan.  We plan to rely primarily on word of mouth from contacts we develop personally through our efforts to promote and market ourselves. We plan to use the efforts of our management to develop these contacts.  In order to successfully grow our company, we may need to significantly increase our financial commitment to creating awareness and acceptance of our company among potential clients, which would be expensive.  To date, marketing and advertising expenses have been negligible.  We have not yet fully developed our marketing program and do not know the specific cost of such a program, although we believe that it will be expensive. If we fail to successfully market and promote our business, we could lose potential clients to our competitors, or our growth efforts may be ineffective.  If we incur significant expenses promoting and marketing ourselves, it could delay or completely forestall our profitability.
 
We have no agreement with any broker or dealer to act as a market maker for our securities.  The lack of a broker or dealer to create or maintain a market in our stock could adversely impact the price and liquidity of our securities.

We have no agreement with any broker or dealer to act as a market maker for our securities and there is no assurance that we will be successful in obtaining any market makers. Thus, no broker or dealer will have an incentive to make a market for our stock. The lack of a market maker for our securities could adversely influence the market for and price of our securities, as well as your ability to dispose of, or to obtain accurate information about, and/or quotations as to the price of, our securities.

We are an art consulting, marketing and intermediary organization.  Our business is not diversified, which could result in significant fluctuations in our operating results. A downturn in that sector may reduce our stock price, even if our business is successful.

We are an art consulting, marketing and intermediary organization, and, accordingly, dependent upon trends in that business sector.  Downturns in that sector could adversely effect on our business.  A downturn in that sector may reduce our stock price, even if our business is successful.
 

 
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The share  control position of Rebecca Gregarek, David Gregarek, Kathy and Todd Sheehan will limit the ability of other shareholders to influence corporate actions.

After distribution of our shares to the Art Design shareholders, our largest shareholders, Rebecca Gregarek, David Gregarek,  Kathy Sheehan and Todd Sheehan own and control 1,140,000 shares, after giving effect to the Spyglass warrants and thereby control approximately 82.5% of our outstanding shares.  Because these individuals beneficially control almost 83% of the outstanding shares they will have a significant role in controlling the election or removal of our directors, the supervision and management of our business or a change in control of or sale of our company, even if they believed such changes were in the best interest of our shareholders generally.

Our future success depends, in large part, on the continued service of our President and Secretary-Treasurer.
 
We depend almost entirely on the efforts and continued employment of Mrs. Gregarek, our President and Kathy Sheehan, our Secretary-Treasurer.  Mrs. Gregarek is our primary executive officer, and we will depend on her for nearly all aspects of our operations. Mrs. Sheehan is our primary financial officer, and we will depend on her for nearly all aspects of our financial compliance. We do not have an employment contract with either Mrs. Gregarek or Mrs. Sheehan, and we do not carry key person insurance on either’s life.  The loss of the services of Mrs. Gregarek or Mrs. Sheehan through incapacity or otherwise, would have a material adverse effect on our business.  It would be very difficult to find and retain qualified personnel such as Mrs. Gregarek or Mrs. Sheehan.
 
Applicable SEC rules governing the trading of “Penny Stocks” limit the liquidity of our common stock, which may affect the trading price of our common stock. The over-the-counter market for stock such as ours is subject to extreme price and volume fluctuations. You may not able to sell your shares when you want to do so, if at all.
 
Our common stock is currently not quoted in any market. If our common stock becomes quoted, we anticipate that it will trade well below $5.00 per share. As a result, our common stock is considered a “penny stock” and is subject to SEC rules and regulations that impose limitations upon the manner in which our shares can be publicly traded. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock and the associated risks.  Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special written suitability determination for the purchaser and receive the written purchaser’s agreement to a transaction prior to purchase.  These regulations have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock. The securities of companies such as ours have historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors, such as new product developments and trends in the our industry and in the investment markets generally, as well as economic conditions and quarterly variations in our operational results, may have a negative effect on the market price of our common stock. As a result of any or all of these factors, you may not able to sell your shares when you want to do so, if at all.


 
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We have the authority to issue up to 50,000,000 shares of common stock, 1,000,000 shares of preferred stock, and to issue options and warrants to purchase shares of our common stock without stockholder approval.  We are only planning to issue 1,082,060 shares in this registration statement. As a result, issuances of our stock could dilute current shareholders and adversely affect the market price of our common stock, if a public trading market develops.
 
We have the authority to issue up to 50,000,000 shares of common stock, 1,000,000 shares of preferred stock, and to issue options and warrants to purchase shares of our common stock without stockholder approval.  Although no financing is planned currently, we may need to raise additional capital to fund operating losses.  If we raise funds by issuing equity securities, our existing stockholders who receive shares in the spin-off may experience substantial dilution.  In addition, we could issue large blocks of our common stock to fend off unwanted tender offers or hostile takeovers without further stockholder approval.
 
The issuance of preferred stock by our board of directors could adversely affect the rights of the holders of our common stock.  An issuance of preferred stock could result in a class of outstanding securities that would have preferences with respect to voting rights and dividends and in liquidation over the common stock and could, upon conversion or otherwise, have all of the rights of our common stock.  Our board of directors' authority to issue preferred stock could discourage potential takeover attempts or could delay or prevent a change in control through merger, tender offer, proxy contest or otherwise by making these attempts more difficult or costly to achieve.
 
Colorado law and our Articles of Incorporation protect our directors from certain types of lawsuits, which could make it difficult for us to recover damages from them in the event of a lawsuit.
 
Colorado law provides that our directors will not be liable to our company or to our stockholders for monetary damages for all but certain types of conduct as directors.  Our Articles of Incorporation require us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law.  The exculpation provisions may have the effect of preventing stockholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances.  The indemnification provisions may require our company to use our assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.
 
Because we are a company with limited operating history, we do not expect to pay dividends on common stock.

We have not paid any cash dividends with respect to our common stock, and it is unlikely that we will pay any dividends on our common stock in the foreseeable future. Earnings, if any, that we may realize will be retained in the business for further development and expansion.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

    None.
 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

    None.


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

    None.
 

ITEM 5.  OTHER INFORMATION

   None.


ITEM 6.  EXHIBITS

Exhibit
   
Number
Description
 
     
3.1*
Articles of Incorporation
 
3.2*
Bylaws
 
4.1*
Warrant dated June 1, 2008 for Spyglass Investment Partnership
 
4.2*
Warrant dated June 1, 2008 for David Wagner & Associates, P.C.
 
5.1
Opinion re: Legality
 
10.1*
Promissory note dated June 1, 2008 with Spyglass Investment Partnership
 
10.2*
Promissory note dated June 1, 2009 with Spyglass Investment Partnership
 
10.3*
Promissory note dated June 1, 2010 with Spyglass Investment Partnership
 
10.4*
Promissory note dated December 31, 2010 with Spyglass Investment Partnership
 
31.1
Certification of CEO pursuant to Sec. 302
 
32.1
Certification of CEO pursuant to Sec. 906
 
31.2
Certification of CFO pursuant to Sec. 302
 
32.2
Certification of CEO pursuant to Sec. 906
 

* Previously filed

(b)  
Reports on Form 8-K. One report was filed on March 29, 2011under cover of Form 8-K for the fiscal quarter ended March 31, 2011, relating to a change of our accountants.
 
 

 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



 Dated: May 16, 2011
 
Art Dimensions, Inc.
 
 
 
By: 
  /s/ Rebecca Gregarek
 
   
Rebecca Gregarek
President and Chief Executive Officer
 
 
 
 
 
 

 
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