Biozoom, Inc. - FORM 10-Q - February 9, 2011

Attached files

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EX-31.1 - CERTIFICATION - Biozoom, Inc.	f10q1210ex31i_enterart.htm
EX-31.2 - CERTIFICATION - Biozoom, Inc.	f10q1210ex31ii_enterart.htm
EX-32.1 - CERTIFICATION - Biozoom, Inc.	f10q1210ex32i_enterart.htm
EX-32.2 - CERTIFICATION - Biozoom, Inc.	f10q1210ex32ii_enterart.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended December 31, 2010

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

For the transition period from _____ to _____

Commission File Number: 333-152404

ENTERTAINMENT ART, INC.

(Exact name of small business issuer as specified in its charter)

Nevada	26-0370478
(State of incorporation)	(IRS Employer ID Number)

c/o Joseph Koegel

Entertainment Art, Inc.

571 Washington Street

West Hempstead, New York 11552

(Address of principal executive offices)

516-333-8034

(Issuer's telephone number)

________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes No o

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

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o		Smaller reporting company x

(Do not check if a smaller reporting company)

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

As of February 8, 2011, 59,730,000 shares of common stock, par value $0.001 per share, were outstanding.

TABLE OF CONTENTS

	Page
PART I
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
Item 3 Quantitative and Qualitative Disclosures About Market Risk	13
Item 4 Controls and Procedures	13

PART II
Item 1. Legal Proceedings	14
Item IA. Risk Factors	14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3. Defaults Upon Senior Securities	14
Item 4. Removed and Reserved	14
Item 5. Other Information	14
Item 6. Exhibits	14

PART I

FINANCIAL INFORMATION

ENTERTAINMENT ART, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED BALANCE SHEET

ASSETS

	December 31, 2010			March 31, 2010
	(Unaudited)
Current Assets:
Cash	$	2,177		$	3,792

Total Current Assets		2,177			3,792

Total Assets	$	2,177		$	3,792


LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)

Current Liabilities:
Notes Payable	$	40,500		$	25,000
Accrued Liabilities		12,882			5,268
Loans Payable - Related Party		27,500			27,500
Loans Payable		-			2,500

Total Current Liabilities		80,882			60,268

Total Liabilities		80,882			60,268


Commitments and Contingencies

Stockholders’ Equity:

Preferred Stock, $.001 par value; 10,000,000 shares authorized, none issued and outstanding		-			-
Common Stock, $.001 par value; 100,000,000 shares authorized, 59,730,000 issued and outstanding		59,730			59,730
Additional Paid-In Capital		6,370			6,370
Deficit Accumulated During the Development Stage		(144,805	)		(122,576	)

Total Stockholders’ Equity (Deficiency)		(78,705	)		(56,476	)

Total Liabilities and Stockholders’ Equity (Deficiency)	$	2,177		$	3,792

The accompanying notes are an integral part of these financial statements.

ENTERTAINMENT ART, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENT OF OPERATIONS

(Unaudited)

	For the Nine Months						For the						For the Period
	Ended						Quarters Ended						June 15, 2007
	December 31,						December 31,						(Inception) To
	2010			2009			2010			2009			December 31, 2010
Revenues:
Sales - Net	$	-		$	1,500		$	-		$	-		$	1,500

Costs and Expenses:
Cost of Sales		-			1,500			-			-			1,500
Rent		-			-			-			-			13,000
Consulting Fees		-			-			-			-			9,000
Professional Fees		16,730			19,747			3,188			4,504			84,424
Other Selling, General and
Administrative Expenses		2,409			9,488			688			611			38,661

Total Costs and Expenses		19,139			30,735			3,876			5,115			146,585

Loss from Operations		(19,139	)		(29,235	)		(3,876	)		(5,115	)		(145,085	)

Other Income (Expense):
Extinguishment of Debt		-			6,093			-			-			6,093
Interest Expense		(3,090	)		(1,795	)		(1,031	)		(840	)		(5,813	)

Total Other Income (Expense)		(3,090	)		4,298			(1,031	)		(840	)	$	280

Net Loss	$	(22,229	)	$	(24,937	)	$	(4,907	)	$	(5.955	)	$	(144,805	)

Basic and Diluted Loss Per Share	$	0.00		$	0.00		$	0.00		$	0.00

Weighted Average Common
Shares Outstanding		59,730,000			59,730,000			59,730,000			59,730,000

The accompanying notes are an integral part of these financial statements.

ENTERTAINMENT ART, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

FOR THE PERIOD JUNE 15, 2007 (INCEPTION) TO DECEMBER 31, 2010


								Deficit
					Additional			Accumulated
	Common Stock				Paid-In			During the
	Shares		Amount		Capital			Development Stage			Total

Balance, June 15, 2007		-	$	-	$	-		$	-		$	-

Common Stock Issued to Founder at $.00013 per share, June 2007		39,600,000		39,600		(34,500	)		-			5,100

Common Stock Issued to Private Investors at $.003 per share, November 2007 to March 2008		20,130,000		20,130		40,870			-			61,000

Net Loss for the Period		-		-		-			(39,375	)		(39,375	)

Balance, March 31, 2008		59,730,000		59,730		6,370			(39,375	)		26,725


Net Loss for the Year Ended March 31, 2009		-		-		-			(53,402	)		(53,402	)

Balance, March 31, 2009		59,730,000		59,730		6,370			(92,777	)		(26,677	)

Net Loss for the Year Ended March 31, 2010		-		-		-			(29,799	)		(29,799	)

Balance, March 31, 2010		59,730,000		59,730		6,370			(122,576	)		(56,476	)

Net Loss for the Nine Months Ended December 31, 2010 (Unaudited)		-		-		-			(22,229	)		(22,229	)

Balance, December 31, 2010 (Unaudited)		59,730,000	$	59,730	$	6,370		$	(144,805	)	$	(78,705	)

The accompanying notes are an integral part of these financial statements.

ENTERTAINMENT ART, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENT OF CASH FLOWS

(Unaudited)

	For the Nine Months						For the Period
	Ended						June 15, 2007
	December 31,						(Inception) to
	2010			2009			December 31, 2010
Cash Flows from Operating Activities:
Net Loss	$	(22,229	)	$	(24,937	)	$	(144,805	)
Debt Extinguishment		-			(6,093	)		(6,093	)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Changes in Assets and Liabilities:
(Increase) in Sundry Receivables		-			(327	)		-
Decrease in Deferred Offering Costs		-			-			8,000
(Decrease) in Accounts Payable -
Related Parties		-			(22,500	)		(1,907	)
Increase in Accrued Liabilities		7,614			945			12,882

Net Cash Used in Operating Activities		(14,615	)		(52,912	)		(131,923	)

Cash Flows from Investing Activities:		-			-			-

Cash Flows from Financing Activities:
Proceeds from Notes Payable		13,000			25,000			38,000
Proceeds from Loans Payable - Related Party		-			27,500			27,500
Proceeds from Sale of Common Stock		-			-			66,100
Proceeds of Loans Payable		-			-			2,500

Net Cash Provided by Financing Activities		13,000			52,500			134,100

Increase (Decrease) in Cash		(1,615	)		(412	)		2,177

Cash – Beginning of Period		3,792			5,289			-

Cash – End of Period	$	2,177		$	4,877		$	2,177


Supplemental Disclosures of Cash Flow Information:
Interest Paid	$	-		$	-		$	-
Income Taxes Paid	$	-		$	-		$	-


Supplemental Disclosures of Non-Cash Financing Activities:
Deferred Offering Costs Recorded in Accounts Payable -
Related Party	$	-		$	-		$	8,000

Reclassification of Loans Payable to Notes Payable	$	2,500		$	-		$	2,500

The accompanying notes are an integral part of these financial statements.

ENTERTAINMENT ART, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1 - Organization and Basis of Presentation

Entertainment Art, Inc. (“the Company”) was incorporated on June 15, 2007 under the laws of the State of Nevada.

The Company has not yet generated revenues from planned principal operations and is considered a development stage company as defined in Accounting Standards Codification ("ASC") 915. The Company intended to focus on designing, providing and selling a line of fashionable zip bags. The Company has since abandoned its business plan and is now seeking an operation with which to merge or acquire. Accordingly, the Company is now considered a blank check company. There is no assurance, however, that the Company will achieve its objectives or goals.

In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. These financial statements are condensed and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

The Company is a development stage company and has not commenced planned principal operations. The Company had virtually no revenues and incurred a net loss of $22,229 for the nine months ended December 31, 2010, and a net loss of $144,805 for the period June 15, 2007 (inception) to December 31, 2010. In addition, the Company had working capital and stockholders' deficiencies of $78,705 at December 31, 2010. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

There can be no assurance that sufficient funds will be generated during the next year or thereafter from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital could force the Company to curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company's existing stockholders.

The Company is attempting to address its lack of liquidity by raising additional funds, either in the form of debt or equity or some combination thereof. During the nine months ended December 31, 2010 the Company borrowed $13,000. There can be no assurances that the Company will be able to raise the additional funds it requires.

The accompanying condensed financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

ENTERTAINMENT ART, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 2 - Preferred Stock

The Company’s Board of Directors may, without further action by the Company’s stockholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series. The holders of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of the Company before any payment is made to the holders of the common stock. Furthermore, the board of directors could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of the common stock.

NOTE 3 - Common Stock

In June 2007 the Company issued 39,600,000 shares of common stock to its Founders for $5,100.

In October 2007 the Company sold 20,130,000 shares of common stock to private investors at $.003 per share for gross proceeds of $61,000.

On June 30, 2009 the Board of Directors authorized a 33 for 1 forward split of the Company's common stock to stockholders of record on July 8, 2009 and with a payment date of July 21, 2009. All share and per share data have been retroactively restated to reflect this recapitalization.

NOTE 4 - Related Party Transactions

During the period June 15, 2007 (inception) to March 31, 2008, the Company paid approximately $35,000 to an entity owned by two of its officers' and directors. Included in such payments were consulting fees and rent in the amount of $9,000 and $10,000, respectively. The Company rented space from this entity on a month to month basis.

During the period June 15, 2007 (inception) to March 31, 2008, the Company paid a law firm owned by an officer and director approximately $1,000 for start-up organization expenses.

During the year ended March 31, 2009, the Company was charged approximately $3,600 by an entity owned by two of its officers' and directors. Included in such payments was rent in the amount of $3,000. The Company previously rented space from this entity on a month to month basis.

During the year ended March 31, 2010, the Company paid $26,898 in legal fees to a law firm owned by an officer and director of the Company.

During the year ended March 31, 2010, the Company satisfied its accounts payable - related party obligation of $28,593 by the payment of $22,500. The balance of $6,093 was recorded as extinguishment of debt income for the year ended March 31, 2010.

ENTERTAINMENT ART, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 4 - Related Party Transactions (Continued)

During the year ended March 31, 2010, the Company, in connection with the termination of its originally planned business, purchased goods for $1,500 from an entity owned by two of its officers' and directors. These goods were sold at cost, in order to dispose of them.

At March 31, 2010, the Company owed $1,644 in legal fees to a law firm owned by an officer and director of the Company, which is included in accrued liabilities.

At March 31, 2010 loans payable to a related party in the amount of $27,500 bear interest at 5% per annum and are payable on demand.

At December 31, 2010, the Company owed $1,650 in legal fees to a law firm owned by an officer and director of the Company, which is included in accrued liabilities.

At December 31, 2010 the Company owed $2,381 in interest on a loan payable to an officer and director in the amount of $27,500. This accrued interest is included in accrued liabilities.

NOTE 5 - Change in Ownership

On May 1, 2009, the principal shareholders of the Company entered into a Stock Purchase Agreement which provided for the sale of 39,600,000 shares of common stock of the Company (the "Purchased Shares") owned by the three principals to Medford Financial Ltd. (the "Purchaser"). The consideration paid for the Purchased Shares, which represented 66.3% of the issued and outstanding share capital of the Company on a fully-diluted basis, was $120,000.

NOTE 6 - Notes Payable

On August 7, 2009, the Company issued a promissory note for $16,000. The promissory note is payable on demand and bears interest at 9% per annum.

On October 31, 2009, the Company issued a promissory note for $9,000 to the same party. This promissory note is payable on demand and bears interest at 9% per annum.

On April 5, 2010, the Company borrowed $3,000 from the holder of its note payable. On April 19, 2010, the Company issued a promissory note for $5,500 which memorialized a $2,500 advance during the quarter ended March 31, 2010 and $3,000 advanced on April 5,2010. The promissory note is payable on demand and bears interest a 9% per annum.

On July 30, 2010, the Company issued a promissory note for $10,000 to the same party. This promissory note is payable on demand and bears interest at 9% per annum.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this Form 10-Q, references to “Entertainment Art,” Company,” “we,” “our” or “us” refer to Entertainment Art, Inc. unless the context otherwise indicates.

Forward-Looking Statements

The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Overview

Entertainment Art, Inc. (the “Company”) was incorporated on June 15, 2007 in the State of Nevada. We were initially focused on the business of designing, marketing and selling a line of fashionable zipper bags. Due to the state of the economy, the Company has conducted virtually no business other than organizational matters, filing its Registration Statement and filings of periodic reports with the SEC. The Company has since abandoned its business plan and is now seeking an operating company with which to merge or to acquire.

We are now considered a blank check company. The U.S. Securities and Exchange Commission (the “SEC”) defines those companies as “any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.” Under SEC Rule 12b-2 under the Securities Act of 1933, as amended (the “Securities Act”), we also qualify as a “shell company,” because we have no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.

The Company’s current business plan is to attempt to identify and negotiate with a business target for the merger of that entity with and into the Company. In certain instances, a target company may wish to become a subsidiary of ours or may wish to contribute or sell assets to the Company rather than to merge. No assurances can be given that we will be successful in identifying or negotiating with any target company, or, if we do enter into such a business combination, no assurances can be given as to the terms of a business combination, or as to the nature of the target company. We seek to provide a method for a foreign or domestic private company to become a reporting or public company whose securities are qualified for trading in the United States secondary markets.

In October 2007 we sold 20,130,000 shares of common stock to private investors at $0.003 per share for gross proceeds of $61,000. The Company registered these shares, which represents 33.70% of the issued and outstanding shares of common stock, for resale. On June 30, 2009, the board of directors approved the implementation of a 33:1 forward stock split without correspondingly increasing the authorized shares of common stock. The effective date of the forward split was July 21, 2009 and as a result of the forward split, the Company has 59,730,000 shares of common stock issued and outstanding. All share and per share data have been retroactively adjusted to reflect this recapitalization.

On May 1, 2009, the principal shareholders of the Company entered into a Stock Purchase Agreement which provided for the sale of 39,600,000 shares of common stock of the Company (the "Purchased Shares") owned by the Company's three principals to Medford Financial Ltd. (the "Purchaser"). The consideration paid for the Purchase Shares, which represented 66.3% of the issued and outstanding share capital of the Company on a fully-diluted basis, was $120,000.

At December 31, 2010, the Company owed $1,650 in legal fees to a law firm owned by David Lubin, an officer and director of the Company.

At December 31, 2010 the Company owed $2,381 in interest on a loan payable to an officer and director in the amount of $27,500.

The address of our principal executive office is c/o Mr. Joseph Koegel, Entertainment Art, Inc. 571 Washington Street, West Hempstead, New York 11552. Our telephone number is (516) 946-2049. We do not have a functioning website at this time.

Plan of Operation

During the next 12 months, the Company intends to seek, investigate and, if such investigation warrants, acquire an interest in one or more business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of a publicly held corporation. At this time, the Company has no plan, proposal, agreement, understanding or arrangement to acquire or merge with any specific business or company, and the Company has not identified any specific business or company for investigation and evaluation. No member of management has had any material discussions with any other company with respect to any acquisition of that company.

The Company will not restrict its search to any specific business, industry or geographical location, and the Company may participate in a business venture of virtually any kind or nature. The discussion of the proposed plan of operation under this caption and throughout this Quarterly Report is purposefully general and is not meant to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potential business opportunities.

The Company will have to obtain funds in one or more private placements to finance the operation of any acquired business. Persons purchasing securities in these placements and other shareholders will likely not have the opportunity to participate in the decision relating to any acquisition. The Company’s proposed business is sometimes referred to as a “blind pool” because any investors will entrust their investment monies to the Company’s management before they have a chance to analyze any ultimate use to which their money may be put. Consequently, the Company’s potential success is heavily dependent on the Company’s management, which will have virtually unlimited discretion in searching for and entering into a business opportunity. None of the officers and directors of the Company has had any experience in the proposed business of the Company. There can be no assurance that the Company will be able to raise any funds in private placements. In any private placement, management may purchase shares on the same terms as offered in the private placement.

Management anticipates that it will only participate in one potential business venture. This lack of diversification should be considered a substantial risk to investing in the Company because it will not permit the Company to offset potential losses from one venture against gains from another. The Company may seek a business opportunity with a firm which only recently commenced operations, or a developing company in need of additional funds for expansion into new products or markets, or seeking to develop a new product or service, or an established business which may be experiencing financial or operating difficulties and is in need of additional capital which is perceived to be easier to raise by a public company. In some instances, a business opportunity may involve the acquisition or merger with a corporation which does not need substantial additional cash but which desires to establish a public trading market for its common stock. The Company may purchase assets and establish wholly owned subsidiaries in various businesses or purchase existing businesses as subsidiaries.

The Company anticipates that the selection of a business opportunity in which to participate will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries, and shortages of available capital, management believes that there are numerous firms seeking the benefits of a publicly traded corporation. Such perceived benefits of a publicly traded corporation may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for the principals of a business, creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes) for all shareholders, and other factors. Potentially available business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

As part of any transaction, the acquired company may require that management or other stockholders of the Company to sell all or a portion of their shares to the acquired company, or the principals of the acquired company. It is anticipated that the sales price of such shares will be lower than the current market price or anticipated market price of the Company’s common stock. The Company’s funds are not expected to be used for purposes of any stock purchase from insiders. The Company’s shareholders will not be provided the opportunity to approve or consent to such sale.

The above description of potential sales of management stock is not based upon any corporate bylaw, shareholder or board resolution, or contract or agreement. No other payments of cash or property are expected to be received by management in connection with any acquisition.

The Company has not formulated any policy regarding the use of consultants or outside advisors, but does not anticipate that it will use the services of such persons.

The Company has, and will continue to have, insufficient capital with which to provide the owners of business opportunities with any significant cash or other assets. However, management believes the Company will offer owners of business opportunities the opportunity to acquire a controlling ownership interest in a public company at substantially less cost than is required to conduct an initial public offering. The owners of the business opportunities will, however, incur significant post-merger or acquisition registration costs in the event they wish to register a portion of their shares for subsequent sale. The Company will also incur significant legal and accounting costs in connection with the acquisition of a business opportunity including the costs of preparing post-effective amendments, Forms 8-K, agreements and related reports and documents nevertheless, the officers and directors of the Company have not conducted market research and are not aware of statistical data which would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity.

The Company does not intend to make any loans to any prospective merger or acquisition candidates or to unaffiliated third parties.

Sources of Opportunities

The Company anticipates that business opportunities for possible acquisition will be referred by various sources, including its officers and directors, professional advisors, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals.

The Company will seek a potential business opportunity from all known sources, but will rely principally on personal contacts of its officers and directors as well as indirect associations between them and other business and professional people. It is not presently anticipated that the Company will engage professional firms specializing in business acquisitions or reorganizations.

The officers and directors of the Company are currently employed in other positions and will devote only a portion of their time (not more than three hours per week) to the business affairs of the Company, until such time as an acquisition has been determined to be highly favorable. In addition, in the face of competing demands for their time, the officers and directors may grant priority to their full-time positions rather than to the Company.

Evaluation of Opportunities

The analysis of new business opportunities will be undertaken by or under the supervision of the officers and directors of the Company. Management intends to concentrate on identifying prospective business opportunities which may be brought to its attention through present associations with management. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operation, if any; prospects for the future; present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services or trades; name identification; and other relevant factors. Officers and directors of the Company will meet personally with management and key personnel of the firm sponsoring the business opportunity as part of their investigation. To the extent possible, the Company intends to utilize written reports and personal investigation to evaluate the above factors. The Company will not acquire or merge with any company for which audited financial statements cannot be obtained.

The Company will not restrict its search for any specific kind of business, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or is in essentially any stage of its corporate life. It is currently impossible to predict the status of any business in which the Company may become engaged, in that such business may need additional capital, may merely desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer.

Acquisition of Opportunities

In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another corporation or entity. It may also purchase stock or assets of an existing business. On the consummation of a transaction, it is possible that the present management and shareholders of the Company will not be in control of the Company. In addition, a majority or all of the Company’s officers and directors may, as part of the terms of the acquisition transaction, resign and be replaced by new officers and directors without a vote of the Company’s shareholders.

It is anticipated that any securities issued in any such reorganization would be issued in reliance on exemptions from registration under applicable Federal and state securities laws. In some circumstances, however, as a negotiated element of this transaction, the Company may agree to register such securities either at the time the transaction is consummated, under certain conditions, or at a specified time thereafter. The issuance of substantial additional securities and their potential sale into any trading market which may develop in the Company’s common stock may have a depressive effect on such market. While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so called “tax free” reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the “Code”). In order to obtain tax free treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, the shareholders of the Company, including investors in this offering, would retain less than 20% of the issued and outstanding shares of the surviving entity, which could result in significant dilution in the equity of such shareholders.

As part of the Company’s investigation, officers and directors of the Company will meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of the Company’s limited financial resources and management expertise.

The manner in which each company participates in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the company and other parties, and the relative negotiating strength of the company and its management.

With respect to any mergers or acquisitions, negotiations with target company management will be expected to focus on the percentage of the Company which target company shareholders would acquire in exchange for their shareholdings in the target company. Depending upon, among other things, the target company’s assets and liabilities, the Company’s shareholders will in all likelihood hold a lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company’s shareholders.

The Company will not have sufficient funds (unless it is able to raise funds in a private placement) to undertake any significant development, marketing and manufacturing of any products which may be acquired.

Accordingly, following the acquisition of any such product, the Company will, in all likelihood, be required to either seek debt or equity financing or obtain funding from third parties, in exchange for which the Company would probably be required to give up a substantial portion of its interest in any acquired product. There is no assurance that the Company will be able either to obtain additional financing or interest third parties in providing funding for the further development, marketing and manufacturing of any products acquired.

It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity the costs therefore incurred in the related investigation would not be recoverable.

Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.

Management believes that the Company may be able to benefit from the use of “leverage” in the acquisition of a business opportunity. Leveraging a transaction involves the acquisition of a business through incurring significant indebtedness for a large percentage of the purchase price for that business.

Through a leveraged transaction, the Company would be required to use less of its available funds for acquiring the business opportunity and, therefore, could commit those funds to the operations of the business opportunity, to the acquisition of other business opportunities or to other activities. The borrowing involved in a leveraged transaction will ordinarily be secured by the assets of the business opportunity to be acquired. If the business opportunity acquired is not able to generate sufficient revenues to make payments on the debt incurred by the Company to acquire that business opportunity, the lender would be able to exercise the remedies provided by law or by contract. These leveraging techniques, while reducing the amount of funds that the Company must commit to acquiring a business opportunity, may correspondingly increase the risk of loss to the Company. No assurance can be given as to the terms or the availability of financing for any acquisition by the Company. During periods when interest rates are relatively high, the benefits of leveraging are not as great as during periods of lower interest rates because the investment in the business opportunity held on a leveraged basis will only be profitable if it generates sufficient revenues to cover the related debt and other costs of the financing. Lenders from which the Company may obtain funds for purposes of a leveraged buy-out may impose restrictions on the future borrowing, distribution, and operating policies of the Company. It is not possible at this time to predict the restrictions, if any, which lenders may impose or the impact thereof on the Company.

Results of Operations For the three months ended December 31, 2010 compared to the three months ended December 31, 2009

The following discussion should be read in conjunction with the condensed financial statements and in conjunction with the Company's Form 10-K filed on June 18, 2010. Results for interim periods may not be indicative of results for the full year.

Revenues

The Company did not generate any revenues for the three (3) months ended December 31, 2010 and 2009. We are not expecting to generate any revenues in the future.

During the three (3) months ended December 31, 2010 and 2009, total operating expenses were $3,876 and $5,115, respectively. General and administrative expenses were $688 and $611, respectively. Professional fees were $3,118 and $4,504, respectively and were associated with fulfilling the Company’s SEC reporting requirements (including bookkeeping and accounting services).

Net loss

During the three (3) months December 31, 2010 and 2009, the net loss was $4,907 and $5,955, respectively and the net loss amounted to $144,805 for the period June 15, 2007 (inception) December 31, 2010.

Results of Operations For the nine months ended December 31, 2010 compared to the nine months ended December 31, 2009

Revenues

The Company had net revenues of $0 and $1,500 for the nine (9) months ended December 31, 2010 and 2009, respectively. We are not expecting to generate any revenues in the future.

During the nine (9) months ended December 31, 2010 and 2009, total operating expenses were $19,139 and $29,235, respectively. General and administrative expenses were $2,409 and $9,488, respectively. Professional fees were $16,730 and $19,747, respectively and were associated with fulfilling the Company’s SEC reporting requirements (including bookkeeping and accounting services).

Net loss

During the nine (9) months ended December 31, 2010 and 2009, the net loss was $22,229 and $24,937, respectively and the net loss amounted to $144,805 for the period June 15, 2007 (inception) to December 31, 2010.

Liquidity and Capital Resources

As of December 31, 2010, the Company had cash in the amount of $2,177.

The focus of Entertainment Art’s efforts is to acquire or develop an operating business. Despite no active operations at this time, management intends to continue in business and has no intention to liquidate the Company. Entertainment Art has considered various business alternatives including the possible acquisition of an existing business, but to date has found possible opportunities unsuitable or excessively priced. Entertainment Art does not contemplate limiting the scope of its search to any particular industry. Management has considered the risk of possible opportunities as well as their potential rewards. Management has invested time evaluating several proposals for possible acquisition or combination; however, none of these opportunities were pursued. Entertainment Art presently owns no real property and at this time has no intention of acquiring any such property. Entertainment Art’s expected expenses are comprised substantially of professional fees, primarily incident to its reporting requirements.

The accompanying financial statements have been prepared assuming Entertainment Art will continue as a going concern. Entertainment Art’s recurring losses from operations, stockholders’ deficiency and working capital deficiency, and lack of revenue generating operations, raise substantial doubt about the Company’s ability to continue as a going concern.

Management believes Entertainment Art will continue to incur losses and negative cash flows from operating activities for the foreseeable future and will need additional equity or debt financing to sustain its operations until it can achieve profitability and positive cash flows, if ever. Management plans to seek additional debt and/or equity financing for Entertainment Art, but cannot assure that such financing will be available on acceptable terms.

The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of such business plan will actually improve the Company’s operating results.

Going Concern Consideration

There can be no assurance that sufficient funds will be generated during the next three months or thereafter from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital could force the Company to curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company's existing stockholders.

The Company is attempting to address its lack of liquidity by raising additional funds, either in the form of debt or equity or some combination thereof. There can be no assurances that the Company will be able to raise the additional funds it requires.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 3.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our principal executive officer and principal financial officer has reviewed the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13(a)-15(e) and 15(d)-15(e)) within the end of the period covered by this Quarterly Report on Form 10-Q and has concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner.

Changes in Internal Controls over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 1A. Risk Factors

As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 1A.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

None.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Use of Proceeds

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Remove and Reserved

Item 5. Other Information.

None

Item 6. Exhibits

Exhibit No.		Description

31.1		Rule 13a-14(a)/15d14(a) Certifications of Joseph Koegel, the Principal Executive Officer (attached hereto).

31.2		Rule 13a-14(a)/15d14(a) Certifications of David Lubin, the Principal Financial Officer (attached hereto).

32.1		Section 1350 Certifications of Joseph Koegel, the Principal Executive Officer (attached hereto)

32.2		Section 1350 Certifications of David Lubin, the Principal Financial Officer (attached hereto)

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.

		ENTERTAINMENT ART, INC.
Dated: February 9, 2011		By: /s/ Joseph Koegel Name: Joseph Koegel Title: President, Chief Executive Officer, Chairman and Director (Principal Executive Officer)

Dated: February 9, 2011		By: /s/ David Lubin Name: David Lubin Title: Treasurer, Secretary and Director (Principal Financial and Accounting Officer)

Biozoom, Inc. - FORM 10-Q - February 9, 2011

Attached files

Biozoom, Inc. Reports