SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB/A
(Amendment No. 2)

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

Commission File Number 333-105393

CAPE COASTAL TRADING CORPORATION

(Name of small business issuer in its charter)

New York 52-2372260

(State of organization) (I.R.S. Employer Identification Number)

301 West 53, 6C, New York, NY 10019

(Address of principal executive offices)

Registrant’s telephone number, including area code: 646-215-3583

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

None

Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:

None

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter periods 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 [ ]

As of May 24, 2004, there were 2,300,375 shares of the Registrant's common stock outstanding.

This Report on Form 10-QSB/A, Amendment No. 2, for the quarter ended March 31, 2004, is being filed to disclose that as of the dates on which the original Report on Form 10-QSB, and all amendments thereto including this amendment, were filed the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. The issuer has checked “Yes” to the statement regarding these matters as set forth on the cover page.

TABLE OF CONTENTS

PART I

	Page
ITEM 1	DESCRIPTION OF BUSINESS	2
ITEM 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6
ITEM 3	CONTROLS AND PROCEDURES	9

PART II

	Page
ITEM 1	LEGAL PROCEEDINGS	9
ITEM 2	CHANGES IN SECURITIES	9
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	9
ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	9
ITEM 5	OTHER INFORMATION	9
ITEM 6	EXHIBITS AND REPORTS ON FORM 8-K	9

PART I

ITEM 1. DESCRIPTION OF BUSINESS

CAPE COASTAL TRADING CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 2004
(UNAUDITED)

ASSETS


CURRENT ASSETS
Cash		$ 4,325
Inventory		425


Total current assets		4,750
FIXED ASSETS, NET		1,247


TOTAL ASSETS		$ 5,997

LIABILITIES AND STOCKHOLDERS' DEFICIT


CURRENT LIABILITIES
Accounts payable	$ 5,500
Payable to shareholder	3,360

TOTAL CURRENT LIABILITIES	8,860

STOCKHOLDERS' DEFICIT
Common stock: $.001 par value; 50,000,000
shares authorized, 2,290,875 issued and
outstanding	2,290
Paid-in capital	12,524

Retained deficit accumulated in the
development stage	(17,677	)

Total stockholders' deficit	(2,863	)

TOTAL LIABILITIES AND STOCKHOLDERS'	$ 5,997
DEFICIT

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

CAPE COASTAL TRADING CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS FOR THE PERIODS ENDED MARCH 31, 2004 AND 2003
AND FOR THE PERIOD FROM INCEPTION (AUGUST 16, 2002) TO MARCH 31, 2004

(UNAUDITED)

		2004			2003			CUMULATIVE FROM INCEPTION TO MARCH 31, 2004
REVENUE		$	--		$	--		$	125

COST OF GOODS SOLD			--			--			75

GROSS PROFIT			--			--			50

EXPENSES
General and administrative			3,094			564			7,441

Consulting fees			--			--			200
Professional fees			--			--			9,631

Total operating costs and expenses			3,094			564			17,272

OTHER EXPENSE
State and local taxes			--			455			455

Loss from operations and before taxes			(3,094	)		(1,019	)		(17,677	)

PROVISION FOR INCOME TAXES			--			--			--

Net loss		$	(3,094	)	$	(1,019	)	$	(17,677	)



LOSS PER SHARE Basic and diluted	$		(0.00)		$	(0.00	)


WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic and diluted			2,268,657			2,218,152

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

CAPE COASTAL TRADING CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED
MARCH 31, 2004 AND 2003 AND FOR THE PERIOD FROM INCEPTION
(AUGUST 16, 2002) TO MARCH 31, 2004

(UNAUDITED)

	2004			2003			CUMULATIVE FROM INCEPTION TO MARCH 31, 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(3,094	)	$	(1,019	)	$	(17,677	)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization		208			200			1,254
Stock Issued for consulting		--			200			200
Changes in assets and liabilities:
Inventories		--			--			(425	)
Accounts payable		1,400			(2,481	)		8,039
Payable to shareholder		865			40			3,360

Net cash used in operating activities		(621	)		(3,060)			(5,249	)

CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets		--			--			(2,501	)

Net cash used in investing activities		--			--			(2,501	)

CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common stock		4,875			6,650			11,725
Proceeds from capital contributions		--			--			350

Net cash provided by financing activities		4,875			6,650			12,075

INCREASE IN CASH		4,254			3,590			4,325
CASH AT BEGINNING OF PERIOD		71			122			--

CASH AT END OF PERIOD	$	4,325		$	3,712		$	4,325


SUPPLEMENTAL INFORMATION
Interest paid	$	--		$	--		$	--

Income taxes paid	$	--		$	--		$	--

Stock issued for accounts payable	$	--		$	--		$	2,539

The accompanying notes are an integral part of these financial statements

CAPE COASTAL TRADING CORP.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 2004 AND 2003 AND FOR THE
PERIOD FROM INCEPTION (AUGUST 16, 2002) TO MARCH 31, 2004

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Organization

Cape Coastal Trading Corp. (“The Company”) is a development stage company that was incorporated in New York on August 16, 2002. The Company is focused on importing artworks and crafts from Ghana, Africa to sell to its vendors and customers in the U.S. The Company is engaged in the planning, selection, and procurement of these products.

Basis of Presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. They 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. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.

These financial statements should be read in conjunction with the financial statements and footnotes of the Company on Form 10-KSB for the quarter ended December 31, 2003.

2. GOING CONCERN

Since inception, the Company has been considered a development stage company and has generated minimal operating revenues. There is substantial doubt that the Company will generate sufficient revenues during 2004 to meet its operating cash requirements. Accordingly, the Company’s ability to continue operations through 2004 depends on its success in obtaining equity financing in an amount sufficient to support its operations. This raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. The Company intends to raise additional capital through private or public securities offerings.

3. RELATED PARTY TRANSACTION

At March 31, 2004 the Company owed $3,360 to a major shareholder for purchases he made and expenses he paid on behalf of the Company.

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

When used in this Form 10-QSB, the following discussion contains certain statements that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that refer to expectations, projections or other characterization of future events or circumstances, and especially those which include variations of the words "believes," "intends," "estimates," "anticipates," "expects," "plans," or similar words or variations thereof, are likely to be forward-looking statements, and as such, are likely to concern matters involving risk, uncertainty, unpredictability and other factors that could materially and adversely affect the outcome or results indicated by or inferred from the statements themselves. Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this Form 10QSB and in the Company's other filings with the Securities and Exchange Commission, and that no statements contained in the following discussion or in this Form 10QSB should be construed as a guarantee or assurance of future performance or future results

PLAN OF OPERATION

CCTC is in its developmental stages and has generated very little revenue since its inception, August 16, 2002. It is imperative that the Company raise $25,000 to satisfy the cash requirements in the next 12 months or until it can sustain itself based on its own operations. Currently, the Company does not have any commitments for capital from its officers, directors, majority shareholders or otherwise. There are no assurances that the Company will be able to raise any additional financing. If the Company does not raise additional financing, the Company may be forced to scale back, curtail or cease its business operations.

It may become necessary for CCTC to sell additional stock in one or more private placements or subsequent public offerings. If CCTC cannot obtain at least $25,000 in one or more private placements or subsequent public offerings, we will seek financing, however, the financing to be sought may not be forthcoming and even if additional financing becomes available, it may not be available on terms that are favorable to CCTC.

During the next twelve months there are no expected purchases or sales of plant and significant equipment.

Over the next 12 months, the operations of CCTC will be focused on identifying a professional photographer and catalogue designer, contacting HBCU bookstore management and key administrative college and university personnel, and selecting an advertising agency to develop a campaign for our products in the Retail and Department store market. CCTC has arranged for both Lizmof Enterprise, a Ghana-based independent foreign dealer and distributor in art, craft and general merchants, and Gye Nyame Handicraft Co., a Ghana-based independent foreign producers and exporters dealer, to procure and distribute artworks and crafts to the company’s office in the United States. In June, July and August of 2003, Management attended several trade shows in New York and was able to identify local carriers of these imported products. CCTC is actively pursuing these local carriers as an alternative means to procure certain items of inventory.

The Company has no written contracts with Lizmof Enterprise or Gye Nyame Handicraft Co. for the production and delivery of any artworks and crafts. Subject to Management approval, Lizmof Enterprise’s has a current list and description of the artworks and crafts to be produced and delivered to the Company . The Company obtained its current inventory selection on a visit to Lizmof Enterprise’s and Gye Nyame Handicraft Co., both located in Ghana, Africa, in December of 2002 by an officer of the Company.

The remaining inventory purchased from Lizmof Enterprise and Gye Nyame Handicrafy Co. in December 2002 will mainly be utilized as samples in CCTC’s marketing efforts to obtain orders for the artworks and crafts. The retail price of our artworks, crafts, and leather products range from $15.00 to $500.00. CCTC expects to sell some of the remaining inventory and receive sales there from.

CCTC anticipates that within the next 12 months it will be in a better position to determine exactly how much should be expended with regard to the actual marketing costs involved in the advertising and promotion of the products. CCTC anticipates expending up to $15,000.00 in marketing costs including advertising in journals and print publications reviewed by consumers, specifically, African American students. These marketing efforts will commence upon the development and distribution of a Company catalogue to selected targets. CCTC contemplates that the $15,000.00 presently allocated for marketing will be sufficient to permit continued marketing of the products until such time as CCTC can fund further marketing efforts through revenues earned by it.

Only in the event the Company raises the additional $25,000. as discussed above, CCTC may hire its first part-time employee. This employee would be responsible for the sales and marketing of the artworks and crafts. It is contemplated that this employee would be employed under terms that will provide for an hourly salary of $15 per hour plus a commission incentive arrangement based upon units sold. At such time as sales for the artworks and crafts reach a level of 500 to 1,000 units, CCTC will have to add a full-time executive employee, to perform day-to-day operations at a salary of approximately $30,000.00. Additionally, a part-time hourly wage employee would be required for storage and shipping purposes. Since CCTC has not allocated funds for this purpose, these individuals would, if necessary, be engaged should we sufficient sales revenue.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2004 (THE "2004 QUARTER") COMPARED TO THREE MONTHS ENDED MARCH 31, 2003 (THE "2003 QUARTER").

The Company is considered a development stage company and has generated very little revenue since its inception, August 16, 2002. Cost of sales was $0 in Quarter 2004 as well as Quarter 2003. In Quarter 2003 the Company had total operating costs and expenses of $1,019, consisting of $564 in general and administrative expenses as compared to total operating costs and expenses of $3,094 in Quarter 2004, consisting of general and administrative expenses of $3,094

Net operating loss increased $2,075 from $1,019 in Quarter 2003 to $3,094, or 3.04%, in Quarter 2004.

We had other expenses of $455 consisting of state and local taxes in Quarter 2003 compared to $0 in Quarter 2004.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2004, the Company had total current assets of $4,750, which consisted of $4,325 in cash and $435 in inventory. At March 31, 2004, total current liabilities were $8,860, which consisted of $5,500 in accounts payable and $3,360 in shareholder payables. At March 31, 2004, the Company had negative working capital of $4,110 and with a current ratio of 54%. As of March 31, 2004, we had a deficit of $17,677.

During Quarter 2004, the Company had an increase in cash of $4,254. The Company used $621 in operating activities during Quarter 2004, which consisted of its net loss of $3,094 that was offset by the following adjustments: $208 for depreciation expense, $1,400 for an increase in accounts payable and $864 for an increase in payable to shareholder.

During Quarter 2004, the Company received $4,875 from issuance of common stock.

RISK FACTORS

Management lacks operational experience in the artworks and crafts retail industry.

CCTC is a start-up company that markets and sells products that it imports and exports. Messrs. Sarfoh and High, the current officers of CCTC, have effective control over all decisions regarding both policy and operations of CCTC with no oversight from other management. Messrs. Sarfoh and High do not have any experience in the area of starting-up and properly staffing a company, operating an import and export business, or operating an Internet business. The success of CCTC is contingent upon these individuals’ ability to make appropriate business decisions in these areas. It is possible that this lack of relevant operational experience could prevent CCTC from becoming a profitable business and an investor from obtaining a return on his investment in CCTC.

Additional capital investment in CCTC may not result in future profit.

CCTC is operating at a loss which may continue in the future. It cannot be determined if an additional capital investment in CCTC will permit CCTC to recognize a profit in the future. As of December 31, 2003, CCTC has sustained operating losses of $14,583. The amount of this loss should not be indicative of future losses sustainable by CCTC. As of December 31, 2003, CCTC had expended only a small amount of office expenses and had not yet begun accruing any expenses with regard to the actual anticipated operating costs. CCTC intends to utilize future revenues to market and procure the delivery of its products and operate its business.

Management may have underestimated the size of the consumer market for their products, which may negatively impact future sales and profit.

At the present time, CCTC has only evaluated the marketability of its products, based upon the management’s perception of the potential value of African artworks and crafts in the marketplace. Once CCTC obtains the necessary capitalization, it will immediately commence direct and targeted marketing of its products, other than on its website at www.ghanacrafts.com and to the 100 HBCU’s”. CCTC’s website was launched in mid-2003 and it is too premature to anticipate how the website will, if at all, aid CCTC in its marketing and sales efforts. In the event marketing efforts reveal that the product is not marketable, CCTC will not have a potential source of income and it will be necessary for CCTC to seek another means of obtaining income or the business will fail.

Consumers may not adopt the Internet as a way of buying African artworks and crafts, which would prevent us from becoming profitable.

We may not be able to convert a large number of consumers who purchase African artworks and crafts, both while visiting Africa, and from traditional shopping methods, to online shopping for African artworks and crafts. As a result CCTC may never achieve widespread customer acceptance of shopping for African artworks and crafts online. Specifically, consumers may not wish to change the way they purchase art and may feel it is necessary to view the actual works of arts and crafts rather than pictures before purchasing them. In addition, consumers may not be willing to make orders online due to the perceived difficulty of placing complex orders online or pricing that does not meet customer expectations of finding competitive prices on the Internet. As a result, we may never derive sufficient revenues from our online retail operations division in order to become a profitable enterprise, which could have a materially adverse impact on our business, results of operations and financial condition.

CCTC may not be able to differentiate its artworks and crafts from competitors which may adversely impact the company’s ability to recognize a profit.

CCTC will be competing with importers of artworks and crafts who sell similar products to the company’s target population and have already established a market for their products. An investor’s ability to realize a return on their purchase of shares will be dependent upon management’s ability to differentiate their artworks and crafts from competitive artworks and crafts currently in the marketplace. CCTC will focus its marketing on the authentic designs of its products and target the segments of the market that will best appreciate this design.

CCTC does not have formalized agreements with its suppliers which could result in increased acquisition costs.

CCTC’s agreement with Lizmof Enterprise and Gye Nyame Handicraft Co. Producers and Exporters are oral in nature. No formalized contract has been entered into thus exposing the company to market price fluctuations which could result in increased product acquisition costs. CCTC expects to formalize an agreement with the above named suppliers upon depletion of its current inventory on hand or upon receiving a specialized customer order from its website. In order to compete, CCTC will have to be assured that it can continually procure a quality product at a competitive price. The lack of a written contract could expose CCTC to increased prices per unit.

Our principal stockholder controls the business affairs of CCTC and thus investors will have limited or no participation in our business affairs.

Currently, our principal stockholder and President, Kwajo Sarfoh, owns approximately 78.2% of our common stock. As a result, he will have significant influence over all matters requiring approval by our stockholders without the approval of minority stockholders. In addition, he will be able to elect all of the members of our Board of Directors, which will allow him to significantly control our affairs and management. He will also be able to affect most corporate matters requiring stockholder approval by written consent, without the need for a duly noticed and duly-held meeting of stockholders. Accordingly, you will be limited in your ability to affect change in how we conduct our business

CCTC may not have sufficient capital to procure its products, which could cause investors to lose all or a part of their investment in us.

In its Initial Public Offering, CCTC received less than 15% of the maximum offering price of $50,000, or $6,775, and sold 33,875 of the 250,000 shares offered for sale. CCTC will be able to operate, however, it may need to seek additional sources of financing. If additional financing is sought however, the financing to be sought may not be forthcoming and even if additional financing becomes available, it may not be available on terms that are favorable to CCTC. In the event that it cannot sell all of the shares being offered or obtain adequate financing, CCTC will concentrate its efforts on the purchase of debt. However, it may become necessary for CCTC to sell additional stock in one or more private placements or subsequent public offerings. If CCTC cannot obtain additional financing and revenue from operations are insufficient, it will have to cease operations and investor’s value will be lost.

CCTC may not recognize an operating profit in the future unless it can employ experienced management to operate the business on a full-time basis.

CCTC is currently dependent upon the efforts of Messrs. Sarfoh and High. Specifically, the company’s performance is substantially dependent on the performance of Mr. Sarfoh, its president. The loss of the services of Mr. Sarfoh could have a materially adverse impact on our business, results of operations or financial condition. In addition, the absence of Mr. Sarfoh will force us to seek a replacement who may have less experience, limited direct access to the markets and artisans in Ghana or who may not understand our business as well, or we may not be able to find a suitable replacement.

A conflict of interest may arise regarding the amount of time that CCTCs current officers can devote to CCTC business activities.

CCTC’s officers are only engaged in the business activities of CCTC on a part-time basis. This could cause the officers a conflict of interest between the amount of time they devote to CCTC’s business activities and the amount of time required to be devoted to such other activities. Messrs. Sarfoh and High, CCTC’s current officers, are engaged in the practice of public accountancy on a full-time basis. They devote 20 hours per week to CCTC’s business activities. This amount of time historically has been sufficient to satisfy the business needs of CCTC. Subsequently to this offering, CCTC will increase its business activities in terms of marketing, product procurement, sales, and administration. This increase in business activities will require that CCTC’s officers engage in the business activities of CCTC on a full-time basis, thereby causing Messrs. Sarfoh and High a conflict of interest.

CCTC has not entered into binding employment contracts with Messrs. Sarfoh and High requiring them to devote sufficient time to CCTC business activities, thereby potentially inhibiting CCTCs ability to grow its business.

In the event that there is a conflict of interest and Messrs. Sarfoh and High are not willing to devote more time to CCTC’s business activities, they may either employ full-time employees who have the experience and expertise necessary to bring the artworks and crafts to market, resign after finding suitable successors or cease operations, causing investors to lose their investment in us. While it is expected that other management will be added over time, there are no assurances that such will occur. If management does not devote adequate time or find experienced employees, investors will lose their investment in us.

CCTC does not expect to pay cash dividends, which may lower expected returns for investors.

When making an investment in CCTC, an investor should not expect to receive cash dividends from CCTC. An investor must evaluate the potential for his return on his investment, based upon the investor’s future ability to sell the shares purchased through this offering for a greater amount in the future. The holders of CCTC common stock are entitled to receive dividends when and if declared by the Board of Directors. CCTC does not intend to pay cash dividends in the foreseeable future, but instead intends to retain any and all earnings to finance the growth of the business. To date, CCTC has not paid cash dividends on its common stock.

There is not an established market for shares of CCTC common stock, which could make markets for these shares highly illiquid.

Investors may not be able to sell shares acquired in this offering because CCTC common stock is not currently publicly traded. It is unlikely that any active public trading market can be established or sustained in the foreseeable future. CCTC intends to have its common stock quoted on the OTC electronic bulletin board as soon as practicable, however, there can be no assurance that CCTC shares will be quoted on the over the counter bulletin board. Until there is an established trading market, holders of CCTC common stock will find it difficult to sell or to obtain accurate quotations for the price of the common stock. CCTC does not currently meet the requirement to have shares listed on the American Stock Exchange (“AMEX”) or the NASDAQ stock market, therefore, any market for securities that does develop will be highly illiquid. It is unknown whether CCTC common shares will achieve sufficient distribution or that it will be able to obtain the number of market makers necessary to obtain listing on the NASDAQ stock market in the foreseeable future.

CCTC shares are considered penny stock, which may impact an investors ability to re-sell their shares in the public market.

Federal law imposes additional disclosure requirements for this stock, which may have a materially adverse impact on the investors’ ability to resell their shares in the public market. CCTC’s common stock is currently considered a “Penny Stock,” “as defined under Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, under federal securities laws since its market price is below $5.00 per share. Federal rules and regulations under the Securities Exchange Act of 1934, generally impose additional sale practice and disclosure requirements on broker/dealers who sell or recommend CCTC’s shares to certain investors. Broker/dealers who sell Penny Stock to certain types of investors may be required to comply with the Securities and Exchange Commission’s regulations concerning the transfer of Penny Stock. If an exemption is not available, these regulations require broker/dealers to make a suitability determination prior to selling Penny Stock to the purchaser, receive the purchaser’s written consent to the transaction, and provide certain written disclosures to the purchaser. These rules may affect the ability of broker/dealers to make a market in or to trade CCTC shares. In turn, this may impact the investors’ ability to re-sell those shares in the public market.

Our auditor has expressed substantial doubt about the continuing operation of our business

The capital placed into CCTC through this offering may not be sufficient to permit CCTC to continue operations as an ongoing business. An investor should be aware that his investment will be lost if the Company cannot continue to operate. The projected need for additional capital in our business may not be sufficient to sustain CCTC’s operation over the next 12 months. Therefore, even if all of the shares offered pursuant to this offering are purchased, the investors’ investment may be of little or no value should future events not occur as projected.

CRITICAL ACCOUNT POLICIES

Our discussion and analysis of our financial condition and results of operations is based upon our audited financial statements, which have been prepared in accordance with accounting principals generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to uncollectible receivable, investment values, income taxes, the recapitalization and contingencies. We base our estimates on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about 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.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

Going Concern

ITEM 3 CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures. The Companys chief executive officer and principal financial officer, after evaluating the effectiveness of the Company’s "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report (the "Evaluation Date"), has concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and designed to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to him by others within those entities.

(b) Changes in internal control over financial reporting. There were no significant changes in the Company's internal control over financial reporting during the fourth fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Based on an evaluation performed, the Company’s certifying officers have concluded that the disclosure controls and procedures were effective as of March 31, 2004, to provide reasonable assurance of the achievement of these objectives. There was no change in the Company’s internal control over financial reporting during the fiscal quarter ended March 31, 2004, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

CCTC is not currently a party to any legal proceedings.

ITEM 2. CHANGES IN SECURITIES

The Company’s securities are currently held of record by a total of approximately 36 persons. There is presently no public market for CCTC’s common stock. The Company has never paid a cash dividend on its common stock and does not anticipate the payment of a cash dividend in the foreseeable future. The Company intends to reinvest in its business operations any funds that could be used to pay a cash dividend.

From January 2003 to March 2003, CCTC completed an Offering of 66,500 shares of its common stock at a price of $0.10 per share to a total of 18 purchasers (“Regulation D Offering”). The last subscription for shares in this Offering was completed on March 31, 2003. The total amount received from the Regulation D Offering was $6,650.00. The Regulation D Offering and sales were deemed to be exempt under Rule 506 of Regulation D and section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons and the company made independent determinations that all of these persons were sophisticated investors, and that they were capable of analyzing the merits and risks of their investment.

In particular, our company confirmed that with respect to the exemption claimed under Rule 506 D and section 4(2) of the Securities Act of 1933, that:

Each purchaser referred to gave written assurance of investment intent without a view for resale and certificates for shares sold to each purchaser bear a legend consistent with such investment intent and restricting transfer:
Sales were made to a limited number of persons. No general solicitation to the public was made in connection with such sales;
Each purchaser represented in writing that they had sufficient sophistication to evaluate the investment and could afford to lose their entire investment without adversely affecting their lifestyle;
Neither our company nor any person acting on our behalf offered or sold shares by means of any form of general solicitation or general advertising;
The purchasers represented in writing that they acquired the shares for their own accounts.
Shareholders have been placed on notice that their securities will need to be sold in compliance with Rule 144 of the Act, and may not be transferred otherwise.

On September 15, 2002, CCTC issued 1,800,000 shares of common stock to Mr. Kwajo M. Sarfoh in exchange for $2,539.00 of capital contributed to CCTC to fund general business operations. CCTC therefore valued the common shares of CCTC at approximately $.00115 per share and recorded the value on its books at $2,539.00. Additionally, the Board of Directors authorized the issuance of 200,000 shares of common stock at $.001 par value to Trae O. High for consulting services provided to the Company amounting to $200.00. and of 200,000 shares of common stock at $.001 par value to David Loev in consideration for $200.00. Mr. The sales to Messrs. Sarfoh, High and Loev were deemed to be exempt under section 4(2) of the Securities Act of 1933, as amended.

USE OF PROCEEDS FROM SALE OF REGISTERED SECURITIES

During 1st Quarter ended March 31, 2004 and beginning of the 2nd Quarter, through April 11, 2004, the Company sold 33,875 out of the 250,000 shares of common stock, par value $.001, for a fixed price of $.20 per share. The offering proceeds received from the sale of such shares amounted to $6,775. These shares were registered for sale under the Securities Act of 1933 with the Securities and Exchange Commission on Amendment No. 5, Form SB-2/A, and declared effective for sale on November 12, 2003.

From this offering, $3,800 has been paid to Thomas Leger & Co. L.L.P. for accounting services, $350.00 has been paid to Jason Karavias, Esq. for legal services, $350.00 to the Company's transfer agent, Pacific Stock Transfer Company, for set-up fees of which $390.00 remains payable, and $550.00 to Eworldwire for Company distribution release services to the Colleges and University market. Remaining proceeds from this offering of $1,535 will be used for initial catalogue design, website enhancements and general and administrative expenses.

The management of CCTC anticipates applying for trading in its common stock on the over the counter bulletin board upon the effectiveness of the registration statement of which this prospectus forms a part. However, CCTC can provide no assurances that its shares will be traded on the bulletin board, or, if traded, that a public market will materialize.

No dividends have been declared or paid on the Company’s securities, and it is not anticipated that any dividends will be declared or paid in the foreseeable future. Income will be retained for the development and expansion of the Company’s business. Dividend policy for the future is subject to the discretion of the Board of Directors, and will depend upon a number of factors, including earnings, debt service, capital requirements, business conditions and other factors that the Board of Directors may deem relevant.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3.1 Articles of Incorporation (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on May 20, 200

3.2 Bylaws (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on May 20, 200

3.3 Share Certificate (incorporated by reference to Registration Statement on Form SB-2 filed with the Securities and Exchange Commission, Registration Statement No. 333-105393, on May 20, 2003

10.1 Website Designer Contract (incorporated by reference to Registration Statement on Form SB-2 filed with the Securities and Exchange Commission, Registration Statement No. 333-105393, on August 12, 2003).

10.2 HostPC Contract (incorporated by reference to Registration Statement on Form SB-2 filed with the Securities and Exchange Commission,Registration Statement No. 333-105393, on August 12, 2003

10.3 Subscription Agreement (incorporated by reference to Registration Statement on Form SB-2 filed with the Securities and Exchange Commission, Registration Statement No. 333-105393, on August 12, 2003)

10.4 Registration Rights Agreement (incorporated by reference to Registration Statement on Form SB-2 filed with the Securities and Exchange Commission, Registration Statement No. 333-105393, on May 20, 2003).

10.5 Subscription Agreement (incorporated by reference to Registration Statement on Form SB-2 filed with the Securities and Exchange Commission, Registration Statement No. 333-105393, on August 12,2003).

31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amende

32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200

(b) Reports of Form 8K

None.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CAPE COASTAL TRADING CORPORATION.

/S/ Kwajo M. Sarfoh
——————————————
Kwajo M. Sarfoh, President, Director, Treasurer, Controller
Date: September 24, 2004