SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB/A

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

Commission File Number 333-105393

CAPE COASTAL TRADING CORPORATION

(Name of small business issuer in its charter)

New York                                            52-23722

> (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.

As of August 23, 2004, there were 2,300,375 shares of the Registrant's common stock outstanding.



This Report on Form 10-QSB/A, for the quarter ended June 30, 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

FINANCIAL INFORMATION

|       | 
|------ | 
|ITEM 1 | 
|ITEM 2 | 
|ITEM 3 | 

PART II

OTHER INFORMATION

|       | 
|------ | 
|ITEM 1 | 
|ITEM 2 | 
|ITEM 3 | 
|ITEM 4 | 
|ITEM 5 | 
|ITEM 6 | 

PART I

ITEM 1.  FINANCIAL STATEMENTS



CAPE COASTAL TRADING CORP.(A DEVELOPMENT STAGE COMPANY) BALANCE SHEETJUNE 30, 2004(UNAUDITED)ASSETS

|                     | 
|-------------------- | 
|CURRENT ASSETS       | 
|Cash                 | 
|Inventory            | 
|                     | 
|                    
|Total current assets | 
|FIXED ASSETS, NET    | 
|                     | 
|                    
|TOTAL ASSETS         | 
|                     | 







LIABILITIES AND STOCKHOLDERS' DEFICIT

|                                          | 
|----------------------------------------- | 
|CURRENT LIABILITIES                       | 
|Accounts payable                          | 
|Payable to shareholder                    | 
|                                          | 
|TOTAL CURRENT LIABILITIES                 | 
|                                          | 
|STOCKHOLDERS' DEFICIT                     | 
|Common stock: $.001 par value; 50,000,000 | 
|shares authorized, 2,300,375 issued and   | 
|outstanding                               | 
|Paid-in capital                           | 
|                                          | 
|Retained deficit accumulated in the       | 
|development stage                         | 
|                                          | 
|Total stockholders' deficit               | 
|                                          | 
|TOTAL LIABILITIES AND STOCKHOLDERS'       | 
|DEFICIT                                   | 



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



CAPE COASTAL TRADING CORP. (A DEVELOPMENT STAGE COMPANY)STATEMENTS OF OPERATIONSFOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003

(UNAUDITED)

|                                      | 2004 | 2003 |  
|------------------------------------- | ---- | ---- | -
|REVENUE                               |      |      | $
|                                      |      |      |  
|COST OF GOODS SOLD                    |      |      |  
|                                      |      |      |  
|GROSS PROFIT                          |      |      |  
|                                      |      |      |  
|EXPENSES                              |      |     
|General and administrative            |      |      |  
|                                     
|Professional fees                     |      |      |  
|                                      |      |      |  
|Total operating costs and expenses    |      |      |  
|                                      |      |      |  
|OTHER EXPENSE                         |      |     
|State and local taxes                 |      |      |  
|                                      |      |      |  
|Loss from operations and before taxes |      |      |  
|                                      |      |      |  
|PROVISION FOR INCOME TAXES            |      |      |  
|                                      |      |      |  
|Net loss                              |      |      | $
|                                      |      |      |  
|                                      |      |      |  
|                                      |      |     
|LOSS PER SHAREBasic and diluted       |      | $    |  
|                                      |      |      |  
|                                     
|WEIGHTED AVERAGE SHARES               |      |     
|OUTSTANDING                           |      |     
|Basic and diluted                     |      |      |  
|                                     



























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





CAPE COASTAL TRADING CORP. (A DEVELOPMENT STAGE COMPANY)STATEMENTS OF OPERATIONSFOR THE PERIODS ENDED JUNE 30, 2004 AND 2003AND FOR THE PERIOD FROM INCEPTION (AUGUST 16, 2002) TO JUNE 30, 2004

(UNAUDITED)

|                                      | 2004 | 2003 | CUMULATIVEFROMINCEPTION TOJUNE 30,2004
|------------------------------------- | ---- | ---- | --------------------------------------
|REVENUE                               |      |      | $                                     
|                                      |      |      |                                       
|COST OF GOODS SOLD                    |      |      |                                       
|                                      |      |      |                                       
|GROSS PROFIT                          |      |      |                                       
|                                      |      |      |                                       
|EXPENSES                              |      |     
|General and administrative            |      |      |                                       
|                                     
|Consulting fees                       |      |      |                                       
|Professional fees                     |      |      |                                       
|                                      |      |      |                                       
|Total operating costs and expenses    |      |      |                                       
|                                      |      |      |                                       
|OTHER EXPENSE                         |      |     
|State and local taxes                 |      |      |                                       
|                                      |      |      |                                       
|Loss from operations and before taxes |      |      |                                       
|                                      |      |      |                                       
|PROVISION FOR INCOME TAXES            |      |      |                                       
|                                      |      |      |                                       
|Net loss                              |      |      | $                                     
|                                      |      |      |                                       
|                                      |      |      |                                       
|                                      |      |     
|LOSS PER SHAREBasic and diluted       |      | $    |                                       
|                                      |      |      |                                       
|                                     
|WEIGHTED AVERAGE SHARES               |      |     
|OUTSTANDING                           |      |     
|Basic and diluted                     |      |      |                                       
|                                     









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 ENDEDJUNE 30, 2004 AND 2003 AND FOR THE PERIOD FROM INCEPTION(AUGUST 16, 2002) TO JUNE 30, 2004

(UNAUDITED)

|                                          | 2004 | 2003 | CUMULATIVEFROMINCEPTION TOJUNE 30,2004
|----------------------------------------- | ---- | ---- | --------------------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES      |      |      |                                       
|Net Loss                                  |      |      | $                                     
|Adjustments to reconcile net loss to      |      |     
|net cash used in operating activities:    |      |     
|Depreciation and amortization             |      |      |                                       
|Stock Issued for consulting               |      |      |                                       
|Changes in assets and liabilities:        |      |     
|Inventories                               |      |      |                                       
|Accounts payable                          |      |      |                                       
|Payable to shareholder                    |      |      |                                       
|                                          |      |      |                                       
|Net cash used in operating activities     |      |      |                                       
|                                          |      |      |                                       
|CASH FLOWS FROM INVESTING                 |      |     
|ACTIVITIES                                |      |     
|Purchase of fixed assets                  |      |      |                                       
|                                          |      |      |                                       
|Net cash used in investing activities     |      |      |                                       
|                                          |      |      |                                       
|CASH FLOWS FROM FINANCING                 |      |     
|ACTIVITIES                                |      |     
|Proceeds from issuance of common stock    |      |      |                                       
|Proceeds from capital contributions       |      |      |                                       
|                                          |      |      |                                       
|Net cash provided by financing activities |      |      |                                       
|                                          |      |      |                                       
|INCREASE IN CASH                          |      |      |                                       
|CASH AT BEGINNING OF PERIOD               |      |      |                                       
|                                          |      |      |                                       
|CASH AT END OF PERIOD                     |      |      | $                                     
|                                          |      |      |                                       
|                                          |      |      |                                       
|SUPPLEMENTAL INFORMATION                  |      |     
|Interest paid                             |      |      | $                                     
|                                         
|Income taxes paid                         |      |      | $                                     
|                                         
|Stock issued for accounts payable         |      |      | $                                     
|                                         

The accompanying notes are an integral part of these financial statement

CAPE COASTAL TRADING CORP.NOTES TO THE FINANCIAL STATEMENTSFOR THE PERIODS ENDED JUNE 30, 2004 AND 2003 AND FOR THE PERIOD FROM INCEPTION (AUGUST 16, 2002) TO JUNE 30, 2004



1.     ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Organization

Cape Coastal Trading Corp. (The Company or "CCTC) 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 fiscal year 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 June 30, 2004 the Company owed $3,411 to a major shareholder for purchases he made and expenses he paid on behalf of the Company.

4.     SUBSEQUENT EVENTS

In August 2004, the Company received an aggregate of $5,450 in advances consisting of $4,548 from a director of the Company and $902 from a person owning more than 10% of the Company's common stock.Also in August 2004, the Company entered into a Purchase and Sale Agreement for the purchase of 500 bookbags in September, October and November for an aggregate purchase price of $6,000, and a Consulting Agreement pursuant to which the consultant will be responsible for accepting the bookbags purchased and the delivery of the bookbags to the Companys current United States address.

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 has commitments from officers, directors and affiliates for $10,000 to implement its business plan during the next twelve months.  A significant portion of the $10,000 will be used to build brand awareness and condition the market.  The Company does not expect significant revenue or cash flows from operations in Fall 2004.

Although there can be no assurance that CCTC will raise additional financing, or that financing opportunities, if any, which it may encounter will be on terms favorable to CCTC, the Companys officers and directors believe their backgrounds and experience combined with CCTCs status as a fully reporting public company puts CCTC in a better position than most of its competitors to raise such financing. If the Company does not raise additional financing, the Company may be forced to scale back, curtail or cease its business operations.

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:

A.        Fall 2004: HBCU Bookstore Sales (Phase I)

In the 1st and 2nd Quarter of 2004, CCTC contacted the bookstores of 91 of the 100 historically black colleges and universities (HBCUs or HBCU) for the purpose of offering its bookbags for sale on their campuses. CCTC sent advertising literature to each of the 91 colleges and university bookstores. Of the 91 HBCUs contacted, the Company has identified 10 (the Fall HBCUs) to which it will market its book bags in the Fall of 2004. The Company will provide between 20 of the 500 bookbags to 20 individuals at eachof the 10 Fall HBCUs. Selected students will be either active fraternal and sorority presidents or campus student body (or other organization) leaders.

CCTC is in the process of contacting the fraternal and sorority student presidents and campus student body (or other organization) leaders at the Fall HBCUs. To increase the market and awareness for the book bags and other authentic apparel, the Company, on April 9, 2004, engaged Eworldwide Press Release Distribution (Eworldwide) to create and distribute a Company release to the College and University Press describing the Company and its products. The Company release was distributed to over 2,800 College and University publications in all 50 states in the U.S. In preparation for the Spring Semester, the Company plans to engage Eworldwire for a second Company release in late Fall of 2004 that will enlist the Black Media, Local and State Media and top 100 US Newspapers distribution services offered by Eworldwide.

On August 10, 2004, the Company entered into a three-month consultant agreement with Albert Ofori (Consultant). On August 12, 2004, the Company entered into an agreement with Adongos Leather Enterprise (Adongo) for the production of 500 bokbags due in September, October and November of 2004. Mr. Ofori, a citizen of Ghana, will be responsible for accepting the bookbags manufactured by Adongo and the delivery of the bookbags to the Companys current United States address.

In June, July and August of 2004, Management attended several trade shows in New York and was able to identify, as a secondary option, 2 U.S based local carriers for the manufacture of the bookbags in the event its Ghana based suppliers fail. The Company had been in negotiations with Lizmof Enterprise, a Ghana based independent foreign dealer and distributor in art, craft and general merchants, and Gye Nyame Handicraft Co., Producers and Exporters, for the manufacture, labeling and purchase of between 200  400 bookbags. The Company decided that neither of these manufacturers was capable of adhering to the bookbag design specifications and delivery schedules required by the Company.

It is estimated that the brand awareness achieved amongst this HBCU student-consumer base, preparing for entry into the economic marketplace, will aid the Company in gaining market share and sustained revenues in the Retail and & Department Store Market.

To leverage the HBCU brand loyalty created in Phase I and implement the Retail & Department Store Strategy (Phase II), the Company will have to expend a majority of the capital made available to the Company to inform and condition this market. Given this, the Company does not expect significant revenue or cash flow from operations in Fall 2004.

B.        1st Quarter 2005: Retail & Department Store Sales (Phase II)

Management believes that the Retail and Department store market offer the greatest source of revenue for the Companys stools, wood-works, and other home and office furnishing.

Management has observed Ghanaian and other African artworks and crafts in stores such as Pier 1 Imports, Kmart, Wal-Mart, etc. The Company has decided to approach this market towards the end of the 2nd Quarter of 2005. The Companys officers and directors believe that its Fall 2004 HBCU campaign will increase the Companys brand and likelihood for success in the Retail & Department Store sector.

With this purpose in mind, the Company is currently in the process of designing a catalogue of its custom hand-made wood-works and crafts. In the 1st quarter of 2005, the Company will obtain the services of a professional photographer, catalogue designer and an advertising agency to produce a professional catalogue that Management believes will aid the Company in generating sales in this market.

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 retail price of the Companys artworks, crafts, and leather products range from $15.00 to $500.00.

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.The Company does not plan to hire a full-time employee until after the Company raises the additional $25,000, as discussed below, and begins to genrate slaes, which may or may not occur within
the next twelve months.  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 per month, CCTC will have to add a full-time executive employee to perform day-to-day operations. Additionally, a part-time hourly wage employee would be required for storage and shipping purposes.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO SIX MONTHS ENDED JUNE 30, 2003

The Company is considered a development stage company and has generated very little revenue since its inception, August 16, 2002. The Company did not generate any revenue for the six months ended June 30, 2004, as compared to $125 of revenue for the six months ended June 30, 2003. The decrease in revenue was due to the Company focusing its resources on the development of the Companys public corporate structure and acclimating itself with its new obligations now that it is a public company. As discussed above under the heading Plan of Operation, the Company will begin to focus its resources on marketing its products in Fall 2004.

Cost of goods sold was $0 for the six months ended June 30, 2004, as compared to $75 for the six months ended June 30, 2003. The decrease in cost of goods sold was due to the decrease in revenue.

General and administrative (G&A) expense for the six months ended June 30, 2004 increased $2,032 (or 179%) to $3,167 as compared to $1,135 for the six months ended June 30, 2003. The increase in G&A expense was due to an increase in costs that the Company realized after becoming a public company.

Professional fees for the six months ended June 30, 2004 were $2,850 as compared to $0 for six months ended June 30 2003. The increase in professional fees was due to the Company becoming a public company.

Total operating costs and expenses for the six months ended June 30, 2004 increased $4,882 (or 430%) to $6,017 as compared to $1,135 for the six months ended June 30, 2003. The increase in total operating costs and expenses was due to the increase in G&A expense and the increase in professional fees.

State and local taxes for the six months ended June 30, 2004 were $0 as compared to $455 for the six months ended June 30, 2003.

Net loss for the six months ended June 30, 2004 increased $4,477 (or 291%) to $6,017 as compared to $1,540 for the six months ended June 30, 2003.

Basic and diluted loss per share was $0.00 for both the six months ended June 30, 2004 and June 30, 2003.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2004, the Company had total current assets of $1,826, which consisted of $1,401 in cash and $425 in inventory.  At June 30, 2004, total current liabilities were $6,751, which consisted of $3,340 in accounts payable and $3,411 in shareholder payables.  At June 30, 2004, the Company had negative working capital of $4,925 and with a current ratio of 0.27%.  As of June 30, 2004, we had a deficit of $3,887.

Net cash used in operating activities was $5,445 during the six months ended June 30, 2004, consisting of net loss of $6,017 and a decrease in accounts payable of $760 that was offset by an adjustment for depreciation of $417 and an increase in payable to shareholder of $915.

The Company did not have any cash flows from investing activities during the six months ended June 30, 2004.

Net cash provided by financing activities was $6,775 for the six months ended June 30, 2004, which consisted of proceeds from the issuance of the Companys common stock in connection with its IPO.

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 has commitments from officers, directors and affiliates for $10,000 to implement its business plan during the next twelve months. A significant portion of the $10,000 will be used to build brand awareness and condition the market. The Company does not expect significant revenue or cash flows from operations in Fall 2004. As of the filing of this Report, the Company has received an aggregate of $5,450 from affiliates. The Company is attempting to raise additional funds through private debt and/or equity offerings. The Company intends to use any funds raised for working capital. There can be no assurance that any new capital would be available to the Company or that adequate funds for the Company's operations, whether
from the Company's revenues, financial markets, or other arrangements will be available when needed or on terms satisfactory to the Company. Any additional financing may involve dilution to the Company's then-existing shareholders. At this time, no additional financing has been secured or identified. If the Company is unable to obtain debt and/or equity financing upon terms that the Companys management deems sufficiently favorable, or at all, it would have a materially adverse impact upon the Companys ability to pursue its business strategy and maintain its current operations. As a result, it may require the Company to delay, curtail or scale back some or all of its operations.





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. For the period ended June 30, 2004, CCTC has sustained operating losses of $17,677. The amount of this loss should not be indicative of future losses sustainable by CCTC. As of June 30, 2004, 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.

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 our most recent fourth fiscal quarter that materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



PART IIOTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

CCTC is not currently a party to any legal proceedings.

ITEM 2.  CHANGES IN SECURITIES

None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 5.  OTHER INFORMATION

Subsequent Events

In August 2004, the Company received an advance of $4,548 from a director and an advance of $902 from a person who owns more than 5% of the Company's common stock.  The advances are due upon demand and bear no interest.

In August 2004, the Company entered into an agreement with Consultant.  Pursuant to this agreement, Consultant will be responsible for accepting the bookbags manufactured by Adongo and the delivery of the bookbags to the Company's current United States address.

Also in August 2004, the Company entered into a Purchase and Sale Agreement with Adongo for the production of 500 bookbags due in Septmebr, October, and November of 2004.  The Company will pay Adongo an aggregate $6,000 for the bookbags.

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, 2003.                                          
|3.2   | Bylaws (incorporated by reference from Registration Statement on Form 10-SB  filed with the Securities and Exchange Commission on May 20, 2003.                                                            
|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).     
|10.6* | Cape Coastal News Release, dated, May 4, 2004.                                                                                                                                                             
|10.7* | Purchase and Sale Agreement between Adongos Leather Enterprise and Cape Coastal Trading Corporation, dated August 12, 2004.                                                                               
|10.8* | Consulting Services Agreement dated, August 10, 2004 (Agreement) by and between Cape Coastal Trading Corporation and Albert Ofori.                                                                       
|31*   | Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.                                                                                               
|32*   | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                    

*Filed herein

(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, Chief Executive Officer and Principal Financial OfficerDate:  September 24, 2004
| |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  | 
| |  |