SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB

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                                          
  52-23722

> (State of organization)             
>     (I.R.S. Employer Ide

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

1

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TABLE OF CONTENTS

PART I

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

PART II

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

PART I

ITEM 1.  DESCRIPTION
 OF BUSINESS



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

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







2

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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, 2,290,875 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 PERIODS ENDED MARCH 31, 2004 AND 2003AND FOR THE PERIOD FROM INCEPTION (AUGUST 16, 2002)
 TO MARCH 31, 2004

(UNAUDITED)

|                                      | 2004 | 2003 | CUMULATIVEFROMINCEPTION TOMARCH 31,2004
|------------------------------------- | ---- | ---- | ---------------------------------------
|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.

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

(UNAUDITED)

|                                          | 2004 | 2003 | CUMULATIVEFROMINCEPTION TOMARCH 31,2004
|----------------------------------------- | ---- | ---- | ---------------------------------------
|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 statements

4

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CAPE COASTAL TRADING CORP.NOTES TO THE FINANCIAL
 STATEMENTSFOR 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.

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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 2004, 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.

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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.

7

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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

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.



8

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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 IIOTHER 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:

1. 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:
2. Sales were made to a limited number of persons. No
 general solicitation to the public was made in connection with such sales;
3. 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;
4. 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;
5. The purchasers represented in writing that they acquired
 the shares for their own accounts.
6. 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, ControllerDate: May 24, 2004
| |  | ---------------------------------------------------------------------------------------------------------------



| |  | 
| |  | 

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