**UNITED
        STATES**
 **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 September 30, 2005**
   **Commission
        File No. 005-50995**
  
  (Name
        of
        small business issuer in its charter)
  **Cape
        Coastal Trading Corporation**
  122
        Ocean
        Park Blvd., Suite 307, Santa Monica, CA 90405
   *Incorporated
                  in New York*
              
              *I.R.S.
                  Employer*
                *Identification
                  No. 52-2372260*
 *Issuer's
        telephone number: (310) 396-1691*
   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 period that the registrant was required
        to
        file such reports), and (2) has been subject to such filing requirements
        for the past 90 days. **Yes
        [X] No [  ]**
  At
        October 31, 2005, there were 2,300,375 shares of the Issuer’s common stock
        outstanding.
  Transition
        Small Business Disclosure Format (Check One). Yes [ ] No [X]
  
   
 **TABLE
        OF CONTENTS**
   **PART
        I**
  **FINANCIAL
        INFORMATION**
  ITEM
                  1
              
              
              FINANCIAL
                  STATEMENTSITEM
                  2
              
              
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONITEM
                  3
              
              
              CONTROLS
                  AND PROCEDURES
 **PART
        II**
  **OTHER
        INFORMATION**
  ITEM
                  5
              
              
              OTHER
                  INFORMATIONITEM
                  6
              
              
              EXHIBITS
 **EXHIBITS**
  EXHIBIT
                  31
              
              
              CERTIFICATION
                  PURSUANT TO SECTION 302 OF THE
                SARBANES-OXLEY
                  ACT OF 2002EXHIBIT
                  32
              
              
              CERTIFICATION
                  PURSUANT TO SECTION 906 OF THE
                SARBANES-OXLEY
                  ACT OF 2002
  
 
 **SPECIAL
        NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS**
  This
        section and other parts of this Form 10-QSB contain forward-looking statements
        that are, by their nature, subject to risks and uncertainties. These
        forward-looking statements include, without limitation, statements relating
        to
        our company’s operations, economic performance, financial condition, growth and
        acquisition strategies, investments, and operating plans. Any such statements
        that are not statements of historical fact may be deemed to be forward-looking
        statements. Without limiting the generality of the foregoing, words such
        as
“believe”, “expect”, “intend”, “anticipate”, “may”, “should”, “expects”,
“plans”, “anticipates”, “estimates”, “predicts”, “potential”, “continue”,
“projects” or the negative or other variations or comparable terminology or
        derivatives thereof denote forward-looking statements. These statements are
        only
        predictions and by their nature involve substantial risks and uncertainties,
        many of which are beyond our control. Thus, actual results may differ materially
        from those expressed in or implied by such forward-looking statements. Factors
        that could cause actual results to differ materially include, but are not
        limited to, those discussed in Item. 6 of the Company’s Form 10-KSB filed on
        February 8, 2005, Management’s Discussion and Analysis or Plan of Operation,
        under the heading “Risk Factors.”  Although we believe that the
        expectations reflected in the forward-looking statements are reasonable,
        we
        cannot guarantee future results, levels of activity, performance or
        achievements. We are under no obligation to publicly update any of the
        forward-looking statements to reflect events or circumstances after the date
        hereof or to reflect the occurrence of unanticipated events.
  
 **PART
        I**
   **FINANCIAL
        INFORMATION**
  **ITEM
        1.  FINANCIAL STATEMENTS**
  **CAPE
        COASTAL TRADING CORP.**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **BALANCE
        SHEET**
 **SEPTEMBER
        30, 2005**
 **(UNAUDITED)**
   **ASSETS**CURRENT
                  ASSETS
              
              $
              --FIXED
                  ASSETS, NET
              
              
              --TOTAL
                  ASSETS
              
              $
              --**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**CURRENT
                  LIABILITIESAccounts
                  Payable
              
              $
              3,068Payable
                  to Stockholders
              
              
              57,596TOTAL
                  CURRENT LIABILITIES
              
              
              60,664STOCKHOLDERS'
                  DEFICITCommon
                  Stock: $.001 par value; 50,000,000Shares
                  authorized; 2,300,375 issued andOutstanding
              
              
              2,300Paid-in
                  Capital
              
              
              14,414Retained
                  Deficit
              
              
              (77,378
              )TOTAL
                  STOCKHOLDERS' DEFICIT
              
              
              (60,664
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS'DEFICIT
              
              $
              --
 
 
 The
        accompanying notes are an integral part of these financial
        statements.
  2
 **CAPE
        COASTAL TRADING CORP.**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **STATEMENTS
        OF OPERATIONS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005
        AND
        2004**
 **AND
        FOR THE PERIOD FROM INCEPTION (AUGUST 16, 2002) TO SEPTEMBER 30,
        2005**
 **(UNAUDITED)**
  **3
                  MOS. ENDED**
              
              **9
                  MOS. ENDED**
              
              **CUMULATIVE**
                **FROM**
                **INCEPTION**
                **TO**
                **SEPTEMBER
                  30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**
              
              **2005**REVENUESales
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              --
              
              $
              125Less:
                  Cost of goods sold
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              75Net
                  sales revenue
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              50Gain
                  on disposition of assets
              
              
              12,061
              
              
              --
              
              
              12,061
              
              
              --
              
              
              12,061Total
                  Revenues
              
              
              12,061
              
              
              --
              
              
              12,061
              
              
              --
              
              
              12,111GENERAL
                  AND ADMINISTRATIVE EXPENSESGeneral
                  and administrative
              
              
              218
              
              
              828
              
              
              2,275
              
              
              1,554
              
              
              9,561Consulting
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              200Depreciation
              
              
              206
              
              
              208
              
              
              622
              
              
              615
              
              
              2,501Franchise
                  taxes
              
              
              --
              
              
              --
              
              
              --
              
              
              455
              
              
              963Professional
                  Fees
              
              
              2,850
              
              
              3,600
              
              
              56,083
              
              
              3,000
              
              
              76,264Total
                  general and administrative expenses
              
              
              3,274
              
              
              4,636
              
              
              58,980
              
              
              5,624
              
              
              89,489Profit
                  (Loss) from operations andbefore
                  taxes
              
              $
              8,787
              
              $
              (4,636
              )
              $
              (46,919
              )
              $
              (5,574
              )
              $
              (77,378
              )PROVISION
                  FOR INCOME TAXES
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --Net
                  Profit (Loss)
              
              $
              8,787
              
              $
              (4,636
              )
              $
              (46,919
              )
              $
              (5,574
              )
              $
              (77,378
              )PROFIT
                  (LOSS) PER SHAREBasic
                  and diluted
              
              $
              0.00
              
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.02
              )WEIGHTED
                  AVERAGE SHARES OUTSTANDINGBasic
                  and diluted
              
              
              2,300,375
              
              
              2,289.405
              
              
              2,300,375
              
              
              2,160,681
 
 The
        accompanying notes are an integral part of these financial
        statements
  3
 **CAPE
        COASTAL TRADING CORP.**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **STATEMENTS
        OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND
        2004**
 **AND
        FOR THE PERIOD FROM INCEPTION (AUGUST 16, 2002) TO SEPTEMBER 30,
        2005**
 **(UNAUDITED)**
  **2005**
              
              **2004**
              
              **CUMULATIVE**
                **FROM**
                **INCEPTION**
                **TO**
                **SEPTEMBER
                  30, 2005**CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (46,919
              )
              $
              (10,653
              )
              $
              (77,378
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Depreciation
                  and amortization
              
              
              622
              
              
              625
              
              
              2,501Stock
                  issued for consulting
              
              
              --
              
              
              --
              
              
              200Change
                  in prepaid expense
              
              
              --
              
              
              (1,310
              )
              
              --Change
                  in inventory
              
              
              545
              
              
              (120
              )
              
              --Change
                  in accounts payable
              
              
              643
              
              
              (1,900
              )
              
              5,607Net
                  cash used in operating activities
              
              
              (45,109
              )
              
              (13,358
              )
              
              (69,070
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESPurchase
                  of fixed assets
              
              
              --
              
              
              --
              
              
              (2,501
              )Net
                  cash used in investing activities
              
              
              --
              
              
              --
              
              
              (2,501
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESProceeds
                  from issuance of common stock
              
              
              --
              
              
              6,775
              
              
              13,625Proceeds
                  from capital contributions
              
              
              --
              
              
              --
              
              
              350Change
                  in payable to shareholder
              
              
              44,990
              
              
              6,568
              
              
              57,596Net
                  cash provided by financing activities
              
              
              44,990
              
              
              13,343
              
              
              71,571INCREASE
                  (DECREASE) IN CASH
              
              
              (119
              )
              
              (15
              )
              
              --CASH
                  AT BEGINNING OF PERIOD
              
              
              119
              
              
              71
              
              
              --CASH
                  AT END OF PERIOD
              
              $
              --
              
              $
              56
              
              $
              --SUPPLEMENTAL
                  INFORMATIONInterest
                  paid
              
              $
              --
              
              $
              --
              
              $
              --Income
                  taxes paid
              
              $
              --
              
              $
              --
              
              $
              --Stock
                  issued for accounts payable
              
              $
              --
              
              $
              --
              
              $
              2,539
 
 The
        accompanying notes are an integral part of these financial
        statements
   4
 **CAPE
        COASTAL TRADING CORP.**
 **NOTES
        TO THE FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND
        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. Prior to January 13, 2005, the
        Company was focused on importing artworks and crafts from Ghana, Africa to
        sell
        to its vendors and customers in the U.S. From and after January 13, 2005,
        the
        Company no longer operates said business and the Company’s business plan now
        consists of exploring potential targets for a business combination with the
        Company through a purchase of assets, share purchase or exchange, merger
        or
        similar type of transaction. The Company does not have any specific plans
        or
        proposals at this time which relate to or would result in: (a) the acquisition
        by any person of additional securities of the Company; (b) an extraordinary
        corporate transaction, such as a merger, reorganization or liquidation,
        involving the Company or any of its subsidiaries; (c) a sale or transfer
        of a
        material amount of assets of the Company or of any of its subsidiaries; (d)
        any
        change in the present board of directors or management of the Company, including
        any plans or proposals to change the number or term of directors or to fill
        any
        existing vacancies on the board; (e) any material change in the present
        capitalization or dividend policy of the Company; (f) any other material
        change
        in the Company's business or corporate structure; (g) changes in the Company's
        charter, bylaws or instruments corresponding thereto or other actions which
        may
        impede the acquisition of control of the issuer by any other person; (h)
        causing
        a class of securities of the Company to be delisted from a national securities
        exchange or to cease to be authorized to be quoted in an inter-dealer quotation
        system of a registered national securities association; (i) a class of equity
        securities of the Company becoming eligible for termination of registration
        pursuant to Section 12(g)(4) of the Securities Act; or (j) any similar action
        to
        those enumerated above.
  **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. The accompanying financial statements for prior
        years contain certain reclassifications to conform to current year
        presentation.
  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, 2004.
  **Loans
        Payable--Shareholders**
 
 During
        the quarter ended September 30, 2005, shareholders made additional loans
        to the
        Company aggregating $3,068 and shareholder loans aggregating $12,606 were
        released in consideration of a sale of assets (see below)
 
 **Discontinuance
        of Prior Business.**
 
 During
        the quarter ended March 31, 2005, the Company discontinued its business of
        importing artworks and crafts from Ghana, Africa to sell to its vendors and
        customers in the U.S. This business was later sold pursuant to an Asset Purchase
        Agreement (see ITEM 5. OTHER INFORMATION—Asset Purchase Agreement).
 
 
 5
 
 **Sale
        of Assets.**
  Effective
        as of August 1, 2005, the Company sold all of its operating assets pursuant
        to
        an Asset Purchase Agreement entered into on January 13, 2005. As a result
        of the
        sale of assets, the Company recorded a net gain of $12,061, which was recorded
        in the quarter ended September 30, 2005. The assets sold had a book value
        of
        $545 and the sale price comprised the release of $12,606 of shareholders
        loans
        payable by the company to the purchaser. (see ITEM 5. OTHER INFORMATION—Asset
        Purchase Agreement)
  **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 2005 to meet its operating
        cash
        requirements. Accordingly, the Company’s ability to continue operations through
        2005 depends on its success in obtaining additional capital in an amount
        sufficient to meet its cash needs. 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. At this time, the
        Company is dependent upon advances from its principal shareholders to satisfy
        all of its financial requirements. No shareholder has made any commitment
        to
        provide such financing.
  **ITEM
        2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION**
  **PLAN
        OF OPERATION**
  **Overview**
  The
        Company is a development stage company and has generated very little revenue
        since its inception, August 16, 2002. We are a “shell” company that has no
        specific business plan or purpose other than to engage in a merger or
        acquisition. We will attempt to locate and negotiate with an operating business
        entity for the combination of that target with us. The combination will most
        likely take for form of a merger, stock-for-stock exchange or stock-for-assets
        exchange. In most instances, the target will want to structure the business
        combination to be within the definition of a tax-free reorganization under
        Section 351 or 368 of the Internal Revenue Code of 1986, as
        amended.
  During
        the period from inception through January 13, 2005, the Company was focused
        on
        importing artworks and crafts from Ghana, Africa to sell to customers in
        the
        United States. From and after January 13, 2005, the Company no longer operates
        said business and the Company’s business plan now consists of exploring
        potential targets for a business combination with the Company through a purchase
        of assets, share purchase or exchange, merger or similar type of transaction.
        The Company does not have any specific plans or proposals at this time which
        relate to or would result in: (a) the acquisition by any person of additional
        securities of the Company; (b) an extraordinary corporate transaction, such
        as a
        merger, reorganization or liquidation, involving the Company or any of its
        subsidiaries; (c) a sale or transfer of a material amount of assets of the
        Company or of any of its subsidiaries; (d) any change in the present board
        of
        directors or management of the Company, including any plans or proposals
        to
        change the number or term of directors or to fill any existing vacancies
        on the
        board; (e) any material change in the present capitalization or dividend
        policy
        of the Company; (f) any other material change in the Company's business or
        corporate structure; (g) changes in the Company's charter, bylaws or instruments
        corresponding thereto or other actions which may impede the acquisition of
        control of the issuer by any other person; (h) causing a class of securities
        of
        the Company to be delisted from a national securities exchange or to cease
        to be
        authorized to be quoted in an inter-dealer quotation system of a registered
        national securities association; (i) a class of equity securities of the
        Company
        becoming eligible for termination of registration pursuant to Section 12(g)(4)
        of the Securities Act; or (j) any similar action to those enumerated above.
  **RESULTS
        OF OPERATIONS**
  **THREE
        MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THREE MONTHS ENDED SEPTEMBER
        30,
        2004**
  The
        Company did not generate any revenues from sales for the three months ended
        September 30, 2005, or the three months ended September 30, 2004. The Company
        generated a net gain of $12,061 on the sale of assets during the three months
        ended September 30, 2005. The assets sold had a book value of $545 and the
        sale
        price comprised the release of $12,606 shareholders loans payable by the
        company
        to the purchaser.
  6
 Expenses
        for the three months ended September 30, 2005 were $3,274, comprising general
        and administrative expenses (“G&A”) of $218, professional fees of $2,850 and
        depreciation expense of $206 compared to $4,636 for the three months ended
        September 30, 2004, comprising G&A of $828, professional fees of $3,600 and
        depreciation expense of $208.
  Basic
        and
        diluted profit per share was $0.00 for the three months ended September 30,
        2005
        compared to $0.00 for the three months ended and September 30, 2004.
  **NINE
        MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
        2004**
  The
        Company did not generate any revenues from sales for the nine months ended
        September 30, 2005, or the nine months ended September 30, 2004. The Company
        generated a net gain of $12,061 on the sale of assets during the nine months
        ended September 30, 2005. The assets sold had a book value of $545 and the
        sale
        price comprised the release of $12,606 shareholders loans payable by the
        company
        to the purchaser.
  Expenses
        for the nine months ended September 30, 2005 were $58,980, comprising general
        and administrative expenses (“G&A”) of $2,275, professional fees of $56,083
        and depreciation expense of $622 compared to $5,624 for the nine months ended
        September 30, 2004, comprising G&A of $1,554, professional fees of $3,000,
        franchise taxes of $455 and depreciation expense of $615. The increase in
        professional fees was related to the Company’s efforts to identify a merger
        partner and the audit for the period ended December 31, 2004 and
        transaction-related professional fees and expenses.
  Basic
        and
        diluted loss per share was $0.02 for the nine months ended September 30,
        2005
        compared to $0.00 for the nine months ended and September 30, 2004.
  **LIQUIDITY
        AND CAPITAL RESOURCES**
  At
        September 30, 2005, the Company had no current assets.  At September
        30, 2005, total current liabilities were $60,664, which consisted of accounts
        payable and loans from shareholders.  At September 30, 2005, the Company
        had negative working capital of $60,664.  As of September 30, 2005,
        we had
        an accumulated deficit of $77,378.
  Net
        cash
        used in operating activities was $45,109 during the nine months ended September
        30, 2005, consisting of net operating loss of $46,919, an increase in accounts
        payable of $643, a decrease in inventory of $545 and a depreciation expense
        of
        $622.
  The
        Company did not have any cash flows from investing activities during the
        nine
        months ended September 30, 2005.
  Net
        cash
        provided by financing activities was $44,990 for the nine months ended September
        30, 2005, which consisted entirely of additional loans by
        shareholders.
  It
        is
        imperative that the Company raise sufficient capital to satisfy its cash
        requirements until it can complete a business combination with a target company
        which may result in the Company becoming a going concern. There is no guarantee
        that the Company will be able to complete such a transaction within the next
        12
        months, if at all or that such a transaction will result in the Company becoming
        a going concern. In the meantime, the Company is dependent upon advances
        from
        its principal shareholders to satisfy all of its financial requirements.
        No
        shareholder has made any commitment to provide such financing. There can
        be no
        assurance that the Company will be able to raise any additional financing,
        or
        that financing opportunities, if any, which it may encounter will be on terms
        favorable to the Company. During the period ended September 30, 2005 and
        for
        future periods, the Company will, at a minimum, incur expenses related to
        compliance with applicable regulatory and financial reporting requirements,
        which will include but not be limited to professional fees and financial
        printing fees. The Company will also incur costs in connection with the review,
        analysis and completion of any potential transactions. The Company does not
        expect significant revenue or cash flows from operations until a potential
        transaction is completed, if at all.
  There
        is
        no assurance whatsoever that we will be able at need to raise necessary funds
        from outside sources. Such a lack of funds could result in severe consequences
        to us, including among others:
   7
  1.
              failure
                  to make timely filings with the SEC as required by the Exchange
                  Act, which
                  also probably would result in suspension of trading or quotation
                  in our
                  stock and could result in fines and penalties to us under the Exchange
                  Act
  2.
              curtailing
                  or eliminating our ability to locate and perform suitable investigations
                  of potential acquisitions; or
  3.
              inability
                  to complete a desirable acquisition due to lack of funds to pay
                  legal and
                  accounting fees and acquisition-related
                  expenses.
  **Off-Balance
        Sheet Arrangements.**
 
 We
        do not
        have any off-balance sheet arrangements that have or are reasonably likely
        to
        have a current or future effect on our financial condition, changes in our
        financial condition, revenues or expenses, results of operations, liquidity,
        capital expenditures or capital resources that is material to
        investors.
 
 **Critical
        Accounting Policies**
 
 The
        Company prepared the financial statements in accordance with accounting
        principles generally accepted in the United States of America. The preparation
        of these financial statements requires the use of estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and the disclosure
        of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amount of revenues and expenses during the reporting period.
        Management periodically evaluates the estimates and judgments made. Management
        bases its estimates and judgments on historical experience and on various
        factors that are believed to be reasonable under the circumstances. Actual
        results may differ from these estimates as a result of different assumptions
        or
        conditions.
  **ITEM 3    
        CONTROLS AND PROCEDURES.**
  **Evaluation
        of Disclosure Controls and Procedures**
 
 Our
        management (consisting solely of our President) conducted an evaluation of
        our
        "disclosure controls and procedures" (as defined in the General Rules and
        Regulations under the Securities Exchange Act of 1934 at Rules 13a-15 and
        15d-15) within the 90-day period prior to the filing of this Form 10-QSB.
        Disclosure controls and procedures that are designed with the objective of
        ensuring that information required to be disclosed in our reports filed under
        the Securities Exchange Act of 1934, such as this Form 10-QSB, is recorded,
        processed, summarized and reported within the time period specified by the
        Securities and Exchange Commission’s guidelines. Based on management's
        evaluation, it was concluded that as of September 30, 2005 and as of the
        date
        that the evaluation of our disclosure controls and procedures was completed,
        our
        disclosure controls and procedures are effective to ensure that all material
        information required to be filed in this Quarterly Report on Form 10-QSB
        has
        been made known to him in a timely fashion.
 
 There
        have been no changes (including corrective actions with regard to significant
        deficiencies or material weaknesses) in our internal control over financial
        reporting identified in connection with the evaluation performed that occurred
        during the fiscal quarter covered by this report that has materially affected,
        or is reasonably likely to materially affect, our internal control over
        financial reporting.
 
  8
 **PART
        II**
  **OTHER
        INFORMATION**
  **ITEM
        5.  OTHER INFORMATION**
  1.  **Asset
        Purchase Agreement** .
  On
        January 13, 2005, the Company entered into an Asset Purchase Agreement (the
        “Asset Purchase Agreement”) with Kwajo Sarfoh, the Company’s then President and
        Treasurer and a member of the Company’s board of directors. Pursuant to the
        Asset Purchase Agreement, the Company agreed to sell to Mr. Sarfoh, on an
“AS
        IS”“WHERE IS” basis all of the Company’s interest in the Company’s name “Cape
        Coastal Trading Corporation,” its Website (www.ghanacrafts.com), and all of the
        other agreements, contracts, leases, licenses and other arrangements and
        other
        tangible and intangible property of the Company (the “Purchased Assets”) to the
        extent that the same relate to the business (the “Business”) of importing
        artworks and crafts from Ghana, Africa to sell to vendors and customers in
        the
        U.S.
  The
        terms
        of the Agreement require Mr. Sarfoh to assume all of the existing and future
        liabilities and obligations of the Business. The purchase price for the
        Purchased Assets was to be paid at the closing of the transactions contemplated
        by the Asset Purchase Agreement (the “APA Closing”) by Mr. Sarfoh’s delivery to
        the Company of a release of all amounts owed by the Company to Mr. Sarfoh,
        including any shareholder loans by Mr. Sarfoh to the Company. No fairness
        opinion was obtained in connection with the transactions contemplated by
        the
        Asset Purchase Agreement. The then board of directors, consisting of Kwajo
        Sarfoh and Trae O’Neil High, approved this transaction and indicated that such
        transaction was in the best interests of the Company and its stockholders.
        The
        Asset Purchase Agreement was filed as Exhibit 10.3 the Company’s Form 8-K filed
        on January 14, 2005.
  The
        APA
        Closing was originally to take place on the earlier of (a) the soonest
        practicable date following the date that the Company acquires or commences
        an
        operating business, (b) the last day of the sixth month following the date
        that
        the Asset Purchase Agreement was entered into, or (c) such other date as
        the
        parties may mutually agree. If the APA Closing occurs under clause (b) above
        then the Company would have the right to continue to use the name “Cape Coastal
        Trading Corporation” for an additional six months following such APA Closing.
  By
        mutual
        agreement between the parties, the transaction contemplated by the APA closed
        effective as of August 1, 2005.
  **ITEM
        6.  EXHIBITS**
  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
  9
 **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/
                  Geoffrey Alison
                ——————————
                Geoffrey
                  Alison, Chief Executive Officer and
                Principal
                  Financial Officer
                Date: November
                  10, 2005
 
  
  
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