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UNITED STATESSECURITIES 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, 2005

Commission File No. 000-50995




(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. EmployerIdentification No. 52-2372260

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 May 16, 2005, there were 2,300,375
shares of the Issuers common stock outstanding.

Transition Small Business Disclosure Format (Check One).  Yes [ ]  No [X]

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TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

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

PART II

OTHER INFORMATION

|       | 
|------ | 
|ITEM 5 | 
|ITEM 6 | 

EXHIBITS

|           | 
|---------- | 
|EXHIBIT 31 | 
|EXHIBIT 32 | 

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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.

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PART I

FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CAPE COASTAL TRADING CORP.
(A DEVELOPMENT STAGE COMPANY) BALANCE SHEETMARCH 31, 2005(UNAUDITED)
ASSETS

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

LIABILITIES AND STOCKHOLDERS DEFICIT

|                                                      | 
|----------------------------------------------------- | 
|CURRENT LIABILITIES                                   | 
|Accounts payable                                      | 
|Payable to stockholders                               | 
|                                                      | 
|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 integralpart of these financial statements.



CAPE COASTAL TRADING CORP.
(A DEVELOPMENT STAGE COMPANY)STATEMENT OF OPERATIONS FOR THE PERIODS ENDED MARCH 31, 2005 AND 2004
AND FOR THE PERIOD FROM INCEPTION (AUGUST 16, 2002) TO MARCH 31, 2005(UNAUDITED)

|                                          | 2005 | 2004 | CUMULATIVEFROMINCEPTION TOMARCH 31,2005
|----------------------------------------- | ---- | ---- | ---------------------------------------
|REVENUE                                   |      |      |                                        
|Sales                                     |      |      | $                                      
|Less: Cost of goods sold                  |      |      | $                                      
|                                          |      |      |                                        
|Net sales revenue                         |      |      |                                        
|                                          |      |      |                                        
|                                          |      |      |                                        
|GENERAL AND ADMINISTRATIVE EXPENSES       |      |      |                                        
|                                         
|General and administrative                |      |      |                                        
|                                         
|Consulting                                |      |      |                                        
|Depreciation                              |      |      |                                        
|Franchise Taxes                           |      |      |                                        
|Professional Fees                         |      |      |                                        
|                                          |      |      |                                        
|Total general and administrative expenses |      |      |                                        
|                                          |      |      |                                        
|                                          |      |      |                                        
|Loss from operations and before taxes     |      |      |                                        
|                                          |      |      |                                        
|PROVISION FOR INCOME TAXES                |      |      |                                        
|                                          |      |      |                                        
|                                          |      |      |                                        
|Net loss                                  |      |      | $                                      
|                                          |      |      |                                        
|                                          |      |      |                                        
|LOSS PER SHARE                            |      |     
|Basic and diluted                         |      |      | $                                      
|                                          |      |      |                                        
|WEIGHTED AVERAGE SHARES OUTSTANDING       |      |     
|Basic and diluted                         |      |      |                                        



The accompanying notes are an integralpart of these financial statements.

CAPE COASTAL TRADING CORP.(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED MARCH 31, 2005 AND 2004 AND FOR THE PERIOD FROM INCEPTION
 (AUGUST 16, 2002) TO MARCH 31, 2005(UNAUDITED)



|                                              | 2005 | 2004         | CUMULATIVEFROM INCEPTIONTOMARCH 31,2005
|--------------------------------------------- | ---- | ------------ | ---------------------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES          |      |              |                                        
|Net loss                                      |      | $    (29,369 | )                                      
|Adjustments to reconcile net loss to net cash |     
|used in operating activities:                 |     
|Depreciation and Amortization                 |      | 208          |                                        
|Stock issued for consulting                   |      | --           |                                        
|Change in inventory                           |      | --           |                                        
|Change in accounts payable                    |      | 26,358       |                                        
|                                              |      |              |                                        
|Net cash used in operating activities         |      | (2,803       | )                                      
|                                              |      |              |                                        
|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           |      | --           |                                        
|Change in payable to shareholder              |      | 2,684        |                                        
|                                              |      |              |                                        
|Net cash provided by financing activities     |      | 2,684        |                                        
|                                              |      |              |                                        
|INCREASE (DECREASE) IN CASH                   |      | (119         | )                                      
|CASH AT BEGINNING OF PERIOD                   |      | 119          |                                        
|                                              |      |              |                                        
|CASH AT END OF PERIOD                         |      | $            |                                        
|                                              |      |              |                                        
|                                              |      |              |                                        
|SUPPLEMENTAL INFORMATION                      |     
|Interest paid                                 |      | $        --  |                                        
|Income taxes paid                             |      | --           |                                        
|Stock issued for accounts payable             |      | --           |                                        

The accompanying notes are an integralpart of these financial statements.

CAPE COASTAL TRADING CORP. 
(A DEVELOPMENT STAGE COMPANY)NOTES TO THE FINANCIAL STATEMENTSFOR THE
THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)

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.

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 MARCH 31, 2005 COMPARED TO THREE MONTHS ENDED MARCH 31, 2004

The Company did not generate any
revenues from sales for the three months ended March 31, 2005, or the three months ended
March 31, 2004.

Expenses for the three months ended
March 31, 2005 were $29,369, comprising general and administrative expenses
(G&A) of $1,779, professional fees of $27,382 and depreciation expense of
$208 compared to $3,094 for the three months ended March 31, 2004, all of which was
G&A. The increase in professional fees was related to the Companys audit for the
period ended December 31, 2004 and transaction-related professional fees and expenses. As
a result, the Companys net loss was $29,369 for the three months ended March 31,
2005, as compared to net loss of $3,094 for the three months ended March 31, 2004.

Basic and diluted loss per share was
$0.01 for the three months ended March 31, 2005 compared to $0.00 for the three months
ended and March 31, 2004.

LIQUIDITY AND CAPITAL
RESOURCES

At March 31, 2005, the Company had
total current assets of $545.  At March 31, 2005, total current liabilities were
$44,073, which consisted of accounts payable and loans from shareholders.  At March
31, 2005, the Company had negative working capital of $43,528.  As of March 31, 2005,
we had an accumulated deficit of $59,828.

Net cash used in operating activities
was $2,803 during the three months ended March 31, 2005, consisting of net operating loss
of $29,369, an increase in accounts payable of $26,358 and a depreciation expense of $208.

The Company did not have any cash
flows from investing activities during the three months ended March 31, 2005.

Net cash provided by financing
activities was $2,684 for the three months ended March 31, 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 March 31, 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:

|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 March 31, 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.

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PART II

OTHER INFORMATION

ITEM 5.  OTHER
INFORMATION

Pursuant to the terms of the Stock
Purchase Agreement (see Form 8-K filed by the Company on January 14, 2005, which is
incorporated by reference in its entirety), Trae ONeil High resigned from his
position as Secretary and a director of the Company on January 14, 2005. Also on January
14, 2005, Geoffrey Alison was appointed as a director and as Secretary of the Company. On
February 8, 2005, Kwajo Sarjoh resigned from his positions as the President and Treasurer
and a director and Mr. Alison was concurrently appointed to the additional positions of
President and Treasurer of the Company. At this time, Mr. Alison is the sole director and
sole officer of the Company holding the positions of President, Treasurer and Secretary of
the Company.

On January 14, 2005, the Company
filed with the U.S. Securities and Exchange Commission an Information Statement Pursuant
to Section 14(F) of the Securities Exchange Act of 1934 and Rule 14F-1 thereunder (see
Schedule 14F filed by the Company on January 14, 2005, which is incorporated by reference
in its entirety). Said Information Statement was mailed on or about January 19, 2005, to
holders of record on January 12, 2005, of shares of the Companys Common Stock.

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 will 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
will 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 will 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.

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

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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                                      
| |  | ----------------------------------------------------------------------
| |  |                                                                       
| |  | By:  /s/  Geoffrey Alison                                             
| |  | Geoffrey AlisonChief Executive Officer and
Principal Financial Officer
| |  |                                                                       
| |  | Date: May 19, 2005