---

# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

# Washington, D.C. 20549

# FORM 10-KSB

---

|[X] | ANNUAL REPORT UNDER SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ------------------------------------------------------------------------------

For the fiscal year ended May 31,
2001

OR

---

|[   ] | TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|----- | ----------------------------------------------------------------------------------

For
    the transition period from _______________ to ______________.

Commission File Number: 0-17284

Mercari Communications
Group, Ltd.
(Exact name of small business issuer in its charter)

Colorado   
              
              
    
              
              
        84-1085935
              
  
    (State or other jurisdiction of    
              
    
             
   (I.R.S. employer identification number)
              
  
     incorporation or organization)

1005 East Cobblestone
Drive, Highlands Ranch, CO              
80126
(Address of principal executive offices)              
            (Zip code)

Registrants
telephone number, including area code:      
(303) 791-3888

Securities registered
pursuant to section 12 (b) of the Act:      None

Securities registered
pursuant to section 12 (g) of the Act:      
Common stock, $0.00001 Par Value

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by section
13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 [   ]            
NO      [X]

Indicate by check mark if
disclosure of delinquent filers pursuant to Rule 405 of regulation S-K is not
contained herein and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.      
[   ]

State the aggregate market
value of the voting stock held by non-affiliates of the registrant. The
aggregate market value shall be computed by reference to the price at which the
stock was sold, or the average bid and ask prices of such stock, as of a
specified date within 60 days prior to the date of filing: The common shares of
registrant are not traded at the present time on any medium. There is no
market in the shares and it is not possible to determine what, if any, market
value the voting stock held by non-affiliates may have.

Indicate the number of
shares outstanding of each of registrants classes of stock as of the
latest practicable date: As of May 31, 2001, there were approximately
394,274,720 common shares outstanding.

---

# DOCUMENTS
INCORPORATED BY REFERENCE

List hereunder the
documents incorporated by reference and the Part of this Form 10-KSB into which
the document is incorporated:   None

## Part I

## Item 1.   
Description of Business

Mercari Communications
Group, Ltd. (the Company) was incorporated in December 1987 to be a
multi-faceted producer and distributor of relevant life management products and
services designed to enhance personal development and professional
effectiveness. The Company intended to provide education and communication
services, training, counseling and personal development programs for adults,
primarily in the 30 to 55 age range. The Company intended to concentrate on
three primary areas: (i) acquiring or producing and distributing informational
and instructional materials, (ii) producing and conducting conferences and
seminars, and (iii) acquiring new products which feature novel means for
addressing the information and education needs of adult Americans.

The Company completed an
Initial Public Offering (IPO) of its securities in September 1988 having sold
77,637,000 units at $0.01 per unit, generating $776,370 in gross proceeds. Each
unit consisted of one common share and one Series A Warrant to purchase one
common share. Following the offering and after paying debt incurred and offering
expenses, net proceeds to the Company were $539,213.

On April 20, 1989 the
Company called all 87,137,000 outstanding Series A Warrants for redemption on
June 16, 1989. There were 2,835,440 Series A Warrants exercised @ $0.01 for
gross proceeds of $28,326 and 302,280 Series A Warrants exercised @ $0.0125 for
gross proceeds of $3,775, or total gross proceeds of $32,101. All remaining
Series A Warrants expired following the warrant call.

The Company ceased all
operations mid-year 1990 and was considered to be dormant.

On December 10, 2000 the
one remaining director and two unaffiliated businessmen created a new business
plan for the Company. New officers and two new directors were appointed for the
purpose of implementing the new plan. The new business plan primarily provided
for the clean up of the Company so as to provide for the filing of
all delinquent reports with the Colorado Secretary of State, the United States
Securities and Exchange Commission and the Internal Revenue Service and
restructuring the balance sheet and the capital structure. Once the Company is
current with all agencies, the Company intends to seek to have its common stock
traded publicly. The purpose of these actions is the allow the Company to then
acquire an operating privately owned business, through a reverse merger, that
has assets, revenues and earnings and wishes to become a publicly owned
corporation. The Company currently has no prospective acquisition candidates and
has not discussed this plan with any potential acquisition candidate.

Year 2000 concerns.
Since the Company has had no operations from 1990 through 2001 there are no
historical records currently maintained on computer files and the Company
currently owns no computer equipment. Therefore, the year 2000 concerns that may
impact other businesses should have minimal to zero impact on the Company.
However, the year 2000 concern may have an impact on any business the Company
may acquire in the future, and management intends to research this issue as part
of its due diligence related to potential acquisition
candidates.

## Item 2.   
Description of Properties

The principal executive
offices of the Company are currently located at 1005 East Cobblestone Drive,
Highlands Ranch, Colorado 80126. The telephone number at this address is
303-791-3888. The Company is receiving the use of this space free of charge from
Mr. Higgins.

---

## Item 3.   
Litigation

No material legal
proceedings to which the Company is a party or to which the Companies property
is subject is pending and no such material proceeding is known by management to
be contemplated.

## Item 4.   
Submission of Matters to a vote of Security Holders

There were no meetings of
security holders during the period covered by this report. However, management
intends to seek shareholder approval for several issues at the next shareholder
meeting. These issues could include a reverse stock split, elimination of the
accumulated deficit and shareholder equity through a quasi-reorganization to
more accurately reflect the present financial condition of the Company, a change
in the Par Value of the common stock, the number of common shares authorized and
shareholder approval to change the name of the corporation at the time a
reverse merger occurs.

## PART II

## Item 5.   
Market for Common Equity and related Stockholder Matters

No market for the common
stock of the Company existed as of the date of this report, nor for the last
five years. Any market which existed for these shares ceased when the business
operations ceased in August 1990. However, management intends, and is hopeful,
that when the Company is current with all filings with the Securities and
Exchange Commission, that NASD will allow the common stock of the Company to
trade on the OTC electronic Bulletin Board exchange as a fully reporting
company.

## Outstanding
shares and shareholders

As of May 31, 2001, the
transfer ledgers maintained by the Companys stock transfer agent indicated
that there were 394,274,720 shares of common stock issued and outstanding held
by approximately 300 shareholders of record on that date. There were no shares
of preferred stock outstanding on that date.

## Dividends

The Company has not
declared or paid any dividends on the common stock from inception to the date of
this report, although there are no restrictions on the payment of dividends.
Further, no dividends are contemplated at any time in the foreseeable future.

## Item 6.   
Managements  discussion and analysis of Financial Condition and Results of
Operations

The  following should be
reviewed in  connection  with the  financial  statements  and  managements
comments thereon set forth under this section and Item 7 below.

`Years ended May 31,
                                       2001                2000
                                       ----                ----
Statement of Operations:

Revenues                           $    -0-             $    -0-
Operating Expenses                      -0-                  -0-
Net Profit (Loss)                       -0-                  -0-
Profit (Loss) Per Share                  *                    *

Balance Sheet Data:

Assets                             $    -0-             $    -0-
Liabilities(1)                     $ (110,435)          $ (110,435)
Stockholder's Equity (Deficit)(2)  $ (699,516)          $ (699,516)`

---

*
Negligible in amount

|(1) | There were approximately $110,000 of unpaid obligations of the
Company when operations ceased in August 1990. The Company believes none of such
claims would be collectible by creditors, as the statute of limitations
applicable to collection of such commercial debt has expired under the Colorado
Revised Statute 13-80-101, which limits the collection of commercial debt to six
years from the date the last payment was made.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | These deficit amounts were carried forward from the past operations of the
Company and management intends to seek shareholder approval for a
quasi-reorganization to reduce these amounts to zero, to more
accurately reflect the present financial condition of the Company.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Liquidity

The Company has not
generated any cash flows from operating or investing activities since August
1990. No operating capital was required through the fiscal period covered by
this report. Operating capital required subsequent to this report will be
provided by one or more of the directors, or from proceeds of stock sold to the
three current Board of Director members, or from other presently unknown
sources. Until and unless the Company receives additional capital, it will not
have sufficient assets to engage in any business.

Results of Operations

The  Company  had  no
operations  from 1990 through May 31, 2001. In December 2000 the Company adopted
the business plan set forth in Item 1 above.

## INDEX TO FINANCIAL
STATEMENTS

`PAGE
                                                                             ----
INDEPENDENT AUDITOR'S REPORT                                                  F-1

FINANCIAL STATEMENTS:

       Balance Sheets as of May 31, 2001 and 2000                             F-2

       Statement of Operations for the years ended May 31, 2001 and 2000      F-3

       Statement of Changes in Stockholder Equity for the period from
       December 30, 1987 (Inception) to May 31, 2001                          F-4

       Statement of Cash Flows for the years ended May 31, 2001 and 2000      F-5

NOTES TO FINANCIAL STATEMENTS                                                 F-6`

## Item 8.   
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

The  Company has had no
disagreement with its  accountant on any matter of accounting principal or
practice,  financial  statement  disclosure or auditing scope or procedure which
would have  caused  the  accountant  to make  reference  in its report  upon the
subject matter of the disagreement.

---

## PART III

## Item 9.   
Directors and Executive Officers of the Company

The  following table sets
forth all directors and executive  officers of the Company,  as of July 5, 2000,
as well as states their ages:

`NAME                 AGE            POSITION WITH COMPANY *

     Thomas A. Higgins         52            Chairman

     Robert W. Marsik          55            President and Secretary

     Allan Bergenfield         59            Director`

*
No current  director has any  arrangement or  understanding  whereby they are or
will  be  selected  as  a  director  or  nominee   past  the  current   term  of
office.

Officers will hold office
until the next annual meeting of shareholders and until their successors have
been duly elected and qualified. The officers are elected by the Board of
Directors at its annual meeting immediately following the shareholders
annual meeting and hold office until their death or until they earlier resign or
are removed from office. There are no written or other contracts providing for
the election of directors or term of employment of executive officers, all of
whom serve on an at will basis.

The Company does not have
any standing audit, nominating or compensation committees, or any committees
performing similar functions. The Board will meet periodically throughout the
year as necessity dictates. During the years of 1990, 1991, 1992, 1993, 1994,
1995, 1996, 1997, 1998, 1999 the Board held no meetings and there was no acting
by consent. During 2000 there was one Board meeting.

Executive Profiles

Thomas A. Higgins
was a founder and has been Chairman of the Company  since  inception in December
1987.  Mr. Higgins  received a Bachelor of Arts degree from Drake  University in
1971 and a Masters  of  Public  Administration  degree  from the  University  of
Colorado in 1974.  Mr. Higgins has served as an Officer and Director for several
public companies that successfully  completed IPO offerings  including  Bionomic
Sciences, Technology Management and Marketing, Inc., OZO Diversified Automation,
Inc. and Perfect  Products,  Inc. Most recently Mr. Higgins has been employed in
the wireless telecommunications field with several local companies in the Denver
area providing sales and marketing  expertise and capital  formation and capital
structuring expertise.

Robert W. Marsik is
currently an independent business broker with a merger and acquisition firm and
has been Chief Executive Officer, President, Vice President and Director for
numerous public companies over the last twenty years. He has successfully
completed several IPO, secondary and warrant exercise funding programs for the
companies he was involved in and has considerable merger and acquisition
experience with public companies. With many years experience in manufacturing,
sales, marketing and administration Mr. Marsik brings diverse and unique
management skills to the Company.

Allan Bergenfield is
currently the President and principal owner of Bergenfield and Associates which
is a regional sales and marketing company servicing the Eastern Seaboard region
of the United States and provides sales, broker and marketing services for
numerous consumer manufacturing companies. He established this business in 1985
after resigning as Senior Vice President of Minnetonka Inc., a manufacturer of
health and beauty aid products. Mr. Bergenfield has also served as a member of
the Board of Directors for other public and private companies and brings
considerable management experience to the Company.

## Item 10.   
Executive Compensation

No compensation was paid to
the Board of Directors or to Executive Officers of the Company in their
capacities as such as of the date of this report, and no cash compensation is
anticipated to be paid at any time in the immediate future to any member of the
Board.

---

Employment Agreements:   
None.

## Item 11.   
Security Ownership of Management and Certain Others

Based upon information
provided to the Company by its transfer agent, the following table sets forth,
as of December 22, 2000, the shares of common stock owned by each current
director, by directors and executive officers as a group and by each person
known by the Company to own more than 5 % of the outstanding common stock.

`Title of Class                     Name and address of           Number of shares  Percent of Class(1)

Common                             Thomas A. Higgins                97,000,000           25.0%
                                   1005 East Cobblestone Drive
                                   Highlands Ranch, CO 80126

Directors and Executive Officers
As a group                                                          97,000,000           25.0%`

(1)   
Based upon  394,274,720  shares of common stock issued and outstanding as of May
31, 2001.

## Item 12.   
Certain Transactions

The office space, telephone
and office  supplies  consumed  by the Company  are  provided  free of charge by
Thomas Higgins.

## PART IV

## Item 13.   
Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The following documents and
reports have been filed as a part of this report:

## 1.   
Financial Statements:

F-1   Independent Auditors Report
       F-2   Balance Sheet
       F-3   Statement of Operations
       F-4   Statement of Stockholders Equity
       F-5   Statement of Cash Flows
       F-6   Notes to Financial Statements

2.   Financial
Statement Schedules:    None

3.   
Exhibits required by Item 601:   None

4.   
Reports on Form 8-K:   None

---

# Robison, Hill & Co.
Certified Public Accountants
1366 East Murray-Holiday Raod
Salt Lake City, Utah 84117-5050

# MERCARI
COMMUNICATIONS GROUP, LTD.

# (A
Development Stage Company)

# -:-

# INDEPENDENT
AUDITORS REPORT

# MAY 31, 2001
AND 2000

# CONTENTS

`Page
                                                                           ----

Independent Auditor's Report.............................................. F-1

Balance Sheets
  May 31, 2001 and 2000................................................... F-2

Statements of Operations
  For the Years Ended May 31, 2001 and 2000............................... F-3

Statement of Stockholders' Equity for the
  Period from December 30, 1987 (Inception) to May 31, 2001............... F-4

Statements of Cash Flows
  For the Years Ended May 31, 2001 and 2000 .............................. F-5

Notes to Financial Statements............................................. F-6`

---

INDEPENDENT AUDITORS
REPORT

Mercari Communications
Group, Ltd.
(A Development Stage Company)

We
have audited the accompanying balance sheets of Mercari Communications Group,
Ltd. (a development stage company) as of May 31, 2001 and 2000, and the related
statements of operations and cash flows for the two years ended May 31, 2001,
and the statement of stockholders equity for the period from December 30,
1987 (inception) to May 31, 2001. These financial statements are the
responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Mercari Communications Group, Ltd.
(a development stage company) as of May 31, 2001 and 2000, and the results of
its operations and its cash flows for the two years ended May 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.

Respectfully submitted
        
                
                
                
                
                
                
                
                
                /s/ Robison, Hill & Co.
        
                
                
                
                
                
                
                
                
            
    Certified Public Accountants
Salt Lake City, Utah
January 8, 2002

---

MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)BALANCE SHEETS

`May 31,
                                                          -------------------
                                                          2001           2000
                                                          ----           ----

Assets: ..........................................     $    --        $    --
                                                       =========      =========

Current Liabilities:
   Accounts Payable & Accrued Liabilities ........     $ 110,435      $ 110,435
                                                       ---------      ---------

          Total Liabilities ......................       110,435        110,435
                                                       ---------      ---------

Stockholders' Equity:
  Common Stock, Par value $.00001
    Authorized 950,000,000 shares,
    Issued 394,274,720 shares at May 31, 2001
    and May 31, 2000 .............................         3,943          3,943
  Paid-In Capital ................................       804,722        804,722
  Retained Deficit ...............................      (919,100)      (919,100)
  Deficit Accumulated During the
    Development Stage ............................          --             --
                                                       ---------      ---------

     Total Stockholders' Equity ..................      (110,435)      (110,435)
                                                       ---------      ---------

     Total Liabilities and
       Stockholders' Equity ......................     $    --        $    --
                                                       =========      =========`

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

---

MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)STATEMENTS OF OPERATIONS

`Cumulative
                                                                           since
                                                                         August 31,
                                                For the year ended         2001
                                                     May 31,            Inception of
                                                -----------------       development
                                                2001         2000          stage
                                                ----         ----       ------------

Revenues: ...............................     $   --       $   --       $   --

Expenses: ...............................         --           --           --
                                              --------     --------     --------

Net Income ..............................     $   --       $   --       $   --
                                              ========     ========     ========

Basic & Diluted Earnings per share ......     $   --       $   --
                                              ========     ========`

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

---

MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)STATEMENT OF STOCKHOLDERS EQUITYFOR THE PERIOD FROM DECEMBER 30, 1987 (INCEPTION) TO MAY 31, 2001

`Deficit
                                                                                                     Accumulated
                                                                                                        Since
                                                                                                   August 31,2001
                                                                                                    Inception of
                                                Common Stock             Paid-In      Retained       Development
                                           Shares          Par Value     Capital       Deficit           Stage
                                           ------          ---------     -------      --------     ---------------

Balance at December 30, 1987
(inception) ..........................          --      $      --    $      --      $      --             $  --

Stock Issued for Cash - $.00001/sh ...   271,000,000          2,710         --             --                --
Stock Issued for Cash - $.0001/sh ....     8,000,000             80          720           --                --
Stock Issued for Cash - $.0025/sh ....     8,000,000             80       19,920           --                --
Offering Costs .......................          --             --           (500)          --                --
Net Loss .............................          --             --           --          (62,639)             --
                                         -----------    -----------  -----------    -----------        ----------

Balance at May 31, 1988 ..............   287,000,000          2,870       20,140        (62,639)             --

Stock Issued for Cash - $.0001/sh ....     1,500,000             15          135           --                --
Stock Issued for Cash - $.01/sh ......    77,637,000            777      775,594           --                --
Offering Costs .......................          --             --       (126,353)          --                --
Stock Issued for Cash - $.01/sh ......     2,835,440             28       28,326           --                --
Net Loss .............................          --             --           --         (501,740)             --
                                         -----------    -----------  -----------    -----------        ----------

Balance at May 31, 1989 ..............   368,972,440          3,690      697,842       (564,379)             --

Stock Issued for Cash - $.0125/sh ....       302,280              3        3,775           --                --
Stock Issued for Debt - $.004/sh .....    25,000,000            250      103,105           --                --
Net Loss .............................          --             --           --           (3,355)             --
Write-off of Assets ..................          --             --           --         (351,366)             --
                                         -----------    -----------  -----------    -----------        ----------

Balance at May 31, 1990 ..............   394,274,720          3,943      804,722       (919,100)             --
                                         -----------    -----------  -----------    -----------        ----------

Balance at May 31, 2001 ..............   394,274,720    $     3,943  $   804,722    $  (919,100)          $  --
                                         ===========    ===========  ===========    ===========        ==========`

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

---

MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)STATEMENTS OF CASH FLOWS

`Cumulative
                                                                               Since
                                                                             August 31,
                                                     For the years ended        2001
                                                           May 31,          Inception of
                                                     -------------------    Development
                                                      2001        2000         Stage
                                                      ----        ----      ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:

Net Loss ........................................   $   --       $   --       $   --
                                                    --------     --------     --------
  Net Cash Used in operating activities .........       --           --           --
                                                    --------     --------     --------

CASH FLOWS FROM INVESTING
ACTIVITIES:

Net cash provided by
  investing activities ..........................       --           --           --
                                                    --------     --------     --------

CASH FLOWS FROM FINANCING
ACTIVITIES:

Net Cash Provided by
  Financing Activities ..........................       --           --           --
                                                    --------     --------     --------

Net (Decrease) Increase in
  Cash and Cash Equivalents .....................       --           --           --
Cash and Cash Equivalents
  at Beginning of Period ........................       --           --           --
                                                    --------     --------     --------
Cash and Cash Equivalents
  at End of Period ..............................   $   --       $   --       $   --
                                                    ========     ========     ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest ......................................   $   --       $   --       $   --
  Franchise and income taxes ....................   $   --       $   --       $   --

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:   None`

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

---

MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)NOTES TO FINANCIAL STATEMENTSFOR THE YEARS ENDED MAY 31, 2001 AND 2000

NOTE 1 - ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This
summary of accounting policies for Mercari Communications Group, Ltd. (a
development stage company) is presented to assist in understanding the
Companys financial statements. The accounting policies conform to
generally accepted accounting principles and have been consistently applied in
the preparation of the financial statements.

Organization and
Basis of Presentation

The
Company was incorporated under the laws of the State of Colorado on December 30,
1987. The Company ceased all operating activities during the period from June 1,
1990 to August 31, 2001 and was considered dormant. Since August 31, 2001, the
Company is in the development stage, and has not commenced planned principal
operations.

Nature of Business

The
Company has no products or services as of May 31, 2001. The Company was
organized as a vehicle to seek merger or acquisition candidates. The Company
intends to acquire interests in various business opportunities, which in the
opinion of management will provide a profit to the Company.

Cash and Cash
Equivalents

For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents to the extent the funds are not being held for investment purposes.

Pervasiveness of
Estimates

The
preparation of financial statements in conformity with generally accepted
accounting principles required 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.

---

MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)NOTES TO FINANCIAL STATEMENTSFOR THE YEARS ENDED MAY 31, 2001 AND 2000

NOTE 1 - ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss per Share

The
reconciliations of the numerators and denominators of the basic loss per share
computations are as follows:

`Per-Share
                                     Income       Shares      Amount
                                     ------       ------      --------
                                  (Numerator)  (Denominator)

                                   For the year ended May 31, 2001
                                   -------------------------------
Basic Earnings per Share
Loss to common shareholders .....   $   --     394,274,720   $   --
                                    ========   ===========   ========

                                   For the year ended May 31, 2000
                                   -------------------------------
Basic Earnings per Share
Loss to common shareholders .....   $   --     394,274,720   $   --
                                    ========   ===========   ========`

There
are no outstanding common stock equivalents for May 31, 2001 and 2000 and are
thus not considered.

Concentration of Credit
Risk

The
Company has no significant off-balance-sheet concentrations of credit risk such
as foreign exchange contracts, options contracts or other foreign hedging
arrangements.

NOTE 2 - INCOME TAXES

As
of May 31, 2001, the Company had a net operating loss carryforward for income
tax reporting purposes of approximately $919,000 that may be offset against
future taxable income through 2005. Current tax laws limit the amount of loss
available to be offset against future taxable income when a substantial change
in ownership occurs. Therefore, the amount available to offset future taxable
income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount.

---

MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)NOTES TO FINANCIAL STATEMENTSFOR THE YEARS ENDED MAY 31, 2001 AND 2000

NOTE 3 - DEVELOPMENT
STAGE COMPANY

The
Company has not begun principal operations and as is common with a development
stage company, the Company has had recurring losses during its development
stage. The Companys financial statements are prepared using generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other material
assets, nor does it have an established source of revenues sufficient to cover
its operating costs and to allow it to continue as a going concern. In the
interim, shareholders of the Company have committed to meeting its minimal
operating expenses.

NOTE 4 - COMMITMENTS

As
of May 31, 2001 all activities of the Company have been conducted by corporate
officers from either their homes or business offices. Currently, there are no
outstanding debts owed by the company for the use of these facilities and there
are no commitments for future use of the facilities.

---

# SIGNATURES

Pursuant to the
requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

MERCARI COMMUNICATIONS GROUP, LTD.
Date:    February __, 2002   
                  
      /s/ Robert W. Marsik
             
            
            
            
            
            Robert W. Marsik, President

Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates included. 
Date:    February __, 2002   
                  
      /s/ Thomas A. Higgins
             
            
            
            
            
            Thomas A. Higgins, Chairman
Date:    February __, 2002   
                  
      /s/ Robert W. Marsik
             
            
            
            
            
            Robert W. Marsik, President
Date:    February __, 2002   
                  
      /s/ Allan Bergenfield
             
            
            
            
            
            Allan Bergenfield, Director

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