SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                For the quarterly period ended September 30, 2004

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

               For the transition period from          to           .
                                             ----------  -----------

                        Commission File Number: 0 - 50752

                                MONACO GROUP INC.
                               ------------------
             (Exact name of registrant as specified in its charter)


                Delaware                               98-0404764
                --------                               ----------
     (State or other jurisdiction of         (I.R.S. Employer Identification
     incorporation or organization)                      Number)

          20A Voyager Court South, Etobicoke, Ontario, Canada, M9W 5M7
          -------------------------------------------------------------
                    (Address of principal executive offices)

                                 (416) 213-0028
                                 --------------
                           (Issuer's telephone number)

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 |X| No |_|

At  November 19, 2004, the  registrant  had  5,007,000  shares of Common  Stock,
no par value, issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<page>

                         PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

The interim  financial  statements  included herein have not been reviewed by an
independent  public  accountant as required by Item 310(b) of Regulation S-B. We
will amend this filing at such time as these interim  financial  statements have
been reviewed.

<page>

                                MONACO GROUP INC.

                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2004

                             (Stated in US Dollars)

                                   (Unaudited)




<page>


                                MONACO GROUP INC.
                       INTERIM CONSOLIDATED BALANCE SHEET
                    September 30, 2004 and December 31, 2003
                             (Stated in US Dollars)
                                   (Unaudited)
                                   -----------
<table>
<caption>
                                                                                     September 30,         December 31,
                                     ASSETS                                               2004                 2003
                                     ------                                               ----                 ----

                                                                                        <c>                <c>
Current
   Cash                                                                            $         60,744    $          6,977
   Accounts receivable                                                                    1,570,168                   -
   Inventory                                                                                409,971                   -
   Prepaid expenses                                                                          22,451                   -
                                                                                       ------------          ----------
                                                                                          2,063,334               6,977
                                                                                       ------------          ----------

Capital assets - Note 6                                                                     351,116                   -
Organizational costs                                                                            831                   -
Trademarks                                                                                  400,000                   -
Goodwill                                                                                  1,261,233                   -
Future income taxes                                                                          15,853                   -
                                                                                       ------------          -----------
                                                                                          2,029,033                   -
                                                                                       ------------

                                                                                   $      4,092,367    $          6,977
                                                                                       ============          ==========

                                   LIABILITIES
                                   -----------
Current
   Accounts payable and accrued liabilities                                        $      1,636,803    $          4,110
   Taxes payable                                                                              4,122                   -
   Loans from related party - Note 7                                                         20,000               1,595
   Advances from related party - Note 8                                                     644,893                   -
   Current portion of long-term debt                                                         49,537                   -
                                                                                        -----------          ----------
                                                                                          2,355,355               5,705

Loans payable - Note 9                                                                      290,565                   -
Future income taxes                                                                         164,070                   -
                                                                                        -----------          ----------
                                                                                          2,809,990               5,705
                                                                                        -----------          ----------
</table>



                             SEE ACCOMPANYING NOTES

<page>

                                MONACO GROUP INC.
                       INTERIM CONSOLIDATED BALANCE SHEET
                    September 30, 2004 and December 31, 2003
                             (Stated in US Dollars)
                                   (Unaudited)
                                   -----------
<table>
<caption>
                        STOCKHOLDERS' EQUITY (DEFICIENCY)
                        ---------------------------------

                                                                                   <c>                       <c>
Capital stock - Note 10 Authorized:
   15,000,000 Common stock, $0.001 par value
     4,000,000 Preferred stock, $0.001 par value

  Issued and Outstanding:
     4,907,000 shares of Common stock (December 31, 2003: 4,446,500)                          4,907               4,447
     Shares to be issued                                                                    937,635                   -

Additional paid-in capital                                                                  544,243              80,203
Accumulated deficit                                                                  (      204,408)     (       83,378)
                                                                                        -----------          ----------
                                                                                          1,282,377               1,272
                                                                                        -----------          ----------
                                                                                   $      4,092,367    $          6,977
                                                                                        ===========          ==========
</table>
Nature and  Continuance  of Operations - Note 1
Commitments - Notes 4, 5, 10, 12 and 14
Subsequent Events - Notes 10 and 14









                             SEE ACCOMPANYING NOTES

<page>

                                MONACO GROUP INC.
                  INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
     for the three and nine month periods ended September 30, 2004 and 2003
                             (Stated in US Dollars)
                                   (Unaudited)
                                   -----------
<table>
<caption>
                                                             Three Months       July 21, 2003       Nine Months
                                                                Ended          (inception) To          Ended
                                                            September 30,       September 30,      September 30,
                                                                 2004               2003                2004
                                                                 ----               ----                ----

                                                            <c>                  <c>               <c>
Sales                                                     $       1,630,283   $               -  $       1,824,712

Cost of sales                                                     1,509,696                   -          1,701,234
                                                               ------------          ----------          ---------
Gross profit                                                        120,587                   -            123,478
                                                               ------------          ----------          ---------
General and Administrative Expenses
   Accounting and audit fees                                          7,782               1,500             13,632
   Advertising and promotion                                            245                   -                245
   Amortization                                                      13,587                   -             13,587
   Bank charges                                                       1,906                 119              2,169
   Commissions                                                        3,475                   -              3,475
   Consulting fees                                                        -              57,500                  -
   Directors fees and expenses                                        2,317                   -              2,317
   Equipment rental                                                   5,738                   -              5,738
   Filing and regulatory fees                                         1,054               1,020              4,899
   Foreign exchange                                                  11,690                   -             11,690
   Insurance                                                          1,323                   -              1,323
   Interest expense                                                   3,920                   -              3,920
   Legal fees                                                        13,309               5,450             52,536
   Office and miscellaneous                                          15,550                 206             15,767
   Rent                                                              27,438                   -             27,438
   Repairs and maintenance                                            4,059                   -              4,059
   Stock based compensation expense                                  18,750                   -             18,750
   Telephone                                                          1,109                   -              1,109
   Transfer agent fees                                                    -                   -                625
   Travel                                                             2,154                   -              2,154
   Wages and benefits                                                70,932                   -             70,932
                                                              -------------         -----------        -----------
                                                                    206,338              65,795            256,365
                                                              -------------         -----------        -----------
Net loss for the period                                      (       85,751)     (       65,795)    (      132,887)
Income taxes                                                 (        3,443)                  -     (        3,443)
Future tax recovery                                                  15,300                   -             15,300
                                                              -------------         -----------        ------------
Net loss for the period                                   $  (       73,894)  $  (       65,795) $  (      121,030)
                                                              =============         ===========        ============
</table>



                             SEE ACCOMPANYING NOTES

<page>

                                MONACO GROUP INC.
            INTERIM CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
     for the three and nine month periods ended September 30, 2004 and 2003
                             (Stated in US Dollars)
                                   (Unaudited)
                                   -----------


<table>
<caption>

                                                             <c>                  <c>               <c>
Basic and diluted loss per share                          $  (         0.02)  $  (         0.02) $  (         0.03)
                                                               =============        ============         ==========
Weighted average number of shares outstanding                     4,520,210           4,164,960          4,520,210
                                                               =============        ============         ==========
</table>












                             SEE ACCOMPANYING NOTES

<page>

                                MONACO GROUP INC.
                  INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
              for the nine months ended September 30, 2004 and 2003
                             (Stated in US Dollars)
                                   (Unaudited)
                                   -----------
<table>
<caption>
                                                                                                   July 21, 2003
                                                                                                  (inception) To
                                                                              September 30,        September 30,
                                                                                   2004                2003
                                                                                   ----                ----

                                                                              <c>                  <c>
Cash flows from Operating Activities
   Net loss for the period                                                  $  (      121,030)  $  (       65,795)
   Items not affecting cash
   Amortization                                                                        13,998                   -
   Issuance of common stock for services                                                    -              57,500
   Issuance of common stock on acquisition of business                                400,000                   -
   Issuance of exchangeable stock for assets and business                             937,635                   -
   Stock-based compensation expense - Note                                             18,750                   -
   Goodwill                                                                    (    1,261,233)                  -
   Non-cash interest expense                                                                                    -
   Changes in non-cash working capital items:                                                                   -
     Accounts receivable                                                       (    1,570,168)                  -
     Inventory                                                                 (      409,971)                  -
     Prepaid expenses                                                          (       22,451)                  -
     Future income taxes recoverable                                           (       15,853)                  -
     Accounts payable and accrued liabilities                                       1,632,693               4,110
     Future income taxes payable                                                      160,070                   -
     Taxes payable                                                                      4,122                   -
                                                                                -------------        ------------
                                                                               (      229,438)     (        4,185)
                                                                                -------------        ------------
Cash flow from Investing Activities
   Capital assets acquired                                                     (      268,713)                  -
   Trademarks acquired                                                         (      400,000)                  -
   Organizational costs                                                        (          831)                  -
   Purchase of capital assets                                                  (       96,401)                  -
                                                                                -------------        ------------
                                                                               (      765,945)                  -
                                                                                -------------        ------------
Cash flow from Financing Activities
   Issuance of common stock                                                            45,750              26,900
   Loans from related party                                                            18,405                   -
   Advances from related parties                                                      644,893                   -
   Long-term note payable - net of 15,625 repayment                                    70,103                   -
   Long-term note payable                                                             269,999                   -
                                                                                -------------         -----------
                                                                                    1,049,150              26,900
                                                                                -------------         -----------
</table>



                             SEE ACCOMPANYING NOTES

<page>

                                MONACO GROUP INC.
            INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
              for the nine months ended September 30, 2004 and 2003
                             (Stated in US Dollars)
                                   (Unaudited)
                                   -----------
<table>
<caption>

                                                                            <c>                     <c>
Increase in cash during the period                                                     53,767              22,715

Cash, beginning of period                                                               6,977                   -
                                                                                -------------         -----------
Cash, end of period                                                         $          60,744   $          22,715
                                                                                =============         ===========

Supplemental disclosure of cash flow information Cash paid for:
     Interest                                                               $                   $
                                                                                ==============        ===========
     Income taxes                                                           $                   $
                                                                                ==============        ===========
Non-cash Transaction - Note 11
</table>



                             SEE ACCOMPANYING NOTES
<page>

                                MONACO GROUP INC.
             INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
     for the period July 21, 2003 (Date of Incorporation) to June 30, 2004
                             (Stated in US Dollars)
                                   (Unaudited)
                                   -----------
<table>
<caption>
                                         Common Stock                             Additional
                                         ------------                             Paid-in     Accumulated
                                      Number     Par              Shares to       Capital     Deficit             Total
                                      ------     ----             ----------      -------     -------             -----
                                                Value             be issued

                                  <c>           <c>          <c>              <c>           <c>              <c>
Capital stock issued
  For services        - at $0.01     4,000,000 $     4,000                      $   36,000    $      -        $       40,000
  For services        - at $0.10       175,000         175                          17,325           -                17,500
  For cash             -at $0.10       271,500         272                          26,878           -                27,150
Net loss for the period ended
 December 31, 2003                           -           -                               -       (83,378)        (    83,378)
                                     ---------   ---------         -----------   ---------    ----------          ----------
Balance, December 31, 2003           4,446,500       4,447                          80,203       (83,378)              1,272
Capital contribution                         -           -                           1,000           -                 1,000
Capital stock issued
  For services        - at $0.625       30,000          30                          18,720           -                18,750
  For cash            - at $1.50        30,500          31                          45,720           -                45,750
  Issued  pursuant  to  purchase
agreement                              400,000         400                         399,600           -               400,000
Net loss for the period                      -           -                               -       (121,030)       (   121,030)
Exchangeable   stock   issued  -
Note 10
   Issued  pursuant  to purchase
agreement       - at $1.25                                             937,635                                       937,635
                                     ---------   ---------         -----------    ---------     ---------           ---------
Balance, September 30, 2004          4,907,000 $     4,907      $      937,635  $   544,243   $  (204,408)    $     1,282,377
                                     =========   =========         ===========    =========     ==========          =========
</table>



                             SEE ACCOMPANYING NOTES

<page>

                                MONACO GROUP INC.
             NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                    September 30, 2004 and December 31, 2003
                             (Stated in US Dollars)
                                   (Unaudited)
                                   -----------

Note 1        Nature and Continuance of Operations
              ------------------------------------

              The  Company was  incorporated  in the State of  Delaware,  United
              States of  America  on July 21,  2003 and the  fiscal  year end is
              December 31.

              The Company's  business is  brokerage,  sales,  merchandising  and
              distribution  of grocery and consumer  products  across Canada and
              the  United  States of America to  independent  and chain  grocery
              stores, discount stores, drug stores, convenience stores and other
              distributors.

              On  July  27,  2004,  MG  Holdings  Inc.,  one  of  the  Company's
              wholly-owned  subsidiaries,  completed the  acquisition of certain
              assets of Sweet  Valley Foods Inc.  ("Sweet  Valley") and began to
              manufacture,  process,  and  distribute  sugar  using  the  assets
              acquired from Sweet Valley.  The Company  formed Sweet Valley Food
              Corporation  for the purpose of operating the assets acquired from
              Sweet Valley Foods Inc. (See Note 4).

              On August  20,  2004,  the  Company  acquired  all the  issued and
              outstanding capital stock of Bayshore Foods Inc.  ("Bayshore") and
              entered the snack food business (See Note 5).

              These interim consolidated financial statements have been prepared
              on a going concern basis. The Company has accumulated a deficit of
              $204,408  since  inception.  Its  ability to  continue  as a going
              concern is  dependent  upon the ability of the Company to generate
              profitable operations in the future and/or to obtain the necessary
              financing  to meet  its  obligations  and  repay  its  liabilities
              arising from normal business operations when they come due.

              The  Company  has a working  capital  deficiency  of  $292,021  at
              September  30,  2004  and must  support  current  commitments  and
              operations and planned  expansion for the next twelve months.  The
              outcome of these matters cannot be predicted with any certainty at
              this time. The Company has historically satisfied its capital need
              primarily  by  issuing   equity   securities  or  borrowing   from
              shareholders.

<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 2
(Unaudited)
 ---------

Note 2        Basis of Presentation
              ---------------------

              The accompanying  unaudited interim financial statements have been
              prepared  by the Company in  conformity  with  generally  accepted
              accounting  principles  of the United  States of America.  Certain
              information  and  footnote   disclosures   normally   included  in
              financial   statements   prepared  in  accordance  with  generally
              accepted accounting  principles,  however,  have been condensed or
              omitted  pursuant to the rules and  regulations  of the Securities
              and  Exchange  Commission.  In  the  opinion  of  management,  all
              adjustments   (consisting   of   normal   recurring   adjustments)
              considered  necessary for a fair  presentation have been included.
              The results of operations for the interim  period ended  September
              30,  2004 are not  necessarily  indicative  of the  results  to be
              expected  for the entire  fiscal year ending  December  31,  2004.
              These interim  financial  statements should be read in conjunction
              with  the  audited  financial  statements  for  the  period  ended
              December 31, 2003 included in the Company's Form SB-2 as filed and
              amended with the Securities  and Exchange  Commission on March 18,
              2004, April 6, 2004, April 23, 2004 and May 5, 2004.

Note 3        Summary of Significant Accounting Policies
              ------------------------------------------
              a)  Inventory

                  Inventory  is valued  at the lower of cost and net  realizable
                  value, determined on a first-in first-out basis.

              b)  Property, Plant and Equipment

                  Property, plant and equipment are stated at cost. Amortization
                  is provided utilizing the following annual rates and methods:

                       Processing equipment      30%         declining balance
                       Warehouse equipment       20%         declining balance
                       Computer equipment        30%         declining balance
                       Leasehold improvements    10 year     straight line

                  In the year an asset is acquired,  additions  are amortized at
                  half the normal rate.

              c)  Goodwill

                  Goodwill  represents  the excess  purchase  price paid for the
                  business  acquisitions outlined in notes 4 and 5 over the fair
                  value assigned to identifiable net assets  acquired.  Goodwill
                  is not  amortized,  and is  tested  for  impairment  at  least
                  annually.  An impairment  loss is recognized when the carrying
                  amount exceeds the fair value of the goodwill.  The fair value
                  of the  goodwill is  determined  as the excess of the value of
                  the business as a whole (using a capitalization  of normalized
                  after tax  earnings  approach)  over the fair value of the net
                  assets.

<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 3
(Unaudited)
 ---------

Note 3        Summary of Significant Accounting Policies (continued)
              ------------------------------------------------------

              d)  Trademarks

                  Trademarks are stated at unamortized  cost. Cost includes both
                  government  fees and  representation  costs.  Amortization  is
                  recognized  on the  straight-line  basis  over a period  of 10
                  years.

              e)  Income Taxes

                  The  company  accounts  for income  taxes  under the asset and
                  liability method. Under this method,  future income tax assets
                  and liabilities are recognized for the future tax consequences
                  attributable  to differences  between the financial  reporting
                  and tax bases of assets and  liabilities  and  available  loss
                  carryforwards.  A valuation allowance is established to reduce
                  tax  assets  if it is more  likely  than  not that all or some
                  portion of such tax assets will not be realized.

              f)  Revenue Recognition

                  Revenue is recognized when goods are shipped.

              g)  Foreign Currency Translation

                  The company has adopted  the  temporal  method of  translating
                  foreign currency  transactions  whereby monetary items denoted
                  in a foreign  currency are  translated at the year-end rate of
                  exchange, except for hedged liabilities,  which are translated
                  at contract  rates.  Non-monetary  items  denoted in a foreign
                  currency are  translated at the  historical  rate of exchange.
                  Translation  gains and losses are included in determining  net
                  earnings.

              h)  Use of Estimates

                  The  preparation of financial  statements,  in accordance with
                  generally accepted accounting principles,  requires management
                  to make  estimates  and  assumptions  that affect the reported
                  amount of assets and  liabilities and disclosure of contingent
                  assets and liabilities at the date of the financial statements
                  and the reported  amount of revenues  and expenses  during the
                  reported year.  These estimates are reviewed  yearly,  and, as
                  adjustments become necessary, they are reported in earnings in
                  the year in which they become known.

<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 4
(Unaudited)
 ---------

Note 3   Summary of Significant Accounting Policies (continued)
         ------------------------------------------------------

              i)  Financial Instruments

                  The company's financial  instruments consist of cash, accounts
                  receivable,  accounts  payable  and  accrued  liabilities  and
                  amounts  due to and from  related  parties.  Unless  otherwise
                  noted,  it is  management's  opinion  that the  company is not
                  exposed to  significant  interest,  credit or  currency  risks
                  arising from these  financial  instruments.  The fair value of
                  these financial instruments approximate their carrying values,
                  unless otherwise noted.

Note 4        Acquisition of Sweet Valley's Assets and Business
              -------------------------------------------------

              Pursuant to an Asset Purchase Agreement dated May 25, 2004, and an
              Amended  Agreement dated June 21, 2004, a wholly-owned  subsidiary
              of the Company acquired substantial all of the assets and business
              of Sweet Valley.  The acquisition has been accounted for using the
              purchase  method of  accounting.  Under  this  method,  the shares
              issued are valued at the fair  value,  agreed to by the  purchaser
              and the  vendor at  arms-length,  of the  assets  and  liabilities
              acquired determined at July 1, 2004 based on the unaudited working
              capital of Sweet Valley as follows:


                                                                    July 1, 2004
                                                                     Fair Value
                                                                      Acquired
                                                                      --------
            Inventory                                          $        210,948
            Capital assets                                              268,673
            Goodwill                                                    847,118
            Assumed liabilities                                   (      77,639)
                                                                   -------------
            Fair value of 100% interest acquired               $      1,249,100
            Future income taxes                                   (      26,112)
                                                                   -------------
                                                               $      1,222,988
                                                                   =============
            Consideration paid
               Cash                                            $        272,848
               Accounts payable                                          12,640
               Shares issued at fair value                              937,500
                                                                   =============

             The carrying  values of the assets and  liabilities of Sweet Valley
             as presented in the June 30, 2004 historical  financial  statements
             approximate their fair values.

             The  expenses  relating to the accounts  payable  portion that form
             part of the  Consideration  paid  noted  above were  incurred  by a
             subsidiary of the Company subsequent to June 30, 2004.

<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 5
(Unaudited)
 ---------

Note 5        Acquisition of Bayshore
              -----------------------

              Pursuant to a Share Purchase  Agreement dated July 1, 2004, Monaco
              acquired all of the capital stock of Bayshore. The acquisition has
              been accounted for using the purchase method of accounting.  Under
              this method,  the promissory note and the shares issued are valued
              at the fair value,  agreed to by the  purchaser  and the vendor at
              arms-length,  of the assets and liabilities acquired determined at
              August 20, 2004 based on the unaudited  assets and  liabilities of
              Bayshore as follows:

                                                              August 20, 2004
                                                                 Fair Value
                                                                  Acquired
                                                                 ---------

            Cash                                           $          5,360
            Other current assets                                    194,186
            Future income tax recovery                                  849
            Trademarks                                              400,000
            Goodwill                                                414,280
            Assumed liabilities                               (     206,649)
                                                              -------------
            Fair value of 100% interest acquired           $        808,026
            Future taxes                                      (     138,027)
                                                              -------------
                                                           $        669,999
                                                              =============
            Consideration paid
               Promissory Note ($350,000 Canadian Dollars) $        269,999
               Shares issued at fair value                          400,000
                                                              =============


             The carrying  values of the assets and  liabilities  of Bayshore as
             presented in the August 19, 2004  historical  financial  statements
             approximate their fair values.

Note 6        Property, Plant and Equipment
             ------------------------------
<table>
<caption>
                                                                                          Accumulated
                                                                          Cost           Amortization
                  
                                                <c>                 <c>

                  Processing equipment                                 $ 324,882         $    13,156
                  Warehouse equipment                                     15,482                 411
                  Computer equipment                                         873                  35
                  Leasehold improvements                                  23,877                 396
                                                                    --------------------------------

                                                                       $ 365,114         $    13,998
                                                                    --------------------------------

                  Net book value                                                         $   351,116
                                                                                          ==========
</table>

<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 6
(Unaudited)
 ---------

Note 7        Loans from Related Party
              ------------------------

              Loans from related party are due to a  shareholder  of the Company
              and are  unsecured,  bear  interest  at 10% per  annum and are due
              within seven days of notice.  The Company has been provided a line
              of credit from this  related  party up to $20,000 on these  terms.
              The  shareholder  has  agreed to waive the  interest  charge up to
              September 30, 2004.

              The shareholder has also advanced an additional  $339,681 which is
              unsecured, non-interest bearing and due on demand.

Note 8        Advances from Related Parties
              -----------------------------

              These  advances are  non-interest  bearing,  unsecured and have no
              specific terms of repayment.

Note 9        Loans Payable
              -------------
<table>
<caption>
              
                                                                        <c>
              Loan payable, unsecured, bears interest at 11% per
              annum and interest is payable monthly and principle
              due on August 20, 2006.                                                   $    269,999

              Loan payable, unsecured, bears interest at prime plus 3% per annum
              and is  repayable  in  monthly  principle  instalments  of  $4,128
              (Cdn$5,208) plus interest to
              February 15, 2006.                                                              70,103
                                                                                        -------------
                                                                                             340,102

              Less:  current portion                                                          49,537
                                                                                        -------------

                                                                                        $    290,565
                                                                                        =============
</table>

Note 10       Capital Stock
              -------------

              Common stock issued, par value and additional paid-in capital have
              been retroactively  adjusted for a forward stock split approved by
              the Company on September 29, 2003, allocating nine more shares for
              each one share held. On August 16, 2004, the Company  approved the
              increase of its authorized common stock to 15,000,000  shares, and
              the  authorization  of  4,000,000  preferred  stock at $0.001  par
              value.

<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 7
(Unaudited)
 ---------

Note 10       Capital Stock (continued)
              -------------------------

              Pursuant to an Option  Agreement  dated July 23, 2003, the Company
              has an option to repurchase up to 90% of the common stock owned by
              certain  directors of the Company up to July,  2004 and 75% of the
              stock to July,  2005 in the event they  terminate  their tenure as
              directors  of the  Company.  The stock may be  repurchased  by the
              Company for 110% of the average amount paid for the stock to July,
              2004 and 120% to July,  2005.  The total stock  applicable to this
              Option  Agreement are based on the number of shares owned by those
              directors  of the  Company  on the date of their  termination.  At
              December 31, 2003 and September 30, 2004, directors of the Company
              subject to the Option  Agreement  owned an  aggregate of 2,240,000
              common shares.

              During the period ended  September 30, 2004, the Company agreed to
              issue  30,000  restricted  shares  of its  common  stock  to three
              directors  of  the  Company.   The  Company  also  issued   30,500
              restricted shares of its common stock to 6 individuals for cash at
              $1.50 per share.

              On August 20, 2004,  the Company  issued  400,000 shares of common
              stock  pursuant to an  agreement,  dated July 1, 2004, to purchase
              all of the issued and outstanding shares of Bayshore.

              On  July  16,  2004,  MG  Holding  Inc.  ("MGH"),   the  Company's
              wholly-owned subsidiary,  amended its articles of incorporation to
              create a new class of stock in the  capital of MGH of  "Non-Voting
              Exchangeable  Shares".  The rights,  privileges,  restrictions and
              conditions   attaching  to  the  Non-Voting   Exchangeable  Shares
              include:
              i)       Each Non-Voting Exchangeable Share may be exchanged for
                      two shares of the Company's common stock.

              ii)     On not less than 30 days prior notice, MGH may redeem some
                       or all of the then  outstanding  Non-Voting
                      Exchangeable Shares ("Redemption") on any date selected by
                      its   board  of   directors   at  $1.25   per   Non-Voting
                      Exchangeable Share.

              iii)    Holders of Non-Voting Exchangeable Shares shall have until
                      the 10th  day  immediately  preceding  the  Redemption  to
                      elect,  by written notice to the Company,  to exchange the
                      Non-Voting Exchangeable Shares for Company common stock.

              On July 27, 2004,  MGH completed the  acquisition  of the business
              and all the assets  (the  "Sugar  Business  Assets")  of the sugar
              division of Sweet Valley Foods Inc. The consideration paid for the
              Sugar  Business   Assets  by  MGH  included   750,000   Non-Voting
              Exchangeable Shares.

              The number of shares of common  stock  issued and  outstanding  at
              September  30,  2004 does not  include  the  750,000  exchangeable
              shares of MGH that are  exchangeable  into 1,500,000 shares of the
              Company's common stock.

<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 8
(Unaudited)
 ---------

Note 10       Capital Stock (continued)
              -------------------------

              Share Purchase Options
              ----------------------

              The Company has a share purchase option plan, which authorizes the
              board of directors to grant  shares as  incentive  share  purchase
              options to directors,  officers and employees.  The exercise price
              of the  options  is  determined  by the fair  market  value of the
              shares at the closing price on the date of the grant.

              During the period ended  September  30, 2004,  the change in share
              purchase options outstanding is as follows:
<table>
<caption>
                                                                                             Weighted
                                                                                              Average
                                                                                Shares    Exercise Price
                                                                                ------    --------------
              
                                                               <c>        <c>

              Options outstanding at December 31, 2003                              -             -
              Granted                                                           90,000         $1.00
                                                                                ------         -----

              Options outstanding and exercisable at September 30, 2004         90,000         $1.00
                                                                                ======         =====
</table>

              At  September  30,  2004,   90,000  share  purchase  options  were
              outstanding to directors  entitling the holders  thereof the right
              to purchase one share of the  Company's  common stock at $1.00 per
              share.  60,000 of these share  purchase  options expire on July 2,
              2009, and the balance on July 27, 2009.

Note 11       Non-cash Transactions
              ---------------------

              Investing  and  financing  activities  that do not  have a  direct
              impact  on  current  cash  flows are  excluded  from the cash flow
              statement.  During  the  period  ended  September  30,  2004,  the
              following transactions were excluded:

                a)    The  Company  issued  30,000  shares  of its  common stock
                      at a deemed  value of  $0.625  per share as  consideration
                      for consulting services;

                b)    The Company issued 400,000 shares of its common stock at a
                      deemed   value  of  $1.00  per  share   pursuant   to  the
                      acquisition of Bayshore.

<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 9
(Unaudited)
 ---------

Note 12       Lease Commitment
              ----------------

              This company leases premises at 4055 Sladeview  Crescent,  Unit 4,
              Mississauga,  Ontario.  The lease  expires on July 14,  2005.  The
              company is obligated for minimum annual rental payments, exclusive
              of taxes, maintenance and insurance as follows.
<table>
<caption>
             
                                                        <c>
              For the three months ending December 31, 2004            $      17,359
              For the six and one half months ending July 14, 2005            34,956
                                                                       --------------
                                                                       $      52,315
                                                                       =============
</table>
Note 13       Significant Customer
              --------------------

              During the three months  ended  September  30,  2004,  the company
              derived approximately 55.3% of its revenue from a single corporate
              client.


Note 14       Subsequent Events
              -----------------

              a)  Subsequent to September 30, 2004,  the Company agreed to issue
                  100,000 restricted common shares to a director of the Company.

              b)  On  October  4,  2004,   the  Company  and  its   wholly-owned
                  subsidiary,  Monaco  (Canada)  Inc.  ("MCI"),  entered into an
                  agreement to purchase all of the issued and outstanding shares
                  of LF  Acquisition  Corp.,  LF Licensed  Products Inc., and LF
                  Brands Inc. in consideration  for 10,000,000 shares of Class A
                  Preferred  Stock of MCI ("Class A Preferred  Stock")  that did
                  not exist as of the date of the agreement, but the Company and
                  MCI have  agreed to form such stock.  The rights,  privileges,
                  restrictions and conditions attaching to the Class A Preferred
                  Stock shall include:

                  i.       the  holders of the Class A Preferred  Stock shall be
                           entitled to receive,  from the  net profits  of  MCI,
                           dividends  of  the  annual  rate of  $.04   (Canadian
                           Dollars)  per  share  per  annum payable quarterly no
                           later than the 15th day of  the month  following  the
                           quarterly  period and accruing  until paid, beginning
                           and  assessed,  commencing  and assessed on the first
                           full  quarter  following  issuance.   The  amount  of
                           dividends  payable  shall be  computed  on the  basis
                           of  a  360  day  year of  four 90 day  quarters.  The
                           holders of MCI's  common  stock shall be  entitled to
                           all  remaining  profits  which the Board of Directors
                           may determine to distribute to holders of that common
                           stock as dividends;
<page>

Monaco Group Inc.
Notes to the Interim Consolidated Financial Statements
September 30, 2004
(Stated in US Dollars) - Page 10
(Unaudited)
 ---------

Note 14       Subsequent Events (continued)
              -----------------------------
                 ii.       Each  share  of  Class A  Preferred  Stock  shall  be
                           retractable,  after 7  years,  at the  option  of the
                           holder thereof at $1.00 (Canadian  Dollars) per share
                           plus,  in each  case,  an amount in cash equal to all
                           dividends on the Class A Preferred  Stock accrued and
                           unpaid  thereon,  pro  rata  to the  date  fixed  for
                           retraction (such amount is hereinafter referred to as
                           the "Retraction Price"); and

                 iii.      Not less than 30 days and not more than 60 days prior
                           to the  retraction  date  notice by first class mail,
                           postage  prepaid,  shall be given to MCI.  Each  such
                           notice of retraction shall specify the date fixed for
                           retraction and the Retraction Price.  Payment will be
                           made up on  presentation  and surrender of the shares
                           of the Class A Preferred  Stock and that on and after
                           the   retraction   date,   dividends  will  cease  to
                           accumulate on such shares.

              Pursuant  to the  provisions  of the  agreement,  the  Company has
              agreed to guarantee all of the  obligations of MCI to the vendors,
              including, but not limited to, the (i) obligation to pay dividends
              regarding the Class A Preferred  Stock to be issued by MCI, if and
              when declared, and (ii) redemption of that Class A Preferred Stock
              by MCI and payment of the applicable  purchase price therefor when
              notified by the holders of that Class A Preferred  Stock,  if they
              desire that such redemption occur.  Additionally,  the Company has
              agreed to guarantee that operating line of credit in the amount of
              $2,000,000.00 (Canadian Dollars) extended by a chartered bank to a
              wholly-owned  subsidiary of LF Acquisition Corp.; and that line of
              credit is currently  secured by the assets of said  subsidiary and
              guaranteed by one of the vendors.

<page>

Item 2.- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

General

The following discussion and analysis should be read in conjunction with, and is
qualified  in its  entirety  by, our  financial  statements  (and notes  related
thereto) appearing elsewhere in this report.

We are a developmental stage company  incorporated in Delaware on July 21, 2003.
We have four subsidiaries,  Monaco (Canada) Inc., incorporated under the laws of
the Province of Ontario on July 25, 2003 ("Monaco  Canada"),  MG Holdings  Inc.,
incorporated  under the laws of the  Province of Ontario on November  10,  2003,
Sweet Valley Food  Corporation,  incorporated  under the laws of the Province of
Ontario on May 14,  2004,  and  Bayshore  Foods  Inc.,  an Ontario  corporation,
acquired on August 20, 2004.

In October 2003, we entered the grocery distribution  business in Canada through
our  subsidiary,  Monaco  (Canada).  Since that time,  we  purchased  brand name
grocery  products  manufactured by such companies as Coca Cola, Pepsi Co., Kraft
Foods, and Colgate-Palmolive  from suppliers on an order-by-order basis and sold
these  products  to a limited  number  of  wholesale  customers  in  Canada.  We
distributed products to these customers on an order-by-order basis. We currently
rely on a few major customers for all of our grocery distribution business.

In July 2004, we completed  our  acquisition  of certain  assets of Sweet Valley
Foods Inc. and began to  manufacture,  process,  and distribute  sugar using the
assets we acquired  from Sweet  Valley  Foods Inc. We formed  Sweet  Valley Food
Corporation  for the purpose of operating  the  business we acquired  from Sweet
Valley  Foods Inc. In August  2004,  we completed  our  acquisition  of Bayshore
Foods, Inc. and entered the snack food business.

Results of Operations

Third Quarter 2004 and Nine months Ended September 30, 2004
-----------------------------------------------------------

Revenues.   Revenues  for  the  three  months  ended  September  30,  2004  were
$1,630,283.  Revenues  for  the  nine  months  ended  September  30,  2004  were
$1,824,712.  As we were not incorporated  until July 21, 2003, we cannot present
comparative  information for the three and nine months ended September 30, 2003.
This revenue was derived from our sugar business,  our snack food business,  and
from our grocery distribution  business in Canada. During the three months ended
September 30, 2004, the Company derived  approximately 55.3% of its revenue from
a single customer.

Cost of Sales. Cost of sales was $1,509,696 for the three months ended September
30, 2004 (92.6%, as a percentage of sales). Cost of sales was $1,701,234 for the
nine months ended September 30, 2004 (93.2%,  as a percentage of sales).  If our
revenue  increases  as we  anticipate,  we  anticipate  that  cost of sales as a
percentage of sales will decrease.

Approximately 60% of our raw material  inventory was supplied by an affiliate to
one of our  directors at terms  believed to be 1.8% above market  prices.  Until
such time as the Company is able to obtain alternative financing, including, but
not limited to, credit from alternative suppliers,  the Company will continue to
purchase raw materials from this supplier for the Company's sugar business.

<page>

General and Administrative Expenses. General and administrative expenses totaled
$206,338  for  the  three  months  ended   September   30,  2004.   General  and
administrative expenses totaled $256,365 for the nine months ended September 30,
2004.  This total was  primarily  due to wages and  benefits  of $70,932 for the
three and nine  month  periods  and legal  fees of $13,309  (three  months)  and
$52,536 (nine months),  mainly related to the filing of a registration statement
on Form SB-2 and subsequent SEC reporting.

Liquidity and Capital Resources

As of September 30, 2004, we had a working  capital  deficit of $292,021.  As of
September  30,  2004,  our cash and cash  equivalents  increased to $60,744 from
$6,977 at December  31,  2003.  Cash used in  operating  activities  amounted to
$229,438,  attributable  mainly to the net loss of 121,030  over the  nine-month
period ended  September 30, 2004 as well as the net effect of the  consolidation
of the Sweet Valley assets and Bayshore business into our operations.  Cash used
in  investing  activities  amounted  to  $765,945,  attributable  mainly  to the
acquisition  of capital  assets and  trademarks in the Sweet Valley and Bayshore
acquisitions.   Financing  activities  provided  $1,049,150  from  advances  and
borrowing  from  related  parties  and  issuances  of  notes  payable  over  the
nine-month period ended September 30, 2004.

For the quarter ended September 30, 2004, the Company posted a quarterly loss of
$73,894. The Company expects to continue to operate at a loss while the business
grows, at least through fiscal 2004.

We have funded our financial needs from inception primarily through net proceeds
received  through  private sales of our  securities,  as well as borrowings  and
advances from related parties.

Plan of Operations

General.  Over the next  twelve  months,  we plan to  enter  the food  brokerage
business and further develop our distribution  business.  Additionally,  we will
manufacture,  process,  and  distribute  sugar using the assets we acquired from
Sweet Valley  Foods Inc.  and we will be involved in the snack food  business of
Bayshore Foods, Inc. If we cannot finance our operating  activity with available
cash, then we will seek alternative sources of funding, including loans from our
directors,  officers, or stockholders,  commercial or private lenders, or credit
from suppliers.  Without regard to our existing loan agreements, there can be no
assurances that loans will be available to us on favorable terms, if at all.

As of  September  30,  2004,  we had cash of $60,744.  At our  current  level of
operations,  our available funds could likely satisfy our cash  requirements for
less than three months.  We anticipate that we will collect accounts  receivable
that will  allow us to meet our cash  requirements  for a longer  period.  If we
cannot  finance our operating  activity with available  cash,  then we will seek
alternative sources of funding, including loans from our directors, officers, or
stockholders, commercial or private lenders, or credit from suppliers.

Distribution.  Over the next  twelve  months,  we plan to  further  develop  our
distribution  business in Canada,  through Monaco  Canada.  On July 24, 2003, we
hired a consultant to compile information pertaining to the grocery industry and
prospective  suppliers.  During the next  twelve  months,  our  management  will
contact these prospective suppliers of grocery products and attempt to establish
them as vendors. Our management will also attempt to expand our customer base by
continuously  offering  prospective  retail and wholesale  customers the grocery
products  sourced  from our existing and  prospective  suppliers at  competitive
prices.  We  anticipate  that we will  continue  to  generate  revenue  from the

<page>

distribution  of grocery  products  to  independent  and chain  grocery  stores,
discount  stores,  drug  stores,   convenience  stores  and  other  grocery  and
foodservice  distributors.  To expand the distribution  business during the next
twelve  months,  we expect to incur sales and  marketing  costs of $100,000  and
general and  administrative  costs of $200,000 during this period.  We intend to
finance these costs by using existing cash, borrowings under our loan agreements
and profits generated from our distribution  business. If we cannot finance this
activity with available cash and the profits  generated from the distribution of
grocery products,  we will seek alternative sources of funding,  including loans
from our directors, officers, or stockholders, commercial or private lenders, or
credit from suppliers.

In connection with our increased distribution business:

o        To purchase products from vendors to be held as inventory,  we may need
         to raise  additional  funds.  It is unlikely  that vendors will give us
         sufficient  credit to fund significant  inventory.  Therefore,  we will
         need to use our available cash to finance  inventory that is not funded
         by vendor  credit.  If we do not have enough  available cash to finance
         inventory,  then we will need to seek  alternative  sources of funding,
         including  loans from our  directors,  officers,  or  stockholders,  or
         commercial or private lenders.
o        To warehouse any products held in inventory, we will require the use of
         a  third-party   warehouse  to  store  such  products.  A   corporation
         controlled by our CFO,  Suzanne  Lilly, currently provides  warehousing
         services to us. This  corporation  has agreed  to  provide  warehousing
         services, as needed, until December 31, 2004 at no cost. Thereafter, if
         we require the use of warehousing  services from this  corporation,  it
         would provide such services,  on a per use basis, inline with  standard
         market rates.  This  corporation  currently  charges its  customers  at
         a rate of $3.75 per pallet for inbound, $3.75 per pallet for   outbound
         and $4.50 per pallet per month for storage.  If we do not  have  enough
         available  cash  to  fund  warehousing costs, we  will  need  to  raise
         additional funds to pay for such  warehousing  by  seeking  alternative
         sources of  funding, including loans from  our directors,  officers, or
         stockholders, or commercial or private lenders.

Brokerage.  We, through our subsidiary,  Monaco Canada, plan to start contacting
manufacturers  and suppliers of food and consumer goods in Canada and offer them
our brokerage  and marketing  services  throughout  the grocery and  foodservice
industry in an effort to establish a national  presence for those  clients.  Our
management will contact these  manufacturers  and suppliers through referrals or
by cold calling.  We will also offer sales and  merchandising  services to these
manufacturers  and suppliers.  We anticipate that we will generate  revenue from
our  brokerage  business  by earning  commissions  and fees from the sale of the
products  of our  clients to  independent  and chain  grocery  stores,  discount
stores,  drug  stores,  convenience  stores and other  grocery  and  foodservice
distributors. These activities will require at least $10,000 for the development
of brochures for our brokerage  business and  approximately  $20,000 for travel,
office  supplies,   and  other  selling  expenses.   In  connection  with  these
activities,  we  intend  to use  existing  cash or  borrowings  under  our  loan
agreements. If we cannot finance this activity with available cash, then we will
seek  alternative  sources  of  funding,  including  loans  from our  directors,
officers,  or  stockholders,  commercial  or  private  lenders,  or credit  from
suppliers.

Acquisitions. On July 27, 2004, we, through our subsidiary MG Holdings, acquired
the assets of Sweet Valley Foods Inc. related to the manufacturing,  processing,
and  selling  of sugar in  consideration  of $80,000  Canadian  dollars in cash,
750,000  exchangeable shares of stock of MG Holdings,  and cash compensation for
its inventory.  Each exchangeable  share of MG Holdings may be exchanged for two
shares of Company common stock. The value of the inventory  purchased from Sweet
Valley  Foods  Inc.,  as at July 1,  2004,  was  $282,724.78  Canadian  dollars.

<page>

Couprie,  Fenton  Inc., a  corporation  owned by certain  shareholders  of Sweet
Valley, has agreed to finance this inventory purchase on a short-term basis. The
cash paid by our  subsidiary,  MG Holdings,  at closing was $80,000.00  Canadian
dollars.  Burgio Holdings,  our largest shareholder,  agreed to loan us funds to
complete  this  purchase.  We  formed  a  new  subsidiary,   Sweet  Valley  Food
Corporation,  an Ontario  corporation,  to operate and utilize the sugar  assets
acquired.

Sweet Valley Food  Corporation  packages and  distributes  granulated  sugar and
related sugar products to the foodservice and retail marketplace in Canada under
the brand name "Sweet  Valley".  It serves as a niche  supplier in the  Canadian
retail,  foodservice and industrial  markets.  Sweet Valley's  customers include
retail customers,  such as grocery and mass merchandise  stores,  and industrial
customers,  principally  food  manufacturers.  The  refined  sugar  is sold in a
variety of packaging  options  under  various  brands.  In addition to packaging
Sweet  Valley's  own brand,  it  packages  the  private-label  brands of various
retailers and  distributors  throughout  Canada.  Sweet Valley Food  Corporation
markets its sugar products to retail grocers and industrial  food  manufacturers
by direct sales and through  distributors.  We plan to continue and hope to grow
this  business over the next twelve  months.  We believe that this business will
have  sufficient  operations to be  self-sufficient.  If operations  prove to be
insufficient,  we will seek alternative sources of funding, including loans from
our directors,  officers,  or stockholders,  commercial or private  lenders,  or
credit from suppliers.

On August 20 2004, we completed the  acquisition of Bayshore Foods Inc., a snack
food  company.  We delivered a note  payable in the amount of $350,000  Canadian
dollars and 400,000  shares of our common  stock at the closing to Amton Inc., a
New York  corporation,  to acquire all of the issued and  outstanding  shares of
Bayshore  Foods Inc.  Bayshore  Foods Inc.  markets and  distributes  snack food
products under the "Amigos"  trademark and "Jimmy Pop Corn" trademark.  Bayshore
Foods  currently  sells its "Amigos"  brand tortilla and nachos chips and "Jimmy
Pop Corn" brand caramel popcorn to retailers and distributors in Canada. We plan
to  continue  and  hope to grow  this  business  over the  next  twelve  months.
Additionally,  Bayshore  Foods Inc.  plans to launch  these two brands  into the
United  States in 2005.  We also plan to expand  the  "Amigos"  brand into other
product  categories,  including tacos,  taco seasoning and salsa, and its "Jimmy
Pop Corn" brand into other  popcorn  categories.  We believe that this  business
will have sufficient operations to be self-sufficient. If operations prove to be
insufficient,  we will seek alternative sources of funding, including loans from
our directors,  officers,  or stockholders,  commercial or private  lenders,  or
credit from suppliers.

On October 4, 2004,  we entered  into a Share  Purchase  Agreement  with  Burgio
Family Holdings Inc., an Ontario corporation ("Burgio Holdings"),  ALBAR Capital
Corp., an Ontario corporation ("ALBAR"),  and Monaco Canada (the "Share Purchase
Agreement").  Approval of the Share Purchase  Agreement requires the affirmative
vote of the  holders of a  majority  of the  disinterested  shares of the Common
Stock voting in person or by proxy at our December 17, 2004 Annual  Meeting.  If
so approved, the transaction is expected to close in January 2005.

Pursuant to the provisions of the Share Purchase Agreement,  Burgio Holdings has
two  wholly  owned   subsidiaries,  which  are  LF Licensed  Products  Inc. ("LF
Licensed") and LF Acquisition  Corp. ("LF  Acquisition").  ALBAR has one  wholly
owned  subsidiary which is LF Brands Inc. LF Brands Inc.  formed Loretta  Baking
Mix Products Ltd.  ("LBMP"),  a Michigan  corporation on October 7, 2004,for the
purpose of exploring the possible purchase of all  the  assets  and  business of
Michigan-based  Amendt  Corporation.  LBMP will require  financing  to  complete
this purchase and there are no assurances that LBMP's will complete the purchase
of Amendt Corporation.LF Brands Inc. also owns 6,000 shares of the capital stock
of Golden Gate Flour  Corporation,  which is 60% of the issued  and  outstanding
shares of Golden Gate Flour Corporation. 2047810  Ontario Inc.owns the remaining

<page>

4,000 shares of capital stock of Golden Gate Flour  Corporation.  LF Brands Inc.
has the option to acquire from 2047810 Ontario Inc. all of  those 4,000  shares.
This option expires in November 2004.

Pursuant to the  provisions of the Share Purchase  Agreement,  we have agreed to
guarantee all of the  obligations of Monaco Canada to Burgio Holdings and ALBAR,
including, but not limited to, the (i) obligation to pay dividends regarding the
Class A Preferred Stock to be issued by Monaco Canada, if and when declared, and
(ii)  redemption of that Class A Preferred Stock by Monaco Canada and payment of
the  applicable  purchase  price  therefor  when notified by the holders of that
Class  A  Preferred   Stock,  if  they  desire  that  such   redemption   occur.
Additionally,  we have agreed to guarantee  that operating line of credit in the
amount of  $2,000,000  (Canadian  Dollars)  extended  by the Bank of Montreal to
Loretta  Foods  Limited;  and that line of credit is  currently  secured  by the
assets of Loretta Foods Limited and guaranteed by Burgio Holdings.

LF  Acquisition  owns 3 shares of the Capital  Stock of Loretta  Foods  Limited,
which are all of the issued and outstanding shares of Loretta Foods Limited.

Pursuant to the  provisions  of the Share  Purchase  Agreement,  at such time as
reasonably  practicable  after the  approval  by our  shareholders  of the Share
Purchase Agreement, Monaco Canada will acquire from Burgio Holdings 1,500 shares
of LF Licensed.  Additionally,  pursuant to the provisions of the Share Purchase
Agreement,  Burgio  Holdings  will  acquire  100  shares of LF  Acquisition.  In
exchange for those 1,500 shares of LF Licensed and 100 shares of LF Acquisition,
Monaco  Canada  shall  issue to  Burgio  Holdings  3,000,000  shares  of Class A
Preferred Stock of Monaco Canada.

Additionally, pursuant to the provisions of the Share Exchange Agreement, Monaco
Canada will  acquire  from ALBAR those 100 shares of capital  stock issued by LF
Brands and  presently  owned by ALBAR.  In  exchange  for those 100 shares of LF
Brands,  Monaco Canada shall issue to ALBAR 7,000,000  shares of Monaco Canada's
Class A Preferred Stock.

LF  Acquisition  is  indebted  to Burgio  Holdings  in the amount of  $1,778,884
Canadian  Dollars.  As security for the  indebtedness  evidenced by that Secured
Debenture,  Burgio  Holdings  has a  security  interest  in those 100  shares of
capital stock issued by LF Acquisition  and all of the assets of LF Acquisition.
Accordingly,  Burgio Holdings has a first priority in those 100 shares and those
assets,  as a secured  creditor,  and that security interest will terminate only
when the indebtedness evidenced by that Secured Debenture is paid completely.

Loretta  Foods Limited is a Canadian food company and is engaged in the business
of  manufacturing,  marketing and  distribution of spices,  seasonings,  flavors
other food  products  under the brand  names  "Loretta",  "Donna"  and "Palm" to
retailers and wholesalers  throughout  Canada. The Company is also a supplier of
private-label  food  products  and  markets  certain  products  under  licensing
agreements with various Canadian organizations.

LF Brands is the owner of 60% of Golden Gate Flour  Corporation,  which owns and
operates  a flour  mill based in  Brantford,  Ontario  and is engaged in milling
wheat into flour and distributing its products primarily to commercial bakeries,
food companies,  food service  companies and retailers.  LF Brands also owns the
rights to Rich'n Moist,  Rich'n Chewy,  Rich'n Fluffy,  1st Prize,  County Fair,
Jelly Powders,  Puddin',  Too Cool, Keep'm Hot Keep'm Cool and The Value Diaper.
These products include baking mixes, flour products and drink mixes.

<page>

We  believe  that  these  businesses  will  have  sufficient  operations  to  be
self-sufficient.   If  operations  prove  to  be  insufficient,   we  will  seek
alternative sources of funding, including loans from our directors, officers, or
stockholders, commercial or private lenders, or credit from suppliers.

During the next twelve months, we may acquire additional local and regional food
companies  in the  United  States and  Canada.  We have not yet  identified  any
additional  companies  that  meet our  criteria,  and we do not have a  specific
timetable for acquisitions.  Additional  acquisitions  will require  significant
financial  resources.  Available cash will not be sufficient to fund  additional
acquisitions.  We would likely finance  additional  acquisitions with loans from
commercial or private lenders. We are not certain that we will be able to obtain
such financing to fund any additional acquisitions.

Adequate funds may not be available when needed or on terms acceptable to us. In
the event that we are not able to obtain  additional  funding on a timely basis,
our business may fail or we may be required to limit any proposed operations.

Employees. As of November 19, 2004, Monaco Canada had 2 employees, including two
of our executive officers. Two independent consultants have provided services to
us, which include the  development of a proposed sales training  program and the
compiling of  information  pertaining  to the grocery  industry and  prospective
suppliers.  As of  November  19,  2004,  Sweet  Valley Food  Corporation  has 10
employees,  including our executive  officer for our sugar division.  One of our
directors  consults with our sugar division,  from time to time,  assisting with
facilitating  sales and raw  material  procurement.  As of  November  19,  2004,
Bayshore Foods had 4 part-time  employees,  including its executive officer.  In
addition,  Bayshore Foods has a short-term  consulting agreement with one of its
co-founders, that requires this consultant to assist with facilitating sales and
raw material procurement.

Over the next  three to six  months,  we plan to  recruit  a staff of up to four
persons  for  Monaco  Canada  to  focus on  procurement,  sales  and  marketing,
administration  and to assist  with the launch of our  business  and  thereafter
commence  selling our products and services.  We plan to hire a purchasing agent
and salespersons on a commission-only  basis, if possible. By doing so, we could
avoid  using  our  limited  cash to pay  salaries  for  these  individuals.  For
salespersons, we intend to pay a commission range of 0.5% to 3.0% of gross sales
depending on the type of product  sold. We believe that this level of commission
will allow us to recruit a qualified salesperson, yet retain a reasonable profit
margin.  For a purchasing  agent, we intend to pay a commission range of 0.5% to
1.0% of  gross  sales  depending  on the  type of  product  sold and the cost of
product  purchased.  We believe that this level of  commission  will allow us to
recruit a qualified  salesperson,  yet retain a  reasonable  profit  margin.  An
administrative employee hired by us would likely be hired on an hourly basis for
approximately $10 to $15 per hour or approximately  $20,000 to $30,000 per year.
We do not believe  that our current  cash will be  sufficient  to recruit a full
procurement,  sales and marketing, and administrative staff. We could recruit up
to one staff member, likely an administrative employee, using available cash and
borrowing  under our loan  agreement.  If we cannot  finance this  activity with
available  cash,  then we will seek  alternative  sources of funding,  including
loans from our directors,  officers,  or  stockholders  or commercial or private
lenders.

Off Balance Sheet Arrangements  None.

<page>

                           FORWARD LOOKING STATEMENTS

Certain matters discussed or referenced in this report, including expectation of
increased  revenues and  continuing  losses,  our  financing  requirements,  our
capital  expenditures  and our  prospects  for the  development  of our  grocery
distribution  business,  are forward-looking  statements.  Other forward-looking
statements may be identified by the use of  forward-looking  terminology such as
"may",  "will",  "expect",  "believe",   "estimate",   "anticipate",   "intend",
"continue",  or similar terms,  variations of such terms or the negative of such
terms. All forward-looking  statements speak only as of the date of this report,
and we expressly  disclaim any obligation or undertaking to release publicly any
updates or revisions to any forward-looking  statements contained in this report
to reflect any change in our expectations  with regard to such statements or any
change in events,  conditions or  circumstances  on which any such  statement is
based. Although such statements are based upon our current expectations,  and we
believe  such   expectations  are  reasonable,   such   expectations,   and  the
forward-looking  statements  based on them,  are subject to a number of factors,
risks and uncertainties that could cause our actual results to differ materially
from  those  described  in  the  forward-looking  statements,   including  those
described  below and in our  other  filings  with the  Securities  and  Exchange
Commission.

ITEM 3 -- CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.  Management, including the
Chief  Executive  Officer  and  Chief  Financial  Officer,   have  conducted  an
evaluation of the effectiveness of disclosure  controls and procedures  pursuant
to Exchange Act Rule 13a-14(c) and 15d-14(c).  This  evaluation was conducted as
of September 30, 2004. Based on that evaluation, the Chief Executive Officer and
Chief Financial  Officer  concluded that the disclosure  controls and procedures
are effective in ensuring that all material  information required to be filed in
this  quarterly  report has been made known to them in a timely  fashion.  There
have been no significant  changes in internal  controls or in other factors that
could  significantly  affect internal controls  subsequent to the date the Chief
Executive Officer and Chief Financial Officer completed their evaluation.

(b) Changes in Internal  Control Over Financial  Reporting.  Our Chief Executive
Officer  and  Chief  Financial   Officer  have  indicated  that  there  were  no
significant  changes  in our  internal  controls  or other  factors  that  could
significantly  affect such controls  subsequent to the date of their evaluation,
and there were no such control  actions with regard to significant  deficiencies
and material weaknesses.

<page>

                          PART II -- OTHER INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES

On July 2,  2004,  William  Fatica  and  Joel  Sebastian  joined  our  board  of
directors.  Each was issued  10,000  shares of our common  stock and  options to
purchase another 30,000 shares for $1.00 per share,  exercisable over the next 5
years.  The exemption from  registration  that these shares were issued under is
Section 4(2) of the Securities Act of 1933. We relied on this exemption  because
these  transactions  did not involve any public  offering,  we did not engage in
advertising or general solicitation, the investors are financially sophisticated
and, as members of our board, have knowledge of our company and business.

On July 27, 2004, we, through our subsidiary MG Holdings, acquired the assets of
Sweet Valley Foods Inc. related to the manufacturing, processing, and selling of
sugar in consideration of $80,000 Canadian dollars in cash, 750,000 exchangeable
shares of stock of MG Holdings,  and cash  compensation for its inventory.  Each
exchangeable  share of MG Holdings  may be  exchanged  for two shares of Company
common stock.  The  exemption  from  registration  that these shares were issued
under is the Regulation S exemption from the  registration  requirements  of the
Securities Act of 1933.

At this same time,  Leo  Couprie  joined our board of  directors  and was issued
10,000 shares of our common stock and options to purchase  another 30,000 shares
for $1.00 per  share,  exercisable  over the next 5 years.  The  exemption  from
registration  that these shares were issued under is the  Regulation S exemption
from the registration requirements of the Securities Act of 1933.

On August 20 2004, we completed the  acquisition of Bayshore Foods Inc., a snack
food  company.  We delivered a note  payable in the amount of $350,000  Canadian
dollars and 400,000  shares of our common  stock at the closing to Amton Inc., a
New York  corporation,  to acquire all of the issued and  outstanding  shares of
Bayshore  Foods Inc.  The  exemption  from  registration  that these shares were
issued under is Section 4(2) of the  Securities  Act of 1933.  We relied on this
exemption  because this transaction did not involve any public offering,  we did
not engage in advertising or general  solicitation,  the investor is financially
sophisticated and has knowledge of our company and business.

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

On August 16, 2004, our  shareholders  elected by written  consent to approve an
amendment to our Certificate of Incorporation to increase our authorized  common
stock, par value $0.001 per share,  from 10,000,000  shares to 15,000,000 shares
and to  authorize  4,000,000  shares of  preferred  stock,  par value $0.001 per
share.

On July 26, 2004 we provided an information statement to our shareholders, which
was filed with the SEC on Schedule 14C, with respect to such shareholder action.

Holders of 4,150,000  shares,  accounting  for  approximately  93% of the shares
outstanding at that time, elected by written consent to approve such action.

On August 16, 2004 we filed an amendment to our Certificate of  Incorporation to
increase  the  authorized  common  stock,  par  value  $0.001  per  share,  from
10,000,000  shares to  15,000,000  shares and to authorize  4,000,000  shares of
preferred  stock, par value $0.001 per share. A copy of this amendment was filed
as an exhibit to our quarterly  report on Form 10-QSB for the quarter ended June
30, 2004.

<page>

ITEM 5. OTHER INFORMATION

There were no material  changes to the procedures by which security  holders may
recommend nominees to the registrant's board of directors.

ITEM 6.  Exhibits and Reports on Form 8-K

Exhibits

31.1.        Rule 13a-14(a) Certification of Chief Executive Officer
31.2.        Rule 13a-14(a) Certification of Chief Financial Officer
32.1.        Certification of Chief Executive Officer Pursuant to 18 U.S.C.
             Section 1350, as Adopted Pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002.
32.2.        Certification of Chief Financial Officer Pursuant to 18 U.S.C.
             Section 1350, as Adopted Pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002.


<page>
                                   SIGNATURES

Pursuant  to the  requirements  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.

                                                  Monaco Group Inc.
                                                  (Registrant)

                                                  By: /s/ Peter Nelipa
                                                  --------------------
                                                  Peter Nelipa
                                                  Chief Executive Officer
                                                  (Duly Authorized Officer)

                                                  Date: November 22, 2004

                                                  By: /s/ Suzanne Lilly
                                                  ---------------------
                                                  Suzanne Lilly
                                                  Chief Financial Officer
                                                  (Principal Financial Officer)

                                                  Date: November 22, 2004

<page>

                                  Exhibit Index

31.1.        Rule 13a-14(a) Certification of Chief Executive Officer
31.2.        Rule 13a-14(a) Certification of Chief Financial Officer
32.1.        Certification of Chief Executive Officer Pursuant to 18 U.S.C.
             Section 1350, as Adopted Pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002.
32.2.        Certification of Chief Financial Officer Pursuant to 18 U.S.C.
             Section 1350, as Adopted Pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002.

<page>

Exhibit 31.1

                     CHIEF EXECUTIVE OFFICER'S CERTIFICATION

I, Peter Nelipa, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Monaco Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading  with respect to the period covered by this report;

3. Based  on  my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial condition, results of operations  and cash flows of the small business
issuer as of, and for, the periods  presented in this report;

4. The small business issuer's other certifying  officer  and I are  responsible
for  establishing   and   maintaining  disclosure  controls  and  procedures (as
defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the  small  business
issuer and have:

         (a) Designed such disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to ensure that material information relating to the small
         business issuer, including its consolidated subsidiaries, is made known
         to us by others within those entities,  particularly  during the period
         in which this report is being prepared;

         (b)  Evaluated  the   effectiveness  of  the  small  business  issuer's
         disclosure  controls and  procedures  and  presented in this report our
         conclusions  about the  effectiveness  of the  disclosure  controls and
         procedures, as of the end of the period covered by this report based on
         such evaluation; and

         (c) Disclosed in this report any change in the small business  issuer's
         internal  control over  financial  reporting  that occurred  during the
         small business  issuer's most recent fiscal quarter (the small business
         issuer's  fourth fiscal  quarter in the case of an annual  report) that
         has materially affected,  or is reasonably likely to materially affect,
         the small business issuer's internal control over financial  reporting;
         and

5. The small business  issuer's other  certifying  officer and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to the small business  issuer's  auditors and the audit committee of
the small  business  issuer's  board of  directors  (or persons  performing  the
equivalent functions):

         (a) All significant  deficiencies and material weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the small  business  issuer's
         ability to record, process, summarize and report financial information;
         and

<page>
         (b) Any fraud,  whether or not material,  that  involves  management or
         other  employees  who have a  significant  role in the  small  business
         issuer's internal control over financial reporting.


Date: November 22, 2004
                                            By: /s/ Peter Nelipa
                                            --------------------
                                            Peter Nelipa
                                            President & Chief Executive Officer


<page>

Exhibit 31.2

                     CHIEF FINANCIAL OFFICER'S CERTIFICATION

I, Suzanne Lilly, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Monaco Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading  with respect to the period covered by this report;

3. Based  on  my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial condition, results of operations  and cash flows of the small business
issuer as of, and for, the periods  presented in this report;

4. The small business issuer's other certifying  officer  and I are  responsible
for  establishing   and   maintaining  disclosure  controls  and  procedures (as
defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the  small  business
issuer and have:

         (a) Designed such disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to ensure that material information relating to the small
         business issuer, including its consolidated subsidiaries, is made known
         to us by others within those entities,  particularly  during the period
         in which this report is being prepared;

         (b)  Evaluated  the   effectiveness  of  the  small  business  issuer's
         disclosure  controls and  procedures  and  presented in this report our
         conclusions  about the  effectiveness  of the  disclosure  controls and
         procedures, as of the end of the period covered by this report based on
         such evaluation; and

         (c) Disclosed in this report any change in the small business  issuer's
         internal  control over  financial  reporting  that occurred  during the
         small business  issuer's most recent fiscal quarter (the small business
         issuer's  fourth fiscal  quarter in the case of an annual  report) that
         has materially affected,  or is reasonably likely to materially affect,
         the small business issuer's internal control over financial  reporting;
         and

5. The small business  issuer's other  certifying  officer and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to the small business  issuer's  auditors and the audit committee of
the small  business  issuer's  board of  directors  (or persons  performing  the
equivalent functions):

         (a) All significant  deficiencies and material weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the small  business  issuer's
         ability to record, process, summarize and report financial information;
         and

<page>
         (b) Any fraud,  whether or not material,  that  involves  management or
         other  employees  who have a  significant  role in the  small  business
         issuer's internal control over financial reporting.



Date: November 22, 2004
                                            By: /s/ Suzanne Lilly
                                            ---------------------
                                            Suzanne Lilly
                                            Chief Financial Officer

<page>

Exhibit 32.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly  Report of Monaco Group Inc. (the "Company") on
Form 10-QSB for the period ended September 30, 2004 as filed with the Securities
and Exchange  Commission  on the date hereof (the  "Report"),  I, Peter  Nelipa,
President and Chief Executive  Officer of the Company,  certify,  pursuant to 18
U.S.C.  ss. 1350, as adopted  pursuant to ss. 906 of the  Sarbanes-Oxley  Act of
2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities  Exchange Act of 1934; and

(2) The  information  contained in the Report fairly presents,  in  all material
respects,  the financial  condition and result of operations of the Company.



By: /s/ Peter Nelipa
--------------------
Peter Nelipa
President and Chief Executive Officer

November 22, 2004

<page>

Exhibit 32.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly  Report of Monaco Group Inc. (the "Company") on
Form 10-QSB for the period ended September 30, 2004 as filed with the Securities
and Exchange  Commission on the date hereof (the  "Report"),  I, Suzanne  Lilly,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350,
as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities  Exchange Act of 1934; and

(2) The  information  contained in the Report fairly presents,  in all  material
respects,  the financial  condition and result of operations of the Company.



By: /s/ Suzanne Lilly
---------------------
Suzanne Lilly
Chief Financial Officer

November 22, 2004