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# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

# Washington, D.C. 20549

# FORM 10-QSB

(Mark one)

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

For the quarterly
period ended August 31, 2004

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

For the transition period from _______________ to ______________.

Commission File Number
0-17284

MERCARI
COMMUNICATIONS GROUP, LTD.
(Exact name of small business issuer as specified in its charter)

|Colorado(State or other jurisdiction of incorporation or organization) |  | 84-1085935(IRS Employer
Identification No.)
|---------------------------------------------------------------------- |  | -------------------------------------------

1005 East Cobblestone
Drive, Highlands Ranch, Colorado, 80126
(Address of principal executive offices)

(303)
791-3888
(Issuers telephone number)

Check
whether the issuer (1) filed all reports required to be filed by Section 13  or 15 (d) of
the Exchange Act during the past 12 months  (or for shorter period that the registrant
was required to file such reports),  and (2) has been subject to such filing requirements
for the past 90 days.  Yes [  ]     No [X]

APPLICABLE
ONLY TO CORPORATE ISSUERS

State
the number of shares outstanding of each of the issuers classes of common equity,
as of the latest practical date:  January 31, 2005 - 1,055,555

Transitional Small
Business Disclosure Format.     Yes 
[  ]     No [X]

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PART
I  FINANCIAL INFORMATION

Item 1.
Financial Statements

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

|                                                 | August 31,2004 | May 31,2004
|------------------------------------------------ | -------------- | -----------
|ASSETS                                           |                |            
|Current Assets                                   |               
|Cash                                             |                | $   4,946  
|Cash in Escrow                                   |                | 10,544     
|Prepaid Expense                                  |                | 1,900      
|                                                 |                |            
|Total Assets                                     |                | $ 17,390   
|                                                 |                |            
|                                                 |                |            
|LIABILITIES AND STOCKHOLDERS EQUITY             |               
|Liabilities:                                     |               
|Accounts Payable & Accrued Liabilities           |                | $   1,050  
|Shareholder Loans                                |                | 550        
|                                                 |                |            
|Total Liabilities                                |                | 1,600      
|                                                 |                |            
|Stockholders Equity                             |               
|Common stock (par value $.00001),                |               
|Authorized 950,000,000 shares,                   |               
|Issued 1,055,555 shares at August 31, 2004       |               
|and May 31, 2004                                 |                | 10         
|Paid-In Capital                                  |                | 36,134     
|Deficit accumulated during the development stage |               
|Since March 1, 2004 in connection with           |               
|Quasi reorganization                             |                | (20,354    
|                                                 |                |            
|Total Stockholders Equity                       |                | 15,790     
|                                                 |                |            
|Total Liabilities and Stockholders Equity       |                | $ 17,390   
|                                                 |                |            
|                                                 |                |            
|                                                 |               

See
accompanying notes

2

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

|                | For the Three Months EndedAugust 31, | CumulativeSinceMarch 1, 2004Inception ofDevelopment |  
|--------------- | ------------------------------------ | --------------------------------------------------- | -
|
|Revenues        |                                      | $                     --                            |  
|                |                                      |                                                     |  
|Expenses        |                                      | 7,923                                               |  
|                |                                      |                                                     |  
|Net Loss        |                                      | $             (7,923                                | )
|                |                                      |                                                     |  
|                |                                      |                                                     |  
|Basic & Diluted |                                     
|Loss per Share  |                                      | $               (0.01                               | )
|                |                                      |                                                     |  
|                |                                      |                                                     |  

See
accompanying notes

3

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

|                                          | For the Three Months EndedAugust 31, | CumulativeSinceMarch 1, 2004Inception ofDevelopment |  
|----------------------------------------- | ------------------------------------ | --------------------------------------------------- | -
|
|CASH FLOWS FROM OPERATING                 |                                      |                                                     |  
|ACTIVITIES:                               |                                     
|Net Loss                                  |                                      | $(7,923                                             | )
|(Increase) Decrease in Prepaid Expenses   |                                      | 1,600                                               |  
|Increase (Decrease) in Accounts Payable   |                                      | (578                                                | )
|                                          |                                      |                                                     |  
|Net Cash Used in operating activities     |                                      | (6,901                                              | )
|                                          |                                      |                                                     |  
|CASH FLOWS FROM INVESTING                 |                                     
|ACTIVITIES:                               |                                     
|Net cash provided by investing activities |                                      | --                                                  |  
|                                          |                                      |                                                     |  
|CASH FLOWS FROM FINANCING                 |                                     
|ACTIVITIES:                               |                                     
|Contributed capital                       |                                      | 5,000                                               |  
|Proceeds from shareholder loans           |                                      | --                                                  |  
|Cash contributed by shareholders          |                                      | --                                                  |  
|                                          |                                      |                                                     |  
|Net cash provided by financing activities |                                      | 5,000                                               |  
|                                          |                                      |                                                     |  
|Net (Decrease) Increase in                |                                     
|Cash and Cash Equivalents                 |                                      | (1,901                                              | )
|Cash and Cash Equivalents                 |                                     
|at Beginning of Period                    |                                      | 17,391                                              |  
|                                          |                                      |                                                     |  
|Cash and Cash Equivalents                 |                                     
|at End of Period                          |                                      | $ 15,490                                            |  
|                                          |                                      |                                                     |  
|                                          |                                      |                                                     |  
|SUPPLEMENTAL DISCLOSURE                   |                                     
|OF CASH FLOW INFORMATION:                 |                                     
|Cash paid during the year for:            |                                     
|Interest                                  |                                      | $        --                                         |  
|Franchise and income taxes                |                                      | $        --                                         |  
|SUPPLEMENTAL DISCLOSURE OF NON-           |                                     
|CASH INVESTING AND FINANCING              |                                     
|ACTIVITIES:                               |                                     
|None                                      |                                     

See
accompanying notes

4

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MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)NOTES
TO FINANCIAL STATEMENTSFOR THE THREE MONTHS ENDED AUGUST 31, 2004 AND 2003(Unaudited)

NOTE 1
 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Interim
Reporting

The
unaudited financial statements as of August 31, 2004 and for the three months
then ended reflect, in the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to fairly state the financial
position and results of operations for the three months. Operating results for
interim periods are not necessarily indicative of the results which can be
expected for full years.

Organization
and Basis of Presentation

The
Company was incorporated under the laws of the State of Colorado on December 30,
1987. The Company ceased all operating activities during the period from June 1,
1990 to August 31, 2001 and was considered dormant. From August 31, 2001 to
March 1, 2004, the Company was in the development stage. On August 3, 2004, the
stockholders of the Company approved a plan of quasi reorganization which called
for a restatement of accounts to eliminate the accumulated deficit and related
capital accounts on the Companys balance sheet. The quasi reorganization
was effective March 1, 2004. Since March 1, 2004, the Company is in the
development stage, and has not commenced planned principal operations.

Nature of
Business

The
Company has no products or services as of August 31, 2004. The Company was
organized as a vehicle to seek merger or acquisition candidates. The Company
intends to acquire interests in various business opportunities, which in the
opinion of management will provide a profit to the Company.

Cash and
Cash Equivalents

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

5

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MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)NOTES
TO FINANCIAL STATEMENTSFOR THE THREE MONTHS ENDED AUGUST 31, 2004 AND 2003(Unaudited)

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

Pervasiveness
of Estimates

The
preparation of financial statements in conformity with generally accepted
accounting principles required management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Loss per
Share

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

|                                | Income | Shares          | Per-ShareAmount
|------------------------------- | ------ | --------------- | ---------------
|
|
|Basic Earnings (Loss) per Share |        |                 |                
|Loss to common shareholders     |        | $        (7,923 | )              
|                                |        |                 |                
|                                |        |                 |                

|                                | For the three months ended August 31, 2003 |                 |  
|------------------------------- | ------------------------------------------ | --------------- | -
|Basic Earnings (Loss) per Share |                                            |                 |  
|Loss to common shareholders     |                                            | $        (4,817 | )
|                                |                                            |                 |  
|                                |                                            |                 |  

There
are no outstanding common stock equivalents for August 31, 2004 and 2003 and are
thus not considered.

Concentration
of Credit Risk

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

6

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MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)NOTES
TO FINANCIAL STATEMENTSFOR THE THREE MONTHS ENDED AUGUST 31, 2004 AND 2003(Unaudited)

NOTE 2
 INCOME TAXES

As
of May 31, 2004, the Company had a net operating loss carryforward for income
tax reporting purposes of approximately $12,000 that may be offset against
future taxable income through 2024. Current tax laws limit the amount of loss
available to be offset against future taxable income when a substantial change
in ownership occurs. Therefore, the amount available to offset future taxable
income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount.

NOTE 3
 DEVELOPMENT STAGE COMPANY

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

NOTE 4
 COMMITMENTS

As
of August 31, 2004 all activities of the Company have been conducted by
corporate officers from either their homes or business offices. Currently, there
are no outstanding debts owed by the company for the use of these facilities and
there are no commitments for future use of the facilities.

NOTE 5
 COMMON STOCK TRANSACTIONS

On
December 17, 2001, the Board of Directors approved the cancellation of 225,833
shares of common stock. As of May 31, 2002, these shares had not been cancelled.
During the year ended May 31, 2003, these shares were cancelled.

On
December 17, 2001, the Board of Directors authorized the sale of 843,305
restricted common shares at par value by the three current Directors. The
Directors paid $7,590 in cash consideration for those shares. As of May 31,
2002, these shares had not been issued. During the year ended May 31, 2003,
these shares were issued.

7

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MERCARI
COMMUNICATIONS GROUP, LTD.(A Development Stage Company)NOTES
TO FINANCIAL STATEMENTSFOR THE THREE MONTHS ENDED AUGUST 31, 2004 AND 2003(Unaudited)

NOTE 5
 COMMON STOCK TRANSACTIONS (continued)

On
August 3, 2004, the Company authorized a 1 for 900 reverse stock split of the
Companys common stock. The reverse stock split reduced the number of
outstanding common shares from 950,000,000 to 1,055,555. All references to the
Companys common stock in the financial statements have been restated to
reflect the reverse stock split.

NOTE 6
 CONTINGENT LIABILITIES

At
May 31, 2003, the Company had $120,471 in current liabilities. The Company
believes that $110,435 of these liabilities were unpaid obligations of the
Company when operations ceased in August of 1990. The Company believes none of
such claims would be collectible by creditors, as the statute of limitations
applicable to collection of such commercial debt has expired under the Colorado
Revised Statute 13-80-101, which limits the collection of commercial debt to six
years from the date the last payment was made. During the year ended May 31,
2004, the Company reclassified the $110,435 of expired liabilities to paid-in
capital.

NOTE 7
 RELATED PARTY TRANSACTIONS

During
the year ended May 31, 2004, an officer loaned the Company $550 to pay general
and administrative expenses. Amounts due to the officer are non-interest
bearing, unsecured and payable at anytime the shareholder desires.

NOTE 8
 QUASI REORGANIZATION

On
August 3, 2004, the Company approved and authorized a plan of quasi
reorganization and restatement of accounts to eliminate the accumulated deficit
and related capital accounts on the Companys balance sheet. The
quasi-reorganization became effective March 1, 2004. The quasi reorganization
resulted in the elimination of $919,100 of retained deficit at the effective
date of the reorganization, the elimination of $34,123 of deficit accumulated
since the August 31, 2001 inception of development stage, and a decrease in
additional paid-in capital of $953,223.

8

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Item 2.
Managements Discussion and Analysis or Plan of Operation.

General
 This discussion should be read in conjunction with Managements
Discussion and Analysis of Financial Condition and Results of Operations in the
Companys annual report on Form 10-KSB for the year ended May 31, 2004.

Results of
Operations

The
Company had no operations from 1990 through 2004. The Company is a development
stage business, which intends to acquire a United States or foreign based
business which is privately owned and wishes to become a publicly owned
business. The Company is now current in its state and federal filing
obligations, and is current in its reporting obligations under the Securities
Exchange Act of 1934, as amended. The Company is now actively seeking one or
more acquisition candidates.

During
each of the years since the Company was reactivated, the Company has had no
revenue and has had losses approximately equal to the expenditures made to
reactivate and meet filing and reporting obligations. We do not expect any
revenue unless and until a business acquisition transaction is completed. Our
expenses have been paid from capital contributions and advances from the three
directors.

Liquidity
and Capital Resources

The
Company requires working capital principally to fund its current operations.
There are no commitments from banks or other lending sources for lines of credit
or similar short-term borrowing, but the Company has been able to obtain
additional capital required from its directors. From time to time in the past,
required short-term borrowing have been obtained from a principal shareholder or
other related entities.

In
order to complete any acquisition, the Company may be required to supplement its
available cash and other liquid assets with proceeds from borrowings, the sale
of additional securities, including the private placement of restricted stock
and/or a public offering, or other sources. There can be no assurance that any
such required additional funding will be available or favorable to the Company.

The
Companys business plan requires substantial funding from a public or
private offering of its common stock in connection with a business acquisition,
for which the Company has no commitments. The Company intends to actively pursue
other financing or funding opportunities.

9

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Item 3.  
Controls and Procedures

The
Companys Chief Executive Officer and Chief Financial Officer have
concluded, based on an evaluation conducted within 90 days prior to the filing
date of this Quarterly Report on Form 10- QSB, that the Companys
disclosure controls and procedures have functioned effectively so as to provide
those officers the information necessary to evaluate whether:

| | (i)  
this Quarterly Report on Form 10-QSB contains any untrue statement of a material
fact or omits 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 Quarterly Report on Form 10-QSB, and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)  
the financial statements, and other financial information included in this Quarterly
Report on
Form 10-QSB, fairly present in all material respects the financial condition,
results of operations and cash flows of the Company as of, and for, the periods
presented in this Quarterly Report on Form 10-QSB.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There
have been no significant changes in the Companys internal controls or in
other factors since the date of the Chief Executive Officers and Chief
Financial Officers evaluation that could significantly affect these
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

PART
II  OTHER INFORMATION

Item 1.  
Legal Proceedings

There
is no pending litigation, which th Company is presently a party to and
management is not aware of any litigation which may arise in the future.

Item 2.  
Changes in Securities

None.

Item 3.  
Defaults Upon Senior Securities

None.

Item 4.  Submission
of Matters to a Vote of Security Holders.

None.

Item 5.  
Other Information

None.

Item 6.  Exhibits
and Reports on Form 8-K

The
Company did not file a report on Form 8-K during the three months ended August
31, 2004.

10

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SIGNATURES

In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | MERCARI COMMUNICATIONS GROUP, LTD.
(Registrant)
| | -----------------------------------------------

|DATE: February 4, 2005 | By   /s/ Robert W. Marsik
       Robert W. Marsik, President
       (Principal Executive and Financial Officer)
|---------------------- | ---------------------------------------------------------------------------------------------------------------

11

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