<PAGE>

                UNITED STATES 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 June 30, 2003

[ ]       TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          For the transition period from                to
                                          -------------    -----------.

                        Commission File Number 000-26463
                                               ---------

                           MILITARY RESALE GROUP, INC.
           -----------------------------------------------------------
           (Name of small business issuer as specified in its charter)

                 New York                                   11-2665282
-------------------------------------------------      ----------------------
 (State or other jurisdiction of incorporation or         (I.R.S. Employer
               organization)                              Identification No.)

                              2180 Executive Circle
                        Colorado Springs, Colorado 80906
     -----------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (719) 391-4564
        ----------------------------------------------------------------
                           (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 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 [ ]

As of June 30, 2003,  there were 14,222,657  shares of the issuer's common stock
outstanding.

Transitional Small Business Disclosure Format (check one):    Yes [ ]  No [X]




<PAGE>



                           MILITARY RESALE GROUP, INC.

                                   FORM 10-QSB


                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                 Page No.
PART I.          Financial Information

<S>             <C>                                                                                               <C>
Item 1.          Financial Statements

                 Balance Sheets - June 30, 2003 and December 31, 2002..................................................1

                 Statements of Operations - three and six months ended June 30, 2003 and 2002..........................2

                 Statements of Cash Flows - three and six months ended June 30, 2003 and 2002..........................3

                 Notes to Financial Statements.........................................................................5

Item 2.          Management's Discussion and Analysis or Plan of Operation.............................................9

Item 3.          Controls and Procedures..............................................................................17

PART II.         Other Information

Item 2.          Changes in Securities and Use of Proceeds............................................................17

Item 6.          Exhibits and Reports on Form 8-K.....................................................................18

Signatures       .....................................................................................................19

Certifications   .....................................................................................................20
</TABLE>

                                       i

<PAGE>



ITEM 1.  FINANCIAL INFORMATION


                           Military Resale Group, Inc.
                            Condensed Balance Sheets


<TABLE>
<CAPTION>
                                                                                          June 30,         December 31,
                                                                                            2003               2002
                                                                                       ---------------    ---------------
                                                                                         (Unaudited)        (Audited)
                                                                                       ---------------    ---------------
           Assets
Current Assets
<S>                                                                                    <C>                <C>
     Cash                                                                              $           820    $         2,072
     Accounts receivable - trade                                                               816,549            428,037
     Inventory                                                                                 277,751            227,416
     Prepaid consulting (Note 3)                                                               374,672            116,417
     Deposits                                                                                   23,358             23,358
     Prepaid interest (Note 4)                                                                 365,400            133,333
     Other current assets                                                                        4,474                618
                                                                                       ---------------    ---------------
       Total Current Assets                                                                  1,863,024            931,251

Fixed Assets
     Office equipment                                                                           12,372             10,607
     Warehouse equipment                                                                       159,444            159,444
     Software                                                                                   16,324             16,324
                                                                                       ---------------    ---------------
                                                                                               188,140            186,375
     Less accumulated depreciation                                                            (93,890)           (76,229)
                                                                                       ---------------    ---------------
       Net Fixed Assets                                                                         94,250            110,146
                                                                                       ---------------    ---------------
     Total Assets                                                                            1,957,274          1,041,397
                                                                                       ===============    ===============
           Liabilities and Stockholders' Equity (Impairment)
Current Liabilities
     Accounts payable and accrued expenses                                                   2,026,814          1,470,776
     Bank overdraft                                                                             14,753             11,068
     Other current liabilities                                                                 114,773             81,726
     Current maturities of capital lease obligations                                            35,093             37,271
     Current portion of deferred rental obligation                                              26,285             21,584
     Accrued interest payable                                                                   69,302             47,816
     Related party notes payable (Note 5 & 6)                                                        -            230,000
     Convertible notes payable (Note 6)                                                         65,000            255,000
     Promissory note payable (Note 8)                                                          100,000                  -
                                                                                       ---------------    ---------------
       Total Current Liabilities                                                             2,452,020          2,155,241
     Deferred rental obligation                                                                 56,950             57,557
     Obligations under capital leases, excluding current maturities                             44,972             51,735
     Convertible notes payable, less current portion (Note 6)                                  505,000                  -
                                                                                       ---------------    ---------------
         Total Liabilities                                                                   3,058,942          2,264,533

Commitment and Contingencies (Note 9)                                                                -                  -

Stockholders' Equity (Impairment)
     Preferred stock, 10,000,000 shares authorized, 0 issued in 2003 and 2002                        -                  -
     Common stock, par value $.0001, 50,000,000 shares authorized,                               1,422              1,138
       14,222,657 and 11,383,390 shares issued and outstanding in 2003 and
       2002, respectively
     Additional paid-in capital                                                              3,258,553          2,050,690
     Accumulated deficit                                                                   (4,361,643)         (3,274,964)
                                                                                       ---------------    ---------------
         Total Stockholders' Equity (Impairment)                                           (1,101,668)         (1,223,136)
                                                                                       ---------------    ---------------
     Total Liabilities and Stockholders' Equity (Impairment)                           $     1,957,274    $     1,041,397
                                                                                       ---------------    ---------------
</TABLE>

See notes to the financial statements.




                                      1
<PAGE>


                           Military Resale Group, Inc.
                       Condensed Statements of Operations
                Three and Six Months Ended June 30, 2003 and 2002
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                            Three Months Ended                      Six Months Ended
                                                     ----------------------------------    ----------------------------------
                                                      June 30,2003       June 30, 2002      June 30, 2003      June 30, 2002
                                                     ---------------    ---------------    ---------------    ---------------
Revenues
<S>                                                  <C>                <C>                <C>                <C>
     Resale revenue                                  $     1,534,377    $     1,657,440    $     3,146,974    $     3,015,024
     Commission revenue                                      135,188             64,472            281,554            124,146
                                                     ---------------    ---------------    ---------------    ---------------
       Total Revenues                                      1,669,565          1,721,912          3,428,528          3,139,170
                                                     ---------------    ---------------    ---------------    ---------------
Cost of goods sold                                         1,334,367          1,457,701          2,846,693          2,696,622
                                                     ---------------    ---------------    ---------------    ---------------
     Gross Profit                                            335,198            264,211            581,835            442,548
                                                     ---------------    ---------------    ---------------    ---------------
Operating Expenses
     Stock based compensation (Note 5 and 7)                 356,484            166,329            562,853            281,394
     Salary and payroll taxes                                141,971            125,747            259,109            215,962
     Professional fees                                       136,056            107,446            200,090            200,446
     Occupancy                                                59,356             55,263            118,712            110,525
     General and administrative                              126,734            106,464            276,793            103,402
     Amortization/depreciation                                 2,670             10,626             17,661             21,253
                                                     ---------------    ---------------    ---------------    ---------------
       Total Operating Expenses                              823,271            571,875          1,435,218            932,982
                                                     ---------------    ---------------    ---------------    ---------------
         Net Loss From Operations                           (488,073)          (307,664)          (853,383)          (490,434)
                                                     ---------------    ---------------    ---------------    ---------------
Other (Expenses)
     Interest expense                                        (97,911)           (29,051)          (233,296)          (240,221)
       Total Other (Expense)                                 (97,911)           (29,051)          (233,296)          (240,221)
                                                     ---------------    ---------------    ---------------    ---------------
         Net Loss                                    $      (585,984)   $      (336,715)   $    (1,086,679)   $      (730,655)
                                                     ===============    ===============    ===============    ===============
Loss Per Share
     Net Loss Per Common Share - basic and diluted   $         (0.05)   $         (0.04)   $         (0.09)   $         (0.08)
                                                     ===============    ===============    ===============    ===============
     Weighted average number of common shares
       shares outstanding - basic and diluted             12,563,035          8,949,752         12,134,457          8,237,398
                                                     ===============    ===============    ===============    ===============
</TABLE>


See notes to the financial statements.

                                      2
<PAGE>



                           Military Resale Group, Inc.
                       Condensed Statements of Cash Flows
                     Six Months Ended June 30, 2003 and 2002
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                               2003          2002
                                                           -----------    -----------
Cash Flows From Operating Activities
<S>                                                        <C>            <C>
     Net Loss                                              $(1,086,679)   $  (730,655)
     Adjustments to reconcile net loss to net cash
       used in operating activities
       Depreciation and amortization                            17,661         21,252
       Amortization of option based interest expense           133,333           --
       Stock based compensation                                491,580        281,394
       Beneficial conversion feature                            75,000
       Stock issued for interest                                  --          150,000
       Loss on disposal of assets                                6,380
Changes in Assets and Liabilities
       Decrease (increase) in accounts receivable             (388,512)       (81,939)
       Decrease (increase) in inventory                        (50,335)       (57,005)
       Decrease (increase) in other assets                      (3,856)         2,994
       (Increase) in deposits                                     --           (2,812)
       Increase in accounts payable and accrued expenses       573,950        190,497
       Increase in deferred rent obligation                      4,094           --
       Increase in other liabilities                            54,533           --
                                                           -----------    -----------

         Net Cash Used In Operating Activities                (179,231)      (219,894)
                                                           -----------    -----------

Cash Flows From Investing Activities
       Purchase of fixed assets                                 (1,765)        (1,912)
                                                           -----------    -----------

Cash Flows Used In Investing Activities                         (1,765)        (1,912)
                                                           -----------    -----------

Cash Flows From Financing Activities
       Bank overdraft                                            3,685         (1,349)
       Payments on capital lease obligations                    (8,941)          --
       Proceeds from issuance of notes                         185,000        229,234
                                                           -----------    -----------

Cash Flows Provided By Financing Activities                    179,744        227,885
                                                           -----------    -----------

Net Increase (Decrease)  in Cash and Cash Equivalents           (1,252)         6,079
Cash and Cash Equivalents at Beginning of Period                 2,072           --
                                                           -----------    -----------

Cash and Cash Equivalents at End of Period                 $       820    $     6,079
                                                           ===========    ===========

SUPPLEMENTAL INFORMATION
     Interest Paid                                         $       466    $     6,170
                                                           ===========    ===========
     Income Taxes Paid                                     $      --      $      --
                                                           -----------    -----------
See notes to the financial statements.
</TABLE>



                                       3

<PAGE>




                           Military Resale Group, Inc.
                       Condensed Statements of Cash Flows




Non-cash investing and financing activities:


<TABLE>
<CAPTION>
                                                                    2003             2002
                                                               --------------   --------------
<S>                                                            <C>              <C>
Issuance of stock and options in exchange for services to be
  rendered over six months                                     $      716,202   $         --
                                                               ==============   ==============


Issuance of common stock in payment of accrued compensation    $       52,445   $         --
                                                               ==============   ==============


Issuance of stock in exchange for cancellation  of
  indebtedness of $150,000 and interest expense of $150,000
  on convertible notes                                         $         --     $      300,000
                                                               ==============   ==============


Issuance of stock options in exchange for note extensions      $      364,500   $         --
                                                               ==============   ==============
</TABLE>




See notes to the financial statements.


                                       4

<PAGE>



                           Military Resale Group, Inc.
                          Notes to Financial Statements


NOTE 1 - NATURE OF ORGANIZATION

     We were  organized  under  the  laws of the  State  of New  York  and are a
     regional  distributor  of  grocery  and  household  items  specializing  in
     distribution to commissaries of the U. S. Military.  Currently,  we service
     six military installations located in Colorado, Wyoming and South Dakota.

     On October  15,  2001,  we entered  into a stock  purchase  agreement  with
     Military  Resale  Group,  Inc., a Maryland  corporation  that was formed on
     October  6,  1997  ("MRG"),  pursuant  to which  98.2% of MRG's  stock  was
     effectively  exchanged  for a  controlling  interest in our  publicly  held
     "shell"  corporation.  Concurrently with the closing of that transaction we
     changed our name from Bactrol Technologies,  Inc. to Military Resale Group,
     Inc. This transaction is commonly  referred to as a "reverse  acquisition".
     For financial accounting purposes, this transaction has been treated as the
     issuance  of  stock  for  our  net  monetary   assets,   accompanied  by  a
     recapitalization  of MRG  with  no  goodwill  or  other  intangible  assets
     recorded.

     For financial  reporting  purposes,  MRG was considered  the acquirer,  and
     therefore,  the historical operating results of Bactrol Technologies,  Inc.
     are not presented.

     The financial statements have been prepared on a going concern basis, which
     contemplates   continuity  of   operations,   realization   of  assets  and
     liquidation of liabilities in the normal course of business.

     We have suffered  recurring  losses from  operations,  and are in a working
     capital deficit position that raises substantial doubt about our ability to
     continue as a going concern.

     Our  management is currently  pursuing  equity and/or debt  financing in an
     effort to continue operations.  The future success of our company is likely
     dependent  on our  ability to attain  additional  capital  to  develop  our
     business  and  ultimately,  upon our  ability to attain  future  profitable
     operations.  There  can be no  assurance  that  we will  be  successful  in
     obtaining such  financing,  or that we will attain  positive cash flow from
     operations.  The financial  statements do not include any adjustments  that
     might result from the outcome of this uncertainty.

NOTE  2 - BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
     been  prepared  in accordance with generally accepted accounting principles
     for  interim financial information and with the instructions to Item 310 of
     Regulation S-B. Accordingly, they do not include all of the information and
     footnotes required by generally accepted accounting principles for complete
     financial  statements.  In  the  opinion  of  management,  all  adjustments
     (consisting  of  normal recurring accruals) considered necessary for a fair
     presentation  have  been  included. Operating results for the three and six
     month  periods  ended  June  30, 2003 are not necessarily indicative of the
     results  that  may  be  expected  for the year ended December 31, 2003. For
     further  information,  refer  to  the consolidated financial statements and
     footnotes thereto included in our annual report on Form 10-KSB for the year
     ended  December  31,  2002.


                                      5
<PAGE>



                           Military Resale Group, Inc.
                          Notes to Financial Statements

NOTE 3 - PREPAID CONSULTING

     Prepaid  consulting  expenses are recorded in connection  with common stock
     and options  issued to  consultants  for future  services and are amortized
     over the  agreement  term.  During the six months ended June 30,  2003,  we
     incurred  additional  prepayments of $715,942 and stock-based  compensation
     expense of $457,687.

NOTE 4 - PREPAID INTEREST

     Prepaid  interest  expense  is  recorded in connection with the issuance of
     options  for  the  extension  of our notes payable. The interest expense is
     being  amortized  over  the  extension  period of six months, with $133,333
     charged  to  interest  expense  in  the  current  period.

NOTE 5 - RELATED PARTY TRANSACTIONS

     In January 2003, we entered into a one-year business  consulting  agreement
     with Edward Meyer,  Jr. for marketing and managerial  consulting  services,
     and an  executive  compensation  agreement  with Edward  Whelan,  our Chief
     Executive  Officer.  In consideration of the services to be rendered by Mr.
     Whelan and Mr. Meyer,  we will issue in respect of each month the number of
     shares determined by dividing $12,000 by the product of 80% and the average
     closing  low price for our common  stock  during each  quarter.  During the
     three months ended June 30, 2003, we issued  218,519 shares of common stock
     under  the  terms of the  agreement  for the  first  quarter  of 2003.  The
     aggregate  cost of the shares  issued,  which was expensed as stock based
     compensation, totaled $52,445.

     During  the  three months ended March 31, 2003 and  June 30, 2003 we issued
     192,414  and 218,519 shares, respectively (96,207 shares each to Mr. Whelan
     and  Mr.  Meyer),  of  common  stock  as consideration under a January 2002
     consulting  agreement  for the fourth quarter of 2002 and the first quarter
     of  2003.  The  transactions  were  valued  at  $0.16 and  $0.24 per share,
     respectively,  the  fair  market  value  of our common stock on the date of
     issuance.

     On March 11, 2003, Edward Whelan loaned us $10,000.  The corresponding note
     bears interest at a rate of 8% per annum and is due on June 3, 2006.

     Subsequent  to June 30, 2003, we issued  254,545  shares of common stock to
     each of Mr.  Whelan and Mr. Meyer for services  rendered  during the second
     quarter  of 2003.  The  aggregate  cost of the  shares  issued,  which was
     expensed as accrued  stock based  compensation  at June 30,  2003,  totaled
     $71,273.

     On  June  30, 2003, in connection with the conversion of $190,000 of demand
     notes  to convertible notes from Edward Whelan, our Chief Executive Officer
     and our Chairman of the Board of directors, and companies which he controls
     and/or  is  shareholder,  1,130,000  stock  options were issued. The demand
     notes  have  been  modified to allow the holder to convert their notes into
     common  stock  at  $0.25  per  share. These convertible notes do not have a
     beneficial  conversion  feature.

     On  June  30,  2003, in connection with the conversion of $25,000 of demand
     notes  to convertible notes from cash of Ethan Hokit, our President and one
     of  our  directors,  and  Atlantic  Investment  Trust,  of  which  Richard
     Tanenbaum,  one of our directors, is the trustee, 25,000 stock options were
     issued  to each of such noteholders. The demand notes have been modified to
     allow  the  holder  to  convert  their notes into common stock at $0.25 per
     share. These convertible notes do not have a beneficial conversion feature.


NOTE 6 - CONVERTIBLE NOTES

     At  June  30,  2003, we had an aggregate of $570,000 payable in convertible
     notes. $20,000 of the convertible notes bear interest at 8% per annum until
     June  30, 2002 and 9% thereafter and were due  on June 30, 2002, $35,000 of
     the  convertible  notes  bear interest at 8% per annum and were due on June
     30,  2003,  and a $10,000 convertible note bearing interest at 8% per annum
     is  due  September 30, 2003. On June 30, 2003, $215,000 of notes originally
     due  on  or  before  June  30,  2003,  and  $50,000 of notes originally due
     September  30,  2003  were  extended  until  June  3, 2006. Such notes bear
     interest  at  8%  per  annum.




                                      6
<PAGE>




                           Military Resale Group, Inc.
                          Notes to Financial Statements


NOTE 6 - CONVERTIBLE NOTES - continued

     Additionally,  on  June 30, 2003 $240,000 of demand notes were converted to
     convertible notes due June 3, 2006. $100,000 of such notes are non-interest
     bearing,  $60,000  of such notes bear interest at 10% per annum and $80,000
     of  such  notes  bear  interest  at  8%  per  annum. In connection with the
     extension  of  the  due  dates  and  conversion  of  the  demand  notes  to
     convertible  notes 1,305,000 stock options were issued and prepaid interest
     of  $365,400  was recorded and will be amortized over the extension period.
     The  terms  of  our  convertible  notes  provide  generally  that,  if  the
     convertible  notes are not in default, the holders may convert, at any time
     and  from  time  to time, all or a portion of the outstanding balance under
     each  convertible  note  into  a  number  of  shares  (subject  to  certain
     anti-dilution  adjustments)  of  our  common stock that will allow the note
     holder  to  receive common stock having a market value equal to 150% of the
     converted  balance  of  the  note.  If  an event of default has occurred in
     respect  of  such convertible notes, the holder may convert the outstanding
     balance  into  a  number  of  shares  (subject  to  certain  anti-dilution
     adjustments)  of  our  common stock equal to twice the number of shares the
     holder  would  have otherwise received if the convertible notes were not in
     default.  Among other events of default, the terms of the convertible notes
     require  us  to register under the Securities Act of 1933 the shares of our
     common  stock  issuable  upon conversion of the convertible notes not later
     than  June 3, 2006. The demand notes have been modified to allow the holder
     to  convert their notes into common stock at $0.25 per share. Such notes do
     not  have  a  beneficial  conversion  feature.

     We follow EITF 98-5 in accounting for  convertible  notes with  "beneficial
     conversion features" (i.e., the notes may be converted into common stock at
     the lower of a fixed rate at the commitment date or a fixed discount to the
     market  price  of the  underlying  common  stock at the  conversion  date).
     Because our convertible notes contained a beneficial  conversion feature on
     the date of issuance, we measured and recognized the intrinsic value of the
     beneficial conversion feature of the convertible notes when the convertible
     notes  were  issued.  During  the  periods  ended  June 30,  2003 and 2002,
     interest expense of $75,000 and $225,000,  respectively  (representing  the
     aggregate  proceeds  to  us  from  convertible  notes  issued  during  such
     periods),   was  recognized  as  the  intrinsic  value  of  the  beneficial
     conversion  feature of the  convertible  notes that were issued during such
     periods.

NOTE 7 - SECURITIES ISSUED FOR SERVICES

     During  the six months  ended  June 30,  2003,  we issued an  aggregate  of
     2,428,334  shares of common stock and  2,350,000  common  stock  options to
     various  consultants  for services  provided or to be provided.  Consulting
     expense of $491,580 was recognized in 2003 and a prepaid consulting expense
     of $363,422  was  recorded in 2003.  These  amounts  were based on the fair
     market value of the shares on the date of issuance.

NOTE 8 - PROMISSORY NOTE PAYABLE

     On March 27, 2003, we issued a promissory note for $100,000 to Romano, Ltd.
     The note  bears  interest  at 15% per annum  and is due on March 26,  2004,
     subject to the  following  contingent  payment  terms  upon our  raising or
     securing additional funding from any third-party source:

<TABLE>
<CAPTION>
               Additional Funding                                    Terms Modification
          ------------------------------ ----------------------------------------------------------------------------
<S>                                      <C>
                    $250,000             Payment of 10% of outstanding principal and accrued interest
                    $500,000             Payment of 15% of outstanding principal and accrued interest
               $1,000,000 or more        Payment of 100% of outstanding principal and accrued interest
</TABLE>




                                      7
<PAGE>



                           Military Resale Group, Inc.
                          Notes to Financial Statements

NOTE 8 - PROMISSORY NOTE PAYABLE - continued

     If we fail to secure any of the  above-referenced  additional funding,  nor
     another  significant  event  such as a merger  or  acquisition  of  another
     company,  we will be required to pay $8,000 per month commencing on July 1,
     2003 until the full obligation is paid or by March 26, 2004.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

     In March 2003, we entered into a consulting agreement that provides for the
     issuance  of  250,000  shares of common  stock  with an option to  purchase
     650,000  shares of common stock at the lower of $.50 per share or the price
     per share  granted to any other  advisor or employee of our company  during
     the term of the  agreement.  The  agreement  is for six  months,  while the
     option expires in five years.

     In February 2003, a capital lease  obligation,  secured by equipment with a
     net  book  value of  $25,363,  was  accelerated  due to  non-payment.  This
     obligation is reflected in the current portion of obligations under capital
     leases in the accompanying financial statements.

     In February  2003,  we entered into a Lease  Modification  Agreement  for a
     capital lease for equipment  with a net book value of $57,183.  The term of
     the lease was extended through April 2007, with no required payment for the
     months between November 2002 and February 2003. Minimum lease payments have
     increased to $2,100  through  October 2003 and $1,980 for the  remaining 40
     months.

     We are a defendant in pending litigation regarding our former premises. The
     plaintiff  is the former  landlord,  who is seeking  damages for an alleged
     breach of the terms of several  operating  lease  agreements for office and
     warehouse  space  located  in  Colorado  Springs,  Colorado.  We  intend to
     vigorously  defend  against  such  claim  and also  intend  to  pursue  our
     counterclaims  for damages caused by the landlord's  constructive  eviction
     from the premises.

     The pending  litigation  is in its  preliminary  stages,  with a trial date
     anticipated in November 2003. The estimated  contingent  liability for this
     litigation  is not  expected  to  exceed  $75,000,  including  the costs of
     defense.

NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS

     In June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
     Retirement  Obligations."  SFAS No. 143 provides  accounting  and reporting
     guidance for legal obligations associated with the retirement of long-lived
     assets that result from the  acquisition,  construction or normal operation
     of a long-lived  asset. SFAS No. 143 requires the recording of an asset and
     a liability  equal to the present value of the estimated  costs  associated
     with the  retirement  of  long-lived  assets  where a legal or  contractual
     obligation  exists. The asset is required to be accreted each year based on
     a present value interest  rate. We implemented  this standard on January 1,
     2003.  The adoption of this standard did not have a material  effect on our
     financial statements.

NOTE 11 - SEGMENT INFORMATION

     We  operate  primarily  in a single  operating  segment,  distributing  and
     marketing resale grocery products to military commissaries.



                                       8
<PAGE>


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

         CERTAIN   STATEMENTS   IN  THIS  REPORT   CONSTITUTE   "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE  SECURITIES  LITIGATION REFORM ACT
OF 1995.  SUCH  FORWARD-LOOKING  STATEMENTS  INVOLVE  KNOWN AND  UNKNOWN  RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE OUR ACTUAL RESULTS,  PERFORMANCE
OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,  PERFORMANCE
OR ACHIEVEMENTS  EXPRESSED OR IMPLIED BY SUCH  FORWARD-LOOKING  STATEMENTS.  THE
WORDS  "BELIEVE",  "EXPECT",  "ANTICIPATE",  "INTEND"  AND  "PLAN"  AND  SIMILAR
EXPRESSIONS IDENTIFY  FORWARD-LOOKING  STATEMENTS.  READERS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF
THE DATE THE STATEMENT WAS MADE. BECAUSE OUR COMMON STOCK IS CONSIDERED A "PENNY
STOCK," AS DEFINED BY THE REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION,
THE SAFE HARBOR FOR  FORWARD-LOOKING  STATEMENTS DOES NOT APPLY TO STATEMENTS BY
OUR COMPANY.

         Our business and results of  operations  are affected by a wide variety
of factors that could materially and adversely affect us and our actual results,
including,  but not  limited to: (1) the  availability  of  additional  funds to
enable us to  successfully  pursue  our  business  plan;  (2) the  uncertainties
related to the  addition  of new  products  and  suppliers;  (3) our  ability to
maintain,  attract  and  integrate  management  personnel;  (4) our  ability  to
complete the  development of our proposed  product line in a timely manner;  (5)
our ability to effectively  market and sell our products and services to current
and new customers;  (6) our ability to negotiate and maintain suitable strategic
partnerships and corporate  relationships with suppliers and manufacturers;  (7)
the intensity of competition;  and (8) general economic conditions.  As a result
of these and other factors,  we may experience  material  fluctuations in future
operating  results on a quarterly or annual basis,  which could  materially  and
adversely affect our business, financial condition,  operating results and stock
price.

         Any forward-looking statements herein speak only as of the date hereof.
We undertake no obligation  to publicly  release the results of any revisions to
these  forward-looking  statements  that  may  be  made  to  reflect  events  or
circumstances   after  the  date  hereof  or  to  reflect  the   occurrence   of
unanticipated  events.  The following  discussion  should be read in conjunction
with the  financial  statements  and related notes  appearing  elsewhere in this
Report.

         Prior  to  November  15,  2001,  we did not  generate  any  significant
revenue,  and accumulated no significant assets, as we explored various business
opportunities.  On  November  15,  2001,  we  acquired  98.2% of the  issued and
outstanding capital stock of Military Resale Group, Inc., a Maryland corporation
("MRG-Maryland"),  in exchange for a controlling  interest in our  publicly-held
"shell"  corporation.   For  financial  reporting  purposes,   MRG-Maryland  was
considered  the  acquirer  in such  transaction.  As a  result,  our  historical
financial  statements  for any period  prior to  November  15, 2001 are those of
MRG-Maryland.

                                       9

<PAGE>


RESULTS OF  OPERATIONS  - THREE  MONTHS  ENDED JUNE 30,  2003  COMPARED TO THREE
MONTHS ENDED JUNE 30, 2002

         REVENUES.  Total  revenue for the three  months  ended June 30, 2003 of
$1,669,565  reflected a decrease of $52,347,  or approximately 3.0%, compared to
total  revenue of  $1,721,912  for the three  months  ended June 30,  2002.  Our
revenues are derived in either one of two ways. In the majority of instances, we
purchase   products  from   manufacturers   and  suppliers  for  resale  to  the
commissaries  we  service.  In such  cases,  we  resell  the  manufacturer's  or
supplier's  products to the commissaries at generally the same prices we pay for
such products, which prices generally are negotiated between the manufacturer or
supplier and the Defense  Commissary  Agency ("DeCA").  Revenue is recognized as
the gross sales amount received by us from such sales ("resale revenues"), which
includes (i) the purchase  price paid by the  commissary  plus (ii) a negotiated
storage and delivery fee paid by the manufacturer or supplier.  In the remaining
instances,  we act as an agent for the  manufacturer or supplier of the products
we sell, and earn a commission paid by the  manufacturer or supplier,  generally
in an amount equal to a percentage of the  manufacturer's  or  supplier's  gross
sales amount ("commission  revenues").  In such cases,  revenue is recognized as
the commission we receive on the gross sales amount.

         Resale  revenue for the three months ended June 30, 2003 of  $1,534,377
reflected a decrease of  $123,063,  or  approximately  7.4%,  compared to resale
revenue of  $1,657,440  for the three months ended June 30, 2002.  This decrease
was  attributable  primarily to our  short-term  cash shortage  during the three
months  ended June 30,  2003,  which  prevented us from adding new products on a
resale basis due the significant cash expenditure required. For the three months
ended June 30,  2003,  approximately  59.7% of our gross profit was derived from
sales involving  resale revenue  compared to  approximately  75.6% for the three
months ended June 30, 2002.  During the year ended  December 31, 2002,  we began
implementing  our  long-term  strategy  to  increase  the  ratio of our sales of
products we sell on a resale basis,  rather than a commission  basis, due to the
payment  discounts we often receive from the  manufacturers and suppliers of the
goods we purchase  for resale.  However,  due to our  short-term  cash  shortage
during the three  months  ended June 30,  2003,  we were  required to lower this
ratio by increasing the amount of our of sales on a commission  basis,  which do
not require a significant cash expenditure.

         Commission  revenues  for the  three  months  ended  June  30,  2003 of
$135,188 reflected an increase of $70,716,  or approximately  110%,  compared to
commission revenues of $64,472 for the three months ended June 30, 2002. For the
three months ended June 30,  2003,  approximately  40.3% of our gross profit was
derived from sales involving  commission  revenues as compared to  approximately
24.4%  for  the  three  months  ended  June  30,  2002.   These  increases  were
attributable primarily to the addition of the new products we began supplying to
commissaries  during the first and second  quarters  of fiscal  2003,  including
products distributed by Mid-Valley Products,  that we sell on a commission basis
due to our short-term cash shortage  discussed above. We cannot be certain as to
whether this trend will  continue;  however,  in the long term we are seeking to
increase the ratio of our sales of products sold on a resale basis,  rather than
a commission basis, because we believe we can increase our profitability on such
sales by  taking  advantage  of  payment  discounts  frequently  offered  by the
manufacturers  and  suppliers  of  such  products.   Provided  we  can  generate
sufficient cash from operations or financing  activities,  we




                                       10
<PAGE>



intend to do so by seeking to add new products that we can offer to commissaries
on a resale basis from our existing  manufactures  and suppliers and from others
with whom we do not currently have a working relationship.

         In the second  quarter of 2003,  we added to our  supplier  network the
Snak King line of products  distributed  by Sun-Dance  Distributing,  Inc. and a
line of frozen pies,  cobblers and other dessert foods produced by Mrs. Smith's,
Inc.  Pursuant to our agreements with Sun-Dance  Distributing and Mrs.  Smith's,
Inc.,  we purchase  products  for resale to  commissaries.  Our  agreement  with
Sun-Dance  Distributing  has no defined term and may be  terminated by Sun-Dance
Distributing  at any time.  Our  agreement  with Mrs.  Smith's  Bakeries  has no
defined term and is cancelable by such supplier upon 30 days' written notice.

         Subsequent  to June 30,  2003,  we added to our  supplier  network  the
Country Pride brand of fresh chicken  products made by ConAgra  Foods,  Inc. The
Country Pride lines  replaced a majority of the lines of fresh chicken  products
that were previously  supplied to us by Tyson Foods, Inc. On August 1, 2003, the
Country Pride lines became available in the commissaries we currently serve. Our
agreement  with ConAgra is a one-year  agreement  that is  cancelable by ConAgra
upon 30 days' written notice.  Subsequent to June 30, 2003, we also added to our
supplier network a line of specialty  coffees made by Peaberry Coffee Ltd. and a
line of smoked and pickled seafood products  supplied by  SeaSpecialities,  Inc.
Pursuant to our agreements with Peaberry Coffee and SeaSpecialities, we purchase
products for resale to  commissaries.  Such  agreements have a ten-year term and
are cancelable by such suppliers upon 120 days' written notice.

         Management  believes our  long-term  success will be dependent in large
part on our ability to add additional product offerings to enable us to increase
our sales and  revenues.  However,  we believe  our  ability  to add  additional
product  offerings is dependent on our ability to obtain  additional  capital to
fund new business  development and increased sales and marketing efforts. We are
currently in discussions with a number of other  manufacturers  and suppliers in
an effort to reach an agreement under which we can distribute  their products to
the  military  market.  While there can be no  assurance  that we will do so, we
believe we will be successful in  negotiating  agreements  with a number of such
suppliers and manufacturers.

         To date,  all of our sales revenue has been  generated  from  customers
located in the United States.

         COST OF GOODS SOLD.  Cost of goods sold consists of our cost to acquire
products  from  manufacturers  and  suppliers  for  resale to  commissaries.  In
instances when we sell products on a commission basis, there is no cost of goods
sold because we act as an agent for the manufacturer or supplier and earn only a
commission on such sales.  During the three months ended June 30, 2003,  cost of
goods sold  decreased by $123,334,  or  approximately  8.5%, to $1,334,367  from
$1,457,701  for the  three  months  ended  June  30,  2002.  This  decrease  was
attributable  primarily to the decrease in revenue from products that we sold on
a resale  basis  during the three  months ended June 30, 2003 as compared to the
three months ended June 30, 2002.  We cannot be certain as to whether this trend
will continue; however, in the long term we are seeking to increase the ratio of
our sales on a resale basis.



                                       11
<PAGE>


         GROSS  PROFIT.  Gross  profit for the three  months ended June 30, 2003
increased by  approximately  $70,987,  or approximately  26.9%,  compared to the
three months ended June 30, 2002,  from $264,211 for the three months ended June
30, 2002 to $335,198 for the three months ended June 30, 2003. This increase was
attributable  primarily  to the increase in our sale of products on a commission
basis that have no associated cost of good sold.

         OPERATING  EXPENSES.  Total operating expenses  aggregated $823,271 for
the three  months  ended June 30, 2003 as  compared  to  $571,875  for the three
months  ended  June  30,  2002,   representing  an  increase  of  $251,396,   or
approximately  44.0%. The increase in total operating  expenses was attributable
primarily  to an  increase  in  stock-based  compensation  expense  of  $190,155
resulting  primarily from the issuance of shares of our common stock and options
to  purchase  shares  of  our  common  stock  to  our   consultants;   increased
professional  fees of $28,610  resulting  primarily  from  expenses  incurred in
connection with our 2002 audit;  increased  salary and payroll taxes of $16,224;
and increased general and administrative expenses of $20,270 resulting primarily
from increased  truck rental expense and increased  premiums on health  workers'
compensation insurance.

         INTEREST  EXPENSE.  Interest  expense of $97,911  for the three  months
ended June 30,  2003  reflected  a increase  of $68,860 as  compared to interest
expense of $29,051 for the three  months  ended June 30,  2002.  The increase in
interest  expense was  attributable  primarily  to  interest  expense of $60,000
resulting from the recognition of the beneficial  conversion  feature (the right
to convert debt into shares of our common stock at a discount to the fair market
value of our common stock) of $60,000 aggregate  principal amount of convertible
promissory  notes issued in the three months ended June 30, 2003, as compared to
$25,000 aggregate principal amount of convertible promissory notes issued in the
three months ended June 30, 2002, and, to a lesser extent, increase borrowings.

         NET LOSS. Primarily as a result of the increased operating and interest
expenses  discussed  above,  we  incurred a net loss of  $585,984  for the three
months  ended June 30, 2003 as compared to a net loss of $336,715  for the three
months ended June 30, 2002.

SIX MONTHS ENDED JUNE 30, 2003 COMPARED TO SIX MONTHS ENDED JUNE 30, 2002

         REVENUES.  Total  revenue  for the six months  ended  June 30,  2003 of
$3,428,528 reflected an increase of $289,358, or approximately 9.2%, compared to
total revenue of $3,139,170 for the six months ended June 30, 2002.

         Resale  revenue for the six months  ended June 30,  2003 of  $3,146,974
reflected an increase of $131,950,  or  approximately  4.4%,  compared to resale
revenue of $3,015,024 for the six months ended June 30, 2002.  This increase was
attributable primarily to the addition of the new products we began supplying to
commissaries  during  third  and  fourth  quarters  of  fiscal  2002,  including
Hillshire Farm and Kahn's product groups of Sara Lee Foods -USA, that we sell



                                       12
<PAGE>



on a resale basis. For the six months ended June 30, 2003,  approximately  51.6%
of our gross profit was derived from sales involving  resale revenue compared to
approximately 71.9% for the six months ended June 30, 2002.

         Commission  revenues for the six months ended June 30, 2003 of $281,554
reflected an increase of $157,408, or approximately 127%, compared to commission
revenues of $124,146 for the six months ended June 30, 2002.  For the six months
ended June 30,  2003,  approximately  48.4% of our gross profit was derived from
sales involving  commission  revenues as compared to approximately 28.1% for the
six months ended June 30, 2002. These increases were  attributable  primarily to
the addition of the new products we began supplying to  commissaries  during the
first and second quarters of fiscal 2003,  including products distributed by Mid
Valley  Products,  that we sell on a commission basis due to our short-term cash
shortage discussed above.

         COST OF GOODS SOLD.  During the six months ended June 30, 2003, cost of
goods sold  increased by $150,071,  or  approximately  5.6%, to $2,846,693  from
$2,696,622  for  the  six  months  ended  June  30,  2002.   This  increase  was
attributable  primarily to the addition of new products that we sell on a resale
basis.  We cannot be certain  as to  whether  or not this  trend will  continue;
however, in the long term we are seeking to increase the ratio of our sales on a
resale basis, as discussed above.

         GROSS  PROFIT.  Gross  profit  for the six months  ended June 30,  2003
increased by approximately $139,287, or approximately 31.5%, compared to the six
months ended June 30, 2002, from $442,548 for the six months ended June 30, 2002
to  $581,835  for  the six  months  ended  June  30,  2003.  This  increase  was
attributable  primarily  to the increase in our sale of products on a commission
basis that have no associated cost of good sold.

         OPERATING EXPENSES.  Total operating expenses aggregated $1,435,218 for
the six months  ended June 30, 2003 as  compared to $932,982  for the six months
ended June 30,  2002,  representing  an increase of $502,236,  or  approximately
53.8%. The increase in total operating expenses was attributable primarily to an
increase in stock-based  compensation  expense of $281,459  resulting  primarily
from the issuance of shares of our common  stock and options to purchase  shares
of our common stock to our  consultants;  increased  salary and payroll taxes of
$43,147; and increased general and administrative expenses of $173,391 resulting
primarily from increased  truck rental expense and increased  premiums on health
workers'  compensation  insurance  and  additional  salary  expenses  due to the
addition of office and warehouse personnel.

         INTEREST EXPENSE. Interest expense of $233,296 for the six months ended
June 30, 2003 reflected a decrease of $6,925 as compared to interest  expense of
$240,221  for the six months  ended June 30,  2002.  The  decrease  in  interest
expense was attributable  primarily to decreased interest expense resulting from
the recognition of the beneficial  conversion feature (the right to convert debt
into shares of our common  stock at a discount  to the fair market  value of our
common stock) of $70,000  aggregate  principal amount of convertible  promissory
notes issued in the six months ended June 30, 2003  (offset by  amortization  of
option-based  interest  expense  of  approximately  $133,333),  as  compared  to
$225,000  aggregate  principal amount of convertible  promissory notes issued in
the six months ended June 30, 2002.



                                       13
<PAGE>


         NET LOSS.  Primarily as a result of the increased  operating  discussed
above,  we incurred a net loss of  $1,086,679  for the six months ended June 30,
2003 as  compared to a net loss of  $730,655  for the six months  ended June 30,
2002.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 2003,  we had a cash  balance of  approximately  $820.  Our
principal source of liquidity has been borrowings.  Since November 2001, we have
funded our operations primarily from borrowings of approximately  $820,000. Such
borrowings  consisted  of  $340,000  aggregate  principal  amount of demand note
indebtedness,  of which $240,000 was borrowed from our affiliates,  and $480,000
aggregate  principal amount of convertible note indebtedness,  of which $120,000
was borrowed from our affiliates,  pursuant to the issuance of convertible notes
bearing  interest at either 8% ("8%  convertible  notes") or 9% ("9% convertible
notes")  per annum and having  original  maturity  dates  between  three to five
months  following the date of issuance of such  convertible  notes.  At June 30,
2003,  $80,000 aggregate  principal  amount of 9% convertible notes and $250,000
aggregate principal amount of 8% convertible notes were outstanding.

         In April 2002,  $150,000  aggregate  principal amount of 9% convertible
notes (and $2,380 accrued interest thereon) was converted by the holders into an
aggregate  of  1,793,573  shares  of  our  common  stock.  The remaining $80,000
aggregate  principal  amount of 9% convertible notes are convertible at any time
and  from  time to time by the noteholders into a maximum of 1,200,000 shares of
our  common  stock  (subject  to  certain  anti-dilution  adjustments) if the 9%
convertible  notes  are  not in default, or a maximum of 2,400,000 shares of our
common  stock  (subject  to  certain  anti-dilution  adjustments) if an event of
default  has occurred in respect of such notes. The $250,000 aggregate principal
amount  of 8% convertible notes outstanding are convertible at any time and from
time to time by the noteholders into a maximum of 1,500,000 shares of our common
stock  (subject  to certain anti-dilution adjustments). In nearly all instances,
the  terms  of  the 8% and 9% convertible notes require us to register under the
Securities  Act  of 1933 the shares our common stock issuable upon conversion of
the  9% convertible notes not later than June 3, 2006. In July 2002, the holders
of  $20,000  aggregate principal amount of 8% convertible notes maturing on June
30, 2002 denied our request to extend the maturity of their notes. In June 2003,
the  holders  of  $35,000  aggregate  principal  amount of  9% convertible notes
maturing  on  June 30, 2003 and the holder of $10,000 aggregate principal amount
of  8%  convertible  notes  maturing on September 30, 2003 denied our request to
extend the maturity of their notes until June 3, 2006. The outstanding principal
and  interest  on  such convertible notes maturity on June 30, 2002 and June 30,
2003  have  not yet been paid and, thus, such convertible notes are currently in
default.

         In June 2003, $240,000 aggregate  principal amount of our demand notes
with various  maturity dates and $265,000  aggregate  principal amount of our 8%
convertible notes due June 30, 2003 or September 30, 2003, were extended to June
3, 2006. This debt represented  approximately 78% of our short-term  liabilities
at June 30,  2003.  As a  result  of the  extension,  our  remaining  short-term
liabilities  are  approximately  $165,000,  of which $65,000 is  convertible  to
equity.  In consideration  of their  willingness to extend the maturity dates of
such notes, we issued such noteholders  five-year options to purchase  1,305,000
shares  of our  common  stock  at an  exercise



                                       14
<PAGE>

price of $0.25 per share. As additional consideration, we granted the holders of
our  demand notes who agreed to extend the maturity dates, the right to convert,
at  any  time and from time to time, all or a portion of the outstanding balance
under  such notes (including accrued interest thereon) into shares of our common
stock  at  a  conversion  price  of  $0.25.  Such notes do not have a beneficial
conversion  feature.

         The terms of $35,000  aggregate  principal amount of our 9% convertible
notes and $10,000 aggregate principal amount of our 8% convertible notes provide
generally  that, if the  convertible  notes are not in default,  the holders may
convert,  at any time and from time to time, all or a portion of the outstanding
balance under each  convertible note into a number of shares (subject to certain
anti-dilution adjustments) of our common stock that will allow the noteholder to
receive  common  stock  having a  market  value  equal to 150% of the  converted
balance of the note. To achieve this result,  the conversion price of such notes
has been initially set at $0.50;  provided,  that the closing price per share of
our common stock as reported on the OTC Bulletin Board on the date of conversion
is at least $0.75 per share. If such closing price is less than $0.75 per share,
the  conversion  price shall be  proportionately  reduced,  but in no event to a
conversion price that is less than $0.10 per share in the case of 9% convertible
notes or $0.25  per share in the case of 8%  convertible  notes,  to permit  the
noteholder  to receive  the  number of shares  discussed  above.  If an event of
default has occurred in respect of a 9% convertible note, the holder may convert
the   outstanding   balance  into  a  number  of  shares   (subject  to  certain
anti-dilution  adjustments)  of our  common  stock  equal to twice the number of
shares the holder would have otherwise  received if such 9% convertible note was
not in default.

         The terms of our remaining 8% convertible  notes are  convertible  into
shares of our  common  stock at a price of $0.25 per share  (subject  to certain
anti-dilution  adjustments).  The terms of our  remaining 9%  convertible  notes
provide generally that, if the convertible notes are not in default, the holders
may  convert,  at any time  and  from  time to  time,  all or a  portion  of the
outstanding balance under each convertible note into a number of shares (subject
to certain  anti-dilution  adjustments)  of our common stock that will allow the
noteholder  to receive  common  stock having a market value equal to 150% of the
converted  balance of the note. To achieve this result,  the conversion price of
such notes has been initially set at $0.25; provided, that the closing price per
share of our common stock as reported on the OTC  Bulletin  Board on the date of
conversion  is at least  $0.375 per share.  If such  closing  price is less than
$0.375 per share, the conversion price shall be proportionately  reduced, but in
no event to a conversion price that is less than $0.10 per share. If an event of
default has occurred in respect of a 9% convertible note, the holder may convert
the   outstanding   balance  into  a  number  of  shares   (subject  to  certain
anti-dilution  adjustments)  of our  common  stock  equal to twice the number of
shares the holder would have otherwise  received if such 9% convertible note was
not in default.

         In  February  2003,  one  of  our  capital  lease  obligations  in  the
approximate  amount of $35,000,  which is secured by  equipment  with a net book
value of $25,363,  was accelerated by the lessor due to non-payment.  Management
has contacted such lessor to negotiate alternative payment arrangements for this
obligation.  If unsuccessful,  the lessor could bring suit to collect payment or
foreclose  upon the  collateral.  Any such  litigation may hinder our ability to
raise or obtain the  capital  we require or have an adverse  impact on the terms
upon which we are able to attract or obtain such capital.



                                       15
<PAGE>


         Our current cash levels,  together with the cash flows we generate from
operating  activities,  are not  sufficient to enable us to execute our business
strategy.  As a result, we intend to seek additional capital through the sale of
up to 5,000,000  shares of our common stock. In December 2001, we filed with the
Securities  and Exchange  Commission a registration  statement  relating to such
shares.  Such registration  statement has not yet been declared  effective,  and
there can be no  assurance  that the  Securities  and Exchange  Commission  will
declare such registration  statement effective in the near future, if at all. In
the interim, we intend to fund our operations based on our cash position and the
near term cash flow generated from operations, as well as additional borrowings.
In the event we are able to generate  sales  proceeds of at least  $1,000,000 in
our proposed offering,  we believe that the net proceeds of such sale,  together
with anticipated  revenues from sales of our products,  will satisfy our capital
requirements  for at  least  the  next 12  months.  However,  we  would  require
additional  capital  to  realize  our  strategic  plan  to  expand  distribution
capabilities and product  offerings.  These conditions raise  substantial  doubt
about our ability to continue as a going concern.  Our actual financial  results
may  differ  materially  from the stated  plan of  operations.  Our  independent
auditors have indicated in its report on our 2002 financial  statements that our
recurring losses from operations and our  difficulties in generating  sufficient
cash flow to meet our obligations and sustain our operations  raise  substantial
doubt about our ability to continue as a going concern.  Such  qualification may
hinder our  ability to raise or obtain the capital we require or have an adverse
impact on the terms upon which we are able to attract or obtain such capital. In
addition,  such  qualification  may adversely  impact our ability to attract and
maintain new customer accounts.

         Assuming that we receive net proceeds of at least  $1,000,000  from our
proposed offering,  we expect capital expenditures to be approximately  $100,000
during the next 12 months, primarily for the acquisition of an inventory control
system.  It is expected that our principal  uses of cash during that period will
be to  provide  working  capital,  to  finance  capital  expenditures,  to repay
indebtedness  and for other  general  corporate  purposes,  including  sales and
marketing  and  new  business  development.  The  amount  of  spending  for  any
particular  purpose is  dependent  upon the total cash  available  to us and the
success of our offering of common stock.

         At June 30, 2003, we had liquid assets of $817,369,  consisting of cash
and accounts  receivable  derived from  operations,  and other current assets of
$1,045,655,  consisting  primarily  of  inventory  of  products  for sale and/or
distribution  and  prepaid  expenses.  Long term  assets of  $188,140  consisted
primarily of warehouse equipment used in operations.

         Current  liabilities of $2,452,020 at June 30, 2003 consisted primarily
of  $2,026,814 of accounts  payable and accrued  expenses and $165,000 for notes
payable.

         Our working  capital  deficit was  $588,996 as of June 30, 2003 for the
reasons described above.

         During the six months ended June 30, 2003,  we used cash of $179,231 in
operating  activities  primarily as a result of the net loss we incurred  during
this period.


                                       16
<PAGE>


         During the six months ended June 30,  2003,  we used net cash of $1,765
in investing activities, all of which was used for capital expenditures.

         Financing  activities,   consisting  primarily  of  proceeds  from  the
issuance of notes payable,  provided net cash of $179,744  during the six months
ended June 30, 2003.

ITEM 3.  CONTROLS AND PROCEDURES

         (a) Based upon an evaluation  performed  within 90 days of this Report,
  our Chief Executive  Officer ("CEO") and Chief Financial  Officer ("CFO") have
  each concluded  that our  disclosure  controls and procedures are effective to
  ensure  that  material  information  relating  to our Company is made known to
  management, including the CEO and CFO, particularly during the period when our
  periodic  reports  are being  prepared,  and that our  internal  controls  are
  effective  to provide  reasonable  assurances  that our  financial  condition,
  results of  operations  and cash flows are fairly  presented  in all  material
  respects.

         (b) The CEO and CFO each note  that,  since the date of his  evaluation
  until the date of this  Report,  there  have been no  significant  changes  in
  internal controls or in other factors that could significantly affect internal
  controls,   including  any  corrective  actions  with  regard  to  significant
  deficiencies and material weaknesses.


PART II.          OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         (a) None.

         (b) None.

         (c) In May and June 2003, we issued $60,000 aggregate  principal amount
of convertible  promissory  notes with original  maturity dates of September 30,
2003 that, as amended, mature on June 3, 2006 and bear interest at 8% per annum.
Such notes are  convertible at any time and from time to time by the noteholders
into a maximum  of  360,000  shares of our  common  stock  (subject  to  certain
anti-dilution adjustments). The terms of such notes require us to register under
the  Securities  Act of 1933  the  shares  of our  common  stock  issuable  upon
conversion  of such  notes  not later  than June 3,  2006,  except  for  $10,000
aggregate  principal  amount of such notes  which  require us to  register  such
shares not later than  September 30, 2003.  In connection  with the sale of such
notes,  we issued 400,000 shares to the  noteholders.  Such note and shares were
issued by us in  reliance  upon the  exemption  from  registration  provided  by
Section 4(2) of the Securities  Act of 1933, as amended,  on the basis that such
issuance did not involve a public  offering,  no underwriter fees or commissions
were  paid  by us in  connection  with  such  issuance  and  such  persons  were
`accredited  investors' as defined in Regulation D under the  Securities  Act of
1933, as amended.

                                       17
<PAGE>

         In May 2003, we issued 109,259 shares of our common stock to one of our
consultants for services  rendered during the first quarter of 2003. Such shares
were issued by us in reliance upon the exemption from  registration  provided by
Section 4(2) of the Securities  Act of 1933, as amended,  on the basis that such
issuance did not involve a public  offering,  no underwriter fees or commissions
were  paid by us in  connection  with  such  issuance  and  such  person  was an
`accredited  investor' as defined in  Regulation D under the  Securities  Act of
1933, as amended.

         In May 2003, we issued  109,259 shares of our common stock to our Chief
Executive Officer as compensation for services rendered during the first quarter
of 2003.  Such  shares were issued by us in  reliance  upon the  exemption  from
registration provided by Section 4(2) of the Securities Act of 1933, as amended,
on the  basis  that  such  issuance  did  not  involve  a  public  offering,  no
underwriter fees or commissions were paid by us in connection with such issuance
and such person was an  `accredited  investor' as defined in  Regulation D under
the Securities Act of 1933, as amended.

         In June 2003, we issued 595,000 shares of our common stock and warrants
to purchase  1,000,000  shares of our common stock to a consultant  for services
rendered.  Such  shares and  warrants  were  issued by us in  reliance  upon the
exemption  from  registration  provided by Section 4(2) of the Securities Act of
1933,  as  amended,  on the basis that such  issuance  did not  involve a public
offering,  no underwriter fees or commissions were paid by us in connection with
such  issuance  and such  persons  were  `accredited  investors'  as  defined in
Regulation D under the Securities Act of 1933, as amended.

         In June 2003,  we issued an aggregate  of 133,334  shares of our common
stock to two consultants for services rendered. Such shares were issued by us in
reliance upon the exemption  from  registration  provided by Section 4(2) of the
Securities  Act of 1933,  as amended,  on the basis that such  issuance  did not
involve a public offering, no underwriter fees or commissions were paid by us in
connection  with such issuance and such persons were  `accredited  investors' as
defined in Regulation D under the Securities Act of 1933, as amended.

         In June 2003,  we issued  options to purchase  1,305,000  shares of our
common stock to holders of our 8% and 9% convertible  notes in  consideration of
their willingness to extend the maturity dates of such notes until June 3, 2006.
Such options were issued by us in reliance upon the exemption from  registration
provided by Section 4(2) of the Securities Act of 1933, as amended, on the basis
that such issuance did not involve a public  offering,  no  underwriter  fees or
commissions  were paid by us in  connection  with such issuance and such persons
were `accredited  investors' as defined in Regulation D under the Securities Act
of 1933, as amended.

         (d) None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits.  The  following  exhibits  are  filed  herewith  or  are
incorporated by reference to Exhibits previously filed.


                                       18
<PAGE>


EXHIBIT
   NO.   DESCRIPTION
-------  -----------

10.1     Consigned Distributor Agreement dated July 21, 2003 between the Company
         and ConAgra Poultry Company.

31.1     Certification  of our Principal  Executive  Officer,  Edward T. Whelan,
         pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification  of our  Principal  Financial  Officer,  Ethan D.  Hokit,
         pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1     Certification  of our Principal  Executive  Officer,  Edward T. Whelan,
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2     Certification  of our  Principal  Financial  Officer,  Ethan D.  Hokit,
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)      Reports on Form 8-K.

         None.


                                       19
<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned  thereunto duly authorized,  in Colorado  Springs,
Colorado on September 3, 2003.

                             MILITARY RESALE GROUP, INC.


                             By:  /s/ Ethan D. Hokit
                                  ----------------------------------------
                                  Name:   Ethan D. Hokit
                                  Title:  President (Principal Accounting
                                          Officer and Principal Financial
                                          Officer)



                                       20
<PAGE>





                                  CERTIFICATION
                           PURSUANT TO 18 U.S.C. 1350
                 (SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

         I, EDWARD T. WHELAN,  CHIEF EXECUTIVE OFFICER of MILITARY RESALE GROUP,
INC., certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Military Resale
         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 registrant as of, and for, the periods presented in this report;

4.       The  registrant'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
         registrant 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 registrant, 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  registrant'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  registrant's
                  internal control over financial reporting that occurred during
                  the registrant's  most recent fiscal quarter (the registrant's
                  fourth  fiscal  quarter in the case of an annual  report) that
                  has materially affected, or is reasonably likely to materially
                  affect,  the  registrant's  internal  control  over  financial
                  reporting; and

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



                                       21
<PAGE>


         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
                  registrant's ability to record, process,  summarize and report
                  financial information; and

         b)       Any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal control over financial reporting.


Date:  September 3, 2003

                                     /s/ Edward T. Whelan
                                     -----------------------------------
                                         Edward T. Whelan
                                         Chief Executive Officer




                                       22
<PAGE>



                                  CERTIFICATION
                           PURSUANT TO 18 U.S.C. 1350
                 (SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002)

         I, ETHAN D. HOKIT,  CHIEF  FINANCIAL  OFFICER of MILITARY RESALE GROUP,
INC., certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Military Resale
         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 registrant as of, and for, the periods presented in this report;

4.       The  registrant'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
         registrant 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 registrant, 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  registrant'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  registrant's
                  internal control over financial reporting that occurred during
                  the registrant's  most recent fiscal quarter (the registrant's
                  fourth  fiscal  quarter in the case of an annual  report) that
                  has materially affected, or is reasonably likely to materially
                  affect,  the  registrant's  internal  control  over  financial
                  reporting; and

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


                                       23
<PAGE>


         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
                  registrant's ability to record, process,  summarize and report
                  financial information; and

         b)       Any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal control over financial reporting.




Date:  September 3, 2003

                                              /s/ Ethan D. Hokit
                                              --------------------------------
                                                  Ethan D. Hokit
                                                  Chief Financial Officer



                                       24
<PAGE>