UNITED STATES


SECURITIES AND
EXCHANGE COMMISSION


Washington, D.C. 20549





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FORM 1O-QSB





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(Mark One)


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

ACT OF 1934





For the quarterly period ended September 30, 2002





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




For the transition period from  to





Commission file number 000-17510





MEGA GROUP, INC.


(Exact name of small business issuer as specified in its charter)





NEW YORK

14-1653446(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)





1730 Rhode Island Ave., N.W. Suite 415, Washington, DC 20036


(Address of principal executive offices)





(202) 296-9594


(Issuers telephone number)





N/A


(Former name, former address and former fiscal year, if changed since last
report)





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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requires for the past 90 days. Yes [    ] No [X]





State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable
date: 9,433,605 shares of common stock (including 74,802 shares held of record by our wholly-owned subsidiary), as of December 20, 2002.





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







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PART I FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS.





MEGA GROUP, INC. AND SUBSIDIARY





CONSOLIDATED BALANCE SHEET





September 30, 2002ASSETSCURRENT ASSETSCash

$
4,527Marketable securities


1,328Loans receivable  affiliates


46,011Loans receivable  stockholders


53,995Loans finance costs, net


6,667TOTAL CURRENT ASSETS


112,528PROPERTY AND EQUIPMENTComputer equipment


10,683Office furniture and equipment


13,695TOTAL


24,378Less: Accumulated depreciation and amortization


(15,877
)NET PROPERTY AND EQUIPMENT


8,501TOTAL ASSETS

$
121,029





The accompanying Notes to Financial Statements are an integral part of
these financial statements.




2




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MEGA GROUP, INC. AND SUBSIDIARY





CONSOLIDATED BALANCE SHEET





September 30, 2002LIABILITIES AND DEFICIENCY IN STOCKHOLDERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt

$
988,862Accounts payable and accrued expenses


607,397Accrued wages


374,547Accrued interest


191,008Loans payable  stockholder


104,321Loans payable  affiliates


2,939TOTAL CURRENT LIABILITIES


2,269,074LONG-TERM DEBT, NET OF CURRENT PORTION


18,133TOTAL LIABILITIES


2,287,207COMMITMENTS AND CONTINGENCIESDEFICIENCY IN STOCKHOLDERS EQUITYPreferred stock, cumulative 8%, $1 par value per share,400,000 shares authorized, 10,000 shares issued and
outstanding


10,000Common stock, $0.016 par value per share, 25,000,000 shares authorized, 9,359,303 shares issued and
outstanding


149,749Additional paid-in capital


3,544,718Accumulated deficit


(5,869,375
)Accumulated other comprehensive income (loss)


(1,270
)TOTAL DEFICIENCY IN STOCKHOLDERS EQUITY


(2,166,178
)TOTAL LIABILITIES AND DEFICIENCY IN STOCKHOLDERS EQUITY

$
121,029







3




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MEGA GROUP, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF OPERATIONS





Three Months Ended September 30, 2001


Three Months Ended September 30, 2002


Nine Months Ended September 30, 2001


Nine Months Ended September 30, 2002REVENUE

$



$



$
2,858


$
OPERATING EXPENSESCompensation and benefits


10,991



50,000



88,474



125,000Other selling, general and administrative expenses


54,146



135,397



196,883



209,745Depreciation and amortization


1,000



4,025



3,000



5,408TOTAL OPERATING EXPENSES


66,137



189,422



288,357



340,153LOSS FROM OPERATIONS


(66,137
)


(189,422
)


(285,499
)


(340,153
)OTHER INCOME (EXPENSE)Interest income


57







941



220Interest expense


(26,199
)


(36,427
)


(77,620
)


(96,074
)Realized loss on sale of marketable securities


(6,541
)






(85,567
)


(487
)TOTAL


(32,683
)


(36,427
)


(162,246
)


(96,341
)LOSS BEFORE BENEFIT FOR INCOME TAXES


(98,820
)


(225,849
)


(447,745
)


(436,494
)BENEFIT FOR INCOME TAXES


20,144







39,544



NET LOSS

$
(78,676
)

$
(225,849
)

$
(408,201
)

$
(436,494
)BASIC NET LOSS PER COMMON SHAREBasic net loss per common share

$
(.01
)

$
(.03
)

$
(.05
)

$
(.05
)Weighted average common shares outstanding


8,056,912



8,864,738



8,056,912



8,468,676




4




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MEGA GROUP, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)





Three Months Ended September 30, 2001


Three Months Ended September 30, 2002


Nine Months Ended September 30, 2001


Nine Months Ended September 30, 2002NET LOSS

$
(78,676
)

$
(225,849
)

$
(408,201
)

$
(436,494
)DECREASE IN UNREALIZED LOSS ON MARKETABLE SECURITIES, NET OF TAX






248







32UNREALIZED GAIN ON MARKETABLE SECURITIES


16,818







13,792



RECLASSIFICATION OF PREVIOUSLY UNREALIZED LOSS ON MARKETABLE SECURITIES TO REALIZED


6,541







85,567



TAX PROVISION


(19,744
)






(39,744
)


OTHER COMPREHENSIVE INCOME (LOSS)


3,615



248



59,615



32COMPREHENSIVE INCOME (LOSS)

$
(75,061
)

$
(225,601
)

$
(348,586
)

$
(436,462
)





The accompanying Notes to Financial Statements are an integral part of
these financial statements.




5




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MEGA GROUP, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENT OF CASH FLOWS





Nine Months Ended September 30, 2001


Nine Months Ended September 30, 2002CASH FLOWS FROM OPERATING ACTIVITIESNet Loss

$
(408,201
)

$
(436,494
)ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED BY OPERATING ACTIVITIESRealized loss on disposition of marketable securities


85,567



487Depreciation and amortization


3,000



5,408Benefit for income taxes


(39,744
)


Court judgment increasing long term debt


5,817



Seizure of cash in litigation


9,345



Common stock issued for payment of membership dues






1,000Common stock issued for payment of professional services






50,000(INCREASE) DECREASE INAccrued interest


(725
)


INCREASE (DECREASE) INAccounts Payable and accrued expenses


147,721



(54,032
)Accrued wages






125,000Accrued interest


77,619



76,678NET CASH USED BY OPERATING ACTIVITIES


(119,601
)


(231,953
)CASH FLOWS FROM INVESTING ACTIVITIESPurchases of marketable securities


(45,307
)


(323
)Proceeds from sale of marketable securities


137,347



Loan made to stockholder, net






(53,995
)Loans made to affiliates, net


(19,395
)


(877
)NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES


72,645



(55,195
)CASH FLOWS FROM FINANCING ACTIVITIESDebt proceeds


30,000



321,930Principal payments on debt


(33,151
)


(80,700
)Loans from stockholder


45,241



33,345Loans from affiliate


280



Preferred dividends


(600
)


NET CASH PROVIDED BY FINANCING ACTIVITIES


41,770



274,575NET DECREASE IN CASH


(5,186
)


(12,573
)CASHBEGINNING OF PERIOD


26,383



17,100CASHEND OF PERIOD

$
21,197


$
4,527SUPPLEMENTAL CASH FLOW INFORMATIONActual Cash Payment for:Income Tax

$
200


$
Interest

$



$
19,396Noncash Investing and Financing transactionsCommon Stock issued for payment of loan financing costs

$



$
10,000Common Stock issued for payment of accrued wages

$



$
41,543Marketable securities exchanged for payment of accrued wages

$



$
84





The accompanying Notes to Financial Statements are an integral part of
these financial statements.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





1. NATURE OF BUSINESS





The consolidated financial
statements include the accounts of Mega Group, Inc., a New York corporation and its wholly owned subsidiary, Small Business Investment Corporation of America, Inc. (SBICOA), an Oregon corporation (collectively, the Company). All significant
inter-company transactions and accounts have been eliminated in the consolidated financial statements. The Companys current business plan is to provide diversified financial services to ethnic communities and faith-based entities in the United
States and to operate as a specialized financial institution providing loans and investments for businesses in low and moderate income communities.





2. INTERIM FINANCIAL PRESENTATION





The consolidated financial statements have been prepared
by the Company without audit and are subject to year-end adjustment. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These consolidated interim statements should be read in conjunction with the most recent audited consolidated financial statements filed by the
Company on Form 10-KSB with the Securities and Exchange Commission. The consolidated financial statements reflect all adjustments (which include only normal recurring adjustments) which, in the opinion of management are necessary to present fairly
the Companys financial position, results of operations and cash flows.





Results of operations for the nine
and three months ended September 30, 2002 are not necessarily indicative of results to be achieved for the full fiscal year.





3.
RECENT ACCOUNTING PRONOUNCEMENTS





In 2002, the Financial Accounting Standards Board issued the following:





SFAS No. 145, Recission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No.
13, and Technical Corrections, effective in fiscal years beginning after May 15, 2002.





SFAS
No. 146, Accounting for Costs Associated with Exit or Disposal Activities, effective for exit of disposal activities initiated after December 31, 2002.





SFAS No. 147, Acquisitions of Certain Financial Institutions, effective October 1, 2002.





Management has determined that these statements would have no significant impact on its consolidated financial statements.




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4. FINANCIAL CONDITION





As of September 30, 2002, the Company has a deficiency in stockholders equity and a working capital deficiency. In addition, the Company is in default on certain
notes payable and other obligations and is involved in significant litigation involving past business dealings. On October 11, 2000, as a condition of Mega Group, Inc.s acquisition of SBICOA, the president, Steven Gregory, agreed to indemnify
the Company and respective directors, shareholders, affiliates, and certain other associated persons (collectively, the Indemnitee Group) and to hold the Indemnitee Group harmless from and against all claims or liabilities relating to the
Companys business, including all litigation claims then being asserted against the Company. Mr. Gregorys agreement is subject to certain conditions, among them that (i) it is effective until not later than October 11, 2004, (ii) it is
contingent on the successful completion of a securities offering by the Company, and (iii) his obligation shall be satisfied only by his delivery to the Company of such number of the Companys common shares owned by him, valued for this purpose
at $2.50 per share, as shall be equal to the amount of any claim settled or finally determined. Mr. Gregory has granted the Indemnitee Group a security interest in his shares to secure his obligation.





The intent of Mega Group, Inc.s acquisition of SBICOA is to direct the Company into new business lines providing financial services
to currently underserved ethnic minorities through alliances with churches and other organizations serving those groups. The Company intends in the near term to obtain additional equity funding to pursue these new lines of business and to provide
the funds to satisfy its current obligations. The extent to which the Company can raise additional equity and achieve profitable operations from new business activities will determine if the Company can continue as a going concern.





On May 2, 2002, the Company entered into a non-binding letter of intent with an underwriter to engage in a firm-commitment
registered public offering of 1,500,000 units, each unit consisting of one share of the Companys common stock and a warrant to purchase one additional share of the Companys common stock, representing 35% of our equity fully diluted, at
an offering price currently estimated at $6.00 per unit. The letter of intent is subject to various conditions and to the execution of formal written underwriting documents.





5. LEGAL MATTERS





There have been no significant
developments to litigation matters since filing of fiscal year 2001 Form 10-KSB.





6. LONG-TERM DEBT





On July 15, 2002, the Company entered into a Loan and Security Agreement with Matah Holdings, LLC (a New Jersey Limited Liability
Company). The agreement provides a working capital loan facility under which borrowings may be made up to $500,000 from July 18, 2002 through August 28, 2002. To date, proceeds from two $150,000 promissory notes dated July 18, 2002 and July 29, 2002
have been received. The notes are personally guaranteed by the chief executive officer and treasurer (who are also majority stockholders). Principal and accrued interest at 12% per annum under each note are due on January 14, 2003 (no monthly
payments are required). This agreement also called for 100,000 shares of the Companys common stock to be issued to the lender as additional consideration.





7. COMMON STOCK





Effective May 7, 2002, the Company authorized and issued 692,391
shares of its common stock to the Chief Executive Officer of the Company for payment of previously accrued wages valued at $41,543 ($0.06 per share).





Effective June 30, 2002, the Company authorized and issued 10,000 shares of its common stock to a nonaffiliated third party for payment of membership dues valued at $1,000 ($0.10 per share).





Effective May 2, 2002, the Company authorized the issuance of 400,000 shares of its common stock to a
nonaffiliated investment bank for financial consulting services valued at $40,000 ($0.10 per share). The stock was issued on September 30, 2002.





Effective July 15, 2002, the Company authorized the issuance of 100,000 shares of its common stock to Matah Holdings, LLC (see above) as partial consideration, valued at $10,000 ($0.10 per share), for
entering into a loan and security agreement with the Company and for advancing loans to the Company totaling $300,000.





Effective September 15, 2002, the Company authorized the issuance of 100,000 shares of its common stock to a former executive for past professional services valued at $10,000 ($0.10 per share). The stock was issued on September 30,
2002.





8. RELATED PARTY TRANSACTIONS





Loan payablestockholder: The Company owes its president $104,321 at September 30, 2002. The obligation is the result of payments made by the president on the Companys behalf. Such
payments covered certain debt requirements as well as operating expenses. Such expenditures on the Companys behalf totaled $11,115 and $33,345 for the three and nine-month periods ended September 30, 2002.





Loan receivablestockholder: In August 2002, the Company advanced $99,995 to an officer under a short-term borrowing
arrangement. $53,995 remains unpaid as of September 30, 2002.




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





SOME OF THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE IN THIS REPORT ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. STATEMENTS ABOUT OUR EXPECTATIONS, BELIEFS, PLANS, OBJECTIVES, ASSUMPTIONS, OR FUTURE EVENTS OR PERFORMANCE ARE NOT HISTORICAL FACTS AND MAY BE FORWARD-LOOKING.
FORWARD-LOOKING STATEMENTS ARE OFTEN, BUT NOT ALWAYS, MADE THROUGH THE USE OF WORDS OR PHRASES LIKE ANTICIPATE, ESTIMATE, PLANS, PROJECTS, CONTINUING, ONGOING,
EXPECTS, MANAGEMENT BELIEVES, WE BELIEVE, WE INTEND, AND SIMILAR WORDS OR PHRASES. ACCORDINGLY, THESE STATEMENTS INVOLVE ESTIMATES, ASSUMPTIONS, AND UNCERTAINTIES. ANY FORWARD-LOOKING STATEMENTS ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE FACTORS, INCLUDING RISK FACTORS, DISCUSSED IN THIS REPORT OR INCORPORATED BY REFERENCE. BECAUSE THE FACTORS DISCUSSED IN THIS REPORT OR INCORPORATED BY REFERENCE COULD CAUSE ACTUAL RESULTS OR OUTCOMES
TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN FORWARD-LOOKING STATEMENTS, YOU SHOULD NOT OVER-RELY ON FORWARD-LOOKING STATEMENTS. FURTHER, EACH FORWARD-LOOKING STATEMENT SPEAKS ONLY AS OF THE DATE ON WHICH IT IS MADE, AND WE UNDERTAKE NO OBLIGATION
TO UPDATE ANY FORWARD-LOOKING STATEMENT TO REFLECT LATER EVENTS OR CIRCUMSTANCES AS THEY OCCUR.





We believe
that our financial condition and results of operations included in this report are not indicative of our future prospects. During the six months ended September 30, 2002 and the year ended December 31, 2001, we had been in transition. During these
periods, we discontinued our insurance agency business, acquired the Small Business Investment Company of America, Inc. and commenced the implementation of a new business plan and operation.





Our business plan is to offer diversified financial services to ethnic communities and faith-based entities in the United States. Our operations will initially include:





Business and Community Development Lending





We propose to operate as a specialized financial institution, known as a Community and Individual Investment Corporation (CIIC), under an initiative of the U.S.
Department of Housing and Urban Development (HUD). CIICs are for-profit, resident-owned, non-bank banks that, in the words of HUD, serve an important function by making business and housing loans in low- and
moderate-income communities. CIICs may use HUD funds to provide community development and business loans, business start-up or expansion loans, and rental housing rehabilitation loans.





We propose to acquire, or become licensed to operate as, a Small Business Investment Company (SBIC) or a New Markets Venture Capital Company
(NMVCC), under initiatives of the U.S. Small Business Administration (SBA). SBICs and NMVCCs provide SBA-guaranteed debt financing or equity capital to small-business concerns and developmental venture capital financing to
concerns in low-income areas.





We propose to support community-based financing, through other financial
institutions, by making direct investments, providing loan guarantees and other credit enhancements, and purchasing loans. We intend to provide technical assistance to lenders and borrowers and to assist banks in complying with the requirements of
the Community Reinvestment Act.





Investment Referral Services





We expect to package, service, and advise closed-end investment companies and other savings and investment programs that will permit community- and faith-based equity
participation in these efforts.





Business Strategic Planning and Financial Consulting Services





Finally, we propose to provide fee-based financial consulting services to local governments throughout the United States.





Our business plan referred to above calls for a capitalization of at least $30,000,000. Accordingly, we
are now undercapitalized. We intend to satisfy any liquidity needs during the foreseeable future by engaging in one or more public or non-public equity financings. The nature of our business and proposed business does not require any significant
product research and development, purchase or sale of plant and equipment, or changes in the number of employees. In the event that we are unable to raise significant funds, we may be unable to make required payments as they become due and may be
unable to fully execute our business plan.





Since October 11, 2000, through SBICOA, we have sustained our
operations substantially through private borrowings. On July 15, 2002, together with SBICOA, we entered into a loan and security agreement with Matah Holdings, L.L.C., a nonaffiliated lender. The agreement provided us with a working capital facility
under which we had the right to borrow up to $500,000, of which $300,000 is currently in use. The borrowings are evidenced by promissory notes due, together with interest at 12% per annum, on January 14, 2003 and are personally guaranteed by our
chairman of the board of directors, chief executive officer, and principal shareholder, John H. Brown, and by our secretary-treasurer, director, and principal shareholder, Joyce L. Brown.





Results of Operations





Nine Months Ended
September 30, 2002





During the nine months ended September 30, 2002, our cash position decreased from $21,197
at September 30, 2001 to $4,527 at September 30, 2002. During the same nine-month period ended September 30, 2002, we realized a net loss of $436,494 after revenue of $0, ongoing expense in the total amount of $340,153, interest expenses of $96,074,
interest income of $220 and a realized loss from the sale of marketable securities in the amount of $487.





Three Months Ended September 30, 3002





During the three months ended September 30, 2002, we
realized a net loss of $225,849 after revenues of $0, ongoing expenses in the total amount of $189,422 and interest expense of $36,427.





ITEM 3. CONTROLS AND PROCEDURES.





Within the 90 days prior to the filing date of this
quarterly report, our principal executive officer and principal financial officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures. They have advised us that, based on that evaluation, they concluded
that our disclosure controls and procedures are effective to ensure that material information relating to us, and our consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual
report is being prepared. There have been no significant changes in our internal controls or in other factors that could significantly affect our internal controls since the date of their evaluation. Our principal executive officer and principal
financial officer identified no significant deficiencies and material weaknesses requiring corrective action.




9




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PART II OTHER INFORMATION





ITEM 1. LEGAL PROCEEDINGS.





There were no material developments in any litigation to which
we were a party. Please refer to our 10-KSB filed November 04, 2002 for current litigation matters.





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.





(a) EXHIBITS.





99.1Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.





(b) REPORTS ON FORM 8-K.





We did not file any reports on Form 8-K during the period covered by this report.




10




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SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





MEGA GROUP, INC.Date: December 27, 2002



By:

/s/    JOHN H. BROWNJohn H. Brown Chief Executive Officer





Date: December 27, 2002



By:

/s/    MERRITT C. BROWNMerritt C. Brown Chief Financial Officer




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CHIEF EXECUTIVE OFFICER CERTIFICATION





I, John H. Brown, certify that:





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





2.
Based on my knowledge, this quarterly 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 quarterly report;





3. Based on my knowledge,
the financial statements, and other financial information included in this quarterly 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 quarterly report;





4. The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:





a.) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiary,
is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;





b.) Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation
Date); and





c.) Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;





5.
The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent
function):





a.) All significant deficiencies in the design or operation of internal controls which
could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and





b.) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrants internal controls; and





6. The registrants other certifying officers and I
have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material weaknesses.





Date: December 27, 2002/s/     JOHN H. BROWNJohn H. Brown, Chief Executive Officer of Mega Group, Inc.




12




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CHIEF FINANCIAL OFFICER CERTIFICATION





I, Merritt C. Brown, certify that:





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





2.
Based on my knowledge, this quarterly 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 quarterly report;





3. Based on my knowledge,
the financial statements, and other financial information included in this quarterly 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 quarterly report;





4. The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:





a.) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiary,
is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;





b.) Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation
Date); and





c.) Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;





5.
The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent
function):





a.) All significant deficiencies in the design or operation of internal controls which
could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and





b.) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrants internal controls; and





6. The registrants other certifying officers and I
have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material weaknesses.





Date: December 27, 2002By:

/S/    MERRITT C. BROWNMerritt C. Brown, Chief Financial Officer of Mega Group, Inc.




13