UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    ---------

                                   FORM 1O-QSB

                                    ---------

(Mark One)
[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

[ ]       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]

      Indicate by check mare whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

      APLLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common equity, as of the latest
practicable date: 9,516,959 shares of common stock (including 75,302 shares held
of record by our wholly-owned subsidiary), as of July 15, 2006.

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


<PAGE>

TABLE OF CONTENTS

MEGA GROUP, INC. AND SUBSIDIARY

<TABLE>
<CAPTION>
                                      INDEX
                                      -----
<S>             <C>                                                                                               <C>
PART I.         FINANCIAL INFORMATION

       ITEM 1.  Financial Statements

                Consolidated Balance Sheets- June 30, 2004 (Unaudited) and December 31, 2003                       1

                Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, 2004 and 2003        2

                Consolidated Statements of Operations (Unaudited) Six Months Ended June 30, 2004 and 2003          3

                Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2004 and 2003          4

                Notes to Unaudited Consolidated Financial Statements                                               5

       ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations              8

       ITEM 3.  Controls and Procedures                                                                            8

PART II.        OTHER INFORMATION                                                                                  9

SIGNATURES                                                                                                        11
</TABLE>


<PAGE>

MEGA GROUP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2004 AND DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                                                                JUNE 30,
                                                                                  2004          DECEMBER 31,
                                                                              (UNAUDITED)          2003
                                                                              -----------       -----------
                                     ASSETS
<S>                                                                                 <C>               <C>
 Cash and cash equivalents                                                    $                 $     6,622
 Other assets                                                                       2,099             2,099
                                                                              -----------       -----------
   Total current assets                                                             2,099             8,721
Equipment, net of accumulated depreciation of $20,553 and $19,459,
respectively                                                                        5,110             6,204
                                                                              -----------       -----------
       TOTAL ASSETS                                                           $     7,209       $    14,925
                                                                              ===========       ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
   Accounts payable and accrued liabilities                                   $ 1,133,528       $   904,711
   Accrued interest                                                               237,195           177,129
   Due to shareholders and officers, including convertible notes payable
    of $15,000                                                                    281,054           276,888
   Notes payable                                                                  645,000           645,000
                                                                              -----------       -----------
       TOTAL CURRENT LIABILITIES                                                2,296,777         2,003,728
                                                                              -----------       -----------

STOCKHOLDERS' DEFICIT
   Preferred stock, cumulative 8%, $1 par value per share, 400,000
   shares authorized, 10,000 shares issued and outstanding with a
   liquidation preference of $1 per share                                          10,000            10,000
   Common stock, $0.016 par value per share, 25,000,000 shares
   authorized, 9,333,625 shares issued and outstanding                            149,338           149,338
   Additional paid-in capital                                                     245,849           245,849
   Accumulated deficit                                                         (2,694,755)       (2,393,990)
                                                                              -----------       -----------
       Total stockholders' deficit                                             (2,289,568)       (1,988,803)
                                                                              -----------       -----------
       TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                            $     7,209       $    14,925
                                                                              ===========       ===========
</TABLE>

              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                          CONSOLIDATED BALANCE SHEETS.


                                        1
<PAGE>

MEGA GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                 2004                 2003
                                                             (UNAUDITED)           (UNAUDITED)
                                                             -----------           -----------
<S>                                                               <C>                   <C>
REVENUE                                                      $        --           $    14,500
                                                             -----------           -----------
OPERATING EXPENSES
   Compensation and benefits                                      86,250                75,000
   Other selling, general and administrative                      34,966                59,350
   Depreciation                                                      547                 8,613
                                                             -----------           -----------
       TOTAL OPERATING EXPENSES                                  121,763               142,963
                                                             -----------           -----------
LOSS FROM OPERATIONS                                            (121,763)             (128,463)
                                                             -----------           -----------
OTHER EXPENSE
   Interest expense to stockholders and officers                   7,091                 5,008
   Interest expense                                               25,025                38,297
                                                             -----------           -----------
       TOTAL OTHER EXPENSE                                        32,116                43,305
                                                             -----------           -----------
LOSS BEFORE PROVISION FOR INCOME TAXES                          (153,879)             (171,768)
PROVISION FOR INCOME TAXES                                            --                    --
                                                             -----------           -----------
   Net loss                                                  $  (153,879)          $  (171,768)
                                                             ===========           ===========
BASIC AND DILUTED NET LOSS PER COMMON SHARE:
   Basic and diluted net loss per common share               $     (0.02)          $     (0.02)
                                                             ===========           ===========
   Basic and diluted weighted average common shares            9,333,625             9,359,303
                                                             ===========           ===========
</TABLE>


              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                          CONSOLIDATED BALANCE SHEETS.


                                        2
<PAGE>

MEGA GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                 2004                 2003
                                                             (UNAUDITED)           (UNAUDITED)
                                                             -----------           -----------
<S>                                                              <C>                   <C>
REVENUE                                                      $        --                14,500
                                                             -----------           ===========
OPERATING EXPENSES
   Compensation and benefits                                     172,500               150,000
   Other selling, general and administrative                      62,939               141,443
   Depreciation                                                    1,094                50,592
                                                             -----------           -----------
TOTAL OPERATING EXPENSES                                         236,533               342,035
                                                             -----------           -----------
LOSS FROM OPERATIONS                                            (236,533)             (327,535)
OTHER EXPENSE
   Interest expense to stockholders and officers                  14,182                11,600
   Interest expense                                               50,050                69,801
                                                             -----------           -----------
       TOTAL OTHER EXPENSE                                        64,232                81,401
                                                             -----------           -----------
LOSS BEFORE PROVISION FOR INCOME TAXES                          (408,936)
                                                                                      (300,765)
PROVISION FOR INCOME TAXES                                            --                    --
                                                             -----------           -----------
   Net loss                                                  $  (300,765)             (408,936)
                                                             ===========           ===========
BASIC AND DILUTED NET LOSS PER COMMON SHARE:
   Basic and diluted net loss per common share               $     (0.03)                (0.04)
                                                             ===========           ===========
   Basic and diluted weighted average common shares            9,333,625             9,359,303
                                                             ===========           ===========
</TABLE>


              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                          CONSOLIDATED BALANCE SHEETS.


                                        3
<PAGE>

MEGA GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                            2004                 2003
                                                                         (UNAUDITED)          (UNAUDITED)
                                                                         -----------         -----------
<S>                                                                            <C>                <C>
   CASH FLOW FROM OPERATING ACTIVITIES

   Net Loss                                                              $  (300,765)        $  (408,936)

   ADJUSTMENT TO RECONCILE CHANGES IN NET ASSETS TO NET CASH FLOW
     FROM OPERATING ACTIVITIES

   Depreciation                                                                1,094              50,592

   ACCRETION OF DISCOUNT AND OTHER                                             4,166               1,753

   EFFECT OF CHANGES IN NON-CASH WORKING CAPITAL BALANCES

   Account receivables                                                            --              (9,500)

   Other Assets                                                                   --              (2,099)

   Accounts payable and accrued liabilities                                  228,817             134,776

   Accrued interest                                                           60,066              74,535
                                                                         -----------         -----------
   Net cash flow from operating activities                                    (6,622)           (158,879)
                                                                         -----------         -----------
CASH FLOW USED IN INVESTING ACTIVITIES

Purchase of property, equipment and other                                         --              (2,241)

CASH FLOW FROM FINANCING ACTIVITIES

   Debt proceeds                                                                  --             181,736

   Payments on debt to stockholders and officers                                  --             (21,484)
                                                                         -----------         -----------
NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES                                    --             160,252
                                                                         -----------         -----------
Change in cash and cash equivalents                                           (6,622)               (648)
                                                                         -----------         -----------
Cash and cash equivalents, beginning of period                                 6,622               4,031
                                                                         -----------         -----------
CASH AND CASH EQUIVALENTS, END PERIOD                                    $        --         $     3,383
                                                                         ===========         ===========
CASH PAID FOR INTEREST                                                   $        --         $        --
                                                                         ===========         ===========
CASH PAID FOR TAXES                                                      $        --         $        --
                                                                         ===========         ===========
</TABLE>

              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                          CONSOLIDATED BALANCE SHEETS.


                                        4
<PAGE>

MEGA GROUP, INC. AND SUBSIDIARY

NOTED TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004


1.   NATURE OF          The consolidated financial statements include the
     BUSINESS           accounts of the 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            The accompanying unaudited consolidated financial
     FINANCIAL          statements of the Company have been prepared in
     PRESENTATION       accordance with accounting principles generally accepted
                        in the United States of America for interim financial
                        information and with the instructions to From 10-QSB.
                        Accordingly, they do not include all the information
                        required for complete financial statements. In the
                        opinion of management, all adjustments and
                        reclassifications considered necessary for a fair
                        presentation have been included. All such adjustments
                        are of a normal recurring nature. Operating results for
                        the six month periods ended June 30, 2004 are not
                        necessarily indicative of the results that may be
                        expected for the year ending December 31, 2004 or any
                        other period. The enclosed unaudited consolidated
                        financial statements should be read in conjunction with
                        the consolidated financial statements and footnotes
                        thereto incorporated by reference in the Company's
                        Annual Report on Form 10-KSB for the year ended December
                        31, 2003.

     NET LOSS PER       Basic net loss per common share is calculated by
     COMMON             dividing the net loss attributable to common
     SHARE              stockholders by the weighted average number of common
                        shares outstanding during the year. Diluted earnings per
                        share is calculated using the weighted average number of
                        common shares plus dilutive common stocks equivalents
                        outstanding during the period. Anti-dilutive common
                        stock equivalents are excluded. Common stock equivalents
                        are stock options.

     STOCK OPTION       The Company adopted the fair-value recognition provision
     ACCOUNTING         of SFAS No. 123 (as revised in 2004 and referred to as
                        "SFAS No. 123R") Accounting for Stock-based
                        Compensation. SFAS 123R generally eliminates variable
                        accounting and requires companies to recognize in the
                        income statement over the vesting period of the options
                        an estimate of expense based on the fair value of those
                        options, typically as of the date of grant.

                                        5
<PAGE>

MEGA GROUP, INC. AND SUBSIDIARY

NOTED TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004


2.   INTERIM
     FINANCIAL
     PRESENTATION,
     CONTINUED

     STOCK OPTION       In June 2001, the Company granted one of its directors
     ACCOUNTING,        options, exercisable until June 30, 2006 or until 30
     CONTINUED          days prior to the commencement of any registered public
                        offering of its equity securities, whichever comes
                        first, to purchase a total of 100,000 shares of its
                        common stock for $.50 per share. The Company has
                        estimated the value of these options to be insignificant
                        based on the Black-Scholes model with the following
                        assumptions: expected life: 2.9 years; Volatility: 0.0%;
                        Risk-free interest rate: 5.0% and dividend yield: 0.0%.

3.   FINANCIAL          As of June 30, 2004, the Company has a deficiency in
     CONDITION          stockholders' equity and a working capital deficit of
                        approximately $2,290,000. The Company has not been
                        successful to date in executing its business plan and
                        there are no guarantees that it will be successful in
                        implementing it in the future. The Company has not
                        generated significant revenue from its business plan and
                        has primarily relied upon contributions and loans from
                        shareholders to fund operations. The Company will
                        require significant new capital funding to implement the
                        business plan and to satisfy the Company's cash
                        requirements for the next twelve months. There are no
                        guarantees the Company's shareholders will continue to
                        fund operations or that there is a viable market for the
                        Company to raise the required capital. The Company is in
                        default on the majority of its debt and is significantly
                        delinquent on amounts owed to vendors and employees. The
                        Company will require capital funding in order to fund
                        the capital deficit. The Company is delinquent in all
                        required tax filings for the years ending December 31,
                        2003, 2004, and 2005.

                        The intent of the Company's management is to direct it
                        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 and to obtain
                        additional debt financing 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 financing and achieve profitable
                        operations from new business activities will determine
                        if the Company can continue as a going concern.

                        Management believes it will be successful in obtaining
                        additional equity and debt financing, but no assurances
                        can be given in this regard.

                                        6
<PAGE>

MEGA GROUP, INC. AND SUBSIDIARY

NOTED TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004


4.   RELATED PARTY      The Company owes certain of our stockholders $281,054
     TRANSACTIONS       and $276,888 as of June 30, 2004 and December 31, 2003,
                        respectively of which $154,016 are notes payable and
                        $127,038 and $122,872 was for expenses paid by the
                        stockholder on the Company's behalf. The Company is in
                        default on all notes payable. The Company originally
                        owed a stockholder $139,538 (Stockholder Obligation) for
                        expenses paid on the Company's behalf. The Stockholder
                        Obligations has no specified terms for interest or
                        repayment. The Stockholder Obligation was discounted by
                        $25,000 based on a 6% discount rate during the year
                        ending December 31, 2003 based on the Company repaying
                        the stockholder in the year ending December 31, 2006.
                        The Stockholder Obligation is being amortized into the
                        liability through interest expense. For each of the
                        periods ending June 30, 2004 and 2003, the Stockholder
                        Obligation accreted by $4,166.



                                        7
<PAGE>

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

Forward-Looking Statements. This management's discussion and analysis of
financial condition and results of operations and other portions of this report
include forward-looking statements such as: statements of the Company's goals,
intentions, and expectations; estimates of risks and of future costs and
benefits; and statements of the Company's ability to achieve financial and other
goals. These forward-looking statements are subject to significant uncertainties
because they are based upon: the amount and timing of future changes in market
behaviors and other economic conditions; future laws and regulations; and a
variety of other matters. Because of these uncertainties, the actual future
results may be materially different from the results indicated by these
forward-looking statements. In addition, the Company's past performance does not
necessarily indicate its future results.

                GENERAL- SIX MONTHS ENDED JUNE 30, 2004 AND 2003

During the first six months of 2004 and 2003, we generated $0 and $14,500 of
revenue and we realized a net loss of $300,765 and $408,936, respectively. We
had operating expenses in the total amount of $236,533 and $327,535
respectively, and interest expense of $64,232 and $81,401, respectively. The
decrease in operating expenses was primarily a result of cost controlling
measures. Interest expense decreased as a result of payments made during the
year ended December 31, 2003. During the first six months of 2004 we sustained
operations substantially through private borrowings received in 2003.

                               FINANCIAL CONDITION

Our cash position decreased from $6,622 at December 31, 2003 to $0 at June 30,
2004 primarily due to use of cash to fund operating expenses. We have applied a
100% valuation allowance for our net deferred tax assets of approximately
$4,267,000, which is primarily from our net operating loss carry-forward,
because the realization of the net deferred tax asset is likely not to be
realized as a result of either change in control limitations or lack of income
prior to expiration.

Our total liabilities increased from approximately $2,004,000 as of December 31,
2003 to approximately $2,297,000 as of June 30, 2004 as a result of withholding
payments to vendors, employees, and debt holders. As of June 30, 2004, the
Company has a deficiency in stockholders' equity and working capital of
approximately $2,290,000. In addition, the Company is in default on the majority
of our notes payable and is significantly delinquent in amounts owed to vendors
and employees. We have and will continue to primarily rely upon private debt
offerings and stockholder contributions to fund liquidity requirements. There is
no guarantee that stockholders will continue to fund operations or that there is
a viable market for us to raise equity or debt in the future. We plan to fund
the deficiency by implementation of our business plan and through additional
equity fundings.

As of June 30, 2004, the Company has no capital resources. The Company is
committed to pay approximately $138,000 as part of a non-cancelable lease
agreement over the next five years. The Company is in default or has debt coming
due in 2005 of approximately $799,000. Additionally, the Company has
approximately $237,000 of accrued and unpaid interest related to the debt
required to be paid in 2004. The Company plans to raise capital through equity
and debt means to fulfill these capital requirements. There is no guarantee that
there is a viable market for us to raise the required equity or debt in the
future.

ITEM 3. CONTROLS AND PROCEDURES

The Company's management, under supervision and with the participation of its
Chief Executive Officer and Chief Financial Officer, evaluated as of the last
day of the period covered by this report, the effectiveness of the design and
operation of the Company's disclosure controls and procedures, as defined in
Rule 13a-15 under the Securities Exchange Act of 1934. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were adequate. There were no
significant changes in the Company's internal controls over financial reporting
(as defined in Rule 13a-15 under the Securities Act of 1934) for the period
ended June 30, 2004 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.

                                        8
<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company has entered into routine proceedings incidental to its business, and
does expect that these proceedings will have a material adverse effect on the
Company.

ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

<TABLE>
<CAPTION>

<S>                                                                                                      <C>
      Note  payable to a  stockholder  and  officer,  unsecured,  bearing  interest at 15%, due
      January 2004. The Company is in default on this note, and  accordingly,  it is classified
      as a current liability.                                                                           $ 51,000

      Note payable to a stockholder  and officer,  unsecured,  bearing  interest at 5%, due May
      2004.  The Company is in default on this note,  and  accordingly,  it is  classified as a
      current liability.                                                                                   2,500

      Note  payable to a  stockholder  and  officer,  unsecured,  bearing  interest at 15%, due
      December 2003. The Company is in default on this note, and accordingly,  it is classified
      as a current liability.                                                                             61,402

      Note payable to a stockholder  and officer of the Company,  unsecured,  convertible  into
      common shares at a conversion  price of $ 0.3333 per share due on January  2004,  bearing
      interest  at 15%.  The  Company  is in  default  on this  note,  and  accordingly,  it is
      classified as a current liability.                                                                  15,000
                                                                                                     -----------
     Total amount payable to officers
                                                                                                         129,902
      Note payable to a stockholder of the Company for redemption of the
      Company's common shares, unsecured, bearing interest at 6%, due June 15,
      2000. The Company is delinquent in payments and accordingly is in default
      on this note.
                                                                                                          24,114
                                                                                                     -----------
      Total amount payable to stockholders and officers
                                                                                                         154,016
      Note payable to an individual for a cash loan, unsecured, bearing interest
      at 12%. The Company is delinquent in payments and accordingly is in
      default on this note.
                                                                                                         100,000
      Note payable, unsecured, bearing interest at 12.5%, due June 2003. The
      Company is delinquent in payments and accordingly is in default on this
      note.
                                                                                                          60,000
      Working capital notes payable to Matah Holding,  LLC,  bearing interest at 12%, due April
      14, 2003.  The Company is  delinquent in payments and  accordingly  is in default on this
      note.                                                                                              485,000
                                                                                                     -----------
     TOTAL                                                                                           $   799,016
                                                                                                     ===========
</TABLE>

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Exhibit 99.1 (a), (b), 18 U.S.C Section 1350 Certifications

                                        9
<PAGE>

                                   SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.


Date: July 21, 2006                                     MEGA GROUP, INC.

                                                  By:   /s/ JOHN H. BROWN
                                                        -----------------------
                                                        JOHN H. BROWN
                                                        CHIEF EXECUTIVE OFFICER



Date: July 21, 2006                               By:   /s/ JOYCE BROWN
                                                        -----------------------
                                                        JOYCE BROWN
                                                        CHIEF FINANCIAL OFFICER





                                       10