**UNITED      STATES **

**SECURITIES      AND EXCHANGE COMMISSION **

**Washington,      D.C. 20549 **

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**FORM      1O-QSB **

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| x |   | **QUARTERLY                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES                EXCHANGE** **ACT                OF 1934**  |
|---|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

**For      the quarterly period ended June 30, 2007**

| o |   | **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)      **

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**Table      of Contents**

**Mega      Group, Inc. and Subsidiary**

**Index**

| **Part                I.**  |   | **Financial                Information**                                                                                                 |   |
|-----------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                        |   |                                                                                                                                     |   |
| **Item                1.**  |   | Financial                Statements                                                                                                      |   |
|                        |   |                                                                                                                                     |   |
|                        |   | Consolidated                Balance Sheets- June 30, 2007 (Unaudited) and December 31,                2006                               | **1**  |
|                        |   |                                                                                                                                     |   |
|                        |   | Consolidated                Statements of Operations (Unaudited) Three Months ended June 30,                2007 and                2006 | **2**  |
|                        |   |                                                                                                                                     |   |
|                        |   | Consolidated                Statements of Operations (Unaudited) Six Months ended June 30, 2007                and                2006   | **3**  |
|                        |   |                                                                                                                                     |   |
|                        |   | Consolidated                Statements of Cash Flows (Unaudited) Six Months ended June 30, 2007                and                2006   | **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                                                                                                   | **9**  |
|                        |   |                                                                                                                                     |   |
| **Part                II.** |   | **Other                Information**                                                                                                     | **9**  |
|                        |   |                                                                                                                                     |   |
| **Signatures**              |   |                                                                                                                                     | **11** |

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**Mega        Group Inc. and Subsidiary**

**Consolidated        Balance Sheets**

**As        of June 30, 2007 and December 31, 2006**

|                                                                                                                                                                                                                                       |   | **June                  30, 2007 (Unaudited)** |           |  **December                  31, 2006** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|----------------|----------------------------------------------|--------|
| **Assets**                                                                                                                                                                                                                                 |   |                                           |           |                                    |   |
| Cash                  and cash equivalents                                                                                                                                                                                                 |   | **$**                                          | **8,505**      |                                         | $      | 2,622 |   |
| Other                  assets                                                                                                                                                                                                              |   |                                           | **3,399**      |                                         |   | 3,399 |   |
| Total                  current assets                                                                                                                                                                                                      |   |                                           | **11,904**     |                                         |   | 6,021 |   |
| Loan                  receivable                                                                                                                                                                                                           |   |                                           | **25,000**     |                                         |   | 25,000 |   |
| **Total                  assets**                                                                                                                                                                                                          |   | **$**                                          | **36,904**     |                                         | $      | 31,021 |   |
|                                                                                                                                                                                                                                       |   |                                           |           |                                         |   |   |   |
| **Liabilities                  and Stockholders’ Deficit**                                                                                                                                                                           |   |                                           |           |                                         |   |   |   |
|                                                                                                                                                                                                                                       |   |                                           |           |                                         |   |   |   |
| **Liabilities**                                                                                                                                                                                                                            |   |                                           |           |                                         |   |   |   |
| Accounts                  payable and accrued liabilities                                                                                                                                                                                  |   | **$**                                          | **2,104,240**  |                                         | $      | 1,922,286 |   |
| Accrued                  interest                                                                                                                                                                                                          |   |                                           | **695,432**    |                                         |   | 613,009 |   |
| Due                  to shareholders and officers                                                                                                                                                                                          |   |                                           | **139,538**    |                                         |   | 139,538 |   |
| Notes                  payable to shareholders and officers, including convertible notes                  payable                  of $146,602                                                                                             |   |                                           | **342,242**    |                                         |   | 280,741 |   |
| Notes                  payable, including convertible notes of $199,000                                                                                                                                                                    |   |                                           | **844,000**    |                                         |   | 844,000 |   |
| **Total                  current liabilities**                                                                                                                                                                                             |   |                                           | **4,125,452**  |                                         |   | 3,799,574 |   |
| **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, $0.016 par value per share, 25,000,000 shares authorized,                  9,744,233                  shares issued and outstanding                                                                         |   |                                           | **155,907**    |                                         |   | 155,907 |   |
| Additional                  paid-in capital                                                                                                                                                                                                |   |                                           | **391,780**    |                                         |   | 391,780 |   |
| Accumulated                  deficit                                                                                                                                                                                                       |   |                                           | **(4,646,235** | **)**                                        |   | (4,326,240 | ) |
| Total                  stockholders’ deficit                                                                                                                                                                                         |   |                                           | **(4,088,548** | **)**                                        |   | (3,768,553 | ) |
| **Total                  liabilities and stockholders’ deficit**                                                                                                                                                                     |   | **$**                                          | **36,904**     |                                         | $      | 31,021 |   |

**The        accompanying notes are an integral part of these consolidated balance        sheets.**

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**Mega      Group Inc. and Subsidiary**

**Consolidated      Statements of Operations**

**For      the Three Month Periods ended June 30, 2007 and 2006**

|                                                            |   | **2007                (Unaudited)** |          |  **2006                (Unaudited)** |   |
|-----------------------------------------------------------------|--------|-------------------------------------|---------------|-------------------------------------------|--------|
|                                                            |   |                                |          |                                      |   |   |   |
| **Revenue**                                                     |   | **$**                               | **1,237**     |                                      | $      | - |   |
| **Operating                expenses**                           |   |                                |          |                                      |   |   |   |
| Compensation                and benefits                        |   |                                | **86,250**    |                                      |   | 86,250 |   |
| Other                selling, general and administrative        |   |                                | **24,480**    |                                      |   | 23,302 |   |
| Depreciation                                                    |   |                                | **-**         |                                      |   | 547 |   |
| **Total                operating expenses**                     |   |                                | **110,730**   |                                      |   | 110,099 |   |
| **Loss                from operations**                         |   |                                | **(109,493**  | **)**                                     |   | (110,099 | ) |
| **Interest                expense**                             |   |                                |          |                                      |   |   |   |
| Interest                expense - stockholders and officers     |   |                                | **10,424**    |                                      |   | 9,888 |   |
| Other                interest expense                           |   |                                | **32,482**    |                                      |   | 30,150 |   |
| **Total                interest expense**                       |   |                                | **42,906**    |                                      |   | 40,038 |   |
| **Loss                before provision for income taxes**       |   |                                | **(152,399**  | **)**                                     |   | (150,137 | ) |
| **Provision                for income taxes**                   |   |                                | **-**         |                                      |   | - |   |
| Net                loss                                         |   | **$**                               | **(152,399**  | **)**                                     | $      | (150,137 | ) |
| **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 |   |                                | **9,744,233** |                                      |   | 9,516,959 |   |

**The        accompanying notes are an integral part of these consolidated balance        sheets.**

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**Mega      Group Inc. and Subsidiary**

**Consolidated      Statements of Operations**

**For      the Six Month Periods ended June 30, 2007 and 2006**

|                                                            |   | **2007                (Unaudited)** |          |  **2006                (Unaudited)** |   |
|-----------------------------------------------------------------|--------|-------------------------------------|---------------|-------------------------------------------|--------|
|                                                            |   |                                |          |                                      |   |   |   |
| **Revenue**                                                     |   | **$**                               | **3,042**     |                                      | $      | 5,175 |   |
| **Operating                expenses**                           |   |                                |          |                                      |   |   |   |
| Compensation                and benefits                        |   |                                | **172,500**   |                                      |   | 172,500 |   |
| Other                selling, general and administrative        |   |                                | **68,114**    |                                      |   | 66,256 |   |
| Depreciation                                                    |   |                                | **-**         |                                      |   | 1,094 |   |
| **Total                operating expenses**                     |   |                                | **240,614**   |                                      |   | 239,850 |   |
| **Loss                from operations**                         |   |                                | **(237,572**  | **)**                                     |   | (234,675 | ) |
| **Interest                expense**                             |   |                                |          |                                      |   |   |   |
| Interest                expense - stockholders and officers     |   |                                | **19,847**    |                                      |   | 21,247 |   |
| Other                interest expense                           |   |                                | **62,576**    |                                      |   | 59,548 |   |
| **Total                interest expense**                       |   |                                | **82,423**    |                                      |   | 80,795 |   |
| **Loss                before provision for income taxes**       |   |                                | **(319,995**  | **)**                                     |   | (315,470 | ) |
| **Provision                for income taxes**                   |   |                                | **-**         |                                      |   | - |   |
| Net                loss                                         |   | **$**                               | **(319,995**  | **)**                                     | $      | (315,470 | ) |
| **Basic                and diluted net loss per common share:** |   |                                |          |                                      |   |   |   |
| Basic                and diluted net loss per common share      |   | **$**                               | **(0.03**     | **)**                                     | $      | (0.03 | ) |
| Basic                and diluted weighted average common shares |   |                                | **9,744,233** |                                      |   | 9,516,959 |   |

**The        accompanying notes are an integral part of these consolidated balance        sheets.**

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**Mega        Group Inc. and Subsidiary**

**Consolidated        Statements of Cash Flows**

**For        the Six Month Periods ended June 30, 2007 and 2006**

|                                                                                                                       |   | **2007                (Unaudited)** |         |  **2006                (Unaudited)** |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------------|-------------------------------------------|--------|
| **Cash                flow from operating activities**                                                                     |   |                                |         |                                 |   |
| Net                Loss                                                                                                    |   | **$**                               | **(319,995** | **)**                                     | $      | (315,470 | ) |
| **Adjustment                to reconcile changes in net assets to net cash flow from operating                activities** |   |                                |         |                                      |   |   |   |
| Depreciation                                                                                                               |   |                                | **-**        |                                      |   | 1,094 |   |
| **Effect                of changes in non-cash working capital balances**                                                  |   |                                |         |                                      |   |   |   |
| Accounts                payable and accrues liabilities                                                                    |   |                                | **181,954**  |                                      |   | 163,001 |   |
| Accrued                interest                                                                                            |   |                                | **82,423**   |                                      |   | 80,795 |   |
| Net                cash flow used in operating activities                                                                  |   |                                | **(55,618**  | **)**                                     |   | (70,580 | ) |
| **Cash                flow from financing activities**                                                                     |   |                                |         |                                      |   |   |   |
| Debt                proceeds                                                                                               |   |                                | **90,000**   |                                      |   | - |   |
| Payments                on debt to stockholders and officers                                                               |   |                                | **(28,499**  | **)**                                     |   | (47,500 | ) |
| **Net                cash flow provided by financing activities**                                                          |   |                                | **61,501**   |                                      |   | (47,500 | ) |
| Change                in cash and cash equivalents                                                                         |   |                                | **5,883**    |                                      |   | (118,080 | ) |
| **Cash                and cash equivalents, beginning of period**                                                          |   |                                | **2,622**    |                                      |   | 136,634 |   |
| **Cash                and cash equivalents, end period**                                                                   |   | **$**                               | **8,505**    |                                      | $      | 18,554 |   |
| **Cash                Paid for Interest**                                                                                  |   | **$**                               | -            |                                      | $      | - |   |
| **Cash                Paid for Taxes**                                                                                     |   | **$**                               | **-**        |                                      | $      | - |   |

**The        accompanying notes are an integral part of these consolidated balance        sheets.**

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**Mega        Group Inc. and Subsidiary**

**Notes        to Unaudited Consolidated Financial Statements**

**For        the Three and Six Months Ended June 30, 2007**

| **1.** **Nature                of Business**             |   | The                consolidated financial statements include the accounts of the Mega                Group,                Inc. (the Company), 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                accompanying unaudited consolidated financial statements of the Company                have been prepared in accordance with accounting principles generally                accepted in the United States of America for interim financial information                and with the instructions to Form 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                period ended June 30, 2007, are not necessarily indicative of the                results                that may be expected for the year ending December 31, 2007 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, 2006. |
|                                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Net                Loss per Common Share**        |   | Basic                net loss per common share is calculated by dividing the net loss                attributable to common 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 which consists exclusively                of stock                options are excluded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Stock                Option Accounting**                    |   | The                Company adopted the fair-value recognition provision 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

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**Mega      Group Inc. and Subsidiary**

**Notes      to Unaudited Consolidated Financial Statements**

**For      the Three and Six Months Ended June 30, 2007**

| **3.** **Financial                Condition** | As                of June 30, 2007, the Company has a deficiency in stockholders’ equity and                a working capital deficit of approximately $4,088,548. 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. Although no income                tax                liability exists, the Company is delinquent in all required Federal                income                tax filings for the years ending December 31, 2003, 2004, 2005, and                2006. 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. |
|----------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **4.** **Related                Party Transactions** | The                Company owes certain of our stockholders $481,780 and $420,279 as                of June                30, 2007 and December 31, 2006, respectively of which $342,242 and                $280,741, respectively, are notes payable and $139,538 was for expenses                paid by the stockholder on the Company’s behalf. The Company is in default                on all notes payable. The $139,538 has no specified terms for interest                or                repayment and is considered currently                payable. |
|-----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Mega        Group Inc. and Subsidiary**

**Notes        to Unaudited Consolidated Financial Statements**

**For        the Three and Six Months Ended June 30, 2007**

| **5****.                New Accounting Pronouncements** | In                June 2006, the Financial Accounting Standards Board, (“FASB”) issued                FASB Interpretation No. 48, “Accounting for Uncertainty in Income                Taxes” (“FIN48”). FIN 48 is an interpretation of FASB Statement                No. 109, “Accounting for Income Taxes,” and seeks to reduce the                diversity in practice associated with certain aspects of measurement                and                recognition in accounting for income taxes. In addition, FIN 48 provides                guidance on de-recognition, classification, interest and penalties,                and                accounting in interim periods and requires expanded disclosure with                respect to the uncertainty in income taxes.  The Company adopted the                provisions of FIN 48 on January 1, 2007. There was no cumulative                effect as a result of applying FIN 48. No adjustment was made to                the                opening balance of retained earnings.   In                September 2006, the FASB issued Statements of Financial Accounting                Standards (“SFAS”) 157, Fair Value Measurements. SFAS 157 defines fair                value, establishes a framework for measuring fair value in generally                accepted accounting principles, and expands disclosures about fair                value                measurements. SFAS 157 applies to existing accounting pronouncements                that                require or permit fair value measurements in which FASB had previously                concluded fair value is the most relevant measurement attribute.                Accordingly, SFAS 157 does not require any new fair value measurements.                SFAS 157 is effective for financial statements issued for fiscal                years                beginning after November 15, 2007, with early adoption encouraged.                The Company does not believe that the adoption of this interpretation                will                have a significant impact on its financial condition and results                of                operations.  In                February 2007, the FASB issued SFAS No. 159, "The Fair Value                Option for Financial Assets and Financial Liabilities-Including an                amendment of FASB Statement No. 115." SFAS 159 permits entities                to choose to measure eligible items at fair value at specified election                dates. Unrealized gains and losses on items for which the fair value                option has been elected are reported in earnings at each subsequent                reporting date. The fair value option (i) may be applied instrument                by instrument, with certain exceptions, (ii) is irrevocable (unless a                new election date occurs) and (iii) is applied only to entire                instruments and not to portions of instruments. SFAS 159 is effective                for the Company on January 1, 2008 and is not expected to have a                significant impact on the Company's financial                statements. |
|---------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**General-      Six Months Ended June 30, 2007 and 2006**

**Financial      Condition**

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**ITEM      3. CONTROLS AND PROCEDURES**

**PART      II. OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS**

**ITEM      2. CHANGES IN SECURITIES**

**ITEM      3. DEFAULTS UPON SENIOR SECURITIES**

| Unsecured                note payables to stockholders and officers bearing interest at rates                between 5% and 15% all of which are in default.                                                                                           |   | **$**  | **167,526**   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------|--------|
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Unsecured                note payable to a stockholder and officer convertible into common                shares                at $0.33 per share, bearing interest at 15%, due December 2003. The                Company is in default on this note. |   |   | **56,602**    |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Total                amount payable to officers                                                                                                                                                                                                        |   |   | **224,128**   |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Note                payable, unsecured, bearing interest at 10%, due March 2007. The                Company                is in default on this note.                                                                                                 |   |   | **4,000**     |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Note                payable to stockholder for redemption of common stock, unsecured                bearing                interest at 6%, due June 2000. The Company is in default on this                note.                                       |   |   | **24,114**    |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Total                amount payable to stockholders and officers                                                                                                                                                                                       |   |   | **252,242**   |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Note                payable to an individual, unsecured bearing interest at 12%. The                Company                is in default on this note.                                                                                                 |   |   | **100,000**   |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Various                unsecured notes payable convertible into common stock at $0.33 per                share,                bearing interest at 10%, due January 2006. The Company is in default                on                these notes.      |   |   | **90,000**    |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Various                unsecured notes payable convertible into common stock at $0.33 per                share,                bearing interest at 10%, due in 2007. The Company is in default on                these                notes.           |   |   | **169,000**   |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| Working                capital notes payable to Matah Holdings, LLC bearing interest at                12% due                April 2003. The Company is in default on these notes.                                                                    |   |   | **485,000**   |   |
|                                                                                                                                                                                                                                                   |   |   |          |   |
| **Total**                                                                                                                                                                                                                                              |   | **$**  | **1,096,242** |   |

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

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**ITEM      5. OTHER INFORMATION**

**ITEM      6. EXHIBITS**

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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.**

|                                 |                                       |                                                                                            |
|--------------------------------------|--------------------------------------------|-------------------------------------------------------------------------------------------------|
| Date:                August 14, 2007 | MEGA                GROUP, INC.            |
|                            |                                  |                                                                                       |
|                                      | By:                              | /s/                JOHN H.                BROWN         |
|                                 | **John                H. Brown**           |
|                                 | **Chief                Executive Officer** |

|                                      |                                       |                                                                                          |
|-------------------------------------------|--------------------------------------------|-----------------------------------------------------------------------------------------------|
| Date: August                14, 2007 | By:                              | /s/                JOYCE                BROWN         |
|                                      | **Joyce                Brown**             |
|                                      | **Chief                Financial Officer** |

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