**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB**





X  ANNUAL REPORT UNDER SECTION13 OR 15 (d) OF THE
      SECURITIES EXCHANGE ACT OF 1934





FOR
      the
      fiscal year ended January 31, 2001





___
      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF
      1934





For
      the
      transition period from __________ to __________





Commission
      file number 0-13635





**SFG
      FINANCIAL CORPORATION**


**F/K/A   SFG
      CORPORATION**


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





**Delaware**
            **13-320894**(State
                or other jurisdiction
            (IRS
                Employerof
                incorporation or organization)
            Identification
                Number)





**255
      Executive Drive, Suite 408**


**Plainview,
      NY 11803**


(Address
      of principal executive offices)





**(516)
      349-9100**


(Issuer’s
      telephone number)





85
      Amherst Street, Garden City, New York 11530


(Former
      name or former address, if changed since last report)








Securities
      registered under Section 12 (b) of the Exchange Act: None


Securities
      registered under Section 12 (g) of the Exchange Act: Common Stock,
      $0.001





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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. X





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





Issuer’s
      revenues for the most recent fiscal year: $11,012.00





The
      aggregate market value of voting stock held by non-affiliates of the Registrant
      cannot be easily determined.





As
      of
      January 31, 2001, the Registrant had 4,026,856 shares of common stock
      outstanding.





Transitional
      Small Business Disclosure Format (Check one) Yes__  No   X













**TABLE
      OF CONTENTS**








**PART
                I**ITEM
                1.
            DESCRIPTION
                OF BUSINESS
            3ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            3ITEM
                3.
            LEGAL
                PROCEEDINGS
            3ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            3**PART
                II**ITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            4ITEM
                6.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            4ITEM
                7.
            FINANCIAL
                STATEMENTS
            5ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            5ITEM
                8A
            CONTROLS
                AND PROCEDURES
            5ITEM
                8B
            OTHER
                INFORMATION
            6**PART
                III**ITEM
                9.
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
            6ITEM
                10.
            EXECUTIVE
                COMPENSATION
            7ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            7ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE
            8ITEM
                13.
            EXHIBITS
            8ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            9**SIGNATURES**
            10























2





**PART
      I**





Item
                1.
            Description
                of Business





SFG
      Financial Corporation (the “Company”) until August 4, 2000, known as SFG
      Corporation, was incorporated in Delaware on November 9, 1983.  SFG
      Financial Corporation operates as a holding company. Stratford Financial Corp
      (SFC) is a wholly owned subsidiary of SFG Financial Corporation. Empire Asset
      Management Corp. is a wholly owned subsidiary of Stratford Financial
      Corp.





SFC
      is an
      independent third party lessor specializing in computer and general equipment
      leasing. Through its wholly owned subsidiary, Empire Asset Management Corp
      (EAMC), it offers leases on selected IBM computer peripheral equipment. EAMC
      also seeks to earn fees through the brokerage of lease and finance
      transactions.





The
      Company provides no products or services and has continued to seek a suitable
      merger partner.





On
      November 15th of 2000, it acquired for 500,000 shares of common stock Franchise
      Consultants Group Inc., of Buffalo, New York, a start up business that provides
      clients with assistance in identifying potential franchising opportunities
      and
      helps them in completing the franchise application process as well as providing
      them with the requisite financing.





The
      Company has no patents, trademarks, licenses, franchises, or concessions. The
      Company had no backlog of orders as of January 31, 2001.





The
      Company employs one person on a full time basis. The Company considers its
      relations with its employee to be good. The employee is not represented by
      a
      collective bargaining agreement or other obligations.





Item
                2.
            Description
                of Property





The
      Company’s offices consist of 150 feet of space and are located in Garden City,
      New York. This space is available without a lease and without cost to the
      company.





Item
                3.
            Legal
                Proceedings





None





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





No
      matters have been submitted to a vote of security holders during the fiscal
      year
      ending January 31, 2001.











3





**PART   II**





Item
                5.
            Market
                for Common Equity and Related Stockholder
                Matters





The
      Company’s Common Stock trades on the Electronic Pink Sheets under symbol SFGC,
      The Pink Sheets is a centralized quotation service that collects and publishes
      market maker quotes for OTC securities in real time.





The
      approximate number of holders of the Company’s common Stock at January 31, 2001
      was 405.





The
      following table reflects the high and low prices on a quarterly basis for the
      fiscal years ended 2001 and 2000.





Fiscal  2001
            
            Fiscal
                2000Quarter
                ended
            
            High
            
            Low
            
            High
            
            LowApril
                30
            
            0.06
            
            0.06
            
            0.88
            
            0.25July
                31
            
            1.03
            
            0.50
            
            0.38
            
            0.38October
                31
            
            0.50
            
            0.50
            
            0.51
            
            0.06January
                31
            
            1.25
            
            0.50
            
            0.06
            
            0.06




The
      quotation shown may reflect inter-dealer prices, without mark-up, markdown
      and
      may not represent actual transactions.





Registrant
      has not paid a cash dividend on its Common Stock and does not contemplate paying
      any cash dividends on its common stock in the near future.





Item
                6.
            Management’s
                Discussion and Analysis or Plan of
                Operation





Forward
      –Looking Statements





The
      information in this report contains forward-looking statements. All statements
      other than statements of historical fact made in this report are forward
      looking. In particular, the statements herein regarding industry prospects
      and
      future results of operations or financial position are forward-looking
      statements. Forward-looking statements reflect management’s current expectations
      and are inherently uncertain. Our actual results may differ significantly from
      management’s expectations.





The
      following discussion and analysis should be read in conjunction with the
      consolidated financial statements of SFG Financial Corporation, included
      herewith. This discussion should not be construed to imply that the results
      discussed herein will necessarily continue into the future, or that any
      conclusion reached herein will necessarily be indicative of actual operating
      results in the future. Such discussion represents only the best present
      assessment of our management.








4





Plan
      of Operation





Fiscal
      2001 Compared to Fiscal 2000





Revenues
      decreased to $11,012.00 in fiscal 2001 from $211,535.00 in fiscal 2000. The
      decrease in revenues can be attributed to our inability to develop the new
      sources of debt and equity necessary for originating operating and finance
      leases as well as the continued erosion in the value of the revenues that could
      be generated by remarketing, lease extensions or equipment sales from our
      existing portfolio. The Company does not have the resources to compete in an
      increasingly competitive marketplace and is dependent on business from one
      large
      client.





Liquidity
      and Capital Resources





The
      financial position of the company remained tenuous during the fiscal year.
      Management has struggled to operate with limited resources as it attempted
      to
      identify a potential merger partner either in its current business or in another
      field.





The
      Company does not expect its financial position to improve unless it is able
      to
      identify and complete a merger with a more substantial entity. We believe at
      least $30,000 is needed to continue for a period of approximately for a period
      of 12 months. It has not been determined if additional funding will be required
      for the franchise business related activities.





There
      can
      be no assurance that the Company will be able to improve its financial position
      even if the above stated objective is met.





Item
                7.
            Financial
                Statements





Financial
      Statements appear at the end of this report.





Item
                8.
            Changes
                In and Disagreements with Accountants And Financial
                Disclosure





None





Item
                8A.
            Controls
                and Procedures





As
      of the
      end of the period covered by this report, we conducted an evaluation, under
      the
      supervision and with the participation of our chief executive officer and chief
      financial officer of our disclosure controls and procedures (as defined in
      Rule
      13a-15(e) and Rule 15d-15(e) of the Exchange Act).  Based upon this
      evaluation, our chief executive officer and chief financial officer concluded
      that our disclosure controls and procedures are ineffective to insure that
      information required to be disclosed by us in the reports that we file or submit
      under the Exchange Act is:  (1) accumulated and communicated to our
      management, including our chief executive officer and chief financial, as
      appropriate to allow timely decisions regarding required disclosure; and (2)
      recorded, processed summarized and reported within the time periods specified
      in
      the Commission’s rules and forms.  Management has concluded that the
      Company’s disclosure controls and procedures need to be improved significantly,
      primarily by finding ways to assure that our reports to the SEC are filed on
      a
      timely basis. While the Company does not currently have any material operations,
      if it were to commence or undertake material operations or transactions, the
      Company would need to take prompt action to institute such controls and
      procedures to insure compliance.








5





There
      was
      no change to our internal controls or in other factors that could affect these
      controls during our last fiscal quarter that has materially affected, or is
      reasonably likely to materially affect, our internal control over financial
      reporting.





Item
                8B.
            Other
                Information





None





**Part
      III**





Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                16(a)
                of the Exchange Act





The
      following table sets forth the names and ages of all directors and executive
      officers of the Company and the positions in the Company held by
      them.





**Name**
            **Age**
            **Position**Bruce
                Stephens
            58
            Chief
                Executive Officer and SecretaryMichael
                Frey
            55
            DirectorJohn
                A. Dugan
            68
            Director





**Bruce
      Stephens** was appointed as Chief Executive Officer and Secretary of SFG
      upon the closing of the Merger.  Mr. Stephens has, for more than the
      past five years, been acting as a consultant in the areas of electronic order
      entry and execution trading systems for early stage hedge funds, traders and
      others.




**Michael
      Frey** was Chief Executive Officer, Chairman and a Director of COESfx
      from its formation until his resignation upon the closing of the Merger, at
      which time he was appointed a Director of SFG. Mr. Frey was the founder and
      President of A.J. Michaels & Company from1987 to1998. Mr. Frey also founded
      two securities clearing firms and was the founder of the S.O.E.S Training
      Center, a learning facility specializing in the formal application of the NASDAQ
      Small Order Execution System (S.O.E.S).





**John
      A. Dugan** has served in various positions with SFG since 1986, including
      Executive Vice President, Secretary and Treasurer. He became a Director in
      January 1988. In 1996, he was appointed Chairman and Chief Executive Officer
      and
      he resigned such positions upon the closing of the Merger. He was a marketing
      executive having worked at the Service Bureau Corporation, a former Division
      of
      the IBM Corporation, from 1967 to 1969. He later joined DPF Incorporated, then
      a
      New York Stock Exchange Company, serving in various positions including Vice
      President Asset Management, from 1970 to 1984. Mr. Dugan graduated from the
      United States Naval Academy.








6


(b)
                  Significant Employees
              None
 (c)
                  Family Relationships
              None
 (d)
                  Involvement in certain legal proceedings
              None
 (e)
                  Audit committee financial expert
              None


Item
                10.
            Executive
                Compensation





**Summary
      Compensation Table**




The
      following table sets forth all compensation paid in respect of our Chief
      Executive Officer and those individuals who received compensation in excess
      of
      $100,000 per year (collectively, the "Named Executive Officers") for our last
      two completed fiscal years.





**SUMMARY
      COMPENSATION TABLE**





Name
                and principal position
            Year
            Salary
            Bonus
            Stock
                Awards
            Option
                Awards
            Non-Equity
                Incentive Plan
            Non-qualified
                Deferred Compensation Earnings
            All
                other compensation
            **Total**($)
            ($)
            ($)
            ($)
            ($)
            ($)
            ($)
            ($)**Bruce
                Stephens**
            2001
            $13,100
            
            
            
            
            
            NA
            $13,100CEO
            2000
            $53,621
            
            
            
            
            
            NA
            $53,621




On
      June
      28, 1993 the Board of Directors approved the Company’s Stock Option Plan which
      covers 2,500,000 shares of the Company’s Common Stock. No shares have been
      exercised under this plan since its inception and no options are outstanding.
      This plan will expire in June 2003 and will not be renewed. There are no other
      forms of compensation outstanding.





Item
                11.
            Security
                Ownership of Certain Beneficial Owners and
                Management





The
      following table contains information as of January 31, 2001 as to the beneficial
      ownership of the Company’s Common Stock (the only class Outstanding) by each
      person or entity who was the beneficial owner of more than 5% of the outstanding
      shares of that class, each person who is a director or officer of the Company
      and all persons as a group who are officers and directors of the Company and
      as
      to the percentage of outstanding shares held by them at January 31,
      2001











7








Name
                and Address of
            Shares
            Percentage
                of
              Ownership
                (1)Sol
                Dorfberger
            270,000
            6.70%2323
                Quentin RoadBrooklyn,
                New York 11220Bruce
                Stephens
            253,500
            6.29%85
                Amherst StreetGarden
                City, New York 11530Anthony
                S. Pintauro
            477,125
            11.85%18
                Maunekea StreetSag
                Harbor, New York 11963Laurence
                D. Levin
            253,500
            6.29%1621
                Covington RoadYardley,
                PA 19067-0962Nicholas
                Gugliuzza
            500,000
            11.71%527
                Meadow DriveBuffalo,
                New York 14224-1517All
                Directors and Officers
            730,625
            18.44%





(1)
      Shares shown in this table are owned of record and/or beneficially.


(2)
      No
      options, warrants, rights, conversion privileges or similar obligations
      exist.





Item
                12.
            Certain
                Relationships and Related
                Transactions





None





Item
                13.
            Exhibits





Number
            Description





31.1
            Certification
                by Chief Executive Officer and Principal Accounting Officer, required
                by
                Rule 13a-14(a) nor Rule 15d-14(a) of the Exchange
                Act*





32.1
            Certification
                by Chief Executive Officer and Principal Accounting Officer, required
                by
                Rule 13a-14(b) of the Exchange Act and Section 1350 of Chapter 63
                of Title
                18 of the United States Code *





*
      Filed
      herewith











8





Item
                14.
            Principal
                Accountant Fees and Services








Fiscal
                Year 2000
            
            Fiscal
                Year 20011.
                Audit Fees
            
            $3,750
            
            $3,7502.
                Audit Related Fees
            
            None
            
            None3.
                Tax Fees
            
            None
            
            None4.
                All Other Fees
            
            None
            
            None5.
                No audit committee6.
                None










































































9





**SIGNATURES**





In
      accordance with Section 13 or 15(d)
      of the Securities Exchange Act, the registrant caused this report to be signed
      on its behalf by the undersigned thereunto duly authorized.





SFG
                FINANCIAL CORPORATIONBy:
            /s/
                Bruce StephensName:
            Bruce
                StephensTitle:
            Chairman
                and Chief Executive Officer
              and
                Principal Accounting Officer














Dated:
      September 28, 2007




In
      accordance with the Exchange Act,
      this report has been signed by the following persons on behalf of registrant
      and
      in the capacities and on the dates indicated.





By:
            /s/
                Bruce StephensName:
            Bruce
                StephensTitle:
            Chief
                Executive Officer and SecretaryBy:
            /s/
                Michael FreyName:
            Michael
                FreyTitle:
            DirectorBy:
            /s/
                Ralph BalzanoName:
            Ralph
                BalzanoTitle:
            Director






































10
























































**SFG
      FINANCIAL CORPORATION AND SUBSIDIARIES**


**GARDEN
      CITY, NEW YORK**





**CONSOLIDATED
      FINANCIAL STATEMENTS**





**JANUARY
      31, 2001 AND 2000**






























































**SFG
      FINANCIAL CORPORATION AND SUBSIDIARIES**





CONTENTS








PageIndependent
                auditor’s report
            F-2
                – F-3Financial
                statements:Consolidated
                balance sheets
            F-4Consolidated
                statements of operations
            F-5Consolidated
                statements of shareholders’ equity (deficiency)
            F-6Consolidated
                statements of cash flows
            F-7Notes
                to consolidated financial statements
            F-8
                – F-11















































F-1





ACCOUNTING
                SERVICES
            TAX
                CONSULTANTS





*Michael
      Masters & Co.*


CERTIFIED
      PUBLIC ACCOUNTANTS


175
      MEMORIAL HIGHWAY, SUITE 2-10


NEW
      ROCHELLE, NEW YORK 10801





(914)
      632-1695      FAX(914) 632-2142





MICHAEL
                MASTERS, C.P.A.
            ASSOCIATEKENNETH
                PALMASANO, C.P.A.
            MARK
                RINGEL, C.P.A











**INDEPENDENT
      AUDITOR’S REPORT**








To
      the
      Board of Directors and Stockholders


SGF
      Financial Corporation and Subsidiaries


Garden
      City, New York








We
      have
      audited the consolidated balance sheet of SFG Financial Corporation and
      Subsidiaries as of January 31, 2001, and the related Statements of Operations,
      Shareholders’ Deficiency and Cash Flows for the year then ended. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit. The financial statements of SFG Corporation and Subsidiaries as
      of
      January 31, 2000, were audited by other auditors whose report dated March 8,
      2000 on those statements included an explanatory paragraph describing conditions
      that raised substantial doubt about the Company’s ability to continue as a going
      concern discussed in Note #9 to the financial statements.





We
      conducted our audit in accordance with generally accepted auditing standards.
      Those standards require that we plan and perform the audit to obtain reasonable
      assurance about whether the financial statements are free of material
      misstatement. An audit includes examining, on a test basis, evidence supporting
      the amounts and disclosures in the financial statements. An audit also includes
      assessing the accounting principles used and significant estimates made by
      management, as well as evaluating the overall financial statement presentation.
      We believe that our audit provides reasonable basis for our
      opinion.





In
      our
      opinion, the January 31, 2001 financial statements referred to above present
      fairly, in all material respects, the financial position of SFG Financial
      Corporation and Subsidiaries as of January 31, 2001, and the results of its
      operations and its cash flows for the year then ended in conformity with
      generally accepted accounting principles














F-2


ACCOUNTING
                  SERVICES
              TAX
                  CONSULTANTS
 
 *Michael
        Masters & Co.*
 CERTIFIED
        PUBLIC ACCOUNTANTS
 175
        MEMORIAL HIGHWAY, SUITE 2-10
 NEW
        ROCHELLE, NEW YORK 10801
 
 (914)
        632-1695      FAX(914) 632-2142
 
 MICHAEL
                  MASTERS, C.P.A.
              ASSOCIATEKENNETH
                  PALMASANO, C.P.A.
              MARK
                  RINGEL, C.P.A





The
      accompanying financial statements have been prepared assuming that the Company
      will Continue as a going concern- As discussed in Note #9 to the financial
      statements, the Company has suffered recurring losses from operations and has
      a
      net capital deficiency. Those conditions raise substantial doubt about its
      ability to continue as a going concern. Management’s plans regarding those
      matters are also described in Note #9. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.

















*/s/
      Michael Masters & Co.*





Michael
      Masters & Co.


Certified
      Public Accountants


New
      Rochelle, New York


April
      22,
      2002

















F-3





**SFG
      FINANCIAL CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**AS
      OF JANUARY 31,**





**2001**
            
            
            **2000****ASSETS****Current
                Assets**Cash
                on hand
            
            $
            10,192
            
            
            $
            41,173**Total
                Current Assets**
            
            
            10,192
            
            
            
            41,173**Total
                Assets**
            
            
            10,192
            
            
            
            41,173**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIENCY)****Liabilities**Accounts
                payable and accrued expenses
            
            
            112,095
            
            
            
            111,791Due
                to officers
            
            
            845
            
            
            
            2,711Sales
                tax payable
            
            
            221,692
            
            
            
            221,943**Total
                Liabilities**
            
            
            334,632
            
            
            
            336,445**STOCKHOLDERS'
                EQUITY (DEFICIENCY)**Common
                stock; $.001 par value 100,000,000 shares authorized; 4,026,856 and
                3,226,856 shares issued and outstanding at January 31, 2001 and 2000,
                respectively
            
            
            4,027
            
            
            
            3,227Additional
                paid in capital
            
            
            2,281,650
            
            
            
            2,062,167Retained
                earnings
            
            
            (2,610,117
            )
            
            
            (2,360,666
            )**Total
                Stockholders' Equity (Deficiency)**
            
            
            (324,440
            )
            
            
            (295,272
            )**Total
                Liabilities and Stockholders' Equity (Deficiency)**
            
            $
            10,192
            
            
            $
            41,173

















The
      accompanying notes are an integral part of the financial
      statements.








F-4





**SFG
      FINANCIAL CORPORATION AND
      SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**FOR
      YEARS ENDED JANUARY 31,**





**2001**
            
            
            **2000****Revenue:**Rental
                income
            
            $
            11,512
            
            
            $
            121,918Residual
                income
            
            
            -
            
            
            
            75,423Sale
                of equipment
            
            
            -
            
            
            
            14,194Loss
                on investment
            
            
            (500
            )
            
            
            -**Total
                Revenues**
            
            
            11,012
            
            
            
            211,535**Operating
                Expenses**Professional
                fees
            
            
            51,462
            
            
            
            2,530Administrative
                expenses
            
            
            39,046
            
            
            
            57,380Salaries
            
            
            13,100
            
            
            
            53,621Interest
            
            
            -
            
            
            
            25,806Leasing
                Expenses
            
            
            -
            
            
            
            6,584Rent
            
            
            -
            
            
            
            1,950Consulting
                fees
            
            
            156,700
            
            
            
            134,400**Total
                Operating Expenses**
            
            
            260,308
            
            
            
            282,271**Income
                (Loss) From Operations**
            
            
            (249,296
            )
            
            
            (70,736
            )**Provision
                for Taxes**New
                York State corporate taxes
            
            
            155
            
            
            
            853**Net
                Income (Loss)**
            
            $
            (249,451
            )
            
            $
            (71,589
            )**Earnings
                Per Share**
            
            $
            (0.07
            )
            
            $
            (0.02
            )**Weighted
                Average of Number of Common Shares Outstanding**
            
            
            3,411,856
            
            
            
            2,942,899




















The
      accompanying notes are an integral part of the financial
      statements.








F-5





**SFG
      FINANCIAL CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)**


**FOR
      THE YEARS ENDED JANUARY 31, 2001 AND 2000**








COMMON
                STOCK
            
            
            CAPITAL
              IN
                EXCESS
            
            
            RETAINEDSHARES
            
            
            AMOUNT
            
            
            OF
                PAR
            
            
            EARNINGS**Balance
                at February 1. 1999**
            
            
            2,855,856
            
            
            $
            2,856
            
            
            $
            1,693,450
            
            
            $
            (2,289,077
            )Shares
                issued for services
            
            
            100,000
            
            
            
            100
            
            
            
            99,900
            
            
            
            -Shares
                issued to retire debt
            
            
            271,000
            
            
            
            271
            
            
            
            268,817Net
                Income (Loss) for year ended January 31, 2000
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            (71,589
            )**Balance
                at January 31, 2000**
            
            
            3,226,856
            
            
            
            3,227
            
            
            
            2,062,167
            
            
            
            (2,360,666
            )Shares
                issued for services
            
            
            85,000
            
            
            
            85
            
            
            
            29,698
            
            
            
            -Prior
                Period Adjustment
            
            
            150,000
            
            
            
            150
            
            
            
            124,850
            
            
            
            -Shares
                issued as return on investment
            
            
            65,000
            
            
            
            65
            
            
            
            64,935
            
            
            
            -Shares
                issued for investment
            
            
            500,000
            
            
            
            500
            
            
            
            -
            
            
            
            -Net
                Income (Loss) for year ended January 31, 2001
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (249,451
            )**Balance
                at January 31, 2001**
            
            
            4,026,856
            
            
            $
            4,027
            
            
            $
            2,281,650
            
            
            $
            (2,610,117
            )









































The
      accompanying notes are an integral part of the financial
      statements.








F-6





**SFG
      FINANCIAL CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**AS
      OF JANUARY 31,**





**2001**
            
            
            **2000****Cash
                flow from operating activities:****Net
                income (loss)**
            
            $
            (249,451
            )
            
            $
            (71,589
            )**Adjustments
                to reconcile net income to net cash provided by (used in) operating
                activities:**Gain
                on sale of assets
            
            
            
            
            
            
            (13,399
            )Common
                stock issued fro services
            
            
            95,283
            
            
            
            100,000**Changes
                in assets and liabilities:**Increase
                (decrease) in Assets:Due
                from officers
            
            
            -
            
            
            
            560(Increase)
                decrease in Liabilities:Accounts
                payable and accrued expenses
            
            
            304
            
            
            
            14,545Advance
                rentals
            
            
            -
            
            
            
            (9,174
            )Due
                to officers
            
            
            (1,866
            )
            
            
            (276
            )Sales
                tax payable
            
            
            (251
            )
            
            
            (63
            )**Net
                cash provided by operations**
            
            
            (155,981
            )
            
            
            20,604**Cash
                flow from investing activities:**Proceeds
                from sale of fixed assets
            
            
            -
            
            
            
            13,399**Cash
                provided from (for) investing activities**
            
            
            -
            
            
            
            13,399**Cash
                flow from financing activities:**Payments
                of long term debt
            
            
            
            
            
            
            (2,063
            )Sale
                of common stock
            
            
            125,000
            
            
            
            -**Cash
                flow provided from (for) financing activities**
            
            
            125,000
            
            
            
            (2,063
            )**Net
                increase in cash and cash equivalent**
            
            
            (30,981
            )
            
            
            31,940**Cash
                and cash equivalents at beginning of year**
            
            
            41,173
            
            
            
            9,233**Cash
                and cash equivalents at end of year**
            
            $
            10,192
            
            
            $
            41,173


















The
      accompanying notes are an integral part of the financial
      statements.








F-7





**1.  Organization
      and significant accounting policies:**





**Summary
      of accounting policies**


This
      summary of accounting policies of SFG Financial Corporation and Subsidiaries
      (the Company) is presented to assist in understanding the Company’s financial
      statements. The financial statements and notes are representations of the
      Company’s management who is responsible for the integrity and objectivity of the
      financial statements. These accounting policies conform to generally accepted
      accounting principles and have been consistently applied in the preparation
      of
      the financial statements.





**Basis
      of consolidation**


The
      consolidated financial statements include the accounts of SFG Financial
      Corporation and its wholly owned subsidiaries. All significant intercompany
      accounts and transactions have been eliminated in consolidation.





**Leasing
      arrangements**


The
      Company’s leasing operations consist of operating leases of computers and
      peripheral equipment. The Company recognizes rental income, as earned, over
      the
      lives of the leases.





**Asset
      sales and remarketing agreements**


In
      prior
      years, the Company acquired equipment and the related leases thereon and
      immediately or shortly after acquisition, sold them for their tax benefits
      to
      third party investors. Concurrent with the sales, the Company entered into
      remarketing agreements with the investors whereby it agreed to use its best
      efforts to remarket the equipment on behalf of the investors at the end of
      the
      original lease terms. As payment for these services the Company receives a
      portion of the future amounts received from the remarketing of the equipment.
      These revenues are recorded as residual income when collected. No residual
      income was collected in the year ended January 31, 2001.





**Equipment
      under operating leases and furniture and equipment**


Equipment
      under operating leases and furniture and equipment are stated at cost.
      Expenditures for major renewals and betterments that extend the useful life
      of
      property and equipment are capitalized. Expenditures for maintenance and repairs
      are charged to expense as incurred.





January
                31,2001
            
            
            2000Equipment
                under operating leases
            
            $
            335,907
            
            
            $
            335,907Furniture
                and equipment
            
            
            1,655
            
            
            
            1,655337,562
            
            
            
            337,562Accumulated
                depreciation
            
            
            337,562
            
            
            
            337,562Net
            
            $
            0
            
            
            $
            0











F-8





**Net
      income (loss) per common share**


Net
      Income (loss) per Common Share is computed using the weighted average number
      of
      common shares outstanding each period.





**Cash
      and cash equivalents**


For
      purposes of reporting the statements of cash flows, cash and cash equivalents
      include money market accounts and all highly liquid debt instruments purchased
      with maturity of three months or less.





**Earnings
      per share**


Earnings
      per share are based on the weighted-average number of shares of common stock
      outstanding in each year. The Company maintains a capital structure which
      consists of capital stock and includes no potential for dilution via
      conversions, exercise of options, or other arrangements that would increase
      the
      number of shares outstanding.





**Income
      taxes**


Income
      taxes are provided for the tax effects of transactions reported in the Financial
      Statements and consist primarily of taxes currently due.





**Use
      of estimates**


The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect certain reported amounts and disclosures. Accordingly, actual results
      could differ from these estimates.





**2.  Note
      payable**


Note
      payable beneficially to a director and shareholder at January 31, 1999 was
      $271,151. The note was dated October 29, 1996 in the original amount of $275,000
      with 9.55% interest payable in 360 monthly installments and principal and
      interest of $2,322. On January 31, 2000, the note paid in full exchange for
      271,000 shares of common stock. The balance of the note prior to exchange for
      common stock was $269,088.





**3.  Related
      party transactions**





**Lease**


The
      Company leases office space on a month-to-month basis from an officer of the
      Company. The Company paid no rent for the year ended January 31, 2001 and paid
      41,950 for the year ended January 31, 2000.





**Consulting
      Agreements**


The
      Company paid $156,700 and $134,00 during the years ended January 31, 2001 and
      2000, respectively, to a material interested parties, officers, directors or
      advisors to the officers and directors for consulting and other
      fees.








F-9





**Note
      payable**


As
      discussed in note #2 a director and shareholder loaned $275,000 to the Company
      in 1996. This note was paid by an exchange of stock on January 31, 2000.
      Interest expense incurred on this note was $25,806 for the year ended January
      31, 2000.





**Due
      from/to officers**


Balances
      represent non-interest bearing advances to/from officers and directors that
      have
      no specific repayment terms.





**4.  Major
      customers**


The
      Company was leasing to one customer. The lease expired in calendar
      2000.





**5.  Income
      taxes**


The
      company files a consolidated tax return. Tax expense is allocated to the
      subsidiaries based on their portion of taxable income to consolidated taxable
      income.





At
      January 31, 2001 the Company had net operating loss carryforwards of
      approximately $2,650,000 that expire January 31, 2010 and 2021.





**6.   Stock
      based compensation**


The
      Company has a stock option plan for employees and others who render services
      to
      the Company or its subsidiaries. Under the Plan the Company may grant options
      for up to 2,500,000 shares of common stock. The exercise price of each option
      will be fixed by the Board of Directors but shall not be less than the fair
      market value per share for the Company’s stock on the date of the grant. The
      Board shall determine the term of the options; however, options to 10% or more
      shareholders shall not be exercisable more than five years after the date of
      granting the option.





As
      of
      January 31, 2001 and 2000 there were no options granted.





**7.  Common
      stock transactions**


In
      the
      year ended January 31, 2001 The Company sold 150,000 shares to an outside
      investor and issued 65,000 shares to pay off a previous investment. These
      transactions were intended for the purpose of preserving capital or providing
      additional capital needed.





**8.  Loss
      on investment**


On
      November 15, 2000 the Company entered into an agreement with Franchise
      Consultants Group, Inc. (FCG) in which SFG would exchange 500,000 shares of
      common stock for 100% of FCG stock. The merging of the two companies was
      intended to provide FCG with the capital needed to make acquisitions of
      companies that were potential franchise candidates. By January 31, 2001,
      Management had decided that the arrangement was not viable. Therefore, the
      agreement between the two companies was terminated, and the amount of the
      investment was written off as a loss. The loss was computed based on the 500,000
      shares at the stated price par value of $0.001 per share.








F-10





**9.  Going
      concern**


These
      financial statements are presented on the basis that the Company is a going
      concern.  Going concern contemplates the realization of assets and the
      satisfaction of liabilities in the normal course of business over a reasonable
      length of time. The accompanying financial statements show recurring losses
      from
      operations and that liabilities exceed assets by $324,000 and $295,272 at
      January 31, 2001 and 2000 respectively.  The operating leases of the
      Company terminated in 2000.  The Company has elected to implement a
      business plan that has allowed it to continue operations while identifying
      a
      merger partner. There are no assurances that a merger will be
      completed.




































































F-11