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, 2007
 
 COMMISSION
        FILE NUMBER 0-13635
 
 SFG
        FINANCIAL CORPORATION
 (Name
        of
        small business issuer in its charter)
 
 Delaware
              13-3208094(State
                  or other jurisdiction of incorporation or organization)
              (IRS
                  Employer Identification Number)85
                  Amherst StreetGarden
                  City, New York
              11530(Address
                  of Principal executive offices)
              Zip
                  Code
 
 Issuer’s
        telephone number (516) 327-0843
 
 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
        10KSB
        or any amendment to this Form 10KSB.   [X]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined by Rule
        12b-2 of the Exchange Act).  Yes [X] No [ ]
 
 Issuer
        had revenues of $ -0- for the fiscal year ended January 31, 2007.
 
 The
        aggregate market value of the voting common stock held by non-affiliates
        cannot
        be readily determined.
 As
        of
        July 19
 
 Transitional
        Small Business Disclosure Format (Check one):  Yes [  ] No
        [X]
 
 
  
 
 **TABLE
        OF CONTENTS**
 
 
 **PART
                  I**ITEM
                  1.
              DESCRIPTION
                  OF BUSINESS
              2ITEM
                  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
              6ITEM
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE
              6ITEM
                  8A
              CONTROLS
                  AND PROCEDURES
              6**PART
                  III**ITEM
                  9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
                  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
              7ITEM
                  10.
              EXECUTIVE
                  COMPENSATION
              8ITEM
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS
              8ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                  INDEPENDENCE
              9ITEM
                  13.
              EXHIBITS
              9ITEM
                  14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              10**SIGNATURES**
              11
 
 
 
 
  1
  PART
        I
 
 Item1.
              Description
                  of Business
 
 Overview
 
 SFG
        Financial Corporation (the “Company”), formerly named SFG
        Corporation,
 was
        incorporated in Delaware on November 9, 1983.  Since January 2002, we
        have had no operations and our company is a corporate shell. We do not produce
        any products or services. We have no patents, trademarks, licenses, franchises,
        or concessions.
 
 Since
        early 2002, we have sought to engage in a material corporate undertaking,
        including, but not limited to, selected mergers and acquisitions and have
        continued to seek a suitable merger partner.  Our plans since 2002,
        have been to enter into a business combination with an operating company
        in
        exchange for our securities.  Management anticipated seeking out such
        a company through solicitation and contact with persons and firms from various
        places and areas of business.  Our efforts are ongoing.
  We
        have
        no employees except for our Chief Executive Officer, John Dugan. Since, 2001
        Mr.
        Dugan has not received any compensation for his services as our Chief Executive
        Officer. In addition, Mr. Dugan has agreed to contribute his time without
        a
        requirement for future compensation for these efforts.
 
 We
        are
        delinquent in our filings with the U. S. Securities and Exchange Commission
        (“SEC”).  The goal of management is to regain compliance with its
        filing requirements with the SEC.
 
 Our
        current business plan is to complete a process of bringing the Company into
        compliance with state and federal filing requirements, and then take the
        steps
        necessary for the completion of a merger or acquisition transaction. However,
        we
        require additional capital to fund our business plans and to bring our company.
        We are focused on the need to arrange for a merger, acquisition or other
        form of
        business combination that will provide the Company with access to qualified
        management personnel and an operating business which is capable of generating
        revenue and income on an ongoing basis.  We may require more capital
        to undertake our plans and may restructure our Management with new members.
        There can be no assurance that we can accomplish the foregoing. We continue
        to
        modify plans and efforts to raise capital to help fund our plan of operations
        until we are able to fund our operations from our operations.
 
 On
        March
        6, 2007, we entered into an Agreement and Plan of Merger (the “Merger
        Agreement”) pursuant to which our wholly- owned subsidiary will acquire COESfx
        Holdings, Inc. n/k/a XLFX, Inc. (“XLFX”). An amendment to the Merger Agreement
        was entered into on March 30, 2007.  XLFX is the operator of a
        proprietary electronic system used for foreign currency trading. Closing
        of the
        transaction is subject to approval of by XLFX’ shareholders.  As
        consideration for the transaction, shareholders of XLFX and certain parties
        affiliated with them will receive 94,486,144 shares of our common stock and
        rights to receive an additional 267,590,400 shares at such time as we have
        filed
        an Amendment to our Articles of Incorporation to authorize additional
        shares.  The Merger Agreement also provides for the appointment of
        certain individuals currently affiliate to XLFX to our Board of
        Directors.
 
  2
  Need
        for Capital and Risks
 
 We
        are
        subject to many risks, most significant being the risk we may not continue
        as a
        business entity or achieve the necessary level of capital to operate and
        maintain any business on a long term basis.
 
 Item
                  2.
              Description
                  of Property
 
 The
        Company’s offices are located in 150 feet of space in Garden City, New York.
        This space is used without a lease and without cost to us.
 
 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 fourth
        quarter of our fiscal year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  3
  PART  II
 
 Item
                  5.
              Market
                  for Common Equity and Related Stockholder
                  Matters
 
 Our
        Common Stock trades on the Electronic Pink Sheets under the 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 our Common Stock on January 31, 2007 was
        444.
 
 The
        following table reflects the high and low prices (or our common stock on
        a
        quarterly basis for the fiscal years ended January 31, 2007, 2006 and
        2005).
 
 Fiscal  2007
              
              Fiscal
                  2006
              
              Fiscal
                  2005Quarter
                  ended
              
              High
              
              Low
              
              High
              
              Low
              
              High
              
              LowApril
                  30
              
              0.10
              
              0.10
              
              0.15
              
              0.14
              
              0.12
              
              0.12July
                  31
              
              0.10
              
              0.06
              
              0.14
              
              0.08
              
              0.15
              
              0.12October
                  31
              
              0.07
              
              0.06
              
              0.10
              
              0.08
              
              0.14
              
              0.13January
                  31
              
              0.07
              
              0.05
              
              0.10
              
              0.10
              
              0.14
              
              0.14
 
 The
        quotation shown may reflect inter-dealer prices, without mark-up, markdown
        or
        commissions and may not necessarily represent actual transactions.
 
 We
        have
        not paid a cash dividend on its Common Stock and we do not contemplate paying
        any cash dividends on common stock in the near future.
 
 Equity
        Securities Sold Without Registration
 
 No
        securities of the Company were sold without registration during the period
        ended
        January 31, 2007
 
 
 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.
 
  4
  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.
 
 Plan
        of Operation
 
 As
        of
        fiscal year ended January 31, 2007, we were focused upon continuing our Company
        as a viable entity and looking for merger and acquisition candidates. Our
        current plan, is focused on corporate governance considerations in completing
        the process of updating filings with both the SEC and the State of Delaware,
        and
        related efforts.  Management believes that our efforts to find an
        operating company with which a merger, acquisition or other form of business
        combination can be successfully completed will be significantly enhanced
        if we
        maintain a status as a fully compliant public company
 
 On
        March
        6, 2007, we entered into an Agreement and Plan of Merger (the “Merger
        Agreement”) pursuant to which our wholly- owned subsidiary will acquire COESfx
        Holdings, Inc. n/k/a XLFX, Inc. (“XLFX”).  An amendment to the Merger
        Agreement was entered into on March 30, 2007.  XLFX is the operator of
        a proprietary electronic system used for foreign currency trading. Closing
        of
        the transaction is subject to approval of by XLFX’ shareholders.  As
        consideration for the transaction, shareholders of XLFX and certain parties
        affiliated with them will receive 94,486,144 shares of our common stock and
        rights to receive an additional 267,590,400 shares at such time as we have
        filed
        an Amendment to our Articles of Incorporation to authorize additional
        shares.  The Merger Agreement also provides for the appointment of
        certain individuals currently affiliate to XLFX to our Board of Directors.
        There
        can be no assurance that we will be able to successfully consummate this
        transaction.
 
 Liquidity
        and Capital Resources
 
 We
        have
        no revenues.
 
 Payments
        to the Company’s independent registered accounting firm and other professionals
        to bring the Company in compliance with its SEC filing requirements have
        been
        funded by advances to the Company by XFLX, in contemplation of the consummation
        of the merger agreement with XFLX, Inc
 
 We
        believe at least $35,000 is needed to continue for a period of approximately
        12
        months, not undertaking any material transaction, which would require even
        more
        funding.  We may undertake debt or equity financings to meet our
        operating and capital requirements. However, we cannot guarantee that any
        additional equity or debt financing will be available in sufficient amounts
        or
        on acceptable terms. If such financing is not available in sufficient amounts
        or
        on acceptable terms, our financial condition may be adversely affected. In
        addition, equity financing may result in dilution to existing stockholders
        and
        may involve securities that have rights, preferences, or privileges that
        are
        senior to our common stock, and any debt financing obtained must be repaid
        regardless of whether or not we generate profits or cash flows from our business
        activities.
 
  5
  Item
                  7.
              Financial
                  Statements
 
 Financial
        statements appear at the end of this Report.
 
 
 
 Item
                  8.
              Changes
                  In And Disagreements with Accountants On Accounting 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 ensure 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 officer, 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 ensure
        compliance.
  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
 
 
 
 
 
  6
  **PART
        III**
 
 
 Item
                  9.
              Directors,
                  Executive Officers, Promoters and Control Persons; Compliance
                  with16(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
              
              PositionJohn
                  A. Dugan
              
              68
              
              Chairman
                  and Chief Executive OfficerAnthony
                  S. Pintauro
              
              79
              
              Director
 
 John
        A. Dugan
 
 Mr.
        Dugan
        has served in various positions with the Company 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. He was a
        Marketing Executive having worked at the Service Bureau Corporation .a former
        Division of the International Business Machines Corporation (IBM) 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
        1973
        to 1984. He is a graduate of the United States Naval Academy.
 
 Anthony
        S. Pintauro
 
 Mr.
        Pintauro has been a Director of our company since April 1989.He is a retired
        computer leasing executive having served as National Account Manager with
        International Business machines Corporation (IBM) from 1947 to 1966.He later
        served as an executive with DPF Incorporated, then a New York Stock Exchange
        Company, as Vice President Marketing, Computer Leasing Division from 1973
        to
        1980. Mr. Pintauro is a graduate of Manhattan College with a Bachelors Degree
        in
        Electrical Engineering.
  (b)
                  Significant Employees
              None
 (c)
                  Family Relationships
              None
 (d)
                  Involvement in certain legal proceedings
              None
 (e)
                  Audit committee financial expert
              None
 
 Since
        we
        are a shell company and have no operating business activities, there are
        no
        committees of the Board of Directors.
 
  7
  We
        have
        not adopted a Code of Ethics because we have no operations, financial
        activities, or even material non-financial activities.
 
 
 Compliance
        with section 16(a) of the Exchange Act
 
 Section
        16(a) of the Securities Exchange Act of 1934 requires our directors and
        executive officers and persons who beneficially own more than ten percent
        of a
        registered class of our equity securities to file with the SEC initial reports
        of ownership and reports of change in ownership of common stock and other
        equity
        securities of our company. Officers, directors and greater than ten percent
        stockholders are required by SEC regulations to furnish us with copies of
        all
        Section 16(a) forms they file. None of the required persons have filed any
        reports during the fiscal year ended January 31, 2007.
 
 
 Item
                  10.
              Executive
                  Compensation
 
 **SUMMARY
        COMPENSATION TABLE**
 
 None
        of
        our officers received or accrued compensation during the fiscal years ending
        January 31, 2007, 2006 and 2005.
 
 Outstanding
        Equity Awards at Fiscal Year-End Table.
  No
        options were granted to our executive officers during the fiscal year ended
        January 31, 2007.
  Director
        Compensation
  Our
        directors did not receive any compensation for serving in their capacities
        as
        the Company’s directors.
 
 
 Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and
                  Management
 
 The
        following table contains information as of January 31, 2007 as to the beneficial
        ownership of the Company’s Common Stock  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, 2007
 
 
  8
  
 Name
                  and Address of
              
              Shares
              
              Percentage
                  of
                Ownership
                  (1)John
                  A. Dugan
                85
                  Amherst Street
                Garden
                  City, New York 11530
              
              503,500
              
              9.13%Anthony
                  S. Pintauro
                18
                  Maunakea Street
                Sag
                  Harbor, New York 11963
              
              691,000
              
              12.53%Irv
                  J. Fischer
                6317
                  Via Primo Street
                Lake
                  Worth, Florida 33467
              
              400,000
              
              7.25%Nicholas
                  Gugliuzza
                527
                  Meadow Drive
                Buffalo,
                  New York 14224
              
              500,000
              
              9.06%All
                  Directors and Officers
              
              1,194,000
              
              22.66
                  %
 
 (1)
              Based
                  upon 5,513,856 shares issued and outstanding as of January 31,
                  2007
 
 Item
                  12.
              Certain
                  Relationships and Related
                  Transactions
 
 Since
        the
        beginning of the Company’s last fiscal year, there have been no transaction or
        any currently proposed transaction, in which the Company was or is to be
        a
        participant and the amount involved exceeds the lesser of $120,000 or one
        percent of the average of the small business issuer’s total assets at year-end
        for the last three completed fiscal years, and in which any related person
        had
        or will have a direct or indirect material interest.
 
 
 Item
                  13.
              Exhibits
 
 **Number**
              
              **Description**3.1
              
              Articles
                  of Incorporation *3.2
              
              Bylaws  *31.1
              
              Certification
                  by Chief Executive Officer and Principal Accounting Officer, required
                  by
                  Rule 13a-14(a) or 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) or Rule 15d-14(b) of the Exchange Act and Section
                  1350 of
                  Chapter 63 of Title 18 of the United States
                  Code*
 
 *
        Filed
        herewith
 
  9
  Item
                  14.
              Principal
                  Accountant Fees and Services
 
 Fiscal
                  Year 2007
              
              Fiscal
                  Year 2006
              
              Fiscal
                  Year 20051.Audit
                  Fees
              
              $7,500
              
              $7,500
              
              $7,5002
                  Audit Related Fees
              
              None
              
              None
              
              None3.Tax
                  Fees
              
              None
              
              None
              
              None4.All
                  Other Fees
              
              None
              
              None
              
              None5.
                  No audit committee6.None
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  10
  **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 CORPORATIONDate:
                  July 20, 2007
              By: */s/ John A.
                  Dugan*John
                  A. DuganChairman,
                  Chief Executive Officer and
                Principal
                  Accounting Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 11





























**SFG
      FINANCIAL CORPORATION**





**COMPARATIVE
      FINANCIAL STATEMENTS**





**FOR
      THE YEAR ENDING JANUARY 31, 2007 and 2006**
























































**SFG
      FINANCIAL CORPORTATION**





CONTENTS








PageIndependent
                accountant’s report
            F-1Comparative
                financial statements:Comparative
                balance sheets
            F-2Comparative
                statements of income and expenses
            F-3Comparative
                statements of stockholders equity (deficiency)
            F-4Comparative
                statements of cash flows
            F-5Notes
                to the comparative financial statements
            F-6
                - F-7



























































**THOMAS
      BAUMAN**


**CERTIFIED
      PUBLIC ACCOUNTANT**


**4
      SCHAEFFER STREET**


**HUNTINGTON
      STATION, NY 11746**


**Telephone
      (631) 427-4789     Fax (631)
      424-3649**











To
      the
      Board of Directors and Stockholders


SFG
      Financial Corporation


Garden
      City, New York





INDEPENDENT
      AUDITOR’S REPORT





I
      have
      audited the accompanying balance sheets of SFG Financial Corporation (A
      Development Stage Company) as of January 31, 2007 and 2006, and the related
      Statements of Operations, Stockholders’ Equity, and Cash Flows for the years
      then ended.  These financial statements are the responsibility of the
      Company’s management.  My responsibility is to express an opinion on
      these financial statements based on my audit.





I
      conducted the audit in accordance with standards established by the Public
      Company Accounting Oversight Board.  Those standards require that I
      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.  I believe
      that my audit provides a reasonable basis for my opinion.





In
      my
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of SFG Financial Corporation (A
      Development Stage Company) as of January 31, 2007 and 2006, and the results
      of
      its operations and cash flows for the years then ended, in conformity with
      generally accepted accounting principles.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern.  As discussed in Note 4 to the
      financial statements, the Company has had limited operations and has not
      commenced planned principle operations.  The Company’s financial
      position and operating results raise substantial doubt about its ability to
      continue as a going concern.  Management’s plans regarding those
      matters also are described in Note 4.  The financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.











Thomas
      Bauman, C.P.A.


July
      13,
      2007




F-1





**SFG
      FINANCIAL CORPORATION**


**BALANCE
      SHEETS**


**AS
      OF JANUARY 31,**





**2007**
            
            
            **2006****ASSETS****Current
                Assets**Cash
                on hand
            
            $
            20
            
            
            $
            20**Total
                Current Assets**
            
            
            20
            
            
            
            20**Total
                Assets**
            
            
            20
            
            
            
            20**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIENCY)****Liabilities**Accounts
                payable and accrued expenses
            
            
            67,344
            
            
            
            90,280Due
                to related parties
            
            
            22,869
            
            
            
            20,892Loan
                payable
            
            
            76,216
            
            
            
            -**Total
                Liabilities**
            
            
            166,429
            
            
            
            111,172**STOCKHOLDERS'
                EQUITY (DEFICIENCY)**Common
                stock; $.001 par value 100,000,000
                shares  authorized;5,413,856
                and 4,313,856 shares issued; 5,413,856 shares and4,313,856 shares outstanding at January 31, 2007 and 2006,
                respectively
            
            
            5,514
            
            
            
            4,314Additional
                paid in capital
            
            
            2,502,351
            
            
            
            2,425,701Retained
                earnings
            
            
            (2,674,274
            )
            
            
            (2,541,167
            )**Total
                Stockholders' Equity (Deficiency)**
            
            
            (166,409
            )
            
            
            (111,152
            )**Total
                Liabilities and Stockholders' Equity (Deficiency)**
            
            $
            20
            
            
            $
            20







See
        accompanying notes to the financial statements
 F-2


**SFG
      FINANCIAL CORPORATION**


**STATEMENTS
      OF INCOME AND EXPENSES**


**FOR
      YEARS ENDED JANUARY 31,**





**2007**
            
            
            **2006****Revenue:**Sales
            
            $
            -
            
            
            $
            -**Operating
                Expenses**Consulting
                fees
            
            
            69,875
            
            
            
            408Filing
                fees
            
            
            7,260
            
            
            
            1,060Finance
                charges
            
            
            210Office
                expenses
            
            
            2,503
            
            
            
            12,000Professional
                fees
            
            
            52,221Travel
            
            
            350
            
            
            
            15**Total
                Operating Expenses**
            
            
            132,419
            
            
            
            13,483**Income
                (Loss) From Operations**
            
            
            (132,419
            )
            
            
            (13,483
            )**Provision
                for Taxes**State
                corporate taxes
            
            
            688
            
            
            
            155**Net
                Income (Loss)**
            
            $
            (133,107
            )
            
            $
            (13,638
            )**Earnings
                Per Share**
            
            $
            (0.027
            )
            
            $
            (0.003
            )**Weighted
                Average of Number of Common Shares Outstanding**
            
            
            4,913,856
            
            
            
            4,313,856








See
          accompanying notes to the financial statements
 F-3


**SFG
      FINANCIAL CORPORATION**


**STATEMENTS
      OF STOCKHOLDERS'  EQUITY (DEFICIENCY)**








CAPITALCOMMON
                STOCK
            
            
            IN
                EXCESS
            
            
            RETAINEDSHARES
            
            
            AMOUNT
            
            
            OF
                PAR
            
            
            EARNINGS**Balance
                at January 31, 2002**
            
            
            4,268,856
            
            
            $
            4,269
            
            
            $
            2,402,408
            
            
            $
            (2,487,405
            )Shares
                issued for services
            
            
            25,000
            
            
            
            25
            
            
            
            20,913
            
            
            
            -Net
                Income (Loss) for year ended January 31, 2003
            
            
            
            
            
            $
            -
            
            
            
            -
            
            
            
            7,670**Balance
                at January 31, 2003**
            
            
            4,293,856
            
            
            
            4,294
            
            
            
            2,423,321
            
            
            
            (2,479,735
            )Net
                Income (Loss) for year ended January 31, 2004
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (10,361
            )Prior
                Period Adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (16,150
            )**Balance
                at January 31, 2004**
            
            
            4,293,856
            
            
            
            4,294
            
            
            
            2,423,321
            
            
            
            (2,506,246
            )Net
                Income (Loss) for year ended January 31, 2005
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            (23,201
            )Prior
                Period Adjustment
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            1,918Restricted
                stock issued for services
            
            
            20,000
            
            
            
            20
            
            
            
            2,380
            
            
            
            -**Balance
                at January 31, 2005**
            
            
            4,313,856
            
            
            
            4,314
            
            
            
            2,425,701
            
            
            
            (2,527,529
            )Net
                Income (Loss) for year ended January 31, 2006
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            (13,638
            )**Balance
                at January 31, 2006**
            
            
            4,313,856
            
            
            
            4,314
            
            
            
            2,425,701
            
            
            
            (2,541,167
            )Net
                Income (Loss) for year ended January 31, 2007
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            (133,107
            )Restricted
                stock issued for services
            
            
            1,200,000
            
            
            
            1,200
            
            
            
            76,650
            
            
            
            -**Balance
                at January 31, 2007**
            
            
            5,513,856
            
            
            
            5,514
            
            
            
            2,502,351
            
            
            
            (2,674,274
            )





See
          accompanying notes to the financial statements
 F-4


**SFG
      FINANCIAL CORPORATION**


**STATEMENTS
      OF CASH FLOWS**


**AS
      OF JANUARY 31,**





**2007**
            
            
            **2006****Cash
                flow from operating activities:****Net
                income (loss)**
            
            $
            (133,107
            )
            
            $
            (13,638
            )**Adjustments
                to reconcile net income to net cash provided by operating activities:****Changes
                in assets and liabilities:**Increase
                (decrease) in accounts payable
            
            
            (22,936
            )
            
            
            4,000Increase
                (decrease) in due to related parties
            
            
            1,977
            
            
            
            9,638Increase
                (decrease) in loan payable
            
            
            76,216
            
            
            
            -**Net
                cash provided by operations**
            
            
            (77,850
            )
            
            
            -**Cash
                flow from investing activities:**Purchase
                of  fixed assets
            
            
            -
            
            
            
            -**Cash
                provided from (for) investing activities**
            
            
            -
            
            
            
            -**Cash
                flow from financing activities:**Increase
                (decrease) in Common stock
            
            
            1,200Increase
                (decrease) in additional paid in capital
            
            
            76,650
            
            
            
            -**Cash
                flow provided from (for) financing activities**
            
            
            77,850
            
            
            
            -**Net
                increase in cash and cash equivalent**
            
            
            -
            
            
            
            -**Cash
                and cash equivalents at beginning of year**
            
            
            20
            
            
            
            20**Cash
                and cash equivalents at end of year**
            
            $
            20
            
            
            $
            20**Cash
                paid for interest and income taxes as follows:**Interest
            
            $
            -
            
            
            $
            -Corporate
                income taxes paid
            
            $
            590
            
            
            $
            155

















See
          accompanying notes to the financial statements
 F-5


**SFG
      FINANCIAL CORPORATION**


**NOTES
        TO THE COMPARATIVE FINANCIAL STATEMENTS**








**1.
      Significant accounting policies:**





**a.**
            **Organization
                and Business Operations**





SFG
      Financial Corporation (the “Company”) was organized in November 1983 as a
      Delaware corporation.  The Company has since ceased normal operation,
      and is currently a shell with no real business activity. It has been kept active
      as a holding company whose purpose is to seek out and attract partners for
      possible merger or acquisition.


**b.**
              **Cash
                    and cash equivalents**


The
      Company considers all highly liquid debt instruments purchased with maturity
      of
      three months or less to be cash equivalents.





**c.**
            **Use
                of estimates**





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the
      period.  Actual results could differ from these
      estimates.


**d.**
              **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.





**e.**
            **Income
                taxes**





Income
      taxes are accounted for by the asset/liability approach in accordance with
      FAS-109 (Accounting for Income Taxes). The provision for income taxes represents
      the total income taxes paid or payable for the current year. As of October
      31,
      2006 the Company did not have a deferred tax asset or liability.








**2.  Accounts
      payable and accrued expenses**





Accounts
      payable and accrued expenses represent expenses that the Company has incurred
      to
      remain as an active shell and seek out possible business partners for a
      merger.





F-6


**SFG
      FINANCIAL CORPORATION**


**NOTES
        TO THE COMPARATIVE FINANCIAL STATEMENTS**








**3.  Loan
      payable**





As
      discussed in note 6, the Company is looking for a potential merger partner.
      The
      Company is currently in negotiation with an entity in the financial services
      industry to form a merged corporation.  The transaction would be
      accounted for as a Type (B) Reorganization as defined in the IRC Code Section
      368. Although the merged entity will remain ***SFG Financial
      Corporation***, a majority of the authorized issued and outstanding
      Common Shares of the Company will be owned by the Merger Partner.  In
      connection with these negotiations the Company has received a loan from an
      intermediary party to be used to pay certain expenses in connection with the
      merger. The balance of this loan will be converted into shares of 5,513,856
      shares of SFG common stock before the merger. If the merger fails to occur,
      the
      loan will be repaid in cash and common stock. The initial deposit made in August
      2006 was in the amount of $100,000. The balance of this deposit at January
      31,
      2007 is $76,216. The loan does not accrue interest.








**4.  Related
      party transactions**





The
      Company does not maintain a bank account. The payables of the Company are being
      paid by some of the stockholders. The amounts paid by these stockholders on
      behalf of the company are represented on the Balance sheet as Due to related
      parties. As of January 31, 2007 and 2006 the total due to related parties was
      $22,869 and $20,892 respectively. Interest on these loans has not been
      accrued.




Certain
      stockholders of the Company have received compensation, in the form of
      restricted common stock, for various consulting services provided. The amount
      of
      this compensation for the year ended January 31, 2007 and January 31, 2006
      was
      $69,875 and $0 respectively.








**5.  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.  As stated in Note 1, the Company has elected to
      implement a business plan that has allowed it to continue operations while
      identifying a merger partner. There can be no assurance that a merger will
      be
      completed.






**6.  Subsequent
      event**





The
      Company is currently negotiating a reverse merger with a company in the
      technology industry. When the merger is consummated the current shareholders
      of
      the Company will own 3% of the new company outstanding common stock. The merger
      partner company has a class of preferred stock which contains rights to acquire
      preferred stock in the newly merged company. If all rights are executed existing
      shareholders in the Company will own approximately 2.32% of the issued stock
      in
      the new company.








F-7