UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
  FORM
        10-KSB
 (Mark
        One)
 
 [X]
              ANNUAL
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
  FOR
        THE
        FISCAL YEAR ENDED **JANUARY
        31, 2005**
 
 OR
 
 [  ]
              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** ****
 (Name
        of
        small business issuer in its charter)
 
 **Delaware**
              **13-3208094**(State
                  or jurisdiction of
                incorporation
                  or organization)
              (I.R.S.
                  Employer
                Identification
                  No.)
 
 **85
        Amherst Street, Garden 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, $.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 contained in the 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 Exchange Act). Yes [X] No [ ]
 
 Issuer
        had revenues of $ -0- for the fiscal year ended January 31, 2005.
 
 The
        aggregate market value of the voting stock held by non-affiliates cannot
        be
        readily determined.
 
 As
        of
        December 11, 2006, the Registrant had 5,513,856 shares of common stock
        outstanding.
 
 Transitional
        Small Business Disclosure Format (Check one): Yes [  ] No
        [X]
 
  -1-
   **TABLE
        OF CONTENTS**
 
 PART
                  IITEM
                  1. DESCRIPTION OF BUSINESSITEM
                  2. DESCRIPTION OF PROPERTYITEM
                  3. LEGAL PROCEEDINGSITEM
                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                  HOLDERSPART
                  IIITEM
                  5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERSITEM
                  6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATIONITEM
                  7. FINANCIAL STATEMENTSITEM
                  8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL
                  DISCLOSUREITEM
                  8A. CONTROLS AND PROCEDURESPART
                  IIIITEM
                  9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL
                  PERSONS AND
                CORPORATE GOVERNANCE;COMPLIANCE
                  WITH SECTION 16(a) OF THE EXCHANGE
                  ACTITEM
                  10. EXECUTIVE COMPENSATIONITEM
                  11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT
                AND RELATED STOCKHOLDER MATTERSITEM
                  12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
                  AND DIRECTOR INDEPENDENCEITEM
                  13. EXHIBITSITEM
                  14. PRINCIPAL ACCOUNTANT FEES AND
                  SERVICESSIGNATURES
 
  -2-
  
 PART
        I
  Item
        1. Description of Business
  Past
        Business Development
 
 SFG
        Financial Corporation (the "Company"), formerly named SFG Corporation, was
        incorporated in Delaware on November 9, 1983. Since January 2002, the Company
        has conducted business as a corporate shell. The Company provides no products
        or
        services and has continued to seek a suitable merger or acquisition. We have
        no
        patents, trademarks, licenses, franchises, or concessions. We had no backlog
        of
        orders as of January 31, 2005.
 
 The
        Company employs one person on a full time basis (our C.E.O., John Dugan).
        The
        person has not been compensated because of the non-availability of funds
        and has
        agreed to contribute his time without a requirement for future compensation
        for
        these efforts. The Company considers its relations with its employee to be
        good.
        The employee
        is not represented by a collective bargaining agreement or other
        obligations.
 
 Early
        2002 Business Plans, Forward
 
 Since
        early 2002, our Company has sought to engage in a material corporate
        undertaking, including, but not limited to, selected mergers and acquisitions.
        We have been in the developmental stage for many years, and this applies
        for the
        period since early 2002, and we have no operations other than consideration
        of
        possible merger or acquisition related transactions, from time to time.
 
 Originally,
        the computer leasing business we sought to undertake was subject to numerous
        risk factors, including rapidly changing technology, increased costs of capital,
        as well as competition from larger companies, and this has not
        changed.
 
 We
        intended, since at least 2002, 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. This is ongoing.
 
 The
        analysis of any business opportunity will be undertaken by, or under the
        supervision of, our Management, which does not include a professional business
        analyst.
 
 The
        Securities Exchange Act of 1934, as amended (sometimes “Exchange Act”), requires
        that any merger or acquisition candidate comply with certain reporting
        requirements, which includes providing audited financial statements to be
        included in the reporting filings made under the Exchange Act.
 
 We
        have
        determined not to acquire or merge with any company without audited financial
        statements, or the capability to supply them within the required period of
        time
        after closing of any proposed transaction.
 
 While
        the
        intentions were pursued since 2002, our Company was unable to timely comply
        with
        the requirements of reporting, including financial statement disclosures.
        We
        lacked monies to do so and Management infrastructure or support.
 
 We
        had no
        properties at that time (2002) and had no agreements to acquire any properties.
 
 We
        used
        offices at no cost.
   -3-
   Current
        Status-Summary
 
 The
        Company is deficient in its filings with the U.S. Securities and Exchange
        Commission (“SEC”). The current goal of Management is to update the SEC flings,
        and we are in the process of completing necessary audits and reports, with
        the
        assistance of professionals, including accountants and lawyers.
 
 At
        the
        same time, the Company intends to continue to pursue its business, above,
        while
        it still needs and is seeking additional capital to meet cash flow requirements.
  Current
        and Prospective Business Plans and Pursuits
 
 The
        current business plan, in summary, is to complete a process of bringing the
        Company into compliance with state and federal filing requirements, such
        as the
        SEC, and then to take steps for a merger or acquisition transaction to have
        an
        operating business as part of 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 that is compliant with all
        state
        and federal laws and regulations, and which is capable of generating revenue
        and
        income on an ongoing basis. We are currently seeking additional employees
        and
        consultants, although the ability to pay them does not currently exist. We
        may
        require more capital to undertake our plans. We may restructure our Management
        with new members.
 
 As
        discussed above, our business plan is also tied into the need for capital
        besides starting cash flow. We continue to modify plans and efforts to raise
        capital to help fund our various operations until we reach, if possible,
        the
        position of being able to self finance from cash flow. We do not, however,
        have
        any steady source of cash flow.
 
 One
        of
        the first major efforts, following regulatory compliance tasks, specifically
        updating our SEC filings, will be to undertake an acceptable merger or
        acquisition transaction and later establish relations with investment bankers
        and brokers as part of our plans.
 
 We
        are
        also looking at venture capital opportunities, joint ventures, and similar
        transactions. We plan to keep investors and the market informed about
        Company developments by future press releases and other communications,
        which we hope to start in 2007.
 
 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 long term.
  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 the year ended, for which this Report applies.
 
 
 -4-
   PART
        II
  Item
        5. Market for Common Equity and Related Stockholder
        Matters
  The
        Company's Common Stock trades on the Electronic Pink Sheets under the symbol
        SFGC.PK.
 
 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 on December 11,
        2006
        was 443.
 
 The
        following table reflects the high and low prices (in $ per share) for the
        Company's common stock, on a quarterly basis, for fiscal years ended January
        31,
        2004, 2005 and 2006.
 
 **Fiscal
                    2006**
              **Fiscal
                  2005**
              **Fiscal
                  2004**Quarter
                  ended:
              High
              Low
              High
              Low
              High
              LowApril
                  30
              .15
              .14
              .12
              .12
              .10
              .06July
                  31
              .14
              .08
              .15
              .12
              .15
              .10October
                  31
              .10
              .08
              .14
              .13
              .17
              .15January
                  31
              .10
              .10
              .14
              .14
              .16
              .12
  The
        quotations shown may reflect inter-dealer prices, without retail mark-up,
        mark-down or commission and may not necessarily represent actual
        transactions.
 
 The
        Company has 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.
 
 -5-
 Equity
        Securities Sold Without Registration
 
 The
        following securities of our Company were sold without Registration for the
        period ended January 31 of the fiscal year covered by this Report:
 
 None
 
 General
        Information
 
 All
        of
        the above noted shares, if any, were issued directly by the Company, and
        no
        commissions or fees were paid in connection with any of these transactions.
        The
        Company gave the purchasers the opportunity to ask questions and receive
        answers
        concerning the terms and conditions of the transactions and to obtain any
        additional information which the Company possessed or could acquire without
        unreasonable effort or expense that is necessary to verify the accuracy of
        information furnished; the Company advised the purchaser of the limitations
        on
        resale, and neither the Company nor any person acting on its behalf sold
        the
        securities by any form of general solicitation or general advertising; and/or
        the Company exercised reasonable care to assure that the purchasers of the
        securities are not underwriters within the meaning of section 2(11) of the
        Securities Act of 1933, as amended, in compliance with Rule 502.
  Item
        6. Management's Discussion and Analysis or Plan of
        Operation
  Plan
        of
        Operation
 
 At
        the
        time of the period covered by this Report, we were focused upon continuing
        our
        Company as a viable entity, looking for merger and similar acquisition
        candidates, and we now continue to do so.
 
 Our
        current plan, in summary, is focused primarily on corporate governance
        considerations in completing the process of updating filings with both
        applicable state and federal agencies, as needed, namely the SEC and the
        State
        of Delaware, and related efforts. Management believes that its 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 the
        Company maintains a status as a fully compliant public company.
 
 The
        first
        part is compliance with laws and regulations, primarily updating and keeping
        current filings with the SEC, and next establishing a business by making a
        merger, acquisition or similar transaction with an operating
        company.
 
 We
        believe at least $25,000 is needed to continue for a period of approximately
        12
        months, not undertaking any material transaction, which would require even
        more
        funding. We anticipate obtaining funding to address cash flow needs through
        private placements, loans and similar matters.
 
 Our
        plan
        is subject to many risks. No assurance of success can be given. We are subject
        to many risks.
 
 Forward
        Looking Statements
 
 The
        foregoing Management’s Discussion and Analysis or Plan of Operation and other
        parts of this Report may contain “forward looking statements” within the meaning
        of Rule 175 under the Securities Act of 1933, as amended, and Rule 3b-6 under
        the Securities Act of 1934, as amended, including statements regarding, among
        other items, the Company business, the Company strategies, projections, and
        anticipated trends in the Company and in any industry in which it operates.
        The
        words “believe,” “expect,” “anticipate,” “intends,” “forecast,” “project,” and
        similar expressions identify forward-looking statements. These forward-looking
        statements are based largely on the Company expectations and are subject
        to a
        number of risks and uncertainties, certain of which are beyond the Company’s
        control. The Company cautions these statements are further qualified by
        important factors that could cause actual results to differ materially from
        those in the forward looking statements. The Company disclaims any intent
        or
        obligation to update “forward looking statements.”
  -6-
   Item
        7. Financial Statements
  MANAGEMENT’S
            REPORT ON INTERNAL CONTROL OVER FINANCIAL
            REPORTING
 
 Our
            management is responsible for establishing and maintaining adequate internal
            control over financial reporting, as such term is defined in Rules 13a-15(f)
            and
            15d-15(f) under the Securities Exchange Act of 1934, as amended. Our
            internal
            control over financial reporting was designed to provide reasonable assurance
            to
            management and our Board of Directors regarding the reliability of financial
            reporting and the fair presentation of our financial statements. With
            the
            participation of our management, including our Chief Executive Officer
            and Chief
            Financial Officer, we conducted an evaluation of the effectiveness of
            our
            internal control over financial reporting based on the framework in *Internal
            Control-Integrated Framework* issued
            by
            the Committee of Sponsoring Organizations of the Treadway Commission
            (COSO).
            Based on our evaluation, our management concluded that our internal control
            over
            financial reporting was effective as of January 31, 2006.
  Our
            management’s assessment of the effectiveness of our internal control over
            financial reporting for SFG Financial Corporation, as of January 31,
            2005 has
            been audited by Thomas Bauman C.P.A., an independent registered public
            accounting firm, as stated in its report which is included herein.
 By:
                  /s/ John
                    A.
                    DuganChief
                    Executive Officer
                    Principal
                      Executive, Accounting and Financial
                      Officer
 -7-
 Report
              of Independent Registered Public Accounting
              Firm
 To
              The
              Board of Directors and Shareholders,
  SFG
              Financial Corporation:
  We
              have
              audited management’s assessment, included in the accompanying Management’s
              Report on Internal Control over Financial Reporting, that SFG Financial
              Corporation (the "Company") maintained effective internal control over
              financial
              reporting as of January 31, 2005, based on criteria established in *Internal
              Control-Integrated Framework* issued
              by
              the Committee of Sponsoring Organizations of the Treadway Commission
              (COSO). The
              Company’s management is responsible for maintaining effective internal control
              over financial reporting and for its assessment of the effectiveness
              of internal
              control over financial reporting. Our responsibility is to express
              an opinion on
              management’s assessment and an opinion on the effectiveness of the Company’s
              internal control over financial reporting based on our audit.
  We
              conducted our audit in accordance with the standards of the Public
              Company
              Accounting Oversight Board (United States). Those standards require
              that we plan
              and perform the audit to obtain reasonable assurance about whether
              effective
              internal control over financial reporting was maintained in all material
              respects. Our audit included obtaining an understanding of internal
              control over
              financial reporting, evaluating management’s assessment, testing and evaluating
              the design and operating effectiveness of internal control, and performing
              such
              other procedures as we considered necessary in the circumstances. We
              believe
              that our audit provides a reasonable basis for our opinion.
  A
              company’s internal control over financial reporting is a process designed to
              provide reasonable assurance regarding the reliability of financial
              reporting
              and the preparation of financial statements for external purposes in
              accordance
              with generally accepted accounting principles. A company’s internal control over
              financial reporting includes those policies and procedures that (1)
              pertain to
              the maintenance of records that, in reasonable detail, accurately and
              fairly
              reflect the transactions and dispositions of the assets of the company;
              (2)
              provide reasonable assurance that transactions are recorded as necessary
              to
              permit preparation of financial statements in accordance with generally
              accepted
              accounting principles, and that receipts and expenditures of the company
              are
              being made only in accordance with authorizations of management and
              directors of
              the company; and (3) provide reasonable assurance regarding prevention
              or timely
              detection of unauthorized acquisition, use, or disposition of the company’s
              assets that could have a material effect on the financial statements.
  Because
              of its inherent limitations, internal control over financial reporting
              may not
              prevent or detect misstatements. Also, projections of any evaluation
              of
              effectiveness to future periods are subject to the risk that controls
              may become
              inadequate because of changes in conditions, or that the degree of
              compliance
              with the policies or procedures may deteriorate.
  In
              our
              opinion, management’s assessment that SFG Financial Corporation maintained
              effective internal control over financial reporting as of January 31,
              2005, is
              fairly stated, in all material respects, based on criteria established
              in *Internal
              Control-Integrated Framework* issued
              by
              the Committee of Sponsoring Organizations of the Treadway Commission
              (COSO).
              Also, in our opinion, SFG Financial Corporation maintained, in all
              material
              respects, effective internal control over financial reporting as of
              January 31,
              2005, based on criteria established in *Internal
              Control-Integrated Framework* issued
              by
              the Committee of Sponsoring Organizations of the Treadway Commission
              (COSO).
  We
              also
              have audited, in accordance with the standards of the Public Company
              Accounting
              Oversight Board (United States), the accompanying financial statements
              of the
              Company as listed in the accompanying index and our report dated December
              15,
              2006 expressed an unqualified opinion on those financial statements.
              Our report
              dated December 15, 2006 contains an explanatory paragraph that states
              that 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
              principal operations. The Company’s financial position and operating results
              raise substantial doubt about its ability to continue as a going concern.
              Management’s plan 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.
 Date: January
                      5, 2007
                    By:
                    /s/ Thomas
                      BaumanThomas
                      Bauman C.P.A.
  -8-
 The
        Financial Statements listed on the accompanying index are filed with and
        included as a part of this Report on the pages which follow;
  Independent
          Auditor's Report
  Balance
          Sheets as of January 31, 2006 and 2005
  Statements
          of Income and Expenses  for the Years Ended
          January 31, 2006 and 2005
  Statements
          of Stockholders ’
Equity
          (Deficiency) for the Years Ended January 31, 2006, 2005, 2004 and
          2003
  Statements
          of Cash Flows for the Years Ended January 31, 2006
          and 2005
  Notes
          to Comparitive Financial Statements
 Item
        8. Changes In and Disagreements with Accountants On Accounting And
        Financial Disclosure
  None
 
 ITEM
        8a.Controls
        and Procedures
  We
        do not
        believe there were any matters involving controls or procedures to report
        as of
        the period covered by this Report. However, we have performed, under the
        supervision and with the participation of the Company’s Management, including
        the CEO acting as CEO and CFO, a review of the effectiveness of the design
        and
        operation of the Company’s disclosure controls and procedures. Based on that
        evaluation, Management concluded that the Company’s disclosure controls and
        procedures need to be improved, primarily by finding ways to assure that
        our
        reports to the SEC are filed on a current basis. The Company recognizes the
        need
        to improve controls, and while it does not currently have any material
        operations, if it were to commence or undertake material operations or
        transactions, it would be prudent to have previously instituted
        controls. Management believes it will do so in the near future. There have
        been
        no significant changes in the Company's internal controls or in other factors
        that could significantly affect internal controls subsequent to year
        end.
 
 
 -9-
 
 
 PART
        III
 
 Item
        9. Directors, Executive Officers, Promoters, Control Persons and
        Corporate Governance;
 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. The
        Directors named below will serve until the next annual meeting of stockholders
        and until their successors are duly elected and have been qualified. Officers
        will hold their positions at the will of the Board of Directors, absent any
        employment agreement, of which none currently exist.
 
 **Name**
              **Age**
              **Position**John
                  A. Dugan
              67
              Chairman
                  and Chief Executive OfficerAnthony
                  S. Pintauro
              78
              Director
   (b)
                    Significant Employees
                None(c)
                    Family Relationships
                None(d)
                    Involvement in certain legal proceedings
                None(e)
                    Audit committee/financial expert
                None
 
 Since
        the
        Company is a shell, it has no operating business activities and there are
        no
        committees of the Board of Directors.
  We
        have
        not adopted a Code of Ethics. We may do so for the new year, 2007. Our lack
        of
        operations, financial activities, or even material non-financial activities,
        and
        cash flow problems, and little or no contractual relations, have suggested
        to us
        that a Code of Ethics should be delayed until the Company has transactions
        and
        more members of Management and such noted activities aforesaid.
  -10-
 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 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. He
        graduated from 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 a National Account Manager with
        International Business Machines Corporation (IBM) from 1960 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.
  Compliance
        with Section 16(a) of the Exchange Act
 
 Section
        16(a) of the Securities Exchange Act of 1934 requires directors, certain
        officers and persons holding 10% or more of common stock to file reports
        regarding their ownership and regarding their acquisitions and dispositions
        of
        common stock with the SEC. Such persons are required by SEC regulations to
        furnish us with copies of all Section 16(a) forms they file.
 
 Item
        10. Executive Compensation
  **Name
                  and Principal Position**
              **For
                  Year**
              **Salary**John
                  A. Dugan Chairman/CEO
              Fiscal
                  2004
              $
                  0Fiscal
                  2005
              $
                  0Fiscal
                    2006
              $
                0
 
 The
        Company does not have a Stock Option Plan and no warrants or other forms
        of
        Executive Compensation exist.
   -11-
   Item
        11. Security Ownership of Certain Beneficial Owners and Management
        and Related Stockholder Matters
  The
        following table contains information 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 the last day of the period covered by this Report.
 
 
 **Name
                  and Address of**
              **Shares**
              **Percentage
                  of Ownership (1)**Sol
                  Dorfberger
              270,000
              6.26%2323
                  Quentin RoadBrooklyn,
                  New York 11220John
                  A. Dugan
              253,500
              5.88%85
                  Amherst StreetGarden
                  City, New York 11530Anthony
                  S. Pintauro
              477,125
              11.06%18
                  Maunakea StreetSag
                  Harbor, New York 11963Laurence
                  D. Levin
              253,500
              5.88%1621
                  Covington RoadYardley,
                  PA 19067-0962Nicholas
                  Gugliuzza
              500,000
              11.59%527
                  Meadow DriveBuffalo,
                  New York 14224-1517All
                  Directors and Officers
              730,625
              16.94%
 
 (1)
        Shares shown in this table are owned of record and/or beneficially.
 (2)
        No
        options, warrants, rights, conversion privileges or similar obligations exist.
 
 -12-
 Item
        12. Certain Relationships and Related
        Transactions
  For
        the
        fiscal year covered by this Report, there has not been any material
        transaction between the Company and any of its officers and/or Directors.
        From
        time to time, the Company may have debts due to certain related stockholders
        or
        officers, but we do not believe these are extraordinary or material in
        nature.
  Item
        13. Exhibits
  Exhibits.
   -13-
   EXHIBIT
        INDEX
 
 
 **Number**
              **Description**3.1
              Articles
                  of Incorporation (incorporated by reference to Company filings
                  with
                  SEC)3.2
              Bylaws
                (incorporated by reference to Company filings with SEC)31
              Officer
                Certification, Sarbanes-Oxley Act32
              Certification,
                Sarbanes-Oxley Act
                Certification
  Reports
        On Form 8-K
 
 None
  Item
        14. Principal Accountant Fees and Services
  **Fiscal
                    Year 2004**
              **Fiscal
                    Year 2005**
              **Fiscal
                  Year 2006**1.
                  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
 
 
 -14-
   **SIGNATURES**
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Registrant
        caused this report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized.
  **SFG
                FINANCIAL CORPORATION**Date: January
                23, 2007
              By:
              /s/ John
                A.
                DuganJohn
                A. DuganC.E.O.
  In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the registrant and in
        the capacities and on the dates indicated.
  **Signature**
              **Title**
              **Date**/s/
                  John A. Dugan
                John
                  A. Dugan
                
                
                
                /s/
                  Anthony Pintauro
                Anthony
                  Pintauro
              C.E.O.
                (principal
                  executive officer)
                (principal
                  accounting officer)
                Director
                
                
                Director
              January
                  23, 2007
                
                
                
                
                January
                  23, 2007
 
  -15-
  
 **SFG
        FINANCIAL CORPORATION**
 
 **COMPARATIVE
        FINANCIAL STATEMENTS**
 
 **FOR
        THE YEARS ENDING JANUARY 31, 2006 and 2005**
 
 
 -16-
  **SFG
        FINANCIAL CORPORTATION**
 
 CONTENTS
 
 
 
 PageIndependent
                  Auditor's Report
              18Financial
                  statements:Balance
                    Sheets as of January 31, 2006 and
                    2005
              19Statements
                    of Income and Expenses for the Years
                    Ended January 31, 2006 and 2005
              20Statements
                    of Stockholders’Equity (Deficiency) for the Years Ended January 31, 2006, 2005,
                    2004 and
                    2003
              21Statements
                    of Cash Flows for the Years Ended January 31,
                    2006 and 2005
              22Notes
                    to Comparitive Financial
                    Statements
              23
   -17-
  **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, 2006 and 2005, 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, 2006 and 2005, 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
            principal 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.
 
 
 /s/
            Thomas Bauman, C.P.A.Thomas Bauman, C.P.A.
 November
            15, 2006
 -18-






**SFG
      FINANCIAL CORPORATION**


**BALANCE
      SHEETS**


**AS
      OF JANUARY 31**


**2006**
            
            
            **2005****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
            
            
            90,280
            
            
            86,280Due
                to related parties
            
            
            20,892
            
            
            11,254**Total
                Liabilities**
            
            
            111,172
            
            
            97,534**Stockholders'
                Equity (Deficiency)**Common
                stock; $.001 par value 100,000,000 shares
            
            
            4,314
            
            
            4,314authorized;
                4,313,856 shares issued; 4,313,856 sharesoutstanding
                at January 31, 2006 and 2005, respectivelyAdditional
                paid in capital
            
            
            2,425,701
            
            
            2,425,701Retained
                earnings
            
            
            (2,541,167
            )
            
            (2,527,529
            )**Total
                Stockholders' Equity (Deficiency)**
            
            
            (111,152
            )
            
            (97,514
            )**Total
                Liabilities and Stockholders' Equity (Deficiency)**
            
            $
            20
            
            $
            20






-19-






**SFG
        FINANCIAL CORPORATION**
 **STATEMENTS
        OF INCOME AND EXPENSES**
 **FOR
        YEARS ENDED JANUARY 31**
  **2006**
              
              
              **2005****Revenue:**Sales
              
              $
              -
              
              $
              -**Operating
                  Expenses**Filing
                  fees
              
              
              408
              
              
              566Office
                  expenses
              
              
              1,060
              
              
              80Professional
                  fees
              
              
              12,000
              
              
              20,000Stock
                  transfer fees
              
              
              -
              
              
              2,400Travel
              
              
              15
              
              
              -**Total
                  Operating Expenses**
              
              
              13,483
              
              
              23,046**Income
                  (Loss) From Operations**
              
              
              (13,483
              )
              
              (23,046
              )**Provision
                  for Taxes**New
                  York State corporate taxes
              
              
              155
              
              
              155**Net
                  Income (Loss)**
              
              $
              (13,638
              )
              $
              (23,201
              )**Earnings
                  Per Share**
              
              $
              (0.003
              )
              $
              (0.005
              )**Weighted
                  Average of Number of Common**
              
              
              4,313,856
              
              
              4,307,189**Shares
                  Outstanding**






-20-




**SFG
        FINANCIAL CORPORATION**
 **STATEMENTS
        OF STOCKHOLDERS' EQUITY
        (DEFICIENCY)**
  **CAPITAL****COMMON
                  STOCK**
              
              
              **IN
                  EXCESS**
              
              
              **RETAINED****SHARES**
              
              
              **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
              )






-21-




**SFG
        FINANCIAL CORPORATION**
 **STATEMENTS
        OF CASH FLOWS**
 **AS
        OF JANUARY 31**
  **2006**
              
              
              **2005****Cash
                  flow from operating activities:****Net
                  income (loss)**
              
              $
              (13,638
              )
              $
              (23,201
              )**Adjustments
                  to reconcile net income to net cash provided****by
                  operating activities:****Changes
                  in assets and liabilities:**Increase
                  (decrease) accounts payable
              
              
              4,000
              
              
              16,566Increase
                  (decrease) due to related parties
              
              
              9,638
              
              
              4,235Increase
                  (decrease) deferred taxes
              
              
              -
              
              
              (1,918
              )Prior
                  period adjustment
              
              
              -
              
              
              1,918**Net
                  cash provided by operations**
              
              
              -
              
              
              (2,400
              )**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
              
              
              
              
              
              20Increase
                  (decrease) in additional paid in capital
              
              
              -
              
              
              2,380**Cash
                  flow provided from (for) financing activities**
              
              
              -
              
              
              2,400**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
              
              $
              155
              
              $
              155






-22-




**SFG
        FINANCIAL CORPORATION**
 **NOTES
        TO 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 is 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 January 31, 2006 the Company
        did not have a deferred tax asset or liability.
  **f.**
            **Prior
                period adjustment**  The
        prior
        period adjustment represents the correction of an error made in the year
        ending
        January 31, 2003 in the provision for income taxes. The Company has adopted
        FAS-154 Accounting Changes and Error Corrections, and accordingly has restated
        prior period financial statements to correct this error. In addition, the
        cumulative effect of the error on periods prior to those presented is reflected
        in the carrying amounts of assets and liabilities as of the beginning of
        the
        year ended January 31, 2005, and an offsetting adjustment increasing
        stockholders equity by $1,918 has been made to the opening balance of retained
        earnings.
  **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.
 
 **3.
        **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 the by these
        stockholders on
        behalf
        of the company are represented on the Balance sheet as Due to related parties.
        As of January 31, 2005 and 2006 the total due to related parties was $11,254
        and $20,892,
        respectively. Interest on these loans has not been accrued.
 
 **4. **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.
 
 
 -23-