U. S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB


     [X] Quarterly  report under Section 13 or 15(d) of the Securities  Exchange
Act of 1934

     For the quarterly period ended December 31, 2003
                                    -----------------

     [ ] Transition report under Section 13 or 15(d) of the Exchange Act

     For the transition period from __________ to __________

                         Commission File Number 0-49659
                                                -------

                                    XRG, INC.
                                    --------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

         DELAWARE                                    58-2583457
         --------                                    ----------
(State or Other Jurisdiction of                   (I.R.S. Employer
 Incorporation or Organization)                  Identification No.)

               5301 Cypress Street, Suite 111 Tampa, Florida 33607
               ---------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (813) 637-0700
                                 --------------
                           (Issuer's Telephone Number)

     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 a
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       No   X
     ---      ---

     The number of shares  outstanding of the Issuer's  Common Stock,  $.001 Par
Value, as of February 13, 2004 was 22,334,044.

         Transitional Small Business Disclosure Format:

Yes       No  X
     ---     ---

<PAGE>

                           XRG, Inc. and Subsidiaries


                                      Index



                                                                            Page
Part I - Financial Information

Item 1.  Financial Statements

         Balance Sheet -
           December 31, 2003................................................  1

         Statements of Operations -
           Three and nine months ended December 31, 2003 and 2002...........  2

         Statements of Changes in Stockholders' Deficit -
           Nine months ended December 31, 2003..............................  3

         Statements of Cash Flows -
           Three and nine months ended December 31, 2003 and 2002...........  4

         Notes to Condensed Consolidated Financial Statements...............  6

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations.............................. 11

Item 3.  Controls & Procedures.............................................. 17

Part II - Other Information

Item 1. Legal Proceedings................................................... 17

Item 2. Change in Securities and Use of Proceeds............................ 18

Item 3. Defaults Upon Senior Securities..................................... 18

Item 5. Other Information................................................... 19

Item 6. Exhibits and Reports on Form 8-K.................................... 19

Signatures.................................................................. 20

                                       i
<PAGE>

<TABLE>
<CAPTION>

                                   XRG, Inc. and Subsidiaries
                                   Consolidated Balance Sheet
                                       December 31, 2003
                                           (unaudited)
<S>                                                                       <C>
Assets
Current assets:
   Accounts receivable                                                                    66,408
                                                                                -----------------
Total current assets                                                                      66,408

Equipment, net of accumulated depreciation                                                50,942

Advances to J. Bently Companies, Inc.                                                  1,142,653

Transportation equipment deposits                                                      1,200,000
Investment in R&R Intermodal                                                             200,000
                                                                                -----------------
                                                                                       1,400,000

                                                                             $         2,660,003
                                                                                =================


Liabilities and Stockholders' Equity

Current liabilities:
   Bank overdraft                                                                        191,084
   Current portion of long term debt                                                     150,000
   Accounts payable including related party payables of $81,710                          103,000
   Accrued expenses                                                                       44,945
   Factorer line of credit                                                                59,094
   Related party advances                                                                 70,126
                                                                                -----------------
Total current liabilities                                                                618,249
                                                                                -----------------

Long-term liabilities:
   Convertible notes payable; net of unamortized discount
     of  $18,819                                                                         461,181
                                                                                -----------------
Total long-term liabilities                                                              461,181
                                                                                -----------------

                                                                                -----------------
Total liabilities                                                                      1,079,430
                                                                                -----------------

Stockholders' equity:
   Series A Preferred stock; $.001 par value; 5,000,000 shares authorized;
     5,000,000 shares issued and outstanding                                               5,000
   Preferred stock; $.001 par value; 45,000,000 shares authorized;
     0 shares issued and outstanding
   Common stock; $.001 par value; 100,000,000 shares authorized;
     22,434,044 shares issued and 22,334,044 outstanding                                  22,434
   Common stock payable                                                                   80,000
   Additional paid-in capital                                                         19,602,690
   Stock subscription receivable                                                          (5,000)
   Accumulated deficit for unrelated dormant operations                              (15,405,274)
   Accumulated deficit                                                                (2,619,277)
   Treasury stock at cost                                                               (100,000)
                                                                                -----------------
Total stockholders' equity                                                             1,580,573
                                                                                -----------------

                                                                             $         2,660,003
                                                                                =================
</TABLE>


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


                                       1
<PAGE>

<TABLE>
<CAPTION>


                                                        XRG, Inc. and Subsidiaries
                                                   Consolidated Statements of Operations
                                                               (unaudited)


                                              Three Months Ended December 31,           Nine Months Ended December 31,
                                            -------------------------------------     ------------------------------------
                                                  2003                  2002               2003                  2002
                                            ---------------       ---------------     --------------        --------------
<S>                                       <C>                   <C>                 <C>                   <C>
Revenues                                   $        908,066      $        214,624    $     1,206,291       $       670,274

Cost of operations                                  228,130               265,427            251,100               748,910
                                            ---------------       ---------------     --------------        --------------

Gross profit (loss)                                 679,935               (50,803)           955,190               (78,636)

Selling, general and administrative
      expenses                                      281,921               181,980          1,507,546               377,463
                                            ---------------       ---------------     --------------        --------------

                                                    398,014              (232,783)          (552,356)             (456,099)

      Interest expense                             (153,799)              (26,915)          (774,539)              (73,811)
                                            ---------------       ---------------     --------------        --------------

Net income (loss)                          $        244,215      $       (259,698)   $    (1,326,895)      $      (529,910)
                                            ===============       ===============     ==============        ==============

Basic income (loss) per share              $           0.01      $          (0.03)   $         (0.08)      $         (0.06)
                                            ===============       ===============     ==============        ==============

Diluted income (loss) per share            $           0.01      $          (0.03)   $         (0.08)      $         (0.06)
                                            ===============       ===============     ==============        ==============

Shares used in computing income (loss) per share:

Basic                                            22,207,087             9,262,912         16,655,819             9,262,912
                                            ===============       ===============     ==============        ==============

Diluted                                          23,302,464             9,262,912         16,655,819             9,262,912
                                            ===============       ===============     ==============        ==============

</TABLE>

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

                                       2
<PAGE>

<TABLE>
<CAPTION>

                                                    XRG, Inc. and Subsidiaries
                                    Consolidated Statements of Changes in Stockholders' Equity

                                               Nine Months Ended December 31, 2003
                                                         (unaudited)




                                              Common Stock                                                         Preferred Stock
                                         ----------------------      Common        Treasury         Stock      ---------------------
                                          Number of                  Stock          Stock        Subscription    Number of
                                           Shares        Amount     Payable                       Receivable      Shares     Amount
                                         -----------   -----------------------   ------------   -------------- -----------  --------
<S>                                     <C>         <C>        <C>            <C>            <C>               <C>        <C>
Balance, March 31, 2003                  10,649,776  $  10,650  $      57,648  $           -  $           -             - $       -

XRG, Inc. preferred stock issued                                                                     (5,000)    5,000,000     5,000

XRG, Inc. stock issued for
   note conversion                        1,506,000      1,506

XRG, Inc. stock issued                      243,570        243        (57,648)
   for interest

XRG, Inc. stock issued for
   cash                                   1,845,000      1,845

XRG, Inc. stock to be issued for
   cash                                           -          -         80,000

XRG, Inc. stock issued for warrant        4,732,000      4,732
   conversion

XRG, Inc. stock issued for options          550,000        550
   exercised at $.001

XRG, Inc. stock issued for deposit        1,150,000      1,150
   on transportation equipment

XRG, Inc. stock issued for acquisition      200,000        200

XRG, Inc. stock retired to Treasury                                                 (100,000)

XRG, Inc. stock issued
   for services at $.55                   1,557,698      1,558              -              -              -             -         -

Beneficial conversion feature
   of convertible debt

Net loss for the period                           -          -              -              -              -             -         -
                                         -----------   --------   ------------   -----------    -----------   ------------  --------
Balance, December 31, 2003               22,434,044  $  22,434  $      80,000  $    (100,000) $      (5,000)    5,000,000 $   5,000
                                         ===========   ========   ============   ============   ============  ============  ========

</TABLE>

<TABLE>

                     Accumulated
                     Deficit for
     Additional      Unrelated
      Paid-in        Dormant      Accumulated
      Capital        Operations     Deficit          Total
    ------------   ------------  -------------   ------------
<S>              <C>            <C>           <C>
  $  15,652,648  $ (15,405,274) $ (1,292,382) $    (976,710)

                                                          -


        751,494                                     753,000

         57,405                                           -



        461,523                                     463,368


              -                                      80,000

         (4,732)                                          -


              -                                         550


      1,148,850                                   1,150,000


        199,800                                     200,000

                                                   (100,000)


        854,518              -             -        856,076

        481,184                                     481,184

             -              -     (1,326,895)    (1,326,895)
    ------------   ------------   -----------   ------------
  $  19,602,690  $ (15,405,274) $ (2,619,277) $   1,580,573
    ============   ============   ===========   ============
</TABLE>


The accompanying notes are an intregral part of the consolidated financial
statements.


                                       3
<PAGE>


                           XRG, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                                Nine Months Ended December 31,
                                                                             --------------------------------------
                                                                                   2003                 2002
                                                                             -----------------    -----------------

<S>                                                                          <C>                  <C>
Operating activities
       Net loss                                                                  $ (1,326,895)          $ (529,910)
                                                                             -----------------    -----------------

       Adjustments to reconcile net loss to net cash used by operating
         activities:
             Depreciation and amortization                                             10,249                3,635
             Common stock issued for services                                         856,076                    -
             Amortization of discount on convertible notes                            676,008                    -
             (Increase) decrease in:
               Accounts receivable                                                    (66,408)                 499
               Prepaid expenses                                                             -                    -
             Increase (decrease) in:
               Accounts payable                                                        46,278               (5,838)
               Accrued expenses                                                         9,491               29,257
                                                                             -----------------    -----------------
         Total adjustments                                                          1,531,694               27,553
                                                                             -----------------    -----------------

                                                                             -----------------    -----------------
         Net cash provided (used) by operating activities                             204,799             (502,357)
                                                                             -----------------    -----------------


Investing activities
       Purchase of equipment                                                           (1,305)             (37,647)
       Deposit on purchase of transportation equipment                                (50,000)                   -
                                                                             -----------------    -----------------
       Net cash used by investing activities                                          (51,305)             (37,647)
                                                                             -----------------    -----------------

Financing activities
       Bank overdraft                                                                 191,084
       Factoring line of credit                                                        59,094
       Increase in advances to J. Bently Companies, Inc.                           (1,142,653)                   -
       Net (payments) borrowings on stockholder
           advances                                                                    38,500                    -
       Proceeds from common stock issued and options exercised                        463,918                    -
       Proceeds from common stock to be issued                                         80,000
       Proceeds from issuance of notes payable                                        270,000              283,000
       Principal payments on notes payable                                            (30,000)             (25,000)
       Payment for treasury stock                                                    (100,000)                   -
                                                                             -----------------    -----------------
       Net cash provided (used) by financing activities                              (170,057)             258,000
                                                                             -----------------    -----------------

       Net increase (decrease) in cash                                                (16,563)            (282,004)

       Cash at beginning of period                                                     16,563              315,179
                                                                             -----------------    -----------------

       Cash at end of period                                                              $ 0             $ 33,175
                                                                             =================    =================

</TABLE>

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

                                       4
<PAGE>

                           XRG, Inc. and Subsidiaries


           Condensed Consolidated Statements of Cash Flows (Unaudited)




                                                         Nine Months Ended
                                                            December 31,
                                                   -----------------------------
                                                      2003              2002
                                                   -----------------------------
Supplemental disclosures of cash flow
    information and noncash investing
    and financing activities:
        Cash paid during the period for interest    $64,139           $40,448
                                                   =============================


        During the nine months ended December 31, 2003, the Company recorded a
        discount on convertible notes payable of $143,984 which related to the
        beneficial conversion feature of the notes payable and the warrants
        issued with these notes. The discount is being amortized over the life
        of the related notes.

        During the period ended December 31, 2003, the Company entered into
        agreements with note holders to convert $753,000 in notes payable into
        1,506,000 shares of common stock. The holders of the notes have
        surrendered the outstanding notes solely for common stock of the
        Company. These shares were issued in September, 2003. The Company
        recognized the beneficial conversion feature of these notes which
        totaled $337,200 for the period ended December 31, 2003.

        During the period ended December 31, 2003, 4,732,000 shares of the
        Company's common stock were issued in exchange for warrants. These
        warrants were exchanged for a like number of shares of common stock on a
        one for one basis for no additional consideration in connection with the
        conversion of the notes.

        The Company issued 1,150,000 shares of common stock for deposits on
        transportation equipment purchased from J. Bently Companies, Inc.

        The Company issued 200,000 shares for a deposit on the acquisition of
        R&R Express Intermodal, Inc. In December 2003, the Company modified the
        Stock Purchase Agreement with R&R Express Intermodal, Inc. to purchase
        100,000 of these shares for $100,000 which is reflected as treasury
        stock at cost.


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

                                       5
<PAGE>


                           XRG, Inc. and Subsidiaries

              Notes to Condensed Consolidated Financial Statements

       Three and Nine Months Ended December 31, 2003 and 2002 (Unaudited)

1.      Condensed Consolidated Financial Statements

In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary for a fair statement of (a) the results of
operations for the three and nine months ended December 31, 2003 and 2002, (b)
the financial position at December 31, 2003, and (c) cash flows for the
nine-month periods ended December 31, 2003 and 2002, have been made.

The unaudited condensed consolidated financial statements and notes are
presented as permitted by Form 10-QSB. Accordingly, certain information and note
disclosures normally included in condensed consolidated financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been omitted. The accompanying condensed
consolidated financial statements and notes should be read in conjunction with
the audited financial statements and notes of the Company for the fiscal year
ended March 31, 2003. The results of operations for the nine-month periods ended
December 31, 2003 and 2002 are not necessarily indicative of those to be
expected for the entire year.

The accompanying condensed consolidated financial statements have been prepared
on a going concern basis which contemplates continuity of operations and
realization of assets and liquidation of liabilities in the ordinary course of
business. Because of significant operating losses, the Company's ability to
continue as a going concern is dependent upon its ability to obtain sufficient
additional financing and, ultimately, upon future profitable operations. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue in existence.

Prior to the quarter ended September 30, 2003, the Company devoted substantially
all of its efforts to establishing its freight transportation business and,
therefore, has been in the development stage since 1999. During the quarter
ended September 30, 2003, the Company's planned principal operations commenced
and significant revenues were realized which allowed the Company to emerge from
its development stage status.

2.      Per Share Calculations

Per share data was computed by dividing net loss by the basic and diluted
weighted average number of shares outstanding during the three and nine months
ended December 31, 2003 and 2002. The basic weighted average shares outstanding
for the three and nine months ended December 31, 2003 was 22,207,087 and
16,655,819 as compared to 9,262,912 for the three and nine months ended December
31, 2002. The diluted weighted average shares outstanding for the three and nine
months ended December 31, 2003 was 23,302,464 and 16,655,819 as compared to
9,262,912 for the three and nine months ended December 31, 2002.

                                       6
<PAGE>

                           XRG, Inc. and Subsidiaries

              Notes to Condensed Consolidated Financial Statements

       Three and Nine Months Ended December 31, 2003 and 2002 (Unaudited)

3.      Notes Payable

Please refer to the audited consolidated financial statements consisting of the
Company's consolidated balance sheet as of March 31, 2003 and the related
consolidated statements of operations, changes in stockholders' deficit, and
cash flows for the year then ended.

During the nine months ended December 31, 2003, the Company issued $170,000 of
convertible notes payable. In connection with the notes, the Company issued
detachable warrants to purchase 340,000 shares of the Company's restricted
common stock. The Company issued 340,000 shares of common stock during the
period ended December 31, 2003 in exchange for these warrants which were
exchanged for a like number of shares of common stock on a one for one basis for
no additional consideration in connection with the conversion of the notes.

During the nine months ended December 31, 2003, the Company issued a $100,000
convertible note to one individual with a conversion price of $.42 per share. In
connection with this note, the Company issued detachable warrants to purchase
100,000 shares of the Company's restricted common stock at a exercise price of
$.42 per share.

During the nine months ended December 31, 2003, the Company recorded a discount
on convertible notes payable for $143,984 which related to the beneficial
conversion feature of the notes payable and the warrants issued with these
notes. The discount is being amortized over the life of the related notes. The
value of the warrants was $90,492 based on the Company's calculation under the
Black-Scholes option pricing model and was allocated to the note proceeds as a
part of the discount on notes payable.

In June 2003, note holders holding approximately $753,000 of the Company's notes
payable voluntarily elected to convert their principal into the Company's common
stock. 1,506,000 shares of common stock were issued for this principal
conversion. The holders of the notes have surrendered the outstanding notes
solely for common stock of the Company. The Company recognized the beneficial
conversion feature of these notes which totaled $337,200 as interest expense
during the period ended December 31, 2003.

4.  Equity Transactions

During the period ended December 31, 2003, 4,732,000 shares of the Company's
common stock were issued in exchange for warrants. These warrants were exchanged
for a like number of shares of common stock on a one for one basis for no
additional consideration in connection with the conversion of the notes.

During the nine month period ended December 31, 2003, the Company raised
$463,368 pursuant to a stock purchase agreement in exchange for 1,845,000 shares
of its restricted common stock. In addition, the Company received $80,000 to
issue 320,000 shares of the Company's common stock. These shares were not issued
by December 31, 2003 and the $80,000 was recorded as a common stock payable.

                                       7
<PAGE>

                           XRG, Inc. and Subsidiaries

              Notes to Condensed Consolidated Financial Statements

       Three and Nine Months Ended December 31, 2003 and 2002 (Unaudited)

4.  Equity Transactions (continued)

During the nine month period ended December 31, 2003 the Company issued 243,570
shares of its common stock for interest on notes payable.

In June 2003, the Board of Directors approved and adopted resolutions
establishing and designating 5,000,000 shares of Series A Preferred Stock $.001
par value. The holders of Series A Preferred Stock are entitled to ten votes for
each share held on all matters on which the holders of the Company's Common
Stock are entitle to vote and shall vote together with the holders of Common
Stock and not as a separate class or series. Series A Preferred Stock shall have
no dividend, conversion, or redemption rights and no liquidation preferences.

In July 2003, three of the Company's officers and directors were issued an
aggregate of 5,000,000 shares of Series A Voting Preferred Stock for the
aggregate par value of the shares or $5,000.

On July 7, 2003, an amendment to the Company's Certificate of Incorporation
increasing the authorized number of common shares from 15,000,000 to
100,000,000, par value $.001 and authorizing the board of directors to issue up
to 50,000,000 preferred shares, par value $.001 issuable in series with such
terms, rights and preferences as determined by subsequent resolutions of the
Board of Directors was approved in a special shareholder meeting. The Company's
financial statements at December 31, 2003 reflect this amendment to the
Company's Certificate of Incorporation.

During the period ended December 31, 2003, the Company purchased 100,000 shares
of its common stock for $100,000 pursuant to the Stock Purchase Agreement
Addendum between the Company and R&R Express Intermodal, Inc. dated January 1,
2004. These shares are classified as treasury stock at cost in the Company's
financial statements.

During the period ended December 31, 2003, 1,557,698 shares of the Company's
common stock were issued for services valued at $856,076.

5. Equipment Purchases

In June 2003, the Company executed a purchase agreement with a truckload carrier
in Sweetwater, Tennessee to acquire equipment assets consisting of approximately
275 freight trailers. The purchase price of these assets is approximately
$3,400,000, including the assumption of approximately $2,200,000 of equipment
loans, the payment of $50,000 in cash, and the issuance of $1,150,000 worth of
shares of the Company's Common Stock. The agreement relating to this equipment
purchase contains a true up adjustment provision, which requires us to issue
additional shares of our common stock based upon the then prevailing market
price such that the total value of our common stock equals $1,150,000 at
adjustment dates of six and twelve months from closing date. During August 2003,
the Company made the $50,000


                                       8
<PAGE>

                           XRG, Inc. and Subsidiaries

              Notes to Condensed Consolidated Financial Statements

       Three and Nine Months Ended December 31, 2003 and 2002 (Unaudited)

5. Equipment Purchases(continued)

cash  payment and issued  1,150,000  shares of our Common Stock to the J. Bently
Companies,  Inc.  shareholders which are classified as transportation  equipment
deposits in our financial  statements  until we are able to obtain a clear title
to these assets.

In addition, the Company entered into a fleet owner agreement with the truckload
carrier to manage the utilization of these purchased assets for a two year
period. Pursuant to the terms of this agreement, the Company will pay to the
truckload carrier 67% of gross freight revenues as compensation for the movement
of its freight. In addition, the Company agreed to pay the maximum lease payment
for purchased transportation of 67% of gross revenues plus 2% of gross revenues
as a commission. During the period ended December 31, 2003, the Company advanced
J. Bently Companies, Inc. $1,142,653 which will be deducted from future
purchased transportation, commission payments, and common stock issued to the
truckload carrier's principal shareholder. The Company is in the process of
negotiating with J. Bently Companies, Inc. to settle these advances. Management
does not believe that the settlement will have a material effect on the Company.

6. Employment Agreements

In July 2003, the Company entered into a three year employment agreement with
its Chief Operating Officer. Under this agreement, he is entitled to an annual
base salary of not less than $120,000 and is entitled to additional bonus
compensation as determined by the Company's board of directors or Compensation
Committee. Such bonuses may be paid in cash or issued in shares of the Company's
Common Stock on such terms as approved by the board of directors. He is entitled
to an automobile allowance of $600 per month during the term of his agreement.
He has agreed not to compete with the Company during the term of this agreement
and for a period of two (2) years after termination of this agreement.

In September 2003, the Company through its XRG Logistics, Inc. wholly owned
subsidiary entered into a five year employment agreement the President of XRG
Logistics. Under this agreement, he is entitled to an annual base salary of not
less than $96,000 and is entitled to additional bonus compensation as determined
by the Company's board of directors or Compensation Committee. Such bonuses may
be paid in cash or issued in shares of the Company's Common Stock on such terms
as approved by the board of directors. He is entitled to an automobile allowance
of $500 per month during the term of his agreement. He has agreed not to compete
with the Company during the term of this agreement and for a period of five (5)
years after termination of this agreement.

                                       9
<PAGE>

                           XRG, Inc. and Subsidiaries

              Notes to Condensed Consolidated Financial Statements

       Three and Nine Months Ended December 31, 2003 and 2002 (Unaudited)

7. Acquisition

On August 20, 2003, the Company entered into a Stock Purchase Agreement with R&R
Express Intermodal, Inc., a Pittsburgh, Pennsylvania intermodal truckload
carrier. On January 1, 2004, the Company modified the original Stock Purchase
Agreement and closed on the purchase of 100% of R&R Express Intermodal's common
stock. The Company had previously issued 200,000 shares of common stock to R&R
Express Intermodal, Inc.'s shareholders. During December 2003, 100,000 of the
200,000 previously issued shares were returned to treasury. R&R Express
Intermodal, Inc. provides truck transportation for container freight from either
a railroad yard or a port, to the freight's destination. This transaction is
classified as a deposit on the acquisition of R&R Express Intermodal, Inc. in
the Company's financial statements for the period ended December 31, 2003.

8. Subsequent Events

During December 2003, the Company entered into a short-term bridge loan with The
Fortuis Foundation Fund, L.P. for an aggregate of up to $550,000 through the
issuance of loan notes. The note term is for three months, renewable for three
additional periods commencing with the end of the first term and bears interest
at a rate of 12% per annum and is secured by a lien on the Company's equipment,
property and fixtures. Funds will be utilized primarily for completing
acquisitions and general working capital purposes. As of February 20, 2004, the
first advance of $350,000 under this loan did not clear the Company's bank which
has resulted in an overdraft balance in the Company's cash account. This
overdraft should be satisfied once the Company receives cleared funds which it
expects in the near future.

On January 9, 2004, the Company filed a Registration Statement on Form S-8 with
the Securities and Exchange Commission, for the purpose of registering under the
Securities Act of 1933, as amended, an aggregate of 3,000,000 shares of the
authorized common stock, par value $.001 per share, which may be issued or
acquired pursuant to the XRG, Inc. Nonqualified Stock Option Plan.

                                       10
<PAGE>
                           XRG, Inc. and Subsidiaries

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The statements contained in this Report on Form 10-QSB, that are not purely
historical, are forward-looking information and statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These include statements regarding the Company's
expectations, intentions, or strategies regarding future matters. All
forward-looking statements included in this document are based on information
available to the Company on the date hereof. It is important to note that the
Company's actual results could differ materially from those projected in such
forward-looking statements contained in this Form 10-QSB. The forward-looking
statements contained here-in are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to the foregoing involve
judgments regarding, among other things, the Company's ability to secure
financing or investment for capital expenditures, future economic and
competitive market conditions, and future business decisions. All these matters
are difficult or impossible to predict accurately and many of which may be
beyond the control of the Company. Although the Company believes that the
assumptions underlying its forward-looking statements are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included in this form 10-QSB will prove to be
accurate.


GENERAL

Our business plan focuses on acquiring and operating both asset and non-asset
based truckload carriers in the contiguous 48 states. In June 2003, we executed
a purchase agreement with J. Bently Companies, Inc., a truckload carrier in
Sweetwater, Tennessee to acquire equipment assets consisting of approximately
275 freight trailers. The purchase price of these assets is approximately
$3,400,000, including the assumption of approximately $2,200,000 of equipment
loans, the payment of $50,000 in cash, and the issuance of $1,150,000 worth of
shares of XRG common stock with registration rights. An additional 2,200,000
shares of our common stock will be escrowed as collateral for the equipment
loans. The agreement relating to this equipment purchase contains a true up
adjustment provision, which requires us to issue additional shares of our common
stock based upon the then prevailing market price such that the total value of
our common stock equals $1,150,000 at adjustment dates of six and twelve months
from the closing date. In addition, In May 2003, we entered into a fleet owner
agreement with J. Bently Companies, Inc. to manage the utilization of these
purchased assets for a two-year period. Pursuant to the terms of this agreement,
XRG will pay to J. Bently Companies, Inc. 67% of gross freight revenues as
compensation for the movement of freight. During August 2003, we made the
$50,000 cash payment and issued 1,150,000 shares of our Common Stock to the J.
Bently Companies, Inc. shareholders which are classified as a transportation
equipment deposit in our financial statements until we are able to obtain a
clear title to these assets.

On August 30, 2003, we entered into an Independent Contractor Agreement with J.
Bently under our wholly owned subsidiary XRG Logistics, Inc. in which we pay a
commission of 2% of gross revenue to J. Bently for shipper customers. On
September 1, 2003, we began operating pursuant to the Fleet Owner and
Independent Contractor Agreements under our wholly owned subsidiary XRG


                                       11
<PAGE>

Logistics, Inc. During the period ended December 31, 2003, the Company advanced
J. Bently Companies, Inc. $1,142,653 that will be deducted from future purchased
transportation, commission payments, and common stock issued to the truckload
carrier's principal shareholder. The Company is in the process of negotiating
with J. Bently Companies, Inc. to settle these advances. Management does not
believe that the settlement will have a material effect on the Company. During
the period from September 1, 2003 until December 31, 2003 we generated
approximately $1,200,000 in revenues in this subsidiary.

On August 20, 2003, we entered into a Stock Purchase Agreement with R&R Express
Intermodal, Inc., a Pittsburgh, Pennsylvania intermodal truckload carrier. On
January 1, 2004, we modified the original Stock Purchase Agreement and fulfilled
the closing conditions of the Definitive Stock Purchase Agreement Addendum and
completed this acquisition. Under the terms of the acquisition, the Pittsburgh,
Pennsylvania based intermodal carrier will become a wholly owned subsidiary of
XRG, Inc.

In accordance with the terms of the Stock Purchase Agreement, the originally
announced stock-for-stock transaction was modified to $100,000 in cash and
100,000 shares of our common stock pursuant to the Stock Purchase Agreement
Addendum dated January 1, 2004. R&R Express Intermodal, Inc. provides truck
transportation for container freight from either a railroad yard or a port, to
the freight's destination. This type of carrier operates in a sector that
management views as becoming increasingly important in the truckload industry.

We believe that we have identified a significant opportunity to consolidate
profitable, established medium-sized (under $30 million in revenue) truckload
carriers that have developed long-term customer relationships. The trucking
industry has exhibited strong growth due to the trend toward just-in-time
inventories, and the general increase in the need for transportation of
commodities. Truckload carriers have become the critical link in the
distribution chain between manufacturers and/or distributors and the
marketplace. Time-definite delivery has become an important element of this
distribution chain and is a contributing factor in successful just-in-time
systems. The universe of truckload carriers is dominated by small to
medium-sized independent carriers with gross revenues of less than $20 million.
We believe that the opportunity to consolidate truckload carriers that have
revenues less than $30 million in revenues is significant because shippers are
increasingly outsourcing their company fleets and relying on larger carriers
that provide sophisticated information systems and value-added services.
Therefore, the smaller carrier is faced with increased competition from carriers
that provide these value-added services forcing them to look for an exit
strategy that can strengthen their competitiveness and sustain their business.

We are optimistic that our business strategy will entice many small trucking
companies to be acquired by us. There is no assurance that our business strategy
is viable, or whether, we will be able to complete an acquisition in the future.
We have identified ten small trucking companies for potential acquisition that
fit our criteria and are actively pursuing four.

To continue to implement the initial stages of our business plan, which we view
as completing four truckload carrier acquisitions, we estimate that we will
require an additional $1 million capital infusion. We plan on raising this
capital through either debt or equity financing, however, there is no assurance
that we will be able to obtain financing on favorable terms to complete these
acquisitions and successfully implement our business plan.

                                       12
<PAGE>

RESULTS OF OPERATIONS

Three months ended December 31, 2003 compared to three months ended December 31,
2002

XRG generated $908,066 in revenues during the three-month period ended December
31, 2003 as compared to $214,624 during the same period ended December 31, 2002.
Our revenues during the period ended December 31, 2003 are attributable to the
truckload carrier operations of our XRG Logistics, Inc. subsidiary pursuant to a
Fleet Owner Agreement with J. Bently Companies, Inc. Net revenues were recorded
by XRG based upon J. Bently Companies, Inc.'s gross revenues of approximately
$2.6 million for the quarter ended December 31, 2003.

Related expenses were $228,130 and $265,427 resulting in a gross margin of
$679,935 and ($50,803) during the periods December 31, 2003 and 2002,
respectively. Related expenses during the three months ended December 31, 2003
were primarily payroll expenses of $148,697 incurred in our XRG Logistics, Inc.
subsidiary. In addition, XRG Logistics, Inc. incurred $52,338 in commissions
related to our Independent Contractor Agreement with J. Bently Companies, Inc.
Our gross margin increased substantially from the period ended December 31, 2002
to the same period of 2003 as a result of our Fleet Owner Agreement with J.
Bently Companies, Inc. executed in August 2003.

For the three-month period ended December 31, 2003, total selling, general and
administrative expenses were $281,921 as compared to $181,980 for the previous
three-month period, an increase of $99,941 or 55%. This increase is primarily
the result of the addition of general and administrative costs associated with
our XRG Logistics, Inc. subsidiary during the three months ended December 31,
2003.

Interest expense for the three-month period ended December 31, 2003 and 2002 was
$153,799 and $26,915, respectively. Interest expense increased $126,884 or 471%
from December 31, 2002 to 2003 as a result of a small increase in notes payable
during 2003 and $124,210 of amortization relating to the discount on notes
payable during the current period.

We had net income of $244,215 for the three-month period ended December 31, 2003
as compared to a loss of $259,698 for the three-month period ended December 31,
2002. This increase in our operating income over that of the three-month period
ended December 31, 2002 is the result of the contribution from our XRG
Logistics, Inc. subsidiary.

The basic income per share was $0.01 for the three-month period ended December
31, 2003 compared to a basic loss per share of $0.03 for the three-month period
end December 31, 2002. The basic weighted average shares outstanding for the
three-month period ended December 31, 2003 was 22,207,087 as compared to
9,262,912 for the three-month period ended December 31, 2002. The diluted income
per share was $0.01 for the three-month period ended December 31, 2003 compared
to a basic loss per share of $0.03 for the three-month period end December 31,
2002. The diluted weighted average shares outstanding for the three-month period
ended December 31, 2003 was 23,302,464 as compared to 9,262,912 for the
three-month period ended December 31, 2002.

                                       13
<PAGE>

Nine months ended December 31, 2003 compared to nine months ended December 31,
2002

XRG generated $1,206,291 in revenues during the nine-month period ended December
31, 2003 as compared to $670,274 during the same period ended December 31, 2002.
Our revenues during the period ended December 31, 2003 are attributable to the
truckload carrier operations of our XRG Logistics, Inc. subsidiary pursuant to a
Fleet Owner Agreement with J. Bently Companies, Inc. Net revenues were recorded
by XRG based upon J. Bently Companies, Inc.'s gross revenues of approximately
$3.5 million for the nine-month period ended December 31, 2003.

Related expenses were $251,100 and $748,910 resulting in a gross margin of
$955,190 and ($78,636) during the periods December 31, 2003 and 2002,
respectively. Related expenses during the nine months ended December 31, 2003
were primarily payroll expenses of $148,697 incurred in our XRG Logistics, Inc.
Subsidiary. In addition, XRG Logistics, Inc. incurred $70,259 in commissions
related to our Independent Contractor Agreement with J. Bently Companies, Inc.
Our gross margin increased substantially from the period ended December 31, 2002
to the same period of 2003 as a result of our Fleet Owner Agreement with J.
Bently Companies, Inc. executed during August, 2003.

For the nine-month period ended December 31, 2003, total selling, general and
administrative expenses were $1,507,546 as compared to $377,463 for the previous
nine-month period, an increase of $1,130,083 or 299%. This increase is primarily
the result of shares issued for services valued at approximately $856,000 during
the nine months ended December 31, 2003.

Interest expense for the nine-month period ended December 31, 2003 and 2002 was
$774,539 and $73,811, respectively. Interest expense increased $700,728 or 949%
from December 31, 2002 to 2003 as a result of higher notes payable during 2003
and amortization of the discount and beneficial conversion feature of these
notes.

We had a net loss of $1,326,895 for the nine-month period ended December 31,
2003 as compared to a loss of $529,910 for the nine-month period ended December
31, 2002. This increase in our operating loss over that of the nine-month period
ended December 31, 2002 is the result of an increase in consulting services paid
with our common stock, travel, and office costs, personnel costs associated with
the implementation of our information systems as well as higher interest
expenses associated with our long-term debt.

The basic loss per share was $.08 for the nine-month period ended December 31,
2003 compared to a basic loss per share of $.06 for the nine-month period ended
December 31, 2002. The basic weighted average shares outstanding for the
nine-month period ended December 31, 2003 was 16,655,819 as compared to
9,262,912 for the nine-month period ended December 31, 2002. The diluted loss
per share was $.08 for the nine-month period ended December 31, 2003 compared to
a diluted loss per share of $.06 for the nine-month period ended December 31,
2002. The diluted weighted average shares outstanding for the nine-month period
ended December 31, 2003 was 16,665,819 as compared to 9,262,912 for the
nine-month period ended December 31, 2002.

                                       14
<PAGE>

Liquidity and Capital Resources

To date, we have funded our capital requirements and our business operations
with funds provided by borrowings and equity investments. We have raised
$1,393,120 in the form of notes payable at various interest rates of 12.0% to
15.0%, payable quarterly. These notes mature at various dates until November
2004 and are unsecured. None of these notes individually exceed $100,000. XRG,
Inc is the note issuer, and none of these note-holders are officers or directors
of XRG. In connection with these notes, warrants to acquire 4,732,000 shares of
common stock were granted to these note-holders. During the period ended
December 31, 2003, 4,732,000 shares of the Company's common stock were issued in
exchange for the these warrants. These warrants were exchanged for a like number
of shares of common stock on a one for one basis for no additional consideration
in connection with the conversion of the notes. In addition, during June 2003,
approximately $753,000 of these notes were voluntarily converted to our common
stock at a price of $.50 per common share.

During the nine months ended December 31, 2003, the Company issued $170,000 of
convertible notes payable. In connection with the notes, the Company issued
detachable warrants to purchase 340,000 shares of the Company's restricted
common stock. During the period ended December 31, 2003, 340,000 shares of the
Company's common stock were issued in exchange for warrants. These warrants were
exchanged for a like number of shares of common stock on a one for one basis for
no additional consideration in connection with the conversion of the notes.

During the nine months ended December 31, 2003, the Company issued a $100,000
convertible note to one individual. In connection with this note, the Company
issued detachable warrants to purchase 100,000 shares of the Company's
restricted common stock.

During the period ended December 31, 2003, we raised $463,368 pursuant to a
stock purchase agreement in exchange for 1,845,000 shares of our restricted
common stock. In addition, we received $80,000 to issue 320,000 shares of our
common stock. These shares were not issued by December 31, 2003 and the $80,000
was recorded as a common stock payable.

During December 2003, we entered into a short-term bridge loan with The Fortuis
Foundation Fund, L.P. for an aggregate of up to $550,000 through the issuance of
loan notes. The note term is for three months, renewable for three additional
periods commencing with the end of the first term and bears interest at a rate
of 12% per annum and are secured by a lien on our equipment, property and
fixtures. Funds will be utilized primarily for completing acquisitions and
general working capital purposes. As of February 20, 2004, the first advance of
$350,000 under this loan did not clear our bank which has resulted in an
overdraft balance in our cash account. This overdraft should be satisfied once
we receive cleared funds which we expect in the near future.


                                       15
<PAGE>

For the period ended December 31, 2003 we generated $204,799 in cash from
operating activities as compared to $502,357 used in operating activities in the
similar period ended December 31, 2002. Investing activities for the present
period included equipment deposits of $50,000. Financing activities for the
period ended December 31, 2003 used $170,057 from the repayment of notes payable
and the advances to J. Bently Companies, Inc. For the period ended December 31,
2003, cash decreased $16,563 as compared to $282,004 in the same period of the
prior year.

Historically we have not generated sufficient revenues from operations to
self-fund our capital and operating requirements. These factors raise
substantial doubt concerning our ability to continue as a going concern. We
expect that our working capital will come from fundings that will primarily
include equity and debt placements. We had a cash balance at December 31, 2003
of $0 and negative working capital of $551,841. We believe that our access to
capital will be sufficient to sustain our operations for at least 12 months. Our
monthly cash "burn rate" is approximately $75,000 per month. This estimate is a
forward-looking statement that involves risks and uncertainties. The actual time
period may differ materially from that indicated as a result of a number of
factors so that we cannot assure that our cash resources will be sufficient for
anticipated or un-anticipated working capital and capital expenditure
requirements for this period.

There is no assurance that we will be successful in raising capital through debt
or equity placements. If such financing is not available when required, we may
be unable to pay our debts in a timely manner, develop our business, take
advantage of acquisition opportunities, or respond to competitive pressures, any
of which could have a material adverse effect on our business, financial
condition and results of operations. Our inability to raise additional capital
could cause us to breach our payment obligations to third parties or otherwise
fail to satisfy our business obligations.

We anticipate raising capital in the next twelve months from the issuance of
convertible notes. We anticipate that capital raised from the issuance of
convertible notes and working capital from completed truck-load carrier
acquisitions, will sustain our operations over the next twelve months. This
estimate is a forward-looking statement that involves risks and uncertainties.
The actual time period may differ materially from that indicated as a result of
a number of factors so that we cannot assure that our cash resources will be
sufficient for anticipated or un-anticipated working capital and capital
expenditure requirements for this period.

Seasonality

In the transportation industry, results of operations frequently show a seasonal
pattern. Seasonal variations may result from weather or from customer's reduced
shipments after the busy winter holiday season. Therefore, are revenues are
affected by seasonal variations mostly during December.

                                       16
<PAGE>

Item 3.  Controls and Procedures

Within 90 days prior to the date of filing of this report, we carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and the Chief Financial Officer, of the design and operation
of our disclosure controls and procedures. Based on this evaluation, our Chief
Executive Officer and the Chief Financial Officer concluded that our disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the information that we are required to disclose in the reports we file under
the Securities Exchange Act of 1934, within the time periods specified in the
SEC's rules and forms. Our Chief Executive Officer and the Chief Financial
Officer also concluded that our disclosure controls and procedures are effective
in timely alerting them to material information relating to our company required
to be included in our periodic SEC filings. In connection with the new rules, we
are in the process of further reviewing and documenting our disclosure controls
and procedures, including our internal controls and procedures for financial
reporting, and may from time to time make changes designed to enhance their
effectiveness and to ensure that our systems evolve with our business. There
have been no significant changes in our internal controls or in other factors
that could significantly affect internal controls subsequent to the date of this
evaluation. However, in connection with our ongoing evaluation of internal
controls over financial reporting, certain internal control matters were noted
that require corrective actions. Although we do not consider any existing
deficiencies in our current controls and procedures to be material, we are
currently improving accounting controls and procedures. Specifically, we plan to
implement a new accounting system within the next 12 months, which will place
all of our accounting data under one operating platform, which should
substantially eliminate the need for adjusting journal entries and
reconciliations in connection with the preparation of our financial statements.
Furthermore, we plan to integrate our accounting software platforms with our
trucking logistics software so that such information may be more efficiently
compiled. We expect to complete the implementation of such improvements in our
controls and procedures prior to our first fiscal year ending on or after April
15, 2005, which is currently the initial year of implementation of new Item 308
of Regulation SK regarding internal control over financial reporting.


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.
         -----------------

         From time to time, we may be involved in litigation relating to claims
         arising out of our ordinary course of business. We believe that there
         are no claims or actions pending or threatened against us, the ultimate
         disposition of which would have a materially adverse effect on us.

         In May, 2003, a legal action was filed in Franklin County, Ohio,
         against the Company (and against our president, based on a personal
         guaranty) by the landlord of our former office space in Pittsburgh,
         Pennsylvania. The landlord claimed approximately $63,000 in unpaid
         rent. In January, 2004, the court granted the Company's motion to
         dismiss the case for lack of proper jurisdiction in the State of Ohio.


                                       17
<PAGE>

         In July 2003, a legal action was filed in Hillsborough County, Florida,
         against the Company by the landlord of our current office space in
         Tampa, Florida. This legal action was for eviction and unpaid rent. A
         judgment was rendered against the Company and the Company subsequently
         paid the amount of the judgment in full in October 2003. A satisfaction
         of judgment has been entered in the case.

Item 2.  Change in Securities and Use of Proceeds.
         -----------------------------------------

         During the period ended December 31, 2003, we raised $463,368 pursuant
         to a stock purchase agreement in exchange for 1,845,000 shares of our
         restricted common stock. In addition, we received $80,000 to issue



         320,000 shares of our common stock. These shares were not issued by
         December 31, 2003 and the $80,000 was recorded as a common stock
         payable. We relied on Section 4(2) for the issuance of these
         securities.

         On July 7, 2003, we approved an amendment to our certificate of
         incorporation at a special meeting of stockholders. This Amendment to
         our Certificate of Incorporation increases the authorized number of
         common shares from 15,000,000 to 100,000,000, par value $.001 and
         authorizes the board of directors to issue up to 50,000,000 preferred
         shares, par value $.001 issuable in series with such terms, rights and
         preferences as determined by subsequent resolutions of the Board of
         Directors.

         In June 2003, the Board of Directors approved and adopted resolutions
         establishing and designating 5,000,000 shares of Series A Preferred
         Stock $.001 par value. The holders of Series A Preferred Stock are
         entitled to ten votes for each share held on all matters on which the
         holders of the Company's Common Stock are entitled to vote and shall
         vote together with the holders of Common Stock and not as a separate
         class or series. Series A Preferred Stock shall have no dividend,
         conversion, or redemption rights and no liquidation preferences.

         In July 2003, Donald G. Huggins, Jr., Kevin Brennan, and Stephen
         Couture each purchased 1,666,666.66 shares for an aggregate of
         5,000,000 shares of Series A Voting Preferred Stock. These officers and
         directors purchased these shares of Series A Voting Preferred Stock for
         the aggregate par value of the shares or $5,000.

         The Voting Preferred Stock was issued to assure complete and unfettered
         control of the Company by its holders. The issuance of the Voting
         Preferred Stock constitutes an anti-takeover device since the approval
         of any merger or acquisition of the Company will be completely
         dependent upon the approval of the holders of this Voting Preferred
         Stock.

Item 3.  Defaults Upon Senior Securities.
         --------------------------------

         None

                                       18
<PAGE>

Item 5.  Other Information
         -----------------

         In July 2003, we entered into an employment agreement with Neil
         Treitman, our Chief Operating Officer.

         In September 2003, we entered into an employment agreement with Stanley
         Shadden, the President of XRG Logistics, Inc., our wholly owned
         subsidiary.

Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------

          (a) Exhibits

          Exhibit 10.1 Form of Loan  Agreement  between XRG, Inc and The Fortuis
          Foundation Fund, L.P. dated December 22, 2003.

          Exhibit 10.2 Form of Promissory  Note between XRG, Inc and The Fortuis
          Foundation Fund, L.P. dated December 22, 2003.

          Exhibit 10.3 Form of Guaranty  between the  Officers and  Directors of
          XRG, Inc. and The Fortuis  Foundation  Fund,  L.P.  dated December 22,
          2003.

          Exhibit 11 is the  Statement  of  Computation  of Earnings  (Loss) Per
          Share

          Exhibit   31.1   Certification   pursuant   to  Section   302  of  the
          Sarbanes-Oxley Act of 2002 signed by Kevin P. Brennan.

          Exhibit   31.2   Certification   pursuant   to  Section   302  of  the
          Sarbanes-Oxley Act of 2002 signed by Stephen Couture.

          Exhibit 32.1  Certification  pursuant to 18 U.S.C.  Section  1350,  as
          adopted  pursuant  to Section  906 of the  Sarbanes-Oxley  Act of 2002
          signed by Kevin P. Brennan.

          Exhibit 32.2  Certification  pursuant to 18 U.S.C.  Section  1350,  as
          adopted  pursuant  to Section  906 of the  Sarbanes-Oxley  Act of 2002
          signed by Stephen Couture.

          (b) Reports on Form 8-K

          During the quarter ended December 31, 2003, the Company filed with, or
          furnished   to,  the   Securities   and   Exchange   Commission   (the
          "Commission") the following Current Reports on Form 8-K:

          Current  Report on Form 8-K (Item 2 and Item 7) dated  August 20, 2003
          (filed  with  the  Commission  on  February  9,  2004)  reporting  the
          acquisition of R&R Express Intermodal, Inc. on January 1, 2004.


                                       19
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant had
duly caused the report to be signed on its behalf by the undersigned thereunto
duly authorized.


                                         XRG, Inc.

Dated:   2/19/2004

                                         /s/ Kevin Brennan
                                         ------------------------------------
                                             Kevin Brennan
                                             President & CEO

                                         /s/ Stephen Couture
                                         ------------------------------------
                                             Stephen Couture
                                             Vice President, Finance & CFO


                                       20