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**October      31, 2005**

**0-13635**

**SFG      FINANCIAL CORPORATION**

| **Delaware**                                   | **13-3208094**                        |
|------------------------------------------------|---------------------------------------|
| (State                or other jurisdiction of | (IRS                Employer          |
| incorporation                or organization)  | Identification                Number) |

**85      Amherst Street, Garden City, New York 11530**

**(516)-327-0843**

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**TABLE      OF CONTENTS**

| PART I                FINANCIAL                INFORMATION                  |
|----------------------------------------------------------------------------------|
|                                                                             |   |
| Item                1.                                                           | FINANCIAL                STATEMENTS. |
|                                                                             |   |
| Item                2.                                                           | MANAGEMENT'S                DISCUSSION AND ANALYSIS OR PLAN OF                OPERATION. |
|                                                                             |   |
| Item                3.                                                      | CONTROLS                AND PROCEDURES. |
|                                                                             |   |
|                                                                             |   |
|                                                                             |   |
|  PART              II OTHER              INFORMATION                        |
|                                                                             |   |
| Item                1.                                                           | LEGAL                PROCEEDINGS. |
|                                                                             |   |
| Item                2.                                                           | UNREGISTERED                SALES OF EQUITY SECURITIES AND USE OF                PROCEEDS. |
|                                                                             |   |
| Item                3.                                                           | DEFAULTS                ON SENIOR SECURITIES. |
|                                                                             |   |
| Item                4.                                                           | SUBMISSION                OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
|                                                                             |   |
| Item                5.                                                           | OTHER                INFORMATION. |
|                                                                             |   |
| Item                6.                                                           | EXHIBITS. |
|                                                                             |   |
|                                                                             |   |
| SIGNATURES                                                                       |
|                                                                             |   |
| EX-31              (Certifications, Sarbanes-Oxley Act of 2002)                  |
| EX-32                (Certifications, Sarbanes-Oxley Act of                2002) |

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Item      1. Financial Statements

**SFG        FINANCIAL CORPORATION**

**COMPARATIVE        FINANCIAL STATEMENTS**

**FOR        THE NINE MONTHS ENDING OCTOBER 31, 2006 and 2005**

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**SFG        FINANCIAL CORPORTATION**

|                                                                              | Page   |
|-----------------------------------------------------------------------------------|--------|
|                                                                              |   |
| Independent                  accountant’s report                            | 1      |
|                                                                              |   |
| Financial                  statements:                                            |   |
|                                                                              |   |
| Balance                  Sheets                                                   | 2      |
|                                                                              |   |
| Statements                  of Income and Expenses                                | 3      |
|                                                                              |   |
| Statements                  of Stockholders' Equity                  (Deficiency) | 4      |
|                                                                              |   |
| Statements                  of Cash Flows                                         | 5      |
|                                                                              |   |
| Notes                  to the Comparative Financial                  Statements   | 6      |
|                                                                              |   |
|                                                                              |   |
|                                                                              |   |
|                                                                              |   |
|                                                                              |   |
|                                                                              |   |
|                                                                              |   |

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**THOMAS        BAUMAN**

**CERTIFIED        PUBLIC ACCOUNTANT**

**4        SCHAEFFER STREET**

**HUNTINGTON        STATION, NY 11746**

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

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**SFG        FINANCIAL CORPORATION**

**BALANCE        SHEETS**

**AS        OF OCTOBER 31, **

|                                                                            |   |   |       |   |   |       |   |
|---------------------------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                                                            |   |   | **2006**   |   |   | **2005**   |   |
| **ASSETS**                                                                      |   |   |       |   |   |       |   |
| **Current                  Assets**                                             |   |   |       |   |   |       |   |
| Cash                  on hand                                                   |   | $      | 9,606      |   | $      | 20         |   |
|                                                                            |   |   |       |   |   |       |   |
|                                                                            |   |   |       |   |   |       |   |
| **Total                  Assets**                                               |   |   | 9,606      |   |   | 20         |   |
|                                                                            |   |   |       |   |   |       |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY (DEFICIENCY)**          |   |   |       |   |   |       |   |
| **Liabilities**                                                                 |   |   |       |   |   |       |   |
| Accounts                  payable and accrued expenses                          |   |   | 68,076     |   |   | 86,280     |   |
| Deposit                  payable                                                |   |   | 71,971     |   |   | -          |   |
| Due                  to related parties                                         |   |   | 22,244     |   |   | 12,202     |   |
| **Total                  Liabilities**                                          |   |   | 162,291    |   |   | 98,482     |   |
|                                                                            |   |   |       |   |   |       |   |
| **Stockholders'                  Equity (Deficiency)**                          |   |   |       |   |   |       |   |
| Common                  stock; $.001 par value 100,000,000 shares authorized;   |   |   | 5,514      |   |   | 4,314      |   |
| 5,513,856                  and 4,313,856 shares issued; 5,513,856 and 4,313,856 |   |   |       |   |   |       |   |
| shares                  outstanding at October 31, 2006 and 2005, respectively  |   |   |       |   |   |       |   |
| Additional                  paid in capital                                     |   |   | 2,502,351  |   |   | 2,425,701  |   |
| Retained                  earnings                                              |   |   | (2,660,550 | )      |   | (2,528,477 | )      |
| **Total                  Stockholders' Equity (Deficiency)**                    |   |   | (152,685   | )      |   | (98,462    | )      |
|                                                                            |   |   |       |   |   |       |   |
|                                                                            |   |   |       |   |   |       |   |
| **Total                  Liabilities and Stockholders' Equity (Deficiency)**    |   | $      | 9,606      |   | $      | 20         |   |
|                                                                            |   |   |       |   |   |       |   |

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**SFG          FINANCIAL CORPORATION**

**STATEMENTS          OF INCOME AND EXPENSES**

**FOR          THE NINE MONTHS ENDED OCTOBER 31**

|                                                                           |   |   |      |   |   |      |   |
|--------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|
|                                                                           |   |   | **2006**  |   |   | **2005**  |   |
| **Revenue:**                                                                   |   |   |      |   |   |      |   |
| Forgiveness                    of debt                                         |   | $      | 8,050     |   | $      | -         |   |
|                                                                           |   |   |      |   |   |      |   |
| **Operating                    Expenses**                                      |   |   |      |   |   |      |   |
| Filing                    and stock transfer fees                              |   |   | 2,035     |   |   | -         |   |
| Interest                    expense                                            |   |   | 4         |   |   |      |   |
| Office                    expenses                                             |   |   | 1,434     |   |   | 778       |   |
| Penalties                    & interest                                    |   |   | 108       |   |   | -         |   |
| Professional                    fees                                           |   |   | 123,701   |   |   | -         |   |
| Travel                                                                         |   |   | -         |   |   | 15        |   |
| **Total                    Operating Expenses**                                |   |   | 127,282   |   |   | 793       |   |
|                                                                           |   |   |      |   |   |      |   |
| **Income                    (Loss) From Operations**                           |   |   | (119,232  | )      |   | (793      | )      |
|                                                                           |   |   |      |   |   |      |   |
| **Provision                    for Taxes**                                     |   |   |      |   |   |      |   |
| New                    York State corporate taxes                              |   |   | 151       |   |   | 155       |   |
|                                                                           |   |   |      |   |   |      |   |
| **Net                    Income (Loss)**                                       |   | $      | (119,383  | )      | $      | (948      | )      |
|                                                                           |   |   |      |   |   |      |   |
| **Earnings                    Per Share**                                      |   | $      | (0.026    | )      | $      | (0.000    | )      |
|                                                                           |   |   |      |   |   |      |   |
| **Weighted                    Average of Number of Common Shares Outstanding** |   |   | 4,580,523 |   |   | 4,313,856 |   |
|                                                                           |   |   |      |   |   |      |   |

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**SFG          FINANCIAL CORPORATION**

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

|                                                      |       |       |                                                                    |       |       |                             |       |       |                          |       |       |         |       |
|-----------------------------------------------------------|------------|------------|-------------------------------------------------------------------------|------------|------------|----------------------------------|------------|------------|-------------------------------|------------|------------|--------------|------------|
|                                                      |       |       |                                                                    |       |       |                             |       |       | **CAPITAL**                   | ** ** | ** ** |              | ** ** |
|                                                      | ** ** | ** ** | **COMMON                    STOCK      ** | ** ** | ** ** | **IN                    EXCESS** | ** ** | ** ** | **RETAINED**                  | ** ** |
|                                                      | ** ** | ** ** | **SHARES **                                                        | ** ** | ** ** | **AMOUNT**                       | ** ** | ** ** | **OF                    PAR** | ** ** | ** ** | **EARNINGS** |       |
| **Balance                    at January 31, 2005**        |       |       | 4,313,856                                                               |       | $          | 4,314                            |       | $          | 2,425,701                     |       | $          | (2,527,529   | )          |
|                                                      |       |       |                                                                         |       |       |                             |       |       |                          |       |       |         |       |
| Net                    Income (Loss) for the nine months  |       |       |                                                                    |       |       |                                  |       |       |                               |       |       |              |       |
| ended                    October 31, 2005                 |       |       |                                                                    |       |       |                             |       |       |                          |       |       | (948         | )          |
|                                                      |       |       |                                                                    |       |       |                             |       |       |                          |       |       |         |       |
| **Balance                    at October 31, 2005**        |       |       | 4,313,856                                                               |       |       | 4,314                            |       |       | 2,425,701                     |       |       | (2,528,477   | )          |
|                                                      |       |       |                                                                    |       |       |                             |       |       |                          |       |       |         |       |
| Net                    Income (Loss) for the three months |       |       |                                                                         |       |       |                                  |       |       |                               |       |       |              |       |
| November                    1, 2005 to January 31, 2006   |       |       |                                                                    |       |       |                             |       |       |                          |       |       | (12,690      | )          |
|                                                      |       |       |                                                                    |       |       |                             |       |       |                          |       |       |         |       |
| **Balance                    at January 31, 2006**        |       |       | 4,313,856                                                               |       |       | 4,314                            |       |       | 2,425,701                     |       |       | (2,541,167   | )          |
|                                                      |       |       |                                                                    |       |       |                             |       |       |                          |       |       |         |       |
| Shares                    issued for services             |       |       | 1,150,000                                                               |       |       | 1,150                            |       |       | 73,600                        |       |       |         |       |
| Shares                    issued to extinguish debt       |       |       | 50,000                                                                  |       |       | 50                               |       |       | 3,050                         |       |       |         |       |
| Net                    Income (Loss) for the nine months  |       |       |                                                                    |       |       |                             |       |       |                          |       |       |              |       |
| ended                    October 31, 2006                 |       |       |                                                                    |       |       |                             |       |       |                          |       |       | (119,383     | )          |
|                                                      |       |       |                                                                    |       |       |                             |       |       |                          |       |       |         |       |
| **Balance                    at October 31, 2006**        |       |       | 5,513,856                                                               |       | $          | 5,514                            |       | $          | 2,502,351                     |       | $          | (2,660,550   | )          |
|                                                      |       |       |                                                                    |       |       |                             |       |       |                          |       |       |         |       |

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**SFG          FINANCIAL CORPORATION**

**STATEMENTS          OF CASH FLOWS**

**FOR          THE NINE MONTHS ENDED OCTOBER 31**

|                                                                            |   |   |     |   |   |     |   |
|---------------------------------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
|                                                                            |   |   | **2006** |   |   | **2005** |   |
| **Cash                    flow from operating activities:**                     |   |   |     |   |   |     |   |
| **Net                    income (loss)**                                        |   | $      | (119,383 | )      | $      | (948     | )      |
| **Adjustments                    to reconcile net income to net cash provided** |   |   |     |   |   |     |   |
| **by                    operating activities:**                                 |   |   |     |   |   |     |   |
| **Changes                    in assets and liabilities:**                       |   |   |     |   |   |     |   |
| Increase                    (decrease) accounts payable                         |   |   | (22,204  | )      |   | -        |   |
| Increase                    (decrease) due to related parties                   |   |   | 1,352    |   |   | 948      |   |
| Increase                    (decrease) deposit payable                          |   |   | 71,971   |   |   | -        |   |
| **Net                    cash provided by operations**                          |   |   | (68,264  | )      |   | -        |   |
|                                                                            |   |   |     |   |   |     |   |
| **Cash                    flow from investing activities:**                     |   |   |     |   |   |     |   |
| Purchase                    of fixed assets                                     |   |   | -        |   |   | -        |   |
| **Cash                    provided from (for) investing activities**            |   |   | -        |   |   | -        |   |
|                                                                            |   |   |     |   |   |     |   |
| **Cash                    flow from financing activities:**                     |   |   |     |   |   |     |   |
| Increase                    (decrease) in Common stock                          |   |   | 1,200    |   |   | -        |   |
| Increase                    (decrease) in additional paid in capital            |   |   | 76,650   |   |   | -        |   |
| **Cash                    flow provided from (for) financing activities**       |   |   | 77,850   |   |   | -        |   |
|                                                                            |   |   |     |   |   |     |   |
| **Net                    increase in cash and cash equivalent**                 |   |   | 9,586    |   |   | -        |   |
|                                                                            |   |   |     |   |   |     |   |
| **Cash                    and cash equivalents at beginning of year**           |   |   | 20       |   |   | 20       |   |
|                                                                            |   |   |          |   |   |          |   |
| **Cash                    and cash equivalents at end of year**                 |   | $      | 9,606    |   | $      | 20       |   |
|                                                                            |   |   |     |   |   |     |   |
| **Cash                    paid for interest and income taxes as follows:**      |   |   |     |   |   |     |   |
| Interest                                                                        |   | $      | -        |   | $      | -        |   |
| Corporate                    income taxes paid                                  |   | $      | 155      |   | $      | 155      |   |
|                                                                            |   |   |     |   |   |     |   |

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**SFG          FINANCIAL CORPORATION**

**NOTES          TO THE COMPARATIVE FINANCIAL          STATEMENTS**

**1.          Significant accounting policies:**

| **a.  ** | **Organization                  and Business Operations** |
|--------------------|-----------------------------------------------------------|
| **b.  ** | **Cash                  and cash equivalents** |
|--------------------|------------------------------------------------|
| **c.  ** | **Use                  of estimates** |
|--------------------|---------------------------------------|
| **d.  ** | **Earnings                  per share** |
|--------------------|-----------------------------------------|
| **e.  ** | **Income                  taxes** |
|--------------------|-----------------------------------|

**2.          Accounts payable and accrued expenses**

**3.          Deposit payable**

**      **
***SFG          Financial Corporation***

**4.          Related party transactions**

**5.**Going          concern****

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Item      2. Management's Discussion and Analysis or Plan of      Operation

Item      3. Controls and Procedures

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Item      1. LEGAL PROCEEDINGS

Item      2.UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Item      3. DEFAULTS ON SENIOR SECURITIES

Item      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS

Item      5. OTHER INFORMATION

Item      6. Exhibits

EX-31      (Certifications, Sarbanes-Oxley Act of      2002)

EX-32      (Certifications, Sarbanes-Oxley Act of      2002)

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SIGNATURES

|                                     |                                       |                                             |
|------------------------------------------|--------------------------------------------|--------------------------------------------------|
|                                     | **SFG              FINANCIAL CORPORATION** |
|                                |                                  | (Registrant)                                |
| Date: January              23, 2007 | By:                              | /s/ John              A.              Dugan |
|                                     | John              A. Dugan                 |
|                                     | Chairman/CEO                               |

|                                     |                                                                   |                                             |
|------------------------------------------|------------------------------------------------------------------------|--------------------------------------------------|
|                                     | **SFG              FINANCIAL CORPORATION**                             |
|                                |                                                              |                                        |
| Date: January              23, 2007 | By:                                                          | /s/ John              A.              Dugan |
|                                     | John              A. Dugan                                             |
|                                     | Chairman/CEO(principal                executive and financial officer) |

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