U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the fiscal year ended December 31, 2000

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

     For the transition period from             to
                                   -------------  -------------
     Commisison file number 0-26509

                       SOUTHERN GROUP INTERNATIONAL, INC.
                      -------------------------------------
                     (Name of small business in its charter)

                  Florida                                 65-06001272
 --------------------------------------------     -----------------------------
(State or other jurisdiction of Incorporation)   (IRS Employer Identification #)

                                  69 Mall Drive
            --------------------------------------------------------
            Address of Principal Executive Office (street and number)

                             Commack, New York 11725
                            ------------------------
                            City, State and Zip Code

Issuer's telephone number:  (631) 543-2800
Securities registered under Section 12(b) of the Act:
Title of each class   N/A
Securities to be registered under Section 12(g) of the Act:

                          Common Stock $.001 par value
                                (Title of Class)

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
                              -----

State issuer's revenue for its most recent fiscal year: $-0-

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked priced of such stock, as of a specified date within the past 60
days (See definition of affiliate in Rule 12b-2):$-0-

Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 2,092,200 as of September 30, 2001.

(Documents incorporated by reference. If the following documents are
incorporated by reference, briefly describe them and identify the part of the
Form 10-KSB (e.g. Part I, Part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) of the Securities Act of 1933 ("Securities Act"). The listed documents
should be clearly described for identification purposes.

<PAGE>


                                     PART I


ITEM 1.   DESCRIPTION OF BUSINESS.

General

     The Company was incorporated under the laws of the State of Florida on
August 10, 1995, and is in the early developmental and promotional stages. To
date the Company's only activities have been organizational ones, directed at
the raising of capital, and preliminary efforts to seek one or more properties
or businesses for acquisition. The Company has not commenced any commercial
operations. The Company has no full-time employees and owns no real estate.

     The Company's business plan is to seek, investigate, and, if warranted,
acquire one or more properties or businesses. Such an acquisition may be made by
purchase, merger, exchange of stock, or otherwise, and may encompass assets or a
business entity, such as a corporation, joint venture, or partnership. The
Company has very limited capital, and it is unlikely that the Company will be
able to take advantage of more than one such business opportunity. The Company
intends to seek opportunities demonstrating the potential of long-term growth as
opposed to short-term earnings.

     As of the end of its fiscal year ending December 31, 2000, the Company had
not identified any business opportunity that it plans to pursue, nor has the
Company reached any agreement or definitive understanding with any person
concerning an acquisition.

     It is anticipated that the Company's officers and directors will initiate
contacts with securities broker-dealers and other persons engaged in other
aspects of corporate finance to advise them of the Company's existence and to
determine if the companies or businesses they represent have an interest in
considering a merger or acquisition with the Company. No assurance can be given
that the Company will be successful in finding or acquiring a desirable business
opportunity, given the limited funds that are expected to be available for
acquisitions, or that any acquisition that occurs will be on terms that are
favorable to the Company or its stockholders.

     The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are able
to satisfy, or anticipate in the reasonably near future being able to satisfy,
the minimum asset requirements in order to qualify shares for trading on NASDAQ
or on an exchange such as the American or Pacific Stock Exchange. (See
"Investigation and Selection of Business Opportunities"). The Company
anticipates that the business opportunities presented to it will (i) be recently
organized with no operating history, or a history of losses attributable to
under-capitalization or other factors; (ii) be experiencing financial or
operating difficulties; (iii) be in need of funds to develop a new product or
service or to expand into a new market; (iv) be relying upon an untested product
or marketing concept; or (v) have a combination of the characteristics mentioned
in (i) through (iv). The Company intends to concentrate its acquisition efforts
on properties or businesses that it believes to be undervalued. Given the above
factors, investors should expect that any acquisition candidate may have a
history of losses or possibilities.

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     The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural
resources, manufacturing, high technology, product development, medical,
communications and others. The Company's discretion in the selection of business
opportunities is unrestricted, subject to the availability of such
opportunities, economic conditions, and other factors.

     As a consequence of the Company's registration of its securities under the
Securities Exchange Act of 1934, any entity which has an interest in being
acquired by the Company is expected to be an entity that desires to become a
public company as a result of the transaction. In connection with such an
acquisition, it is highly likely that an amount of stock constituting control of
the Company would be issued by the Company or purchased from the Company's
current principal shareholders by the target entity or its controlling
shareholders.

     It is anticipated that business opportunities will come to the Company's
attention from various sources, including its officers and directors, its other
stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plans, understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.

Investigation and Selection of Business Opportunities

     To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the other
company's management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological changes, and numerous
other factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is anticipated that
the historical operations of a specific firm may not necessarily be indicative
of the potential for the future because of the possible need to shift marketing
approaches substantially, expand significantly, change product emphasis, change
or substantially augment management, or make other changes. Because of the lack
of training or experience of the Company's management, the Company will be
dependent upon the owners of a business opportunity to identify such problems
and to implement, or be primarily responsible for the implementation of,
required changes. Because the Company may participate in a business opportunity
with a newly organized firm or with a firm which is entering a new phase of
growth, it should be emphasized that the Company will incur further risks,
because management in many instances will not have proved its abilities or
effectiveness, the eventual market for such company's products or services will
likely not be established, and such company may not be profitable when acquired.

     It is anticipated that the Company will not be able to diversify, but will
essentially be limited to one such venture because of the Company's limited
financing. This lack of diversification will not permit the Company to offset
potential losses from one business opportunity against profits from another, and
should be considered an adverse factor affecting any decision to purchase the
Company's securities.

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<PAGE>


     It is emphasized that management of the Company may effect transactions
having a potentially adverse impact upon the Company's shareholders pursuant to
the authority and discretion of the Company's management to complete
acquisitions without submitting any proposal to the stockholders for their
consideration. Company management does not generally anticipate that it will
provide holders of the Company's securities with financial statements, or any
other documentation, concerning a target company or its business prior to any
merger or acquisition. In some instances, however, the proposed participation in
a business opportunity may be submitted to the stockholders for their
consideration, either voluntarily by Company management which elects to seek the
stockholders' advice and consent, or because state law so requires.

     The analysis of business opportunities will be undertaken by or under the
supervision of the Company's executive officers and directors.

     Although there are no current plans to do so, Company management might hire
an outside consultant to assist in the investigation and selection of business
opportunities, and in that event, might pay a finder's fee. Since Company
management has no current plans to use any outside consultants or advisors to
assist in the investigation and selection of business opportunities, no policies
have been adopted regarding use of such consultants or advisors, the criteria to
be used in selecting such consultants or advisors, the services to be provided,
the term of service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is likely that any
such fee the Company agrees to pay would be paid in stock and not in cash.
Otherwise, the Company anticipates that it will consider, among other things,
the following factors:

     (a) Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;

     (b) Competitive position as compared to other companies of similar size and
experience within the industry segment as well as within the industry as a
whole;

     (c) Strength and diversity of existing management, or management prospects
that are scheduled for recruitment;

     (d) Capital requirements and anticipated availability of required funds, to
be provided from operations, through the sale of additional securities, through
joint ventures or similar arrangements, or from other sources;

     (e) The cost of participation by the Company as compared to the perceived
tangible and intangible values and potential;

     (f) The extent to which the business opportunity can be advanced;

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<PAGE>


     (g) The Company's perception of how any particular business opportunity
will be received by the investment community and by the Company's stockholders;

     (h) The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required items; and

     (i) Whether the financial condition of the business opportunity would be,
or would have a significant prospect in the foreseeable future to become, such
as to permit the securities of the Company, following the business combination,
to qualify to be listed on an exchange or on a national automated securities
quotation system, such as NASDAQ, so as to permit the trading of such securities
to be exempt from the requirements of Rule 15c2-6 recently adopted by the
Securities and Exchange Commission. See "Risk Factors - The Company - Regulation
of Penny Stocks."

     In regard to the possibility that the shares of the issuer would qualify
for listing on NASDAQ, the current standards for initial listing include, among
other requirements that the issuer have (1) net tangible assets of at least $4
million, or a market capitalization of at least $50 million, or net income in
its latest fiscal year of not less than $750,000 in its latest fiscal year, or
in two of the last three fiscal years; (2) a public float (i.e., shares that are
not held by any officer, director of 10% stockholder) of at least 1 million
shares; (3) a minimum bid price of at least $4 per share; (4) at least 300 round
lot stockholders (i.e., stockholders who own not less than 100 shares); and (5)
have an operating history of at least one year or have a market capitalization
of at least $50 million,. Many, and perhaps most of the business opportunities
that might be potential candidates for a combination with the Company would not
satisfy the NASDAQ listing criteria.

     No one of the factors described above will be controlling in the selection
of a business opportunity, and management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex.
Potential investors must recognize that, because of the Company's limited
capital available for investigation and management's limited experience in
business analysis, the Company may not discover or adequately evaluate adverse
facts about the opportunity to be acquired.

     The Company is unable to predict when it may participate in a business
opportunity and it has not established any deadline for completion of a
transaction. It expects, however, that the process of seeking candidates,
analysis of specific proposals and the selection of a business opportunity may
require several additional months or more.

     Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with written materials
regarding the business opportunity containing such items as a description of
product, service and company history; management resumes; financial information;
available projections, with related assumptions upon which they are based; an
explanation of proprietary products and services; evidence of existing patents,
trademarks, or services marks, or rights thereto; present and proposed forms of
compensation to management; a description of transactions between such company

                                       4

<PAGE>


and its affiliates during relevant periods; a description of present and
required facilities; an analysis of risks and competitive conditions; a
financial plan of operation and estimated capital requirements; audited
financial statements or an indication that audited statements will be available
within sixty (60) days following completion of a merger transaction; and other
information deemed relevant.

     As part of the Company's investigation, the Company's executive officers
and directors may meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.

     Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates which have long-term plans for raising equity capital
through the public sale of securities and believe that the possible prior
existence of a public market for their securities would be beneficial, and
acquisition candidates which plan to acquire additional assets through issuance
of securities rather than for cash, and believe that the possibility of
development of a public market for their securities will be assistance in that
process. Acquisition candidates which have a need for an immediate cash infusion
are not likely to find a potential business combination with the Company to be
an attractive alternative.

Form of Acquisition

     It is impossible to predict the manner in which the Company may participate
in a business opportunity. Specific business opportunities will be reviewed as
well as the respective needs and desires of the Company and the promoters of the
opportunity and, upon the basis of that review and the relative negotiating
strength of the Company and such promoters, the legal structure or method deemed
by management to be suitable will be selected. Such structure may include, but
is not limited to, share exchanges, mergers, agreements for purchase of and sale
of stock or assets, leases, licenses, joint ventures and other contractual
arrangements. The Company may act directly or indirectly through an interest in
a partnership, corporation or other form of organization. Implementing such
structure may require the merger, consolidation or reorganization of the Company
with other corporations or forms of business organization. In addition, the
present management and stockholders of the Company most likely will not have
control of a majority of the voting shares of the Company following a
reorganization transaction. As part of such a transaction, the Company's
directors may resign and new directors may be appointed without any vote by
stockholders.

     It is likely that the Company will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986, depends upon the issuance to the stockholders of
the acquired company of more than 80% of the common stock of the combined
entities immediately following the reorganization. If a transaction were
structured to take advantage of these provisions rather than other "tax free"
provisions provided under the Internal Revenue Code, the Company's stockholders
in such circumstances would retain in the aggregate 20% or less of the total
issued and outstanding shares. This could result in substantial additional

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dilution in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in the Company by the current officers, directors and principal
shareholders. (See "Description of Business - General").

     It is anticipated that any securities issued in any reorganization would be
issued in reliance upon exemptions, if any are available, from registration
under applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of the transaction, the Company may agree to
register such securities either at the time the transaction is consummated, or
under certain conditions or at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any trading
market that might develop in the Company's securities may have a depressive
effect upon such market.

     The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.

     As a general matter, the Company anticipates that it will enter into a
letter of intent with the management, principals or owners of a prospective
business opportunity prior to signing a binding agreement.

     Such a letter of intent will set forth the terms of the proposed
acquisition but will not bind either the Company or the business opportunity to
consummate the transaction. Execution of a letter of intent will by no means
indicate that consummation of an acquisition is probable. Neither the Company
nor the business opportunity will be bound to consummate the acquisition unless
and until a definitive agreement concerning the acquisition as described in the
preceding paragraph is executed. Even after a definitive agreement is executed,
it is possible that the acquisition would not be consummated should either party
elect to exercise any right provided in the agreement to terminate it on
specified grounds.

     It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of the Company to pay until an indeterminate future time may make it
impossible to procure goods and services.

Competition

     The Company expects to encounter substantial competition in its efforts to
locate attractive opportunities, primarily from business development companies,
venture capital partnerships and corporations, venture capital affiliates of
large industrial and financial companies, small investment companies, and
wealthy individuals. Many of these entities will have significantly greater

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experience, resources and managerial capabilities than the Company and will
therefore be in a better position than the Company to obtain access to
attractive business opportunities. The Company also will experience competition
from other public "blind pool" companies, many of which may have more funds
available than does the Company.

Administrative Offices

     The Company currently maintains a mailing address at 69 Mall Drive,
Commack, New York. The Company's telephone number there is (631) 543-2800.

     Other than this mailing address, the Company does not currently maintain
any other office facilities, and does not anticipate the need for maintaining
office facilities at any time in the foreseeable future. The Company pays no
rent or other fees for the use of this mailing address.

Employees

     The Company is a development stage company and currently has no employees.
Management of the Company expects to use consultants, attorneys and accountants
as necessary, and does not anticipate a need to engage any full-time employees
so long as it is seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in specific business
opportunities. No remuneration will be paid to the Company's officers except as
set forth under "Executive Compensation" and under "Certain Relationships and
Related Transactions."

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.

     Except for historical matters, the matters discussed in this Form 10-KSB
are forward-looking statements based on current expectations, and involve risks
and uncertainties. Forward-looking statements include, but are not limited to,
statements under the following headings:

  (i) "Description of Business - General" - the general description of the
Company's plan to seek a merger or acquisition candidate, and the types of
business opportunities that may be pursued.

  (ii) "Description of Business - Investigation and Selection of Business
Opportunities" - the steps which may be taken to investigate prospective
business opportunities, and the factors which may be used in selecting a
business opportunity.

  (iii) "Description of Business - Form of Acquisition" - the manner in which
the Company may participate in a business acquisition.

     The Company wishes to caution the reader that there are many uncertainties
and unknown factors which could affect its ability to carry out its business
plan in the manner described herein.



ITEM 2.   DESCRIPTION OF PROPERTY.

     The Company currently maintains a mailing address at 69 Mall Drive,
Commack, New York 11725, which is the address of its President. The Company pays
no rent for the use of this mailing address. The Company does not believe that

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it will need to maintain an office at any time in the foreseeable future in
order to carry out its plan of operations described herein. The Company's
telephone number is (631) 543-2800.

     The Company currently has no investments in real estate, real estate
mortgages, or real estate securities, and does not anticipate making any such
investments in the future. However, the policy of the Company with respect to
investment in real estate assets could be changed in the future without a vote
of security holders.

ITEM 3. LEGAL PROCEEDINGS.

     The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.

     No director, officer or affiliate of the Company, and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.

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

     No matters were submitted to a vote of the security holders of the Company
during the fiscal year which ended December 31, 2000.

                                     Part II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     There has been no established public trading market for the Company's
securities since its inception on August 10, 1995. However, the Company's
securities are traded on the National Quotation Bureau pink sheets with no bid
and no offer. The Company's trading symbol is SGPI. As of September 30, 2001
there were 2,092,200 shares outstanding, and the Company has 70 shareholders of
record. No dividends have been paid to date and the Company's Board of directors
does not anticipate paying dividends in the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

     The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholders equity other than the receipt of proceeds in the amount of $63,064
for its inside capitalization funds. Substantially all of such funds have been
used to pay expenses incurred by the Company.

     The Company intends to seek to carry out its plan of business as discussed
herein. In order to do so, it will require additional capital to pay ongoing
expenses, including particularly legal and accounting fees incurred in
conjunction with future compliance with its on-going reporting obligations.

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Results of Operations

     During the period from August 10, 1995 (inception) through December 31,
2000, the Company has an accumulated deficit of $(153,387). During this period,
the Company has engaged in no significant operations other than organizational
activities, acquisition of capital, preparation and filing of the registration
of its securities under the Securities Exchange Act of 1934, as amended,
compliance with its periodical reporting requirements, and efforts to locate a
suitable merger or acquisition candidate. No revenues were received by the
Company during this period.

     The Company anticipates incurring a loss during fiscal year ending December
31, 2001 as a result of expenses associated with compliance with the reporting
requirements of the Securities Exchange Act of 1934, and expenses associated
with locating and evaluating acquisition candidates. The Company anticipates
that until a business combination is completed with an acquisition candidate, it
will not generate revenues. It may also continue to operate at a loss after
completing a business combination, depending upon the performance of the
acquired business.

Need for Additional Financing

     It is anticipated that the Company will require additional capital in order
to meet its cash needs for the next year, including the costs of compliance with
the continuing reporting requirements of the Securities Exchange Act of 1934, as
amended.

     No specific commitments to provide additional funds have been made by
management or other stockholders, and the Company has no current plans,
proposals, arrangements or understandings with respect to the sale or issuance
of additional securities prior to the location of a merger or acquisition
candidate. Accordingly, there can be no assurance that any additional funds will
be available to the Company to allow it to cover its expenses. Notwithstanding
he foregoing, to the extent that additional funds are required, the Company
anticipates receiving such funds in the form of advancements from current
shareholders without issuance of additional shares or other securities, or
through the private placement of restricted securities rather than through a
public offering.

     The Company does not currently contemplate making a Regulation S offering.

     The Company may also seek to compensate providers of services by issuances
of stock in lieu of cash. For information as to the Company's policy in regard
to payment for consulting services, see "Certain Relationships and
Transactions."

Year 2000 Compliance

     Year 2000 issues are not currently material to the Company's business,
operations or financial condition, and the Company does not currently anticipate
that it will incur any material expenses to remedy Year 2000 issues it may
encounter. However, Year 2000 issues may become material to the Company
following its completion of a business combination transaction. In that event,
the Company will be required to adopt a plan and a budget for addressing such
issues.


ITEM 7. FINANCIAL STATEMENTS.

4.   INCOME TAXES

     The Company has a Federal net operating loss carryforward of approximately
$153,000 expiring in the year 2010 through 2020. The tax benefit of this net
operating losses is approximately $61,000 and has been offset by a full
allowance for business contributions under IRC Section 381. For the period ended
December 31, 2000 the valuation allowance increased by $32,522.

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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     On April 3, 2001, the Company filed a Form 8-K disclosing termination of
its relationship with its independent certified public accountant, Stuart H.
Benjamin, P.C., and announcing appointment of Grant Thornton, LLP ("Grant") as
the Company's new accountants. Although interviews with Grant took place, Grant
was never engaged as the Company's independent certified public accountant.
Accordingly, the disclosure of the engagement of Grant by the Company's
management in the Company's April 3, 2001 Form 8-K was erroneous.

     On April 10, 2001, the Company engaged the accounting firm of Livingston
Wachtell & Co. ("Livingston") as its independent public accountants to audit the
Company's financial statements beginning with fiscal year ending December 31,
2000, and to review the Company's interim financial statements beginning with
fiscal quarter ended March 31, 2001. The appointment of new independent public
accountants was approved by the Company's Board of Directors. We amicably
concluded our relationship with our former independent public accountant, Stuart
H. Benjamin ("Benjamin") effective with the appointment of Livingston. Prior to
the appointment of Livingston, the Company did not consult with Livingston on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure. There were no disagreements with Benjamin on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure that would have caused Benjamin to make references
in his report to such disagreement. Benjamin's reports on the Company's
financial statements have contained no adverse opinion or disclaimer of opinion
and were not modified as to audit scope or accounting principles.

                                    Part III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

     The directors and executive officers currently serving the Company are as
follows:

Name                        Age                        Position(s) held
-----               --------------------               ----------------------
Konrad C. Kim               31                         President, Director
Seema Wasil                 30                         Secretary, Director
Rahul Rametra               28                          Director

     The directors named above will serve until the next annual meeting of the
Company's stockholders. Thereafter, directors will be elected for one year terms
at the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the board of directors, absent any employment agreement, of which
none currently exists or is contemplated. There is no arrangement or
understanding between any of the directors or officers of the Company and any
other person pursuant to which any director or officer was or is to be selected
as a director or officer.

     The directors and officers will devote their time to the Company's affairs
on an "as needed" basis, which, depending on the circumstances, could amount to
as little as two hours per month, or more than forty hours per month, but more
than likely will fall within the range of five to ten hours per month.

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Biographical Information

     Konrad C. Kim- received a Bachelor of Science degree from the University of
Wisconsin in 1992. From 1995 - 1997 he was a Consultant Systems Administrator
for SONY Entertainment, Columbia House, and The Village Voice newspaper. From
1997 - 1999 he was a Technical Systems Analyst at Moody's Investor's Services.
Since 1999 he has been a Systems

Engineer at Gateway.com.

     Seema Wasil- earned a Bachelors Degree in Accounting from Hofstra
University in 1991 and a Masters Degree in Special Education from Hofstra in
1993. From 1995 to 1998 she worked in the Accounting and Public Relations
departments of Atec Group, Inc. a publicly traded Company. From 1999 to the
present, she has been a Vice-President of Stern Capital Partners, Ltd, a private
consulting firm.

     Rahul Rametra- received a Bachelors Degree from State University of New
York, Stony Brook in 1995, and earned a Masters Degree in Finance from C.W. Post
University in 1998. He has been employed by ATEC Group, Inc. since 1995 and is
currently a sales representative for Atec Group, Inc. and Chief Operating
Officer of Nexar, Inc. a subsidiary of Atec Group, Inc.

Compliance with Section 16(a) of the Exchange Act.

     Seema Wasil and Rahul Rametra, officers and directors of the Company, and
Surinder Rametra, Beresford Overseas, Ltd., and Nirmala Rametra, beneficial
owners of more than 10% of the Company's common stock, were each required to
file an Initial Statement of Beneficial ownership of Securities on Form 3 at the
time of the registration of the Company's securities under Section 12(g) of the
Act. None of them made a timely filing on Form 3. They have each represented to
the Company that they will complete all required filings under Section 16(a) on
or before September 30, 2001.

ITEM 10.  EXECUTIVE COMPENSATION.

     No officer or director received any remuneration from the Company during
the fiscal year. Until the Company acquires additional capital, it is not
intended that any officer or director will receive compensation from the Company
other than reimbursement for out-of-pocket expenses incurred on behalf of the
Company. See "Certain Relationships and Related Transactions." The Company has
no stock option, retirement, pension, or profit-sharing programs for the benefit
of directors, officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT.

     The following table sets forth, as of the end of the Company's most recent
fiscal year, the number of shares of Common Stock owned of record and
beneficially by executive officers, directors and persons who hold 5.0% or more
of the outstanding Common Stock of the Company. Also included are the shares
held by all executive officers and directors as a group.

                                       11

<PAGE>


Name and                         Number of Shares               Percent of
Address                          Owned Beneficially            Class Owned
--------------------------------------------------------------------------------

Surinder Rametra                  553,200(4)                       26.4%
27 Riesling Ct
Commack, NY 11725

Beresford Overseas Limited        300,000                          14.3%
P.O. Box 174
St. James Chambers
Athol Street
Douglas, Isle of Man 1M99 1PP

Stern Capital Partners LLC        300,000                          14.3%
170 East 88th Street
New York, NY 10128

Mid-Continental Securities Corp.  300,000                          14.3%
713 Pineside Lane
Naples, FL 34107

Nirmala Rametra(1)                152,000(4)                       7%
27 Riesling Court
Commack, NY 11725

Seema Wasil(2)                    47,000(2)                        2.2%
27 Riesling Court
Commack, NY 11725

Rahul Rametra                     22,000(3)                        1.1%
209 Crombie Street
Huntington Station, NY 11746

Konrad C. Kim                     10,000                           ***
69 Mall Street
Commack, NY

All Directors and                 79,000                           3.8%%
Executive officers (3)persons)

*** Less than 1%

(1)  Nirmala Rametra is the wife of Surinder Rametra.

(2) Seema Wasil is the Secretary and Director of Southern Group
International,Inc., and is the daughter of Surinder Rametra and Nirmala Rametra.

(3) Rahul Rametra is a Director of Southern Group International, Inc., and the
nephew of Surinder Rametra and Nirmala Rametra.

(4) Does not include 57,000 shares held by S&N Associates, Inc. a corporation of
which Surinder Rametra and Nirmala Rametra are the sole shareholders.

All of the above disclaim any beneficial ownership in shares owned by family
members.

Changes in Control

         A change in control of the Company will probably occur upon
consummation of a business combination, which is anticipated to involve
significant change in ownership of stock of the company, membership of the board
of directors. The extent of any such change or control in ownership or board
composition cannot be predicted at this time.

                                       12

<PAGE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Indemnification of Officers and Directors

     As permitted by Florida law, the Company's Articles of Incorporation
provide that the Company will indemnify its directors and officers against
expenses and liabilities they incur to defend, settle, or satisfy any civil or
criminal action brought against them on account of their being or having been
Company directors or officers unless, in any such action, they are adjudged to
have acted with gross negligence or willful misconduct. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable.

Conflicts of Interest

     None of the officers of the Company will devote more than a portion of his
time to the affairs of the Company. There will be occasions when the time
requirements of the Company's business conflict with the demands of the
officers' other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.

     Each of the Company's officers and directors also are officers, directors,
or both of several other corporations. These companies may be in direct
competition with the Company for available opportunities.

     Company management, and the other principal shareholders of the Company,
intend to actively negotiate or otherwise consent to the purchase of a portion
of their common stock as a condition to, or in connection with, a proposed
merger or acquisition transaction. Members of management acquired their shares
for services rendered at a price of $0.001 per share, and the total purchase
price for all presently issued and outstanding shares. It is anticipated that a
substantial premium may be paid by the purchaser in conjunction with any sale of
shares by officers, directors or affiliates of the Company which is made as a
condition to, or in connection with, a proposed merger or acquisition
transaction. The fact that a substantial premium may be paid to Company
officers, directors and affiliates to acquire their shares creates a conflict of
interest for them and may compromise their state law fiduciary duties to the
Company's other shareholders. In making any such sale, Company officers,
directors and affiliates may consider their own personal pecuniary benefit
rather than the best interests of the Company and the Company's other
shareholders, and the other shareholders are not expected to be afforded the
opportunity to approve or consent to any particular buy-out transaction
involving shares held by members of Company management.

                                       13

<PAGE>


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a) The Exhibits listed below are filed as part of this Annual Report.

Exhibit No.       Document
------------      ---------------

3.1               Articles of Incorporation (incorporated by reference from
                  Registration Statement on Form 10-SB filed with the Securities
                  and Exchange Commission on June 25, 1999).

3.2               Bylaws (incorporated by reference from Registration Statement
                  on Form 10-SB filed with the Securities and Exchange
                  Commission on June 25, 2000).


     (b)  No Reports on Form 8-K were filed during the year ended December 31,
          2000.

                                       14

<PAGE>


SIGNATURES

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

Dated: October 29, 2001

                                            SOUTHERN GROUP INTERNATIONAL, INC.



                                            By:  s/s  Konrad C. Kim
                                               --------------------------------
                                                      Konrad C. Kim, President,
                                                      Director



                                            By:  s/s Seema Wasil
                                               --------------------------------
                                                     Seema Wasil, Secretary,
                                                     Director



                                            By:  s/s  Rahul Rametra
                                               --------------------------------
                                                      Rahul Rametra, Director

                                       15

<PAGE>






                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


Board of Directors and Stockholders
Southern Group International, Inc.
  (A Development Stage Company)


We have audited the accompanying balance sheet of SOUTHERN GROUP INTERNATIONAL,
INC. (a development stage company) as of December 31, 2000, and the related
statements of operations, cash flows and changes in stockholders' deficiency for
the year then ended and for the period August 10, 1995 (date of inception) to
December 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We did not audit the financial
statements of SOUTHERN GROUP INTERNATIONAL, INC. for the period August 10, 1995
(date of inception) to December 31,1999. The financial statement amounts of the
statements of operations, cash flows and changes in stockholders' deficiency for
such prior periods are encompassed in the cumulative financial statements for
the period August 10, 1995 (date of inception) to December 31, 2000. The
financial statements for all periods prior to January 1, 2000 were audited by
other auditors whose reports express unqualified opinions on those statements,
and our opinion, insofar as it relates to amounts for the period from inception
to December 31,1999, included in the cumulative totals for the statements of
operations, cash flows and changes in stockholders' deficiency, is based solely
on the reports of the other auditors.

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

In our opinion, based on our audit and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of SOUTHERN GROUP INTERNATIONAL, INC. as of December 31,
2000, and the results of its operations and its cash flows for the year then
ended and for the period August 10, 1995 (date of inception) to December 31,
2000, in conformity with generally accepted accounting principles.

/s/Livingston, Wachtell & Co., LLP

New York, New York
May 25, 2001


<PAGE>



                       SOUTHERN GROUP INTERNATIONAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEETS

                           DECEMBER 31, 2000 AND 1999



                                     ASSETS
                                     ------

                                                          2 0 0 0      1 9 9 9
                                                         ---------    ---------
CURRENT ASSETS

      Cash                                               $  10,011    $   1,976
      Marketable Securities                                   --         29,531
                                                         ---------    ---------

              TOTAL ASSETS                               $  10,011    $  31,507
                                                         =========    =========



                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                    ----------------------------------------

CURRENT LIABILITIES:

      Loan Payable                                       $    --      $   2,831
      Loans Payable, Related Parties                          --         15,039
      Accrued Expenses                                      84,694         --
                                                         ---------    ---------

              TOTAL LIABILITIES                             84,694       17,870
                                                         ---------    ---------

STOCKHOLDERS' DEFICIENCY

      Preferred stock - $.0001 par value,
          10,000,000 Shares Authorized,
          -0- Shares Issued and Outstanding                   --           --
      Common Stock - $ .0001 Par Value,
          80,000,000 Shares Authorized,
          1,402,200 and 1,245,800 Shares Issued and
          Outstanding in 2000 and 1999, respectively           141          125
      Additional Paid-in Capital                            78,563       62,939
      Deficit Accumulated During the Development Stage    (153,387)     (72,083)
      Accumulated Other Comprehensive Income                  --         22,656
                                                         ---------    ---------

              TOTAL STOCKHOLDERS' DEFICIENCY               (74,683)      13,637
                                                         ---------    ---------

              TOTAL LIABILITIES AND STOCKHOLDERS'
                 DEFICIENCY                              $  10,011    $  31,507
                                                         =========    =========


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

                                        2

<PAGE>
<TABLE>
<CAPTION>


                                SOUTHERN GROUP INTERNATIONAL, INC.
                                   (A DEVELOPMENT STAGE COMPANY)

                                     STATEMENTS OF OPERATIONS

                             FOR THE YEARS ENDED DECEMBER 31, 2000 AND
                              1999 AND FOR THE PERIOD AUGUST 10, 1995
                             (DATE OF INCEPTION) TO DECEMBER 31, 2000




                                                                                 AUGUST 10, 1995
                                               YEAR              YEAR          (DATE OF INCEPTION)
                                               ENDED             ENDED                 TO
                                            DECEMBER 31,       DECEMBER 31,        DECEMBER 31,
                                               2000               1999                2000
                                               ----               ----                ----

<S>                                        <C>                 <C>                 <C>
Income                                     $      --           $      --           $      --

COST AND EXPENSES
   General and Administrative Expenses:
     Consulting Fees                            74,000                --                74,000
     Bank Charges                                   61                 675               1,693
     Filing Fees                                   300                 250                 900
     Edgar Filing Service Fees                   2,878                 740               3,618
     Legal Fees                                  9,816              10,000              20,316
     Accounting Fees                             9,750               1,725              11,850
     Transfer Agent Fees                         1,100                 750               3,460
     Miscellaneous                                --                  --                    64
                                           -----------         -----------         -----------

Total Cost and Expenses                         97,905              14,140             115,901
                                           -----------         -----------         -----------

Operating Loss                                 (97,905)            (14,140)           (115,901)
                                           -----------         -----------         -----------

Other Income (Expenses)
     Impairment Loss on Related
         Party Receivable                         --               (50,000)            (50,000)
     Interest Income                               164                --                   164
     Interest Expense                             (652)             (3,457)             (4,739)
     Gain on Sale of Marketable Security        17,089                --                17,089
                                           -----------         -----------         -----------

Total Other Income (Expenses)                   16,601             (53,457)            (37,486)
                                           -----------         -----------         -----------

NET LOSS                                   $   (81,304)        $   (67,597)        $  (153,387)
                                           ===========         ===========         ===========

LOSS PER COMMON SHARE                      $    (.0580)        $    (.0649)        $    (.1577)
                                           ===========         ===========         ===========

WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING                      1,401,773           1,041,964             972,583
                                           ===========         ===========         ===========



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

                                                 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                           SOUTHERN GROUP INTERNATIONAL, INC.
                                             (A DEVELOPMENT STAGE COMPANY)
                                   STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                                                AND COMPREHENSIVE LOSS

                                            FOR THE PERIOD AUGUST 10, 1995
                                       (DATE OF INCEPTION) TO DECEMBER 31, 2000



                                                                                 Deficit
                                                Common Stock                   Accumulated  Accumulated
                                              $.0001 Par Value      Additional During the      Other
                                              -----------------      Paid-In   Development Comprehensive Comprehensive
                                             Shares      Amount      Capital      Stage       Income         Loss
                                            ---------   ---------   ---------   ---------    ---------    ---------
<S>                                          <C>        <C>         <C>         <C>          <C>          <C>
Balances, August 10, 1995                        --     $    --     $    --     $    --      $    --      $    --

   Issuance of Common Stock                   642,800          64        --          --           --           --

   Net Loss for the Period                       --          --          --           (64)        --           --
                                            ---------   ---------   ---------   ---------    ---------    ---------

Balances - December 31, 1995                  642,800          64        --           (64)        --           --

The Company was inactive during 1996             --          --          --          --           --           --
                                            ---------   ---------   ---------   ---------    ---------    ---------

Balances, December 31, 1996                   642,800          64        --           (64)        --

The Company was inactive during 1997             --          --          --          --           --           --
                                            ---------   ---------   ---------   ---------    ---------    ---------

Balances - December 31, 1997                  642,800          64        --           (64)        --           --

   Sale of Common Stock                         3,000           1       2,999        --           --           --

   Net Loss                                      --          --          --        (3,589)        --           --
                                            ---------   ---------   ---------   ---------    ---------    ---------

Balances - December 31, 1998                  645,800          65       2,999      (3,653)        --           --

   Prior Period Adjustments                      --          --          --          (833)        --           --

   Sale of Common Stock                       297,500          30      29,720        --           --           --

   Shareholders Loans Converted to Stock      233,750          23      23,352        --           --           --

   Common Stock Issued for Marketable
     Securities, Valued at $.10 Per Share      68,750           7       6,868        --           --           --

     Net Loss                                    --          --          --       (67,597)        --        (67,597)

     Unrealized Gain on Marketable
        Securities                               --          --          --          --         22,656       22,656
                                            ---------   ---------   ---------   ---------    ---------    ---------

Balances - December 31, 1999                1,245,800         125      62,939     (72,083)      22,656      (44,941)

Shareholders' Loan Converted to Stock         156,400          16      15,624        --           --           --

     Net Loss                                    --          --          --       (81,304)        --        (81,304)

     Change in Unrealized Gain on
        Marketable Securities                    --          --          --          --        (22,656)     (22,656)
                                            ---------   ---------   ---------   ---------    ---------    ---------

Balances - December 31, 2000                1,402,200   $     141   $  78,563   $(153,387)   $    --      $(103,960)
                                            =========   =========   =========   =========    =========    =========


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

                                                          4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                       SOUTHERN GROUP INTERNATIONAL, INC.
                                         (A DEVELOPMENT STAGE COMPANY)

                                            STATEMENTS OF CASH FLOWS

                                    FOR THE YEARS ENDED DECEMBER 31, 2000 AND
                                     1999 AND FOR THE PERIOD AUGUST 10, 1995
                                    (DATE OF INCEPTION) TO DECEMBER 31, 2000


                                                                                                AUGUST 10, 1995
                                                                  YEAR              YEAR           (DATE OF
                                                                  ENDED             ENDED        INCEPTION) TO
                                                              DECEMBER 31,      DECEMBER 31,      DECEMBER 31,
                                                                  2000              1999             2000
                                                                  ----              ----             ----
CASH FLOWS FROM OPERATING ACTIVITIES
    <S>                                                        <C>               <C>               <C>
     Net Loss                                                  $ (81,304)        $ (67,597)        $(153,387)
     Adjustments to Reconcile Net Income (Loss) to
         Net Cash Used in Operating Activities:
              Realized Gain on Sale of Available-for Sale
                  Securities                                     (17,089)             --             (17,089)
              Impairment Loss on Related Party Receivable           --              50,000            50,000
              Changes in Assets and Liabilities:
                  Increase (Decrease) in Accrued Expenses         84,694              (200)           84,694
                                                               ---------         ---------         ---------

     NET CASH USED IN OPERATING ACTIVITIES                       (13,699)          (17,797)          (35,782)
                                                               ---------         ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from Sale of Available-for-Sale Securities          23,965              --              23,965
     Increase in Loan Receivable, Related Party                     --                --             (50,800)
     Decrease in Loan Receivable, Related Party                     --                 800               800
                                                               ---------         ---------         ---------

     NET CASH PROVIDED BY (USED IN) INVESTING
         ACTIVITIES                                               23,965               800           (26,035)
                                                               ---------         ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from Short-term Debt                                   600            38,860            99,682
     Repayment of Short-term Debt                                 (2,831)          (52,033)          (60,668)
     Proceeds from Issuance of Common Stock                         --              29,750            32,814
                                                               ---------         ---------         ---------

     NET CASH PROVIDED BY (USED IN)
         FINANCING ACTIVITIES                                     (2,231)           16,577            71,828
                                                               ---------         ---------         ---------

NET INCREASE (DECREASE) IN CASH                                    8,035              (420)           10,011

CASH - Beginning of Period                                         1,976             2,396              --
                                                               ---------         ---------         ---------

CASH - End of Period                                           $  10,011         $   1,976         $  10,011
                                                               =========         =========         =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:
     Cash Paid During the Period for Interest                  $     652         $   2,763         $   3,774
                                                               =========         =========         =========
     Cash Paid During the Period for Income Taxes              $    --           $    --           $    --
                                                               =========         =========         =========
     Schedule of Noncash Investing and Financing Activities-
Unrealized Gain on Marketable Securities                       $ (22,656)        $  22,656         $    --
                                                               =========         =========         =========
         Common Stock Issued for Marketable Securities         $    --           $   6,875         $   6,875
                                                               =========         =========         =========
         Conversion of Shareholders' Loans to Capital Stock    $  15,640         $  23,375         $  39,015
                                                               =========         =========         =========


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

                                                        5
</TABLE>


<PAGE>



                       SOUTHERN GROUP INTERNATIONAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2000


1.   THE COMPANY, MANAGEMENT DISCUSSION AND PLAN OF OPERATION

     On August 10, 1995, Southern Group International, Inc. (the "Company"),
         formerly Future Vision Products, Inc. and Hydrogen Technology, Inc.,
         were incorporated under the laws of the State of Florida. The Company
         is seeking entities to acquire or merge with, in order to complete its
         business plan.


     LIQUIDITY AND CAPITAL RESOURCES

     The Company remains in the development stage and for the year ended
         December 31, 2000, has experienced no significant change in liquidity,
         capital resources or stockholders' equity other than the receipt of
         proceeds for its operating expenses. Substantially all of such funds
         have been used to pay expenses incurred by the Company.

     The Company intends to seek to carry out its plan of business of seeking to
         complete a merger or business acquisition transaction. In order to do
         so, it will require additional capital to pay ongoing expenses.


     RESULTS OF OPERATIONS

     During the year ended December 31, 2000, the Company has engaged in no
         significant operations other than the acquisition of capital for
         general and administrative expenses and registration of its securities
         under the Securities Exchange Act of 1934. During this period, the
         Company received no operating revenues. General and administrative
         expense consists primarily of professional and consulting fees and rent
         expenses.


     NEED FOR ADDITIONAL FINANCING

     The Company's existing capital will not be sufficient to meet the Company's
         cash needs, including complying with its continuing reporting
         obligation under the Securities Exchange Act of 1934. Accordingly,
         additional capital will be required.


     STATEMENT OF CASH FLOWS

     The Company considers all highly liquid debt instruments purchased with
         maturity of three months or less to be cash equivalents. During the
         year ended December 31, 2000, the Company paid $652 in interest; no
         taxes were paid for the same period.

                                       6

<PAGE>


                       SOUTHERN GROUP INTERNATIONAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2000


2.   THE COMPANY, MANAGEMENT DISCUSSION AND PLAN OF OPERATION (Continued)


     START-UP COSTS

     The Company adopted the provisions of the American Institute of Certified
         Public Accountants' Statement of Position 98-5, "Reporting on the Costs
         of Start-Up Activities". SOP provides guidance on the financial
         reporting of start-up and organization costs and requires such costs to
         be expensed as incurred.

     The start-up costs consist principally of professional and consulting fees.


     NET LOSS PER COMMON SHARE

     The net loss per common share is computed by dividing the net loss for the
         period by the weighted average number of shares outstanding at December
         31, 2000.


     USE OF ESTIMATES

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


     SIGNIFICANT ESTIMATES

     Several areas require significant management estimates relating to
         uncertainties for which it is reasonably possible that there will be a
         material change in the near term. The significant area requiring the
         use of management estimates related to valuation of loan receivable
         from related party and the fair value price per share.


     INCOME TAXES

     The Company is currently in a development stage and has not yet commenced
         an active trade or business. The Company did not provide any current or
         deferred federal or state income tax provision or benefit for any of
         the periods presented because to date, as it has experienced operating
         losses. The Company has a federal net operating loss carryforward of
         approximately $153,000 expiring in the years 2010 through 2020. The tax
         benefit of this net operating loss, based on an effective tax rate of
         40%, is approximately $61,000 and has been offset by a full allowance
         for business combination under IRC Section 381. For the period ended
         December 31, 2000, based on an effective tax rate of 40%, the valuation
         allowance increased by $32,522.

                                       7

<PAGE>


                       SOUTHERN GROUP INTERNATIONAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2000


3.   SECURITIES AVAILABLE FOR SALE

     Securities available for sale consist of marketable equity securities not
         classified as either held-to-maturity or trading securities. Securities
         available for sale are stated at fair value, and unrealized holding
         gains and losses are reported as a separate component of stockholders'
         equity as accumulated other comprehensive income in 1999.

     Dividends on marketable equity securities are recognized in income when
         declared. Realized gains and losses are determined on the basis of the
         actual cost of the securities sold.

     Securities available for sale at December 31, 1999 consisted of 8,750
         shares of Yournet Inc., which is traded on the OTC Bulletin Board.
         During the year ended December 31, 2000, the Company sold all the
         securities available for sale for total proceeds of $23,965 resulting
         in gross realized gains of $17,089.


4.   LOAN PAYABLE

     The Company has a bank line of credit, which provides borrowings up to
         $75,000. The line of credit is guaranteed by a stockholder of the
         Company, and principal and interest on advances is payable monthly at
         the bank prime rate plus 1%. The line of credit is due to expire in
         October 2001. The Company has fully repaid the bank line of credit on
         February 25, 2000. Interest expense related to the bank line of credit
         was $51 during the year ended December 31, 2000.


5.   LOANS PAYABLE - STOCKHOLDERS

     Due to cash flow problems loans were received from certain stockholders to
         repay the bank's line of credit and provide working capital.
         Stockholders' loans totaling $23,375 and $15,640 were converted to
         equity as a result of resolutions adopted by the Board of Directors on
         May 5, 1999 and June 29, 2000, respectively. The stockholders agreed to
         accept a total of 390,150 shares of the Company's $.0001 par value
         restricted common stock in full settlement of the Company's obligation
         of $39,015. The fair market value of the shares issued were determined
         by management to be $.10 per share and accordingly, no gain or loss on
         these stockholders' debt to equity conversions has been recorded in the
         statements of operations for the years ended December 31, 2000 and
         1999. There was no public market for the Company's stock on these dates
         of stock issuance.


6.   RELATED PARTY TRANSACTIONS

     During the fourth fiscal quarter of 1999, the Company determined that the
         carrying value of a loan receivable from F-PAC International, Inc.
         ("F-PAC"), a related party, of $50,000 and $833 out of accrued interest
         receivable totaling $7,100 was impaired in accordance with SFAS 118 and
         was written down to its fair value. Fair value, which was determined by
         reference to the present value of the estimated future cash in flows of
         such receivables, was less than the carrying value by $50,833. An
         impairment loss of that amount (included in other expenses) was charged
         to operations in 1999.

                                       8

<PAGE>


                       SOUTHERN GROUP INTERNATIONAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2000


6.   RELATED PARTY TRANSACTIONS (Continued)

     On June 29, 2000, the Company received 571,000 shares of restricted common
        stock of F-PAC International, Inc. ("F-PAC"), a related party, as full
        settlement of a loan receivable from F-PAC of $57,100 (including accrued
        interest of $7,100). The fair market value per share at the date of
        settlement, $.10 per share, was determined by F-PAC's management at the
        date of conversion.

     This investment is being held principally for the purpose of selling it in
        the near term and is being classified accordingly as a trading security.
        Trading securities are recorded at fair value on the balance sheet in
        current assets, with the change in fair value during the period included
        in earnings.

     As of December 31, 2000, the fair market value per share could not be
        reliably measured, because the stock is not actively traded and
        therefore, was reported on the Company's balance sheet at $- 0 -.


7.   COMMON STOCK TRANSACTIONS - RELATED PARTIES

     Pursuant to a resolution adopted by the Board of Directors on March 1, 2001
         for related party services performed in 2000, the Company will issue
         690,000 shares of restricted common stock to certain shareholders at a
         price of $.10 per share, for an aggregate consideration of $69,000
         which includes $64,000 of consulting fees and $5,000 of directors fees.
         The price of $.10 per share, which exceeds the book value per share,
         was determined as the fair value by management at December 31, 2000, as
         there was no public market for the stock.

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