SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 --------------

                                 AMENDMENT NO.1
                                       TO
                                   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 March 31, 2002


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

                For the transition period from ______ to _______


                         Commission File Number 0-49659

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

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


5301 Cypress Street, Suite 111 Tampa, Florida                            33607
---------------------------------------------                            -----
  (Address of principal executive offices)                            (Zip Code)


Registrant's telephone Number, including area code: (813) 637-0700

Securities registered pursuant to Section 12(b) of the Exchange Act: None

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                  [ X ] Yes  [    ] No

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

State  issuer's  revenues  for its most  recent  fiscal  year  ended  March  31,
2002........$110,201

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant at March 31, 2002 was $-0-.

<PAGE>

                               FORM 10-KSB - Index


                                     PART I
                                     ------


                                                                           Page
                                                                           ----

Item 1.           Business.................................................   2
Item 2.           Description of Property..................................  11

Item 3.           Legal Proceedings........................................  11

Item 4.           Submission of Matters to a Vote of Security Holders......  11


                                     PART II


Item 5.           Market of the Registrant's Securities and
                   Related Stockholder Matters.............................  12

Item 6.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations............  14

Item 7.           Financial Statements and Supplementary Data..............  17

Item 8.           Changes in and Disagreements with Accountants on Accounting
                           and Financial Disclosures.......................  17

                                    PART III


Item  9.          Directors and Executive Officers of the Registrant.......  18

Item 10.          Executive Compensation...................................  19

Item 11.          Security Ownership of Certain Beneficial
                   Owners and Management...................................  20

Item 12.          Certain Relationships and Related Transactions...........  21

Item 13.          Exhibits, Consolidated Financial Statements,
                  Schedules and Reports on Form 8-K......................... 22

                  Signatures................................................ 23

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<PAGE>

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This  Annual  Report on Form  10-KSB and the  documents  incorporated  herein by
reference contain forward-looking statements that have been made pursuant to the
provisions  of the  Private  Securities  Litigation  Reform  Act of  1995.  Such
forward-looking  statements  are based on current  expectations,  estimates  and
projections about XRG, Inc.'s industry,  management's  beliefs,  and assumptions
made by management.  Words such as "anticipates," "expects," "intends," "plans,"
"believes,"  "seeks,"   "estimates,"   variations  of  such  words  and  similar
expressions  are intended to identify  such  forward-looking  statements.  These
statements are not guarantees of future  performance  and are subject to certain
risks,  uncertainties and assumptions that are difficult to predict;  therefore,
actual  results and  outcomes  may differ  materially  from what is expressed or
forecasted in any such forward-looking statements.


                                     PART I
                                     ------

ITEM 1.  BUSINESS

         We were originally  incorporated in New Jersey in December 1976,  under
the name of Natural Resources Guardianship  International,  Inc and by amendment
changed our name to XRG International,  Inc. in September 1978. Between 1976 and
2000, we had been engaged in an unrelated  business.  From 1976 through 2000, we
developed,  manufactured,  and marketed  fuel  catalysts for gasoline and diesel
engines.  During this  period we invested in excess of $2.5  million on research
and  development  of our  products  at testing  facilities  at  Carnegie  Mellon
University and SATRA Automotive Testing  Laboratories.  We marketed our products
to large  commercial,  industrial,  and marine  customers and to operations that
repackaged  our products for retail sale under their own brands.  We shifted our
marketing  emphasis to a retail product line which was met with high competition
from  lower  priced  comparable  products.  This  competition  coupled  with the
recession of the early 1980's  resulted in our Chapter 11  bankruptcy  filing in
November  1983.  We were able to  restructure  our  operations  and emerge  from
bankruptcy in 1984, however, our business had declined to a point from increased
competition where we could not recover.

         After our  original  business  plan ceased,  we became a "blank  check"
company as defined by the Securities and Exchange Commission.  The SEC defines a
blank check company as one which has no specific  business or plan other than to
consummate an acquisition of or merge into another  business or entity. A number
of states have  enacted  statutes,  rules and  regulations  limiting the sale of
securities  of  "blank  check"  companies  in  their  respective  jurisdictions.
Additionally,  some states  prohibit  the initial  offer and sale as well as any
subsequent resale of securities of shell companies to residents of their states.

         In March 2000, XRG  International,  Inc.  agreed to issue USA Polymers,
Inc. a Florida  Corporation,  3,000,000  shares of our Common  Stock for certain
intangible  assets of the  company.  USA  Polymers,  Inc. is  controlled  by our
current  officers and directors and had developed a strategy for a consolidation
plan in the injection  molding  industry.  We acquired its trade name,  business
plan, target acquisition lists, and management. The shareholders of USA Polymers
gained effective control of XRG International,  Inc. Subsequent to the purchase,
we decided to abandon this business plan and the acquired  assets were deemed to
have no value to XRG International, Inc. and the loss was charged to expense for
the period ended March 31, 2000.

         In order to  restructure  our  operations  to  reflect  our new line of
business,  XRG,  Inc.("XRG"),  a privately owned Delaware  Corporation,  with no
significant  operations  from its  inception in November  2000,  merged with XRG
International,  Inc. in December  2001.  XRG, Inc. a Delaware  Corporation,  was
controlled  by our  current  officers  and  directors,  therefore  these  merged
entities were under common control. XRG, Inc. was originally  incorporated under
the name of USA Polymers, Inc., a Delaware Corporation and by amendment, changed
its name to XRG, Inc.  Pursuant to the terms of the Agreement and Plan of Merger
XRG International, Inc. exchanged all of its outstanding shares of Common Stock,
for approximately 70% of the common stock of XRG, Inc, a Delaware Corporation in
a reverse merger transaction.  XRG, Inc., a Delaware  Corporation was considered
the  Surviving  Corporation  and the  acquirer  for  accounting  purposes.  Upon
completion of the merger,  we were no longer considered a "blank check" company.
XRG is classified as a development  stage enterprise and provides the management
for our consolidation plan in the freight transportation business.

                                       2
<PAGE>

         We have completed our  restructuring  and our business plan now focuses
on acquiring and operating both asset and non-asset based truck-load carriers in
the contiguous 48 states.  We are currently  providing  administrative  services
through our  subsidiary  XRG G&A, Inc. for  invoicing,  collections,  regulatory
compliance,  credit reviews, processing payments and commissions,  and answering
services  for one of our targeted  acquisitions  at a service fee equal to 3% of
its gross billings. During the fourth quarter and the year ended March 31, 2002,
we generated $110,201 in revenues from these administrative services. To-date we
have not generated any revenues from the acquisition and operation of truck-load
carriers.

Overview

         XRG  plans  on  consolidating   established  and  profitable  truckload
carriers throughout the United States that have long-term customer relationships
and  typically  generate  revenues  between $5 and $20 million.  We believe that
these  acquisitions  will enable us to diversify  our customer  base,  technical
capabilities  and  geographic   areas  served.   It  is  our  belief  that  this
consolidation   opportunity   provides  us  with  an   opportunity  to  generate
substantial business.

         Our  philosophy  within the truckload  industry will be to hire out the
"purchased  transportation"  defined as the total costs of operating the tractor
and  trailer,   including   fuel,   repairs  and   maintenance,   driver  wages,
depreciation,  finance costs of the  equipment,  and physical  damage  insurance
which will be the responsibility of the  owner/operator.  By contracting with an
owner/operator  to haul the load, these costs will remain their  responsibility.
Our cost will be a previously  agreed upon price for transporting the load which
is typically a percentage  of the contract  price or a price per mile.  Revenues
will be generated  upon delivery of the load. XRG will not bear any of the costs
of idle  equipment.  This will  allow us to avoid the  greatest  shortfall  that
carriers that own their own equipment face, utilization or the number of miles a
tractor and trailer  travels  under load as a percentage  of total miles driven.
Equipment  that is not under load is a cost to the  typical  carrier and reduces
its  utilization.  Carriers  that own their own  equipment  are faced  with this
problem.  Because we will contract for the equipment,  only trucks pulling loads
incur expenses and therefore we will experience higher utilization  levels. This
cost will be  contracted  for prior to the load  being  picked  up,  and will be
typically 75% of the gross revenue of the load. Maintenance, breakdowns, and all
other expenses  associated with owning equipment will be the  responsibility  of
the equipment  owner,  and not us. It is our belief that  contracting  purchased
transportation  will allow us to fix our costs as a  percentage  of revenues and
increase our utilization  because we will not be bear the costs relating to idle
equipment which will give us a competitive advantage over asset-based truck-load
carriers.

         Currently,  we are  only  providing  administrative  services  for  one
customer  located in Pittsburgh,  Pennsylvania.  On February 1, 2002,  XRG, Inc.
created a new subsidiary,  XRG G&A, Inc. and executed an Administrative Services
Agreement   with  KDK   TRANSPORT,   INC.  which  permits  XRG  G&A  to  provide
administrative services for a period of five years unless terminated by KDK upon
30 days prior  written  notice to XRG. XRG G&A,  Inc.  collects a 3% service fee
payable  weekly based on KDK's  trucking and  brokerage  gross  billings for the
prior  week.  XRG has  generated  $110,201  in  revenues  during the period from
February 1, 2002 until March 31, 2002.  Related expenses were $107,831 resulting
in a gross margin of $2,370.

         During the year ended March 31,  2002,  we incurred a loss of $324,136.
We have not  generated  sufficient  revenues  from  operations  to self-fund our
capital and operating  requirements.  We had a cash balance at March 31, 2002 of
$315,179  and working  capital of  $193,621.  The primary  source of our working
capital  during the year ended March 31,  2002,  was from the  issuance of notes
payable.  We believe that our current cash  resources and access to capital will
be sufficient to sustain our operations for at least 12 months. Our monthly cash
"burn  rate"  is   approximately   $25,000  per  month.   This   estimate  is  a
forward-looking statement that involves risks and uncertainties. The actual time
period  may differ  materially  from that  indicated  as a result of a number of
factors so that we cannot assure that our cash  resources will be sufficient for
anticipated  or   un-anticipated   working   capital  and  capital   expenditure
requirements for this period.

Industry

          Trucking has evolved  rapidly over the last 20 years and has proven to
be  the  preferred  mode  of  transportation  of  most  manufactured  goods  and
commodities.  According to Yellow Corporation,  a leading freight transportation
company,  the trucking  industry in 2001  accounted for 87.3% of total  domestic
freight  revenue,  or $610 billion,  and 67.4% of domestic  freight volume.  The
growth in trucking is the result of the ability for trucking companies to create
customized  transportation  services  that provide more  flexibility  that other
means of transportation like railroads. As a result of the growth in the

                                       3
<PAGE>

truckload  industry  and the  increasing  demand for the timely and  expeditious
movement of freight,  new  opportunities are emerging for carriers that have the
expertise to meet the needs of today's sophisticated  shippers. The just-in-time
revolution helped integrate trucking into a shipper's business processes.  These
companies  depended  heavily on the ability of trucking to deliver  goods at set
times in order to reduce inventories in the production  process.  Of the 458,634
interstate  motor  carriers  on file in 1998,  approximately  70% operate six or
fewer trucks  according to the Office of Motor  Carriers,  Washington,  D.C. Our
business plan focuses on acquiring  smaller trucking  companies in this segment,
however,  to-date we have not completed any acquisitions that provide us current
market share.

Business Strategy

         Our business  strategy  focuses on initially  providing  administrative
services  through our  subsidiary  XRG G&A,  Inc.  for  invoicing,  collections,
regulatory compliance,  credit reviews, processing payments and commissions, and
answering services for targeted trucking company  acquisitions.  We believe that
these services are  attractive to small trucking  companies and it is our belief
that such  services  will  provide the  necessary  foundation  for the  eventual
acquisition of these  established and profitable  truckload  carriers.  However,
there is no assurance  that we will be  successful  in  attracting  or acquiring
these small trucking  companies.  These  businesses have  established  long-term
relationships  with  existing  customers to provide  freight  shipping  services
within the United  States.  Management  believes  that  significant  acquisition
opportunities  currently  exist  within  the  truckload  carrier  industry.  The
industry is highly  fragmented,  management  estimates  that only 1% of carriers
have annual revenues in excess of $100 million.  In evaluating specific carriers
for acquisition, we will consider the following factors:

          o        Profitability
          o        Gross margin
          o        Experienced personnel
          o        Management team
          o        Compatibility or synergies
          o        Reputation
          o        Customer base
          o        Efficiencies, equipment capacity

         Other factors such as the property's location, potential for expansion,
vertical  and  horizontal  integration,  competitive  market  position,  pricing
structure, and technical and management expertise will be evaluated.

         We  believe  that we can  initially  attract  established,  profitable,
trucking companies with long-established customer bases by providing the founder
of these companies with a method for a  re-capitalization  or exit strategy.  We
will focus our efforts on privately  owned closely held trucking  companies that
typically  generate  revenues between $5 and $20 million.  In many cases,  these
targeted  acquisitions  will be family owned  businesses in which the founder is
planning for his or her retirement.  XRG's acquisition strategy will allow these
companies to be acquired and operate autonomously which essentially will provide
them the ability continue to operate as a "family" business.  Founders will have
the option of retiring or remaining involved with the business.  In either case,
they will  receive  consideration  for their  business  and XRG will rely on the
management  team to  continue  operating  the  business.  XRG will  only  target
acquisitions  that contain  management  teams that can  effectively  continue to
operate the trucking company if the founder chooses to retire.  It is our belief
that many of these small trucking companies have grown to their limit based upon
the financial  resources that are available to them.  Historically,  bank credit
limits and insurance liability limits have dictated their growth constraints. We
believe  that XRG will  obtain  economies  of scale in this regard as we acquire
these  companies and will be able to obtain better credit and insurance  limits,
as well as,  providing  these  acquired  trucking  companies  with the financial
resources for future  growth.  However,  there is no assurance  that XRG will be
successful in attracting  and acquiring  these  trucking  companies,  and if so,
there is no assurance  that we will obtain  economies of scale  associated  with
better credit and insurance  rates.  In addition,  there is no assurance that we
can obtain financial resources to provide for future growth once these companies
are acquired.

         We believe that there are several reasons why established,  profitable,
trucking  companies  with  long-established  customer  bases  would  want  to be
acquired by XRG,  Inc.  Liability  insurance  for trucking  companies  has risen
substantially  in recent  years which has made it difficult  for small  trucking
companies to absorb these costs.  The primary  claims  consist of cargo loss and
damage and auto liability  (personal injury and property damage).  After several
years of aggressive  pricing,  insurance carriers have raised premiums which has
increased  trucking  companies'  insurance  and claims  expense.  The  terrorist

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<PAGE>

attacks of September 11, 2001, in the United States, and subsequent events, will
likely result in additional increases,  especially for small trucking companies.
It is our belief that future insurance increases may cause these companies to be
less profitable, therefore, limiting their marketability and exit strategies, as
well  as,  reducing  their  ability  to raise  capital  through  debt or  equity
placements  to expand or  maintain  their  businesses.  We  believe  that  after
consolidating several of these trucking companies, XRG, Inc. will be in a better
position to negotiate lower insurance premiums.  However,  there is no assurance
that XRG will be able to obtain favorable  insurance premiums and control future
increases in insurance premiums.

         Small trucking companies have a difficulty acquiring  "backhauls" which
refer to a load of  freight  that  permits a truck to  return  to the  company's
headquarters  with a loaded  truck,  rather  than an empty  one.  By  completing
acquisitions and implementing our information system at each location we believe
that we can improve the  dispatch  system to help  carriers  with load  matching
thereby  improving  utilization.  There are no assurances  that our  information
system  will be capable of  improving  the  dispatch  system  thereby  improving
utilization for various acquired trucking companies.

         Increased  competition  from  larger  trucking  companies  has  reduced
margins for the smaller  operators.  XRG seeks to regain these  margins  through
acquisitions  and  economies of scale to better  compete with larger  truck-load
carriers.  We believe that by centralizing the  administrative  services through
our subsidiary XRG G&A, Inc. for invoicing, collections,  regulatory compliance,
credit reviews, processing payments and commissions, and answering services will
allow us to reduce  costs and will be an  important  aspect for  increasing  our
acquired company's margins.  However, there is no assurance that we will realize
efficiencies   associated  with  centralizing  the  administrative  services  of
acquired companies.

         In  acquiring a  particular  business,  XRG will  follow a  disciplined
approach utilizing specific  operating and financial  criteria.  We will develop
pro forma financial statements for acquisition candidates that reflect estimates
of revenue  and costs  under the target  Company's  current  ownership  and will
utilize such information to determine a reasonable purchase price. The following
outlines the material steps of our disciplined approach:

     o    We will identify a potential  candidate primarily through our contacts
          in the industry,  including brokers, and other industry professionals.
          This cost will be minimal, and the time varies depending on the status
          of  other  acquisitions  in the  process.  Generally,  the  number  of
          potential  candidates  will exceed our ability to make  introductions,
          and new opportunities will be constantly presented.

     o    We will review the candidates'  most recent  financial  information to
          determine if the carrier  operates  profitably,  or if not, whether we
          can  provide  assistance  in  adjusting   operating  ratios.  We  will
          generally   determine   whether  a  candidate  fits  our   acquisition
          parameters  within  a week of  receiving  the  requested  information.
          Current  management  will be involved in this  process;  therefore  no
          additional costs will be incurred.

     o    If a candidate is determined to be a likely fit, we will arrange a one
          day on site  meeting to extract  more  information  about the carrier,
          meet the owners, and familiarize  ourselves with the current operating
          staff. This process will require one to two days of travel,  and costs
          will be  generally  limited  to travel  and  overnight  expenses  that
          typically will not exceed $2,500.

     o    Upon  review of  information  gathered  from the on site visit we will
          determine  if  the   candidate   fits  our  criteria  for  a  credible
          acquisition target. In particular, we will look for the following:

               a.       Profitability
               b.       Capability of onsite management
               c.       Quality of customers and their associated
                         credit worthiness.
               d.       Valuations and selling price expectations
                         of the founder.
               e.       Reasons for wanting to sell.

     o    If the  candidate  is a viable  target,  we will prepare an offer that
          will be constructed to meet his or her price under our terms.  We will
          then submit the offer to the owner,  negotiate  any  adjustments,  and
          work toward a signed  letter of intent.  This process will be the most
          lengthy  and may take  from a few  weeks to as much as six  months  to
          complete.  Again the process will be  conducted by current  management
          and generally no additional costs will be incurred.

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<PAGE>

     o    If the  letter of intent is agreed to by both  parties,  documentation
          will be  prepared  by our  attorneys  while on site due  diligence  is
          conducted.  This process may take 30-60 days,  and may cost $20,000 to
          $30,000.

     o    Finally,  assuming  that  the  due  diligence  does  not  uncover  any
          misstatements,   and  the  final  purchase   agreements  do  not  vary
          significantly  from the original  proposal,  the  acquisition  will be
          closed  within 30 days after the  purchase  agreement is signed by XRG
          and the trucking acquisition.

         We believe that we can assemble the most talented  personnel,  minimize
downside  risk of volume  loss to  competitors,  and provide  opportunities  for
increased  profitability with our operating formula which includes the following
elements:

     o    We will seek and identify  trucking  company  operations for potential
          acquisition that have maintained their operating costs at 75% of gross
          revenue and sales, marketing, and dispatch costs at 10% of their gross
          revenues.  After these  potential  targets are  acquired,  any savings
          below this 85% threshold will be retained by current management of the
          operation as an incentive in the form of a bonus. In our experience, a
          typical operator can maintain costs at 82% to 83% of revenues.

     o    We will consolidate the management of insurance,  financing costs, and
          backroom administrative services at a central administrative office at
          a cost of  approximately  8% to 10% of the  acquired  company's  gross
          revenues.  We  will  expect  to gain  economies  of  scale  as we grow
          internally  through  acquisitions.   We  believe  that  our  costs  of
          providing  these services will decrease as we achieve lower  insurance
          costs  through  greater  bargaining  power,   however,   there  is  no
          assurances  that we will be able to  achieve  this.  We are  currently
          charging 3% of revenues for administrative  services for one customer.
          These  services do not currently  include the  management of insurance
          and financing costs which accounts for the 5% to 7% difference.

         We are optimistic that our business strategy and operating formula will
entice many small  trucking  companies to be acquired by us. To-date we have not
completed any acquisitions. There is no assurance that our business strategy and
operating  formula  are  viable,  or  whether,  we will be able to  complete  an
acquisition in the future.  Currently, we provide our administrative services to
one customer.  We have  identified  ten small  trucking  companies for potential
acquisition that fit our criteria and are actively pursuing four, however,  none
have agreed to come on board.

         We plan to retain all key personnel of acquired  businesses and provide
them  with  significant   operating   responsibility   to  assure  the  seamless
continuation of service levels in order to maintain customer  relationships.  We
will benefit from our strong management team supported by an autonomous regional
team that has the  knowledge and  expertise to  appropriately  meet the needs of
their local customers.

         XRG typically  will seek either  employment or  non-compete  agreements
with former owners and management,  as the situation dictates. Key technical and
management  personnel  will  be  offered  employment   agreements,   along  with
incentives  to encourage  their  continued  loyalty to the  company.  Employment
agreements  will  typically  remain at  similar  salary  levels  as  before  the
completion of the acquisition.  Significant  performance incentive bonuses could
be realized by any savings below our 85% threshold which will be retained by the
current management of the operation.  For example,  an acquired trucking company
that generates $10 million in revenues would provide $300,000 per year at an 82%
cost threshold in incentive bonuses for the trucking company's  management.  Our
largely  performance  based  compensation  arrangement  will  align  XRG's  cash
requirements  with the  successes  of its  acquisitions.  In  addition,  we will
centralize  certain  financial,  accounting,  legal,  administrative,   employee
benefit,  and sales functions to create a more efficient  operating structure in
our administration.

Sales, Marketing, and Distribution

         Our primary  marketing  emphasis will be to develop and maintain  close
working  relationships  with our acquired  trucking  company's sales departments
which,  in turn,  have strong  relationships  with their  logistic  and shipping
departments. Sales to our acquired trucking company's customer base will be made
directly by their sales staff and XRG will provide resources and assistance,  as
required,  to this staff.  These teams will service customers and assist them in
programs to provide the most efficient logistics services possible.  We have not
begun our efforts in  assembling a sales team.  We plan on acquiring  members of
this team by acquiring  trucking  companies and utilizing their sales personnel.
Therefore,  XRG will be in a  position  to  attract  the most  experience  sales
personnel that will be most familiar with the individual  acquisition's trucking
operations.

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<PAGE>

         XRG intends on  developing a marketing  department  that will  actively
take advantage of opportunities for new business, share sales leads, and provide
other cross marketing.  Consolidation  economies will allow for more competitive
pricing and payment terms with both customers and vendors.  We will also develop
a detailed and budgeted  marketing  program for each acquired  business based on
the needs and  opportunities  of the local  market.  We  believe  that  selected
acquisition  candidates have tremendous  opportunities  to increase market share
internally  by  implementing  these  various  programs,  however,  there  is  no
assurance that we will be able to successfully implement our marketing programs.

Operations

         XRG,  as it  grows  through  acquisitions,  will  be  able  to  realize
efficiencies  that  carriers  could not benefit from  individually.  Examples of
these  economies  will be the  pooling of  marketing  and  technical  expertise;
savings associated with sophisticated information systems that provide real time
information  on  pricing,  and  equipment  utilization,  and the better use of a
larger shipper base for more profitable backhauls.

         Our   information   system  is  currently  in  its  initial  stages  of
implementation.  It is expected  that this system  will be fully  functional  in
fiscal  year  2003.  Our  expenditures  to-date  on our  information  system are
approximately  $15,000 and we expect to spend an additional  $35,000 to complete
its   implementation.   This   proprietary   system  was  originally   developed
approximately  15 years ago and it was  originally  developed  to  control,  and
enhance the operation of a non-asset  based trucking  carrier.  The software was
developed  using the FoxPro  database and has been upgraded to the new Microsoft
Windows version of this database. It was developed to allow transactions tracked
to be integrated on a real time basis into SBT Accounting  Systems for financial
management  purposes.  It will provide 24-7 automated  advancement and payoff of
truck drivers and the integration of safety and DOT  compliance.  All credit and
collections  procedures  have  been  automated  to  prevent  a load  from  being
transported  for a customer  that either has poor  credit or exceeds  designated
credit  limits.  In addition,  credit and  collection  personnel will be able to
track invoices over prescribed aging limits.  Finally,  the system will allow us
to  communicate  real  time on line with our  customers,  lending  sources,  and
banking  sources.   We  will  continually   enhance  the  system  to  allow  the
assimilation of other carriers,  both asset and non-asset based. In addition, we
are proceeding with the  introduction  of Citrix  software as our  communication
platform to further  enhance our abilities to share  information  on a real time
basis.

         XRG intends on developing an  autonomous  management  structure to best
maintain  existing  customer  relationships.  This  philosophy will require that
newly acquired  carriers  maintain their  individual  identities.  Each of these
businesses  will  operate  as  a  separate   subsidiary  and  division  of  XRG.
Advertising  and  other  promotional  materials,  including  invoices,  purchase
orders, and other paperwork will depict the acquired company's existing logo and
name.  This  strategy  will help  continue the customer  goodwill  each acquired
company has built up over the years.  While our operating style will allow local
operators  significant  responsibility in daily operating  decisions,  financial
parameters jointly established during the budgeting process will be monitored by
senior management through our centralized management information systems.

         In addition,  XRG will establish a compensation  structure  designed to
maintain and create "ownership incentives" for divisional personnel.  We plan on
rewarding  personnel with bonuses tied to the achievement of certain  objectives
and by developing an employee  incentive  stock option plan.  Option plans,  and
other  incentive  programs,  will  be in  addition  to  the  stock  that  "owner
entrepreneurs"  receive as part of the  purchase  price  when we  acquire  their
business.  It will be our  philosophy  to structure  acquisitions  such that the
sellers  remain  with us, and that they accept our  securities  as part of their
sale  proceeds.  We  believe  that this will  help to  insure  an  orderly,  and
profitable  transition,  and will  increase  the  former  owner's  incentive  to
continue to grow his or her business and benefit from future stock appreciation.
We plan on acquiring  trucking  companies using our cash, stock, bank financing,
and  owner  financing.  Management  will  determine  the mix of these  financing
alternatives  on a case by case basis  depending  on the  owner's  needs and our
availability of capital.

         The key elements in the our operating strategy include the following:

          o    Expand sales for acquired divisional carriers.

          o    Acquire  additional  truckload carriers allowing XRG to diversify
               product lines and expand geographical markets.

                                       7
<PAGE>

          o    Pursue  long-term  relationships  with new customers  through new
               marketing programs.

         The greatest barrier to national market dominance by any one, truckload
carrier, is the enormous cost in equipment  procurement,  maintenance,  and most
importantly utilization.

         Utilization  refers to the number of miles a tractor and trailer travel
under load as a percentage of total miles driven. Proper utilization will be the
responsibility of the dispatch  department which plans either in advance,  or as
the initial  shipment is being  moved,  the return trip with as little  deadhead
(unloaded miles) as possible. It will be imperative to have a system in place so
that a dispatcher  can monitor  available  loads and  available  equipment to be
loaded to assist in the planning process.  Proper  utilization  provides greater
efficiencies   which  will  enhance  our  revenues  as  more  shipments  can  be
accommodated.  A portion of the each acquisition's  management team compensation
will  be  tied  effectively  to  utilization.  Improper  equipment  procurement,
maintenance,  and utilization would reduce or eliminate  significant bonuses. In
addition, under utilization could have a negative effect on the profitability of
XRG, Inc. Our strategy of contracting  purchased  transportation  will limit the
effect of  utilization  on our  business and will allow us to fix our costs as a
percentage of revenues and reduce costs relating to idle equipment.  There is no
assurance that acquired companies will be able to maintain profitable operations
after being acquired.

         Our strategy will be to continue to use fleets and owner operators that
will be responsible for equipment  costs.  This eliminates the problems of under
utilization  of  equipment,   improper  maintenance  or  inefficient   operating
procedures since the  owner/operator  is responsible for the costs of his or her
equipment.  The truck  payment will be  contracted  for as a percentage of gross
revenue,  therefore our costs will be fixed,  and no costs are incurred unless a
load is contracted  for and revenues are  generated.  Small  truckload  carriers
operate  throughout the United States,  conducting  their  businesses with local
customers.  Consolidating  these small  carriers will provide them with the size
and capital structure to compete more effectively in their local markets,  while
maintaining  the close  relationships  that these  companies  developed over the
years.  Management  believes that the  "divisions of" strategy will separate XRG
from other  consolidation  players,  because it will allow the  management,  and
employees of the acquired  company to continue those services that its customers
have relied upon.  This  philosophy  will also allow the company to maintain its
own unique  culture and  environment  that the company's  employees  have become
comfortable  with,  and depend upon.  XRG  management  believes that the typical
strong bond between the acquired companies and its employees must be maintained.
This should then allow for a smooth and seamless acquisition  process.  Within a
larger  organization,  the acquired  companies  will benefit from a professional
sales force, sophisticated management information systems, and a larger universe
of shippers to make use of for more profitable backhauls.

         XRG's divisions will remain  autonomous from a management  perspective,
however,  many accounting and  administrative  functions will be consolidated at
the corporate offices. Such functions include:

          o        Purchasing
          o        Accounts Receivables
          o        Accounts Payable
          o        Payroll

         A state-of-the-art  management information system, featuring the use of
application  server technology,  will be implemented to handle accounting,  load
processing,  and other system functions. This system will provide information on
load  levels,   equipment   maintenance  and  utilization,   load  costing,  and
profitability.  Server  technology will allow management to implement the system
at each  location  with ease,  and allow the use of any PC equipment on hand, to
provide real time  information to both local  operators and central  management.
The system  will be  developed  to a point where each sales  representative  has
access to "on-line" information while in the field.  Quotations will be given at
the customer's  offices and delivery times based on equipment  scheduling can be
established.  This management  information  system provides  truckload  carriers
tremendous competitive advantage over local competitors.

         We intend to acquire carriers, which have a strong presence in a number
of unrelated  markets.  This  approach  will allow us to  diversify  the type of
shipper  we conduct  business  with to reduce  the risks of  unfavorable  market
conditions  or downturns in specific  markets.  In addition,  we will be able to
pool our technical expertise across these markets.  XRG will focus its marketing
efforts on maintaining  long-term  relationships  with existing  customers while
pursuing  new  customers  in all of our future  target  markets.  Our  customers
typically will have  relationships  with a limited number of carriers.  Bills of

                                       8
<PAGE>

lading  depicting  the name of the carrier  will be issued  upon  picking up the
load.  Signed  delivery  receipts  will be  released by the  consignee  upon the
completed delivery of the freight,  at which time, the cost of the load, will be
invoiced by the  carrier.  Customers  will  provide the  Carrier  with  periodic
forecasts of their requirements, which will be updated regularly.

         Rates will be typically  negotiated with the shipper, and will be based
on the type of freight to be hauled,  the length of haul,  the area of delivery,
and any other  unique  aspects  of the load.  As  shippers  typically  seek rate
reductions from time to time, our ability to improve operating  performance will
be generally  dependent on increasing  efficiency through increased  automation.
Since we will not own the equipment, and the costs of "purchased transportation"
(all  costs  associated  with the  operation  of the  equipment)  will be fixed,
operational efficiencies will be the responsibility of the operator.

         There  are  three  types  of  potential  target  candidates  we will be
seeking. Depending on the type of carrier, XRG will be acquiring the following:

          o    Non-asset based carriers whose clients are agents with or without
               their  own  equipment.  The  revenue  equipment  is leased to the
               carrier, however it is either owned by an owner-operator,  or the
               agent who  employs  drivers to  operate  its  equipment.  In this
               situation we will be acquiring  customer  bases,  employee bases,
               leases  on  physical  facilities,   equipment  leases,  operating
               licenses, trade names, and sales forces.

          o    Non-asset   based  carriers  whose   customers  are   traditional
               shippers,  and who employ  owner-operators  to haul the  freight.
               Again these  owner-operators  are leased to the carrier.  In this
               situation we will be acquiring  customer  bases,  employee bases,
               leases on physical facilities,  operating licenses,  trade names,
               and sales forces.

          o    Traditional  asset based  carriers that owns their own equipment,
               and have shippers as customers. In this case we would operate the
               carrier similar to a non-asset based carrier  described above and
               require that  management be responsible for operating the carrier
               at 85% of gross revenues. In this situation, we will be acquiring
               customer bases,  employee bases,  leases on physical  facilities,
               equipment  leases,  operating  licenses,  trade names,  and sales
               forces.

Competition

         The truckload  carrier industry is highly  fragmented and characterized
by intense competition.  As a result, our targeted  acquisitions  typically will
have  customers  that are  financially  sound,  that require  equipment  that is
predominately  in their fleet,  and whose business ships mostly  truckloads on a
steady basis. This focus provides for improved customer relationships and allows
both XRG and its  customers  to work  together  to respond  quicker to  shipping
requirements and changes.

         We believe that none of our potential  competitors will have a dominant
position in the market,  although certain of XRG's  competitors may have greater
financial,  marketing,  equipment, and/or other resources than XRG. As a result,
they may be able to respond  more  quickly to new or emerging  technologies  and
changes in customer requirements than us. XRG's consolidation  strategy seeks to
alleviate some of these threats by establishing  centralized  marketing programs
and sharing technical and management  expertise.  XRG's management believes that
carriers  primarily compete based on responsiveness to customer needs,  delivery
time,  volume  capabilities,  technical  expertise,  and  price.  XRG's  primary
competitive  strengths will be its ability to provide  reliable  service,  while
maintaining superior delivery on a just-in-time or scheduled lead-time basis.

         Although  there are many truckload  carriers  engaged in the hauling of
freight  in the  United  States,  few are  successful  at  utilizing  the latest
information  technology  to  efficiently  handle the vast  amounts of data,  and
paperwork  generated  by the  movement of freight.  This  includes  not only the
paperwork  necessary to properly bill and collect on a load,  but the tremendous
amount of information required by the various regulatory agencies.

                                       9
<PAGE>

         Carriers have built  relationships with customers over the years. Solid
reputations  for  on  time  deliveries,  operational  expertise,  and  equipment
availability  coupled with skilled driver requirements have created an effective
barrier  to entry for new  companies  trying to enter  this  industry.  Carriers
primarily  serve  customers  within  their own  regions  and over the years have
formed strong long-term relationships with them.

         The  transportation  industry is highly  competitive.  We will  compete
with, and expect to continue to compete with,  numerous  national,  regional and
local trucking  companies,  many of which have significantly  larger operations,
greater financial, marketing, human, and other resources than us. We may compete
on a limited basis with  companies such as Landstar  System,  Inc. We anticipate
that  competition may increase in the future.  There can be no assurance that we
will  successfully  compete in any  market in which we  conduct  or may  conduct
operations.

Regulation

         The trucking industry is subject to regulatory and legislative  changes
that can have a  materially  adverse  effect on  operations.  Historically,  the
Interstate  Commerce  Commission  ("ICC") and various state  agencies  regulated
truckload  carriers' operating rights,  accounting  systems,  rates and charges,
safety,  mergers  and  acquisitions,  periodic  financial  reporting  and  other
matters. In 1995, federal legislation was passed that preempted state regulation
of prices, rates, and services of motor carriers and eliminated the ICC. Several
ICC functions were transferred to the Department of Transportation  ("DOT"), but
a lack of regulations  implementing  such transfers  currently  prevents us from
assessing the full impact of this action.

         Each  potential  acquisition  will be  regulated  by the United  States
Department of Transportation  ("DOT") and by various state agencies. The DOT has
broad powers,  generally  governing  activities  such as the regulation of, to a
limited degree, motor carrier operations,  rates,  accounting systems,  periodic
financial  reporting  and  insurance.  Subject to federal  and state  regulatory
authorities  or  regulation,  we may transport most types of freight to and from
any point in the United States over any route selected by us.

         The trucking industry is subject to possible regulatory and legislative
changes (such as increasingly  stringent  environmental  and/or  safety/security
regulations  or limits on vehicle weight and size) that may affect the economics
of the industry by requiring  changes in operating  practices or by changing the
demand  for  common  or  contract  carrier  services  or the  cost of  providing
truckload services.

         Interstate motor carrier operations are subject to safety  requirements
prescribed  by the DOT.  All of our drivers  will be  required to have  national
commercial  driver's  licenses and will be subject to mandatory drug and alcohol
testing.  The DOT's national  commercial  driver's  license and drug and alcohol
testing  requirements  may  adversely  affected  the  availability  of qualified
drivers to XRG.

         Motor carrier  operations may also be subject to environmental laws and
regulations,  including  laws and  regulations  dealing  with  underground  fuel
storage tanks, the transportation of hazardous materials and other environmental
matters.   It  will  be  our   intention  to  transport  a  minimum   amount  of
environmentally   hazardous  substances.  If  we  should  fail  to  comply  with
applicable  regulations,  we could be subject to substantial  fines or penalties
and to civil and criminal liability.

         Our operations may involve certain inherent environmental risks. We may
maintain  bulk  fuel  storage  and  fuel  islands  at  several  of our  acquired
facilities.  Our  operations  may involve the risks of fuel spillage or seepage,
environmental damage, and hazardous waste disposal, among others.

Employees

         We   currently   have  twelve   employees.   Nine   employees   provide
administrative services and three are in management.  No employee is represented
by a labor union. We consider our employee relations to be good.

Risks Related to our Business

          o    Losses from  Operations;  Accumulated  Deficit;  and Negative Net
               Worth. We have incurred  substantial losses since we were formed.
               From  the  date of our  formation  through  March  31,  2002,  we
               incurred net losses of  $15,867,828.  $15,405,274 of this loss is
               related to the previous dormant  operations of XRG International,
               Inc.  Our losses  During the year ended  March 31, 2002 and 2001,
               were  $324,136  and  $123,389,  respectively.  There  can  be  no
               assurance  that the Company  will be able to generate  sufficient
               revenues to allow the Company to achieve profitable operations.

                                       10
<PAGE>

          o    Need  for  Additional  Financing.   We  will  require  additional
               financing  in the  future  to  support  our  operations  and  any
               expansion   plans  may   result   in   additional   dilution   to
               shareholders.  There can be no assurance that our operations will
               supply the revenues  necessary for such purpose.  There can be no
               assurances  given that such  financing  will be  available in the
               amounts  required or, if  available,  that such  financing may be
               obtained on terms satisfactory to XRG.

          o    Loss of Key Personnel.  The loss of the services of Mr.  Brennan,
               our Chief Executive Officer, could have a material adverse effect
               on the Company.  XRG does not maintain any key man life insurance
               on the life of Mr. Brennan. In addition, there is no assurance we
               will be able to attract other  competent and qualified  employees
               on terms  deemed  acceptable  to us to  implement  our  expansion
               plans.

          o    Future Acquisitions.  We plan on expanding our business, in part,
               through  the  acquisition  of  small  trucking   businesses.   In
               attempting to locate and consummate such acquisitions,  we may be
               competing with other  prospective  purchasers of the  acquisition
               candidate,  many of which  may have  greater  resources  than us.
               There can be no assurance  that suitable  acquisition  candidates
               can be identified and acquired on terms  favorable to us, or that
               the acquired  operations can be profitably operated or integrated
               into the XRG's operations.  In addition, any internally generated
               growth experienced by XRG could place significant  demands on our
               management,  thereby  restricting  or limiting our available time
               and opportunity to identify and evaluate  potential  acquisition,
               candidates.  The ability of XRG to consummate  acquisitions  will
               depend  on  our  ability,  to  obtain  sufficient   financing  on
               acceptable  terms,  of which  there can be no  assurance.  To the
               extent management is successful in identifying suitable companies
               for acquisition, we may deem it necessary or advisable to finance
               such   acquisitions   through  the  issuance  of  Common   Stock,
               securities convertible into Common Stock, or debt financing, or a
               combination  thereof. In such cases, the issuance of Common Stock
               or convertible securities could result in further dilution to the
               purchasers  at the  time  of such  issuance  or  conversion.  The
               issuance of debt to finance  acquisitions may result, among other
               things, in the encumbrance of certain of XRG's assets, may impede
               the our  ability  to obtain  bank  financing,  and  decrease  our
               liquidity.

          o    Lack of Public Trading Market.  There is no public trading market
               for XRG's common stock and it is not listed on any  exchange.  In
               order for our shares to commence trading on the OTC:BB electronic
               bulletin   board,   XRG  is  required  to  have  its  Form  10-SB
               Registration Statement cleared with the SEC. XRG will not be able
               to commence trading on the OTC:BB electronic bulletin board until
               we have  responded  to the SEC  staff's  comments  and  filed  an
               amendment for our Form 10-SB. There is no assurance that the NASD
               will  clear a Form  15c2-11  or that  XRG will  able to  locate a
               market maker that will initiate  quotations for XRG's  securities
               on the OTC:BB  electronic  bulleting board. In addition,  the SEC
               and the NASD have adopted certain rules effecting "penny stocks".
               As a result of the rules  regulating  "penny stocks",  the market
               liquidity for our  securities  is adversely  affected by limiting
               the ability of  broker-dealers  to sell XRG's  securities and the
               ability of purchasers  to sell their  securities in the secondary
               market.

          o    Dependence on One Customer.  All of our revenue is generated from
               a one  major  customer.  Generally,  we will not have  long  term
               contractual relationships with our major customers, and we cannot
               assure  you that our  customer  relationships  will  continue  as
               presently  in  effect.  A  reduction  in or  termination  of  our
               services by this customer would have a materially  adverse effect
               on our business and operating results.


ITEM 2.  DESCRIPTION OF PROPERTY

         XRG, Inc. leases approximately 1,000 square feet of office space at 100
Fifth Avenue, Suite 614, Pittsburgh, PA, 15222, which was used for our principal
executive  offices.  The lease for the offices  expires in September  2006.  The
monthly rent for the offices is approximately $1,100.

                                       11
<PAGE>

         We have  relocated  our  principal  executive  offices to 5301  Cypress
Street,  Suite 111, Tampa,  Florida 33607. XRG currently rents approximately 200
square feet for $600 per month on a month-to-month basis. We plan on executing a
lease at this location for approximately  1,400 square feet of space in the near
future.  Upon  execution of this lease,  our monthly rent will be  approximately
$3,000.


ITEM 3.  LEGAL PROCEEDINGS.

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


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

         None


                                       12
<PAGE>

                                     PART II


ITEM 5. MARKET PRICE OF AND  DIVIDENDS  ON THE  REGISTRANT'S  COMMON  EQUITY AND
OTHER SHAREHOLDER MATTERS

Market Value

         There is no public  trading market for XRG's common stock and it is not
listed on any exchange.  We plan to apply for listing on the OTC Bulletin  Board
and anticipate trading by fiscal year ending 2003.

Description of Securities

         The authorized  capital stock  consists of 15,000,000  shares of common
stock, $.001 par value ("Common Stock"), and 5,000,000 of preferred stock, $.001
par value ("Preferred Stock"),  issuable in series. The following description of
our capital stock is subject to and qualified in its entirety by our Certificate
of Incorporation and Bylaws, which are included as exhibits to this registration
statement and by the provisions of applicable Delaware law.

Common Stock

         As of March 31, 2002,  there were 9,087,822 shares of Common Stock, par
value of $.001 per share  outstanding,  held of  record by  approximately  1,300
stockholders.

         The holders of Common  Stock are entitled to one vote per share for the
selection of directors and all other purposes and do not have cumulative  voting
rights.  The holders of Common Stock are entitled to receive dividends when, as,
and if declared by the Board of Directors,  and in the event of the  liquidation
by XRG, Inc., to receive  pro-rata,  all assets remaining after payment of debts
and expenses.  Holders of the Common Stock do not have any  pre-emptive or other
rights to  subscribe  for or purchase  additional  shares of capital  stock,  no
conversion  rights,  redemption,  or  sinking-fund  provisions.  In the event of
dissolution,  whether voluntary or involuntary, of XRG, each share of the Common
Stock is entitled to share ratably in the assets  available for  distribution to
holders of the equity securities after satisfaction of all liabilities.  All the
outstanding shares of Common Stock are fully paid and non-assessable.

Preferred Stock

         Our Board of Directors (without further action by the shareholders) has
the option to issue from time to time authorized  un-issued  shares of Preferred
Stock and determine the terms, limitations,  residual rights, and preferences of
such shares.  We have the authority to issue up to 5,000,000 shares of Preferred
Stock  pursuant to action by our Board of  Directors.  As of March 31, 2002,  we
have not issued shares of our Preferred Stock.

Certain Provisions of the Certificate of Incorporation and Bylaws

         Our  Certificate of  Incorporation  provides that no directors shall be
personally  liable to XRG or our stockholders for monetary damages for breach of
fiduciary  duty as a  director  except as limited by  Delaware  law.  Our Bylaws
provide that we shall indemnify to the full extent authorized by law each of our
directors  and  officers  against  expenses  incurred  in  connection  with  any
proceeding  arising by reason of the fact that such person is or was an agent of
the corporation.

         Insofar as  indemnification  for liabilities may be invoked to disclaim
liability for damages  arising under the Securities Act of 1933, as amended,  or
the Securities  Act of 1934,  (collectively,  the "Acts") as amended,  it is the
position of the Securities and Exchange Commission that such  indemnification is
against public policy as expressed in the Acts and are therefore, unenforceable.

Dividends

         We do not anticipate  the payment of cash dividends in the  foreseeable
future.  Payment  of cash  dividends  is within the  discretion  of our Board of
Directors  and  will  depend  upon,  among  other  factors,   earnings,  capital
requirement and the provisions of Delaware law. There are no restrictions  other
than set forth herein that are  applicable to the ability of us to pay dividends
on our common  stock.  Future  issuance and or sales of  substantial  amounts of
common  stock could  adversely  affect  prevailing  market  prices in our common
stock.

                                       13
<PAGE>

Transfer Agent

         Our transfer agent is American Stock Transfer & Trust Company,  40 Wall
Street, New York, NY 10005.

Shares Eligible for Future Sale

         We believe all of the  outstanding  shares of common stock  aggregating
9,087,822  shares of common stock will be eligible for sale pursuant to Rule 144
under the Securities Act of 1933, subject to restrictions of offers and sales of
such  securities by "insiders" as that term is defined under the  Securities Act
of 1934 and anticipates trading by fiscal year ending 2003.

Penny Stock Considerations

         Penny Stock  Regulation  Broker-dealer  practices  in  connection  with
transactions  in "Penny  Stocks"  are  regulated  by certain  penny  stock rules
adopted by the Securities and Exchange  Commission.  Penny stocks  generally are
equity  securities  with a price  of less  than  $5.00  (other  than  securities
registered  on certain  national  securities  exchanges  or quoted on the NASDAQ
system).  The penny stock rules require a broker-dealer,  prior to a transaction
in a penny stock not otherwise  exempt from the rules, to deliver a standardized
risk disclosure  document that provides  information  about penny stocks and the
risk associated with the penny stock market. The broker-dealer must also provide
the customer  with  current bid and offer  quotations  for the penny stock,  the
compensation of the  broker-dealer  and its salesperson in the transaction,  and
monthly account  statements showing the market value of each penny stock held in
the customer's  account.  In addition,  the penny stock rules generally  require
that prior to a  transaction  in a penny stock,  the  broker-dealer  must make a
written  determination  that the penny  stock is a suitable  investment  for the
purchaser  and receive the  purchaser's  written  agreement to the  transaction.
These  disclosure  requirements  may have the  effect of  reducing  the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules.
XRG's  securities  will likely have a trading price of less than $5.00 per share
and will not be traded on any  exchanges,  therefore we will be subject to Penny
Stock Rules. As a result of the aforesaid  rules  regulating  penny stocks,  the
market  liquidity for our  securities  could be severely  adversely  affected by
limiting the ability of broker-dealers to sell our securities and the ability of
shareholders sell their securities in the secondary market.

                                       14
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

IMPORTANT NOTE ABOUT FORWARD-LOOKING STATEMENTS

         The following  discussion  and analysis  should be read in  conjunction
with our  audited  financial  statements  as of  March  31,  2002 and the  notes
thereto,  all of which financial  statements are included elsewhere in this form
10-KSB.  In addition to historical  information,  the following  discussion  and
other  parts  of this  Form  10-KSB  contain  forward-looking  information  that
involves risks and  uncertainties.  Our actual  results could differ  materially
from  those  anticipated  by such  forward-looking  information  due to  factors
discussed under "Business" and elsewhere in this Form 10-KSB.

         The  statements  that are not  historical  constitute  "forward-looking
statements".  Said  forward-looking  statements  involve risks and uncertainties
that may cause the actual  results,  performance or  achievements of the Company
and its  subsidiaries  to be  materially  different  from  any  future  results,
performance  or  achievements,   express  or  implied  by  such  forward-looking
statements. These forward-looking statements are identified by their use of such
terms and phrases as "expects",  "intends",  "goals",  "estimates",  "projects",
"plans", "anticipates", "should", "future", "believes", and "scheduled".

         The variables which may cause differences  include, but are not limited
to, the  following:  general  economic  and  business  conditions;  competition;
success of operating initiatives;  operating costs;  advertising and promotional
efforts;  the  existence  or absence of adverse  publicity;  changes in business
strategy or development plans; the ability to retain  management;  availability,
terms and deployment of capital;  business  abilities and judgment of personnel;
availability  of  qualified  personnel;  labor  and  employment  benefit  costs;
availability and costs of raw materials and supplies; and changes in, or failure
to comply with various  government  regulations.  Although the Company  believes
that the assumptions underlying the forward-looking  statements contained herein
are reasonable, any of the assumptions could be inaccurate, and therefore, there
can be no assurance that the  forward-looking  statements  included in this Form
10-KSB will prove to be accurate.

         In   light   of  the   significant   uncertainties   inherent   in  the
forward-looking  statements  included  herein the inclusion of such  information
should not be regarded as a representation by the Company or any person that the
objectives and expectations of the Company will be achieved.

GENERAL

         XRG  plans  on  consolidating   established  and  profitable  truckload
carriers throughout the United States that have long-term customer relationships
and  typically  generate  revenues  between $5 and $20 million.  We believe that
these  acquisitions  will enable us to diversify  our customer  base,  technical
capabilities and geographic areas served.  This  consolidation  plan provides us
with an opportunity to rapidly develop our business.

         Our  philosophy  within the truckload  industry will be to hire out the
"purchased  transportation".  This will allow the Company to avoid the  greatest
pitfall carriers that own their own equipment face, utilization.  Equipment that
is not  under  load  is a cost  to the  typical  carrier.  Because  the  Company
contracts for the equipment, only trucks pulling loads incur expenses. This cost
will be contracted  for prior to the load being picked up, and will be typically
75% of the gross  revenue of the load.  Maintenance,  breakdowns,  and all other
expenses  associated  with owning  equipment will be the  responsibility  of the
equipment owner and not XRG.

         Currently,  We are  only  providing  administrative  services  for  one
customer  located in Pittsburgh,  Pennsylvania.  On February 1, 2002,  XRG, Inc.
created a new subsidiary,  XRG G&A, Inc. and executed an Administrative Services
Agreement   with  KDK   TRANSPORT,   INC.  which  permits  XRG  G&A  to  provide
administrative services for a period of five years unless terminated by KDK upon
30 days prior written notice to the Company. XRG G&A, Inc. collects a 3% service
fee payable weekly based on KDK's trucking and brokerage  gross billings for the
prior  week.  XRG has  generated  $110,201  in  revenues  during the period from
February 1, 2002 until March 31, 2002.  Related expenses were $107,617 resulting
in a gross margin of $2,370. We are considered a development stage enterprise.

         During the year ended March 31,  2002,  we incurred a loss of $324,136.
We have not  generated  sufficient  revenues  from  operations  to self-fund our
capital and operating  requirements.  We had a cash balance at March 31, 2002 of
$315,179  and working  capital of  $193,621.  The primary  source of our working
capital  during the year ended March 31,  2002,  was from the  issuance of notes

                                       15
<PAGE>

payable.  We believe that our current cash  resources and access to capital will
be sufficient to sustain our operations for at least 12 months. Our monthly cash
"burn  rate"  is   approximately   $25,000  per  month.   This   estimate  is  a
forward-looking statement that involves risks and uncertainties. The actual time
period  may differ  materially  from that  indicated  as a result of a number of
factors so that we cannot assure that our cash  resources will be sufficient for
anticipated  or   un-anticipated   working   capital  and  capital   expenditure
requirements for this period.

         We are  optimistic  that our business  strategy  will entice many small
trucking  companies  to be acquired  by us.  To-date we have not  completed  any
acquisitions.  There is no assurance  that our business  strategy is viable,  or
whether, we will be able to complete an acquisition in the future. Currently, we
provide our  administrative  services to one customer.  We have  identified  ten
small trucking companies for potential acquisition that fit our criteria and are
actively pursuing four, however, none have agreed to come on board.

         To complete the initial stages of our business  plan,  which we view as
completing  our first  trucking  company  acquisition,  we estimate that we will
require an  additional  $1 million  capital  infusion.  We plan on raising  this
capital through either debt or equity financing,  however, there is no assurance
that  will be able to obtain  financing  on  favorable  terms to  complete  this
acquisition.

         We have incurred substantial losses since we were formed. From the date
of our formation  through March 31, 2002, we incurred net losses of $15,867,828.
$15,405,274 of this loss is related to previous unrelated and dormant operations
of XRG  International,  Inc from our initial  incorporation  in December 1976 to
April 30, 1999. On May 1, 1999, we  reactivated  the company to develop plans to
pursue  consolidation  opportunities  within  several  industries  including the
freight transportation industry. XRG International,  Inc. merged with XRG, Inc.,
a  Delaware  Corporation  formed  in  November  2000 to focus on  acquiring  and
operating both asset and non-asset based  truck-load  carriers in the contiguous
48 states.  Our  losses  During the year  ended  March 31,  2002 and 2001,  were
$324,136 and $123,389, respectively.

RESULTS OF OPERATIONS

Year ended March 31, 2002 compared to the year ended March 31, 2001

         XRG generated  $110,201 in revenues  during the period from February 1,
2002 until  March 31,  2002 from our  administrative  services  provided  to one
customer.  Related expenses were $107,831 resulting in a gross margin of $2,370.
These  services are an important  foundation  for the  eventual  acquisition  of
trucking  companies.  We continue to focus our efforts  primarily on identifying
profitable  truckload carriers  throughout the United States for acquisition and
securing financing to support our business.

         For  the  year  ended  March  31,  2002,  total  selling,  general  and
administrative  expenses  were  $280,493 as  compared  to $119,651  for the same
period of the previous  year, an increase of $160,842 or 134%.  This increase is
the  result of an  increase  in  consulting,  travel,  and  office  costs,  plus
additional  legal and accounting  costs associated with preparing and filing our
Form 10-SB Registration Statement.

         Interest expense for the year ended March 31, 2002 and 2001 was $46,013
and $3,738,  respectively.  This increase of $42,275 or 1131% is associated with
an increase in long-term debt of $600,000 from March 31, 2001 to March 31, 2002.

         We had a net loss of  $324,136  for the year  ended  March 31,  2002 as
compared to a loss of $123,389 for the prior year period.  This  increase in the
operating  loss  over that of the  preceding  year  period  is the  result of an
increase in consulting,  travel,  and office costs,  as well as higher  interest
expenses associated with our long-term debt.

         The loss per share was  $0.04  per share for the year  ended  March 31,
2002 as  compared  to a loss per share of $0.02 for the for the year ended March
31, 2001. The weighted  average shares  outstanding for the year ended March 31,
2002 was 7,498,156 as compared to 6,327,597 for the preceding  year period ended
March 31, 2001.

Year ended March 31, 2001 compared to eleven months ended March 31, 2000

         There were no  revenues  for the year ended  December  31, 2001 and the
eleven  months  ended  March 31,  2000.  We focused  our  efforts  primarily  on
identifying  profitable  truckload  carriers  throughout  the United  States for
acquisition and securing financing to maintain our business.

                                       16
<PAGE>

         For  the  year  ended  March  31,  2001,  total  selling,  general  and
administrative  expenses  were  $119,651  as  compared to $12,029 for the eleven
month  period of the  previous  year,  an increase  of  $107,622  or 895%.  This
increase is the result of an increase in consulting,  travel,  and office costs,
plus additional  legal and accounting costs associated with preparing and filing
our Form 10-SB Registration Statement.

         Interest  expense  for the year  ended  March 31,  2001 and the  eleven
months ended March 31, 2000 was $3,738 and $-0-, respectively.  This increase of
$3,738 is  associated  with our long-term  debt  increase of $85,000  during the
current period.

         We had a net loss of  $123,389  for the year  ended  March 31,  2001 as
compared to a loss of $15,029 for the prior eleven month  period.  This increase
in the  operating  loss over that of the  preceding  eleven  month period is the
result of an increase in consulting, travel, and office costs, as well as higher
interest expenses associated with our long-term debt.

         The loss per share was  $0.02  per share for the year  ended  March 31,
2001 as  compared  to a loss per share of $0.00 for the eleven  month  period in
2000. The weighted average shares  outstanding for the year ended March 31, 2001
was  6,327,597 as compared to 3,104,929  for the  preceding  eleven month period
ended March 31, 2000.

Liquidity and Capital Resources

         To date,  we have  funded our  capital  requirements  and our  business
operations with funds provided by the from borrowings. To date, we have received
$685,000  in the form of notes  payable  at various  interest  rates of 12.0% to
15.0%, payable quarterly.  These notes mature at various dates between July 2002
and  March  2004 and are  unsecured.  None of these  notes  individually  exceed
$100,000.  The current  portion of these  notes is $25,000  which is due in July
2002. XRG, Inc is the note issuer,  and none of these  note-holders are officers
or  directors  of XRG.  In  connection  with these  notes,  warrants  to acquire
3,291,000  shares of common  stock  were  granted to these  note-holders.  These
warrants  have no  expiration  date and are  immediately  exercisable  at prices
ranging from $.000025 to $.0005.

         For the year  ended  March 31,  2002 we used  $273,046  in cash used by
operating  activities as compared to $116,337 in the similar  period ended March
31, 2001.  Investing activities for the present year included the acquisition of
computer equipment in the amount of $11,262.  Financing  activities for the year
ended March 31, 2002 provided  $596,998 from the issuance of notes payable.  For
the year ended  March 31,  2002,  cash  increased  $312,690  as  compared  to an
increase of $2,090 in the prior year.

         Historically we have not generated  sufficient revenues from operations
to self-fund our capital and operating requirements.  We expect that our working
capital will come from  fundings  that will  primarily  include  equity and debt
placements.  We had a cash  balance at March 31,  2002 of  $315,179  and working
capital of $193,621.  We believe that our current cash  resources  and access to
capital will be sufficient to sustain our operations for at least 12 months. Our
monthly cash "burn rate" is approximately  $25,000 per month. This estimate is a
forward-looking statement that involves risks and uncertainties. The actual time
period  may differ  materially  from that  indicated  as a result of a number of
factors so that we cannot assure that our cash  resources will be sufficient for
anticipated  or   un-anticipated   working   capital  and  capital   expenditure
requirements for this period.

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

         To-date we have not completed any  acquisitions.  There is no assurance
that we will be able to complete an  acquisition  in the future.  Currently,  we
generate revenue by providing  administrative  services to one customer. We have
identified ten small trucking  companies for potential  acquisition that fit our
criteria and are actively  pursuing four,  however,  none have agreed to come on
board.

         We  anticipate  raising  capital  in the next  twelve  months  from the
issuance of convertible  notes.  These unsecured notes will be convertible after
one year at 50% of the  average  bid price of our  common  stock  from the sixty
trading days  immediately  preceding the conversion date or maturity date. There
is currently no liquidity in or stock, therefore, until our stock begins trading
on an  exchange  we will  resort  primarily  to  raising  capital  through  debt
placements.

                                       17
<PAGE>

Seasonality

         In the transportation industry, results of operations frequently show a
seasonal pattern. Seasonal variations may result from weather or from customer's
reduced shipments after the busy winter holiday season.

Inflation

         We  believe  that the  impact of  inflation  on our  operations  is not
material.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information  required by this item is presented at page F-1 of this
Report, following Part III hereof.


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

         None.


                                       18
<PAGE>

                                    PART III


ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS , PROMOTERS AND CONTROL PERSONS.

Directors and Executive Officers of the Company

         The following table sets forth certain information with respect to each
person who is a director or an executive officer as of March 31, 2002.
<TABLE>
<CAPTION>

            NAME                       AGE                              POSITION
            ----                       ---                              --------

<S>                                   <C>                  <C>
Kevin P. Brennan                      50                      President, Chief Executive Officer,
                                                              Director

Stephen R. Couture                    32                      Vice President of Finance,
                                                              Chief Financial Officer,
                                                              Director, Treasurer

Donald G. Huggins, Jr.                53                      Executive Vice President,
                                                              Chairman of the Board
</TABLE>

         Executive  officers  are  elected by the Board of  Directors  and serve
until their successors are duly elected and qualify,  subject to earlier removal
by the Board of  Directors.  Directors  are  elected  at the  annual  meeting of
shareholders to serve for their term and until their  respective  successors are
duly  elected and  qualify,  or until their  earlier  resignation,  removal from
office,  or death. The remaining  directors may fill any vacancy in the Board of
Directors for an unexpired  term.  See "Board of Directors"  for a discussion of
the Directors' terms.

Business Experience of  Executive Officers and Directors

     Kevin P Brennan,  President, Chief Executive Officer, Director. Mr. Brennan
was CFO and  co-founder of Express  America,  a non-asset  based  transportation
company.  For the last three years he has worked for XRG,  Inc. For the previous
two years, Mr. Brennan was employed with Cherry,  Bekaert,  and Holland,  L.L.P.
certified public  accountants.  Mr. Brennan is an experienced  public accountant
and a licensed CPA. He attended Ohio University,  and graduated with high honors
from Robert Morris University, Pittsburgh, PA with a BA in Accounting.

     Mr. Stephen R. Couture, Vice President of Finance, Chief Financial Officer,
Treasurer,  Director Mr.  Couture is a principal  in Couture & Company,  Inc., a
corporate  financial  consulting  firm  founded in 1980.  He has  consulted  for
numerous public and private companies primarily in the Tampa Bay, Florida region
since 1993. Mr. Couture has been involved with structuring financings, assisting
with  mergers and  acquisitions,  private and public  security  placements,  and
development of company  business plans. Mr. Couture earned a Masters in Business
Administration, emphasis in finance and accounting, from the University of Tampa
and a  Bachelor  of  Science  degree  in  management  systems,  from  Rensselaer
Polytechnic Institute.

     Mr. Donald G.  Huggins,  Jr.,  Executive  Vice  President,  Chairman of the
Board.  Mr.  Huggins is  currently  President  of Private  Capital  Group  Inc.,
Clearwater, Florida. Mr. Huggins has served from 1991 to 1997 as Chief Operating
Officer,  Chief  Financial  Officer and  Director of  Business  Development  and
Strategic  Alliances  for Innova  Pure  Water,  Inc. a  publicly  traded,  water
filtration technology enterprise,  located in Clearwater,  Florida. Prior to his
Innova  tenure,  Mr.  Huggins'  career was focused on  organizing  and acquiring
premium real estate  development  projects,  through a rollup strategy,  for his
privately held development company.

Board of Directors

         Our Bylaws fix the size of the Board of  Directors at no fewer than one
and no more than seven  members,  to be elected  annually by a plurality  of the
votes cast by the  holders of Common  Stock,  and to serve until the next annual
meeting of  stockholders  and until their  successors have been elected or until
their earlier resignation or removal.  Currently,  there are three (3) directors
who were  originally  elected  on October  29,  2001.  In June 2002,  one of our
directors,  Gerald  Couture,  resigned,  and the  vacancy  was filled by his son
Stephen Couture.

                                       19
<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION

Executive Compensation

         The following  table shows the  compensation  paid or accrued by us for
the year ended March 31, 2002 and 2001,  to or for the account of our  officers.
No executive  officers received an annual salary and bonus in excess of $100,000
or more during the stated period.

<TABLE>
<CAPTION>

                                                  SUMMARY COMPENSATION TABLE

                                    Annual Compensation                Long-Term Compensation Awards

                                                                      Restricted
                                                     Other Annual     Stock       Options/    LTIP        All Other
Name & Principal                Salary     Bonus     Compensation     Award(s)    SARs        Payouts     Compensation
Position                Year     ($)        ($)           ($)           ($)       (#)          ($)            ($)

<S>                    <C>       <C>       <C>         <C>              <C>        <C>         <C>          <C>
Kevin Brennan
President, CEO          2002       ---       ---         $67,572         ---         ---         ---           ---

                        2001       ---       ---         $38,000         ---         ---         ---           ---

Donald G. Huggins, Jr.
Executive               2002       ---       ---         $54,500         ---         ---         ---           ---
Vice President
                        2001       ---       ---         $25,300         ---         ---         ---           ---

Stephen R. Couture      2002       ---       ---         $ 5,750         ---         ---         ---           ---
Vice President,
Finance, CFO            2001       ---       ---             ---         ---         ---         ---           ---
</TABLE>

------------------------

Employment and Other Agreements

         Our officers do not currently have employment agreements, however, XRG,
Inc. plans on establishing  employment  agreements with our key employees during
the year ended March 31, 2003.

Stock Options

         XRG intends to adopt a stock option plan in 2002,  which authorizes the
grant of incentive stock options under Section 422 of the Internal  Revenue Code
(the  "Plan").  A total of 1,000,000  shares have been reserved and issued under
the Plan. The Plan will provide that (a) the exercise  price of options  granted
under the Plan shall not be less than the fair market value of the shares on the
date on which the option is granted unless an employee,  immediately  before the
grant,  owns more than 10% of the total combined  voting power of all classes of
stock of XRG or any subsidiaries, whereupon the exercise price shall be at least
110% of the fair  market  value of the shares on the date on which the option is
granted;  (b) the term of the option may not exceed ten years and may not exceed
five years if the employee owns more than 10% of the total combined voting power
of all classes of stock of XRG or any subsidiaries immediately before the grant;
(c) the  shares of stock may not be  disposed  of for a period of two years from
the date of grant of the option and for a period of one year after the  transfer
of such  shares to the  employee;  and (d) at all time from the date of grant of
the option and ending on the date three months  before the date of the exercise,
the employee shall be employed by XRG, or a subsidiary of XRG, unless employment
is terminated because of disability,  in which case such disabled employee shall
be employed  from date of grant to a year  preceding  the date of  exercise,  or
unless such employment is terminated due to death.

                                       20
<PAGE>

Director Compensation

         A director who is an employee  receives no additional  compensation for
services as director or for attendance at or  participation  in meetings  except
reimbursement of out-of-pocket  expenses and options.  Outside directors will be
reimbursed  for  out-of-pocket  expenditures  incurred in attending or otherwise
participating  in  meetings  and may be issued  stock  options  for serving as a
director. We have no other arrangements regarding compensation for services as a
director.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth  certain  information  with  respect  to  the
beneficial  ownership  known to the  Company of shares of Company  Common  Stock
owned as of March 31, 2002 beneficially by (i) each person who beneficially owns
more than 5% of the outstanding  Company Common Stock, (ii) each director of the
Company,  (iii) the Officers of the Company,  and (iv)  directors  and executive
officers of the Company as a group:

<TABLE>
<CAPTION>

                                                               Shares of                            Percent of
      Name of Beneficial Owner (3)                             Common Stock (1)                     Class (2)
--------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                                  <C>
Kevin Brennan(4)                                                  2,000,000                             22.0%
Donald G. Huggins, Jr. (4) (5)                                    2,750,000                             30.3%
Stephen Couture(8)                                                  875,000                              9.6%

Richard Taylor (6)                                                1,000,000                             11.0%
Daniel Bush (7)                                                     800,000                              8.8%
Gerald Couture(8)                                                   875,000                              9.6%

All directors and executive
officers as a group (4 persons)                                   5,625,000                             61.9%
</TABLE>

(1)  Represents sole voting and investment power unless otherwise indicated.

(2)  Based on 9,087,822  common shares  outstanding  as of March 31, 2002.  This
     amount  excludes  warrants to acquire  3,010,000  common  shares  issued in
     connection with our notes payable at March 31, 2002

(3)  The address of each individual is in XRG's care.

(4)  Includes  1,000,000  shares  owned  through USA  Polymers,  Inc., a Florida
     Corporation.

(5)  Donald G. Huggins,  Jr.'s wife Margaret J. Huggins is the stockholder.  Mr.
     Huggins disclaims beneficial ownership of his wife's stock.

(6)  Mr.  Taylor is the  former  President  and Chief  Executive  Officer of XRG
     International, Inc.

(7)  Represents shares issued for consulting services.

(8)  Includes  500,000  shares  owned  through  USA  Polymers,  Inc.,  a Florida
     Corporation.


         These shares of Common Stock held by beneficial owners are "Restricted"
within the meaning of Rule 144 adopted under the Securities Act (the "Restricted
Shares"),  and may not be sold unless they are  registered  under the Securities
Act or sold pursuant to an exemption from  registration,  such as the exemptions
provided by Rule 144 and Rule 701  promulgated  under the  Securities  Act.  The
Restricted Shares were issued by the Company in private transactions in reliance
upon exemptions from registration  under the Securities Act and may only be sold
in accordance with the provisions of Rule 144 or Rule 701 of the Securities Act.

                                       21
<PAGE>

         In  general,  under  Rule 144 as  currently  in effect  any  person (or
persons  whose  shares  are  aggregated),   including  an  affiliate,   who  has
beneficially owned shares for a period of at least one year is entitled to sell,
within  any  three-month  period,  a number of shares  that does not  exceed the
greater of:

         (1)      1% of the then-outstanding shares of common stock; and

         (2) the average  weekly  trading  volume in the common stock during the
four calendar weeks  immediately  preceding the date on which the notice of such
sale on Form 144 is filed with the Securities and Exchange Commission.

         Sales under Rule 144 are also subject to provisions  relating to notice
and manner of sale and the availability of current public  information about us.
In addition,  a person (or persons whose shares are aggregated) who has not been
an affiliate of us at any time during the 90 days immediately  preceding a sale,
and who has  beneficially  owned the  shares  for at least two  years,  would be
entitled to sell such  shares  under Rule  144(k)  without  regard to the volume
limitation and other conditions  described above. While the foregoing discussion
is  intended  to  summarize  the  material  provisions  of Rule 144,  it may not
describe all of the applicable provisions of Rule 144, and, accordingly, you are
encouraged to consult the full text of that Rule.

         The possibility of future sales by existing stockholders under Rule 144
or otherwise may, in the future, have a depressive effect on the market price of
the Common Stock, and such sales, if substantial might also adversely affect the
Company's ability to raise additional capital.

ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         XRG has advances  payable to two of our  officers and  directors in the
amounts  of  $31,626  and  $34,627  as of March 31,  2002 and  March  31,  2001,
respectively, that are unsecured, non-interest bearing, and due on demand. Kevin
Brennan,  our President and Chief Executive Officer has advanced XRG $23,426 and
$28,427 as of March 31, 2002 and 2001, respectively. Donald G. Huggins, Jr., our
Executive  Vice President has advanced us $8,200 and $6,200 as of March 31, 2002
and 2001, respectively.

         Our  officers  have been paid  $127,822  for  consulting  services
during the year ended March 31, 2002.  Kevin  Brennan our  President and CEO has
been paid $67,572. Donald G. Huggins, Jr., our Executive Vice President has been
paid $54,500.  Couture & Company,  Inc., the consulting firm of Stephen Couture,
our Vice President,  Finance and CFO, has been paid $5,750 during the year ended
March 31, 2002.

         In order to restructure  our operations to reflect our new line of
business, XRG, Inc., a privately owned Delaware Corporation, with no significant
operations from its inception in November 2000,  merged with XRG  International,
Inc. in December 2001. At the time of the merger XRG, Inc. had 2,750,000  shares
issued  and  outstanding.  Kevin  Brennan  our  President  and CEO and Donald G.
Huggins,  Jr., our Executive Vice President each owned 1,000,000  shares of XRG,
Inc.,  a  privately  owned  Delaware  Corporation.   Stephen  Couture  our  Vice
President, Finance and CFO owned 750,000 shares of this company.

         In March  2000,  we  agreed  to issue  USA  Polymers,  Inc.  a  Florida
Corporation,  3,000,000 shares of our Common Stock for certain intangible assets
of the  company.  These  shares were issued at $.001 par value or $3,000.  Kevin
Brennan  our  President  and CEO  owns  1,000,000  shares,  Donald  Huggins  our
Executive Vice President owns  1,000,000  shares,  and Stephen  Couture our Vice
President,  Finance and CFO owns 500,000 shares of USA Polymers, Inc. Subsequent
to the  purchase,  the  acquired  assets  were  deemed  to have no  value to XRG
International,  Inc.  and the loss was charged to expense  for the period  ended
March 31, 2000.

         In May 1999,  we agreed to issue  Donald G. Huggins, Jr., our Executive
Vice  President  750,000 shares and Dan Bush,  one of our  shareholders  800,000
shares of our Common Stock for consulting  services.  These shares were valued a
$.001 par value or $1,550.

                                       22
<PAGE>

         We believe that all of the transactions with our officers and directors
were  fair  and  in the  best  interests  of  XRG,  such  transactions  may  not
necessarily have been on the same terms as if negotiated from unaffiliated third
parties.  However,  management  believes that these terms are no less  favorable
than those  that would have been  available  from  unaffiliated  third  parties.
Although no other  transactions  are  contemplated,  it is XRG's policy that all
future transactions with our officers, directors or affiliates would be approved
by members of our board of directors not having an interest in the  transaction,
and will be on terms no less favorable than could be obtained from  unaffiliated
third parties.

ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.

(a)      The following documents are filed as part of this report:

         (1)(2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.

         Financial Statements filed as part of this Report are set forth in Item
         7 and  are  presented  at  page  F-1 of  this  Report;  which  list  is
         incorporated herein by reference. The Financial Statement Schedules and
         the Report of Independent Auditors as to Schedules follow the Exhibits.

         (3) EXHIBITS.

(b)      Reports on Form 8-K

         None.

(c)      Exhibits.  See the Indexes to Exhibits below.

INDEX TO EXHBITS.

All of the  items  below  are  incorporated  by  reference  to the  Registrant's
Registration  Statement on Form 10-SB,  File No.  0-49659,  filed March 4, 2002,
except for Exhibit 10.2, which is included with this filing.

                       EXHIBITS AND SEC REFERENCE NUMBERS
<TABLE>
<CAPTION>

Number           Title of Document                                                                        Location
------           -----------------                                                                        --------
<S>          <C>
3.1              Certificate of Incorporation of USA Polymers, Inc. (2)

3.2              Amendment to Certificate of Incorporation of USA Polymers, Inc. changing name to XRG,
                 Inc. (2)

3.3              Agreement and Plan of Merger of XRG, Inc. and XRG International, Inc. (2)

3.4              Certificate of Merger of XRG, Inc. and XRG International, Inc. - Delaware. (2)

3.5              Certificate of Merger of XRG, Inc. and XRG International, Inc. - New Jersey. (2)

3.6              Amendment to Certificate of Incorporation to Increase Authorized Shares of XRG, Inc.
                 (2)

3.7              ByLaws of XRG, Inc. (2)

10.1             Lease Agreement between Pittsburgh Properties, Ltd. and XRG, Inc. dated August 28,
                 2001. (2)

10.2             Administrative Services Agreement between XRG G&A, Inc. and KDK Transport, Inc. dated
                 February 1, 2002 (1)

99.1             Certification  Pursuant to 18 U.S.C.  Section 1350, as adopted
                 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by
                 XRG's Chief Executive Officer. (3)

99.2             Certification  Pursuant to 18 U.S.C.  Section 1350, as adopted
                 pursuant to Section  906 of the  Sarbanes-Oxley  Act of 2002 by
                 XRG's  Chief  Financial Officer. (3)
</TABLE>

1.       Filed as exhibits to our Form 10-KSB filed on July 10, 2002.
2.       Filed as exhibits to Form 10-SB filed on March 4, 2002.
3.       Filed herewith.

                                       23
<PAGE>

SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                                              XRG, Inc.

Date:   September 9, 2002                            By:      /s/ Kevin Brennan
                                                              -----------------
                                                              Kevin Brennan
                                                              President & CEO

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

         SIGNATURE                                   TITLE                                       DATE
         ---------                                   ---------                                   ----

<S>                                 <C>                                              <C>
/s/ Kevin Brennan                      President and Chief Executive
--------------------------             Officer (Principal Executive                        September 9, 2002
Kevin Brennan                          Officer) and Director

/s/ Stephen Couture                    Vice President, Finance, Chief                      September 9, 2002
----------------------------------     Financial Officer and Director
Stephen Couture

/s/ Donald G. Huggins, Jr.             Executive Vice President                            September 9, 2002
-----------------------------------    and Chairman of the Board
Donald G. Huggins, Jr.
</TABLE>



                                       24
<PAGE>

                        Consolidated Financial Statements

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                   Years Ended March 31, 2002 and 2001 and the
                      Period May 1, 1999 to March 31, 2002

                          Independent Auditors' Report


<PAGE>

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                        Consolidated Financial Statements

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002


                                    Contents



Independent Auditors' Report on Consolidated Financial Statements..........F-1

Consolidated Financial Statements:

    Consolidated Balance Sheet.............................................F-2
    Consolidated Statements of Operations..................................F-3
    Consolidated Statements of Changes in Stockholders' Deficit............F-4
    Consolidated Statements of Cash Flows..............................F-5 - F-6
    Notes to Consolidated Financial Statements........................F-7 - F-13


                                       i
<PAGE>

                          Independent Auditors' Report



Board of Directors
XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
    (A Development Stage Company)
Clearwater, Florida


We have audited the accompanying  consolidated  balance sheet of XRG, Inc. f/k/a
XRG International, Inc. and Subsidiary (a development stage company) as of March
31, 2002 and the  related  consolidated  statements  of  operations,  changes in
stockholders'  deficit,  and cash flows for the years  ended  March 31, 2002 and
2001 and the period May 1, 1999 to March 31 2002. These  consolidated  financial
statements  are  the   responsibility   of  the  management  of  XRG,  Inc.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  These  standards  require  that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  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
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of XRG, Inc. f/k/a XRG
International, Inc. and Subsidiary (a development stage company) as of March 31,
2002 and the results of its  operations and cash flows for the years ended March
31,  2002 and 2001 and the  period May 1, 1999 to March 31,  2002 in  conformity
with accounting principles generally accepted in the United States of America.




Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
June 7, 2002, except Note 10, as to which
    the date is July 1, 2002


                                      F-1
<PAGE>




             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                           Consolidated Balance Sheet

                                 March 31, 2002

<TABLE>
<CAPTION>

<S>                                                                     <C>
Assets
Current assets:
    Cash                                                                  $        315,179
    Other receivables                                                               15,693
                                                                          ----------------
Total current assets                                                               330,872

Equipment, net of accumulated depreciation                                          10,462
                                                                          ----------------


                                                                          $        341,334
                                                                          ================

Liabilities and Stockholders' Deficit
Current liabilities:
    Accounts payable                                                      $         46,219
    Accrued expenses                                                                34,406
    Related party advances                                                          31,626
    Current portion of long-term debt                                               25,000
                                                                          ----------------
Total current liabilities                                                          137,251
                                                                          ----------------


Long-term debt                                                                     660,000
                                                                          ----------------


Stockholders' deficit:
    Preferred stock; $.001 par value; 5,000,000 shares authorized;
        0 shares issued and outstanding
    Common stock; $.001 par value; 15,000,000 shares authorized;
        9,087,822 shares issued and outstanding                                      9,088
    Additional paid-in capital                                                  15,402,823
    Accumulated deficit for unrelated dormant operations                       (15,405,274)
    Deficit accumulated during development stage                                  (462,554)
                                                                           ----------------
Total stockholders' deficit                                                       (455,917)
                                                                           ----------------


                                                                          $        341,334
                                                                           ================
</TABLE>


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

                                      F-2
<PAGE>


             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>


                                                                                                      Period
                                                                    Years Ended March 31,           May 1, 1999
                                                              ------------------------------        to March 31,
                                                                   2002             2001                2002
                                                              -----------------------------------------------------

<S>                                                           <C>              <C>               <C>
Revenues                                                      $    110,201                         $    110,201

Cost of revenues                                                   107,831                              107,831
                                                              -----------------------------------------------------

Gross profit                                                         2,370                                2,370

Selling, general and administrative expenses                       280,493      $    119,651            415,173
                                                              -----------------------------------------------------

Loss from operations                                              (278,123)         (119,651)          (412,803)

Interest expense                                                   (46,013)           (3,738)           (49,751)
                                                              -----------------------------------------------------

Net loss                                                      $   (324,136)     $   (123,389)      $   (462,554)
                                                              =====================================================

Basic loss per share                                          $       (.04)     $       (.02)      $       (.07)
                                                              =====================================================

Weighted average number of common shares
    used in loss per share computation                           7,498,156         6,327,597          6,674,986
                                                              =====================================================

</TABLE>

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


                                      F-3
<PAGE>

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

           Consolidated Statements of Changes in Stockholders' Deficit

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002

<TABLE>
<CAPTION>



                                                                                         Accumulated
                                                                                         Deficit for       Accumulated
                                              Common Stock              Additional       Unrelated        Deficit During
                                       -------------------------          Paid-In        Dormant           Development
                                          Shares       Amount             Capital        Operations           Stage
                                       ------------------------------------------------------------------------------------

<S>                                    <C>           <C>           <C>               <C>                 <C>
Balance, May 1,1999                      1,495,822     $   1,496     $   15,030,193    $    (15,405,274)

Acquisition of company                   3,000,000         3,000

Stock issued for services at
    $.001 par (May 1999)                 1,550,000         1,550

Stock issued in satisfaction
    of debt at $1.36 per share
    (March 2000)                           110,000           110            149,641

Net loss for period                                                                                         $    (15,029)
                                       ------------------------------------------------------------------------------------

Balance, March 31, 2000                  6,155,822         6,156         15,179,834         (15,405,274)         (15,029)

Stock issued in satisfaction
    of debt at $1.23 per share
    (April 2000)                           182,000           182            222,989

Net loss for year                                                                                               (123,389)
                                       ------------------------------------------------------------------------------------

Balance, March 31, 2001                  6,337,822         6,338         15,402,823         (15,405,274)        (138,418)

XRG, Inc. stock issued
    for services at $.001
    par (October 2001)                   2,750,000         2,750

Net loss for year                                                                                               (324,136)
                                       ------------------------------------------------------------------------------------

Balance, March 31, 2002                  9,087,822     $   9,088     $   15,402,823    $    (15,405,274)    $   (462,554)
                                       ====================================================================================
</TABLE>


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

                                      F-4
<PAGE>

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>




                                                                                                      Period
                                                                   Years Ended March 31,            May 1, 1999
                                                              ------------------------------        to March 31,
                                                                   2002             2001                2002
                                                              -----------------------------------------------------
<S>                                                         <C>                <C>                <C>
Operating activities
    Net loss                                                  $   (324,136)     $   (123,389)      $   (462,554)
                                                              -----------------------------------------------------
    Adjustments to reconcile net loss to net
        cash used by operating activities:
           Depreciation                                                800                                  800
           Loss on acquisition                                                                            3,000
           Stock issued for services                                 2,750                                4,300
           Increase in:
               Accounts receivable                                 (15,693)                             (15,693)
               Accounts payable                                     31,420             4,660             46,219
               Accrued expenses                                     31,813             2,392             33,646
                                                              -----------------------------------------------------
    Total adjustments                                               51,090             7,052             72,272
                                                              -----------------------------------------------------
    Net cash used by operating activities                         (273,046)         (116,337)          (390,282)
                                                              -----------------------------------------------------

Investing activities
    Acquisition of equipment                                       (11,262)                             (11,262)
                                                              -----------------------------------------------------

Financing activities
    Net borrowings (payments) on
        stockholder advances                                        (3,002)           33,427             31,626
    Payments on borrowings                                          (5,000)                              (5,000)
    Proceeds from borrowings                                       605,000            85,000            690,000
                                                              -----------------------------------------------------
    Net cash provided by financing activities                      596,998           118,427            716,626
                                                              -----------------------------------------------------

Net increase in cash                                               312,690             2,090            315,082

Cash, beginning of year                                              2,489               399                 97
                                                              -----------------------------------------------------

Cash, end of year                                             $    315,179      $      2,489        $   315,179
                                                              =====================================================

</TABLE>


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


                                      F-5
<PAGE>


             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>


                                                                                                      Period
                                                                   Years Ended March 31,            May 1, 1999
                                                              ------------------------------        to March 31,
                                                                   2002             2001                2002
                                                              -----------------------------------------------------
<S>                                                         <C>                <C>                <C>
Supplemental disclosures of cash flow
    information and noncash investing
    and financing activities:
        Cash paid during the year for interest                $     10,866      $      1,344        $   12,336
                                                              =====================================================
</TABLE>

        During the year ended  March 31,  2000,  the  Company  acquired  certain
        assets of USA Polymers,  Inc. in exchange for 3,000,000 shares of common
        stock valued at $3,000.

        During the year ended March 31, 2000,  the Company issued 110,000 shares
        of common stock in payment of debt in the amount of $149,751.

        During the year ended March 31, 2001,  the Company issued 182,000 shares
        of common stock in payment of debt in the amount of $223,170.

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


                                      F-6
<PAGE>

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002



1.      Background Information

XRG, Inc. (the "Company") was  incorporated in the state of Delaware in November
2000.  The Company plans to acquire and operate both asset and  non-asset  based
truck-load carriers, and to market sophisticated logistical expertise to freight
shippers in the contiguous 48 states.  The corporate  headquarters is located in
Tampa, Florida.

On December  28,  2001,  the  Company  merged with XRG  International,  Inc.,  a
non-reporting,  non-trading public shell. XRG International, Inc. was originally
incorporated  in the state of New Jersey in December  1976 and operated  several
unrelated business ventures until its operations became dormant. On May 1, 1999,
the  Company  was   reactivated   to  develop  plans  to  pursue   consolidation
opportunities  within several  industries  including the freight  transportation
industry.  During 1999,  a change in control  took place and XRG  International,
Inc.  Pursuant to the merger,  the  Company  exchanged  all shares of its common
stock for all of the shares of common stock of XRG  International,  Inc., making
it the sole survivor.  The merger has been accounted for at historical  cost due
to  both  entities  being  under  common   control.   The  Company  is  devoting
substantially  all of its efforts to  establishing  its  freight  transportation
business and,  therefore,  has been in the development stage since the change in
control took place in 1999.

XRG  International,  Inc.  purchased  certain  assets of USA  Polymers,  Inc. in
exchange  for  3,000,000  shares of stock  valued at $3,000.  Subsequent  to the
purchase, the acquired assets were deemed to have no value to XRG International,
Inc. and the loss was charged to expense for the period ended March 31, 2000.

During January 2002, the Company established a wholly owned subsidiary, XRG G&A,
Inc. to perform  certain  administrative  functions  for outside  business.  The
revenues  generated and cost of sales  incurred thus far are derived solely from
this agreement.


2.      Significant Accounting Policies

The significant accounting policies followed are:

        The consolidated  financial statements include the accounts of XRG, Inc.
        and  its  wholly  owned  subsidiary,   XRG  G&A,  Inc.  All  significant
        intercompany accounts have been eliminated.


                                      F-7
<PAGE>

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002



2.      Significant Accounting Policies (continued)

        The preparation of consolidated  financial statements in conformity with
        accounting principles generally accepted in the United States of America
        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  consolidated  financial
        statements and the reported  amounts of revenues and expenses during the
        reporting period. Actual results could differ from those estimates.

        Cash is maintained with one financial  institution in the United States.
        Deposits with this bank may exceed the amounts of insurance  provided on
        such  deposits.  Generally,  the deposits may be redeemed on demand and,
        therefore, bear minimal risk.

        Equipment  is  recorded  at  cost.  Depreciation  is  calculated  by the
        straight-line  method  over the  estimated  useful  lives of the assets,
        generally seven years.  Additions to and major improvements of equipment
        are  capitalized.  Maintenance  and  repairs  are  charged to expense as
        incurred.  As  equipment  is sold or retired,  the  applicable  cost and
        accumulated  depreciation  are eliminated from the accounts and any gain
        or loss is recorded.

        Deferred tax assets and  liabilities  are  recognized  for the estimated
        future  tax  consequences   attributable  to  differences   between  the
        consolidated  financial  statements  carrying amounts of existing assets
        and  liabilities  and their  respective  income tax bases.  Deferred tax
        assets and  liabilities are measured using enacted tax rates expected to
        apply  to  taxable  income  in  the  years  in  which  those   temporary
        differences  are  expected to be  recovered  or  settled.  The effect on
        deferred  tax  assets  and  liabilities  of a  change  in tax  rates  is
        recognized as income in the period that included the enactment date.

        The  Company  issues  stock  in lieu of cash for  certain  transactions.
        Generally,  the  fair  value of the  stock,  based  on  comparable  cash
        purchases, is used to value the transactions.

        Basic loss per share is computed by dividing  loss  available  to common
        stockholders by the weighted average number of common shares outstanding
        for the period.


                                      F-8
<PAGE>


             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002



2.      Significant Accounting Policies (continued)

        The  Company   accounts  for  stock  options  and  warrants   issued  to
        non-employees  in accordance  with FASB No. 123,  "Accounting  for Stock
        Based  Compensation."  FASB No. 123 provides  that expense  equal to the
        fair value of all stock based awards on the date of grant be  recognized
        over the  vesting  period.  The  Company  did not  recognize  expense in
        connection  with  warrants  granted  during 2001 since the fair value of
        those warrants issued was not material.

        In October 2001, the Financial  Accounting  Standards Board issued
        Statement No. 144 (FASB No. 144),  "Accounting  for the  Impairment or
        Disposal of  Long-Lived  Assets." FASB No. 144 addresses the financial
        accounting  and  reporting for the  impairment  of long-lived  assets,
        excluding  goodwill  and  intangible  assets,  to be held  and used or
        disposed  of. FASB No. 144 is required to be applied for fiscal  years
        beginning  after December 15, 2001. The Company is assessing,  but has
        not yet  determined,  how the adoption of FASB No. 144 will impact the
        Company's financial position and results of operations.

        The Company has adopted Statement of Position 98-1,  "Accounting for the
        Costs of Computer Software Developed or Obtained for Internal Use." This
        statement provides guidance on accounting for costs of computer software
        developed for internal use. The Company will capitalize costs associated
        with  software  developed  or obtained  for  internal  use when both the
        preliminary project stage is completed and the Company's  management has
        authorized further funding of the project that it deems probable will be
        completed and used to perform the function  intended.  Capitalized costs
        will include only (1)  external  direct costs of materials  and services
        used in developing or obtaining  internal-use  software, (2) payroll and
        payroll related costs for employees who are directly associated with and
        who devote time to the internal use software  project,  and (3) interest
        costs incurred,  when material,  while developing internal use software.
        Capitalization of such costs will cease no later than the point at which
        the  project is  substantially  complete  and is ready for its  intended
        purpose.

        Software development costs, once completed, will be amortized over the
        expected  life of the project.  Other  computer  software  maintenance
        costs  related to software  development  will be expensed as incurred.
        During the year ended March 31, 2002,  the Company did not incur costs
        related to internally developed or obtained software.

        Certain minor  reclassifications have been made to the 2001 consolidated
        financial statements to conform to those used in 2002.


3.      Equipment

As of March 31, 2002, the Company had office equipment which cost $11,262,  with
accumulated depreciation of $800.


                                      F-9
<PAGE>


             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002



4.      Notes Payable and Long-Term Debt

Notes payable and long-term debt consist of the following at March 31, 2002:
<TABLE>

<S>                                                                              <C>
        Notes  payable;  interest  ranging  from 12.0% to 15.0%;  interest  only
           payments  payable  quarterly;  principal due at various dates between
           July 2002 and March 2004; unsecured                                    $   685,000
        Less amounts currently due                                                     25,000
                                                                                  -----------
                                                                                  $   660,000
</TABLE>

The following is a schedule by year of the principal  payments required on these
notes payable and long-term debt as of March 31, 2002:

        2003                                               $25,000
                                                           =======
        2004                                              $660,000
                                                          ========

In connection with the issuance of $685,000 of notes payable, the Company issued
warrants to acquire 3,010,000 shares of the Company's common stock. In addition,
the Company issued  warrants to acquire 281,000 shares of the Company's stock as
compensation  expense.  The value of the warrants was deemed immaterial based on
the Company's  calculation  under the  Black-Scholes  option  pricing model and,
therefore, none of the note proceeds have been allocated to the detachable stock
warrants or compensation expense.


                                      F-10
<PAGE>

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002



5.      Commitments

The following is a schedule by year of future minimum rental  payments  required
under an operating  lease that has an initial or remaining  noncancelable  lease
term in excess of one year as of March 31, 2002:

        Year Ending
          March 31,
           2003                                         $   12,372
           2004                                             12,372
           2005                                             12,743
           2006                                             13,008
           2007                                              5,420
                                                        ----------
                                                        $   55,915
                                                        ==========

Rent expense amounted to $17,806, $21,840, and $39,646 for the years ended March
31, 2002 and 2001 and the period May 1, 1999 to March 31, 2002, respectively.


6.      Related Party Transactions

The Company has related party advances payable to stockholders in the amounts of
$31,626 as of March 31, 2002. These advances are due on demand,  unsecured,  and
non-interest  bearing. In addition,  the Company paid approximately  $128,000 to
certain  stockholders  for consulting  services  rendered  during the year ended
March 31, 2002.

The terms of the above  advances and amounts are not  necessarily  indicative of
the terms or amounts that would have been  incurred or agreed to had  comparable
transactions been entered into with independent parties.


7.      Income Taxes

The Company has net operating loss carryforwards of $2,137,650 at March 31, 2002
that expire from 2002 to 2021. Annual utilization of the Company's net operating
loss  carryforwards  will be limited due to a change in ownership control of the
Company's  common stock,  which took place in 1999.  Under federal tax law, this
change  of  ownership  of  the  Company  will   significantly   restrict  future
utilization  of the  net  operating  loss  carryforwards.  Other  than  the  net
operating losses,  which have been limited because of the change in ownership as
described  above,  any other net  operating  losses will expire in 2002  through
2021.


                                      F-11
<PAGE>

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002



7.      Income Taxes (continued)

A valuation  allowance  is  required by FASB No. 109 if,  based on the weight of
available  evidence,  it is more likely than not that some portion or all of the
deferred tax asset will not be realized. The need for the valuation allowance is
evaluated  periodically by management.  Based on available evidence,  management
concluded  that a  valuation  allowance  of 100  percent  for March 31, 2002 was
necessary. Significant components of the Company's net deferred tax asset are as
follows as of March 31, 2002:

        Tax benefit of net operating loss                $   812,000
        Valuation allowance                                 (812,000)
                                                         -----------
                                                         $         0
                                                         ===========

8.      Stock Options and Warrants

The Company  granted  warrants to  individuals  associated  with the issuance of
debt.  During the year ended March 31, 2002, the Company granted 3,291,000 stock
warrants to various individuals.  These warrants have no expiration date and are
immediately exercisable at prices ranging from $.000025 to $.0005.

The  following  is a summary of warrant  activity  for the year ended  March 31,
2002:

                                                                   Weighted
                                               Number of            Average
                                               Warrants          Exercise Price
                                            ------------------------------------
        Outstanding balance, March 31, 2001               0            $.00
        Granted                                   3,291,000          $.0002
                                            ------------------------------------
        Outstanding balance, March 31, 2002       3,291,000          $.0002
                                            ====================================

The Company did not recognize expense in connection with warrants granted during
2002 since the fair value of those warrants granted was not material.

The following weighted average assumptions were used to calculate the fair value
of warrants using the Black-Scholes option pricing model as of March 31, 2002:

        Risk-free interest rate                           3.56%
        Expected warrant life                             2.0 years
        Expected dividend yield                           0.0
        Expected volatility                               0.0%

                                      F-12
<PAGE>

             XRG, Inc. f/k/a XRG International, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                       Years Ended March 31, 2002 and 2001
                          and the Period May 1, 1999 to
                                 March 31, 2002



9.      Commitments and Contingencies

The Company has a five-year agreement to provide certain administrative services
for a transport company.  The revenues generated and cost of sales incurred thus
far are derived solely from this agreement.


10.     Subsequent Event

Subsequent to March 31, 2002, the Company  borrowed  additional  monies totaling
approximately $90,000. The terms of these notes are similar to the notes payable
disclosed in Note 4.


                                      F-13