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

                                   FORM 10-KSB


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

                  For the fiscal year ended March 31, 2003

               [ ]  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,
2003........$686,030

     Aggregate  market value of the voting stock held by  non-affiliates  of the
registrant at July 1, 2003 was $729,581.

     The  number of shares  outstanding  of the  registrant's  common  stock was
10,649,776 as of July 1, 2003.

     Transitional Small Business Disclosure Format (check on):

         Yes      No  X
             ---     ---

<PAGE>

                            XRG, INC. AND SUBSIDIARY

                               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 Price 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........   22

Item 13.          Exhibits, Consolidated Financial Statements,
                  Schedules and Reports on Form 8-K.....................   23

Item 14.          Controls and Procedures...............................   24

                  Signatures............................................   25


                                       1
<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

         XRG, Inc. is a Delaware Corporation founded in November 2000. We are a
development stage enterprise that is focused on acquiring and operating both
asset and non-asset based truck-load carriers in the contiguous 48 states.
During our fiscal year ended March 31, 2003, we provided 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 fiscal year ended March 31, 2003, we generated
approximately $686,000 in revenues from these administrative services. This
Administrative Services Agreement was mutually terminated during the fourth
quarter ended March 31, 2003. During our fiscal year ended March 31, 2003, we
did not generate any revenues from the acquisition and operation of truck-load
carriers.

         In June 2003, we executed a purchase agreement with J. Bently
Companies, Inc., a truckload carrier in Sweetwater, Tennessee to acquire
equipment assets consisting of approximately 275 freight trailers. The purchase
price of these assets is approximately $3,400,000, including the assumption of
approximately $2,200,000 of equipment loans, the payment of $50,000 in cash, and
the issuance 1,150,000 shares of XRG common stock with registration rights. An
additional 2,200,000 shares of our common stock will be escrowed as collateral
for the equipment loans. In addition, In May 2003, we entered into a fleet owner
agreement with J. Bently Companies, Inc. to manage the utilization of these
purchased assets for a two year period. Pursuant to the terms of this agreement,
XRG will pay to J. Bently Companies, Inc. 67% of gross freight revenues as
compensation for the movement of our freight. The closing date for the J. Bently
Companies, Inc. purchase agreement and fleet owner agreement is expected in July
2003.

Overview

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

                                       2
<PAGE>

         During the fiscal year ended March 31, 2003, we provided 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 permitted 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.
collected a 3% service fee payable weekly based on KDK's trucking and brokerage
gross billings for the prior week. XRG had generated $796,231 in revenues during
the period from February 1, 2002 until March 31, 2003. Related expenses were
$897,753 resulting in a negative gross margin of $101,522. The Company tested
its infrastructure capabilities by providing administrative services through XRG
G&A, Inc. to KDK Transport, Inc. This Administrative Services Agreement was
mutually terminated during the fourth quarter ended March 31, 2003.

         During the year ended March 31, 2003, we incurred a loss of $829,828.
We have not generated sufficient revenues from operations to self-fund our
capital and operating requirements. We had a cash balance at March 31, 2003 of
$16,563 and negative working capital of $107,238. These factors raise
substantial doubt concerning our ability to continue as a going concern. We
believe that our ability to raise capital will be sufficient to sustain our
operations for at least 12 months. Our monthly cash "burn rate" is approximately
$50,000 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.

         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 we will be able to obtain financing on favorable terms to complete this
acquisition and successfully implement our business plan.

Industry

          The truckload carrier industry 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 railway. As a result of the
growth in the 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:

     -    Past & present financial and operational performance.
     -    Experience and successes of key management and personnel.
     -    Management  team's ability to operate  according to the XRG guidelines
          and take advantage of its proprietary technology.
     -    Compatibility   or  synergies  with  XRG's  management  and  operating
          philosophies.

                                       3
<PAGE>

     -    Reputation.
     -    Quality of customer base.
     -    Efficiencies, fleet age & specialization.

         Other factors such as the property's location, potential for expansion,
vertical and horizontal integration and competitive market position, are also
considered in the evaluation.

         The following are three types of potential target candidates we will be
seeking:

     -    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   agency  leases,   employee   bases,   leases  on  physical
          facilities,  equipment leases,  operating  licenses,  trade names, and
          sales forces.

     -    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.

     -    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, tractors and trailers,  leases on physical facilities,
          equipment leases, operating licenses, trade names, and sales forces.

         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 an exit strategy. We
will focus our efforts on privately owned closely held trucking companies that
typically generate revenues of $30 million or less. 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,
truckload carriers 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
attacks of September 11, 2001, in the United States, and subsequent events,
resulted 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.

                                       4
<PAGE>

         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:

     -    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.

     -    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.

     -    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.

     -    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.

     -    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.

     -    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.

     -    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.

                                       5
<PAGE>

         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:

     -    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.

     -    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.

         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


                                       6
<PAGE>

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.

         We have integrated a state-of-the-art information system that provides
all critical operational information on a single screen to manage all loads and
equipment. This system provides access for entering customer, vendor, and
employment information, pre-planning, editing and dispatching loads, managing
tractors, trailers and drivers, processing check calls, loaded calls and
deliveries. This information will flow from each acquisition's dispatch
department to a consolidated database where information will be simultaneously
available to all departments. The utilization of electronic transfer of
information will reduce redundancies and the time required to perform each
administrative task associated with the operation of the acquired truckload
carriers.

Our information system is designed to:

     -    Develop  greater  levels of driver  retention  with its  sophisticated
          Driver Advance/Settlement module.

     -    Increase   our  market  share  by  the   implementation   of  Internet
          communication between XRG's truckload carriers and shipper customers.

     -    Eliminate redundancies in administrative and accounting functions.

         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:

     -    Expand sales for acquired divisional carriers.

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

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

                                       7
<PAGE>

         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. There is no assurance that acquired companies will be able to maintain
profitable operations after being acquired.

         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:

     -    Purchasing
     -    Accounts Receivables
     -    Accounts Payable
     -    Payroll

         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
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.

                                       8
<PAGE>

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.

         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.

                                       9
<PAGE>

         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 four employees. No employee is represented by a labor
union. We consider our employee relations to be good.

Risks Related to our Business

     -    Losses from Operations;  Accumulated Deficit;  Negative Net Worth; and
          Going  Concern.  We have  incurred  substantial  losses  since we were
          formed.  From the date of our  formation  through  March 31, 2003,  we
          incurred  net  losses  of  $16,697,656.  $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,  2003 and  2002,  were
          $829,828 and $324,136,  respectively.  These factors raise substantial
          doubt concerning our ability to continue as a going concern. There can
          be no assurance  that the Company will be able to generate  sufficient
          revenues to allow the Company to achieve profitable operations.

     -    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.

     -    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.

     -    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  our  ability  to obtain  bank
          financing, and decrease our liquidity.

     -    Penny Stock  Rules.  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.

                                       10
<PAGE>

     -    Dependence on One Customer.  All of our revenue during the fiscal year
          ended March 31, 2003 was generated from 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.  Our  relationship  with this  customer  was  mutually
          terminated  during the fourth quarter ended March 31, 2003, which will
          have a  materially  adverse  effect  on  our  business  and  operating
          results.


ITEM 2.  DESCRIPTION OF PROPERTY

         Our principal executive offices are located at 5301 Cypress Street,
Suite 111, Tampa, Florida 33607. XRG currently leases 1,530 square feet for
$2,422.50 per month which lease expires August 31, 2003.

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.

         In May, 2003, a legal action was filed in Franklin County, Ohio,
against the Company (and against our president, based on a personal guaranty) by
the landlord of our former office space in Pittsburgh, Pennsylvania. The
landlord is claiming approximately $63,000 in unpaid rent. The Company believes
that it has a valid defense with respect to some or all of the claimed damages.

         In July, 2003, a legal action was filed in Hillsborough County,
Florida, against the Company by the landlord of our current office space in
Tampa, Florida. This action is for eviction and unpaid rent. The Company has
been negotiating with the landlord and we expect to achieve a satisfactory
resolution of this matter.


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

         A special meeting of stockholders of the Company was held on July 7,
2003 for the purpose of enabling stockholders to consider and vote on a
resolution authorizing an Amendment to the Certificate of Incorporation, which
increases the authorized number of common shares from 15,000,000 to 100,000,000,
par value $.001 and authorizes the board of directors to issue up to 50,000,000
preferred shares, par value $.001 issuable in series with such terms, rights and
preferences as determined by subsequent resolutions of the board of directors.
Voting was in person by ballot and no proxies were solicited. At such meeting, a
majority of the Company's stockholders voted to approve such resolution. The
following is a summary of the voting results with respect to the approved
resolution authorizing an Amendment to the Certificate of Incorporation from the
July 7, 2003 special meeting:

              For                       Against                  Abstain
              ---                       -------                  -------
           6,425,100                       0                        0

         No other matters were submitted to a vote of the Company's stockholders
during this July 7, 2003 special meeting or during the year ended March 31,
2003.

                                       11
<PAGE>

                                     PART II


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

Market Value

         Our Common Stock is traded on the OTCBB under the symbol "XRGC". Our
Common Stock commenced trading on March 20, 2003. The following table sets
forth, the high and low bid prices of the Common Stock for the periods shown as
reported by the National Quotation Bureau. The bid prices quoted on the OTCBB
reflect inter-dealer prices without retail mark-up, mark-down or commission and
may not represent actual transactions.

                                                      High Bid          Low Bid
 Fiscal Year Ended March 31, 2003                     --------          -------
 Fourth Quarter (January 1, 2003 to March 31, 2003)       .40               .25

 Fiscal Year Ending March 31, 2004
 First Quarter (April 1, 2003 to June 30, 2003)          1.25               .25

Description of Securities

         The authorized capital stock consisted 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 at March 31, 2003. On July 7,
2003, we approved an amendment to our certificate of incorporation at a special
meeting of stockholders. This Amendment to our Certificate of Incorporation
increases the authorized number of common shares from 15,000,000 to 100,000,000,
par value $.001 and authorizes the board of directors to issue up to 50,000,000
preferred shares, par value $.001 issuable in series with such terms, rights and
preferences as determined by subsequent resolutions of the Board of Directors.
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 our Form 10-SB registration statement and by the provisions of
applicable Delaware law.

Common Stock

         As of July 1, 2003, there were 10,649,776 shares of Common Stock, par
value of $.001 per share outstanding, held of record by approximately 2,600
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.

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

                                       12
<PAGE>

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

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

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.

Transfer Agent

         Our transfer agent is Florida Atlantic Stock Transfer, Inc.,
7130 Nob Hill Road, Tamarac, Florida 33321.

Shares Eligible for Future Sale

         We believe all of the outstanding shares of common stock aggregating
10,649,776 shares of common stock as of July 1, 2003, 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.

                                       13
<PAGE>

         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.


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, 2003 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 under $30 million in revenue. 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.

         During our fiscal year ended March 31, 2003, we provided 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 permitted 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. collected a 3% service fee payable weekly based on KDK's trucking and
brokerage gross billings for the prior week. XRG generated $796,231 in revenues
during the period from February 1, 2002 until March 31, 2003. Related expenses
were $897,753 resulting in a negative gross margin of $101,522. The Company
tested its infrastructure capabilities by providing administrative services
through XRG G&A, Inc. to KDK Transport, Inc This Administrative Services
Agreement was mutually terminated during the fourth quarter ended March 31,
2003. We are considered a development stage enterprise.

         In June 2003, we executed a purchase agreement with J. Bently
Companies, Inc., a truckload carrier in Sweetwater, Tennessee to acquire
equipment assets consisting of approximately 275 freight trailers. The purchase
price of these assets is approximately $3,400,000, including the assumption of
approximately $2,200,000 of equipment loans, the payment of $50,000 in cash, and


                                       14
<PAGE>

the issuance 1,150,000 shares of XRG common stock with registration rights. An
additional 2,200,000 shares of our common stock will be escrowed as collateral
for the equipment loans. In addition, In May 2003, we entered into a fleet owner
agreement with J. Bently Companies, Inc. to manage the utilization of these
purchased assets for a two year period. Pursuant to the terms of this agreement,
XRG will pay to J. Bently Companies, Inc. 67% of gross freight revenues as
compensation for the movement of our freight. The closing date for the J. Bently
Companies, Inc. purchase agreement and fleet owner agreement is expected in July
2003.

         During the year ended March 31, 2003, we incurred a loss of $829,828.
We have not generated sufficient revenues from operations to self-fund our
capital and operating requirements. We had a cash balance at March 31, 2003 of
$16,563 and negative working capital of $107,238. These factors raise
substantial doubt concerning our ability to continue as a going concern. We
believe that our ability to raise capital will be sufficient to sustain our
operations for at least 12 months. Our monthly cash "burn rate" is approximately
$50,000 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 $16,697,656.
$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, 2003 and 2002, were
$829,828 and $324,136, respectively.

RESULTS OF OPERATIONS

Year ended March 31, 2003 compared to the year ended March 31, 2002

         We generated $686,030 in revenues during our fiscal year ended March
31, 2003 from our administrative services provided to one customer. Related
expenses were $789,924 resulting in a negative gross margin of $103,894. These
services were an important foundation for the eventual acquisition of trucking
companies. Our administrative services for this one customer ceased during the
fourth quarter ended March 31, 2003. 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, 2003, total selling, general and
administrative expenses were $584,661 as compared to $280,493 for the same
period of the previous year, an increase of $304,168 or 108%. This increase is
the result of an increase in payroll, consulting, travel, office, legal, and
accounting costs.

         Interest expense for the year ended March 31, 2003 and 2002 was
$141,273 and $46,013, respectively. This increase of $95,260 or 207% is
associated with an increase in long-term debt of $458,000 from March 31, 2002 to
March 31, 2003 and amortization expense associated with the discount on
long-term debt.

                                       15
<PAGE>

         We had a net loss of $829,828 for the year ended March 31, 2003 as
compared to a loss of $324,136 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, office, legal, and accounting costs, as well as
higher interest expenses associated with increases in our long-term debt.

The loss per share was $0.09 per share for the year ended March 31, 2003 as
compared to a loss per share of $0.04 for the for the year ended March 31, 2002.
The weighted average shares outstanding for the year ended March 31, 2003 was
9,312,297 as compared to 7,498,156 for the preceding year period ended March 31,
2002.

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.

         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 was
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% was 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 was the result of an
increase in consulting, travel, and office costs, as well as higher interest
expenses associated with an increase in 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.

Liquidity and Capital Resources

         To date, we have funded our capital requirements and our business
operations with funds provided by borrowings. We have raised $1,183,000 in the
form of notes payable at various interest rates of 12.0% to 15.0%, payable
quarterly. These notes mature at various dates until November 2004 and are
unsecured. None of these notes individually exceed $100,000. XRG, Inc is the
note issuer, and none of these note-holders are officers or directors of XRG. In
connection with these notes, warrants to acquire 3,985,570 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.
Subsequent to our year ended March 31, 2003, these warrants were exercised to
acquire 3,985,570 shares of our common stock. In addition, during June 2003,
approximately $823,000 of these notes were voluntarily converted to our common
stock at a price equal to 50% of the market price at the date of conversion.

         For the year ended March 31, 2003 we used $718,969 in cash used by
operating activities as compared to $273,046 in the similar period ended March
31, 2002. Investing activities for the present year included the acquisition of
computer equipment and office furniture in the amount of $37,647. Financing
activities for the year ended March 31, 2003 provided $458,000 from the issuance
of notes payable. For the year ended March 31, 2003, cash decreased $298,616 as
compared to an increase of $312,690 in the prior year.

         Historically we have not generated sufficient revenues from operations
to self-fund our capital and operating requirements. These factors raise
substantial doubt concerning our ability to continue as a going concern. We
expect that our working capital will come from fundings that will primarily
include equity and debt placements. We had a cash balance at March 31, 2003 of
$16,563 and negative working capital of $107,238. We believe that our access to
capital will be sufficient to sustain our operations for at least 12 months. Our
monthly cash "burn rate" is approximately $50,000 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.

                                       16
<PAGE>

         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. Historically, we
have generated revenue by providing administrative services. 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 limited liquidity in or stock, therefore, until our stock trades with
sufficient volumes, we will resort primarily to raising capital through debt
placements.

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.

                                       17
<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, 2003.

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

Kevin P. Brennan                51           President, Chief Executive Officer,
                                             Director

Stephen R. Couture              33           Vice President of Finance,
                                             Chief Financial Officer,
                                             Director, Treasurer, Secretary

Donald G. Huggins, Jr.          54           Executive Vice President,
                                             Chairman of the Board

Neil Treitman                   49           Chief Operating Officer

         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 four 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.

         Mr. Neil Treitman, Chief Operating Officer, has headed organizations
since 1990 that have been the General Partner of entities controlled by
PacifiCorp Financial and SunAmerica Life Company, as well as several smaller
ventures. He is an officer and director of Capital Development Services Int.
(CDSICorp) a company formed to develop investment opportunities. His management
experience includes property acquisitions and finance as well as hands-on
management of a truckload transport company. As the owner of a small (20 truck)


                                       18
<PAGE>

carrier in the Northwest, Mr. Treitman managed all aspects of its operations
including dispatch, recruiting, and customer relationships. He has focused his
attention on creating the electronic infrastructure that will integrate the XRG
subsidiaries and evaluating acquisition candidates to establish XRG's framework.
Mr. Treitman attended Drexel University's School of Business Administration and
received his Professional Designation as a Certified Commercial Investment
Member (CCIM) of the National Board of Realtors in 1980.

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.
Two of these directors were originally elected on October 29, 2001. Our third
director was elected in June, 2002.


ITEM 10.  EXECUTIVE COMPENSATION

Executive Compensation

         The following table shows the compensation paid or accrued by us for
the year ended March 31, 2003 and 2002, to or for the account of our officers.
Our President and Chief Executive Officer was the only officer or director that
received benefits or annual salary and bonus of $100,000 or more.

<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          2003       ---       ---         $103,000        ---         ---         ---           ---

                        2002       ---       ---         $67,572         ---         ---         ---           ---

Donald G. Huggins, Jr.
Executive               2003       ---       ---         $82,000         ---         ---         ---           ---
Vice President
                        2002       ---       ---         $54,500         ---         ---         ---           ---

Stephen R. Couture      2003       ---       ---         $80,546         ---         ---         ---           ---
Vice President,
Finance, CFO
                        2002       ---       ---         $5,750          ---         ---         ---           ---


Neil Treitman           2003       ---       ---         $42,000         ---      450,000(1)     ---           ---
Chief Operating
Officer
                        2002       ---       ---           ---           ---         ---         ---           ---
</TABLE>

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

(1) Based on our calculation using the Black Scholes Option Pricing Model, the
value of these options were deemed immaterial.


                                       19
<PAGE>


Employment and Other Agreements

         In July, 2003, we entered into an employment agreement with Neil
Treitman, our Chief Operating Officer. This agreement has a term of three (3)
years, and commences on July 1, 2003. Under this agreement, Mr. Treitman is
entitled to an annual base salary of not less than $120,000. Mr. Treitman was
granted stock options to purchase 450,000 shares of our common stock. This
option is non-qualified, carries a term of five years, and was issued at par
value on March 1, 2003. Mr. Treitman is entitled to additional bonus
compensation as determined by the Company's Board of Directors or Compensation
Committee. Such bonuses may be paid in cash or issued in shares of our Common
Stock on such terms as approved by our Board of Directors. Mr. Treitman is
entitled to reimbursement for ordinary, necessary and reasonable business
expenses in connection with his services. He may participate in any retirement,
medical, dental, welfare and stock options plans, life and disability insurance
coverages and other benefits afforded our employees. He is entitled to an
automobile allowance of $600 per month during the term of his agreement. Mr.
Treitman was issued a restricted stock grant of 550,000 shares of our common
stock on March 18, 2003. In addition, Mr. Treitman was granted stock options to
purchase 450,000 shares of our common stock as a performance bonus. This option
is non-qualified, carries a term of five years, and was issued at par value on
March 1, 2003. Mr. Treitman has agreed not to compete with us during the term of
this agreement and for a period of two (2) years after termination of this
agreement.

         No other officers currently have employment agreements, however, XRG,
Inc. plans on establishing employment agreements with these officers during the
year ended March 31, 2004.

Stock Options

         XRG intends to adopt a stock option plan in 2003, 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.

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 July 1, 2003 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:

                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                                   Shares of          Percent of
Name of Beneficial Owner (3)                                     Common Stock (1)      Class (2)
------------------------------------------------------------------------------------------------
<S>                                                               <C>                     <C>
Kevin Brennan                                                     2,000,000               18.8%
Donald G. Huggins, Jr.(4)                                         2,750,000               25.8%
Stephen Couture                                                   1,125,000               10.6%
Neil Treitman                                                       550,000                5.2%

Richard Taylor (5)                                                1,000,000                9.4%
Daniel Bush (6)                                                     800,000                7.5%
Gerald Couture                                                      875,000                8.2%

All directors and executive
officers as a group (3 persons)                                   6,425,000               60.3%

</TABLE>

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

(2)  Based on 10,649,776 common shares outstanding as of July 1, 2003. This
     amount excludes warrants to acquire 4,485,570 common shares issued in
     connection with our notes payable. In addition this amount excludes options
     to acquire 550,000 shares of our common stock.

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

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

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

(6)  Represents shares issued for consulting services.

         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.

         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.

                                       21
<PAGE>

         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.

         Neil Treitman, our Chief Operating Officer was issued 550,000 shares of
our Common Stock for past services rendered during the year ended March 31,
2003. We relied upon Section 4(2) for the issuance of these securities. In
addition, Mr. Treitman was granted stock options to purchase 450,000 shares of
our common stock as a performance bonus. This option is non-qualified, carries a
term of five years, and was issued at par value on March 1, 2003. We have
entered into an employment agreement with Mr. Treitman, our Chief Operating
Officer. For description of this employment agreement, see "Executive
Compensation - Employment and Other Agreements".

         Stephen Couture, our Chief Financial Officer was issued 250,000 shares
of our Common Stock for services rendered during the year ended March 31, 2003.
We relied upon Section 4(2) for the issuance of these securities.

         In March 2003, we agreed to issue 100,000 shares of our Common Stock to
Michael T. Cronin, Esq., who is a partner in the law firm which serves as our
corporate and securities counsel. In addition, Mr. Cronin was granted stock
options to purchase 100,000 shares of our common stock. This stock and options
were for partial consideration for legal services rendered during the year ended
March 31, 2003. We relied upon Section 4(2) for the issuance of these
securities.

         In January 2003, we issued 301,864 shares of our Common Stock to Jean
J. Taylor, the wife of Richard Taylor the former President and Chief Executive
Officer of XRG International, Inc. These shares were in full satisfaction
relating to consulting services provided prior to January 1, 2003. Mr. Taylor
advised XRG's management on the prior history and operations of XRG
International, Inc. We relied upon Section 4(2) for the issuance of these
securities.

         XRG has advances payable to two of our officers and directors in the
amount of $31,626 as of March 31, 2003 and 2002, that are unsecured,
non-interest bearing, and due on demand. Kevin Brennan, our President and Chief
Executive Officer has advanced XRG $28,427 as of March 31, 2003. Donald G.
Huggins, Jr., our Executive Vice President has advanced us $8,200 as of March
31, 2003.

         We paid or accrued compensation to our officers in the a amount of
$307,546 for services during the year ended March 31, 2003. Kevin Brennan our
President and CEO has been paid or accrued compensation of $103,000. Donald G.
Huggins, Jr., our Executive Vice President has been paid or accrued compensation
of $82,000. Couture & Company, Inc., the consulting firm of Stephen Couture, our
Vice President, Finance and CFO, has been paid or accrued compensation of
$80,546, and Neil Treitman our Chief Operating Officer has been paid or accrued
compensation of $42,000 during the year ended March 31, 2003.

         Kevin Brennan our President and CEO, Donald G. Huggins, Jr. our
Executive Vice-President, and Stephen Couture our Vice President, Finance and
CFO have subscribe to an aggregate of 5,000,000 shares of Series A Voting
Preferred Stock. Each of these officers subscribe to 1,666,666.66 shares of
Series A Voting Preferred Stock for the aggregate par value of $5,000. The
Voting Preferred Stock has ten votes per share on all matters submitted to a
vote of other holders of Common Stock. Besides preferential voting rights, the
Voting Preferred Stock has no dividend rights, redemption provisions, sinking
fund provisions or conversion, or preemptive or exchange rights. The Voting
Preferred Stock is not subject to further calls or assessments by the Company.

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

         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.


                                       22
<PAGE>

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.

                       EXHIBITS AND SEC REFERENCE NUMBERS

<TABLE>
<CAPTION>

<S>            <C>                                                                                     <C>
Number           Title of Document                                                                        Location

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)

3.8              Amendment to Certificate of Incorporation to Increase Authorized Shares of XRG, Inc.
                 dated July 7, 2003. (3)

3.9              Certificate of Designation, Preferences and Rights of Series A Preferred Stock of XRG,
                 Inc. (3)

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)

                                       23
<PAGE>

10.3             Lease Agreement between Highwoods/Florida Holdings, L.P. and XRG, Inc. dated September
                 5, 2002. (3)

10.4             Asset Purchase Agreement between J. Bently Companies, Inc. and XRG, Inc. (3)

10.5             Fleet Owner Agreement between J. Bently Companies, Inc. and XRG, Inc. (3)

10.6             Employment Agreement between Neil Treitman and XRG, Inc. (3)

10.7             Stock Option Agreement between Michael T. Cronin and XRG, Inc. (3)

10.8             Stock Option Agreement between Neil Treitman and XRG, Inc. (3)

99.1             Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                 Act of 2002.

99.2             Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                 Act of 2002.

99.3             Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
                 Sarbanes-Oxley Act of 2002.

     1.   Incorporated  by  reference to the  Registrant's  Form 10-KSB filed on
          July 10, 2002.
     2.   Incorporated by reference to the Registrant's  Registration  Statement
          on Form 10-SB, File No. 0-49659, filed March 4, 2002.
     3.   Filed Herewith.

</TABLE>

Item 14. Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Securities
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to the
Company's management, including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

During the 90-day period prior to the date of this report, an evaluation was
performed under the supervision and with the participation of the Company's
management, including the Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures were effective. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls, and no corrective actions taken with regard to significant
deficiencies or material weaknesses in such controls, subsequent to the date of
our most recent evaluation of internal controls.

                                       24
<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:   July 14, 2003               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                       July 14, 2003
Kevin Brennan                               Officer) and Director

/s/ Stephen Couture                         Vice President, Finance, Chief                     July 14, 2003
----------------------------------          Financial Officer and Director
Stephen Couture

/s/ Donald G. Huggins, Jr.                  Executive Vice President                           July 14, 2003
-----------------------------------         and Chairman of the Board
Donald G. Huggins, Jr.

</TABLE>


                                       25
<PAGE>


                        Consolidated Financial Statements

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

                          Independent Auditors' Report


<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                        Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003











                                    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



<PAGE>

                          Independent Auditors' Report



Board of Directors
XRG, Inc. and Subsidiary
    (A Development Stage Company)
Clearwater, Florida


We have audited the accompanying consolidated balance sheet of XRG, Inc. and
Subsidiary (a development stage company) as of March 31, 2003 and the related
consolidated statements of operations, changes in stockholders' deficit, and
cash flows for the years ended March 31, 2003 and 2002 and the period May 1,
1999 to March 31 2003. 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. and
Subsidiary (a development stage company) as of March 31, 2003 and the results of
its operations and cash flows for the years ended March 31, 2003 and 2002 and
the period May 1, 1999 to March 31, 2003 in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements of XRG, Inc. and Subsidiary
have been prepared assuming that the Company will continue as a going concern.
As more fully described in Note 2, the Company has had recurring operating
losses since inception, has negative working capital of approximately $107,000
as of March 31, 2003 and has used approximately $719,000 and $273,000 of cash in
operations for the years ended March 31, 2003 and 2002, respectively. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
July 7, 2003

                                      F-1
<PAGE>

<TABLE>
<CAPTION>

                                              XRG, Inc. and Subsidiary
                                           (A Development Stage Company)
                                             Consolidated Balance Sheet
                                                   March 31, 2003

<S>                                                                                       <C>
Assets
Current assets:
    Cash                                                                                      $               16,563
                                                                                                 --------------------
Total current assets                                                                                          16,563

Equipment, net of accumulated depreciation                                                                    59,886
                                                                                                 --------------------

                                                                                              $               76,449
                                                                                                 ====================


Liabilities and Stockholders' Deficit

Current liabilities:
    Accounts payable (including $26,000 to related party)                                                     56,721
    Accrued expenses                                                                                          35,454
    Related party advances                                                                                    31,626
                                                                                                 --------------------
Total current liabilities                                                                                    123,801
                                                                                                 --------------------

Long-term liabilities:
    Notes payable                                                                                            843,000
    Convertible notes payable; net of unamortized discount
      of  $213,643                                                                                            86,357
                                                                                                 --------------------
Total long-term liabilities                                                                                  929,357
                                                                                                 --------------------

                                                                                                 --------------------
Total liabilities                                                                                          1,053,158
                                                                                                 --------------------

Stockholders' deficit:
    Series A Preferred stock; $.001 par value; 5,000,000 shares authorized; 0
      shares issued and outstanding
    Preferred stock; $.001 par value; 45,000,000 shares authorized; 0 shares
      issued and outstanding
    Common stock; $.001 par value; 100,000,000 shares authorized;
      10,649,776 shares issued and outstanding                                                                10,650
    Common stock payable                                                                                      57,649
    Additional paid-in capital                                                                            15,652,648
    Accumulated deficit for unrelated dormant operations                                                 (15,405,274)
    Deficit accumulated during development stage                                                          (1,292,382)
                                                                                                 --------------------
Total stockholders' deficit                                                                                 (976,709)
                                                                                                 --------------------

                                                                                              $               76,449
                                                                                                 ====================
</TABLE>


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

                                      F-2
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)
                      Consolidated Statements of Operations
<TABLE>


                                                                                                                   Period
                                                                      Years Ended March 31,                      May 1, 1999
                                                             ----------------------------------------            to March 31,
                                                                    2003                    2002                    2003
                                                             ----------------        ----------------        -------------------

<S>                                                        <C>                     <C>                     <C>
Revenues                                                   $         686,030       $         110,201       $            796,231

Cost of revenues                                                     789,924                 107,831                    897,753
                                                             ----------------        ----------------        -------------------

Gross profit (loss)                                                 (103,894)                  2,370                   (101,522)

Selling, general and administrative
      expenses                                                       584,661                 280,493                    999,834
                                                             ----------------        ----------------        -------------------

                                                                    (688,555)               (278,123)                (1,101,356)

      Interest expense                                              (141,273)                (46,013)                  (191,026)
                                                             ----------------        ----------------        -------------------
                                                                    (141,273)                (46,013)                  (191,026)
                                                             ----------------        ----------------        -------------------

Net loss                                                   $        (829,828)      $        (324,136)      $         (1,292,382)
                                                             ================        ================        ===================

Basic loss per share                                       $           (0.09)      $           (0.04)      $              (0.17)
                                                             ================        ================        ===================

Weighted average number of
      common shares outstanding                                    9,312,297               7,498,156                  7,455,449
                                                             ================        ================        ===================

</TABLE>


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

                                      F-3
<PAGE>



                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)
           Consolidated Statements of Changes in Stockholders' Deficit

                 Nine Months Ended March 31, 2002 and the Period
                          May 1, 1999 to March 31,2002

<TABLE>



                                                                                           Accumulated
                                         Common Stock                                       Deficit for    Accumulated
                                    ----------------------      Common        Additional     Unrelated   Deficit During
                                      Number of                  Stock         Paid-in        Dormant       Development
                                       Shares       Amount      Payable        Capital      Operations        Stage         Total
                                    -----------   --------   ------------   ------------   ------------   ------------  ------------
<S>                                <C>          <C>        <C>            <C>            <C>            <C>           <C>
Balance, May 1, 1999, as
 previously reported                 1,495,822  $   1,496  $           -  $  15,030,193  $ (15,405,274) $           - $    (373,585)

Prior period adjustment -
 adjustment of common
 shares outstanding for shares
 not turned in for
 reverse stock split                   175,090        175              -          (175)              -              -             -
                                    -----------   --------   ------------   ------------   ------------   ------------  ------------

Balance, May 1, 1999, as restated    1,670,912      1,671              -     15,030,018    (15,405,274)             -      (373,585)


Issuance of stock for acquisition    3,000,000      3,000              -              -              -              -         3,000

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

Stock issued in satisfaction
   of debt at $1.36 per share
   (March 2000)                        110,000        110              -        149,641              -              -       149,751

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

Balance,March 31, 2000               6,330,912      6,331              -     15,179,659    (15,405,274)       (15,029)     (234,313)

Stock issued in satisfaction
   of debt at $1.23 per share
   (April 2000)                        182,000        182              -        222,989              -              -       223,171

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

Balance, March 31, 2001              6,512,912      6,513              -     15,402,648    (15,405,274)      (138,418)     (134,531)

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

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

Balance, March 31, 2002              9,262,912      9,263              -     15,402,648    (15,405,274)      (462,554)     (455,917)

XRG, Inc. stock issued
   for services at $.001
   par (March 2003)                  1,386,864      1,387              -              -              -              -         1,387

XRG, Inc. stock to be issued
   for interest (March 2003)                                      57,649                                                     57,649

Issuance of warrants with
 convertible debt                                                                20,209                                      20,209

Beneficial conversion feature of
 convertible debt                                                               229,791                                     229,791

Net loss for the year                        -          -              -              -              -       (829,828)     (829,828)
                                    -----------   --------   ------------   ------------   ------------   ------------  ------------

Balance, March 31, 2003             10,649,776  $  10,650  $      57,649  $  15,652,648  $ (15,405,274) $  (1,292,382)$    (976,709)
                                    ===========   ========   ============   ============   ============   ============  ============
</TABLE>

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

                                      F-4
<PAGE>



                                    XRG, Inc. and Subsidiary
                                  (A Development Stage Company)
                              Consolidated Statements of Cash Flows
<TABLE>

                                                                                                        Period
                                                                                                     May 1, 1999
                                                                         Years Ended March 31,       to March 31,
                                                                      ----------------------------
                                                                         2003            2002            2003
                                                                      ------------   -------------  ---------------

<S>                                                                   <C>            <C>            <C>
Operating activities
       Net loss                                                        $ (829,828)     $ (324,136)    $ (1,292,382)
                                                                      ------------   -------------  ---------------

       Adjustments to reconcile net loss to net cash used by operating
        activities:
           Depreciation and amortization                                    8,240             800            9,040
           Loss on acquisition                                                  -               -            3,000
           Stock issued for services                                        1,387           2,750            5,687
           Stock issued in lieu of interest                                57,649               -           57,649
           Amortization fo discount on convertible notes                   36,357               -           36,357
           (Increase) decrease in:
             Accounts receivable                                           15,693         (15,693)               -
           Increase (decrease) in:
             Accounts payable                                              (9,515)         31,420           36,703
             Accrued expenses                                               1,048          31,813           34,695
                                                                      ------------   -------------  ---------------
        Total adjustments                                                 110,859          51,090          183,131
                                                                      ------------   -------------  ---------------

                                                                      ------------   -------------  ---------------
        Net cash used by operating activities                            (718,969)       (273,046)      (1,109,251)
                                                                      ------------   -------------  ---------------

Investing activities
       Purchase of property and equipment                                 (37,647)        (11,262)         (48,909)
                                                                      ------------   -------------  ---------------
       Net cash used by investing activities                              (37,647)        (11,262)         (48,909)
                                                                      ------------   -------------  ---------------

Financing activities
       Net borrowings on stockholder
          advances                                                              -          (3,002)          31,626
       Proceeds from issuance of notes payable                            493,000         605,000        1,183,000
       Principal payments on notes payable                                (35,000)         (5,000)         (40,000)
                                                                      ------------   -------------  ---------------
       Net cash provided by financing activities                          458,000         596,998        1,174,626
                                                                      ------------   -------------  ---------------

       Net increase (decrease) in cash                                   (298,616)        312,690           16,466

       Cash at beginning of period                                        315,179           2,489               97
                                                                      ------------   -------------  ---------------

       Cash at end of period                                             $ 16,563       $ 315,179         $ 16,563
                                                                      ============   =============  ===============
</TABLE>



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

                                      F-5
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                      Consolidated Statements of Cash Flows

<TABLE>



                                                                                                      Period
                                                                   Years Ended March 31,            May 1, 1999
                                                              ------------------------------        to March 31,
                                                                   2003             2002                2003
                                                              -----------------------------------------------------
<S>                                                         <C>              <C>                <C>
Supplemental disclosures of cash flow
    information and noncash investing
    and financing activities:
        Cash paid during the year for interest                $     63,178      $     10,866        $   75,514
                                                              =====================================================
</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 $223,171.

        During the year ended March 31, 2003, the Company financed the purchase
        of computer equipment in the amount of $20,017.

        During the year ended March 31, 2003, the Company recorded a discount on
        convertible notes payable for $250,000, which related to the beneficial
        conversion feature of the notes and the warrants issued with those
        notes. The discount is being amortized over the life of the related
        notes.


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

                                      F-6
<PAGE>


                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

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 are located in
Tampa, Florida.

XRG International, Inc, a non-reporting, non-trading public company, was
originally incorporated in the state of New Jersey in December 1976. This
company operated several unrelated business ventures until its operations became
dormant. During 1999 a change in control of the XRG International Inc. took
place, and on May 1, 1999, XRG International, Inc. was reactivated to develop
plans to pursue consolidation opportunities within several industries including
the freight transportation industry. On December 28, 2001, XRG, Inc. merged with
XRG International, Inc. and the Company changed its name to XRG, Inc. The merger
has been accounted for at historical cost since both entities were 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.

The Company 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 the Company 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 in the freight transportation
business.

2.      Going Concern

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
Company incurred operating losses of approximately $829,800 for the year ended
March 31, 2003 and approximately $1,292,000 since it merged from dormant
operations, has used approximately $719,000 of cash from operations for the year
ended March 31, 2003 and approximately $1,109,000 of cash from operations since
it merged from dormant operations. In addition, the Company has negative working
capital of approximately $107,000 as of March 31, 2003. These factors raise
substantial doubt about the Company's ability to continue as a going concern.

The Company expects that its working capital will come from fundings that will
primarily include equity and debt placements and management believes that its
access to capital will be sufficient to sustain operations for at least 12
months. In addition, management expects to complete a truckload carrier
acquisition in the near future that will contribute cash from operations.
However, it is impossible to predict the success of management's efforts.

                                      F-7
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

2.      Going Concern (continued)

The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded assets
or the amounts and classification of liabilities that might be necessary in the
event the Company cannot continue in existence.

3.      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 and transactions have been eliminated.

        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.

                                      F-8
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

3.      Significant Accounting Policies (continued)

        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.

        The Company records the intrinsic value of the beneficial feature of
        convertible debentures as additional paid in capital and amortizes the
        interest over the life of the debentures.

        The Company accounts for stock options and warrants 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. During the
        year ended March 31, 2003, the Company recognized $20,209 as a discount
        on notes payable for warrants issued with convertible debt. The Company
        also issued stock options for the year ended March 31, 2003, however the
        fair value was not material to the financial statements, and no expense
        was recorded. The Company did not recognize expense in connection with
        warrants granted during the year ended March 31, 2002.

4.      Equipment

As of March 31, 2003, the Company had office equipment and software, which cost
$68,916, with accumulated depreciation of $9,030.

5.      Notes Payable and Long-Term Debt

<TABLE>

Notes payable and long-term debt consist of the following at March 31, 2003:

<S>                                                                             <C>
Notes payable; interest ranging from 12.0% to
     15.0%; interest only payments payable
     quarterly; principal due at various dates between July 2003 and March
     2005; unsecured; subsequent to the year ended March 31, 2003, these
     notes were converted into approximately 1,506,000 shares of the
     Company's Common  Stock.                                                    $  843,000

Convertible notes payable; interest 12.0%; interest only payments
     payable quarterly; principal due at various dates between December 2004
     and March 2005; net of unamortized discount of $213,643; at maturity,
     the note holder will be paid the remaining unpaid principal at an 150%
     redemption premium plus accrued interest;  one year from the closing of
     the Company's first trucking acquisition, the note holder can convert the
     unpaid principal and accrued interest at a conversion price equal to 50%
     of the average closing bid price of the Company's Common Stock; unsecured       86,357
                                                                                  ---------
                                                                                 $  929,357
                                                                                  =========
</TABLE>

                                      F-9
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003


5.      Notes Payable and Long-Term Debt (continued)

The following is a schedule by year of the principal payments required on these
notes payable and long-term debt as of March 31, 2003:

        2004 - notes payable converted to common stock                 $843,000
                                                                    ============
        2005                                                           $ 86,357
                                                                    ============

In June 2003, note holders holding approximately $843,000 of the Company's notes
payable voluntarily elected to convert their principal into the Company's common
stock. 1,506,000 shares of common stock will be issued for this principal
conversion. Since these notes will be converted to common stock, the Company has
classified these notes as a long-term liability. The Company will recognize the
beneficial conversion feature of these notes which totals approximately $400,000
as interest expense in the first quarter.

In connection with the issuance of $250,000 of notes payable, the Company issued
warrants to acquire 500,000 shares of the Company's common stock. The value of
the warrants was $20,209 based on the Company's calculation under the
Black-Scholes option pricing model and was allocated to the note proceeds as a
part of the discount on notes payable.

6.      Operating Leases

The Company does not have any operating leases with a term in excess of one
year.

Rent expense amounted to $25,642, $17,806, and $43,448 for the years ended March
31, 2003 and 2002 and the period May 1, 1999 to March 31, 2003, respectively.

7.      Related Party Transactions

The Company has related party advances payable to stockholders in the amounts of
$31,626 as of March 31, 2003. These advances are due on demand, unsecured, and
non-interest bearing. In addition, the Company paid or accrued approximately
$303,546 to certain stockholders for consulting services rendered during the
year ended March 31, 2003.

The Company's Chief Operating Officer was issued 550,000 shares of the Company's
Common Stock valued at $550 for past services rendered during the year ended
March 31, 2003. In addition, this individual was granted stock options to
purchase 450,000 shares of the Company's Common stock as a performance bonus.
This option is non-qualified, carries a term of five years, and was issued at
par value on March 1, 2003. The Company has entered into an employment agreement
with this officer.

The Company's Chief Financial Officer was issued 250,000 shares of the Company's
Common Stock valued at $250 for services rendered during the year ended March
31, 2003.

                                      F-10
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

7.      Related Party Transactions (continued)

In March 2003, the Company issued 100,000 shares of its Common Stock valued at
$100 to an individual who is a partner in the law firm which serves as our
corporate and securities counsel. In addition, this individual was granted stock
options to purchase 100,000 shares of the Company's Common Stock. This stock and
options were for partial consideration for legal services rendered during the
year ended March 31, 2003.

In January 2003, the Company issued 301,864 shares of its Common Stock valued at
$302 to the wife of the former President and Chief Executive Officer of XRG
International, Inc. These shares were in full satisfaction relating to
consulting services provided prior to January 1, 2003.

The Company's President and CEO, Executive Vice-President, and Vice President,
Finance and CFO are the holders of an aggregate of 5,000,000 shares of Series A
Voting Preferred Stock issued in July 2003. Each of these officers acquired
1,666,666 shares of Series A Voting Preferred Stock for the aggregate par value
of $5,000. The Voting Preferred Stock has ten votes per share on all matters
submitted to a vote of other holders of Common Stock. Besides preferential
voting rights, the Voting Preferred Stock has no dividend rights, redemption
provisions, sinking fund provisions or conversion, or preemptive or exchange
rights. The Voting Preferred Stock is not subject to further calls or
assessments by the Company.

The terms of the above may not necessarily have been on the same terms as if
negotiated from unaffiliated third parties.

8.      Income Taxes

The Company has net operating loss carryforwards of $2,571,697 at March 31, 2003
that expire from 2003 to 2022. 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 2003 through
2021.

                                      F-11
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

8.      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, 2003 was
necessary. Significant components of the Company's net deferred tax asset are as
follows as of March 31, 2003:

        Tax benefit of net operating loss               $     977,000
        Valuation allowance                                  (977,000)
                                                         -------------
                                                        $           0
                                                         =============
9.      Stock Options and Warrants

The Company grants warrants and options to purchase shares of its common stock
to various employees and other individuals based on the discretion of the
Company's Board of Directors.

The Company has issued warrants to purchase 3,985,570 shares of its common stock
to individuals associated with the issuance of debt. These warrants were
exercised in June 2003 at $10 per contract. In addition, the Company has issued
500,000 warrants as part of a private placement.

The fair value of each option and warrant granted is estimated on the grant date
using the Black-Scholes option pricing model. The following assumptions were
made in estimating fair value for the years ended March 31, 2003 and 2002:

                                            2003                       2002
                                            ----                       ----
        Dividend yield                             0%                       0%
        Risk-free interest rate         1.57% - 2.99%                    3.56%
        Expected life                       1-2 years                1-2 years
        Expected volatility                        0%                       0%

Following is a summary of the status of common stock option and warrant activity
for the years ending March 31, 2002 and 2003:
                                                           Warrants
                                                           --------
                                                                  Weighted
                                                  Number of        Average
                                                  Warrants      Exercise Price
                                              -------------------------------
        Outstanding, April 1, 2002                 3,291,000      $.0002
        Granted                                    1,555,770       .0376
        Cancelled                                   (361,200)     (.0002)
                                              -------------------------------
        Outstanding, March 31, 2003                4,485,570      $.0134
                                              ===============================
        Exercisable, March 31, 2003                4,485,570      $.0134
                                              ===============================
        Weighted average fair value of option granted
            during the year ended March 31, 2003                      $0
                                                                      ==

                                      F-12
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

9.       Stock Options and Warrants (continued)


                                                                    Weighted
                                                Number of            Average
                                               Warrants          Exercise Price
                                           ------------------------------------
        Outstanding, April 1, 2001                      0               $0
        Granted                                 3,291,000            $.002
                                           ------------------------------------
        Outstanding, March 31, 2002             3,291,000            $.002
                                           ====================================
        Exercisable, March 31, 2002             3,291,000            $.002
                                           ====================================
        Weighted average fair value of option granted
            during the year ended March 31, 2002                        $0
                                                                        ==

                                                          Options
                                                          -------
                                                                    Weighted
                                               Number of            Average
                                                Options          Exercise Price
                                           ------------------------------------
        Outstanding, April 1, 2002                     0               $0
        Granted                                  550,000             .001
                                           ------------------------------------
        Outstanding, March 31, 2003              550,000            $.001
                                           ====================================
        Exercisable, March 31, 2003              550,000            $.001
                                           ====================================
        Weighted average fair value of option granted
            during the year ended March 31, 2003                       $0
                                                                       ==


Following is a summary of the status of outstanding options and warrants at
March 31, 2003:

<TABLE>
<CAPTION>


                  Options and Warrants Outstanding                         Options and Warrants Exercisable
                  --------------------------------                         --------------------------------
   Range of                                  Weighted          Weighted                          Weighted
   Exercise                Number       Average Remaining       Average         Number            Average
    Prices               Outstanding     Contractual life   Exercise Price    Exercisable     Exercise Price
------------------------------------------------------------------------------------------------------------

<C>                 <C>                <C>                    <C>           <C>               <C>
$.001 - $.005           2,929,800          .8 years               $.0002        2,929,800         $.0002
$.001 - $.005             214,800         1.4 years               $.0003          214,800         $.0003
$.003 - $.005             607,200         1.4 years               $.0004          607,200         $.0004
$.001                   1,050,000         2.9 years                $.001        1,050,000          $.001
$.25                      233,770          .3 years                 $.25          233,770           $.25
                          -------                                                 -------
                        5,035,570                                               5,035,570
                        =========                                               =========

</TABLE>

                                      F-13
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

10.     Commitments and Contingencies

The Company had 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. The Company terminated this
agreement on December 31, 2002.

In May, 2003, a legal action was filed in Franklin County, Ohio, against the
Company (and against our president, based on a personal guaranty) by the
landlord of our former office space in Pittsburgh, Pennsylvania. The landlord is
claiming approximately $63,000 in unpaid rent. The Company believes that it has
a valid defense with respect to some or all of the claimed damages.

In July, 2003, a legal action was filed in Hillsborough County, Florida, against
the Company by the landlord of our current office space in Tampa, Florida. This
action is for eviction and unpaid rent. The Company has been negotiating with
the landlord and we expect to achieve a satisfactory resolution of this matter.

11.     Subsequent Events

In June 2003, the Company executed a purchase agreement with a truckload carrier
in Sweetwater, Tennessee to acquire equipment assets consisting of approximately
275 freight trailers. The purchase price of these assets is approximately
$3,400,000, including the assumption of approximately $2,200,000 of equipment
loans, the payment of $50,000 in cash, and the issuance 1,150,000 shares of the
Company's Common Stock. In addition, the Company entered into a fleet owner
agreement with the truckload carrier to manage the utilization of these
purchased assets for a two year period. Pursuant to the terms of this agreement,
the Company will pay to the truckload carrier 67% of gross freight revenues as
compensation for the movement of its freight. The closing date for the
transaction is expected in July 2003.

In June 2003, note holders holding approximately $823,000 of the Company's notes
payable voluntarily elected to convert their principal into the Company's Common
Stock. 1,506,000 shares of common stock will be issued for this principal
conversion.

In June 2003, warrants were exercised to acquire 3,985,570 shares of our common
stock for nominal consideration.

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

                                      F-14
<PAGE>

                            XRG, Inc. and Subsidiary
                          (A Development Stage Company)

                   Notes to Consolidated Financial Statements

                   Years Ended March 31, 2003 and 2002 and the
                      Period May 1, 1999 to March 31, 2003

11.     Subsequent Events (continued)

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

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

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

                                      F-15