Original: Serbia and Montenegro was a country in southeastern Europe, formed from two former republics of the Socialist Federal Republic of Yugoslavia (SFRY): Serbia and Montenegro. Following the breakup of Yugoslavia, it was established in 1992 as a federation called the Federal Republic of Yugoslavia (FRY;).
Simplified: Although both the states now had more freedom to do as they pleased then they did as Federal Republic of Yugoslavia, Serbia and Montenegro was still a Sovereign State united under one government.