Unassociated Document
United States
Securities And Exchange Commission
Washington, D.C. 20549
 
FORM 10-QSB

(Mark One)
   
x
Quarterly Report Pursuant To Section 13 Or 15 (d) Of The Securities Exchange Act Of 1934
   
  For the quarterly period ended: September 30, 2005
   
  Or
   
o
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: 000-28153
 
The Cyber Group Network Corporation
(Exact name of registrant as specified in its charter)
 
 
Nevada
  
33-0901534
(State or other jurisdiction of incorporation of origination)
  
(I.R.S. Employer Identification Number)


Post Office Box 948264, Maitland, FL.
  
32794
(Address of principal executive offices)
  
(Zip code)
 
(407) 645-4433
(Registrant's telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes o No o
 
APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each issuer's classes of common stock, as of the latest practicable date: 500,000,000 issued and outstanding as of November 30, 2005.

Transitional Small Business Disclosure Form (Check one): Yes o No x

The registrant is a shell company (Check one): Yes x No o
 
TABLE OF CONTENTS
TO QUARTERLY REPORT ON FORM 10-QSB
FOR PERIOD ENDED SEPTEMBER 30, 2005
 
 
 
Page
 
 
 
 
 
 
 
 
 
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9
     
10
 
 
 
 
 
 
 
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11
 
 
 
12
 
 
 



PART I - FINANCIAL INFORMATION

Item 1. Financial Statements




THE CYBER GROUP NETWORK CORPORATION
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2005 (UNAUDITED)





THE CYBER GROUP NETWORK CORPORATION
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
 
CONTENTS
     
PAGE
     
PAGE
     
PAGES
     
PAGE
     
PAGES




 
THE CYBER GROUP NETWORK CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
   
ASSETS
  
   
September 30, 2005 (Unaudited)
  
December 31, 2004
  
           
CURRENT ASSETS
          
Cash
  
$
1,137
  
$
1,227
  
TOTAL ASSETS
  
$
1,137
  
$
1,227
  
               
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
               
CURRENT LIABILITIES
              
Accounts payable
  
$
180,235
  
$
180,235
  
Accrued expenses
    
163,022
   
128,529
 
Loans payable
    
231,317
   
231,317
 
Payable to related party
    
52,210
   
52,210
 
Due to officers
    
937,218
   
636,994
 
Total Current Liabilities
    
1,564,002
   
1,229,285
 
               
COMMITMENTS AND CONTINGENCIES
              
               
STOCKHOLDERS’ DEFICIENCY
              
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 2,000,000 Series A shares issued and outstanding
    
2,000
   
2,000
 
Common stock, $0.001 par value, 500,000,000 shares authorized, 177,188,665 shares issued and outstanding
    
177,188
   
177,188
 
Additional paid-in capital
    
10,504,593
   
10,504,593
 
Deficit accumulated during development stage
    
(12,246,646
)
  
(11,911,839
)
TOTAL STOCKHOLDERS’ DEFICIENCY
    
(1,562,865
)
  
(1,228,058
)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
  
$
1,137
  
$
1,277
  
               
               
See accompanying notes to condensed consolidated financial statements.


-1-

THE CYBER GROUP NETWORK CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
AND FOR THE PERIOD FROM MARCH 21, 2000 (INCEPTION) TO SEPTEMBER 30, 2005
(UNAUDITED)
                       
   
For the Three Months Ended September 30, 2005
  
For the Three Months Ended September 30, 2004
  
For the Nine Months Ended
September 30, 2005
  
For the Nine Months Ended
September 30, 2004
  
Cumulative From
March 21, 2000 (Inception) To September 30, 2005
  
                       
REVENUE
  
$
–
  
$
–
  
$
–
  
$
–
  
$
237,304
  
COST OF GOODS SOLD
    
–
    
–
    
–
    
–
    
45,718
 
GROSS PROFIT
    
–
    
–
    
–
    
–
    
191,586
 
                                 
OPERATING EXPENSES
                                
Selling, general and administrative
    
152,359
   
246,593
   
300,314
   
385,404
   
10,746,094
 
Total Operating Expenses
    
152,359
   
246,593
   
300,314
   
385,404
   
10,746,094
 
                                 
LOSS FROM OPERATIONS
    
(152,359
)
  
(246,593
)
  
(300,314
)
  
(385,404
)
  
(10,554,508
)
                                 
OTHER EXPENSE (INCOME)
                                
Forgiveness of debt
    
–
    
–
    
–
    
–
    
(222,786
)
Impairment of property, plant and equipment
    
–
    
–
    
–
    
–
    
44,113
 
Impairment of goodwill
    
–
    
–
    
–
    
–
    
295,000
 
Interest expense
    
24,831
   
4,831
   
34,493
   
14,493
   
1,575,811
 
Total Other Expense
    
24,831
   
4,831
   
34,493
   
14,493
   
1,692,138
 
NET LOSS
  
$
(177,190
)
$
(251,424
)
$
(334,807
)
$
(399,897
)
$
(12,246,646
)
                                 
Net loss per share - basic and diluted
  
$
–
  
$
–
  
$
–
  
$
–
        
                                 
Weighted average number of common shares outstanding - basic and diluted
    
177,188,665
   
174,788,730
   
177,188,665
   
155,431,592
       
                                 
                                 
See accompanying notes to condensed consolidated financial statements.


-2-

THE CYBER GROUP NETWORK CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM MARCH 21, 2000 (INCEPTION) TO SEPTEMBER 30, 2005
(UNAUDITED)
                                             
                                   
Deficit
        
                                   
Accumulated
       
                             
Additional
   
During
        
     
Preferred Stock
    
Common Stock
    
Paid-In
    
Development
        
     
Shares
    
Amount
    
Shares
    
Amount
    
Capital
    
Stage
    
Total
  
                                             
Issuance of common stock and recapitalization due to acquisition on March 21, 2000
    
–
  
$
–
    
740,400
 
$
740
  
$
(740
)
$
–
  
$
–
  
Issuance of stock for services rendered
    
–
    
–
    
608,519
   
609
   
1,277,591
   
–
    
1,278,200
 
Issuance of stock for compensation
    
–
    
–
    
83,487
   
83
   
243,372
   
–
    
243,455
 
Issuance of stock for donations
    
–
    
–
    
18,333
   
18
   
29,932
   
–
    
29,950
 
Conversion of convertible redeemable debentures
    
–
    
–
    
794,058
   
794
   
999,206
   
–
    
1,000,000
 
Conversion of convertible redeemable debentures
    
–
    
–
    
260,519
   
261
   
271,239
   
–
    
271,500
 
Stock options issued for compensation
    
–
    
–
    
–
    
–
    
237,750
   
–
    
237,750
 
Stock options issued for services rendered
    
–
    
–
    
–
    
–
    
220,000
   
–
    
220,000
 
Interest from beneficial conversion features
    
–
    
–
    
–
    
–
    
932,291
   
–
    
932,291
 
Issuance of stock for interest expense
    
–
    
–
    
88,889
   
89
   
99,911
   
–
    
100,000
 
Net loss, 2000
    
–
    
–
    
–
    
–
    
–
    
(4,509,712
)
  
(4,509,712
)
Balance, December 31, 2000
    
–
    
–
    
2,594,205
   
2,594
   
4,310,552
   
(4,509,712
)
  
(196,566
)
Issuance of common stock for services rendered
    
–
    
–
    
13,350,675
   
13,350
   
2,752,503
   
–
    
2,765,853
 
Issuance of stock for compensation
    
–
    
–
    
1,998,841
   
1,999
   
592,296
   
–
    
594,295
 
                                             
                                             
See accompanying notes to condensed consolidated financial statements.


-3-

THE CYBER GROUP NETWORK CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM MARCH 21, 2000 (INCEPTION) TO SEPTEMBER 30, 2005
(UNAUDITED)
                       
   
Preferred Stock
  
Common Stock
  
Additional
Paid-In
  
Deficit Accumulated During Development
      
   
Shares
  
Amount
  
Shares
  
Amount
  
Capital
  
Stage
  
Total
  
                               
Conversion of convertible redeemable debentures
    
–
    
–
    
657,385
   
657
   
603,188
   
–
    
603,845
 
Interest from beneficial conversion features
    
–
    
–
    
–
    
–
    
218,922
    
–
    
218,922
 
Issuance of other stock - litigation
    
–
    
–
    
600,000
   
600
   
148,400
   
–
    
149,000
 
Issuance of restricted shares
    
–
    
–
    
5,555,555
   
5,556
   
(5,556
)
  
–
    
–
  
Series A preferred stock issued
    
2,000,000
   
2,000
   
–
    
–
    
211,250
   
–
    
213,250
 
Net loss, 2001
    
–
    
–
    
–
    
–
    
–
    
(4,902,903
)
  
(4,902,903
)
Balance, December 31, 2001
    
2,000,000
   
2,000
   
24,756,661
   
24,756
   
8,831,555
   
(9,412,615
)
  
(554,304
)
                                             
Issuance of stock to pay loans
    
–
    
–
    
30,253,157
   
30,253
   
346,023
   
–
    
376,276
 
Issuance of stock for compensation
    
–
    
–
    
20,010,289
   
20,010
   
479,275
   
–
    
499,285
 
Issuance of stock for services
    
–
    
–
    
73,214,520
   
73,215
   
678,094
   
–
    
751,309
 
Stock rescinded
    
–
    
–
    
(5,587,962
)
  
(5,588
)
  
5,588
   
–
    
–
  
Net loss, 2002
    
–
    
–
    
–
    
–
    
–
    
(1,924,803
)
  
(1,924,803
)
Balance, December 31, 2002
    
2,000,000
   
2,000
   
142,646,665
   
142,646
   
10,340,535
   
(11,337,418
)
  
(852,237
)
                                             
Issuance of stock for services
    
–
    
–
    
3,000,000
   
3,000
   
2,700
   
–
    
5,700
 
Net loss, 2003
    
–
    
–
    
–
    
–
    
–
    
(300,770
)
  
(300,770
)
Balance, December 31, 2003
    
2,000,000
   
2,000
   
145,646,665
   
145,646
   
10,343,235
    
(11,638,188
)
  
(1,147,307
)
                                             
Issuance of stock for services
    
–
    
–
    
32,542,000
   
32,542
   
160,358
   
–
    
192,900
 
Stock rescinded
    
–
    
–
    
(1,000,000
)
  
(1,000
)
  
1,000
   
–
    
–
  
Net Loss, 2004
    
–
    
–
    
–
    
–
    
–
    
(273,651
)
  
(273,651
)
Balance, December 31, 2004
    
2,000,000
   
2,000
   
177,188,665
   
177,188
   
10,504,593
   
(11,911,839
)
  
(1,228,058
)
Net Loss, 2005
    
–
    
–
    
–
    
–
    
–
    
(334,807
)
  
(334,807
)
Balance, September 30, 2005
    
2,000,000
 
$
2,000
    
177,188,665
 
$
177,188
  
$
10,504,593
  
$
(12,246,646
)
$
(1,562,865
)
                                             
                                             
See accompanying notes to condensed consolidated financial statements.


-4-
 
THE CYBER GROUP NETWORK CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004 AND FOR
THE PERIOD FROM MARCH 21, 2000 (INCEPTION) TO SEPTEMBER 30, 2005
(UNAUDITED)
               
   
For the Nine Months Ended
September 31, 2005
  
For the Nine Months Ended
September 30, 2004
  
For the Period from
March 21, 2000 (Inception) to September 30, 2005
  
               
CASH FLOWS FROM OPERATING ACTIVITIES
  
$
(90
)
$
(1,567
)
$
(1,923,771
)
                     
CASH FLOWS FROM INVESTING ACTIVITIES:
                    
Purchase of property, plant and equipment
    
–
    
–
    
(125,506
)
Purchase of license rights
    
–
    
–
    
(70,000
)
Proceeds used in business acquisition
    
–
    
–
    
(295,000
)
Net Cash Used In Investing Activities
    
–
    
–
    
(490,506
)
                     
CASH FLOWS FROM FINANCING ACTIVITIES:
                    
Proceeds from loan payable
    
–
    
–
    
627,604
 
Proceeds from issuance of convertible debt
    
–
    
–
    
1,787,810
 
Net Cash Provided By Financing Activities
    
–
    
–
    
2,415,414
 
                     
NET INCREASE (DECREASE) IN CASH
    
(90
)
  
1,567
   
1,137
 
                     
CASH - BEGINNING OF PERIOD
    
1,227
   
40
   
–
  
CASH - END OF PERIOD
  
$
1,137
  
$
1,607
  
$
1,137
  

SUPPLEMENTAL DISCLOSURE CASH FLOW INFORMATION:
  
Cash paid for income taxes
  
$
–
  
$
–
  
$
1,227
  
Cash paid for interest
  
$
–
  
$
–
  
$
–
  
                     
                     
See accompanying notes to condensed consolidated financial statements.


 
-5-
 
THE CYBER GROUP NETWORK CORPORATION AND SUBSIDARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2005 (UNAUDITED)
   
   
NOTE 1
BUSINESS ACTIVITY

On March 21, 2000, The Cyber Group Network Corporation and Subsidiary (the "Company", "CGPN", "Cyber Group") was incorporated in the State of California and subsequently purchased Hollywood Entertainment Network, Inc. The Company is a technology driven, internet based, computer security company with one main area of focus: Computer Security. The primary purpose is to continue to transition the Company into a self-sufficient, revenue-generating company, capable of increasing shareholder value. The Company is also very focused on exceeding customer expectations and industry demand. The Company’s mission is to allow people and businesses around the globe to protect their computers with innovative computer security solutions. The Company is seeking to acquire revenue generating businesses or projects with long term potential that will enable the Company to generate revenues to fund the current business plan.

(A)
Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of The Cyber Group Network Corporation and its subsidiary (the "Company"). These statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-QSB and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included. Operating results for the nine months ended September 30, 2005 are not necessarily indicative of the results that may be expected for the year ended December 31, 2005. The accompanying condensed consolidated financial statements and the information included under the heading "Management's Discussion and Analysis" should be read in conjunction with the Company's consolidated financial statements and related notes included in the Company's Form 10-KSB for the year ended December 31, 2004.

(B)
Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


-6-
 
THE CYBER GROUP NETWORK CORPORATION AND SUBSIDARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2005 (UNAUDITED)
   
   
(C)
Earnings Per Share

In accordance with SFAS No. 128, "Earnings Per Share", basic net loss per share has been computed based on the weighted-average of common shares outstanding during the period. Diluted earnings per share include the effects of any outstanding financial instruments that may be converted into common stock, and therefore classified as common stock equivalents. SFAS No. 128 provides guidance to calculate the equivalent number of common shares that would be likely issued in the event the holder would elect to convert the financial instrument into common shares. As per SFAS No. 128, common stock equivalents are not considered in the diluted earnings per share calculations because the effect would have been anti-dilutive.

NOTE 3
COMMITMENTS AND CONTINGENCIES

The Company is involved in certain legal proceeding and claims that arise in the normal course of business. The Company does not believe that the outcome of these matters will have a material adverse effect on its financial position or results of operations.

NOTE 4
STOCKHOLDERS' DEFICIENCY

On November 23, 2001, the Board of Directors approved a fifteen to one reverse stock split on all of the outstanding common shares of the Company. All references to common shares and loss per common share amounts have been adjusted to reflect the 15-to-1 reverse common stock split. The common shares commenced trading on a post reverse split basis on November 26, 2001.

A)
Common Stock

During the year ended December 31, 2004, the Company issued 32,542,000 shares of common stock with a fair value of $192,900 for services rendered and compensation to officers and directors.

During the year ended December 31, 2004, the Company rescinded 1,000,000 shares of common stock originally issued for consulting services during 2003 that were never rendered to the Company.

During the year ended December 31, 2003 and for the period from March 21, 2000 (inception) to December 31, 2002, the Company issued 3,000,000 and 87,173,714 shares of common stock (reflective of reverse split) with a fair value of $5,700 and $4,795,362, respectively, for services. The services were valued at the fair market value of the stock on the date of issuance. For the period from March 21, 2000 (inception) to December 31, 2002, the Company issued options for services rendered valued at $220,000.

For the period from March 21, 2000 (inception) to December 31, 2002, the Company issued 22,092,617 shares of common stock (reflective of reverse split) as compensation totaling $1,337,035. These transactions were valued at the fair market value of the stock on the date of issuance. For the period from March 21, 2000 (inception) to December 31, 2002, the Company converted 1,875,345 of its Series A and Series SPA Subordinated Convertible Redeemable Debentures and accrued interest into 1,711,962 shares of common stock (reflective of reverse split), respectively.

For the period from March 21, 2000 (inception) to December 31, 2002, the Company issued 18,333 shares of common stock (reflective of reverse split) as donations to nonprofit organizations valued at $29,950, respectively. These transactions were valued at the fair market value of the stock on the date of issuance.

For the period from March 21, 2000 (inception) to December 31, 2002, the Company issued 88,889 shares of common stock (reflective of reverse split) as interest expense totaling $100,000.

For the period from March 21, 2000 (inception) to December 31, 2002, the Company issued options (net of those terminated) to employees and Board of Directors to purchase 10,475,972 shares of common stock, respectively, and recorded compensation expense, which is included in the issuance of stock for compensation in the statements of changes in stockholders' deficiency for $237,750. For the period from March 21, 2000 (inception) to December 31, 2002, the Company recorded $1,151,213 of interest from beneficial conversion features.

During the year ended December 31, 2001, the Company issued 5,555,555 shares of common stock to the former CEO for inventions per his employment agreement. During the year ended December 31, 2002, the Company rescinded 5,587,962 shares of common stock from the former CEO due to complications incurred with the former CEO. No expense was recorded in relation to this transaction.

During the year ended December 31, 2001, the Company issued 600,000 shares of common stock with a fair value of $149,000 in relation to the litigation discussed in Note 6(D) of the December 31, 2002 financial statements.

During the year ended December 31, 2002, the Company issued 30,253,157 shares of common stock with a fair value of $376,276 in relation to loan repayment.

During the year ended December 31, 2001, the Company issued 2,000,000 shares of series A preferred stock with a fair value of $213,250 in connection with a litigation settlement. 

 
-7-

THE CYBER GROUP NETWORK CORPORATION AND SUBSIDARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2005 (UNAUDITED)
   
   
NOTE 5
RELATED PARTY TRANSACTIONS

During the period ended September 30, 2005 and year ended December 31, 2004, the Company had certain advances and loans from its Chief Executive Officer and other related individuals. As of September 30, 2005 and December 31, 2004, the due to officers account on the balance sheet includes these advances and loans from officers and directors of the Company.
 
As of September 30, 2005 and December 31, 2004, the Company had a loan payable to a related party totaling $52,210.
 
NOTE 6
GOING CONCERN
 
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles that contemplate the Company's continuation as a going concern. For the nine months ended September 30, 2005, CGPN incurred a net loss of $334,807 and had a working capital deficiency and a stockholders' deficiency of $1,562,865 as of September 30, 2005. In addition, the Company was still in the development stage as of September 30, 2005. These factors raise substantial doubt about the Company's ability to continue as a going concern.
 
The Company has been actively pursuing new acquisitions and the Company is currently negotiating with several potential businesses that would significantly change the operations of the Company. The Company’s ability to continue as a going concern is dependent upon raising capital through debt or equity financing and ultimately by generating revenue and achieving profitable operations. There is no assurance that the Company will be successful in its efforts to raise additional proceeds or achieve profitable operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
NOTE 7
SUBSEQUENT EVENT

On September 20, 2005, The Cyber Group Network Corporation (the “Registrant” or “CGPN”) executed a Share Exchange Agreement (“Exchange Agreement”) by and among R. Scott Cramer, Steve Lowe, David Wassung (all hereinafter collectively referred to as the “CGPN Shareholders”) and the Registrant on the one hand, and Skystar Bio-Pharmaceutical (Cayman) Holdings Co., Ltd., a Cayman Island Company (“Skystar”), and the shareholders of 100% of Skystar’s common stock (the “Skystar Shareholders”), on the other hand. On November 6, 2005, the parties to the Exchange Agreement entered into a Third Amendment to the Exchange Agreement whereby Skystar will hold CGPN Shareholders harmless for any payment of up to US$50,000 made by CGPN in connection with the settlement of any claims (“Claims”) and up to US$10,000 in attorney’s fees incurred in defense of any such Claims. Any amount paid by CGPN in excess of US$50,000 plus US$10,000 in attorney’s fees incurred in connection with the Claims shall be the responsibility of the CGPN Shareholders and shall be paid in cash within 30 days after written notification is delivered to CGPN Shareholders. The closing of this transaction (the “Closing”) occurred on November 7, 2005 (the “Closing Date”). Under the Exchange Agreement, on the Closing Date, the Registrant issued 48,000,000 shares of the Registrant’s Series B Preferred Stock (the “CGPN Shares”) to the Skystar Shareholders in exchange for 100% of the common stock of Skystar. The CGPN Shares issued are voting and shall be convertible, in the aggregate, into a number of shares of the Registrant’s common stock that would equal 89.5% of the outstanding shares of the Registrant’s common stock, if the shares were to be converted on the Closing Date. No shares were converted. In addition, on the Closing Date, Skystar paid the Registrant an amount equal to $120,000, which shall be used to pay liabilities of the Registrant. 


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Item 2. Management's Discussion And Analysis Or Plan Of Operation

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements. These forward-looking statements relate to, among other things, capital expenditures, liquidity, capital resources and competition and may be indicated by words or phrases such as “anticipate”, “estimate”, “plans”, “projects”, “continuing”, “ongoing”, “expects”, “management believes”, “the Company believes”, “the Company intends” and similar words or phrases. The following factors and others discussed in the Company’s periodic reports and filings with the Securities and Exchange Commission are among the principal factors that could cause actual results to differ materially from the forward-looking statements: availability and terms of financing; risk insurance markets; competition; general economic conditions; interest rates; and inflation. However, this list is not a complete statement of all potential risks or uncertainties.

These forward-looking statements are made as of the date hereof based on management’s current expectations, and the Company does not undertake an obligation to update such statements, whether as a result of new information, future events or otherwise. Additional information regarding these and other risk factors may be found in the Company’s other filings made from time to time with the Securities and Exchange Commission.

OVERVIEW

On September 20, 2005, The Cyber Group Network Corporation (the “Registrant” or “CGPN”) executed a Share Exchange Agreement (“Exchange Agreement”) by and among R. Scott Cramer, Steve Lowe, David Wassung (all hereinafter collectively referred to as the “CGPN Shareholders”) and the Registrant on the one hand, and Skystar Bio-Pharmaceutical (Cayman) Holdings Co., Ltd., a Cayman Island Company (“Skystar”), and the shareholders of 100% of Skystar’s common stock (the “Skystar Shareholders”), on the other hand. Under the Exchange Agreement, on the Closing Date, the Registrant will issue shares of the Registrant’s Series B Preferred Stock (the “CGPN Shares”) to the Skystar Shareholders in exchange for 100% of the common stock of Skystar. The CGPN Shares issued shall be convertible, in the aggregate, into a number of shares of the Registrant’s common stock that would equal 89.5% of the outstanding shares of the Registrant’s common stock, if the shares were to be converted on the Closing Date. In addition, on the Closing Date, Skystar will pay the Registrant an amount equal to $120,000, which shall be used to pay liabilities of the Registrant.

The parties’ completion of the transactions contemplated under the Exchange Agreement (the “Closing”) were subject to the satisfaction of certain contingencies including, without limitation, Skystar's delivery of contracts or a series of related contracts with Xian Tianxing Bio-Pharmaceutical Co., Ltd., a Chinese Company, to the Registrant, and also the Registrant’s delivery to Skystar of a release without prejudice from any claims against CGPN, whether actual or contingent, that is satisfactory to Skystar legal counsel, at his sole discretion. The directors of the Registrant and the CGPN Shareholders have approved the Exchange Agreement and the transactions contemplated thereunder. Skystar’s directors and the Skystar Shareholders have approved the Exchange Agreement and the transactions contemplated thereunder (the “Exchange Transaction”). On November 6, 2005 the parties to the Share Exchange Agreement entered into a Third Amendment to the Exchange Agreement whereby Skystar will hold CGPN Shareholders harmless for any payment of up to US$50,000 made by CGPN in connection with the settlement of any claims (“Claims”) and up to US$10,000 in attorney’s fees incurred in defense of any such Claims. Any amount paid by CGPN in excess of US$50,000 plus US$10,000 in attorney’s fees incurred in connection with the Claims shall be the responsibility of the CGPN Shareholders and shall be paid in cash within 30 days after written notification is delivered to CGPN Shareholders.
 
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The closing of this transaction (the “Closing”) occurred on November 7, 2005 (the “Closing Date”).

Prior to the transaction, the Registrant was a development stage computer security company that developed and marketed its computer security hardware and software devices. The Registrant was in the process of developing two products, computer security software and a computer hardware device for tracking missing or stolen computers. However, in the past two years, both the development of the hardware product and the sales of the software product generated minimal revenue for the Registrant. From and after the Closing Date, the Registrant’s primary operations will now consist of the operations of Skystar.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related footnotes for the year ended December 31, 2004 included in FORM 10KSB filed with the SEC on May 19, 2005. The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.

RESULTS OF OPERATIONS

Since inception in March 2000, the Company has been in the development stage. The primary focus has been on the development and marketing of its hardware and software devices, E-Snitch and PPIRT, respectively. Because the Company began shipment of PPIRT in the late fourth quarter 2000 and shipped minimal product, minimal revenue has been generated to date. Because substantially all of its efforts have been concentrated in research and development activities, it has operated at a net loss since inception. The Company incurred a net loss of $334,807 and $339,897 for the nine months ended September 30, 2005 and 2004, respectively. The decrease in the net loss is primarily due to issuance of stock for services during the year ended December 31, 2004. No shares were issues for services during the nine months ended September 30, 2005.

The Company has received reports on its financial statements for the period ending December 31, 2004 from its independent auditor that includes an explanatory paragraph describing the Company's uncertainty to continue as a going concern. These financial statements contemplate the ability to continue as a going concern and as such do not include any adjustments that might result from this uncertainty.

LIQUIDITY AND CAPITAL RESOURCES

As of the fiscal quarter ended September 30, 2005, the Company had current assets of $1,137 and total assets of $1,137. The Company was in a negative working capital position and has a stockholders deficiency of $1,562,865 as of September 30, 2005.

CASH REQUIREMENTS AND ADDITIONAL FUNDING

The Company needs to immediately raise additional capital to run the daily operating activities of the business. The current cash on hand is insufficient to meet its anticipated needs for working capital, capital expenditures and business development for the next twelve months. Because the Company has not sustained a consistent revenue stream, it will need to raise additional capital to meet its operating needs. The Company has been actively pursuing new acquisitions and the Company is currently negotiating with several potential businesses that would significantly change the operations of the Company The Company will continue to research various methods of acquiring capital, like private placement, debt refinancing and SB2 filings. The Company recognizes that filing an SB2 can potentially lead to stock dilution, however, it may be the most effective means to generate cash flow. Irrespective of the funding method, this funding will cover such costs as marketing and distribution, maintaining and upgrading technology, recurring overhead expenses for the day-to-day operation of the business and other unexpected expenses due to economic changes. The Company cannot guarantee that the financing will be available in certain amounts or on acceptable terms.

Item 3. Controls And Procedures

Disclosure controls and procedures are designed to ensure information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the periodic reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including the Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

At the end of this period covered by this Report, we have not conducted an evaluation of the effectiveness of the design and operation of our disclosures controls and procedures pursuant to Securities and Exchange Act Rule 13a-14. This evaluation has not been conducted due to lack of operations and activities and will be conducted as soon as feasibly possible.


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PART II - OTHER INFORMATION 

Item 1.
   
  None.
 
Item 2.
   
  None.
 
Item 3.
   
  None.
 
Item 4.
   
  None.
 
Item 5.
Other Information.
   
  None.
 
Item 6.

Exhibit Number and Brief Description.

Exhibit Number
  
Description
     
2.1
  
Share Purchase Agreement by and between The Cyber Group Network, Inc. and Howard L. Allen and Donald G. Jackson (shareholders of Hollywood Entertainment Network, Inc.) dated May 12, 2000 (1)
2.2
  
Plan of Merger Agreement between The Cyber Group Network Corp. and CGN Acquisitions Corporation dated December 7, 2000 (2)
2.3
  
Share Exchange Agreement between The Cyber Group Network Corporation, R. Scott Cramer, Steve Lowe, David Wassung and Skystar Bio-Pharmaceutical, and the Skystar Shareholders dated September 20, 2005 (3)
3.1
  
Charter of The Cyber Group Network Corporation as filed with the State of Nevada (4)
3.2
  
Company Bylaws (5)
31.1
  
Section 302 Certification by the Corporation’s Chief Executive Officer (Filed herewith.)
31.2
  
Section 302 Certification by the Corporation’s Chief Financial Officer (Filed herewith.)
32.1
  
Section 906 Certification by the Corporation’s Chief Executive Officer (Filed herewith.)
32.2
  
Section 906 Certification by the Corporation’s Chief Financial Officer (Filed herewith.)
     
(1)
Incorporated by reference from the Registrant’s Current Report on Form 8-K/A filed on June 1, 2000.
(2)
Incorporated by reference from the Registrant’s Current Report on Form 8-K/A filed on January 12, 2001.
(3)
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on September 26, 2005.
(4)
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on November 14, 2005.
(5)
Incorporated by reference from the Registrant’s Registration Statement on Form 10-SB filed on November 16, 1999.

The following Form 8-K was issued during the reporting period:

1.
Form 8-K
September 26, 2005, Entry into Share Exchange Agreement (“Exchange Agreement”) by and among R. Scott Cramer, Steve Lowe, David Wassung (all hereinafter collectively referred to as the “CGPN Shareholders”) and the Registrant on the one hand, and Skystar Bio-Pharmaceutical (Cayman) Holdings Co., Ltd., a Cayman Island Company (“Skystar”), and the shareholders of 100% of Skystar’s common stock (the “Skystar Shareholders”)

[SIGNATURES PAGE FOLLOWS]
 
 
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SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
     
     
  THE CYBER GROUP NETWORK CORPORATION
 
 		  
 		  
 
Dated:  December 1, 2005 By:   /s/ Weibing Lu
 
 
Weibing Lu
Chief Executive Officer


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