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: June 30, 2000
Or
[ ] 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:
The Cyber Group Network Corporation
(Exact name of registrant as specified in its charter)
Nevada 88-0407473
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
897 Via Lata Drive, Colton, 92324
California (Zip Code)
(Address of principal executive
offices)
(909) 208-2108
(Registrant's telephone number, including area code)
Hollywood Entertainment 12400 Ventura December 31, 1999
Network, Inc. Blvd., Suite #311 (Former fiscal year)
(Former name) Studio City,
California 91604
(Former address)
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 [ ]
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 be 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 [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
16,138,291
The Cyber Group Network Corporation
(A Development Stage Company)
Table of Contents
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Auditors' Report 4
Balance Sheet June 30, 2000 and June 30, 1999 5
Statement of Income for the Period ended June 30, 2000 and 6
the Period ended June 30, 1999
Statement of Cash Flows for the Three Month Period ended June 7
30, 2000 and the Three Month Period ended June 30, 1999
Statement of Stockholder's Equity for April 1, 2000 to June 8
30, 2000
Notes to Financial Statements 9
Item 2. Management's Discussion and Plan of Operation 12
PART II - OTHER INFORMATION
Item 6. Exhibits 13
SIGNATURES 14
THE CYBER GROUP NETWORK CORPORATION
(A Development Stage Company)
Balance Sheets as of
JUNE 30, 2000 AND 1999
And
Statements of Income,
Stockholders' Equity, and
Cash Flows
For the quarters ended June 30, 2000 and 1999
WITH INDEPENDENT ACCOUNTANT'S REPORT
Prepared By:
Michael F. DeLuca
Certified Public Accountant
Michael F DeLuca
Certified Public Accountant
Accountant's Compilation Report
The Board of Directors
The Cyber Group Network Corporation
Colton, CA.
I have compiled the accompanying balance sheet of The Cyber Group
Network Corporation (a corporation) as of June 30, 2000 and 1999,
and the related statements of income and retained earnings and cash
flows for the three months then ended, in accordance with Statements
on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management. I
have not audited or reviewed the accompanying financial statements
and, accordingly, do not express an opinion or any other form of
assurance on them.
The accompanying financial statements have been prepared assuming
the company will continue as a going concern. As discussed in Note D
to the financial statements, the company has had limited operations
and has not established a long-term source of revenue. This raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in
Note D. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/S/ Michael F DeLuca, CPA
August 15, 2000
Yorba Linda, California
(714) 692-8206 * 23001 E. La Palma Avenue Suite 220A Yorba Linda,
CA. 92887 * Fax (714) 692-3054
THE CYBER GROUP NETWORK CORPORATION
BALANCE SHEET
JUNE 30, 2000 and 1999
ASSETS
2000 1999
Current Assets
Cash in bank $ 104,710 235
Other receivables 7,000
111,710
Property and
Equipment, at cost
Equipment and 169,883 27,000
furniture
Less accumulated ( 3,153) ( 2,700)
depreciation
166,730 24,300
Other Assets
Movie rights 193,022
Goodwill 301,000
Less accumulated (627) -0-
amortization
Total Other Assets 300,373 193,022
Total Assets $578,813 $217,557
LIABILITIES AND CAPITAL
Liabilities
Current Liabilities
Accrued expenses $ 24,319 $
2,500
Long-term liabilities
Bonds payable 304,444
Less unamortized discount (30,444)
274,000
298,319
Stockholders' Equity
Additional paid in capital 734,806 230,498
Common stock - shares authorized 25,000,000; 5,363 3,702
shares issued and outstanding 16,138,291
Deficit accumulated during development stage (459,675) (
19,143)
Total Stockholders' Equity 280,494 215,057
Total liabilities and stockholders' equity $578,813 $217,557
The accompanying notes are an
integral part of this statement
THE CYBER GROUP NETWORK CORPORATION
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE QUARTERS ENDED
JUNE 30, 2000 and 1999
For the three months For the three months
ended ended
June 30, 2000 June 30, 1999
Revenue
-0- -0-
Operating Expenses
Marketing 17,607
Legal and accounting 500
Depreciation 3,780 1,350
Other operating 20,835 23
expenses
Research and 393,809 -0-
development
Total Operating 436,531 1,373
Expenses
Net Loss ( 436,531) ( 1,373)
Beginning Retained ( 23,144) ( 17,770)
Deficit
Deficit accumulated
during
development stage $( 459,675) $( 19,143)
Loss per share:
Basic $ .0556 $ .0004
Diluted $ .0327 $ .0004
Weighted Average
number of
Shares outstanding
Basic 7,847,430 3,702,000
Diluted 13,327,430
The accompanying notes are an
integral part of this statement
THE CYBER GROUP NETWORK CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three For the three
months months
ended ended
June 30, 2000 June 30, 1999
Operating Activities:
Net loss (436,531) ( 1,373)
Depreciation 3,780 1,350
Change in accounts payable 21,219
Change in receivables ( 7,000) -0-
Net cash used by Operating (418,532) ( 23)
Activities
Cash Flows from Investing
Activities:
Investment in goodwill - (301,000)
acquisition
Investment in property and (169,883)
equipment
(470,883)
Cash Flows from Financing
Activities:
Issuance of common stock for 423,700
property
Issuance of common stock 296,425
conversion of debt
Issuance of convertible 274,000
bonds
994,115
Net Increase (Decrease) in 104,700 ( 23)
Cash
Cash at beginning of period 10 258
Cash at End of period $104,710 $ 235
Supplemental disclosures:
Interest paid $ -0- $ -0-
Income taxes paid $ -0- $ -0-
The accompanying notes are an
integral part of this statement
THE CYBER GROUP NETWORK CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
From April 1, 2000 to June 30, 2000
Deficit
Accumulated
During
Paid in Development
Common Stock
Capital Shares Amount Stage
Balances at
April 1, 2000 $230,498 3,702,000 $ 3,702 (23,144)
Stock split 7,404,000
Stock issuance 423,205 1,500,000 495
for property
Stock issuance
for
Conversion of 295,259 3,532,291 1,166
bonds
Liquidating
property
Dividends (214,156)
Net loss -0- -0- -0- (436,531)
Balances at
June 30, 2000 $734,806 16,138,291 $ 5,363 $
(459,675)
The accompanying notes are an
integral part of this statement
THE CYBER GROUP NETWORK CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note A - Summary Of Significant Accounting Policies
The Cyber Group Network Corporation (the "Company"), incorporated
on September 24, 1998 as Hollywood Entertainment Network, Inc., is
a development stage company with a principal business objective to
operate as a developer of computer security technology, internet
access devices and other internet and communication investments.
Because the Company is considered a development stage company the
accompanying financial statements are presented in accordance with
SFAS 7 for development stage companies.
On September 25, 1998, two (2) founding shareholders purchased
three million five hundred thousand (3,500,000) shares of the
Company's authorized treasury stock in exchange for certain
assets contributed to the corporation as disclosed in Note B
Related Party Transactions.
In December of 1998, the Company completed an offering of two
hundred two thousand (202,000) shares of the Common Stock of the
Company to approximately fifty-three (53) unaffiliated
shareholders. This offering was made in reliance upon an
exemption from the registration provisions of Section 4(2) of the
Securities Act of 1933, as amended, pursuant to Regulation D, Rule
504 of the Act.
On May 10, 2000 the Company issued a three for one stock split.
On May 23, 2000 The Cyber Group Network, Inc. purchased 89.1% of
the company's outstanding common stock for $295,000.
Subsequently, The Cyber Group Network, Inc. was merged into the
Company. The Company then changed its name to The Cyber Group
Network Corporation.
A summary of the Company's significant accounting policies
consistently applied in the preparation of the accompanying
consolidated financial statements follows:
Property and Equipment - Depreciation on property and equipment is
provided by charges to income using the straightline method over
the estimated life of the respective assets, ranging generally
from 5 to 7 years. Amortization of leasehold improvements is
provided over the life of the respective leasehold.
Income Taxes - Timing differences in reporting transactions for
financial and tax purposes result in the recognition of deferred
income taxes.
Cash and Cash Equivalents - For the purpose of the statement of
cash flows, the Company considers all cash and certificates of
deposit with an original maturity of months or less to be cash
equivalents.
THE CYBER GROUP NETWORK CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note A - Summary Of Significant Accounting Policies(continued)
Advertising - The company accounts for its advertising costs as
nondirect response advertising. Accordingly, advertising costs are
expensed ad incurred.
Earnings Per Share - The company computes earnings per share using
the weighted average number of shares of common stock outstanding.
Dividends - The company has not yet adopted any policy regarding
the payment of dividends.
Use of Estimates - Management of the company has made certain
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements in accordance
with generally accepted accounting principles. Actual results
could differ from these estimates.
Start-Up Costs - The company has accounted for certain start-up
costs such as Website design, accounting, etc. as expenses per
Statement of Position 98-5.
Note B - Property And Equipment
Property and equipment is stated at cost and consists of the
following:
2000 1999
Equipment and $169,883 $27,000
furniture
Accumulated 3,153 2,700
depreciation
$166,730 $24,300
THE CYBER GROUP NETWORK CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
Note C - Common Stock
The company is authorized to issue 25,000,000 of common stock
having a par value of $.001. The par value was adjusted to
$.00033 upon the three for one stock split on May 10, 2000.
On November 21, 1998 the company conducted a limited public
offering of common stock pursuant to Regulation D, Rule 504 of the
Securities Act of 1933 and sold 202,000 shares of its $.001 Par
value common stock for cash of $20,200.00.
As part of the business combination 1,500,000 shares of common
stock were issued to the shareholders of The Cyber Group Network
Corporation in exchange for the company's assets.
Note D - Going Concern
The company's financial statements are prepared using the
generally accepted accounting principles applicable to a going
concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
However, the company has had limited sources of revenue. Without
realization of additional capital, it would be unlikely for the
company to continue as a going concern. It is management's plan to
seek to raise additional capital via a private placement of funds.
Note E - Financing
On May 23, 2000 the company authorized $1,000,000 face amount of
8% Senior Subordinated Convertible Redeemable
Debentures for $900,000. The debentures are due May 23, 2002. They
are convertible into common stock of the Company at 75% of the
market price of the stock at any time prior to maturity.
At June 30, 2000 $583,000 face of the debentures had been issued
and $251,000 face of the debentures had been converted into
3,532,291 common shares at an average price of $.075 per share.
Item 2. Management's Discussion and Plan of Operation
General
The Cyber Group Network Corporation ("CGPN" or the "Company"), a
Nevada corporation, incorporated on September 24, 1998, is a
developmental stage technology company whose principal business
objectives are to provide computer security technology, patent
public internet access devices and complete acquisitions of other
internet and communications companies. This phase of the Company's
operations began with the acquisition of the previous company's
ownership that occurred on May 23, 2000.
The mission of CGPN is to create, develop and invest in new
innovative technological concepts, which will enhance the Company's
core business, computer security; and bring diversity to the
Company's internet and communications focus. CGPN employs a staff
of professionals experienced in communications technology and
computer security resources that will invest their energy and CGPN's
capital to achieve these goals.
Results of Operations
The Company is a developmental stage company which to date has
generated no revenues. Although CGPN has a limited operating
history, activities to date have been primarily designed to further
our principal business objectives as stated above. As of June 30,
2000, the Company has developed a business plan, recruited and
retained a management team and raised capital via an offering made
in reliance upon an exemption from the registration provisions of
the Securities Act of 1933, as amended, in accordance with
Regulation D, Rule 504. Capital obtained through this offering has
been used for the purposes of research and development, marketing,
and to cover other operating expenses incurred by the Company.
CGPN is currently marketing the "Hi-Tech Hustler" research compact
disk. This product will demonstrate the Company's technological
edge and assist in the marketing of its cyber crime prevention
techniques. The CD gives a preview of the innovative encryption
technologies, firewall penetration testing, service denials and
preventative sequence number attacks that CGPN will employ. Also,
the Company has developed a meta-search engine called
"BigTarget.com" that will provide a simplistic, easy-to-use and
comprehensive way of obtaining highly relevant research results. The
Company plans to generate revenue through leveraging page views in a
banner advertising marketing campaign. In addition, ecommerce
applications will be added such that cyber customers can purchase
products over this website from CGPN's own proprietary line of
software.
Future Business
Due to technological advancements and an increase in computer usage,
demands for better security systems have become a concern for
consumers, organizations and agencies. The Cyber Group Network
Corporation is in the process of designing a computer security
devise that locates missing or stolen computers and other devices
globally within 5 feet of their location. The devise will be
distributed under CyberCrime Corporation a subsidiary of The Cyber
Group network Corporation. This is one of many products and
services that the Company will launch in the coming year. The
Company will actively seek out possible acquisitions of technology-
based companies to ensure future growth.
Liquidity and Capital Resources
To date, the Company formerly known as "Hollywood Entertainment
Network, Inc." has attained cash from offerings of its common stock.
On September 25, 1998, the Company issued 3,500,000 shares of its
$0.001 par value common shares for cash of $3,500. On December 4,
1998, the Company issued 202,000 shares of its common stock pursuant
to Regulation D, Rule 504 of the Securities Act of 1933, as amended,
whereby the Company raised cash of $20,200. On May 10, 2000 the
Company issued a 3 for 1 stock split. As part of the business
combination 1,500,000 shares of common stock were issued to
shareholders of The Cyber Group Network Corporation in exchange for
the Company's assets. On May 23, 2000, the company authorized
$1,000,000 face amount of 8% Senior Subordinated Convertible
Redeemable Debentures for $900,000. The debentures are due May 23,
2002. They are convertible into common stock of the Company at 75%
of the market price of the stock at any time prior to maturity. At
June 30, 2000, $583,000 face of the debentures had been issued and
$251,000 face of the debentures had been converted into 3,532,291
common shares at an average price of $.075 per share.
Without raising additional capital, the Company may not be able to
acquire additional companies that may enhance the growth of the
Company. Furthermore, development of additional technologies could
be suffered by the lack of capital subject to the limited available
cash flow. Accordingly, in order for the Company to achieve its
business objectives and achieve profitable operations, it will be
necessary to generate additional cash flow from operations, raise
additional capital or enter into joint venture arrangements.
Management intends to fund future acquisitions from operations, as
well as borrowings, public and private sales of debt and equity
securities, among other possible sources. The Company has no present
arrangements for future borrowings and its cash flow from operations
may not be adequate to provide the funds needed for these purposes.
There can be no assurance the Company will be able to raise
additional funds in sufficient amounts to allow the Company to
successfully implement its present business strategy or acquisitions
or the development of its existing or future products. No assurance
can be given as to the availability or terms of any additional
financing or joint development arrangements or that such terms as
are available may not be dilutive to the interest of the Company's
shareholders.
PART II - OTHER INFORMATION
Item 6. Exhibits
Exhibit Name and/or Identification of Exhibit
Number
3 Articles of Incorporation & By-Laws
(a)Articles of Incorporation of the Company filed
September 24, 1998. Incorporated by reference to the
exhibits to the Company's General Form For Registration Of
Securities Of Small Business Issuers on Form 10-SB,
previously filed with the Commission.
(b)By-Laws of the Company adopted September 25, 1998.
Incorporated by reference to the exhibits to the Company's
General Form For Registration Of Securities Of Small
Business Issuers on Form 10-SB, previously filed with the
Commission.
13 Annual or Quarterly Reports
(a) Form 10-QSB for the Quarter ended March 31, 2000.
Incorporated by reference to the Company's Quarterly
Report for Small Business Issuers on Form 10-QSB,
previously filed with the Commission.
23 Consent of Experts and Counsel
Consents of independent public accountants
27 Financial Data Schedule
Financial Data Schedule of ALD Services, Inc. ending June
30, 2000
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
(Registrant)
Date: August 17, 2000
By:/s/ Anthony Miller
Anthony Miller, President
