U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB/A

(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
                                               ------------------

        Transition report under Section 13 or 15(d) of the Exchange Act of 1934
-----
             For the transition period from __________ to __________

                          Commission file number 1-9224

                                 CNE GROUP, INC.
                                 ---------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

           DELAWARE                                             56-2346563
           --------                                             ----------
(State or Other Jurisdiction of                             (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

              255 West 36th Street, Suite 800, New York, N.Y. 10018
              -----------------------------------------------------
                    (Address of Principal Executive Offices)

                                  212-300-2112
                                  ------------
                (Issuer's Telephone Number, Including Area Code)

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.

                               Yes  X        No
                                   ---          ---

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                               Yes           No  X
                                   ---          ---

      The number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

            Class                                Outstanding at November 1, 2005
            -----                                -------------------------------

Common stock - par value $.00001                        12,374,248 shares
--------------------------------                        -----------------


<PAGE>



                                    PART I

                              FINANCIAL INFORMATION


Item l.  Financial Statements.










                                       1
<PAGE>

CNE GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheet

<TABLE>
<CAPTION>

                                                         September 30,     December 31,
                                                             2005              2004
                                                         ------------------------------
                                                          (Unaudited)
<S>                                                      <C>              <C>
ASSETS
  Current:
    Cash and cash equivalents                            $      79,641    $      84,408
    Accounts receivable, net of allowance for doubtful
      accounts of $66,000 in 2005 and $51,000 in 2004          250,541          172,010
    Inventory                                                  466,477          260,487
    Other current assets                                         9,642            8,273
                                                         -------------    -------------
      Total current assets                                     806,301          525,178

  Fixed assets, net                                            315,099          394,509
  Intellectual property rights, net                          1,312,140        1,361,948
  Goodwill                                                   7,285,894        7,285,894
  Marketing and distribution agreement                     125,000,000
  Other assets                                                                   21,265
                                                         -------------    -------------
      Total assets                                       $ 134,719,434        9,588,794
                                                         =============    =============

LIABILITIES
  Current:
    Accounts payable and accrued expenses                $    2,330,43    $   1,476,124
    Interest payable                                           250,481          128,050
    Short-term credit arrangements                                  --          191,395
    Line of credit                                                  --           19,199
    Current portion of notes payable                            12,148           17,243
    Due to related party                                     1,282,918               --
    Notes and debenture payable                                502,455          850,000
    10% subordinated notes payable                           1,300,000          966,710
    12% Debentures payable                                     100,000               --
    Tax assessment payable                                       7,500               --
    Senior secured note payable due to related party       124,649,990
    Other notes payable                                             --           23,330
                                                         -------------    -------------
      Total current liabilities                            130,435,926        3,672,051
  Notes payable, net of current portion                             --           22,059
  Deferred grant revenue                                            --          300,000
                                                         -------------    -------------
      Total liabilities                                    130,435,926        3,994,110
                                                         -------------    -------------

Commitments and contingencies

STOCKHOLDERS' EQUITY
  Preferred stock                                                  145              134
  Common stock                                                     127              121
  Paid-in surplus                                           30,243,169       29,919,185
  Accumulated deficit                                      (23,086,833)     (21,451,656)
                                                         -------------    -------------
                                                             7,156,608        8,467,784
    Less treasury stock, at cost - 1,238,656 shares         (2,873,100)      (2,873,100)
                                                         -------------    -------------
      Total stockholders' equity                             4,283,508        5,594,684
                                                         -------------    -------------
      Total liabilities and stockholders' equity         $ 134,719,434    $   9,588,794
                                                         =============    =============
</TABLE>

See Notes to Consolidated Financial Statements.

                                                2
<PAGE>

CNE GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

<TABLE>
<CAPTION>

                                                     Three Months                    Nine Months
                                                  Ended September 30,            Ended September 30,
                                             ------------------------------------------------------------
                                                 2005            2004            2005            2004
                                             ------------------------------------------------------------
                                              (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
<S>                                          <C>             <C>             <C>             <C>
Revenues:
  Product sales                              $    288,628    $    385,711    $    801,589    $  1,279,111
  Service fee income                              170,327         215,364         522,741         798,017
  Internet related income                          12,750          41,920          77,703          99,127
                                             ------------------------------------------------------------
                                                  471,705         642,995       1,402,033       2,176,255
  Cost of goods sold                               72,298         300,574         400,167       1,085,889
                                             ------------------------------------------------------------

     Gross profit                                 399,407         342,421       1,001,866       1,090,366


Other expenses:
  Advertising                                      19,257           5,909          53,542          42,837
  Compensation and related costs                  (65,340)        207,324         335,947       1,028,916
  Organizational costs                             36,860                          36,860
  General and administrative                    1,759,692         322,507       2,219,384         985,806
  Product development                                              92,904                         130,513
  Depreciation and amortization                    17,269          48,848         114,816         145,204
                                             ------------------------------------------------------------
                                                1,767,738         677,492       2,760,549       2,333,276

Loss before other income (expenses)            (1,368,331)       (335,071)     (1,758,683)     (1,242,910)

Other income (expenses):
  Amortization of debt discount                        --         (24,963)        (33,290)       (174,747)
  Grant income                                         --              --         300,000              --
  Gain on sale of subsidiary                          341              --             341              --
  Interest expense                                 (9,444)       (110,757)       (143,569)       (278,099)
  Interest income                                     (67)            277              24             576
                                             ------------------------------------------------------------
                                                   (9,170)       (135,443)        123,506        (452,270)
                                             ------------------------------------------------------------
                                               (1,377,501)       (470,514)     (1,635,177)     (1,695,180)

  Provision for income taxes                           --              --              --              --
                                             ------------------------------------------------------------
Net loss
                                             $ (1,377,501)   $   (470,514)   $ (1,635,177)   $ (1,695,180)
                                             ============================================================

Loss per common share - basic and diluted:   $      (0.12)   $      (0.04)   $      (0.15)   $      (0.16)
                                             ============================================================
Weighted average number of common
  shares outstanding - basic and diluted:      11,640,915      10,640,915      11,263,137      10,349,260
                                             ============================================================
</TABLE>

See Notes to Consolidated Financial Statements.

                                                     3
<PAGE>

CNE GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                             Nine Months Ended September 30,
                                                                             -------------------------------
                                                                                 2005             2004
                                                                             -------------------------------
                                                                             (Unaudited)       (Unaudited)
<S>                                                                          <C>              <C>
Cash flows from operating activities:
Net loss                                                                      $(1,635,177)     $(1,695,180)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization                                                     114,816          145,204
Provision for doubtful accounts                                                    15,000           13,207
Issuance of common stock for services                                              54,000           50,000
Amortization of debt discount                                                      33,290          174,747
Changes in:
Accounts receivable                                                               (93,531)          42,249
Inventory                                                                        (205,990)        (109,439)
Prepaid expenses and other assets                                                  69,704           11,003
Accounts payable, accrued expenses and deferred grant revenue                     643,453          346,686
                                                                              ----------------------------

Net cash used in operating activities                                          (1,004,435)      (1,021,523)

Cash flows from investing activities:
Purchase of furniture and equipment                                               (35,406)         (30,224)

Net cash used in investing activities                                             (35,406)         (30,224)

Cash flows from financing activities:
Proceeds from issuance of Series G Preferred Stock                                220,000               --
Proceeds from sale of 333,333 shares of restricted common stock                    50,000               --
Proceeds from short-term credit arrangements                                     (191,396)          20,853
Net proceeds from issuance of 1,750,000 shares of common stock                         --          571,000
Proceeds from issuance of 10% notes payable                                            --          150,000
Proceeds from issuance of 18% notes payable                                            --          300,000
Proceeds from issuance of 24% notes payable                                            --          150,000
Principal repayments on short-term credit arrangements                                 --         (144,581)
Due to related party                                                              956,470               --
Principal repayments on notes payable - other                                          --         (404,655)

Net cash provided by financing activities                                       1,035,074          642,617

Increase (decrease) in cash and cash equivalents                                   (4,767)        (409,130)
Cash and cash equivalents at beginning of period                                   84,408          460,832

Cash and cash equivalents at end of period                                         79,641           51,702

Supplemental disclosures of cash flow information related to continuing
operations:
  Cash paid during the period for:
    Interest                                                                  $    16,666      $   212,769
                                                                              ============================
    Income taxes                                                              $        --      $        --
                                                                              ============================

Non-cash investing and financing activities relating to conversion of debt
to preferred stock, and forgiveness of interest indebtedness to an officer
and an employee of the Company:
  Interest payable                                                                     --           40,000
                                                                              ============================
  8% notes payable                                                                     --        1,000,000
                                                                              ============================
  Issuance of preferred stock, at par                                                  --              (10)
                                                                              ============================
  Issuance of common stock, at par                                                     --               (2)
                                                                              ============================
  Paid in surplus                                                                      --       (1,089,988)
                                                                              ============================

Purchase of marketing and distribution  agreement in exchange for senior
secured note payable due to related party:

  Marketing and distribution agreement asset                                  $125,000,000.00  $        --
                                                                              ============================

  Liability for senior secured note payable                                   $125,000,000.00  $        --
    Less:  Deferred transaction costs                                          350,010.00               --
                                                                              ----------------------------
Net senior secured note payable                                               $124,649,990.00  $        --
                                                                              ============================

Advances made by related party and disbursed on behalf of the
Company:

  Operating expenses paid by related party                                    $932,908.00      $        --

  Deferred transaction costs paid by related party                                350,010               --
                                                                              ----------------------------

  Amount due to related party                                                 $ 1,282,918      $        --
                                                                              ============================
</TABLE>

See Notes to Consolidated Financial Statements.

                                                 4

<PAGE>

NOTE A - THE COMPANY

The  following   consolidated  financial  statements  of  CNE  Group,  Inc.  and
subsidiaries  (collectively  referred to as the  "Company  or "CNE,"  unless the
context  requires  otherwise)  are  prepared  in  accordance  with the rules and
regulations  of the  Securities  and  Exchange  Commission  for Form  10-QSB and
reflect  all  adjustments   (consisting  of  normal   recurring   accruals)  and
disclosures  which,  in the  opinion of  management,  are  necessary  for a fair
statement of results for the interim  periods  presented.  It is suggested  that
these financial  statements be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-KSB for the
year ended  December 31, 2004,  which was filed with the Securities and Exchange
Commission.

The results of operations for the three months ended  September 30, 2005 are not
necessarily indicative of the results to be expected for the entire fiscal year.

Business
--------

CNE Group, Inc. is a holding company whose primary operating subsidiaries, as of
September 30, 2005, were SRC Technologies,  Inc. ("SRC"),  U.S.  Commlink,  Ltd.
("USCL") and Arrow  Resources  Development,  Ltd.  ("Arrow") SRC, also a holding
company, is the parent of Connectivity,  Inc.  ("Connectivity")  and Econo-Comm,
Inc. (d/b/a Mobile Communications) ("ECI").  Connectivity,  ECI and USCL market,
manufacture,  repair and  maintain  remote  radio and  cellular-based  emergency
response  products  to  a  variety  of  federal,   state  and  local  government
institutions,  and other  vertical  markets  throughout  the United  States.  On
November  3,  2005,  the  Company  sold SRC and USCL  pursuant  to  transactions
described in Note J - Subsequent Events.

Arrow, a development  stage  enterprise,  was incorporated in Bermuda 0n May 20,
2005.  It intends to provide  marketing  and  distribution  services  for lumber
products  pursuant to a marketing and distribution  agreement with Arrow Pacific
Resources PNG Ltd ("PNG"), an affiliate of Arrow Pacific Resources (s) Pte. Ltd.
("APR"). See Note E below.

The Company also  generates  revenue from its  subsidiary,  CareerEngine,  Inc.,
which  is  engaged  in  the  business  of  e-recruiting.  This  segment  is  not
significant to the operations of the Company.

Going Concern
-------------

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  The Company has incurred  substantial
losses,  sustained substantial operating cash outflows and has a working capital
deficit at both  September  30, 2005 and December 31,  2004.  The above  factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  The  Company's  continued  existence  depends on its ability to obtain
additional equity and/or debt financing to fund its operations and ultimately to
achieve profitable operations. There is no assurance that the Company can obtain
additional financing or achieve profitable  operations or generate positive cash
flow.  The 2005 and 2004  financial  statements  do not include any  adjustments
relating to the  recoverability  or  classification of recorded asset amounts or
the amount and classification of liabilities that might be necessary as a result
of this going concern uncertainty.


                                       5
<PAGE>


NOTE A - THE COMPANY (CONTINUED)

Private Financings
------------------

      1.    On or about April 1, 2005, two  individuals,  both of whom are adult
            children of the Company's Chief Executive Officer, purchased 545,000
            shares of the Company's Series G Preferred Stock at a price of $0.20
            per  share.  The  Series G  Preferred  Stock is non  voting,  has no
            liquidating  preference  over the  Common  Stock  and each  share is
            automatically  convertible into two shares of Common Stock when such
            conversion has been approved by the Company's Common Stockholders.

      2.    On or about  April 12,  2005,  four  individuals,  three of whom are
            adult children or related  thereto of the Company's  Chief Executive
            Officer,   purchased  500,000  shares  of  the  Company's  Series  G
            Preferred Stock at a price of $0.20 per share.

      3.    On or about April 20, 2005, an individual  purchased  100,000 shares
            of the  Company's  Series G Preferred  Stock at a price of $0.20 per
            share.

On November 3, 2005, the Company  exchanged all of its Series G Preferred  Stock
pursuant to transactions described in Note J - Subsequent Events.

American Stock Exchange Listing
-------------------------------

On August 25, 2005 the Company's  common stock was suspended from trading on the
American Stock Exchange and delisted on September 26, 2005. It now trades on the
over the counter Bulletin Board.


                                       6
<PAGE>

NOTE A - THE COMPANY (CONTINUED)

At September 30, 2005, our Stockholders'  Equity was  approximately  $4,283,508,
our current assets were $806,301,  and our current liabilities were $130,435,926
that primarily  included a note payable in the principal  amount of $125,000,000
due  from  our  subsidiary,  Arrow,  to  Empire  Advisory,  LLC.  and  notes  to
noteholders,  who  include  certain  of our  current  and former  directors.  On
November  2,  2005,  we  satisfied  Arrow's  note to  Empire by  issuing  Empire
10,000,000  shares of our Series AAA  Preferred  Stock and  satisfied  the other
notes in  exchange  for  shares of our common  stock  pursuant  to  transactions
described in Note J - Subsequent Events.

NOTE B - SIGNIFICANT ACCOUNTING POLICIES

[1]   Inventory:

      Inventory  is  stated  at the  lower  of  cost  (determined  by  first-in,
      first-out  method) or market.  The  Company's  inventory  consists  of the
      following:

                                            September 30,     December 31,
                                                 2005             2004
                                              --------         ---------

             Raw materials                    $ 390,669        $ 242,061
             Work in progress                    73,308           15,926
             Finished goods                       2,500            2,500
                                              ---------        ---------
                      Total                   $ 466,477        $ 260,487
                                              =========        =========

[2]   Fair value of financial instruments:

      For financial statement instruments,  including cash, accounts and accrued
      expenses  payable and amounts due to Empire  Advisory,  LLC.  the carrying
      amounts approximated fair value because of their short maturity.

[3]   Use of estimates:

      The  preparation  of 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  financial  statements  and the  reported
      amounts of revenues  and  expenses  during the  reporting  period.  Actual
      results could differ from those estimates.

[4]   Accounting basis:

      The Company uses the accrual basis of accounting  for financial  statement
      reporting.  Accordingly revenues are recognized when services are rendered
      and expenses realized when the obligation is incurred.

[5]   Income (loss) per share:

      Basic and diluted  earnings  (loss) per common share have been computed in
      accordance  with SFAS No. 128,  "Earnings Per Share."  Basic  earnings per
      share   ("BEPS")  is  computed  by  dividing  net  income  (loss)  by  the
      weighted-average  number of common  shares  outstanding  during  the three
      month periods ended September 30, 2005 and 2004.  Common Stock equivalents
      to purchase Common Stock of the Company that were outstanding at September
      30, 2005 and 2004 were not included in the computation of diluted net loss
      per share as their effect would have been anti-dilutive.

                                       7
<PAGE>

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[6]   Stock-based compensation:

      As permitted under SFAS No. 123,  Accounting for Stock-based  Compensation
      (SFAS No. 123), the Company has elected to continue to follow the guidance
      of APB Opinion No. 25,  Accounting  for Stock Issued to Employees (APB No.
      25), and  Financial  Accounting  Standards  Board  Interpretation  No. 44,
      Accounting  for  Certain  Transactions  Involving  Stock  Compensation--an
      interpretation  of APB Opinion No. 25 (FIN No. 44), in accounting  for its
      stock-based   employee   compensation   arrangements.    Accordingly,   no
      compensation  cost is  recognized  for any of the  Company's  fixed  stock
      options granted to employees when the exercise price of each option equals
      or exceeds the fair value of the  underlying  Common Stock as of the grant
      date for each stock option.  Changes in the terms of stock option  grants,
      such as extensions of the vesting period or changes in the exercise price,
      result in  variable  accounting  in  accordance  with APB  Opinion No. 25.
      Accordingly,  compensation  expense is measured in accordance with APB No.
      25 and recognized over the vesting period.  If the modified grant is fully
      vested, any additional compensation costs is recognized  immediately.  The
      Company  accounts  for  equity  instruments  issued  to  non-employees  in
      accordance with the provisions of SFAS No. 123.

      At September 30, 2005 and December 31, 2004, the Company had a stock-based
      employee compensation plan - the 2003 Plan.

      As   permitted   under   SFAS  No.   148,   Accounting   for   Stock-Based
      Compensation--Transition  and Disclosure,  which amended SFAS No. 123, the
      Company has elected to continue to follow the  intrinsic  value  method in
      accounting  for its  stock-based  employee  compensation  arrangements  as
      defined by APB No. 25 and related  interpretations  including  FIN No. 44.
      The following table  illustrates the effect on net loss and loss per share
      if the Company had applied the fair value  recognition  provisions of SFAS
      No. 123 to stock-based employee compensation for options granted under its
      plan.

<TABLE>
<CAPTION>
                                                      Nine Month Period Ended
                                                           September 30,
                                                    --------------------------
                                                        2005           2004
                                                    -----------    -----------

<S>                                                <C>             <C>
 Net loss, as reported                              $(1,635,177)   $(1,695,180)
                                                    -----------    -----------
 Less, Total stock-based employee compensation
 expense determined under fair value-based method
 for all awards, net of related tax effects                  --       (246,430)
                                                    -----------    -----------

 Pro forma net loss                                 $(1,635,177)   $(1,941,610)
                                                    ===========    ===========

 Net loss per share - basic and diluted:
      As reported                                   $     (0.15)   $     (0.16)
                                                    ===========    ===========
      Pro forma                                     $     (0.15)   $     (0.18)
                                                    ===========    ===========
</TABLE>

      On May 10, 2005, pursuant to a litigation Settlement Agreement the Company
      tendered an aggregate of 850,000  shares of the Company's  Common Stock to
      three  former  officers  and  directors  in exchange  for all of their (i)
      incentive stock


                                       8
<PAGE>

NOTE B - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      options  (1,550,000),  (ii) Series AA Preferred Stock  (1,000,000),  (iii)
      Series A Preferred Stock (305,336) and related Class A Warrants (305,336),
      and (iv) Series C Preferred Stock (4,867,937) and related Class C Warrants
      (4,867,937).  On or about July 9, 2005,  they delivered  those  securities
      required to be delivered by the settlement  agreement to the Company.  The
      Company subsequently retired these securities.

[7]   Recent accounting pronouncements:

      In May  2003,  the  FASB  issued  SFAS No.  150,  Accounting  for  Certain
      Financial Instruments with Characteristics of Both Liabilities and Equity.
      SFAS No.  150  establishes  standards  for how an  issuer  classifies  and
      measures  certain  financial  instruments  with  characteristics  of  both
      liabilities  and equity.  It requires that an issuer  classify a financial
      instrument  that is within its scope as a  liability  (or an asset in some
      circumstances).  Many of those  instruments were previously  classified as
      equity.  SFAS No. 150 is effective for financial  instruments entered into
      or modified after May 31, 2003. The Company  adopted this standard  during
      2003 and the adoption did not have an impact on the Company's consolidated
      financial  statements in 2004 or 2003.During  December 2004, the Financial
      Accounting  Standards  Board  ("FASB")  issued SFAS No. 153,  Exchanges of
      Nonmonetary  Assets -- An Amendment of APB Opinion No. 29. APB Opinion No.
      29,  Accounting  for  Nonmonetary  Transactions  ("APB 29")  required that
      nonmonetary  exchanges be accounted for at fair value,  subject to certain
      exceptions.  SFAS 153 has removed the exception for nonmonetary  exchanges
      of similar  productive  assets,  and  replaced  it with an  exception  for
      exchanges that lack commercial  substance.  The provisions of SFAS 153 are
      effective  prospectively  for all  nonmonetary  asset  exchanges in fiscal
      periods  beginning  after June 15, 2004. The adoption of this standard did
      not have an impact on the Company's  consolidated  financial statements in
      2005 and 2004.

      During December 2004, FASB issued SFAS No. 123 (Revised 2004), Share-Based
      Payment  ("SFAS  123R").  SFAS 123R replaces SFAS No. 123,  Accounting for
      Stock-Based  Compensation  (SFAS 123),  and supersedes APB Opinion No. 25,
      Accounting for Stock Issued to Employees.  SFAS 123R requires companies to
      recognize the compensation cost related to share-based


                                       9
<PAGE>


NOTE B - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      payment  transactions  with  employees in the  financial  statements.  The
      compensation  cost is measured based upon the fair value of the instrument
      issued.  Share-based  compensation  transactions  with  employees  covered
      within  SFAS  123R  include  share   options,   restricted   share  plans,
      performance-based  awards,  share appreciation  rights, and employee share
      purchase plans. SFAS 123 included a fair-value-based  method of accounting
      for share-based payment transactions with employees, but allowed companies
      to continue to apply the guidance in APB 25 provided that they disclose in
      the footnotes to the financial  statements the pro forma net income if the
      fair-value-based  method been applied.  The Company is currently reporting
      share-based payment  transactions with employees in accordance with APB 25
      and provides the required disclosures. SFAS 123R will be effective for the
      Company beginning January 1, 2006.

      In implementing SFAS 123R the Company will apply the modified  prospective
      application  transition  method.  The  modified  prospective   application
      transition method requires the application of this standard to:

            o     All new awards issued after the effective date;
            o     All  modifications,  repurchased or  cancellations of existing
                  awards after the effective date; and
            o     Unvested awards at the effective date.

      For  unvested  awards,  the  compensation  cost  related to the  remaining
      "requisite  service' that has not been rendered at the effective date will
      be determined by the  compensation  cost  calculated  currently for either
      recognition or pro forma  disclosures  under SFAS 123. The Company will be
      adopting the modified prospective application of SFAS 123R.

NOTE C - RESTRUCTURING OF CERTAIN NOTES PAYABLE

As of September 30, 2005, the Company's (i) 10% Subordinated  Notes amounting to
$1,000,000,  (ii) 18% Promissory  Note amounting to $300,000,  (iii) 10% Secured
Note  amounting to $150,000,  and (iv) 24% Secured Notes  amounting to $150,000,
were all due and payable.  Unpaid interest  relating to these notes amounting to
approximately  $220,000  was also due and  payable.  On  November  2,  2005,  we
satisfied  these notes in exchange  for shares of our common  stock  pursuant to
transactions described in Note J - Subsequent Events.

NOTE D - LITIGATION

The Company is a party to various  vendor  related  litigations.  Management has
accrued a liability of approximately  $100,000 and, accordingly,  this liability
has been reflected in accounts payable and accrued expenses.

NOTE E - AGREEMENT AND PLAN OF MERGER BETWEEN ARROW RESOURCES DEVELOPMENT,  LTD.
AND CNE GROUP, INC.

On  August  1,  2005,  the  Company  entered  into  an  agreement  (the  "Merger
Agreement")  with PNG and Arrow,  pursuant  to which,  among other  things,  the
Company  would  merge  with  Arrow and  issue  non-voting  shares of Series  AAA
Preferred Stock to PNG. This stock would automatically convert into an aggregate
of 624 million  shares of the Company's  Common Stock,  which would equal 96% of
the Company's outstanding shares of Common Stock when the Company's stockholders
approved the  conversion and an increase in the number of shares of Common Stock
the Company is authorized to issue so that the conversion could be effected.

                                       10
<PAGE>

Arrow had initially been formed by the Company in anticipation of issuing 97% of
its  stock  to PNG  in  consideration  for  the  execution  of a  marketing  and
distribution agreement (the "Marketing Agreement") between Arrow and PNG and its
affiliated  companies,  and  distributing the 3% balance of Arrow's stock to the
Company's stockholders.  Pursuant to the Marketing Agreement,  the term of which
would  extend  through  July 31,  2103,  PNG  would  retain  Arrow to act as the
exclusive  worldwide  marketer  and  distributor  for  all  of  its  timber  and
derivative products. It would provide for Arrow to retain 10% of the gross sales
generated by all  plantation  operations  from all resources and all  derivative
products, such as paper, pulp and chips.

On or about July 12, 2005, the Company began discussions with representatives of
PNG and APR,  the parent of PNG,  to modify the  transaction  with PNG,  APR and
their  affiliates  so that Arrow would merge  directly  into the Company.  These
discussions led to the execution of the Merger Agreement.

On August 1, 2005,  Arrow entered into the Marketing  Agreement with APR and its
subsidiaries in consideration for Arrow issuing a non-interest bearing note (the
"Note")  in the  principal  amount  of  $125,000,000  to Empire  Advisory,  LLC,
("Empire"), due on or before December 31, 2005. Empire is APR's merchant banker.
The Note permitted the Company,  as Arrow's sole stockholder,  to cause Arrow to
repay it in cash or with 10,000,000  shares of the Company's  non-voting  Series
AAA Preferred Stock.

After the Merger  Agreement  was executed the parties  determined  to change the
form but not the substance of the  transaction.  Rather than merging the Company
and Arrow,  the  parties  agreed  that,  subject  to the  Company  receiving  an
independent   valuation  of  the  Marketing   Agreement  and  audited  financial
statements  of Arrow  acceptable  to it, the  Company,  instead of merging  with
Arrow,  would satisfy the Note by issuing to Empire 10 million shares of voting,
instead of  non-voting,  Series AAA  Preferred  Stock.  Each share of this stock
would grant the holder  thereof the right to cast 62.4  votes,  which,  together
with all  other  shares of Series  AAA  Preferred  Stock,  would  constitute  an
aggregate  of 96% of all  votes on all  matters  brought  before  the  Company's
stockholders  for a vote.  The Company  received the valuation and the financial
statements  and, on November 2, 2005,  satisfied  Arrow's  $125,000,000  note to
Empire by issuing Empire 10 million shares of Series AAA Preferred Stock.

NOTE F - DEFERRED TRANSACTION COSTS

Arrow  has  incurred  certain   transactional   costs  in  connection  with  the
transaction  noted above in Note E. As of September 30, 2005, Arrow had totaling
$350,010 of deferred  transaction costs. These costs include legal fees incurred
by both Arrow and the Company in  contemplation  of the planned  transaction and
other  offering  costs  incurred to Empire.  As of  September  30,  2005,  these
deferred  transaction  costs have been offset  against the  transitional  senior
notes  payable by Arrow to Empire,  since these costs will be deducted  from the
proceeds  received  from  the  issuance  of  convertible  preferred  stock  upon
successful consummation of the transaction described in Note E.

NOTE G - MARKETING AND DISTRIBUTION  AGREEMENT AND RELATED  TRANSACTIONAL SENIOR
NOTE PAYABLE DUE TO EMPIRE ADVISORY, LLC

                                       11
<PAGE>

As already  discussed in August 2005,  Arrow  executed the Marketing  Agreement.
This  Agreement was valued at fair value as determined  based on an  independent
appraisal,  which approximates the market value of 96% of the CNE's public stock
to be issued in the transaction.

The  Marketing  Agreement  will be  amortized  over 99  years  (the  life of the
Agreement)  once Arrow  commences  operations.  As of September  30,  2005,  the
Company  had  recorded  a  $125,000,000  amortizable  intangible  asset for this
agreement and a  corresponding  credit to the  liability for the senior  secured
note  payable to Empire in the same amount  (see Note E) pending  success of the
transaction.  No  amortization of the agreement was taken during the period from
Arrow's  inception  (May 20,  2005)  to  September  30,  2005,  as the  relevant
operations had not yet  commenced.  Operations are expected to commence no later
than the first quarter of 2006.

The senior secured note payable is  non-interest  bearing and could be repaid in
cash or in the form of the  Preferred  Stock  (See  Note  E).  It was due on the
earlier of December 31, 2005 without  further  notice or on events of default as
defined therein.  The senior secured note payable and any Preferred Stock issued
there under are considered  restricted as to the sale thereof under SEC Rule 144
as unregistered  securities.  As noted above, the note was repaid by CNE issuing
10 million shares of its Series AAA Preferred Stock to Empire.

NOTE H - RELATED PARTY TRANSACTIONS

[1]   Management Agreement with Empire Advisory, LLC

      Effective August 1, 2005,  Arrow entered into a Management  Agreement with
      Empire  under  which  Empire   provides   chief   executive   officer  and
      administrative  services  to Arrow in  exchange  for a) an  annual  fee of
      $300,000  for  overhead  expenses,   b)$25,000  per  month  for  rent,  c)
      $1,000,000  per annum  (subject  to  increases  in  subsequent  years) for
      executive services, and d) a one-time fee of $150,000 for execution of the
      proposed transaction.

      As of September 30, 2005,  Arrow had  short-term  borrowings of $1,282,918
      due to Empire, consisting of working capital raised by Empire on behalf of
      Arrow. These amounts are non-interest bearing and due on demand.

      Peter  Frugone is a member of Arrow's  Board of Directors and is the owner
      of Empire.  It is anticipated that on November 22, 2005 he will become the
      Company's Chief  Executive  Officer and a member of the Company's Board of
      Directors.

      "Consulting  fees and services"  charged in the  "Statement of Operations"
      for the  period  from  inception  (May 20,  2005) to  September  30,  2005
      incurred to Empire totaled $641,666.

[2]   Engagement  and  Management   Agreements  entered  into  with  individuals
      affiliated with APR.

      "Consulting  fees and services"  charged in the  "Statement of Operations"
      for the period from Arrow's inception (May 20, 2005) to September 30, 2005
      incurred to Hans Karundeng and Rudolph  Karundeng  under  "Engagement  and
      Management  Agreements" totaled $532,877. In addition, as of September 30,
      2005 Arrow owed them a total of $452,876.  These  agreements are discussed
      in detail in Note I.

NOTE I - COMMITMENTS AND OTHER MATTERS

                                       12
<PAGE>

[1]   Engagement  and  Management   Agreements  entered  into  with  individuals
      affiliated with APR.

      Effective as of May 20, 2005,  Arrow entered into an Engagement  Agreement
      with Hans  Karundeng  for business and financial  consulting  services for
      fees of  $1,000,000  per annum.  The term of the  agreement is five years.
      Hans Karundeng is also a 43% owner of APR.

      Effective as of August 1, 2005, Arrow entered into an Employment Agreement
      with Rudolph  Karundeng for his services as Chairman of the Board of Arrow
      for fees of $1,000,000 per annum. The term of the agreement is five years.
      Rudolph  Karundeng is a son of Hans Karundeng.  It is anticipated  that on
      November  22, 2005 he will the  Company's  Chief  Operating  Officer and a
      member of the Company's Board of Directors

[2]   Management Agreement with Empire Advisory, LLC

      See Note H above.

-CONSULTING AGREEMENT

      On May 11, 2005 the Company  entered into a consulting  Agreement  with an
      individual  that included the issuance of 300,000 shares of its restricted
      Common Stock and  three-year  warrants to purchase an aggregate of 250,000
      shares  at  $0.46  per  share,   subject  to   appropriate   anti-dilution
      provisions.  The individual has since returned the warrants to the Company
      and they have been cancelled.

[3] 5 Year Table of obligations under [1] and [2] above:

      The minimum  future  obligations  for  consulting  fees and services under
      agreements outlined in [1] and [2] are as follows:

         Years Ending
         September 30,                              Amounts
         -------------                              -------

             2006                                $ 3,041,667
             2007                                  3,302,083
             2008                                  3,627,604
             2009                                  4,034,505
             2010                                  3,506,755
                                                 -----------

                                                 $17,512,614
                                                 ===========

The Company also  engages  certain  consultants  to provide  services  including
management of the corporate citizenship program and investor relations services.
These agreements contain  cancellation  clauses with notice with periods ranging
from zero to sixty days.

NOTE J - SUBSEQUENT EVENTS

Background of the Transaction and Change in Control

                                       13
<PAGE>

         On  November  2, 2005,  we issued  10,000,000  shares of our Series AAA
Preferred  Stock to Empire in payment  for the note in the  principal  amount of
$125,000,000 issued by Arrow. In connection therewith,  Empire has agreed to pay
certain  of our  expenses,  including  expenses  relating  to this  transaction,
aggregating approximately $350,000, of which approximately $70,000 has been paid
as of November 2, 2005,  and the balance  will be paid on or about  November 22,
2005.  George W. Benoit,  our Chief Executive  Officer,  will be paid $60,000 of
this amount. Also on November 22, 2005, our current directors plan to resign and
appoint designees of the Preferred Stockholders to be the Company's directors.

Subsequent to September 30, 2005, we:

      (i)   exchanged  all of our 1,392,630  shares of Series A Preferred  Stock
            for our common stock at the rate of one share of Preferred Stock for
            one share of common  stock and  thereafter  retired  this  Preferred
            Stock;
      (ii)  purchased all of our 4,400 shares of Series B Preferred Stock for an
            aggregate  price of $20,000 and  thereafter  retired this  Preferred
            Stock;
      (iii) exchanged all of our 1,145,000  Series G Preferred Stock at the rate
            of one share of  Preferred  Stock for two shares of common stock and
            thereafter retired this Preferred Stock;
      (iv)  exchanged  all of our  outstanding  debt,  exclusive  of accrued but
            unpaid salaries,  directors' and professional fees and expenses, and
            exclusive of the debt cancelled pursuant to a transaction  described
            below relating to the sale of one of SRC, in the aggregate amount of
            approximately  $1,370,000  for an aggregate  of 2,837,533  shares of
            common stock;
      (v)   issued 373,277 shares of common stock to independent contractors for
            services  they  rendered  to us;
      (vi)  except for the warrants and options  referred to in the  transaction
            relating  to  the  sale  of  our  subsidiary,  exchanged  all of our
            warrants and options for an aggregate of 6,275,772  shares of common
            stock; and
      (vii) executed  mutual  general  releases  with  certain of our  creditors
            including,  among others,  our officers and  directors,  pursuant to
            which  all  of our  accrued  but  unpaid  salaries,  directors'  and
            professional   fees  and  expenses  in  the   aggregate   amount  of
            approximately $1,350,000 were released.

      Subsequent to September  30, 2005,  we obtained  releases from our current
directors and a former director,  pursuant to which, for nominal  consideration,
they have each released us from our obligation to pay him any accrued but unpaid
compensation,  directors fees and/or  advances,  as the case may be, that we may
owe him. We have also  released  them from all actions we may have  against them
except for those  prohibited by applicable law. The following table sets for the
amounts that they have released:

Name                                    Amount Released
----                                    ---------------
Joseph G. Anastasi                      $        30,000
George W. Benoit                        $     1,307,050
Anthony S. Conigliaro                   $       223,333
Charles W. Currie                       $        28,000
David W. Dube                           $        35,000

      Subsequent  to September 30, 2005,  we also entered into  agreements  with
Messrs. Anastasi, Benoit,  Conigliaro,  Currie and Dube, members of Mr. Benoit's
family, and Grace C. Lindblom and Frank Ciolli, each a beneficial owner of more

                                       14
<PAGE>

than 10% of our outstanding common stock at the time of the agreements, pursuant
to which we issued them our common stock in exchange for debt owed by us, Series
G Preferred Stock and/or options or warrants,  each to purchase one share of our
common  stock at various  prices.  We were paid $0.20 per share for the Series G
Preferred Stock. The following table sets forth certain information  relating to
these transactions:

<TABLE>
<CAPTION>

Name                                    Consideration Exchanged             Number of Shares Issued
----                                    ------------------------            -----------------------
<S>                                 <C>                                                    <C>
Joseph G. Anastasi                  25,000 options and $26,667 debt                         116,894

George W. Benoit (1)(2)(4)                  600,000  options                                479,887
Maureen Benoit (1)               3,007,903 options and $515,000 debt                      2,656,326

George W. Benoit, Jr. (2)          49,600 shares of preferred stock                         496,000

Kevin J. Benoit (2)(3)             59,400 shares of preferred stock,

                                    514,277 options and $56,667 debt                        712,750
Frank Ciolli (3)                   1,542,833 options and $181,625 debt                      377,324
Anthony S. Conigliaro                   1,314,277 warrants and
                                        options and $56,667 debt                          1,857,538
Charles W. Currie                   25,000 options and $26,667 debt                         112,639
David W. Dube                               100,000 options                                  72,117
Grace C. Lindblom (3)             2,081,550 options and $250,000 debt                       545,167
Anne B. Mullen (2)                  22,913 shares of preferred stock                        228,930
Michael Mullen (4)                  8,000 shares of preferred stock                          80,000
Nancy C. Zucco (2)                  43,003 shares of preferred stock                        430,230

</TABLE>

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


(1) Maureen Benoit is George W. Benoit's wife.
(2) This person is an adult childof George W. Benoit.
(3) This  person was a holder of 10% or more of our common  stock at the time of
    the agreement.
(4) Mr. Mullen is George W. Benoit's son-in-law.

      We issued all of our common stock in the transactions  referred to in this
Note  pursuant  to  the  exemptions  from  the  registration  provisions  of the
securities Act of 1933 provided by Sections 3(a)(9) and 4(2) thereof.

On November 3, 2005, we entered into an agreement  with Gary L..  Eichsteadt,  a
former director,  Thomas L. Sullivan,  a former executive officer,  and David B.
Batzer  pursuant  to which we sold SRC and  SRC-ECI,  Inc.,  SRC's  wholly-owned
subsidiary, and a patent associated with these businesses, to Messrs. Eichsteadt
and Sullivan in  consideration  for the  cancellation  of debt in the  aggregate
amount of $50,000 we owed to Messrs.  Eichsteadt and Sullivan,  the cancellation
of debt in the  aggregate  amount  of  approximately  $150,000  SRC  owed to Mr.
Eichstead,  the  cancellation of debt in the aggregate  amount of  approximately
$300,000 SRC owed to Mr. Batzer, and the return to us by Messrs.  Eichsteadt and
Sullivan of an aggregate of  1,000,000  shares of our Series AA Preferred  Stock
and 4,867,938  shares of our Series C Preferred  Stock and the return by Messrs.
Eichsteadt,  Sullivan  and  Batcher of  options  and  warrants  to  purchase  an
aggregate of 486,000  shares of our common stock.  We have since retired  and/or
canceled all of the  securities  returned to us pursuant to this  agreement.  As
part of this  transaction  Mr.  Eichsteadt  resigned  as a  director.  All inter
company debt was eliminated prior to closing.

                                       15


On November 3, 2005,  we entered  into an  agreement  with USCL and Thomas Leyen
pursuant to which all inter company debt was eliminated prior to closing, and we
transferred  USCL and two patents related to that business to Mr. Leyen and will
pay certain of USCL's  obligations in the aggregate amount not to exceed $86,000
in  consideration  for Mr.  Leyen  canceling  Options  currently  held by him to
purchase an aggregate of 300,000 shares of Common Stock.

                                       16
<PAGE>

Item 2.     Management's  Discussion  and  Analysis  of  Financial Condition and
            Results of Operations.

            General
            -------

            We are a holding company whose primary operating subsidiaries, as of
            September  30,  2005,  were SRC,  US  Commlink  and Arrow  Resources
            Development,  Ltd.  SRC,  also a holding  company,  is the parent of
            Connectivity  and  ECI.  On  November  3,  2005,  we sold SRC and US
            Commlink. Arrow remains our primary operating subsidiary

            On August 1, 2005,  Arrow entered into a marketing and  distribution
            agreement (the "Marketing  Agreement") with Arrow Pacific  Resources
            PNG Ltd.  ("PNG"),  an affiliate of Arrow Pacific Resources (S) Pte.
            Ltd ("APR").  APR and PNG have represented to us that they and their
            affiliated  companies have  initiated the commercial  development of
            timber resources and a eucalyptus plantation operation in Papua, New
            Guinea.  Pursuant to the Marketing  Agreement  Arrow will act as the
            exclusive worldwide marketer and distributor for all of APR's timber
            and derivative products.  This Agreement terminates on July 31, 2103
            unless sooner  terminated  or renewed in accordance  with its terms.
            APR has been  granted  a license  by the  government  of Papua,  New
            Guinea for the  development  of  plantation  operations on more than
            100,000  hectares of land and has entered  into land leases with the
            owners  of this  property.  The  license  terminates  in  2098.  The
            Marketing  Agreement  provides  for Arrow to retain 10% of the gross
            sales generated by all plantation  operations from all resources and
            all derivative products, such as paper, pulp and chips.

            In addition,  we engage in the business of e-recruiting  through our
            subsidiary,  CareerEngine,  Inc. The e-recruiting  business does not
            generate a significant  part of our revenue,  and is not significant
            to our operations.

            Critical Accounting Policies and Estimates
            ------------------------------------------

            The  preparation  of financial  statements in  accordance  with U.S.
            generally  accepted  accounting   principles  requires  us  to  make
            estimates and assumptions that affect the reported amounts of assets
            and  liabilities  at the date of the  financial  statements  and the
            reported  amounts of net revenue and expenses  during the  reporting
            period.  On an ongoing basis,  we evaluate our estimates,  including
            those  related to our  allowance  for doubtful  accounts,  inventory
            reserves,  goodwill and purchased  intangible asset valuations,  and
            asset  impairments.  We base our estimates on historical  experience
            and on various  other  assumptions  that we believe to be reasonable
            under the  circumstances,  the  results  of which form the basis for
            making   judgments   about  the   carrying   values  of  assets  and
            liabilities.  Actual results may differ from these  estimates  under
            different assumptions or conditions.

                                       17
<PAGE>

            We believe the following critical accounting policies, among others,
            affect  the  significant  judgments  and  estimates  we  use  in the
            preparation of our consolidated financial statements:

            Allowance for Doubtful Accounts, Revenue Recognition
            ----------------------------------------------------

            We evaluate the collectibility of our accounts receivable based on a
            combination  of factors.  In  circumstances  where we are aware of a
            specific customer's  inability to meet its financial  obligations to
            us, we record a specific  allowance to reduce the net  receivable to
            the amount we reasonably  believe will be  collected.  For all other
            customers,  we record  allowances for doubtful accounts based on the
            length of time the receivables are past due, the prevailing business
            environment  and  our  historical   experience.   If  the  financial
            condition  of our  customers  were  to  deteriorate  or if  economic
            conditions were to worsen,  additional allowances may be required in
            the future.

            We  recognize  product  revenue  when  persuasive   evidence  of  an
            arrangement  exists,  the  sales  price is  fixed,  the  service  is
            performed or products are shipped to customers,  which is when title
            and risk of loss transfers to the customers,  and  collectibility is
            reasonably assured.

            At  September  30, 2005,  our  allowance  for doubtful  accounts was
            $66,000  for 20.8 % of gross  receivables,  compared  to  $51,000 or
            22.9% of gross  receivables as of December 31, 2004. The decrease in
            the reserve as a percentage  of gross  receivables  at September 30,
            2005 as  compared to December  31,  2004 is  primarily  the result a
            decreased  requirement  for an allowance  for  doubtful  accounts at
            September 30, 2005 than at December 31, 2004.

            Inventory Valuation
            -------------------

            At each balance sheet date, we evaluate our ending  inventories  for
            excess  quantities  and  obsolescence.   This  evaluation   includes
            analyses  of sales  levels  by  product  and  projections  of future
            demand.  If inventories on hand are in excess of forecasted  demand,
            we provide  appropriate  reserves for such excess  inventory.  If we
            have previously  recorded the value of such inventory  determined to
            be in excess of projected  demand, or if we determine that inventory
            is  obsolete,  we write  off these  inventories  in the  period  the
            determination is made.  Remaining inventory balances are adjusted to
            approximate  the lower of our cost or market value. If future demand
            or  market   conditions   are  less  favorable  than  our  projects,
            additional  inventory  write-downs  may be  required,  and  would be
            reflected in cost of revenues in the period the revision is made.

            Valuation of Goodwill.  Purchased  Intangible  Assets and Long-Lived
            --------------------------------------------------------------------
            Assets
            ------

                                       18
<PAGE>

            We perform  goodwill  impairment  tests on an annual basis and on an
            interim basis if an event or circumstance  indicates that it is more
            likely  than  not  that  impairment  has  occurred.  We  assess  the
            impairment of other  amortizable  intangible  assets and  long-lived
            assets whenever events or changes in circumstances indicate that the
            carrying value may not be recoverable. Factors we consider important
            that  could  trigger  an  impairment   review  include   significant
            underperformance  to  historical  or  projected  operating  results,
            substantial   changes  in  our  business  strategy  and  significant
            negative  industry  or  economic  trends.  If  such  indicators  are
            present,  we  evaluate  the fair  value of the  goodwill.  For other
            intangible assets and long-lived assets we determine whether the sum
            of the estimated  undiscounted cash flows attributable to the assets
            in question is less than their caring  value.  If less, we recognize
            an impairment loss based on the excess of the carrying amount of the
            assets over their respective fair values.  Fair value of goodwill is
            determined   by   using  a   valuation   model   based   on   market
            capitalization. Fair value of other intangible assets and long-lived
            assets is  determined  by future  cash  flows,  appraisals  or other
            methods.  If the long-lived asset determined to be impaired is to be
            held and used, we recognize an  impairment  charge to the extent the
            anticipated  net cash flows  attributable to the asset are less than
            the asset's  carrying value.  The fair value of the long-lived asset
            then becomes the asset's new  carrying  value,  which we  depreciate
            over the remaining estimated useful life of the asset.

            Recent Accounting Pronouncements
            --------------------------------

            In May 2003,  the FASB issued SFAS No. 150,  Accounting  for Certain
            Financial  Instruments with  Characteristics of Both Liabilities and
            Equity.  SFAS  No.  150  establishes  standards  for  how an  issuer
            classifies  and  measures   certain   financial   instruments   with
            characteristics  of both liabilities and equity. It requires that an
            issuer classify a financial instrument that is within its scope as a
            liability  (or an  asset  in  some  circumstances).  Many  of  those
            instruments  were previously  classified as equity.  SFAS No. 150 is
            effective for financial  instruments  entered into or modified after
            May 31, 2003. We adopted this standard  during 2003 and the adoption
            did not have an impact on our consolidated  financial  statements in
            2005 or 2004.

            During  December  2004,  the Financial  Accounting  Standards  Board
            ("FASB") issued SFAS No. 153,  Exchanges of Nonmonetary Assets -- An
            Amendment of APB Opinion No. 29. APB Opinion No. 29,  Accounting for
            Nonmonetary   Transactions  ("APB  29")  required  that  nonmonetary
            exchanges  be  accounted  for at  fair  value,  subject  to  certain
            exceptions.  SFAS 153 has  removed  the  exception  for  nonmonetary
            exchanges  of similar  productive  assets,  and  replaced it with an
            exception  for  exchanges  that  lack  commercial   substance.   The
            provisions  of  SFAS  153  are  effective   prospectively   for  all
            nonmonetary  asset exchanges in fiscal periods  beginning after June
            15, 2004.  The  adoption of this  standard did not have an impact on
            our consolidated financial statements in 2005 or 2004.

                                       19
<PAGE>

            During  December  2004,  FASB  issued SFAS No. 123  (Revised  2004),
            Share-Based  Payment ("SFAS 123R"). SFAS 123R replaces SFAS No. 123,
            Accounting for Stock-Based  Compensation  (SFAS 123), and supersedes
            APB Opinion No. 25,  Accounting for Stock Issued to Employees.  SFAS
            123R requires  companies to recognize the compensation  cost related
            to share-based payment  transactions with employees in the financial
            statements.  The  compensation  cost is measured based upon the fair
            value   of   the   instrument   issued.   Share-based   compensation
            transactions  with employees  covered within SFAS 123R include share
            options,  restricted share plans,  performance-based  awards,  share
            appreciation  rights,  and employee share purchase  plans.  SFAS 123
            included a  fair-value-based  method of accounting  for  share-based
            payment  transactions  with  employees,  but  allowed  companies  to
            continue to apply the guidance in APB 25 provided that they disclose
            in the  footnotes  to the  financial  statements  the pro  forma net
            income if the fair-value-based method been applied. We are currently
            reporting   share-based  payment   transactions  with  employees  in
            accordance with APB 25 and provides the required  disclosures.  SFAS
            123R will be effective for us beginning January 1, 2006.

            In  implementing  SFAS 123R we will apply the  modified  prospective
            application transition method. The modified prospective  application
            transition method requires the application of this standard to:

                  o     All new awards issued after the effective date;
                  o     All  modifications,   repurchased  or  cancellations  of
                        existing awards after the effective date; and
                  o     Unvested awards at the effective date.

            For unvested awards,  the compensation cost related to the remaining
            "requisite service' that has not been rendered at the effective date
            will be determined by the compensation cost calculated currently for
            either  recognition or pro forma disclosures under SFAS 123. We will
            be adopting the modified prospective application of SFAS 123R.

      A.    Results of Operations:
            ---------------------

            Three-Month   Period  Ended  September  30,  2005  Compared  to  the
            --------------------------------------------------------------------
            Three-Month Period Ended September 30, 2004
            -------------------------------------------

            Revenues

            Total  revenues  were  $471,705  for the  three-month  period  ended
            September  30, 2005  decreased  from  $642,995  for the  three-month
            period ended  September 30, 2004  primarily due to a decrease of the
            contracts awarded to Connectivity, ECI and Commlink.

                                       20
<PAGE>

            Product  sales  income  decreased  to $288,628  for the  three-month
            period ended  September 30, 2005 from  $385,711 for the  three-month
            period ended  September 30, 2004 primarily due to a reduction of the
            contracts awarded to Connectivity, ECI and Commlink.

            Service fee income decreased to $170,327 for the three-month  period
            ended  September 30, 2005 from $215,364 for the  three-month  period
            ended  September  30,  2004  primarily  due  to a  reduction  of the
            contracts awarded to Connectivity, ECI and Commlink.

            Internet  related  income  decreased to $12,750 for the  three-month
            period ended  September  30, 2005 from  $41,920 for the  three-month
            period ended September 30, 2004 as the operations of our subsidiary,
            Career Engine, Inc., have continued to decline due to our relatively
            small size in the e-recruiting industry.

            Cost of Goods Sold

            Costs of goods  sold,  which  relates to product  sales and  related
            service fee income  decreased to $72,298 for the three-month  period
            ended  September 30, 2005 from $300,574 for the  three-month  period
            ended September 30, 2004 due to the related decrease in revenues.

            Other Expenses

            Total other  expenses  increased to $1,767,738  for the  three-month
            period ended  September 30, 2005 from  $677,497 for the  three-month
            period ended on September  30, 2004 due primarily to the activity of
            our subsidiary, Arrow, a development stage company.

            Advertising expenses increased to $19,257 for the three-month period
            ended  September  30,  2005 from $5,909 for the  three-month  period
            ended September 30, 2004.

            Compensation   and  related  costs  decreased  to  $65,340  for  the
            three-month  period  ended  September  30, 2005 from $207,32 for the
            three-month  period ended September 30, 2004. We instituted  certain
            payroll reduction initiatives, primarily, the third quarter of 2004,
            including the reduction of our executive  personnel and the reversal
            of previous accrued salaries.

            General and administrative  expenses increased to $1,759,692 for the
            three-month  period ended  September  30, 2005 from $322,507 for the
            three-month  period ended  September 30, 2004 due to the activity of
            our subsidiary, Arrow.

            Product  development  expenses  decreased to nil for the three-month
            period ended  September  30, 2005 from  $92,904 for the  three-month
            period  ended  September  30, 2004 due to the  cessation  of certain
            initiatives  commenced by Commlink and SRC and its  subsidiaries  to
            develop products to meet our customers' future requirements.

                                       21
<PAGE>

            Depreciation and amortization  expenses decreased to $17,269 for the
            three-month  period  ended  September  30, 2005 from $48,857 for the
            three-month period ended September 30, 2004

            Other Items

            Amortization  of debt discount  decreased to nil for the three-month
            period ended  September  30, 2005 from  $24,963 for the  three-month
            period  ended  September  30,  2004 as the debt  discount  was fully
            amortized  at April  30,  2005.  There  was no  amortization  in the
            three-month period September 30, 2005 as compared to the three-month
            period ended September 30, 2004.

            Interest  expense  decreased  to $9,444 for the  three-month  period
            ended  September 30, 2005 from $110,751 for the  three-month  period
            ended  September 30, 2004 due primarily to a decrease in the use, by
            SRC and its subsidiaries,  of accounts receivable financing commonly
            referred to as factoring.  Factoring,  when utilized,  has an annual
            interest rate in excess of 36%.

            Operating Loss

            On a  pre-tax  basis,  we had a net  loss  before  income  taxes  of
            $1,377,501  for the  three-month  period  ended  September  30, 2005
            compared  with a net loss before  income  taxes of $470,514  for the
            three-month period ended September 30, 2004.

            Our net loss for the three-month period ended September 30, 2005 was
            $1,377,501  compared with a net loss of $470,514 for the three-month
            period ended  September 30, 2004. For the  three-month  period ended
            September 30, 2005,  net loss per common  share,  basic and diluted,
            was $0.12 per share. For the three-month  period ended September 30,
            2004,  net loss per common share,  basic and diluted,  was $0.04 per
            share.

            Nine-Month   Period  Ended   September  30,  2005  Compared  to  the
            --------------------------------------------------------------------
            Nine-Month Period Ended September 30, 2004
            ------------------------------------------

            Revenues

            Total revenues  decreased to $1,402,033  for the  nine-month  period
            ended  September 30, 2005 from $2,176,205 for the month period ended
            September 30, 2004  primarily due to a decrease in the dollar amount
            of the contracts awarded to Connectivity, ECI and Commlink.

            Product sales income decreased to $801,589 for the nine-month period
            ended September 30, 2005 from  $1,279,111 for the nine-month  period
            ended  September 30, 2004  primarily due to a decrease in the dollar
            amount of the contracts awarded to Connectivity, ECI and Commlink.

                                       22
<PAGE>

            Service fee income  decreased to $522,741 for the nine-month  period
            ended  September  30, 2005 from $798,017 for the  nine-month  period
            ended  September 30, 2004  primarily due to a decrease in the dollar
            amount of the contracts awarded to Connectivity, ECI and Commlink I.

            Internet  related  income  decreased  to $77,703 for the  nine-month
            period  ended  September  30, 2005 from $99,127 for the month period
            ended  September  30,  2004  as the  operations  of our  subsidiary,
            CareerEngine,  Inc.,  as the  operations of our  subsidiary,  Career
            Engine,  Inc., have continued to decline due to our relatively small
            size in the e-recruiting industry .

            Cost of Goods Sold

            Costs of goods  sold,  which  relates to product  sales and  related
            service fee income  decreased to $400,167 for the nine-month  period
            ended September 30, 2005 from  $1,085,889 for the nine-month  period
            ended September 30, 2004 due to the related decrease in revenues.

            Other Expenses

            Total other  expenses  increased to  $2,760,549  for the  nine-month
            period ended September 30, 2005 from $2,333,276 for the month period
            ended  September  30,  2004 due  primarily  to the  activity  of our
            subsidiary, Arrow.

            Advertising  expenses increased to $53,542 for the nine-month period
            ended  September  30, 2005 from  $42,837 for the  nine-month  period
            ended  September  30,  2004.  These   expenditures   relate  to  the
            operations of Commlink and SRC and its subsidiaries.

            Compensation  and  related  costs  decreased  to  $335,947  for  the
            nine-month  period ended  September 30, 2005 from $1,028,916 for the
            nine-month  period ended  September 30, 2004. We instituted  certain
            payroll reduction initiatives, primarily, the third quarter of 2004,
            including the reduction of our executive personnel.

            Organization   cost  increased  for  the  nine-month   period  ended
            September  30, 2005 to $36,860  from nil for the  nine-month  period
            ended  September  30,  2004 due to the  amortization  related to our
            subsidiary, Arrow.

            General and administrative  expenses increased to $2,219,386 for the
            nine-month  period ended  September  30, 2005 from  $985,806 for the
            nine-month  period ended  September  30, 2004 due to activity of our
            subsidiary, Arrow.

                                       23
<PAGE>

            Product  development  expenses decreased to nil for the month period
            ended  September  30, 2005 from $130,513 for the  nine-month  period
            ended September 30, 2004 due to the cessation of certain initiatives
            commenced by Commlink,  Conectivity  and ECI to develop  products to
            meet our customers' future requirements.

            Depreciation and amortization expenses decreased to $114,816 for the
            nine-month  period ended  September  30, 2005 from  $145,204 for the
            nine-month period ended September 30, 2004.

            Other Items

            Amortization   of  debt  discount   decreased  to  $33,290  for  the
            nine-month  period ended  September  30, 2005 from  $174,747 for the
            nine-month  period ended  September 30, 2004 due the combined effect
            of a  decreased  period  of time that the  amortization  of the debt
            discount  ($699,000),  relating to the 10% subordinated notes issued
            in April 2003, pertained, and the change in the rate of amortization
            when the notes were extended for an  additional  year in March 2004.
            The debt discount was fully amortized on April 30, 2005.

            Interest  expense  decreased to $143,569 for the  nine-month  period
            ended  September  30, 2005 from $278,099 for the  nine-month  period
            ended  September 30, 2004 due primarily to a decrease in the use, by
            SRC and its subsidiaries,  of accounts receivable financing commonly
            referred to as factoring.  Factoring,  when utilized,  has an annual
            interest rate in excess of 36%.

            Grant income  increased to $300,000 for the nine-month  period ended
            September  30,  2005  from  nil  for  the  nine-month  period  ended
            September 30, 2004 as the  restrictions  set forth in the grant have
            expired.

            Operating Loss

            On a  pre-tax  basis,  we had a net  loss  before  income  taxes  of
            $1,635,177  for the  nine-month  period  ended  September  30,  2005
            compared with a net loss before  income taxes of $1,695,180  for the
            nine-month period ended September 30, 2004.

            Our net loss for the nine-month  period ended September 30, 2005 was
            $1,635,177 compared with a net loss of $1,635,177 for the nine-month
            period ended  September 30, 2004.  For the  nine-month  period ended
            September 30, 2005,  net loss per common  share,  basic and diluted,
            was $0.15 per share.  For the nine-month  period ended September 30,
            2004,  net loss per common share,  basic and diluted,  was $0.16 per
            share.

      B.    Liquidity and Capital Resources
            -------------------------------

                                       24
<PAGE>

            We have incurred  substantial  losses,  sustained  substantial  cash
            outflows from operating activities and had a working capital deficit
            at September 30, 2005 and December 31, 2004. The above factors raise
            substantial  doubt about our ability to continue as a going concern.
            Our continued  existence depends on our ability to obtain additional
            equity  and/or  debt  financing  to fund our  operations,  financial
            obligations as they become due, and ultimately to achieve profitable
            operations.  There is no  assurance  that we can  obtain  additional
            financing or achieve profitable operations or generate positive cash
            flow.  Our 2005 and 2004  financial  statements  do not  include any
            adjustments  relating to the  recoverability  or  classification  of
            recorded  asset  amounts  or  the  amount  and   classification   of
            liabilities  that  might be  necessary  as a result of this  ongoing
            concern uncertainty..

            On August 25, 2005,  our common stock was suspended  from trading on
            the American  Stock  Exchange and delisted on September 26, 2005. It
            now trades on the over the counter Bulletin Board.

            At September 30, 2005, our  Stockholders'  Equity was  approximately
            $4,283,508,  our  current  assets  were  $806,301,  and our  current
            liabilities were $130,435,926 that primarily included a note payable
            in the  principal  amount of  $125,000,000  due from Arrow to Empire
            Advisory,  LLC.  ("Empire") and notes to  noteholders,  who included
            certain of our  directors  and  officers.  On November  2, 2005,  we
            satisfied Arrow's note to Empire by issuing Empire 10,000,000 shares
            of our Series AAA  Preferred  Stock and we satisfied the other notes
            by  exchanging  them for  shares of our  common  stock  pursuant  to
            transactions described below.

            On August  1,  2005,  we  entered  into an  agreement  (the  "Merger
            Agreement")  with PNG and  Arrow,  pursuant  to which,  among  other
            things,  we would  merge with Arrow and issue  non-voting  shares of
            Series AAA Preferred  Stock to PNG.  This stock would  automatically
            convert into an aggregate of 624 million shares of our Common Stock,
            which would equal 96% of our outstanding shares of Common Stock when
            our  stockholders  approved  the  conversion  and an increase in the
            number of shares of Common Stock we are  authorized to issue so that
            the conversion could be effected.

            We had initially  formed Arrow as a Bermuda  corporation  on May 20,
            2005,  in  anticipation  of issuing  97% of Arrow's  stock to PNG in
            consideration  for the  execution of the  Marketing  Agreement,  and
            distributing the 3% balance of Arrow's stock to our stockholders. On
            or about July 12, 2005, we began discussions with representatives of
            PNG and APR to  modify  the  transaction  with  PNG,  APR and  their
            affiliates  so  that we  would  merge  directly  with  Arrow.  These
            discussions led to the execution of the Merger Agreement.

            On August 1, 2005,  Arrow entered into the Marketing  Agreement with
            APR and its  subsidiaries  in  consideration  for  Arrow  issuing  a
            non-interest  bearing note (the "Note") in the  principal  amount of
            $125,000,000 to Empire,  due on or before December 31, 2005.  Empire
            is APR's  merchant  banker.  The Note  permitted us, as Arrow's sole
            stockholder,  to cause Arrow to repay it in cash or with  10,000,000
            shares of the Company's non-voting Series AAA Preferred Stock.

                                       25
<PAGE>

            After the Merger  Agreement  was executed the parties  determined to
            change the form but not the  substance  of the  transaction.  Rather
            than merging us and Arrow,  the parties agreed that,  subject to our
            receiving an  independent  valuation of the Marketing  Agreement and
            audited  financial  statements of Arrow acceptable to us, instead of
            merging with Arrow,  we would satisfy the Note by issuing to Empire,
            on  behalf  of  APR,  10  million  shares  of  voting,   instead  of
            non-voting,  Series AAA  Preferred  Stock.  Each share of this stock
            would grant the holder thereof the right to cast 62.4 votes,  which,
            together with all other shares of Series AAA Preferred Stock,  would
            constitute  an aggregate of 96% of all votes on all matters  brought
            before our  stockholders  for a vote.  We received the valuation and
            the financial statements and, on November 2, 2005, satisfied Arrow's
            $125,000,000  note to Empire by issuing  Empire 10 million shares of
            Series AAA  Preferred  Stock.  In connection  therewith,  Empire has
            agreed to pay certain of our expenses,  including  expenses relating
            to this transaction,  aggregating  approximately  $350,000, of which
            approximately  $70,000 has been paid as of November 2, 2005, and the
            balance  will be paid on or  about  November  22,  2005.  George  W.
            Benoit,  our Chief Executive  Officer,  will be paid $60,000 of this
            amount.  Also on November 22, 2005,  our current  directors  plan to
            resign and appoint designees of the Preferred Stockholders to be the
            Company's directors.

            Off-Balance Sheet Arrangements
            ------------------------------

            At September 30, 2005 and December 31, 2004,  we had no  off-balance
            sheet arrangements.

            Operating Activities
            --------------------

            We utilized  $1,004,435 of cash in operating  activities  during the
            nine-month  period ended  September  30, 2005.  We had a net loss of
            $1,635,177  during  this  period,  which  included an  aggregate  of
            $207,106 of non-cash items, including depreciation and amortization,
            amortization  of debt discount and allowance for doubtful  accounts.
            In  addition  to  the  impact  of  non-cash  items,   our  operating
            activities for the nine-month  period ended  September 30, 2005 also
            reflected  an  increase  in  accounts  receivable,   inventory,  and
            accounts payable,  accrued expenses, and deferred grant revenue, and
            a decrease in prepaid expenses and other assets.

            We utilized  $1,021,523 of cash in operating  activities  during the
            nine-month  period ended  September  30, 2004.  We had a net loss of
            $1,695,180  during  this  period,  which  included an  aggregate  of
            $383,518 of non-cash items, including depreciation and amortization,
            amortization  of debt discount and allowance for doubtful  accounts.
            In  addition  to  the  impact  of  non-cash  items,   our  operating
            activities for the nine-month  period ended  September 30, 2004 also
            reflected an increase in accounts receivable, inventory, and accrued
            expenses and other  liabilities,  and a decrease in prepaid expenses
            and other assets.

                                       26
<PAGE>

            On January 21,  2004,  we took  several  initiatives  to address our
            operating cash deficiency,  which included, but were not limited to,
            the reduction  and/or  elimination  of certain  executive  salaries,
            waiving of certain interest  payments due officers and/or directors,
            waiving of certain accounts  receivable due an officer and employee,
            and the reduction of certain  administrative  costs. In addition, we
            raised gross  proceeds of $700,000 in February 2004 from the sale of
            our  Common  Stock,  and  restructured   certain  short-term  credit
            arrangements  into a $300,000  note  payable due in  February  2005.
            Furthermore,  in July  through  December  2004 we  restructured  and
            issued  approximately  $450,000  of our  debt  securities.  The note
            payable  and debt  securities  have  been  satisfied  subsequent  to
            September 30, 2005 pursuant to  transactions  described  below.  See
            Subsequent Events.

            Subsequent Events.
            ------------------

            On  November  3, 2005,  we entered  into an  agreement  with Gary L.
            Eichsteadt,  a  former  director,   Thomas  L.  Sullivan,  a  former
            executive  officer,  and David B.  Batzer  pursuant to which we sold
            SRC, its subsidiary and a patent  associated with these  businesses,
            to  Messrs.   Eichsteadt  and  Sullivan  in  consideration  for  the
            cancellation  of debt in the aggregate  amount of $50,000 we owed to
            Messrs.  Eichsteadt and Sullivan,  the  cancellation  of debt in the
            aggregate  amount  of   approximately   $150,000  SRC  owed  to  Mr.
            Eichstead,  the  cancellation  of debt in the  aggregate  amount  of
            approximately  $300,000 SRC owed to Mr. Batzer, and the return to us
            by Messrs.  Eichsteadt  and  Sullivan of an  aggregate  of 1,000,000
            shares of our Series AA Preferred Stock and 4,867,938  shares of our
            Series C  Preferred  Stock  and the  return by  Messrs.  Eichsteadt,
            Sullivan  and  Batcher  of  options  and  warrants  to  purchase  an
            aggregate  of  486,000  shares of our  Common  Stock.  We have since
            retired  and/or  canceled  all  of  the  securities  returned  to us
            pursuant  to  this  agreement.  As  part  of  this  transaction  Mr.
            Eichsteadt  resigned  as a  director.  All  inter  company  debt was
            eliminated prior to closing.

            On  November  3,  2005,  we entered  into an  agreement  with,  U.S.
            Commlink, Ltd. ("Commlink"), our wholly owned subsidiary, and Thomas
            Leyen pursuant to which all inter company debt was eliminated  prior
            to closing,  and we transferred  Commlink and two patents related to
            that  business  to Mr.  Leyen  and will pay  certain  of  Commlink's
            obligations  in the  aggregate  amount  not  to  exceed  $86,000  in
            consideration  for Mr. Leyen canceling Options currently held by him
            to purchase an aggregate of 300,000 shares of our Common Stock.

            Subsequent to September 30, 2005, we:

                  (i)   exchanged  all of  our  1,392,630  shares  of  Series  A
                        Preferred  Stock for our common stock at the rate of one
                        share of  Preferred  Stock for one share of common stock
                        and thereafter retired this Preferred Stock;

                                       27
<PAGE>

                  (ii)  purchased  all of our 4,400 shares of Series B Preferred
                        Stock  for  an  aggregate   price  of   $20,000.00   and
                        thereafter retired this Preferred Stock;

                  (iii) exchanged all of our 1,145,000  Series G Preferred Stock
                        at the rate of one  share  of  Preferred  Stock  for two
                        shares  of  common  stock and  thereafter  retired  this
                        Preferred Stock

                  (iv)  exchanged  all of our  outstanding  debt,  exclusive  of
                        accrued but unpaid salaries, directors' and professional
                        fees and expenses,  and exclusive of the debt  cancelled
                        pursuant to the transaction  described above relating to
                        the   sale  of  SRC,   in  the   aggregate   amount   of
                        approximately  $1,370,000  for an aggregate of 2,837,533
                        shares of common stock;

                  (v)   issued  373,277  shares of common  stock to  independent
                        contractors  for  services  they  rendered  to us;  (vi)
                        except for the warrants  and options  referred to in the
                        transaction  relating  to the  sale  of our  subsidiary,
                        exchanged  all  of  our  warrants  and  options  for  an
                        aggregate  of  6,275,772  shares  of common  stock;  and
                        (vii)executed  mutual  general  releases with certain of
                        our creditors including,  among others, our officers and
                        directors,  pursuant  to which  all of our  accrued  but
                        unpaid salaries,  directors' and  professional  fees and
                        expenses  in  the  aggregate   amount  of  approximately
                        $1,350,000 were released.

            Subsequent  to September  30, 2005,  we obtained  releases  from our
            current  directors  and a former  director,  pursuant to which,  for
            nominal   consideration,   they  have  each  released  us  from  our
            obligation   to  pay  him  any  accrued  but  unpaid   compensation,
            directors' fees and/or advances, as the case may be, that we may owe
            him. We have also released them from all actions we may have against
            them except for those  prohibited by  applicable  law. The following
            table sets for the amounts that they have released:

            Name                               Amount Released
            ----                               ---------------
            Joseph G. Anastasi                 $        30,000

            George W. Benoit                   $     1,307,050
            Anthony S. Conigliaro              $       223,333
            Charles W. Currie                  $        28,000
            David W. Dube                      $        35,000

            Subsequent to September  30, 2005,  we also entered into  agreements
            with Messrs. Anastasi, Benoit, Conigliaro,  Currie and Dube, members
            of Mr. Benoit's family, and Grace C. Lindblom and Frank Ciolli, each
            a beneficial owner of more than 10% of our outstanding  Common Stock
            at the time of the agreements,  pursuant to which we issued them our
            Common Stock

                                       28
<PAGE>

            in exchange  for debt owed by us,  Series G Preferred  Stock  and/or
            options or warrants,  each to purchase one share of our Common Stock
            at  various  prices.  We were paid  $0.20 per share for the Series G
            Preferred Stock. The following table sets forth certain  information
            relating to these transactions:

<TABLE>
<CAPTION>

Name                            Consideration Exchanged             Number of Shares Issued
----                            ------------------------            -----------------------
<S>                          <C>                                           <C>
Joseph G. Anastasi           25,000 options and $26,667 debt                  116,894

George W. Benoit (1)(2)(4)         600,000  options                           479,887
Maureen Benoit (1)          3,007,903 options and $515,000 debt             2,656,326

George W. Benoit, Jr. (2)   49,600 shares of preferred stock                  496,000

Kevin J. Benoit (2)(3)     59,400 shares of preferred stock,

                             514,277 options and $56,667 debt                 712,750
Frank Ciolli (3)           1,542,833 options and $181,625 debt                377,324
Anthony S. Conigliaro           1,314,277 warrants and
                               options and $56,667 debt                     1,857,538
Charles W. Currie          25,000 options and $26,667 debt                    112,639
David W. Dube                      100,000 options                             72,117
Grace C. Lindblom (3)      2,081,550 options and $250,000 debt                545,167
Anne B. Mullen (2)          22,913 shares of preferred stock                  228,930
Michael Mullen (4)          8,000 shares of preferred stock                    80,000
Nancy C. Zucco (2)           43,003 shares of preferred stock                  430,230

</TABLE>


            (1)   Maureen Benoit is George W. Benoit's wife.
            (2)   This person is an adult child of George W. Benoit.
            (3)   This person was a holder of 10% or more of our common stock at
                  the time of the agreement.
            (4)   Mr. Mullen is George W. Benoit's son-in-law.

            We issued all of our Common  Stock in the  transactions  referred to
            above pursuant to the exemptions from the registration provisions of
            the  securities  Act of 1933  provided by Sections  3(a)(9) and 4(2)
            thereof.

      C.    Inflation
            ---------

            Due to the nature of our business,  inflation does not significantly
            impact our operations.


                                       29
<PAGE>

Item 3.     Controls and Procedures

            Our  Chief  Executive  Officer,  who is  also  acting  as our  Chief
            Financial Officer,  has conducted an evaluation of the effectiveness
            of disclosure controls and procedures pursuant to Rule 13a-14 of the
            Exchange Act.  Based on that  evaluation,  he has concluded that our
            disclosure  controls and  procedures  are effective in ensuring that
            all  material  information  required  to be filed in this  Quarterly
            Report  on Form  10-QSB  has  been  made  known  to him in a  timely
            fashion.   There  have  been  no  significant  changes  in  internal
            controls,  or in  other  factors  that  could  significantly  affect
            internal  controls,  subsequent  to  the  date  they  completed  his
            evaluation.


                                       30
<PAGE>

                                     PART II

                                OTHER INFORMATION

Item 1.     Legal Proceedings.

            We are a party to various vendor related  litigations.  Based on the
            opinion of  management,  we have accrued an  estimated  liability of
            approximately $100,000.

Item 5.     Other Information.

            None

Item 6.     Exhibits and Reports on Form 8-K.

Exhibit 4.1 was mislisted as Exhibit 2.1 and Exhibit 31.2 was inadvertently left
out of the filing.  Exhibit 4.1 is being  correctly  listed and Exhibit  31.2 is
herewith being filed.

                  (a)   Exhibits:

                        4.1   Designations  of Rights and  Preferences of Series
                              AAA Preferred Stock.

                        31.2  Certification  pursuant  to  Section  302  of  the
                              Sarbanes-Oxley  Act of  2002  from  the  Company's
                              Chief Financial Officer

                  (b)   Reports on Form 8-K:

                        The  Company  filed a report on Form 8-K on  August  18,
                        2005,  a report  on Form 8-K on  September  6,  2005,  a
                        report on Form 8-K/A on October  24,  2005,  a report on
                        Form 8-K/A  November 8, 2005 and a report on Form 8-K on
                        November 9, 2005.


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<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  amended  report to be signed on its behalf by the  undersigned,  thereunto
duly authorized.

                                        CNE GROUP, INC.



                                          /s/ George W. Benoit
                                        ---------------------------------------
Date: November 21, 2005                 George W. Benoit, Chairman of the Board
                                        of Directors, Chief Executive
                                        Officer and Chief Financial Officer


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