UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ending September 30, 2010

or

For the transition period from                      to                      

Commission file no. 001-03477

Catalyst Resource Group, Inc.

(Exact name of registrant as specified in its charter)

17011 Beach Blvd., Suite 1230, Huntington Beach, CA 92647

(Address of principal executive offices, including zip code)

714-843-5455
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o     Accelerated filer o     Non-accelerated filer o Smaller reporting company þ

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes o No þ

As of November 10, 2010, there were 96,258,196 shares of the issuer's Common Stock, $.001 par value per share, Class A Common Stock, (including 10,867,000 shares to be cancelled) and 9,958 shares of the issuer's Class B Common Stock, $.001 par value, issued and outstanding. 

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                        Catalyst Resource Group, Inc.  

INDEX

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Catalyst Resource Group, Inc

Notes to Unaudited Consolidated Financial Statements

September 30, 2010

1. Basis of Presentation and Recent Accounting Pronouncements

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to interim financial statements. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations and cash flows at September 30, 2010 and for all the periods presented have been made.

The financial information included in this quarterly report should be read in conjunction with the consolidated financial statements and related notes thereto in our Form 10-K for the year ended December 31, 2009.

The results of operations for the nine months ended September 30, 2010 are not necessarily indicative of the results to be expected for the full year ending December 31, 2010.

Development Stage Company

The Company has not earned significant revenue from planned principal operations since 2006. Accordingly, effective January 1, 2007, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in FASB Pronouncements. Among the disclosures required are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations, stockholders' equity (deficit) and cash flows disclose activity since the date of the Company's inception of development stage.

2. GOING CONCERN

The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated deficits of $17,808,404 at September 30, 2010. At September 30, 2010, the Company’s current liabilities exceeded its current assets by $1,076,801.  In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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3. NOTES PAYABLE

At September 30, 2010 and December 31, 2009, notes payable consisted of the following:

Note Payable to ex-president of the Company, unsecured,

8% interest matured September 2006,                                                                  $  250,000

Note Payable due to individual, unsecured, 8% interest due on demand                              50,000

Note Payable due to individual, unsecured, 8% interest due on demand                    25,000    

Note Payable due to individual, unsecured, 8% interest due on demand                              10,500

Convertible Note Payable, unsecured, 8% interest due on demand                                       45,000

Note Payable due to individual, unsecured, 8% interest due on demand                                7,000

Note Payable due to individual, unsecured, 8% interest due on demand                                 6,000

Discount on notes payable                                                                                                    (38,859)

                                                                                                                                 $ 354,641

The convertible notes issued to Asher Enterprises, Inc. (“Asher”) in May 2010 are due and payable on the due dates with interest of 8% per annum. These notes are convertible at the election of Asher from time to time after the issuance date. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 22% per annum and the notes become immediately due and payable. Should that occur, the Company is liable to pay Asher 150% of the then outstanding principal and interest. The note agreements contain covenants requiring Asher’s written consent for certain activities not in existence or not committed to by the Company on the issue date of the notes, as follows: dividend distributions in cash or shares, stock repurchases, borrowings, sale of assets, certain advances and loans in excess of $45,000, and certain guarantees to third-party liabilities. Outstanding note principal and interest accrued thereon can be converted in whole, or in part, at any time by Asher after the issuance date into an equivalent of the Company’s common stock determined by 58% of the average of the three lowest closing trading prices of the Company’s common stock during the ten trading days prior to the date the conversion notice is sent by Asher.

Interest expense on these notes for the nine-month periods ended September 30, 2010 and 2009 were $49,894 and $40,163 respectively.

4. PAYABLES TO RELATED PARTIES

At September 30, 2010 and December 31, 2009, notes payable to related parties consisted of the following:

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The decrease in note payable to PHI Group, Inc. was due to partial repayment of principal.

At September 30, 2010 and December 31, 2009, account payable - related parties were $19,500.

Imputed interest on the interest free short-term loan from officer in the amount of $2,566 and $2,804 were included as an increase to additional paid in capital at September 30, 2010 and December 31, 2009, respectively.

5. DERIVATIVE LIABILITIES

The derivative liabilities are embedded within the Company’s convertible debenture. These instruments were valued using pricing models which incorporate the Company’s stock price, credit risk, volatility, U.S. risk free rate, transaction details such as contractual terms, maturity and amount of future cash inflows, as well as assumptions about probability and the timing of certain events taking place in the future. These embedded derivatives are included in derivative liabilities in the accompanying consolidated balance sheet at September 30, 2010. 

The Company’s Convertible 8% Note issued May 11, 2010 contains a conversion feature that allows for conversion into shares at a price discounted from the market price. This amount is set at 58% of the average of the three lowest stock price over the last 10 days. Additionally, the note contains a reset provision to the exercise price and conversion price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such warrants and notes. This ratchet provision results in a derivative liability in our financial statements.

The value of the derivative liability at September 30, 2010 is $40,995.

6. SUBSEQUENT EVENTS

There are no significant events through the date the financial statements were issued.

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Item 2. Management's Discussion and Analysis

Forward Looking Information

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" from liability for forward-looking statements. Certain information included in this Form 10-Q and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by or on behalf of the Company) are forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions that are not statements of historical facts. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intends," "estimates," "forecast," "project" and similar expressions identify forward-looking statements.

Such forward-looking statements involve important risks and uncertainties, many of which will be beyond the control of the Company. These risks and uncertainties could significantly affect anticipated results in the future, both short-term and long-term, and accordingly, such results may differ from those expressed in forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, changes in external competitive market factors or in the Company's internal budgeting process which might impact trends in the Company's results of operations, unanticipated working capital or other cash requirements, changes in the Company's business strategy or an inability to execute its strategy due to unanticipated change in the industries in which it operates, and various competitive factors that may prevent the Company from competing successfully in the marketplace. Although we believe that these assumptions were reasonable when made, these statements are not guarantees of future performance and are subject to certain risks and uncertainties, some of which are beyond our control, and are difficult to predict. Actual results could differ materially from those expressed in forward-looking statements.

Readers are cautioned not to place undue reliance on any forward-looking statements, which reflect management's view only as of the date of this report. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequence events or circumstances. Readers are also encouraged to review the Company's publicly available filings with the Securities and Exchange Commission.

Company Background

Catalyst Resource Group, Inc., formerly Jeantex Group, Inc., (the "Company") is a Florida corporation, originally incorporated as an Idaho corporation on August 23, 1947 as Western Silver Lead Corporation. Western Silver Lead Corporation (“WSL”) was organized to explore for, acquire and develop mineral properties in the state of Idaho and the western United States. During the first several years WSL's activities have been confined to annual assessment and maintenance work on its Idaho mineral properties and other general and administrative functions. As of September 30, 2000, no proven or probable reserves had been established at any of WSL's mineral properties. On November 1, 2001, WSL entered into an Asset Purchase Agreement to transfer all of its interest in its properties to WSL, LLC, an entity controlled by its former president and director, who is the father of the president and director of WSL at that time. On August 16, 2002, WSL’s shareholders ratified this agreement. On September 24, 2003 the parent Western Silver-Lead Corporation, an Idaho corporation, merged into the wholly-owned subsidiary Western Silver-Lead Corporation, a Florida corporation, whereby each shareholder of the Idaho corporation’s Class A and Class B common stock, par value $0.001, received one share of common stock and Class B common stock, respectively, par value $0.001, of the Florida corporation. The merger was between the parent and the subsidiary corporation and the subsidiary became a surviving corporation.

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On September 29, 2003 the Company entered into an Agreement of Merger with Lexor International, Inc, ("Lexor") a Maryland corporation. Pursuant to the Merger Agreement, the Company issued 10,867,000 shares of its Class A common stock to Lexor's shareholders in exchange for all issued and outstanding shares of the Lexor's common stock. On October 1, 2003, the Company changed its name to Lexor Holdings, Inc. On October 3, 2003 the board of directors of the Company resigned and Christopher Long was appointed as the new president of the Company.

On March 31, 2005 Company entered into a Rescission Agreement with Lexor International, Inc., which terminated the merger agreement. Terms of the Rescission Agreement called for the cancellation of 10,867,000 shares of its Class A common stock issued to Christopher Long and Ha Nguyen, the spouse of Christopher Long, the return of all its pre-merger assets, assumption of any and all liabilities associated with to the pedicure spa business by Lexor International, Inc.  The spa business was considered to be discontinued operations of Jeantex Group, Inc.

On June 22, 2005, the Company entered into a Stock Purchase Agreement with Jeantex, Inc., a California corporation. On June 29, 2005, the transaction contemplated in the Stock Purchase Agreement was completed and a Closing Memorandum was executed by all parties. The Company agreed to issue 20,000,000 shares of its Class A common stock to Jeantex, Inc.'s shareholder in exchange for 100% of the issued and outstanding equity interest of Jeantex, Inc. and issue 36,350,000 shares of its Class A common stock for consulting and reorganization expenses in connection with this transaction. On June 29, 2005 the board of director of the Company approved resolutions to the stock transfer agent to issue shares to Jeantex pursuant to the Agreement.  The shares of Lexor Holdings, Inc. common stock to be issued shall be restricted pursuant to Rule 144.

On December 20, 2005, the Company entered into a Stock Purchase Agreement with Yves Castaldi Corporation, a California corporation. Pursuant to the terms of the Agreement, Jeantex Group, Inc. has agreed to acquire 51% of the total issued and outstanding equity interests of Castaldi (10,408 shares of the common stock) in exchange for the payment of $650,000 in cash ($50,000 paid on December 29, 2005 and an executed promissory note for the remaining $600,000 of which $300,000 is to be used for working capital) and the issuance of 10,000,000 newly-issued shares of Jeantex Group, Inc. common stock. The 10,000,000 shares of Jeantex restricted common stock will be vested on a pro-rata basis, based on a minimum of $10,000,000 in revenues and between $2.5 and $3.0 million in net profit to be generated by Yves Castaldi Corporation in the next 12 months. The closing of this acquisition occurred December 30, 2005. In June 2006, this Stock Purchase Agreement was amended whereby the Company has agreed to reduce its stake in Castaldi from 51% to 20% of the total issue and outstanding number of shares of Castaldi.  Castaldi has agreed to retain only 4,000,000 of the 10,000,000 shares originally issued to it pursuant to the Agreement and will also retain $226,650 paid to Castaldi by the Company as consideration for the Company's 20% stake in Castaldi.  The four million (4,000,000) shares of common stock retained by Castaldi will be vested on a pro-rata basis based on Yves Castaldi Corporation's projected revenues of $10,000,000 and net profits of $2,000,000 in the next twenty-four months commencing July 1, 2006. In the event said target revenues and profitability are not reached within said twenty-four months, the amount of vested shares shall be adjusted accordingly on a pro-rata basis. The remaining 6,000,000 shares will be surrendered by Castaldi.

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As a result of Yves Castaldi Corp.’s filing for Chapter 11 protection with the United States Bankruptcy Court of the Central District of California and naming the Company as a creditor during the fourth quarter of Fiscal Year 2006, the Company has written off its cash investments in Yves Castaldi Corp. and will reclaim all the 10,000,000 shares that were issued to Yves Castaldi Corp.

During the fourth quarter of fiscal year 2006, Jeantex, Inc. discontinued its private label manufacturing business, sold its fully depreciated equipment and began to look for sourcing opportunities in Asia. As of the date of this report, the Company has not entered into any definitive agreement with a sourcing partner for its private label business. The Company has been inactive and seeking for an acquisition opportunity. The Company re-entered the development stage on January 1, 2007.

On April 05, 2010, the Company changed its name to Catalyst Resource Group, Inc. to reflect its new intended scope of business.

Results of Operations

Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009

Revenues:

The Company had no revenue for the quarters ended September 30, 2010 or 2009.

Operating Expenses:

The Company incurred total operating expenses of $6,862 for the quarter ended September 30, 2010 as compared to $6,901 for the same quarter in 2009. The decrease is due to decrease in general and administration expenses in the current period compared to the corresponding quarter in 2009.

Loss from operations:

The Company had losses from operations of $6,862 for the quarter ended September 30, 2010 as compared to a loss from operations of $6,901 for the quarter ended September 30, 2009. This decrease of loss was due to the decrease in general and administration expenses in the current quarter.

Net loss:

The Company had a net loss of $26,405 for the quarter ended September 30, 2010 as compared to a net loss of $20,731 in the same quarter in 2009.  The net loss based on the basic and diluted weighted average number of common shares outstanding for the quarters ended September 30, 2010 and 2009 was $0.00 for both periods.

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Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009

Revenues:

The Company had no revenue for the periods ended September 30, 2010 or 2009.

Operating Expenses:

The Company incurred total operating expenses of $43,142 for the period ended September 30, 2010 as compared to $34,100 for the same period in 2009. The operating expenses consisted of general and administration expenses. The general administration expenses increased in the period ended September 30, 2010 by $9,042 compared to the same period in the prior year due to an increase in audit fees.

Loss from operations:

The Company had losses from operations of $43,142 for the period ended September 30, 2010 as compared to a loss from operations of $34,100 for the same period in 2009. This increase of loss was due to an increase in general and administration expense in the period ended September 30, 2010.

Net loss:

The Company had a net loss of $89,941 for the period ended September 30, 2010 as compared to a net loss of $74,263 in the same period in 2009.  The net loss based on the basic and diluted weighted average number of common shares outstanding for the periods ended September 30, 2010 and 2009 was $0.00 for both periods.

Liquidity and Capital Resources

At September 30, 2010, the Company's had $1,539 in cash. The Company used $36,056 for operating activities during the nine-month period ended September 30, 2010 compared to $34,173 for the same period in 2009. The use of cash in operating activities in 2010 and 2009 were for the payments of some accounts payable and interest.  

In financing activities, the Company obtained $74,003 and $33,975, respectively from proceeds on notes from a related party during the nine-month period ended September 30, 2010 and 2009.

The Company has incurred an accumulated deficit as of September 30, 2010 of $17,808,404.

The future of the Company is dependent on its ability to generate cash from future acquisition of a business. There can be no assurance that the Company will be able to implement its current plan.

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Item 3. Quantitative and Qualitative Disclosure about Market Risk

None

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") (in this case the same person), of the effectiveness of the Company's disclosure controls and procedures as of September 30, 2010. Based on that evaluation, the CEO/CFO has concluded that the Company's disclosure controls and procedures are not effective to provide reasonable assurance that: (i) information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company's management, including the CEO/CFO, as appropriate to allow timely decisions regarding required disclosure by the Company; and (ii) information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Controls

There was no change in our internal control over financial reporting that occurred during this fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Christopher Long vs. Jeantex Group, Inc. et al., Case Number 07CC02012

On January 22, 2007, Christopher Long, former President and CEO of the Company, filed a claim with the Superior Court of California, County of Orange, Central Justice Center, against the Company and Henry Fahman, Interim President of the Company, for a total of $250,000 and accrued interest at 8% per annum in connection with the promissory note dated March 31, 2005 which was made to Christopher Long as a part of the Rescission Agreement between the Company and Lexor International, Inc. The Company and Christopher Long entered into a Compromise Settlement Agreement and Mutual Release on January 11, 2008 whereby the Company and Christopher Long agreed to allow a stipulation to be entered in favor of Christopher Long in the amount of $250,000 plus interest accruing at a rate of 8% per annum. These amounts have been recorded in the books of the Company.

Item 2. Unregistered Sales of Equity and Use of Proceeds  

None

Item 3. Default upon senior Securities

None

Item 4. Submission of matters to a vote of security holders

None

Item 5. Other information

None

Item 6.  Exhibits and Reports on Form 8-K

(A) Exhibits

Index to Exhibits.

31.1 Certification of the Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act

        of 2002.

31.2 Certification of the Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act

        of 2002.

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32.1 Certification of the Principal Executive Officer of the Registrant, pursuant Section 906 of the

        Sarbanes-Oxley Act of 2002.

32.2 Certification of the Principal Financial Officer of the Registrant, pursuant to Section 906 of the

        Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(b) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CATALYST RESOURCE GROUP, INC.

(Formerly Jeantex Group, Inc.)

(Registrant)

Date: November 11, 2010

By: /s/ Henry D. Fahman

Henry D. Fahman

Principal Executive/Financial Officer

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