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

FORM 10-Q

	[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended March 31, 2017
	[   ]		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-55365

 

CAT9 Group Inc.

(Exact name of registrant as specified in its charter)

 

	Delaware		47-2912810
	(State or Other Jurisdiction of		(I.R.S. Employer
	Incorporation or Organization)		Identification No.)
	Yudong Miaoshitai #46-9, Banan District, Chongqing, China		401320
	(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number, including area code: 86 023 6293 2061

 

(Former name, former address and former fiscal year, if changed since last report)

 

 

 

Indicate by check mark whether the registrant (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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

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

Large accelerated filer [ ] Non-accelerated filer [ ] Emerging growth company [X]

Accelerated filer [ ] Smaller reporting company [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

 

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

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of May 15, 2017, the issuer had 101,000,000 shares of its common stock issued and outstanding.

  

 

 

TABLE OF CONTENTS

PART I
Item 1.	Unaudited Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
PART II
Item 1.	Legal Proceedings	15
Item 1A.	Risk Factors	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	Mine Safety Disclosures	15
Item 5.	Other Information	15
Item 6.	Exhibits	16
	Signatures	17

  PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

(Unaudited)

Contents

 

Financial Statements	PAGE
Balance Sheets as of March 31, 2017 (Unaudited) and December 31, 2016	5
Condensed Statements of Operations for the three months ended March 31, 2017 and 2016 (Unaudited)	6
Condensed Statements of Cash Flows for the three months ended March 31, 2017 and 2016 (Unaudited)	7
Notes to Unaudited Condensed Financial Statements	8

 

   

  

CAT9 Group Inc. 
Condensed Consolidated Balance Sheets

						March 31, 2017			December 31, 2016
ASSETS						(unaudited)
Current assets:
		Cash			$	16,866		$	78,233
		Accounts receivable				6,325			-
		Other receivables, related party				89,229			2,737
		Advances to suppliers				194,398			181,002
Total current assets						306,818			261,972
	Property & equipment					1,357			849
Total assets					$	308,175		$	262,821
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accruals					$	30,627		$	-
Customer deposits						57,575			27,235
		Other payables, related party				26,098			58,068
Total current liabilities						114,300			85,303
Total liabilities						114,300			85,303
Shareholders' Equity
		Preferred stock $0.0001 par value, 5,000,000 shares authorized; none issued and outstanding				-			-
		Common stock $0.0001 par value, 500,000,000 shares authorized; 21,000,000 and 20,000,000 shares issued and outstanding, respectively				2,100			2,000
		Stock subscription receivable				(100)			-
		Additional paid-in capital				408,255			381,918
		Accumulated other comprehensive income				(4,498)			3,028
		Accumulated deficit				(211,882)			(209,428)
		Total Stockholders’ Equity				193,875			177,518
Total liabilities and stockholders’ equity					$	308,175		$	262,821

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

CAT9 Group Inc. Condensed Consolidated Statements of Operations (unaudited)
					For the Three Months Ended March 31,
					2017			2016
Revenue				$	88,480		$	27,395
Cost of revenue					29,657			11,927
Gross Margin					58,823			15,468
Operating expenses:
		General and administrative			61,277			14,624
			Total operating expenses		61,277			14,624
Income (loss) from operations					(2,454)			844
Income (loss) before income taxes					(2,454)			844
Provision for income taxes					-			-
Net income (loss)				$	(2,454)		$	844
Other comprehensive income (loss):
Foreign currency translation adjustment					(7,526)			(68)
Comprehensive income (loss)				$	(9,980)		$	776
Basic and diluted net income (loss) per sharesper common share				$	0.00		$	0.00
Basic and diluted weighted average common shares					20,011,111			10,000,000

 

 

  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

CAT9 Group Inc. Condensed Consolidated Statement of Cash Flows
					For the Three Months Ended March 31,
					2017			2016
Cash flows from operating activities:
	Net Income (loss)			$	(2,454)		$	844
	Adjustments to reconcile net income to net cash used in operating activities:
	Foreign currency translation adjustment				(7,526)			(68)
	Depreciation expense				51			-
	Changes in operating assets and liabilities:
	Accounts Receivable				(6,325)			(323)
	Other assets				(13,396)			28,249
	Other assets, related party				(86,492)			(15,071)
		Inventory			-			(1,850)
		Accounts payable and accrued liabilities			60,967			14,011
			Net cash provided by (used in) operating activities		(55,175)			25,792
Cash flows from investing activities:
Purchase of equipment					(559)			-
Net cash used in  investing activities					(559)			-
Cash flows from financing activities:
		Contributed capital			26,337			2,830
		Loans from related parties			10,590			42,403
		Repayment of related party loans			(42,560)
			Net cash provided by (used in) financing activities		(5,633)			45,233
Net change in cash					(61,367)			71,025
Cash, beginning of period					78,233			2
Cash, end of period				$	16,866		$	71,027
SUPPLEMENTAL DISCLOSURES:
	Cash paid for interest			$	-		$	-
	Cash paid for taxes			$	-		$	-

 

  The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

CAT9 Group Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2017

(Unaudited)

 

 

NOTE 1 - DESCRIPTION OF BUSINESS AND HISTORY

 

CAT9 Group Inc., (the “Company”) formerly known as ANDES 4 Inc. ("ANDES 4"), was incorporated under the laws of the State of Delaware on January 26, 2015. On December 27, 2016, the Company and its wholly-owned subsidiary, CAT9 Holdings Ltd, a company organized under the laws of the Cayman Islands, ("CAT9 Cayman"); CAT9 Cayman's wholly-owned subsidiary, CAT9 Investment China Limited, a company organized under the laws of Hong Kong ("CAT9 HK"); and its wholly-owned subsidiary, Chongqing CAT9 Industry Company Ltd, a company organized under the laws of the People's Republic of China closed a share exchange transaction pursuant to which CAT9 became the 100% parent of CAT9 Cayman, assumed the operations of CAT9 Cayman and its subsidiaries, including CAT9 Investment China, and Chongqing CAT9 Industry Company Ltd.

 

CAT9 Cayman is a holding company incorporated in August 20, 2015, under the laws of the Cayman Islands. CAT9 Investment China Limited was incorporated in September 10, 2015, under the laws of Hong Kong. CAT9 Investment China is a window for the group to handle the business operations outside of China.

Chongqing CAT9 Industry Company Ltd. is located in Chongqing, PRC and was incorporated under the laws of the PRC on June 26, 2014. Chongqing Field Industrial Company Ltd. operates through strategic alliance and distribution rights agreements in the PRC, the Company is engaged in the marketing and sales of (1) fresh fruits, vegetables meats (including primarily organic and non-organic from both domestically grown and imported (2) Acquisition of land for the planting of Acer Truncatum trees and harvesting of Acer Truncatum seeds to produce edible oil, (3) providing Hi-Tech cooperative farm management services in the PRC and overseas and (4) farm machinery sales.

 

Prior to the events above, the Company on July 31, 2015, the sole officer and director of the Company entered into a Share Purchase Agreement (the “SPA”) pursuant to which he entered into an agreement to sell an aggregate of 10,000,000 shares of his shares of the Company’s common stock to Chongqing Field Industrial Company Ltd. at an aggregate purchase price of $40,000. These shares represent 100% of the Company’s issued and outstanding common stock. Effective upon the closing date of the Share Purchase Agreement, August 12, 2015, the sole officer and director of the Company executed the agreement and owned no shares of the Company’s stock and Chongqing Field Industrial Company Ltd. was the sole stockholder of the Company.

 

On May 2, 2016, the Company entered into Employee Agreements with Wenfa "Simon" Sun, its President, Chief Executive Officer, and Chairman of the Board of Directors, and MeiHong "Sanya" Qian, its Chief Financial Officer and Secretary. Pursuant to the Employment Agreement, the Company issued 6,000,000 shares of restricted common stock to Wenfa "Simon" Sun, and 4,000,000 shares of restricted common stock to MeiHong "Sanya" Qian.

 

On May 3, 2016, the sole shareholder of the Company, Chongqing Field Industrial Ltd., ("CQFI") consented to a redemption of its 10,000,000 shares of common stock at a price of $0.0001 per share for an aggregate redemption price of $1,000. As a result of this action by CQFI, management of the Company now control 100% of the issued and outstanding shares.

  

With the redemption and subsequent issuance of the 10,000,000 shares of restricted common stock, the Company effected a change in its control and the new majority shareholders are the current members of management of the Company.

 

 

 

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s ability to raise additional capital through debt and/or equity financing is unknown. The obtainment of additional financing and the successful development of the Company’s contemplated plan of operations are necessary for the Company to continue. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. However; management believes that the Company will generate sufficient cash flows to fund its operations and to meet its obligations on timely basis for the next twelve months. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

NOTE 3- SUMMARY OF SIGNIFICANT POLICIES

 

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of CAT9 Group Inc. have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the audited financial statements of CAT9 Group Inc. in our Form 10-K filed on April28, 2017.

 

The interim unaudited financial statements present the balance sheet, statements of operations and cash flows CAT9 Group Inc. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

 

The interim financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of March 31, 2017 and the results of operations and cash flows presented herein have been included in the financial statements. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results of operations for the full year.

 

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

 

Cash and cash equivalents

Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value.

 

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, CAT9 Cayman, and its subsidiaries, including CAT9 Investment China, and Chongqing Field Industrial Company Ltd. All financial information has been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated.

 

Translation Adjustment

For the three months ended March 31, 2017 and the year ended December 31, 2016, the accounts of the Chongqing CAT9 were maintained, and its financial statements were expressed, in RMB.  Such financial statements were translated into USD in accordance with the Foreign Currency Matters Topic of the Codification (ASC 830), with the RMB as the functional currency.  According to the Codification, all assets and liabilities were translated at the current exchange rate at respective balance sheets dates, members’ capitalare translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification (ASC 220), as a component of members’ capital.  Transaction gains and losses are reflected in the income statement.

 

Comprehensive Income

The Company uses SFAS 130 “Reporting Comprehensive Income” (ASC Topic 220).  Comprehensive income is comprised of net income and all changes to the statements of members’ capital, except those due to investments by members, changes in paid-in capital and distributions to members. Comprehensive income for the three months ended March 31, 2017 and 2016 is included net income and foreign currency translation adjustments.

 

Recent Accounting Pronouncements

The Company has evaluated recent pronouncements through Accounting Standards Updates (“ASU”) 2015-08 and believes that none of them will have a material impact on the Company’s financial position, results of operations or cash flows.

 

 

NOTE 4 – ADVANCES TO SUPPLIERS

 

As of the year ended December 31, 2015, the Company entered into contracts with two suppliers to acquire machinery deliverable on December 31, 2016. The company advanced the suppliers $417,046 to secure these purchases which represented approximately fifty percent of the contract amounts. During 2016 one of the suppliers refunded the Company part of the deposit, leaving a balance of $362,005, of which $181,003 is not going to be refunded to the Company and has been debited to impairment loss.

 

NOTE 5- RELATED PARTY TRANSACTIONS

 

During the normal course of business, affiliated companies, members, and/or officers may advance the Company funds to pay for certain operating expenses. All advances are unsecured, non-interest bearing and due on demand.

 

As of March 31, 2017, and December 31, 2016 the Company was indebted to related parties that advanced loans to the Company without any formal repayment terms. As of March 31, 2017, and December 31, 2016 the Company owed the aforementioned related parties $26,098 and $58,068, respectively.

 

During the year ended December 31, 2016, a consultant and the CEO for the Company contributed $40,326 in services and cash to pay for professional fees related to the Company’s SEC filing expenses. The amount has been credited to paid in capital.

 

NOTE 6- STOCKHOLDERS’ EQUITY

 

Preferred Stock

The Company is authorized to issue 5,000,000 shares of $.0001 par value preferred stock. As of March 31, 2017, and no shares of preferred stock had been issued.

 

Common Stock

 

Pursuant to the Share Exchange Agreement dated December 27, 2016 the company cancelled and retired 9,000,000 shares of issued and outstanding common stock, (the “cancelled shares”), reducing the issued and outstanding shares to 1,000,000 shares. A cash amount of $1 was paid to Wenfa “Simon” Sun and Meihong “Sanya” Qian, the Company’s majority shareholders and owners of the cancelled shares, as consideration for cancelling the shares. The Company issued a total of 19,000,000 shares of common stock pursuant to the Share Exchange and as a result of the cancellation of the cancelled shares and the Share Exchange; there are 20,000,000 shares of common stock issued and outstanding following the Share Exchange.

 

On March 31, 2017, the Company entered into a Subscription Agreement with one subscriber for the issuance of its restricted common stock – Tech Associates, Inc. an entity engaged to provide advisory and consulting services to the Company purchased 1,000,000 shares for total cash proceeds of $100.

 

 

 

NOTE 7– ACCUMULATED OTHER COMPREHENSIVE INCOME

 

Balance of related after-tax components comprising accumulated other comprehensive income included members’ capital were as follows at:

 

March 31, 2017

December 31, 2016

Accumulated other comprehensive income, beginning of period	$	3,028	$	453
Change in cumulative translation adjustment		(7,526)		2,575
Accumulated other comprehensive income (loss) end of period	$	(4,498)	$	3,028

 

 

NOTE 8– COMMITMENTS

 

On April 14, 2015, the Company issued a purchase order to Chongqing Fangbaiyuan Trading Co., Ltd. Per the terms of the purchase order half was paid in advance with the balance due upon delivery, scheduled for December 31, 2016. As of December 31, 2016, $227,547 is due upon delivery.

 

On April 21, 2015, the Company issued a purchase order to Chongqing Qinuo Trading Co., Ltd. Per the terms of the purchase order half was paid in advance with the balance due upon delivery, scheduled for December 31, 2016. As of December 31, 2016, $158,685 is due upon delivery.

 

Due to new circumstances the parties have now agreed to cancel these orders. The suppliers will either provide a credit on a future purchase or refund the deposit if they are able to sell the machinery to another third party.

 

NOTE 9– SUBSEQUENT EVENTS

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements other than the following.

 

Subsequent to March 31, 2017, the Company received refunds of approximately $181,000 from its two suppliers that it had previously contracted with to acquire machinery (Note 4).

 

On April 26, 2017, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the authorized shares from 100,000,000 shares of common stock to 500,000,000 shares of common stock.

 

On May 10, 2017, the Company sold a total of 80,000,000 shares of restricted common stock to its officers and director for $0.0001 per share. These shares are restricted shares and as of the date of this filing, the issuer had 101,000,000 shares issued and outstanding. The Company filed a Form 8-K disclosing the event on May 10, 2017.

 

 

 

Special Note Regarding Forward-Looking Statements

 

The following discussion should be read in conjunction with our unaudited financial statements, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results

 

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

 

On May 2, 2016, the Company entered into Employee Agreements with Wenfa "Simon" Sun, its President, Chief Executive Officer, and Chairman of the Board of Directors, and MeiHong "Sanya" Qian, its Chief Financial Officer and Secretary. Pursuant to the Employment Agreement, the Company issued 6,000,000 shares of restricted common stock to Wenfa "Simon" Sun, and 4,000,000 shares of restricted common stock to MeiHong "Sanya" Qian.

 

On May 3, 2016, the sole shareholder of the Company, Chongqing Field Industrial Ltd., ("CQFI") consented to a redemption of its 10,000,000 shares of common stock at a price of $0.0001 per share for an aggregate redemption price of $1,000. As a result of this action by CQFI, management of the Company now control 100% of the issued and outstanding shares.

  

With the redemption and subsequent issuance of the 10,000,000 shares of restricted common stock, the Company effected a change in its control and the new majority shareholders are the current members of management of the Company.

 

The Company will attempt to locate and negotiate with a business entity for the combination of that target company with the Company. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange (the "business combination"). In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that the Company will be successful in locating or negotiating with any target business.

 

The Company has not restricted its search for any specific kind of businesses, and it may acquire a business which is in its preliminary stage, which is already in operation, or in essentially any stage of its business life. It is impossible to predict the status of any business in which the Company may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer.

 

In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity.

 

It is anticipated that any securities issued in any such business combination would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, it will be undertaken by the surviving entity after the Company has entered into an agreement for a business combination or has consummated a business combination. The issuance of additional securities and their potential sale into any trading market which may develop in the Company's securities may depress the market value of the Company's securities in the future if such a market develops, of which there is no assurance.

 

 

The Company will participate in a business combination only after the negotiation and execution of appropriate agreements. Negotiations with a target company will likely focus on the percentage of the Company which the target company shareholders would acquire in exchange for their shareholdings. Although the terms of such agreements cannot be predicted, generally such agreements will require certain representations and warranties of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by the parties prior to and after such closing and will include miscellaneous other terms. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's shareholders at such time.

 

Results of Operations

 

Three months ended March 31, 2017 compared to the three months ended March 31, 2016

 

Sales Revenue

Sales revenue for the three months ended March 31, 2017, were $88,480, compared to $27,395 for the three months ended March 31, 2016, an increase of $61,085. The Company recognized its first revenue in the fourth quarter of 2015 and has seen increasing revenues since.

 

Cost of Goods Sold

Cost of goods sold for the three months ended March 31, 2017, was $29,657, compared to $11,927 for the three months ended March 31, 2016,an increase of $17,730.

 

Operating Expenses

General and administrative expense was $61,277 for the three months ended March 31, 2017, compared to $14,624for the three months ended March 31, 2016,an increase of $46,653. The increase is the result of increased operations.

 

Net Income (Loss)

Net loss for the three months ended March 31, 2017, was $2,454, compared to net income of $844 for the three months ended March 31, 2016. The decrease from net income to a net loss is due to increased general and administrative expense.

 

Liquidity and Capital Resources

During the three months ended March 31, 2016, we used cash of $55,175 in operating activities, $559 in investing activities and $5,633 in financing activities from repayment of related party loans.

Over the next 12 months we expect to expend approximately $40,000 in cash for legal, accounting and related services. Cash used for other expenditures is expected to be minimal. We hope to be able to attract suitable investors for our business plan, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts.

 

We expect to be able to secure capital through advances from our Chief Executive Officer, shareholders and others in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees. We believe it will be difficult to secure capital in the future because we have no assets to secure debt and there is currently no trading market for our securities. We will need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely.

 

The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for acquiring suitable partners or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.

 

 

Operating Capital and Capital Expenditure Requirements

 

Our controlling shareholders expect to advance us additional funding for operating costs in order to implement our business plan. The funds are loaned to the Company as required to pay amounts owed by the Company. As such, our operating capital is currently limited to the resources of our controlling shareholders. The loans from our controlling shareholders are unsecured and non-interest bearing and have no set terms of repayment. We anticipate receiving additional capital once we are able to have our securities actively trading on a public exchange. There is no guarantee our stock will develop a market on that public exchange.

 

Plan of Operation and Funding

 

We do not currently engage in enough business activities that provide cash flow. During the next twelve months we anticipate incurring costs related to:

 

  (i) Filing of Exchange Act reports, and

  (ii) Costs relating to developing our business plan

 

We believe we will be able to meet these costs through amounts, as necessary, to be loaned to or invested in us by our controlling shareholder.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

None.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, March 31, 2017. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report due to a material weakness in our internal control over financial reporting, which is described below.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of March 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of March 31, 2017, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2017: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2017 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

  

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

 

There are not presently any material pending legal proceedings to which the Registrant is a party or as to which any of its property is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.

 

Item 1A. Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

 

Item 6. Exhibits.

Exhibit	Exhibit Description	Filed herewith	Form	Period ending	Exhibit	Filing date
2.1	Share Exchange Agreement dated December 27, 2016, by and among the Registrant, CAT9 Cayman Holdings,; CAT9 Investment China Limited, and Chongqing Field Industrial Company Ltd.		8-K		2.1	12/27/16
3.1	Certificate of Incorporation		10		3.1	02/05/15
3.2	Bylaws		10		3.2	02/05/15
3.3	Amendment to Certificate of Incorporation		8-K		3.3	09/01/15
3.4	Certificate of Approval, Agreement of Merger		8-K		3.4	12/27/16
10.1	Wenfa "Simon" Sun Employment Agreement		8-K		10.1	12/27/16
10.2	MeiHong "Sanya" Qian Employment Agreement		8-K		10.2	12/27/16
10.3	Agreement with Yunnan Province, Acreage Terms		8-K		10.3	05/02/17
10.4	Agreement with Yunnan Province, RMB Amount		8-K		10.4	05/02/17
21.1	List of Subsidiaries		8-K		21.1	12/27/16
31	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Definition	X

 

 

 

SIGNATURES

 

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

 

CAT9 Group Inc.

 

By: /s/ Wenfa “Simon” Sun

Wenfa “Simon” Sun. President, Chief Executive Officer, and Chairman of the Board of Directors

 

By: /s/ MeiHong “Sanya” Qian

MeiHong “Sanya” Qian.Chief Financial Officer, Secretary

 

Dated: May 15, 2017