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, 2020
		For the quarterly period ended June 30, 2020
[ ]		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 333-222288

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.)

	Room 2001, Dading Century Square, No 387, Tianren Road, Wuhou District, Chengdu, Sichuan Province, China		610000
	(Address of Principal Executive Offices)		(Zip Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common		CATN		OTC

Registrant’s telephone number, including area code: 86-028-85594777

N/A

(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	[ ] Accelerated filer
[ ] Non-accelerated filer	[X] Smaller reporting company
	[X] Emerging growth company

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 ~~July~~August 912, 2020, the issuer had 102,166,400 shares of its common stock issued and outstanding.

Reliance on Order for Reporting Relief

The Company has relied on the 45 day relief period provided under the U.S. Securities and Exchange Commission’s (“SEC”) Order (the “Order”) under Section 36 of the Securities Exchange Act of 1934, granting exemptions from specified provisions of the Exchange Act and certain rules thereunder, published under Release No. 34-88465, dated March 25, 2020

The Company has relied on the Order with respect to this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which was due to be filed with the SEC on or before June 30, 2020.

The Company relied on the Order due to the reduction in staff, suspension of in-person operations at certain of the Company’s locations, delays in being able to meet and work with the Company’s auditors due to “shelter in place” restrictions, and other financial and operational concerns associated with or caused by COVID-19.

The Company has included updated risk factors relating to the impact that COVID-19 has had and is continuing to have on the Company and its business.

TABLE OF CONTENTS

PART I
Item 1.	Unaudited Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1413
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1615
Item 4.	Controls and Procedures	1615
PART II
Item 1.	Legal Proceedings	1716
Item 1A.	Risk Factors	1716
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1716
Item 3.	Defaults Upon Senior Securities	1716
Item 4.	Mine Safety Disclosures	1716
Item 5.	Other Information	17
Item 6.	Exhibits	1817
	Signatures	18

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Contents

Financial Statements
Consolidated Balance Sheets as of March 31, 2020 (Unaudited) and December 31, 2019	5
Consolidated Balance Sheets as of June 30, 2020 (Unaudited) and December 31, 2019	4
Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2020 and 2019 (Unaudited)	6
Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2020 and 2019 (Unaudited)	5
Consolidated Statement of Stockholders’ Deficit for the three months ended March 31, 2020 and 2019 (Unaudited)	7
Consolidated Statement of Stockholders’ Deficit for the six months ended June 30, 2020 and 2019 (Unaudited)	6
Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (Unaudited)	8
Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	98

CAT9 GROUP, INC. and Subsidiaries

Consolidated Balance Sheets

	June 30, 2020			December 31, 2019
ASSETS	(Unaudited)

Current assets:
Cash	$	2,554		$	189,429
Accounts receivable, net		134,311			426,895
Prepaid expenses		1,529			1,551
Inventories		364,717			235,101
Other receivables, related party		3,768			1,669
Advances to suppliers		314,541			97,210
Other current assets		39,893			34,203
Total current assets		861,313			986,058
Property & equipment, net		15,963			22,188
Capitalized software costs, net		5,274			13,379

Total assets	$	882,550		$	1,021,625

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued liabilities	$	969,364		$	811,242
Customer deposits		128,509			29,261
Loan payable		70,770			71,808
Loan payable, related parties		110,077			—
Other payables		20,796			22,807
Other payables, related party		417,562			416,807
Total current liabilities		1,717,078			1,351,925

Total liabilities		1,717,078			1,351,925

Shareholders' Deficit:
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; 102,166,400 shares issued and outstanding		10,217			10,217
Additional paid-in capital		497,573			497,573
Accumulated deficit		(1,367,615	)		(825,752	)
Accumulated other comprehensive income (loss)		25,297			(12,338	)
Total Stockholders’ Deficit		(834,528	)		(330,300	)
Total liabilities and stockholders’ deficit	$	882,550		$	1,021,625

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

CAT9 GROUP, INC. and Subsidiaries Consolidated Balance Sheets
CAT9 GROUP, INC. and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
		March 31, 2020			December 31, 2019
	Three Months Ended June 30,					Six Months Ended June 30,
ASSETS		(Unaudited)
		2020			2019	2020		2019
Current assets:
Revenue	$	227,423		$	1,655,995	$	1,281,438	$	1,989,246
Cash	$	171,223		$	189,429
Cost of revenue		96,866			557,891		606,458		744,304
Accounts receivable, net		153,816			426,895
Gross margin		130,557			1,098,104		674,980		1,244,942
Prepaid expenses		—			1,551
Operating expenses:
Inventories		383,824			235,101
Professional fees		13,441			14,374		71,231		33,929
Other receivables, related party		4,467			1,669
Consulting		10,899			15,740		117,297		50,330
Advances to suppliers		436,192			97,210
Selling, general and administrative		360,120			622,891		1,004,017		873,080
Other current assets		42,363			34,203
Total operating expenses		384,460			653,005		1,192,545		957,339
Total current assets		1,191,885			986,058
Income (Loss) from operations		(253,903)			445,099		(517,565)		287,603
Property & equipment, net		18,808			22,188
Other income (expense):
Capitalized software costs, net		9,211			13,379
Other income		2,296			1,513		2,620		1,364
Total assets	$	1,219,904		$	1,021,625
Interest expense		(2,181)			(1,241)		(2,181)		(1,780)
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Other expenses		(11,780)			—		(24,738)		—
Current liabilities:
Total other income (expense)		(11,665)			272		(24,299)		(416)
Accounts payable and accrued liabilities	$	1,119,361			811,242
Income (loss) before income taxes		(265,568)			445,371		(541,864)		287,187
Customer deposits		30,562			29,261
Provision for income taxes		—			—		—		—
Loan payable		70,622			71,808
Net Income (Loss)	$	(265,568)		$	445,371	$	(541,864)	$	287,187
Loan payable, related parties		141,246			—
Other comprehensive income (loss):
Other payables		18,367			22,807
Foreign currency translation adjustment		9,165			1,532		37,635		(13,099)
Other payables, related party		417,871			416,807
Comprehensive income (loss)		(256,403)			446,903		(504,229)		274,088
Total current liabilities		1,798,029			1,351,925
Basic and diluted net income (loss) per share	$	(0.00)		$	0.00	$	(0.01)	$	0.00
Total liabilities		1,798,029			1,351,925
Weighted average number of common shares outstanding, basic and diluted		102,166,400			102,166,400	102,166,400			102,166,400
Shareholders' Deficit:
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; 102,166,400 shares issued and outstanding		10,217			10,217
Additional paid-in capital		497,573			497,573
Accumulated deficit		(1,102,047	)		(825,752)
Accumulated other comprehensive loss		16,132			(12,338)
Total Stockholders’ Deficit		(578,125	)		(330,300)
Total liabilities and stockholders’ deficit	$	1,219,904			1,021,625

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

CAT9 GROUP, INC. and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
CAT9 GROUP, INC. and Subsidiaries Consolidated Statements of Stockholders’ Deficit For the Six Months Ended June 30, 2019 and 2020 (unaudited)
	Three Months Ended March 31,
	Common Stock						Additional paid in		Accumulated			Other comprehensive
	2020			2019
	Shares			Amount			Capital		Deficit			Income (loss)			Total
Revenue	$	1,054,015		$	333,251
Balance, December 31, 2018		102,166,400		$	10,217		$	497,573	$	(1,118,259	)	$	(1,933	)	$	(612,402	)
Cost of revenue		509,592			186,413
Foreign currency translation adjustment		—			—			—		—			(14,631	)		(14,631	)
Gross margin		544,423			146,838
Net loss		—			—			—		(158,182	)		—			(158,182	)
Operating expenses:
Balance, March 31, 2019		102,166,400			10,217			497,573		(1,276,441	)		(16,564	)		(785,215	)
Professional fees		57,790			19,555
Foreign currency translation adjustment		—			—			—		—			1,532			1,532
Consulting		106,398			34,590
Net income		—			—			—		445,371			—			445,371
Selling, general and administrative		643,897			250,189
Balance, June 30, 2019		102,166,400		$	10,217		$	497,573	$	(831,070	)	$	(15,032	)	$	(338,312	)
Total operating expenses		808,085			304,334
		Common Stock						Additional paid in		Accumulated			Other comprehensive
Loss from operations		(263,662	)		(157,496	)
		Shares			Amount			Capital		Deficit			Income (loss)			Total
Other income (expense):
Balance, December 31, 2019		102,166,400		$	10,217		$	497,573	$	(825,752	)	$	(12,338	)	$	(330,300	)
Other income		324			602
Foreign currency translation adjustment		—			—			—		—			28,470			28,470
Interest expense		—			(539	)
Net loss		—			—			—		(276,295	)		—			(276,295	)
Other expenses		(12,958	)		(749	)
Balance, March 31, 2020		102,166,400			10,217			497,573		(1,102,047	)		16,132			(578,125	)
Total other expense		(12,634	)		(686	)
Foreign currency translation adjustment		—			—			—		—			9,165			9,165
Loss before income taxes		(276,295	)		(158,182	)
Net loss		—			—			—		(265,568	)		—			(265,568	)
Provision for income taxes
Balance, June 30, 2020		102,166,400		$	10,217		$	497,573	$	(1,367,615	)	$	25,297		$	(834,528	)
Net Loss	$	(276,295	)	$	(158,182	)
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Other comprehensive loss:
Foreign currency translation adjustment		28,470			(14,631	)
Comprehensive loss		(247,825	)		(172,813	)
Basic and diluted net loss per share	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding, basic and diluted		102,166,400			102,166,400

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

CAT9 GROUP, INC. and Subsidiaries Consolidated Statements of Stockholders’ Deficit For the Three Months Ended March 31, 2019 and 2020 (unaudited)
	Common Stock				Additional paid in		Accumulated			Other comprehensive
	Shares		Amount		Capital		Deficit			income			Total
Balance, December 31, 2018		102,166,400	$	10,217	$	497,573	$	(1,118,259	)	$	(1,933	)	$	(612,402	)
Foreign currency translation adjustment		—		—		—		—			(14,631	)		(14,631	)
Net loss		—		—		—		(158,182	)		—			(158,182	)
Balance, March 31, 2019		102,166,400	$	10,217	$	497,573	$	(1,276,441	)	$	(16,564	)	$	(785,215	)

CAT9 GROUP, INC. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Common Stock						Additional paid in		Accumulated			Other comprehensive
		For the Six Months Ended June 30,
	Shares			Amount			Capital		Deficit			income			Total
		2020			2019
Balance, December 31, 2019		102,166,400		$	10,217		$	497,573	$	(825,752	)	$	(12,338	)	$	(330,300	)
Cash flows from operating activities:
Foreign currency translation adjustment		—			—			—		—			28,470			28,470
Net Income (Loss)	$	(541,864	)	$	287,187
Net loss		—			—			—		(276,295	)		—			(276,295	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Balance, March 31, 2020		102,166,400		$	10,217		$	497,573	$	(1,102,047	)	$	16,132		$	(578,125	)
Foreign currency translation adjustment		37,635			(13,099	)
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Bad debt expense		498,758			(2,653	)
Depreciation and amortizations expense		13,880			6,559
Changes in operating assets and liabilities:
Accounts receivable		(206,173	)		1,911
Prepaid expenses		22			8,339
Inventories		(129,616	)		(224,499	)
Other assets, related party		(2,099	)		(6,131	)
Advances to suppliers		(217,331	)		15,341
Other current assets		(5,690	)		(1,059	)
Accounts payable and accrued liabilities		158,122			(21,529	)
Customer deposit		99,248			189,185
Other payables		(2,011	)		(6,354	)
Net cash provided by (used in) operating activities		(297,119	)		233,198
Cash flows from investing activities:
Purchase of equipment		—			(572	)
Net cash used in investing activities		—			(572	)
Cash flows from financing activities:
Proceeds from loan payable		109,039			79,004
Loans from related parties		755			72,827
Net cash provided by financing activities		109,794			151,831
Net change in cash		(187,325	)		384,457
Effects of currency translation		450			(145	)
Cash, beginning of period		189,429			119,792
Cash, end of period	$	2,554		$	504,104
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	—		$	930
Cash paid for taxes	$	—		$	—

CAT9 Group Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)

		For the Three Months Ended March 31,
		2020			2019
Cash flows from operating activities:
Net Loss	$	(276,295	)	$	(158,182	)
Adjustments to reconcile net income to net cash used in operating activities:
Foreign currency translation adjustment		28,470			(14,631	)
Bad debt expense		379,087			327
Depreciation and amortizations expense		7,061			3,313
Changes in operating assets and liabilities:
Accounts receivable		(106,008	)		(45,452	)
Prepaid expenses		1,551			7,171
Inventories		(148,723	)		1,715
Other assets, related party		(2,798	)		(1,304	)
Advances to suppliers		(338,982	)		35,726
Other current assets		(8,160	)		919
Accounts payable and accrued liabilities		308,119			(67,957	)
Customer deposit		1,301			109,465
Other payables		(4,440	)		12,236
Net cash used in operating activities		(159,817	)		(116,654	)
Cash flows from investing activities:
Purchase of equipment		—			(579	)
Net cash used in investing activities		—			(579	)
Cash flows from financing activities:
Proceeds from loan payable		140,060			48,842
Loans from related parties		1,064			47,035
Net cash provided by financing activities		141,124			95,877
Net change in cash		(18,693	)		(21,356	)
Effects of currency translation		487			(1,053	)
Cash, beginning of period		189,429			119,792
Cash, end of period	$	171,223		$	97,383
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	—		$	942
Cash paid for taxes	$	—		$	—

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

CAT9 GROUP, INC.

Notes to Unaudited Consolidated Financial Statements

~~March~~June 3130, 2020

NOTE 1 - DESCRIPTION OF BUSINESS AND HISTORY

Description of business

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 Industrial 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 Industrial 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.

9NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2020. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The Company's functional currency for Chongqing CAT9 is the Chinese Renminbi (“RMB”); however, the accompanying financial statements have been translated and presented in the United States Dollars (“USD”).

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, Chongqing CAT9 Industrial Co., Ltd: Chongqing Yubei Branch Company of Chongqing CAT9 Industrial Co., Ltd; Chengdu First Branch Company of Chongqing CAT9 Industrial Co., Ltd; and Chengdu Second Branch Company of Chongqing CAT9 Industrial Co., 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 in consolidation.

Translation Adjustment

For the three and six months ended ~~March~~June 3130, 2020 and 2019, 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’ capital are 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 and six months ended ~~March~~June 3130, 2020 and 2019 is included net income and foreign currency translation adjustments.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 include cash in hand and cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less.

NOTE 3 ~~–SIGNIFICANT~~- SIGNIFICANT CONCENTRATION

Credit Risk

Financial instruments which potentially expose the Company to concentrations of credit risk consist of cash and accounts receivable as of ~~March~~June 3130, 2020 and December 31, 2019. The Company performs ongoing evaluations of its cash position and credit evaluations to ensure collections and minimize losses.

10The major part of the Company’s cash at June 30, 2020 and December 31, 2019 is maintained at financial institutions in the PRC which provide insurance on deposit for no more than 500,000 yuan for each depositor in a bank. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.

The major part of the Company’s cash at March 31, 2020 and December 31, 2019 is maintained at financial institutions in the PRC which provide insurance on deposit for no more than 500,000 yuan for each depositor in a bank. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.9

Geographic Concentration

For the three and six months ended ~~March~~June 3130, 2020 and 2019, the Company’s sales were mainly made to customers located in the PRC. In addition, total accounts ~~receivables~~ receivables as of ~~March~~June 3130, 2020 and December 31, 2019 also arose from customers located in the PRC.

Major parts of net assets of the Company are also located in the PRC.

Customer Concentration

~~The~~On ~~following~~April ~~table~~7, ~~sets~~2020, ~~forth~~the ~~information~~Company’s largest asdistributor toof its products which it received 90% of its revenues doing business under the ~~revenue~~trade ~~derived~~names ~~from~~Zhongjun Jilian (Shanghai) Tech Development Co., Ltd., ~~those~~Shanghai Hanan E-business Co., Lt., ~~customers~~and ~~that~~Nanjing Hemu E-business Co., Ltd. ceased ~~accounted~~all ~~for~~operations. ~~more~~Due ~~than~~to ~~10%~~this ofevent, ~~our~~the ~~revenue~~Company ~~for~~has uncollectible accounts receivables in the ~~year~~amount ~~ended~~of ~~March~~$466,954 31(3,299,058 RMB) ~~2020:~~which it does not believe is recoverable.

	Amount		%
Shanghai Haan E-Business Co., Ltd.	$	675,488		64	%
Zhongjun Jilian (Shanghai)Tech Co., Ltd.		212,932		20	%

The following table sets forth information as to the revenue derived from those customers that accounted for more than 10% of our revenue for the three and six months ended June 30, 2020:

The following table sets forth information as to the accounts receivable derived from those customers that accounted for more than 10% of our accounts receivable as of March 31, 2020:

Three Months Ended June 30, 2020	Amount		%
Shanghai Haan E-Business Co., Ltd.	$	58,637		26	%
Zhongjun Jilian (Shanghai)Tech Co., Ltd.	$	78,358		34	%
Mingtong Chongqing Agricultural Technology Development Co., Ltd	$	34,781		15	%

Six Months Ended June 30, 2020
Shanghai Haan E-Business Co., Ltd.	$	729,008		57	%
Zhongjun Jilian (Shanghai)Tech Co., Ltd.	$	289,677		23	%

	Amount		%
She Qiulin	$	103.823		67	%
Sichuan Juhuimin E-Business Co., Ltd.		45,881		30	%

The following table sets forth information as to the accounts receivable derived from those customers that accounted for more than 10% of our accounts receivable as of June 30, 2020:

NOTE 4 –ACCOUNTS RECEIVABLE

	Amount		%
She Qiulin	$	134,311		77	%
Sichuan Jiawanjia.Tech Co Ltd.	$	27,391		20	%

NOTE 4 - ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

		March 31, 2020				December 31, 2019
		June 30, 2020			December 31, 2019
Accounts receivable	$	$638,590	~~535,313~~	$	434,810	$	~~434,810~~
Less: allowance for doubtful accounts		(504,279)	~~(381,497~~	)	(7,915)		~~(7,915~~	)
Accounts receivable, net	$	$134,311	~~153,816~~	$	426,895	$	~~426,895~~

NOTE 5 –- INVENTORIES

Inventories consist of the following:

	March 31, 2020		December 31, 2019
	June 30, 2020		December 31, 2019
Raw materials and parts	$	5874,~~359~~041	$	36,710
Work in process		190,932		—
Finished goods		290,676		198,391
Finished goods		134,533		198,391
Total		364,717		235,101
Total		383,824		235,101
Less: allowance for inventory reserve		—		—
Total inventory, net	$	~~383~~364,~~824~~717	$	235,101

~~NOTE 6 — PROPERTY AND EQUIPMENT~~10

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows:

	March 31, 2020			December 31, 2019
	June 30, 2020			December 31, 2019
Equipment	$	13,~~901~~930		$	14,134
Automobile		33,~~535~~605			34,098
Acer Truncatum saplings		212			215
Total property and equipment		47,~~648~~747			48,447
Less accumulated depreciation		(2831,~~840~~784	)		(26,259	)
Property and equipment, net	$	1815,~~808~~963		$	22,188

11Depreciation expense was $5,932 and $6,559 for the six months ended June 30, 2020 and 2019, respectively.

~~Depreciation~~NOTE ~~expense~~7 - ~~was~~CAPITALIZED ~~$3,057~~SOFTWARE ~~and $3,313 for the three months ended March 31, 2020 and 2019, respectively.~~COSTS

NOTE 7 — CAPITALIZED SOFTWARE COSTS

Capitalized software costs consist of the following as of:

	March 31, 2020			December 31, 2019
	June 30, 2020			December 31, 2019
Software	$	15,~~790~~823		$	16,055
Less accumulated amortization		(610,~~579~~549	)		(2,676	)
Software costs, net	$	95,~~211~~274		$	13,379

Amortization expense was $47,~~004~~948 and $0 for the ~~three~~six months ended ~~March~~June 3130, 2020 and 2019, respectively.

NOTE 8 - – LOAN PAYABLE

On June 16, 2018, the Company entered a loan agreement with an individual in the amount of $70,~~622~~771 (RMB $500,000). The maturity date is June 15, 2019. The loan is unsecured, non-interest bearing. This loan is currently in default.

NOTE 9 - RELATED PARTY TRANSACTIONS

Loan payable, related parties

On January 1, 2020, the Company entered into a loan agreement with Sichuan CAT9 Technology, the company under control of Wenfa Sun, the Company’s President, Chief Executive Officer and Chairman. The loan agreement offers the Company $706,228 (RMB 5,000,000) credit line. The maturity date is December 31, 2020. The loan is unsecured, non-interest bearing. As of ~~March~~June 3130, 2020, the balance of the loan is $~~141~~110,~~246~~077 and unused credit line is $~~564~~597,~~982~~631.

Due to related parties

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~~June 3130, 2020 and December 31, 2019, the Company was indebted to related parties that advanced loans to the Company without any formal repayment terms. As of ~~March~~June 3130, 2020 and December 31, 2019, the Company owed the aforementioned related parties $417,~~871~~562 and $416,807, respectively.

~~NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE LOSS~~11

~~Balance~~NOTE of10 ~~related after~~-~~tax~~ ACCUMULATED ~~components~~OTHER ~~comprising accumulated other~~COMPREHENSIVE ~~comprehensive~~INCOME ~~loss included members’ capital were as follows:~~(LOSS)

	March 31, 2020			December 31, 2019
Accumulated other comprehensive loss, beginning of period	$	(12,338	)	$	(1,933	)
Change in cumulative translation adjustment		28,470			(10,405	)
Accumulated other comprehensive loss, end of period	$	16,132		$	(12,338	)

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

	June 30, 2020		December 31, 2019
Accumulated other comprehensive income (loss), beginning of period	$	(12,338)	$	(1,933)
Change in cumulative translation adjustment		37,635		(10,405)
Accumulated other comprehensive income (loss), end of period	$	25,297	$	(12,338)

NOTE 11 - – 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.

On April 7, 2020, the Company’s largest distributor of its products which it received 90% of its revenues doing business under the trade names Zhongjun Jilian (Shanghai) Tech Development Co., Ltd., Shanghai Hanan E-business Co., Lt., and Nanjing Hemu E-business Co., Ltd. ceased all operations. Due to this event, the Company has uncollectible accounts receivables in the amount of $466,056 (3,299,613 RMB) which it does not believe is recoverable. 12

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~~ 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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand CAT9 Group, Inc., our operations and our present business environment. MD&A is provided as a supplement to—and should be read in conjunction with—our consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q for the second quarter-ended June 30, 2020. The audited financial statements for our fiscal year ended December 31, 2019 filed with the Securities Exchange Commission on Form 10-K on April 27, 2020 and Form 10-K/A May 11, 2020 should be read in conjunction with the discussion below. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these unaudited financial statements.

We were incorporated in the State of Delaware on January 26, 2015 and on February 6, 2015 as ANDES 4, Inc.; we filed our registration statement on Form 10 to register with the U.S Securities and Exchange Commission (the “SEC”) as a public company. We were organized as a vehicle to explore and acquire a target company or business that sought to find value with perceived advantages of being a publicly held corporation.

On July 31, 2015, the sole officer of ANDES 4, Inc., entered into a Share Purchase Agreement (“SPA”) with Chongqing Field Industrial Company Ltd (“CQFI”) whereby the sole officer then resigned and sold his entire position on August 12, 2015. On May 2, 2016, the Company issued 6,000,000 shares of common stock to its President, CEO and Chairman, Wenfa “Simon” Sun and 4,000,000 shares of common stock to its CFO, Meihong “Sanya” Qian via employment agreements, further, on May 3, 2016, CQFI consented to a redemption of its 10,000,000 shares held in the Company, with the redemption, the control over the Company was transferred to Wenfa “Simon” Sun and Meihong “Sanya” Qian.

On December 27, 2016, the Company entered into a merger agreement (the “Merger”) via CAT9 Group, Inc., CAT9 Holdings, a company organized under the laws of the Cayman Islands, CAT9 Investment China Limited, a company organized under the laws of Hong Kong (“CAT9 HK”) and its wholly-owned subsidiary, Chongqing Field Industrial Company Ltd. (“CQFI”).

On December 26, 2017, the Company filed its Form S-1 with the SEC and became effective on April 4, 2018. The Company was issued the trading symbol “CATN” by Financial Industry Regulatory Authority (“FINRA”) and began trading on the Over-the-Counter market pink venue, owned by OTC Markets Group Inc.

On December 7, 2018, our President, CEO and Chairman, Wenfa “Simon” Sun gifted 20,000,000 shares of his personal common stock in our Company to Guofu Industry Development Ltd in a private transaction fully disclosed on Form 13D. These shares represented approximately 19.6% of the shares in CAT9 Group, Inc.

On August 23, 2019, our President, CEO and Chairman, Wenfa “Simon” Sun acquired 10,000,000 shares of common stock held by our former CFO, Meihong “Sanya” Qian who resigned on May 14, 2019. The acquisition of these common shares was done as a privately negotiated transaction and post-purchase, Wenfa “Simon” Sun held 78.3% of CAT9 Group, Inc.

On April 7, 2020, the Company’s largest distributor of its products which it received 90% of its revenues doing business under the trade names Zhongjun Jilian (Shanghai) Tech Development Co., Ltd., Shanghai Hanan E-business Co., Lt., and Nanjing Hemu E-business Co., Ltd. ceased all operations. Due to this event, the Company has uncollectible accounts receivables in the amount of 3,299,612.55 RMB which it does not believe is recoverable.

The result of this event will likely place a significant limitation on our sales and revenues for the near future as we seek new distributor relationships for our products.

We also continue to face uncertainty operating under the conditions of COVID-19, the novel coronavirus which began in Wuhan, China. During the first quarter of 2020, China placed several areas under mandatory quarantine which during this period our employees and staff worked from home. As China is slowly relaxing its quarantine measures, there has been additional quarantine lockdowns as COVID-19 infections have been found in other parts of the country. We cannot make any assurances that COVID-19 will not reappear with new infections and to the extent that COVID-19, or another virus appears, we may encounter prolonged operational lockdown measures that would disrupt our business operations.

Results of Operations

Three months ended ~~March~~June 3130, 2020 compared to the three ~~months~~ months ended ~~March~~June 3130, 2019

Sales Revenue

Sales revenue for the three months ended ~~March~~June 3130, 2020, was $1227,~~054~~423,~~015,~~ compared to $~~333~~1,~~251~~655,995 for the three months ended ~~March~~June 3130, 2019, ana ~~increase~~decrease of $~~720~~1,~~764~~428,572.~~During~~ ~~the~~We ~~second~~have ~~quarter~~experienced ofa ~~2019~~significant ~~the~~decrease ~~Company~~in ~~increased~~revenue ~~its~~primarily ~~sales~~due ~~staff.~~to ~~The~~the ~~new~~largest ~~sales~~distributor ~~agents~~of ~~have~~our ~~been~~products ~~very~~ceasing ~~successful~~all ~~with their sales efforts~~operations.

Cost of Goods Sold

Cost of goods sold for the three months ended ~~March~~June 3130, 2020, was $~~509~~96,~~592~~866, compared to $~~186~~557,~~413~~891 for the three months ended ~~March~~June 3130, 2019, ~~an,increase~~a decrease of ~~323~~$461,~~179~~025 or ~~173~~82.46%. The ~~increase~~decrease in cost of goods is directly related to the ~~increase~~decrease in sales.

Operating Expenses

Professional fees were $5713,~~790~~441 for the three months ended ~~March~~June 3130, 2020, compared to $1914,~~555~~374 for the three months ended ~~March~~June 3130, 2019, ~~an increase~~a decrease of $~~38,235~~933 or ~~195~~6.5%. Professional fees consist mostly of legal and audit expense.

~~Consulting~~Selling, general and administrative expense (“SG&A”) was $~~106~~360,~~398~~120 for the three months ended ~~March~~June 3130, 2020, compared to $34622,~~590~~ 891 for the three months ended ~~March~~June 3130, 2019, an ~~increase~~a decrease of $71262,~~808~~771 or ~~207~~42.62%.~~Consulting~~ ~~expense~~The ~~has~~decrease ~~increased~~is ~~due~~the toresult ~~decreased~~of ~~use~~the ofoverall ~~consulting~~decrease in ~~for~~operations ~~business~~including ~~management~~ salaries and ~~intellectual~~wages, ~~property~~rent, freight and marketing expense.

~~Selling,~~Other general and administrative expense (“SG&A”) was $643,897 for the three months ended March 31, 2020, compared to $250,189 for the three months ended March 31, 2019, an increase of $393,708 or 157.4%. The increase is the result of the overall increase in operations including salaries and wages, rent, freight and marketing expense.income/expenses

15We had total other expenses for the three months ended June 30, 2020 of $11,665, compared to total other income of $272 for the three months ended June 30, 2019. The increase in other expense is due to an increase in asset impairment loss.

Net Loss

Net loss for the three months ended ~~March~~June 3130, 2020, was $~~276~~265,~~295~~568, compared to net income of $~~158~~445,~~182~~371 for the three months ended ~~March~~June 3130, 2019. The ~~increase~~change from net income in the prior period to a net loss isin the ~~result~~current ofperiod is primarily due to our ~~increased~~ ~~SG&A~~significant ~~expense~~decrease in revenue as discussed above.

Six months ended June 30, 2020 compared to the six months ended June 30, 2019

Sales Revenue

Sales revenue for the six months ended June 30, 2020, was $1,281,438, compared to $1,989,246 for the six months ended June 30, 2019, a decrease of $707,808. We have experienced a significant decrease in revenue primarily due to the largest distributor of our products ceasing all operations.

Cost of Goods Sold

Cost of goods sold for the six months ended June 30, 2020, was $606,458, compared to $744,304 for the six months ended June 30, 2019, a decrease of $137,846 or 18.5%. The decrease in cost of goods is directly related to the decrease in sales.

Operating Expenses

Professional fees were $71,231 for the six months ended June 30, 2020, compared to $33,929 for the six months ended June 30, 2019, an increase of $37,302 or 109.9%. Professional fees consist mostly of legal and audit expense.

SG&A expense was $1,004,017 for the six months ended June 30, 2020, compared to $873,080 for the six months ended June 30, 2019, an increase of $130,937 or 15%. The increase is mainly due to an increase in bad debt expense.

Other income/expenses

We had total other expenses for the six months ended June 30, 2020 of $24,299, compared to $416 for the six months ended June 30, 2019. The increase in other expense is due to an increase in asset impairment loss.

Net Loss

Net loss for the six months ended June 30, 2020, was $541,864, compared to net income of $287,187 for the six months ended June 30, 2019. The change from net income in the prior period to a net loss in the current period is primarily due to our significant decrease in revenue as discussed above.

Liquidity and Capital Resources

During the ~~three~~six months ended ~~March~~June 3130, 2020, we used $~~159~~297,~~817~~119 of cash in operating activities compared to $~~116~~233,~~654~~198 ~~used~~provided ~~for~~by operating ~~activities~~ activities in the prior period.

During the ~~three~~six months ended ~~March~~June 3130, 2020, we used $0 for investing activities compared to $~~579~~572 for the purchase of property and equipment in the prior period.

During the ~~three~~six months ended ~~March~~June 3130, 2020, we received $~~141~~109,~~124~~794 from financing activities compared to $95151,~~877~~831 received in the prior period.

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~~June 3130, 2020. 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~~ 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~~June 3130, 2020, 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~~June 3130, 2020, 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, 2020: (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~~June 3130, 2020 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	02/06/15
3.2	Bylaws		10		3.2	02/06/15
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		10-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/ Suyun Cao

Suyun Cao, Chief Financial Officer, Secretary

Dated: ~~July~~August 912, 2020

Filing Compare · CAT9 Group Inc.