Attached files

file filename
EX-32.2 - CATALYST RESOURCE GROUP, INC.cata10q033111ex322.htm
EX-31.1 - CATALYST RESOURCE GROUP, INC.cata10q033111ex311.htm
EX-31.2 - CATALYST RESOURCE GROUP, INC.cata10q033111ex312.htm
EX-32.1 - CATALYST RESOURCE GROUP, INC.cata10q033111ex321.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

 

 

 

 

 

þ

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ending March 31, 2011

or

 

 

 

 

 

 

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                      

 

Commission file no. 0-26307

Catalyst Resource Group, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

Florida

 

82-0190257

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

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

(Address of principal executive offices, including zip code)

714-843-5455
(Registrants telephone number, including area code)

 

Jeantex Group, Inc.

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

 

     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 May 19, 2011, there were 102,596,195 shares of the issuer's Common Stock, $.001 par value per share, Class A Common Stock, (including 20,867,000 shares to be cancelled) and 9,958 shares of the issuer's Class B Common Stock, $.001 par value, issued and outstanding. 

 

 

 

 

 

 


 

 

CATALYST RESOURCE GROUP, INC.

(Formerly JEANTEX GROUP, INC. )

 

INDEX

 

 

 

 

 

 

PART I — FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1. Financial Statements (Unaudited)

 

 

 

 

 

Balance  Sheets  as of  March 31, 2011 and  December 31, 2010 (Unaudited)

 

 

 

 

 

Statements of Operations for the Three Months Ended March 31, 2011 and 2010 (Unaudited)

 

 

 

 

 

Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010 (Unaudited)

 

 

 

 

 

Notes to Unaudited Financial Statements

 

 

 

 

 

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

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk

 

 

 

 

 

Item 4. Control and Procedures

 

 

 

 

 

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

 

 

 

 

 

Item 2. Unregistered Sales of Equity and Use of Proceeds

 

 

 

 

 

Item 3. Defaults upon Senior Securities

 

 

 

 

 

Item 4. Submission of Matters to a Vote of Security Holders

 

 

 

 

 

Item 5. Other Information

 

 

 

 

 

Item 6. Exhibits

 

 

 

 

 

Signatures

 

 

 

 

 

 


 

CATALYST RESOURCE GROUP, INC

FORMERLY JEANTEX GROUP, INC

(DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

(Unaudited)

March 31,

December 31,

2011

2010

ASSETS:

Current Assets:

Cash

$

               5,848

$

180

TOTAL ASSETS

$

               5,848

$

                  180

LIABILITIES AND STOCKHOLDERS' DEFICIT:

Current Liabilities:

Accounts payable

$

           197,307

$

           188,424

Interest payable

           276,577

           264,975

Notes payable

           351,040

           351,040

Convertible promissory note, net of discount $73,271 and 18,809, respectively

               6,729

             18,191

Payables to related parties

           183,347

           246,347

Derivative Liability

             79,320

             40,205

Total Current Liabilities

$

        1,094,320

$

        1,109,182

Stockholders' Deficit:

Common stock, non-assessable, $0.001 par value,

299,990,000 shares authorized, 102,596,195 and 100,118,411 shares

$

           102,597

$

           100,118

issued and outstanding, respectively

Class B Common stock, assessable, $0.001 par value

10,000 shares authorized, 9,958 shares issued and outstanding

                    10

                    10

Additional paid in capital

      16,860,150

      16,778,800

Accumulated deficit prior to development stage

     (16,770,000)

     (16,770,000)

Accumulated deficit during development stage

       (1,281,229)

       (1,217,930)

Total Stockholders' Deficit

$

       (1,088,472)

$

       (1,109,002)

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

               5,848

$

180

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

 

 


 


 

CATALYST RESOURCE GROUP, INC

FORMERLY JEANTEX GROUP, INC

(DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 AND THE PERIOD

FROM RE-ENTERING THE DEVELOPMENT STAGE, JANUARY 1, 2007, TO MARCH 31, 2011

(Unaudited)

 

 

 

 

 

From Re-entering of

 

 

Development Stage

 

 

January 1, 2007 to

 

 

2011

2010

March 31, 2011

 

 

 

 

 

 

NET SALES

$

                   -  

$

                   -  

$

                            -  

 

 

 

 

COST OF GOODS SOLD

                   -  

                   -  

                            -  

 

 

 

 

GROSS PROFIT

                   -  

                   -  

                            -  

 

 

 

 

OPERATING EXPENSES:

 

 

General and administration

            20,037

27,100

379,219

 

 

Bad Debts

                     -

                     -

617,336

 

 

Total Operating Expenses

            20,037

            27,100

996,555

 

 

 

 

Income(Loss) from Operations

          (20,037)

          (27,100)

                 (996,555)

 

 

 

 

OTHER INCOME (EXPENSES)

 

 

Interest expense

          (39,745)

(14,570)

                 (276,584)

 

 

Other expense

            (3,516)

                   -  

                     (8,090)

 

 

Total other income (expense)

          (43,261)

          (14,570)

                 (284,674)

 

 

 

 

 

NET INCOME(LOSS)

$

          (63,298)

$

          (41,670)

$

              (1,281,229)

 

 

 

 

Weighted average number of  Class A shares

 

 

outstanding-basic and diluted

   101,995,073

     96,258,196

 

 

 

 

Basic and diluted net loss per share-Class A

$

(0.00)

$

(0.00)

 

 

 

 

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

 

CATALYST RESOURCE GROUP, INC

FORMERLY JEANTEX GROUP, INC

(DEVELOPMENT STAGE COMPANY)

 STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

AND THE PERIOD FROM RE-ENTERING THE DEVELOPMENT STAGE, JANUARY 1, 2007 TO MARCH 31, 2011

(Unaudited)

Period From

January 1, 2007

(re-entering

development stage) to

2011

2010

March 31, 2011

Cash Flows From Operating Activities:

Net loss

$

(63,298)

$

(41,670)

$

                        (1,281,229)

Adjustments to reconcile net loss to net cash used

in operating activities:

    Bad debts

             -  

             -  

                             617,336

    Imputed interest charged to equity

          926

          850

                               12,213

    Amortization of Discount

     25,239

             -  

                               45,465

Issuance of shares for consulting services

             -  

             -  

                             135,000

    Changes in fair value of derivative liability

       3,516

             -  

                                 8,090

Changes in assets and liabilities:

    Decrease in deposits and prepaid expenses

             -  

             -  

                               46,816

    Increase(decrease) in accounts payable

       8,588

     12,973

                               (9,065)

    Increase in accrued expenses

     13,697

     13,526

                             197,588

        Total adjustments

     51,966

     27,349

                          1,053,443

Net cash used in operating activities

$

    (11,332)

$

    (14,321)

$

                           (227,787)

Cash Flow From Financing Activities:

  Proceeds from notes - related parties

$

             -  

$

     14,335

$

                             130,283

  Payment of Notes- related parties

    (63,000)

             -  

                           (103,666)

  Proceeds from notes

     80,000

             -  

                             145,440

  Payment on notes

             -  

             -  

                               (5,000)

  Payments of lines of credit

             -  

             -  

                               (1,270)

  Stock issued for cash

             -  

             -  

                               62,600

Net cash provided by financing activities

$

     17,000

$

     14,335

$

                             228,387

Increase(decrease) in cash

       5,668

            14

                                    601

Cash  - Beginning of period

          180

            92

                                 5,247

Cash - End of period

$

5,848

$

106

$

5,848

Supplemental Cash Flow Information:

  Interest paid

$

            -   

$

1,000

$

                               19,177

  Taxes paid

$

            -   

$

             -  

$

                                      -  

  Non-cash investing and financing activities:

Debt Discount

$

     44,090

             -  

$

                               44,090

Debt Conversion

$

     37,000

             -  

$

                               37,000

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

 


 

 

 

 

 


 

 

Catalyst Resource Group, Inc.

          (Formerly Jeantex Group, Inc.)         

Notes to Unaudited Consolidated Financial Statements

March 31, 2011

 

 

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 March 31, 2011 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, 2010.

 

The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011.

 

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 $18,051,229 at March 31, 2011. At March 31, 2011, the Company’s current liabilities exceeded its current assets by $1,088,472.  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.

 

 


 

 

3. NOTES PAYABLE

At March 31, 2011 and December 31, 2010, 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

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

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

Note Payable due to individual, unsecured, 8% interest due on demand                                 1,540

                                                                                                                                           $ 351,040

 

Total interest expense for the periods ended March 31, 2011 and 2010 was $39,745 and $14,570 respectively.

 

 

4. PAYABLES TO RELATED PARTIES

 

At March 31, 2011 and December 31, 2010, notes payable to related parties consisted of the following:

 

 

March 31, 2011

 

December 31, 2010

 

 

 

 

Note Payable to PHI Group, Inc. related by ownership, unsecured, 8% interest, due on demand

$ 156,549

 

$ 198,049

 Note Payable to PHILand Corporation, a subsidiary of PHI Group Inc.

 

1,000 

Short-term loan from officer, unsecured, interest free, due on demand

26,798

 

47,298

 

 

 

 

 

$ 183,347

 

$ 246,347

 

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

 

Imputed interest on the interest free short-term loan from officer in the amount of $926 and $3,487 were included as an increase to additional paid in capital at March 31, 2011 and December 31, 2010, respectively.

 

 

5.  CONVERTIBLE PROMISSORY NOTE

 

 


 

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.

 

During the first quarter, the remaining $37,000 principal of the convertible notes issued in May 18, 2010 has been converted into 2,477,784 shares which extinguished the derivative liability resulting in a credit to paid in capital of $41,734. The remaining debt discount was written off to interest expense in the amount of $18,809.

On January 11, 2011 and March 10, 2011, the Company issued a second and a third Convertible Promissory Note to Asher for $40,000 each under similar terms and conditions.

 

12/31/10

Additions

 

Conversions

 

3/31/11

Asher Enterprise

37,000

 

(37,000)

 

80,000

80,000

Discount on Asher Note

(18,809)

(79,035)

 

 

(73,272)

24,572

 

 

6.  DERIVATIVE

 

The Company’s Convertible 8% Note issued May 18, 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 closing bid prices 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.

 

We valued the conversion features in its convertible notes using a binomial lattice valuation model. The lattice model values the embedded derivatives based on a probability-weighted discounted cash flow model. This model is based on future projections of the five primary alternatives possible for settlement of the features included within the embedded derivatives, which are: (i) payments are made in cash, (ii) payments are made in stock, (iii) the holder exercises its right to convert the debentures, (iv) we exercise our right to convert the debentures, and (v) we default on the debentures. We use the model to analyze the underlying economic factors that influence which of these events will occur, when they are likely to occur, and the price of its common stock and specific terms of the debentures, such as interest rate and conversion price, that will be in effect when they occur. Based on the analysis of these factors, we use the model to develop a set of potential scenarios. Probabilities of each scenario occurring during the remaining term of the debentures are determined based on management's projections. These probabilities are used to create a cash flow projection over the term of the debentures and determine the probability that the projected cash flow will be achieved. A discounted weighted average cash flow for each scenario is then calculated and compared to the discounted cash flow of the debentures without the compound embedded derivative in order to determine a value for the compound embedded derivative.

 


 

Roll-forward of Derivative Net Liabilities

 

Total derivative net liabilities as of December 31, 2010

 $     40,205

Derivative balance at issuance (January 11, 2011)

40,666

Derivative balance at issuance (March 10, 2011)

39,035

Conversion of Note

(44,102)

Change due to Market to Market

 

3,516

Net fair value of derivatives as of March 31, 2011

 $     79,320

 

 

During the first quarter, the remaining $37,000 principal of the convertible notes was converted, which extinguished the associated derivative liability. The remaining debt discount of $18,809 was written off to interest expense at the time of conversion. On January 11, 2011 and March 10, 2011, the Company issued a second and third Convertible Promissory Note to Asher for $40,000 each under similar terms and conditions. Based on current guidance, the Company concluded that the convertible notes issued to Asher during the first quarter is also required to be accounted for as a derivative. This guidance requires the Company to bifurcate and separately account for the conversion features of the convertible notes issued as embedded derivatives. Derivative liabilities of $40,666 and $39,035 resulted from the January 11, 2011 and March 10, 2011 note issuances and an associated debt discounts of $40,000 and $39,035, respectively. The debt discounts are being amortized over the nine-month note life, using the effective interest method. Total debt discount amortization for the period ending March 31, 2011 was $24,572 which was recorded as interest expense during the period.

 

The fair value of the derivative liability at March 31, 2011 is $79,320.

 

 

7. RECLASSIFICATION

 

For comparative purposes, prior period’s consolidated financial statements have been reclassified to conform with report classifications of the current period.

 

 

8. STOCKHOLDER’S EQUITY

Pursuant to the amendment of the Articles of Incorporation of the Company as filed with the Secretary of State, Florida, on October 1, 2003, the authorized common stock has been divided into two classes known as Common Stock (previously known as Class A Common Stock) and Class B assessable common stock.

Common Stock

On January 3, 2011, Asher Enterprises, Inc. converted $10,000 of the note to 819,672 shares of the Company’s common stock.

On January 19, 2011, Asher Enterprises, Inc. converted $8,000 of the note to 425,532 shares of the Company’s common stock.

 


 

On January 21, 2011, Asher Enterprises, Inc. converted $10,000 of the note to 578,035 shares of the Company’s common stock.

On February 17, 2011, Asher Enterprises, Inc. converted $9,000 of the note to 654,545 shares of the Company’s common stock.

At March 31, 2011, the Company has authorized for issue, 299,990,000 shares of Common Stock with a par value of $0.001. Common Stock issued and outstanding of 102,596,195 shares is fully paid and non-assessable.

Class B Common Stock

At March 31, 2011, the Company has authorized for issue, 10,000 shares of Class B Common Stock with a par value of $0.001. Class B Common Stock issued and outstanding of 9,958 shares is assessable, provided however, that any assessments levied upon Class B shares are considered as contributions to capital and must be repaid from net profits before dividends are declared or paid to any Common Stock or Class B Common Stock shareholders. Class B capital assessments can be levied at any time by the Board of Directors at their discretion. Shareholders who fail to pay assessments levied on their Class B shares lose ownership of the shares and the shares are returned to the treasury.

Preferred Stock

The Company has 100,000,000 shares of authorized Preferred Stock, with a par value of $0.001. As of the date of this report, the Company has not issued any Preferred Stock.

 

8. SUBSEQUENT EVENT

On April 5, 2011, the Company issued a fourth Convertible Promissory Note to Asher for $40,000 under similar terms and conditions.

On May 5, 2011, the Company entered into an agreement with Rerun Recovery, Inc. to cooperate with each other to utilize a proprietary pre-treatment technology for the mining industry to process and sell platinum group metals (PGMs) and gold from a mine in Alaska and one in Oregon to industrial and private users. Pursuant to the agreement, Rerun Recovery will share 70% net profits of the processed minerals from these mines to the Company. In return, the Company will be responsible for $400,000 related to the operations on the mines and $3,500,000 for building new processing facilities. In addition, the Company will issue also 150,000,000 shares of its authorized but unissued non-assessable common stock to Rerun Recovery in exchange for the 70% profit sharing.  The closing of this transaction is subject to the approval of a majority of shareholders of the Company.

 


 

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.

 


 

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.

 


 

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 better reflect its new intended scope of business.

 

New Business Focus:

The Company has taken various steps to revise its operating and financial plans, including negotiating to acquire technologies related to mining, building materials, energy and natural resources.  Management believes that these new initiatives will create long-term value for the Company but there is no guarantee that the Company will succeed in its plans.

Results of Operations

 

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

 

Revenues:

 

The Company had no revenue for the quarters ended March 31, 2011 or  2010.

 

Operating Expenses:

 

The Company incurred total operating expenses of $20,037 for the quarter ended March 31, 2011 as compared to $27,100 for the same quarter in 2010.  The operating expenses consisted of general and administration expenses.  The decrease is primarily due to the decrease in travel expense.

 

Loss from operations:

 

The Company had losses from operations of $20,037 for the quarter ended March 31, 2011 as compared to a loss from operations of $27,100 for the same quarter in 2010.  This decrease of loss was due to the decrease in general and administration expense of $7,063 in the quarter ended March 31, 2011.

 

Other Income (Expenses):

 

 


 

The Company incurred $39,745 in interest expense for the quarter ended March 31, 2011 as compared to $14,570 in interest expense for the quarter ended March 31, 2010.

 

Net loss:

 

The Company had a net loss of $63,298 for the quarter ended March 31, 2011 as compared to a net loss of $41,670 in the same quarter in 2010.  The net loss based on the basic and diluted weighted average number of common shares outstanding for the quarters ended March 31, 2011 and 2010 was $0.00 for both periods.

 

Liquidity and Capital Resources

 

At March 31, 2011, the Company had $5,848 in cash. The Company used $11,332 for operating activities during the three-month period ended March 31, 2011 compared to $14,321 for the same quarter in 2010.

The use of cash in operating activities in 2011 and 2010 were due to the change in value and amortization of derivatives.  

 

In financing activities, the Company obtained $80,000 from proceeds on notes during the three-month period ended March 31, 2011 compare to $14,335 from proceeds on notes from related party during the three-month period ended March 31, 2010.

 

The Company has incurred an accumulated deficit as of March 31, 2011 of $18,051,229.

 

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.

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 March 31, 2011. 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.  

 

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.

 


 

 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: May 19, 2011

 

By: /s/ Henry D. Fahman

Henry D. Fahman,

Principal Executive/Financial Officer